Additional Covenants of Borrower. Until payment or satisfaction in full of all Liabilities and termination of this Agreement, unless Borrower obtains Bank's prior written consent waiving or modifying any of Borrower's covenants hereunder in any specific instance, Borrower agrees as follows: (a) Borrower shall at all times keep accurate and complete books, records and accounts with respect to all of Borrower's business activities, in accordance with sound accounting practices and generally accepted accounting principles consistently applied, and shall keep such books, records and accounts, and any copies thereof, only at the addresses indicated for such purpose on Exhibit B; (b) Borrower agrees to deliver to Bank the following financial information, all of which shall be prepared in accordance with generally accepted accounting principles consistently applied: (i) no later than twenty (20) days after each calendar month, copies of internally prepared financial statements, including, without limitation, balance sheets and statements of income, retained earnings and cash flow of Borrower, certified by the Chief Financial Officer of Borrower; (ii) no later than thirty (30) days after the end of each of the first three quarters of Borrower's fiscal year a balance sheet, operating statement and reconciliation of surplus of Borrower, which quarterly financial statements may be unaudited but shall be certified by the Chief Financial Officer of Borrower; and (iii) no later than seventy-five (75) days after the end of each of Borrower's fiscal years, audited annual financial statements with an unqualified opinion by independent certified public accountants selected by Borrower and reasonably satisfactory to Bank, which financial statements shall be accompanied by a letter from such accountants acknowledging that they are aware that a primary intent of Borrower in obtaining such financial statements is to influence Bank and that Bank is relying upon such financial statements in connection with the exercise of its rights hereunder and copies of any management letters sent to the Borrower by such accountants; (c) Borrower shall promptly advise Bank in writing of any material adverse change in the business, assets or condition, financial or otherwise, of Borrower, the occurrence of any Event of Default hereunder or the occurrence of any event which, if uncured, will become an Event of Default hereunder after notice or lapse of time (or both); (d) Bank, or any Persons designated by it, shall have the right, at any time, to call at Borrower's places of business at any reasonable times, and, without hindrance or delay, to inspect the Collateral and to inspect, audit, check and make extracts from Borrower's books, records, journals, orders, receipts and any correspondence and other data relating to Borrower's business, the Collateral or any transactions between the parties hereto, and shall have the right to make such verification concerning Borrower's business as Bank may consider reasonable under the circumstances. Borrower shall furnish to Bank such information relevant to Bank's rights under this Agreement as Bank shall at any time and from time to time request. Borrower authorizes Bank to discuss the affairs, finances and business of Borrower with any officers, employees or directors of Borrower or with any Affiliate or the officers, employees or directors of any Affiliate, and to discuss the financial condition of Borrower with Borrower's independent public accountants. Any such discussions shall be without liability to Bank or to Borrower's independent public accountants. Borrower shall pay to Bank all customary fees and out-of-pocket expenses incurred by Bank in the exercise of its rights hereunder, and all of such fees and expenses shall constitute Loans hereunder, shall be payable on demand and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder; (e) Borrower shall: (i) keep the Collateral properly housed and insured for the full insurable value thereof against loss or damage by fire, theft, explosion, sprinklers, collision (in the case of motor vehicles) and such other risks as are customarily insured against by Persons engaged in businesses similar to that of Borrower, with such companies, in such amounts, with such deductibles, and under policies in such form as shall be satisfactory to Bank. Original (or certified) copies of such policies of insurance have been or shall be delivered to Bank within ninety (90) days after the date hereof, together with evidence of payment of all premiums therefor, and shall contain an endorsement, in form and substance acceptable to Bank, showing loss under such insurance policies payable to Bank. Such endorsement, or an independent instrument furnished to Bank, shall provide that the insurance company shall give Bank at least thirty (30) days written notice before any such policy of insurance is altered or canceled and that no act, whether willful or negligent, or default of Borrower or any other Person shall affect the right of Bank to recover under such policy of insurance in case of loss or damage. In addition, Borrower shall cause to be executed and delivered to Bank an assignment of proceeds of its business interruption insurance policies. Borrower hereby directs all insurers under all policies of insurance to pay all proceeds payable thereunder directly to Bank. Borrower irrevocably makes, constitutes and appoints Bank (and all officers, employees or agents designated by Bank) as Borrower's true and lawful attorney (and agent-in-fact) for the purpose of making, settling and adjusting claims under such policies of insurance, endorsing the name of Borrower on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and making all determinations and decisions with respect to such policies of insurance, provided, however, that if no Event of Default shall have occurred and is continuing, Borrower may make, settle and adjust claims involving less than $50,000 in the aggregate ------ without Bank's consent; and (ii) maintain, at its expense, such public liability and third party property damage insurance as is customary for Persons engaged in businesses similar to that of Borrower with such companies and in such amounts, with such deductibles and under policies in such form as shall be satisfactory to Bank and original (or certified) copies of such policies have been or shall be delivered to Bank within ninety (90) days after the date hereof, together with evidence of payment of all premiums therefor; each such policy shall contain an endorsement showing Bank as additional insured thereunder and providing that the insurance company shall give Bank at least thirty (30) days written notice before any such policy shall be altered or canceled. If Borrower at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above or to pay any premium relating thereto, then Bank, without waiving or releasing any obligation or default by Borrower hereunder, may (but shall be under no obligation to) obtain and maintain such policies of insurance and pay such premiums and take such other actions with respect thereto as Bank deems advisable. All sums disbursed by Bank in connection with any such actions, including, without limitation, court costs, expenses, other charges relating thereto and reasonable attorneys' fees, shall constitute Loans hereunder, shall be payable on demand by Borrower to Bank and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder; (f) Borrower shall not use the Collateral, or any part thereof, in any unlawful business or for any unlawful purpose or use or maintain any of the Collateral in any manner that does or could result in material damage to the environment or a violation of any applicable environmental laws, rules or regulations; shall keep the Collateral in good condition, repair and order, ordinary wear and tear excepted; shall permit Bank to examine any of the Collateral at any time and wherever the Collateral may be located; shall not permit the Collateral, or any part thereof, to be levied upon under execution, attachment, distraint or other legal process; shall not sell, lease, grant a security interest in or otherwise dispose of any of the Collateral except as expressly permitted by this Agreement; shall not settle or adjust any Account identified by Borrower as an Eligible Account or with respect to which the Account Debtor is an Affiliate without the consent of Bank, provided, that following the occurrence of an Event of Default, Borrower shall not settle or adjust any Account without the consent of Bank; and shall not secrete or abandon any of the Collateral, or remove or permit removal of any of the Collateral from any of the locations listed on Exhibit B, except for the removal of Inventory sold in the ordinary course of Borrower's business as permitted herein; (g) all monies and other property obtained by Borrower from Bank pursuant to this Agreement will be used solely for business purposes of Borrower; (h) Borrower shall, at the request of Bank, indicate on its records concerning the Collateral a notation, in form satisfactory to Bank, of the security interest of Bank hereunder; (i) Borrower shall file all required tax returns and pay all of its taxes when due subject to any extensions granted by the applicable taxing authority, including, without limitation, taxes imposed by federal, state or municipal agencies, and shall cause any liens for taxes to be promptly released; provided, that Borrower shall have the right to contest the payment of such taxes in good faith by appropriate proceedings so long as (i) the amount so contested is shown on Borrower's financial statements; (ii) the contesting of any such payment does not give rise to a lien for taxes; (iii) Borrower keeps on deposit with Bank (such deposit to be held without interest) an amount of money which, in the sole judgment of Bank, is sufficient to pay such taxes and any interest or penalties that may accrue thereon or the Borrower maintains adequate reserves on its balance sheet in accordance with generally accepted accounting principles; and (iv) if Borrower fails to prosecute such contest with reasonable diligence, Bank may apply the money so deposited in payment of such taxes. If Borrower fails to pay any such taxes and in the absence of any such contest by Borrower, Bank may (but shall be under no obligation to) advance and pay any sums required to pay any such taxes and/or to secure the release of any lien therefor, and any sums so advanced by Bank shall constitute Loans hereunder, shall be payable by Borrower to Bank on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder; (j) Borrower shall not assume, guarantee or endorse, or otherwise become liable in connection with, the obligations of any Person, except by endorsement of instruments for deposit or collection or similar transactions in the ordinary course of business; (k) Borrower shall not (i) enter into any merger or consolidation; (ii) sell, lease or otherwise dispose of any of its assets other than in the ordinary course of business; (iii) purchase all or substantially all of the assets of any Person or division of such Person; or (iv) enter into any other transaction outside the ordinary course of Borrower's business, including, without limitation, any purchase, redemption or retirement of any shares of any class of its stock or any other equity interest, and any issuance of any shares of, or warrants or other rights to receive or purchase any shares of, any class of its stock or any other equity interest; (l) Borrower shall not declare or pay any dividend or other distribution (whether in cash or in kind) on any class of its stock (if Borrower is a corporation) or on account of any equity interest in Borrower (if Borrower is a partnership, limited liability company or other type of entity); (m) Borrower shall not purchase or otherwise acquire, or contract to purchase or otherwise acquire, the obligations or stock of any Person, other than direct obligations of the United States; (n) Borrower shall not amend its organizational documents or change its fiscal year unless such actions would not have an adverse effect on the Borrower's business, property, assets, operations or condition, financial or otherwise, as determined by Bank in its sole discretion, and Bank has received ten (10) days prior written notice of such amendment or change, or enter into a new line of business materially different from Borrower's current business; (o) See Exhibit A (p) Borrower shall reimburse Bank for all costs and expenses, including, without limitation, legal expenses and reasonable attorneys' fees, incurred by Bank in connection with (i) documentation and consummation of this transaction and any other transactions between Borrower and Bank, including, without limitation, Uniform Commercial Code and other public record searches, lien filings, overnight courier or other express or messenger delivery, appraisal costs, surveys, title insurance and environmental audit or review costs; (ii) collection, protection or enforcement of any rights in or to the Collateral; (iii) collection of any Liabilities; and (iv) administration and enforcement of any of Bank's rights under this Agreement. Borrower shall also pay all normal service charges with respect to all accounts maintained by Borrower with Bank and any additional services requested by Borrower from Bank. All such costs, expenses and charges shall constitute Loans hereunder, shall be payable by Borrower to Bank on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder; (q) Borrower shall not purchase or otherwise acquire (including, without limitation, acquisition by way of capitalized lease), or commit to purchase or acquire, any fixed asset if, after giving effect to such purchase or other acquisition, the aggregate cost of all such fixed assets purchased or otherwise acquired would exceed $100,000.00 during any fiscal year of Borrower; ---------- and (r) Neither Borrower nor any Affiliate shall use any portion of the proceeds of the Loans, either directly or indirectly, for the purpose of (i) purchaisng any securities underwritten or privately placed by ABN AMRO Securities (USA) Inc. ("AASI"), an affiliate of Bank; or (ii) purchasing from AASI any securities in which AASI makes a market; or (iii) refinancing or making payments of principal, interest or dividends on any securities issued by Borrower or any Affiliate, and underwritten, privately placed or dealt in by AASI.
Appears in 3 contracts
Sources: Loan and Security Agreement (Empire of Carolina Inc), Loan and Security Agreement (Empire of Carolina Inc), Loan and Security Agreement (Empire of Carolina Inc)
Additional Covenants of Borrower. Until payment or satisfaction in full of all Liabilities and termination of this Agreement, unless Borrower obtains BankLender's prior written consent waiving or modifying any of Borrower's covenants hereunder in any specific instance, Borrower agrees as follows:
(a) Borrower shall at all times keep accurate and complete books, records and accounts with respect to all of Borrower's business activities, in accordance with sound accounting practices and generally accepted accounting principles consistently applied, and shall keep such books, records and accounts, and any copies thereof, only at the addresses indicated for such purpose on Exhibit BEXHIBIT D;
(b) Borrower agrees to deliver to Bank the following financial information, all of which shall be prepared in accordance with generally accepted accounting principles consistently applied: (i) no later than twenty (20) days after each calendar month, copies of internally prepared financial statements, including, without limitation, balance sheets and statements of income, retained earnings and cash flow of Borrower, certified by the Chief Financial Officer of Borrower; (ii) no later than thirty (30) days after the end of each of the first three quarters of Borrower's fiscal year a balance sheet, operating statement and reconciliation of surplus of Borrower, which quarterly financial statements may be unaudited but shall be certified by the Chief Financial Officer of Borrower; and (iii) no later than seventy-five (75) days after the end of each of Borrower's fiscal years, audited annual financial statements with an unqualified opinion by independent certified public accountants selected by Borrower and reasonably satisfactory to Bank, which financial statements shall be accompanied by a letter from such accountants acknowledging that they are aware that a primary intent of Borrower in obtaining such financial statements is to influence Bank and that Bank is relying upon such financial statements in connection with the exercise of its rights hereunder and copies of any management letters sent to the Borrower by such accountants;
(c) Borrower shall promptly advise Bank Lender in writing of any material adverse change in the business, assets or condition, financial or otherwise, of Borrower, the occurrence of any Event of Default hereunder or the occurrence of any event which, if uncured, will become an Event of Default hereunder after notice or lapse of time (or both);
(dc) BankLender, or any Persons designated by it, shall have the right, at any time, to call at Borrower's places of business at any reasonable times, and, without hindrance or delay, to inspect the Collateral and to inspect, audit, check and make extracts from Borrower's books, records, journals, orders, receipts and any correspondence and other data relating to Borrower's business, the Collateral or any transactions between the parties hereto, and shall have the right to make such verification concerning Borrower's business as Bank Lender may consider reasonable under the circumstances. Borrower shall furnish to Bank Lender such information relevant to BankLender's rights under this Agreement as Bank Lender shall at any time and from time to time request. Borrower authorizes Bank Lender to discuss the affairs, finances and business of Borrower with any officers, employees or directors of Borrower or with any Affiliate or the officers, employees or directors of any Affiliate, and to discuss the financial condition of Borrower with Borrower's independent public accountants. Any such discussions shall be without liability to Bank Lender or to Borrower's independent public accountants. Borrower shall pay to Bank Lender all customary fees and out-of-pocket expenses incurred by Bank Lender in the exercise of its rights hereunderhereunder including a reasonable charge per auditor per day plus any out of pocket expenses, and all of such fees and expenses shall constitute Revolving Loans hereunder, shall be payable on demand and, until paid, shall bear interest at the highest rate then applicable to Revolving Loans hereunder;
(e) Borrower shall:
(i) keep the Collateral properly housed and insured for the full insurable value thereof against loss or damage by fire, theft, explosion, sprinklers, collision (in the case of motor vehicles) and such other risks as are customarily insured against by Persons engaged in businesses similar to that of Borrower, with such companies, in such amounts, with such deductibles, and under policies in such form as shall be satisfactory to Bank. Original (or certified) copies of such policies of insurance have been or shall be delivered to Bank within ninety (90) days after the date hereof, together with evidence of payment of all premiums therefor, and shall contain an endorsement, in form and substance acceptable to Bank, showing loss under such insurance policies payable to Bank. Such endorsement, or an independent instrument furnished to Bank, shall provide that the insurance company shall give Bank at least thirty (30) days written notice before any such policy of insurance is altered or canceled and that no act, whether willful or negligent, or default of Borrower or any other Person shall affect the right of Bank to recover under such policy of insurance in case of loss or damage. In addition, Borrower shall cause to be executed and delivered to Bank an assignment of proceeds of its business interruption insurance policies. Borrower hereby directs all insurers under all policies of insurance to pay all proceeds payable thereunder directly to Bank. Borrower irrevocably makes, constitutes and appoints Bank (and all officers, employees or agents designated by Bank) as Borrower's true and lawful attorney (and agent-in-fact) for the purpose of making, settling and adjusting claims under such policies of insurance, endorsing the name of Borrower on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and making all determinations and decisions with respect to such policies of insurance, provided, however, that if no Event of Default shall have occurred and is continuing, Borrower may make, settle and adjust claims involving less than $50,000 in the aggregate ------ without Bank's consent; and
(ii) maintain, at its expense, such public liability and third party property damage insurance as is customary for Persons engaged in businesses similar to that of Borrower with such companies and in such amounts, with such deductibles and under policies in such form as shall be satisfactory to Bank and original (or certified) copies of such policies have been or shall be delivered to Bank within ninety (90) days after the date hereof, together with evidence of payment of all premiums therefor; each such policy shall contain an endorsement showing Bank as additional insured thereunder and providing that the insurance company shall give Bank at least thirty (30) days written notice before any such policy shall be altered or canceled. If Borrower at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above or to pay any premium relating thereto, then Bank, without waiving or releasing any obligation or default by Borrower hereunder, may (but shall be under no obligation to) obtain and maintain such policies of insurance and pay such premiums and take such other actions with respect thereto as Bank deems advisable. All sums disbursed by Bank in connection with any such actions, including, without limitation, court costs, expenses, other charges relating thereto and reasonable attorneys' fees, shall constitute Loans hereunder, shall be payable on demand by Borrower to Bank and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(fd) Borrower shall not use the Collateralits property, or any part thereof, in any unlawful business or for any unlawful purpose or use or maintain any of the Collateral its property in any manner that does or could result in material damage to the environment or a violation of any applicable environmental laws, rules or regulations; shall keep the Collateral in good condition, repair and order, ordinary wear and tear excepted; shall permit Bank to examine any of the Collateral at any time and wherever the Collateral may be located; shall not permit the Collateral, or any part thereof, to be levied upon under execution, attachment, distraint or other legal process; shall not sell, lease, grant a security interest in or otherwise dispose of any of the Collateral except as expressly permitted by this Agreement; shall not settle or adjust any Account identified by Borrower as an Eligible Account or with respect to which the Account Debtor is an Affiliate without the consent of Bank, provided, that following the occurrence of an Event of Default, Borrower shall not settle or adjust any Account without the consent of Bank; and shall not secrete or abandon any of the Collateral, or remove or permit removal of any of the Collateral from any of the locations listed on Exhibit B, except for the removal of Inventory sold in the ordinary course of Borrower's business as permitted hereinLaws;
(ge) all monies and other property obtained by Borrower from Bank Lender pursuant to this Agreement will be used solely for business purposes of Borrower;
(h) Borrower shall, at the request of Bank, indicate on its records concerning the Collateral a notation, in form satisfactory to Bank, of the security interest of Bank hereunder;
(if) Borrower shall file all required tax returns and pay all of its taxes when due subject to any extensions granted by the applicable taxing authoritydue, including, including without limitation, limitation taxes imposed by federal, state or municipal agencies, and shall cause any liens for taxes to be promptly released; provided, that Borrower shall have the right to contest the payment of such taxes in good faith by appropriate proceedings so long as (i) the amount so contested is shown on Borrower's financial statements; (ii) the contesting of any such payment does not give rise to a lien for taxes; (iii) Borrower keeps on deposit with Bank (such deposit to be held without interest) an amount of money which, in the sole judgment of Bank, is sufficient to pay such taxes and any interest or penalties that may accrue thereon or the Borrower maintains adequate reserves on its balance sheet in accordance with generally accepted accounting principles; and (iv) if Borrower fails to prosecute such contest with reasonable diligence, Bank may apply the money so deposited in payment of such taxes. If Borrower fails to pay any such taxes and in the absence of any such contest by Borrower, Bank may (but shall be under no obligation to) advance and pay any sums required to pay any such taxes and/or to secure the release of any lien therefor, and any sums so advanced by Bank shall constitute Loans hereunder, shall be payable by Borrower to Bank on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(jg) Borrower shall not assume, guarantee or endorse, or otherwise become liable in connection with, the obligations of any Person, except by endorsement of instruments for deposit or collection or similar transactions in the ordinary course of business;
(k) Borrower shall not (i) enter into any merger or consolidation; (ii) sell, lease or otherwise dispose of any of its assets other than in the ordinary course of business; (iii) purchase all or substantially all of the assets of any Person or division of such Person; or (iv) enter into any other transaction outside the ordinary course of Borrower's business, including, including without limitation, limitation any purchase, redemption or retirement of any shares of any class of its stock stock, any acquisition of all or any other equity interest, substantially all of the assets of a person and any issuance of any shares of, or warrants or other rights to receive or purchase any shares of, any class of its stock or any other equity intereststock;
(l) Borrower shall not declare or pay any dividend or other distribution (whether in cash or in kind) on any class of its stock (if Borrower is a corporation) or on account of any equity interest in Borrower (if Borrower is a partnership, limited liability company or other type of entity);
(m) Borrower shall not purchase or otherwise acquire, or contract to purchase or otherwise acquire, the obligations or stock of any Person, other than direct obligations of the United States;
(nh) Borrower shall not amend its organizational documents or documents, change its fiscal year unless such actions would not have an adverse effect on year, change the state of Borrower's business, property, assets, operations or condition, financial or otherwise, as determined by Bank in its sole discretion, and Bank has received ten (10) days prior written notice of such amendment or change, organization or enter into a new line any transaction which has the effect of business materially different from changing Borrower's current businessstate of organization;
(o) See Exhibit A
(pi) Borrower shall reimburse Bank Lender for all costs and expenses, including, including without limitation, limitation legal expenses and reasonable attorneys' fees, incurred by Bank Lender in connection with (i) documentation and consummation of this transaction and any other transactions between Borrower and BankLender, including, including without limitation, limitation Uniform Commercial Code and other public record searches, lien filings, overnight courier Federal Express or other similar express or messenger delivery, appraisal costs, surveys, title insurance and environmental audit or review costs; (ii) collection, protection and in seeking to administer, collect, protect or enforcement of enforce any rights in or to the Collateral; (iii) collection of Collateral or incurred by Lender in seeking to collect any Liabilities; Liabilities and (iv) administration and enforcement of to administer and/or enforce any of BankLender's rights under this Agreement. Borrower shall also pay all normal service charges with respect to all accounts maintained by Borrower with Bank Agreement and any additional services requested by Borrower from Bankthe Other Agreements. All such costs, expenses and charges shall constitute Revolving Loans hereunder, shall be payable by Borrower to Bank Lender on demand, and, until paid, shall bear interest at the highest rate then applicable to Revolving Loans hereunder;
(qj) Borrower shall not purchase grant any security interest in or otherwise acquire (including, without limitation, acquisition by way of capitalized lease), control over the Deposit Account to any person or commit to purchase or acquire, any fixed asset if, after giving effect to such purchase or other acquisition, the aggregate cost of all such fixed assets purchased or otherwise acquired would exceed $100,000.00 during any fiscal year of Borrower; ---------- and
(r) Neither Borrower nor any Affiliate shall use any portion of the proceeds of the Loans, either directly or indirectly, for the purpose of (i) purchaisng any securities underwritten or privately placed by ABN AMRO Securities (USA) Inc. ("AASI"), an affiliate of Bank; or (ii) purchasing from AASI any securities in which AASI makes a market; or (iii) refinancing or making payments of principal, interest or dividends on any securities issued by Borrower or any Affiliate, and underwritten, privately placed or dealt in by AASIentity.
Appears in 1 contract
Sources: Revolving Loan and Security Agreement (Direct Response Financial Services Inc)
Additional Covenants of Borrower. Until payment or satisfaction in full of all Liabilities and termination of this Agreement, unless Borrower obtains Bank's prior written consent waiving or modifying any of Borrower's covenants hereunder in any specific instance, Borrower agrees as follows:
(a) Borrower shall at all times keep accurate and complete books, records and accounts with respect to all of Borrower's business activities, in accordance with sound accounting practices and generally accepted accounting principles consistently applied, and shall keep such books, records and accounts, and any copies thereof, only at the addresses indicated for such purpose on Exhibit B;
(b) Borrower agrees to deliver to Bank the following financial information, all of which shall be prepared in accordance with generally accepted accounting principles consistently applied: (i) no later than twenty (20) days after each calendar month, copies of internally prepared financial statements, including, without limitation, balance sheets and statements of income, retained earnings and cash flow of Borrower, certified by the Chief Financial Officer of Borrower; (ii) no later than thirty forty-five (3045) days after the end of each of the first three quarters of Borrower's fiscal year a balance sheet, operating statement and reconciliation of surplus of Borrower, which quarterly financial statements may be unaudited but shall be certified by the Chief Financial Officer of Borrower; and (iii) no later than seventy-five ninety (7590) days after the end of each of Borrower's fiscal years, audited annual financial statements with an unqualified opinion certified by independent certified public accountants selected by Borrower and reasonably satisfactory to Bank, which financial statements shall be accompanied by a letter from such accountants acknowledging that they are aware that a primary intent of Borrower in obtaining such financial statements is to influence Bank and that Bank is relying upon such financial statements in connection with the exercise of its rights hereunder and copies of any management letters sent to the Borrower by such accountantsright hereunder;
(c) Borrower shall promptly advise Bank in writing of any material adverse change in the business, assets or condition, financial or otherwise, of Borrower, the occurrence of any Event of Default hereunder or the occurrence of any event which, if uncured, will become an Event of Default hereunder after notice or of lapse of time (or both);; 9207_1
(d) Bank, or any Persons designated by it, shall have the right, at any time, to call at Borrower's places of business at any reasonable times, and, without hindrance or delay, to inspect the Collateral and to inspect, audit, check and make extracts from Borrower's books, records, journals, orders, receipts and any correspondence and other data relating to Borrower's business, the Collateral or any transactions between the parties hereto, and shall have the right to make such verification concerning Borrower's business as Bank may consider reasonable under the circumstances. Borrower shall furnish to Bank such information relevant to Bank's rights under this Agreement as Bank shall at any time and from time to time request. Borrower authorizes Bank to discuss the affairs, finances and business of Borrower with any officers, employees or directors of Borrower or with any Affiliate Affiliates or the officers, employees or directors of any Affiliate, and to discuss the financial condition of Borrower with Borrower's independent public accountants. Any such discussions shall be without liability to Bank or to Borrower's independent public accountants. Borrower shall pay to Bank all customary fees and out-of-pocket expenses incurred by Bank in the exercise of its rights hereunder, and all of such fees and expenses shall constitute Loans hereunder, shall be payable on demand and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(e) Borrower shall:
(i) keep the Collateral properly housed and shall keep the Collateral insured for the full insurable value thereof against loss or damage by fire, theft, explosion, sprinklers, collision (in the case of motor vehicles) and such other risks as are customarily insured against by Persons engaged in businesses similar to that of Borrower, Borrower with such companies, in such amounts, with such deductibles, amounts and under policies in such form as shall be satisfactory to Bank. Original (or certified) copies of such policies of insurance have been or shall be delivered to Bank within ninety fifteen (9015) days after the date hereof, together with evidence of payment of all premiums therefor, and shall contain an endorsement, in form and substance acceptable to Bank, showing loss under such insurance policies payable to Bank. Such endorsement, or an independent instrument furnished to Bank, shall provide that the insurance company shall give Bank at least thirty (30) days written notice before any such policy of insurance is altered or canceled cancelled and that no act, whether willful or negligent, or default of Borrower or any other Person shall affect the right of Bank to recover under such policy of insurance in case of loss or damage. In addition, Borrower shall cause to be executed and delivered to Bank an assignment of proceeds of its business interruption insurance policies. Borrower hereby directs all insurers under all such policies of insurance to pay all proceeds payable thereunder directly to Bank. Borrower irrevocably irrevocably, makes, constitutes and appoints Bank (and all officers, employees or agents designated by Bank) as Borrower's true and lawful attorney (and agent-in-fact) for the purpose of making, settling and adjusting claims under such policies of insurance, endorsing the name of Borrower on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and making all determinations and decisions with respect to such policies of insurance, provided, however, that if no Event of Default shall have occurred and is continuing, Borrower may make, settle and adjust claims involving less than $50,000 in the aggregate ------ without Bank's consent; and
(ii) maintain, at its expense, such public liability and third party property damage insurance as is customary for Persons engaged in businesses similar to that of Borrower with such companies and in such amounts, with such deductibles and under policies in such form as shall be satisfactory to Bank and original (or certified) copies of such policies have been or shall be delivered to Bank within ninety fifteen (9015) days after the date hereof, together with evidence of payment of all premiums therefor; each such policy shall contain an endorsement showing Bank as additional insured thereunder and providing that the insurance company shall give Bank at least thirty (30) days written notice before any such policy shall be altered or canceledcancelled. If Borrower at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above or to pay any premium in whole or in part relating thereto, then Bank, without waiving or releasing any obligation or default by Borrower hereunder, may (but shall be under no obligation to) obtain and maintain such policies of insurance and pay such premiums and take such other actions with respect thereto as Bank deems advisable. All sums disbursed by Bank in connection with any such actions, including, without limitation, court costs, expenses, other charges relating thereto and reasonable attorneys' fees, shall constitute Loans hereunder, hereunder and shall be payable on demand by Borrower to Bank and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;.
(f) Borrower shall not use the Collateral, or any part thereof, in any unlawful business or for any unlawful purpose or use or maintain any of the Collateral in any manner that does or could result in material damage to the environment or a violation of any applicable environmental laws, rules or regulations; shall keep the Collateral in good condition, repair and order, ordinary wear and tear excepted; shall permit Bank to examine any of the Collateral at any time and wherever the Collateral may be located; shall not permit the Collateral, or any part thereof, to be levied upon under execution, attachment, distraint or other legal process; shall not sell, lease, grant a security interest in or otherwise dispose of any of the Collateral except as expressly permitted by this Agreement; shall not settle or adjust any Account identified by Borrower as an Eligible Account or with respect to which the Account Debtor is an Affiliate without the consent of Bank, provided, that following the occurrence of an Event of Default, Borrower shall not settle or adjust any Account without the consent of Bank; and shall not secrete or abandon any of the Collateral, or remove or permit removal of any of the Collateral from any of the locations listed on Exhibit BB or in any written notice to Bank pursuant to paragraph 10(b) hereof, except for the removal of Inventory sold in the ordinary course of Borrower's business as permitted herein;
(g) all All monies and other property obtained by Borrower from Bank pursuant to this Agreement will be used solely for business purposes of Borrower;
(h) Borrower shall, at the request of Bank, indicate on its records concerning the Collateral a notation, in form satisfactory to Bank, of the security interest of Bank hereunder, and Borrower shall not maintain duplicates or copies of such records at any address other than Borrower's principal place of business set forth on the first page of this Agreement;
(i) Borrower shall file all required tax returns and pay all of its taxes when due subject to any extensions granted by the applicable taxing authoritydue, including, without limitation, taxes imposed by federal, state or municipal agencies, agencies and shall cause any liens for taxes to be promptly released; provided, that Borrower shall have the right to contest the payment of such taxes in good faith by appropriate proceedings so long as (i) the amount so contested is shown on Borrower's financial statements; , (ii) the contesting of any such payment does not give rise to a lien for taxes; , (iii) Borrower keeps on deposit with Bank (such deposit to be held without interest) an amount of money which, in the sole judgment of Bank, is sufficient to pay such taxes and any interest or penalties that may accrue thereon or the Borrower maintains adequate reserves on its balance sheet in accordance with generally accepted accounting principles; thereon, and (iv) if Borrower fails to prosecute such contest with reasonable diligence, Bank may apply the money so deposited in payment of such taxes. If Borrower fails to pay any such taxes and in the absence of any such contest by Borrower, Bank may (but shall be under no obligation to) advance and pay any sums required to pay any such taxes and/or to secure the release of any lien therefor, and any sums so advanced by Bank shall constitute Loans hereunder, shall be payable by Borrower to Bank on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(j) Borrower shall not assume, guarantee or endorse, or otherwise become liable in connection with, the obligations of any Person, except by endorsement of instruments for deposit or collection or similar transactions in the ordinary course of business;
(k) Borrower shall not (i) enter into any merger or consolidation; (ii) , or sell, lease or otherwise dispose of any of its assets other than in the ordinary course of business; (iii) purchase all or substantially all of the assets of any Person its assets, or division of such Person; or (iv) enter into any other transaction outside the ordinary course of Borrower's business, including, without limitation, any purchase, redemption or retirement of any shares of any class of its stock or any other equity intereststock, and any issuance of any shares of, or warrants or other rights to receive or purchase any shares of, any class of its stock or any other equity intereststock;
(l) Borrower shall not declare or pay any dividend or other distribution (whether in cash or in kind) on any class of its stock (if Borrower is a corporation) or on account of any equity interest in Borrower (if Borrower is a partnership, limited liability company partnership or other type of entity);
(m) Borrower shall not purchase or otherwise acquire, or contract to purchase or otherwise acquire, the obligations or stock of any Person, other than direct obligations of the United States;
(n) Borrower shall not amend its organizational documents or change its fiscal year unless such actions would not have an adverse effect on the Borrower's business, property, assets, operations or condition, financial or otherwise, as determined by Bank in its sole discretion, and Bank has received ten (10) days prior written notice of such amendment or change, or enter into a new line of business materially different from Borrower's current businessyear;
(o) See Exhibit A
(p) Borrower Borrower's tangible net worth shall reimburse not at any time be less than that shown on the financial statement most recently presented to Bank prior to the date hereof; "TANGIBLE NET WORTH" being defined for all costs and expenses, including, without limitation, legal expenses and reasonable attorneys' fees, incurred by Bank in connection with (i) documentation and consummation purposes of this transaction and any other transactions between Borrower and Bank, including, without limitation, Uniform Commercial Code and other public record searches, lien filings, overnight courier or other express or messenger delivery, appraisal costs, surveys, title insurance and environmental audit or review costs; paragraph as Borrower's shareholders' equity (iiincluding retained earnings) collection, protection or enforcement less the book value of all intangible assets plus the amount of any rights in or to LIFO reserve, all as determined under generally accepted accounting principles applied on a basis consistent with the Collateralaforesaid financial statement; (iii) collection of any Liabilities; and (iv) administration and enforcement of any of Bank's rights under this Agreement. Borrower shall also pay all normal service charges with respect to all accounts maintained by Borrower with Bank and any additional services requested by Borrower from Bank. All such costs, expenses and charges shall constitute Loans hereunder, shall be payable by Borrower to Bank on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(q) Borrower shall not purchase or otherwise acquire (including, without limitation, acquisition by way of capitalized lease), or commit to purchase or acquire, any fixed asset if, after giving effect to such purchase or other acquisition, the aggregate cost of all such fixed assets purchased or otherwise acquired would exceed $100,000.00 during any fiscal year of Borrower; ---------- and
(r) Neither Borrower nor any Affiliate shall use any portion of the proceeds of the Loans, either directly or indirectly, for the purpose of (i) purchaisng any securities underwritten or privately placed by ABN AMRO Securities (USA) Inc. ("AASI"), an affiliate of Bank; or (ii) purchasing from AASI any securities in which AASI makes a market; or (iii) refinancing or making payments of principal, interest or dividends on any securities issued by Borrower or any Affiliate, and underwritten, privately placed or dealt in by AASI.
Appears in 1 contract
Sources: Loan and Security Agreement (California Pro Sports Inc)
Additional Covenants of Borrower. Until payment or satisfaction in full of all Liabilities and termination of this Agreement, unless Borrower obtains BankLender's prior written consent waiving or modifying any of Borrower's covenants hereunder in any specific instance, Borrower agrees as follows:
(a) Borrower shall at all times keep accurate and complete books, records and accounts with respect to all of Borrower's business activities, in accordance with sound accounting practices and generally accepted accounting principles GAAP consistently applied, and shall keep such books, records and accounts, and any copies thereof, only at the addresses indicated for such purpose on Exhibit B"C";
(b) Borrower agrees to deliver to Bank Lender the following consolidated and consolidating financial information, all of which shall be prepared in accordance with generally accepted accounting principles principles, except for absence of footnotes, consistently applied: (i) no later than twenty forty-five (2045) days after each calendar monthquarter, copies of internally prepared financial statements, including, including without limitation, limitation balance sheets and statements of income, retained earnings and cash flow of Borrower, certified by the Chief Financial Officer chief financial officer of Borrower; (ii) no later than thirty ninety (30) days after the end of each of the first three quarters of Borrower's fiscal year a balance sheet, operating statement and reconciliation of surplus of Borrower, which quarterly financial statements may be unaudited but shall be certified by the Chief Financial Officer of Borrower; and (iii) no later than seventy-five (7590) days after the end of each of Borrower's fiscal yearsyear, annual audited annual financial statements certified, with an unqualified opinion opinion, by independent certified public accountants selected by Borrower and reasonably satisfactory to BankLender, which financial statements shall be accompanied by a letter from such accountants acknowledging that they are aware that a primary intent of Borrower in obtaining such financial statements is to influence Bank and that Bank Lender is relying upon such financial statements in connection with the exercise of its rights hereunder hereunder; and copies of any management letters sent to the Borrower by (iii) such accountantsother financial information as Lender shall reasonably request;
(c) Borrower shall promptly advise Bank Lender in writing of any material adverse change in the business, assets or condition, financial or otherwise, of Borrower, the occurrence of any Event of Default hereunder or the occurrence of any event which, if uncured, will become an Event of Default hereunder after notice or lapse of time (or both). In addition, Borrower shall promptly advise Lender in writing of any default made in the due observance or performance by Borrower of any covenant, condition or agreement where such default would reasonably be expected to have a material adverse change with any operating lease(s), in any lease where Borrower is a party, or in any bond, debenture, note or other evidence of indebtedness;
(d) Bank[this provision has been intentionally deleted];
(e) Lender, or any Persons designated by it, shall have the right, at any timewith reasonable advance notice, to call at Borrower's places of business at any reasonable timestime, and, without hindrance or delay, to inspect the Collateral and to inspect, audit, check and make extracts from Borrower's books, records, journals, orders, receipts receipts, leases, and any correspondence and other data relating to Borrower's business, the Collateral or any transactions between the parties hereto, and shall have the right to make such verification concerning Borrower's business as Bank Lender may consider reasonable under the circumstances. Borrower shall furnish to Bank Lender such information relevant to BankLender's rights under this Agreement as Bank Lender shall at any time and from time to time request. Borrower authorizes Bank Lender to discuss the affairs, finances and business of Borrower with any officers, directors and employees or directors of Borrower identified and authorized by Borrower or with any Affiliate or the officers, directors and employees or directors of any AffiliateAffiliate identified and authorized by Borrower, and to discuss the financial condition of Borrower with Borrower's independent public accountants. Any such discussions shall be without liability to Bank Lender or to Borrower's independent public accountants. Borrower shall pay to Bank Lender all customary fees and out-of-pocket expenses incurred by Bank Lender in the exercise of its rights hereunderhereunder in accordance with and limited by Section 2.5(e), and all of such fees and expenses shall constitute Loans hereunder, shall be payable on demand and, until paid, shall commence to bear interest thirty (30) days after a statement for same has been provided to Borrower at the highest rate Prime Rate then applicable to Loans hereunder;
(ef) Borrower shall:
(i) keep the Collateral properly housed and shall keep the Collateral insured for the full insurable value thereof against loss or damage by fire, theft, explosion, sprinklers, collision (in the case of motor vehicles) and such other risks as are customarily insured against by Persons engaged in businesses similar to that of Borrower, Borrower with such companies, in such amounts, with such deductibles, amounts and under policies in such form as shall be reasonably satisfactory to BankLender, which insurance companies shall be rated by Best rating system to be "A" "XI" or better. Original At the request of Lender, original (or certified) copies of such policies of insurance have been or shall be delivered to Bank within ninety (90) days after the date hereofLender, together with evidence of payment of all premiums therefor, and shall contain an endorsement, in form and substance acceptable to BankLender, showing loss under such insurance policies payable to BankLender. Such endorsement, or an independent instrument furnished to BankLender, shall provide that the insurance company shall give Bank Lender at least thirty (30) days written notice before any such policy of insurance is altered or canceled cancelled and that no act, whether willful or negligent, or default of Borrower or any other Person person shall affect the right of Bank Lender to recover under such policy of insurance in case of loss or damage. In addition, Borrower shall cause to be executed and delivered to Bank an assignment of proceeds of its business interruption insurance policies. Borrower hereby directs all insurers under all such policies of insurance to pay all proceeds payable thereunder directly to BankLender and all proceeds received by Lender may be applied to the Liabilities in such order and manner as Lender shall determine. Upon the occurrence of an Event of Default, Borrower irrevocably irrevocably, makes, constitutes and appoints Bank Lender (and all officers, employees or agents designated by BankLender) as Borrower's true and lawful attorney attorney-in-fact (and agent-in-fact) for the purpose of making, settling and adjusting claims under such policies of insurance, endorsing the name of Borrower on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and making all determinations and decisions with respect to such policies of insurance, provided, however, that if no Event of Default shall have occurred and is continuing, Borrower may make, settle and adjust claims involving less than $50,000 in the aggregate ------ without Bank's consent; and
(ii) maintain, at its expense, such public liability and third party property damage insurance as is customary for Persons engaged in businesses similar to that of Borrower with such companies and in such amounts, with such deductibles and under policies in such form as shall be satisfactory to Bank and Lender and, at the request of Lender, original (or certified) copies of such policies have been or shall be delivered to Bank within ninety (90) days after the date hereofLender, together with evidence of payment of all premiums therefor; each such policy shall contain an endorsement showing Bank Lender as additional insured thereunder and providing that the insurance company shall give Bank Lender at least thirty (30) days written notice before any such policy shall be altered or canceledcancelled. If Borrower at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above or to pay any premium in whole or in part relating thereto, then BankLender, without waiving or releasing any obligation or default by Borrower hereunder, may (but shall be under no obligation to) obtain and maintain such policies of insurance and pay such premiums and take such other actions with respect thereto as Bank Lender deems advisable. All sums disbursed by Bank Lender in connection with any such actions, including, including without limitation, limitation court costs, expenses, other charges relating thereto and reasonable attorneys' fees, shall constitute Loans hereunder, hereunder and shall be payable on demand by Borrower to Bank Lender and, until paid, shall bear interest at the highest rate Prime Rate then applicable to Loans hereunder, unless the Borrower is in default under this Agreement beyond any applicable cure period at which time interest shall accrue at the Default Rate;
(fg) Borrower shall not use the Collateralits property, or any part thereof, in any unlawful business or for any unlawful purpose or use or maintain any of the Collateral its property in any manner that does or could would reasonably be expected to result in material damage to the environment or a violation of any applicable environmental laws, rules or regulations; shall keep the Collateral its property in good condition, repair and order, ordinary wear and tear excepted; shall permit Bank Lender to examine any of the Collateral its property at any time and wherever the Collateral may be locatedtime; shall not permit the Collateralits property, or any part thereof, to be levied upon under execution, attachment, distraint or other legal process; shall not sell, lease, grant a security interest in or suffer to exist a lien on any of its property other than Permitted Liens; shall not sell, lease, transfer or otherwise dispose of any of its property (not to exceed $100,000 per transaction or $250,000 per calendar year) except for the Collateral except as expressly permitted by this Agreement; shall not settle or adjust any Account identified by Borrower as an Eligible Account or with respect to which sale of Inventory in the Account Debtor is an Affiliate without the consent ordinary course of Bank, provided, that following the occurrence of an Event of Default, Borrower shall not settle or adjust any Account without the consent of Bankits business; and shall not secrete or abandon any of the Collateralits property, or remove or permit removal of any of the Collateral its property from any of the locations listed on Exhibit B"C" or as permitted under Section 4.1(c) hereof, except for the removal of Inventory sold in the ordinary course of Borrower's business as permitted hereinbusiness;
(gh) all monies and other property obtained by Borrower from Bank Lender pursuant to this Agreement will be used solely for business purposes of Borrower;
(hi) Borrower shall, at the request of BankLender, indicate on its records concerning the Collateral a notation, in form satisfactory to BankLender, of the security interest of Bank Lender hereunder, and Borrower shall not maintain duplicates or copies of such records at any address other than Borrower's principal place of business set forth on the first page of this Agreement;
(ij) Borrower shall file all required tax returns and pay all of its taxes when due subject to any extensions granted by the applicable taxing authoritydue, including, including without limitation, limitation taxes imposed by federal, state or municipal agencies, and shall cause any liens for taxes other than Permitted Liens to be promptly released; provided, that Borrower shall have the right to contest the payment of such taxes in good faith by appropriate proceedings so long as (i) the amount so contested is shown on Borrower's financial statements; , (ii) the contesting of any such payment does not give rise to a lien for taxes; , and (iii) Borrower keeps on deposit with Bank (such deposit to be held without interest) an amount of money which, in the sole judgment of Bank, is sufficient to pay such taxes and any interest or penalties that may accrue thereon or the Borrower maintains adequate reserves on its balance sheet in accordance with generally accepted accounting principles; and (iv) if Borrower fails to prosecute such contest with reasonable diligence, Bank Lender may apply the money so deposited in payment of such taxes. If Borrower fails to pay any such taxes and in the absence of any such contest by Borrower, Bank Lender may (but shall be under no obligation to) advance and pay any sums required to pay any such taxes and/or to secure the release of any lien therefor, and any sums so advanced by Bank Lender shall constitute Loans hereunder, shall be payable by Borrower to Bank Lender on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunderDefault Rate;
(jk) Borrower shall not assume, guarantee or endorse, or otherwise become liable in connection with, the obligations of any Person, except (i) as described in Exhibit "K", (ii) by endorsement of instruments for deposit or collection collection, (iii) in the situation where Borrower assumes, endorses, guarantees, or otherwise becomes liable for the obligations of a Subsidiary not described in Exhibit "K" in an aggregate amount not to exceed One Million Dollars ($1,000,000), or (iv) similar transactions in the ordinary course of business;
(kl) Borrower shall not (i) enter into any merger or consolidation; (ii) sell, lease or otherwise dispose of any of its assets other than in the ordinary course of business; (iii) purchase all or substantially all of the assets of any Person or division of such Person; or (iv) enter into any other transaction outside the ordinary course in excess of Borrower's business, including, without limitation, $10,000,000 consideration per transaction (including any purchase, redemption or retirement of any shares of any class of its stock), unless (i) such stock or any other equity interest, and any issuance of any shares ofpurchase relates to the Borrower's employee stock purchase plan, or warrants or other rights (ii) Borrower provides to receive or purchase any shares of, any class Lender a Compliance Certificate for the most recent month end period not less than twenty (20) days prior to closing the transaction and certifying compliance with the terms and conditions of its stock or any other equity interestthis Agreement after giving effect to the anticipated transaction (including without limitation proforma income and balance sheet projections of the consolidated companies and a one (1) year cash flow projections with reducing principal of the Loans);
(lm) Borrower shall not enter into any purchase or acquisition with any other business entity wherein Borrower will be controlled by such other business, without the prior express written consent of Lender;
(n) Borrower shall not declare or pay any dividend or other distribution (whether in cash or in kind) on any class of its stock (if Borrower is a corporation) or on account of any equity interest in Borrower (if Borrower is a partnership, limited liability company or other type of entity)stock;
(mo) Borrower shall not make any loans (in excess of $500,000 in the aggregate outstanding) (i) to shareholders, directors or employees of the Borrower, (ii) to any Subsidiary or Affiliate, or (iii) not in the ordinary course of business to any Person;
(p) Borrower shall (i) keep in full force and effect any and all Plans which may, from time to time, come into existence under ERISA, unless such Plans can be terminated without liability to Borrower; (ii) make contributions to all of the Plans in a timely manner and in a sufficient amount to comply with the requirements of ERISA; (iii) comply with all material requirements of ERISA which relate to Plans (including without limitation the minimum funding standards of Section 302 of ERISA); and (iv) notify Lender immediately upon receipt by Borrower of any notice of the institution of any proceeding or other action which may result in the termination of any Plans;
(q) Except as set forth in subsection (l), above, or in connection with the investment, purchase or other acquisition, or contract to invest in marketable securities, Borrower shall not invest in, purchase or otherwise acquire, or contract to invest in, purchase or otherwise acquire, the obligations or stock of any Person, other than direct obligations of the United States. For purposes of this provision, the term "marketable securities" shall mean, (i) securities registered pursuant to the 1933 Act or 1934 Act of the Securities and Exchange Commission which are publicly traded on the New York Stock Exchange or NASDAQ Exchange, or (ii) private securities in the aggregate of not more than One Million Dollars ($1,000,000);
(nr) Borrower shall not amend notify Lender in writing of any amendment to its organizational documents or change to its fiscal year unless such actions would not have an adverse effect on the Borrower's business, property, assets, operations or condition, financial or otherwise, as determined by Bank in its sole discretion, and Bank has received ten (10) days prior written notice of such amendment or change, or enter into a new line of business materially different from Borrower's current businessyear;
(o) See Exhibit A
(ps) Borrower shall reimburse Bank Lender for all costs and expenses, includingincluding without limitation legal expenses, without limitation, legal expenses filing and recording fees and reasonable attorneys' feesfees not to exceed $12,000 for work done with respect to the preparation of Loan Documents for the initial closing, incurred by Bank Lender in connection with (i) documentation and consummation of this transaction and any other transactions between Borrower and BankLender, including, including without limitation, limitation Uniform Commercial Code and other public record searches, lien filings, overnight courier Federal Express or other similar express or messenger delivery, appraisal costs, surveys, title insurance and environmental audit or review costs; (ii) collection, protection and in seeking to administer, collect, protect or enforcement of enforce any rights in or to the Collateral; (iii) collection of Collateral or incurred by Lender in seeking to collect any Liabilities; Liabilities and (iv) administration and enforcement of to administer, participate, assign and/or enforce any of BankLender's rights under this Agreement. Borrower shall also pay all normal service charges with respect to all accounts maintained by Borrower with Bank Agreement and any additional services requested by Borrower from Bankthe Other Agreements. All such costs, expenses and charges shall constitute Loans hereunder, shall be payable by Borrower to Bank Lender on demand, and, until paid, shall bear interest at the highest rate Prime Rate then applicable to Loans hereunder;; and
(qt) Borrower shall not purchase or otherwise acquire (including, without limitation, acquisition by way of capitalized lease), or commit to purchase or acquire, any fixed asset if, after giving effect to such purchase or other acquisition, maintain and comply with the aggregate cost of all such fixed assets purchased or otherwise acquired would exceed $100,000.00 during any fiscal year of Borrower; ---------- andfollowing financial covenants:
(r) Neither Borrower nor any Affiliate shall use any portion of the proceeds of the Loans, either directly or indirectly, for the purpose of (i) purchaisng any securities underwritten or privately placed by ABN AMRO Securities Minimum Tangible Net Worth: Borrower will maintain at all times a Minimum Tangible Net Worth, at September 31, 2001, of not less than $90,000,000 without the Aris, Inc., acquisition and $115,000,000 with Aris, Inc., acquisition plus 85% of the cumulative consolidated net income (USA) Inc. ("AASI"if positive). A one-time adjustment of up to $25,000,000 will be allowed from a future goodwill impairment, an affiliate of Bank; or (ii) purchasing from AASI any securities in which AASI makes a market; or (iii) refinancing or making payments of principalso long as it does not exceed $25,000,000. In the event, interest or dividends on any securities issued by Borrower or any AffiliateDigiTerra, Inc., and underwrittenits Subsidiary is sold, privately placed or dealt the Minimum Tangible Net Worth will be increased by an amount equal to 50% of the increase to stockholder's equity created by the sale of DigiTerra, Inc., in by AASIaccordance with GAAP.
Appears in 1 contract
Additional Covenants of Borrower. Until payment or and satisfaction in full of all Liabilities and termination of this Agreement, unless Borrower obtains Bank's Requisite Lenders' prior written consent waiving or modifying any of Borrower's covenants hereunder in any specific instance, Borrower agrees as follows:
(a) Borrower shall at all times keep accurate and complete books, records and accounts with respect to all of Borrower's business activities, in accordance with sound accounting practices and generally accepted accounting principles consistently applied, and shall keep such books, records and accounts, and any copies thereof, only at the addresses indicated for such purpose on Exhibit B;
(b) Borrower agrees to deliver to Bank Agent the following financial information, all of which shall be prepared in accordance with generally accepted accounting principles consistently applied: :
(i) no later than twenty forty-five (20) days after each calendar month, copies of internally prepared financial statements, including, without limitation, balance sheets and statements of income, retained earnings and cash flow of Borrower, certified by the Chief Financial Officer of Borrower; (ii) no later than thirty (3045) days after the end of each of the first three quarters of Borrower's fiscal year a balance sheet, operating statement and reconciliation of surplus of Borrower, which quarterly financial statements may be unaudited but shall be certified by the Chief Financial Officer of Borrower; and (iiiii) no later than seventy-five one hundred twenty (75120) days after the end of each of Borrower's fiscal years, audited annual financial statements with an unqualified opinion by independent certified public accountants selected by Borrower and reasonably satisfactory to BankAgent and (iii) contemporaneously with the financial statements, which a duly completed certificate and annual financial statements shall be accompanied by statements, a letter from such accountants acknowledging that they are aware that a primary intent duly completed certificate dated the date of Borrower in obtaining such financial statements is statements, in form and substance satisfactory to influence Bank Agent and that Bank is relying upon such financial statements in connection signed by an authorized officer of Borrower, containing calculations of Borrower's compliance with the exercise of its rights hereunder financial covenants contained in this Agreement and copies of any management letters sent to the Borrower by such accountantsExhibit A;
(c) Borrower shall promptly advise Bank Agent and each Lender in writing of any material adverse change in the business, assets property, assets, operations or condition, financial or otherwise, of Borrower, the occurrence of any Event of Default hereunder or the occurrence of any event which, if uncured, will become an Event of Default hereunder after notice or lapse of time (or both);
(d) BankAgent, or any Persons designated by it, shall have the right, at any time, right to call at Borrower's places of business at any reasonable times, and, without hindrance or delay, to inspect the Collateral and to inspect, audit, check and make extracts from Borrower's books, records, journals, orders, receipts and any correspondence and other data relating to Borrower's business, the Collateral or any transactions between the parties hereto, and shall have the right to make such verification concerning Borrower's business as Bank Agent may consider reasonable under the circumstances. Any Lender may, at its own expense accompany Agent in any such inspection. Borrower shall furnish to Bank Agent such information relevant to BankAgent's or any Lender's rights under this Agreement as Bank Agent shall at any time and from time to time request. Borrower authorizes Bank Agent and each Lender to discuss the affairs, finances and business of Borrower with any officers, employees or directors of Borrower or with Parent or any Affiliate or the officers, employees or directors of Parent or any Affiliate, and to discuss the financial condition of Borrower with Borrower's independent public accountants. Any such discussions shall be without liability to Bank Agent, any Lender or to Borrower's independent public accountants. Borrower shall pay to Bank Agent all customary fees and out- of-pocket expenses incurred by Agent in the exercise of its rights hereunder (provided that such fees and out-of-pocket expenses incurred by Bank pursuant to this subparagraph 11(d) after the date hereof while no Event of Default exists shall not exceed $15,000.00 in the exercise of its rights hereunderany calendar year), and all of such fees and expenses shall constitute Loans Liabilities hereunder, shall be payable on demand and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(e) Borrower shall:
(i) keep the Collateral properly housed and insured for the full insurable value thereof against loss or damage by fire, theft, explosion, sprinklers, collision (in the case of motor vehicles) and such other risks as are customarily insured against by Persons engaged in businesses similar to that of Borrower, with such companies, in such amounts, with such deductibles, and under policies in such form form, as shall be satisfactory to BankAgent. Original (or certified) copies of such policies of insurance have been or shall be delivered to Bank be, within ninety (90) days after of the date hereof, delivered to Agent, together with evidence of payment of all premiums therefor, and shall contain an endorsement, in form and substance acceptable to BankAgent, showing loss under such insurance policies payable to BankAgent. Such endorsement, or an independent instrument furnished to BankAgent, shall provide that the insurance company shall give Bank Agent at least thirty (30) days written notice before any such policy of insurance is altered or canceled and that no act, whether willful or negligent, or default of Borrower or any other Person shall affect the right of Bank Agent to recover under such policy of insurance in case of loss or damage. In addition, Borrower shall cause to be executed and delivered to Bank Agent an assignment of proceeds of its business interruption insurance policies. Borrower hereby directs all insurers under all policies of insurance to pay all proceeds payable thereunder in excess of $100,000.00 for any occurrence directly to BankAgent. Any proceeds of insurance paid directly to Borrower shall be used by Borrower to repair or restore the damaged or lost property which gave rise to the insurance claim. Borrower irrevocably makes, constitutes and appoints Bank Agent (and all officers, employees or agents designated by BankAgent) as Borrower's true and lawful attorney (and agent-in-fact) for the purpose of making, settling and adjusting claims under such policies of insurance, endorsing the name of Borrower on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and making all determinations and decisions with respect to such policies of insurance, provided, however, that if no Event of Default shall have occurred and is continuing, Borrower may make, settle and adjust claims involving less than $50,000 in the aggregate ------ without Bank's consent; and
(ii) maintain, at its expense, such public liability and third party property damage insurance as is customary for Persons engaged in businesses similar to that of Borrower with such companies and in such amounts, with such deductibles and under policies in such form as shall be satisfactory to Bank Agent and original (or certified) copies of such policies have been or shall be delivered to Bank within ninety (90) days after the date hereofAgent, together with evidence of payment of all premiums therefor; each such policy shall contain an endorsement showing Bank Agent and each Lender as additional insured thereunder and providing that the insurance company shall give Bank Agent at least thirty (30) days written notice before any such policy shall be altered or canceled. If Borrower at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above or to pay any premium relating thereto, then BankAgent, without waiving or releasing any obligation or default by Borrower hereunder, may (but shall be under no obligation to) obtain and maintain such policies of insurance and pay such premiums and take such other actions with respect thereto as Bank Agent deems advisable. Such insurance, if obtained by Agent, may, but need not, protect Borrower's interests or pay any claim made by or against Borrower with respect to the Collateral. Such insurance may be more expensive than the cost of insurance Borrower may be able to obtain on its own and may be cancelled only upon Borrower providing evidence that it has obtained the insurance as required above. All sums disbursed by Bank Agent in connection with any such actions, including, without limitation, court costs, expenses, other charges relating thereto and reasonable attorneys' fees, shall constitute Loans hereunder, shall be payable on demand by Borrower to Bank Agent and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(f) Borrower shall not use the Collateral, or any part thereof, in any unlawful business or for any unlawful purpose or use or maintain any of the Collateral in any manner that does or could result in material damage to the environment or a violation of any applicable environmental laws, rules or regulationsEnvironmental Laws; shall keep the Collateral in good condition, repair and order, ordinary wear and tear excepted; shall permit Bank Agent and each Lender to examine any of the Collateral at any time and wherever the Collateral may be located; shall not permit the Collateral, or any part thereof, to be levied upon under execution, attachment, distraint or other legal process; shall not sell, lease, grant a security interest in or otherwise dispose of any of the Collateral except as expressly permitted by this Agreement; shall not settle or adjust any Account identified by Borrower as an Eligible Account or with respect to which the Account Debtor is an Affiliate without the consent of BankAgent, provided, that following the occurrence of an Event of Default, Borrower shall not settle or adjust any Account without the consent of BankAgent; and shall not secrete or abandon any of the Collateral, or remove or permit removal of any of the Collateral from any of the locations listed on Exhibit BB (or such other locations as Borrower shall have notified Agent in writing pursuant to subparagraph 10(c) hereof), except for the removal of Inventory sold in the ordinary course of Borrower's business as permitted herein;
(g) all monies and other property obtained by Borrower from Bank Agent and/or Lenders pursuant to this Agreement will shall be used solely for business purposes of Borrower;
(h) Borrower shall, at the request of BankAgent, indicate on its records concerning the Collateral a notation, in form satisfactory to BankAgent, of the security interest of Bank Agent hereunder;
(i) Borrower shall file all required tax returns and pay all of its taxes when due subject to any extensions granted by the applicable taxing authoritydue, including, without limitation, taxes imposed by federal, state or municipal agencies, and shall cause any liens for taxes to be promptly released; provided, that Borrower shall have the right to contest the payment of such taxes in good faith by appropriate proceedings so long as (i) the amount so contested is shown on Borrower's financial statements; (ii) the contesting of any such payment does not give rise to a lien for taxes; (iii) Borrower keeps on deposit with Bank Agent (such deposit to be held without interest) an amount of money which, in the sole judgment of BankAgent, is sufficient to pay such taxes and any interest or penalties that may accrue thereon or the Borrower maintains adequate reserves on its balance sheet in accordance with generally accepted accounting principlesthereon; and (iv) if Borrower fails to prosecute such contest with reasonable diligence, Bank Agent may apply the money so deposited in payment of such taxes. If Borrower fails to pay any such taxes and in the absence of any such contest by Borrower, Bank Agent may (but shall be under no obligation to) advance and pay any sums required to pay any such taxes and/or to secure the release of any lien therefor, and any sums so advanced by Bank Agent shall constitute Loans hereunder, shall be payable by Borrower to Bank Agent on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(j) Borrower shall not assume, guarantee or endorse, or otherwise become liable in connection with, the obligations of any Person, except by endorsement of instruments for deposit or collection or similar transactions in the ordinary course of business;
(k) Borrower shall not not, without the prior written consent of the Requisite Lenders, (i) enter into any merger or consolidation; (ii) sell, lease or otherwise dispose of any of its assets other than in the ordinary course of businessits business and other than asset sales and dispositions involving assets with a value of less than $250,000.00 in any transaction or series of related transactions, provided that the proceeds of all such dispositions, net of reasonable out-of-pocket disposition expenses, are applied to the Liabilities; (iii) purchase the stock or all or substantially all of the assets of any Person or division of such Person; or (iv) enter into any other transaction outside the ordinary course of Borrower's business, including, without limitation, any purchase, redemption or retirement of any shares of any class of its stock or any other equity interestinterest (including any rights, options or warrants with respect thereto) for consideration in excess of $100,000 in the aggregate during any calendar year, and any issuance of any shares of, or warrants or other rights to receive or purchase any shares of, any class of its stock or any other equity interestinterest other than such issuances made pursuant to the terms of Borrower's employee stock option plan;
(l) Borrower shall not declare or pay any dividend or other distribution (whether in cash or in kind) on any class of its stock (if Borrower is a corporation) or on account of any equity interest in Borrower nor shall Borrower redeem, retire, purchase or otherwise acquire all or any portion of the stock of Borrower, except that, provided no Event of Default then exists, Borrower may (if Borrower is a partnership1) redeem stock of odd lot shareholders in an amount not to exceed $50,000.00 per calendar year, limited liability company or other type and (2) pay dividends to its shareholders for Borrower's 2001 fiscal year in an amount not to exceed twelve cents ($0.12) per share of entity)Borrower's stock;
(m) Borrower shall not purchase or otherwise acquire, or contract to purchase or otherwise acquire, the obligations or stock of any Person, other than direct obligations of the United States;
(n) Borrower shall not amend its organizational documents or change its fiscal year unless such actions would not in any manner which could have an adverse effect on the Borrower's businessAgent, property, assets, operations Lenders or condition, financial their interest in any Collateral or otherwise, as determined by Bank in change its sole discretion, and Bank has received ten (10) days prior written notice of such amendment or change, fiscal year or enter into a new line of business materially different from Borrower's current business;
(o) See Exhibit A
(p) Borrower shall reimburse Bank Agent and Lenders for all costs and expenses, including, without limitation, legal expenses and reasonable attorneys' fees, incurred by Bank Agent and, after the occurrence of a Default or Event of Default, Lenders in connection with the (i) documentation and consummation of this transaction and any other transactions between Borrower and BankAgent, including, without limitation, Uniform Commercial Code and other public record searches, lien searches and filings, overnight courier or other express or messenger delivery, appraisal costs, surveys, title insurance and environmental audit or review costs; (ii) syndication of the Loans; (iii) collection, protection or enforcement of any rights in or to the Collateral; (iiiiv) collection of any Liabilities; and (ivv) administration and enforcement of any of BankAgent's or Lender's rights under this Agreement. Borrower shall also pay to Agent for its own account and not for the benefit of the other Lenders, all normal service charges with respect to all accounts maintained by Borrower with Bank Agent and any additional services requested by Borrower from BankAgent. All such costs, expenses and charges shall constitute Loans Liabilities hereunder, shall be payable by Borrower to Bank Agent on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(qp) Borrower shall not purchase or otherwise acquire (including, without limitation, acquisition by way of capitalized lease), or commit to purchase or acquire, any fixed asset if, after giving effect to such purchase or other acquisition, the aggregate cost of all such fixed assets purchased or otherwise acquired would exceed $100,000.00 3,000,000.00 during any fiscal year of Borrower; ---------- and
(rq) Neither Borrower nor any Affiliate shall use any portion of the proceeds of the Loans, either directly or indirectly, for the purpose of (i) purchaisng purchasing any securities underwritten or privately placed by ABN AMRO Securities (USA) Inc. ("AASI"), an affiliate of Bank; or LaSalle, (ii) purchasing from AASI any securities in which AASI makes a market; , or (iii) refinancing or making payments of principal, interest or dividends on any securities issued by Borrower or any Affiliate, and underwritten, privately placed or dealt in by AASI.
Appears in 1 contract
Sources: Loan and Security Agreement (Amcon Distributing Co)
Additional Covenants of Borrower. Until payment or satisfaction in full of all Liabilities and termination of this Agreement, unless Borrower obtains Bank's prior written consent waiving or modifying any of The following shall be applicable to Borrower's covenants hereunder in any specific instance, Borrower agrees as followsoperations during the term of the Temporary Forbearance Period:
(a) Borrower shall at continue to provide to Lenders all times keep accurate and complete booksfinancial reporting required under the Financing Agreements. However, records and accounts with respect to all of Borrower's business activities, future delinquency in accordance with sound accounting practices and generally accepted accounting principles consistently applied, and making timely SEC filings shall keep such books, records and accounts, and any copies thereof, only at the addresses indicated for such purpose on Exhibit Bnot constitute a Terminating Event;
(b) Borrower agrees to deliver to Bank the following financial information, all of which shall be prepared in accordance with generally accepted accounting principles consistently applied: (i) no later than twenty (20) days after each calendar month, copies of internally prepared financial statements, including, without limitation, balance sheets and statements of income, retained earnings and cash flow of Borrower, certified by the Chief Financial Officer of Borrower; (ii) no later than thirty (30) days after the end of each of the first three quarters of Borrower's fiscal year a balance sheetthrough SSG Capital Advisors, operating statement and reconciliation of surplus of Borrower, which quarterly financial statements may be unaudited but shall be certified by the Chief Financial Officer of Borrower; and (iii) no later than seventy-five (75) days after the end of each of Borrower's fiscal years, audited annual financial statements with an unqualified opinion by independent certified public accountants selected by Borrower and reasonably satisfactory provide to Bank, which financial statements shall be accompanied by a letter from such accountants acknowledging that they are aware that a primary intent of Borrower in obtaining such financial statements is Lenders weekly status reports regarding their efforts to influence Bank and that Bank is relying upon such financial statements in connection with the exercise of its rights hereunder and copies of any management letters sent to the Borrower by such accountantssell THL;
(c) Borrower shall promptly advise Bank in writing of any material adverse change in the business, assets or condition, financial or otherwise, of Borrower, the occurrence of any Event of Default hereunder or the occurrence of any event which, if uncured, will become an Event of Default hereunder after notice or lapse of time (or both)maintain all depository accounts with Lenders;
(d) Bank, or There shall be no transfers of any Persons designated assets by it, shall have Borrower except in the right, at any time, to call at Borrower's places ordinary course of business at any reasonable times, andbusiness, without hindrance or delaythe prior approval of Lenders, to inspect the Collateral and to inspectwhich approval right Lenders may exercise in their sole discretion. Such transfers shall include, auditwithout limitation, check and make extracts from Borrower's books, records, journals, orders, receipts and any correspondence and other data relating to Borrower's businesssale of THL, the Collateral or California Wafer Facility. In the event that any transactions between assets are sold, the parties heretoproceeds therefrom shall, after payment of actual and shall have reasonable costs of sale, be applied to the right to make such verification concerning Borrower's business as Bank may consider reasonable under the circumstances. Borrower shall furnish to Bank such information relevant to Bank's rights under this Agreement as Bank shall at any time and from time to time request. Borrower authorizes Bank to discuss the affairs, finances and business of Borrower with any officers, employees or directors of Borrower or with any Affiliate or the officers, employees or directors of any Affiliate, and to discuss the financial condition of Borrower with Borrower's independent public accountants. Any such discussions shall be without liability to Bank or to Borrower's independent public accountants. Borrower shall pay to Bank all customary fees and out-of-pocket expenses incurred by Bank in the exercise of its rights hereunder, and all of such fees and expenses shall constitute Loans hereunder, shall be payable on demand and, until paid, shall bear interest at the highest rate then applicable to Loans hereunderRevolving Credit;
(e) The Borrower shall:
(i) keep has identified approximately $2.2 million worth of Consumer Inventory that is slow-moving. Lenders have consented to the Collateral properly housed and insured for the full insurable value thereof against loss or damage by fire, theft, explosion, sprinklers, collision (in the case liquidation of motor vehicles) and such other risks as are customarily insured against by Persons engaged in businesses similar to that of Borrower, with such companies, in such amounts, with such deductiblessame, and under policies in such form as Borrower agrees to use its best efforts to maximize the value thereof. Any proceeds generated from the sale of said assets shall be satisfactory applied to Bank. Original (or certified) copies of such policies of insurance have been or shall be delivered to Bank within ninety (90) days after the date hereof, together with evidence of payment of all premiums therefor, and shall contain an endorsement, in form and substance acceptable to Bank, showing loss under such insurance policies payable to Bank. Such endorsement, or an independent instrument furnished to Bank, shall provide that the insurance company shall give Bank at least thirty (30) days written notice before any such policy of insurance is altered or canceled and that no act, whether willful or negligent, or default of Borrower or any other Person shall affect the right of Bank to recover under such policy of insurance in case of loss or damage. In addition, Borrower shall cause to be executed and delivered to Bank an assignment of proceeds of its business interruption insurance policies. Borrower hereby directs all insurers under all policies of insurance to pay all proceeds payable thereunder directly to Bank. Borrower irrevocably makes, constitutes and appoints Bank (and all officers, employees or agents designated by Bank) as Borrower's true and lawful attorney (and agent-in-fact) for the purpose of making, settling and adjusting claims under such policies of insurance, endorsing the name of Borrower on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and making all determinations and decisions with respect to such policies of insurance, provided, however, that if no Event of Default shall have occurred and is continuing, Borrower may make, settle and adjust claims involving less than $50,000 in the aggregate ------ without Bank's consent; and
(ii) maintain, at its expense, such public liability and third party property damage insurance as is customary for Persons engaged in businesses similar to that of Borrower with such companies and in such amounts, with such deductibles and under policies in such form as shall be satisfactory to Bank and original (or certified) copies of such policies have been or shall be delivered to Bank within ninety (90) days after the date hereof, together with evidence of payment of all premiums therefor; each such policy shall contain an endorsement showing Bank as additional insured thereunder and providing that the insurance company shall give Bank at least thirty (30) days written notice before any such policy shall be altered or canceled. If Borrower at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above or to pay any premium relating thereto, then Bank, without waiving or releasing any obligation or default by Borrower hereunder, may (but shall be under no obligation to) obtain and maintain such policies of insurance and pay such premiums and take such other actions with respect thereto as Bank deems advisable. All sums disbursed by Bank in connection with any such actions, including, without limitation, court costs, expenses, other charges relating thereto and reasonable attorneys' fees, shall constitute Loans hereunder, shall be payable on demand by Borrower to Bank and, until paid, shall bear interest at the highest rate then applicable to Loans hereunderRevolving Credit;
(f) Borrower shall not use and IC agree to close on the Collateral, or any part thereof, in any unlawful business or for any unlawful purpose or use or maintain any sale of the Collateral California Wafer Facility in any manner that does or could result in material damage a time period and for an amount acceptable to the environment or a violation of any applicable environmental laws, rules or regulations; shall keep the Collateral in good condition, repair and order, ordinary wear and tear excepted; shall permit Bank to examine any of the Collateral at any time and wherever the Collateral may be located; shall not permit the Collateral, or any part thereof, to be levied upon under execution, attachment, distraint or other legal process; shall not sell, lease, grant a security interest in or otherwise dispose of any of the Collateral except as expressly permitted by this Agreement; shall not settle or adjust any Account identified by Borrower as an Eligible Account or with respect to which the Account Debtor is an Affiliate without the consent of Bank, provided, that following the occurrence of an Event of Default, Borrower shall not settle or adjust any Account without the consent of Bank; and shall not secrete or abandon any of the Collateral, or remove or permit removal of any of the Collateral from any of the locations listed on Exhibit B, except for the removal of Inventory sold in the ordinary course of Borrower's business as permitted hereinLenders;
(g) Borrower agrees to notify ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (the "Receiver"), who has been appointed as a receiver to liquidate MSUK, of the covenants contained herein and will direct the Receiver to remit all monies and other property obtained by proceeds of liquidation to which Borrower from Bank pursuant is legally entitled to this Agreement will be used solely for business purposes of BorrowerAgent;
(h) The financial records of Borrower shallshall be subject to review from time to time, and at such time as Lenders may reasonably request (during normal business hours), by accountants retained by Lenders, with the request of Bank, indicate on its records concerning the Collateral a notation, in form satisfactory reasonable expense thereof to Bank, of the security interest of Bank hereunderbe paid by Borrower upon demand;
(i) Borrower The Collateral shall file all required tax returns and pay all of its taxes when due be subject to any extensions granted review from time to time, and at such time as the Lenders may reasonably request, by appraisers retained by the applicable taxing authorityLenders, including, without limitation, taxes imposed by federal, state or municipal agencies, and shall cause any liens for taxes with the reasonable expense thereof to be promptly released; provided, that Borrower shall have the right to contest the payment of such taxes in good faith by appropriate proceedings so long as (i) the amount so contested is shown on Borrower's financial statements; (ii) the contesting of any such payment does not give rise to a lien for taxes; (iii) Borrower keeps on deposit with Bank (such deposit to be held without interest) an amount of money which, in the sole judgment of Bank, is sufficient to pay such taxes and any interest or penalties that may accrue thereon or the Borrower maintains adequate reserves on its balance sheet in accordance with generally accepted accounting principles; and (iv) if Borrower fails to prosecute such contest with reasonable diligence, Bank may apply the money so deposited in payment of such taxes. If Borrower fails to pay any such taxes and in the absence of any such contest by Borrower, Bank may (but shall be under no obligation to) advance and pay any sums required to pay any such taxes and/or to secure the release of any lien therefor, and any sums so advanced by Bank shall constitute Loans hereunder, shall be payable paid by Borrower to Bank on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(j) In consideration of Lenders entering into this Agreement, Borrower shall not assume, guarantee or endorse, or otherwise become liable in connection with, the obligations pay to Lenders a forbearance fee of any Person, except by endorsement $50,000.00 which shall be fully earned upon execution of instruments for deposit or collection or similar transactions in the ordinary course of businessthis Agreement;
(k) Borrower On or before July 19, 2002, MSI shall not (i) enter into any merger or consolidation; (ii) sell, lease or otherwise dispose of any of its assets other than in execute documents satisfactory to Lenders to effectuate a pledge to the ordinary course of business; (iii) purchase all or substantially all Agent of the assets remaining 35% of any Person or division of such Person; or (iv) enter into any other transaction outside the ordinary course of Borrower's business, including, without limitation, any purchase, redemption or retirement of any issued and outstanding shares of any class THL stock, so that 100% of its the stock or any other equity interest, and any issuance of any shares of, or warrants or other rights will then be pledged to receive or purchase any shares of, any class of its stock or any other equity interestAgent;
(l) Borrower On or before July 19, 2002, MSI shall not declare or pay any dividend or other distribution (whether in cash or in kind) on any class execute documents satisfactory to Lenders to effectuate a pledge to the Agent of its the remaining 35% of issued and outstanding shares of ML stock, so that 100% of the stock (if Borrower is a corporation) or on account of any equity interest in Borrower (if Borrower is a partnership, limited liability company or other type of entity);will then be pledged to Agent; and
(m) Borrower agrees to issue on or before July 19, 2002, warrants in favor of Lenders, giving Lenders the right to acquire in the aggregate 594,456 shares (4.99%) of Borrower's outstanding shares of common stock. Said warrants shall be in a form acceptable to the Lenders, in their sole discretion. Such warrants shall not purchase or otherwise acquire, or contract be transferable by Lenders prior to purchase or otherwise acquire, the obligations or stock of any Person, other than direct obligations termination of the United States;
(n) Borrower shall not amend its organizational documents or change its fiscal year unless such actions would not have an adverse effect on the Borrower's business, property, assets, operations or condition, financial or otherwise, as determined by Bank in its sole discretionTemporary Forbearance Period, and Bank has received ten then may be transferred in accordance with applicable law. The warrants shall be exercisable for a period of five (5) years from November 10) days prior written notice of such amendment or change, or enter into a new line of business materially different from Borrower's current business;
(o) See Exhibit A
(p) Borrower shall reimburse Bank for all costs and expenses, including, without limitation, legal expenses and reasonable attorneys' fees, incurred by Bank in connection with (i) documentation and consummation of this transaction and any other transactions between Borrower and Bank, including, without limitation, Uniform Commercial Code and other public record searches, lien filings, overnight courier or other express or messenger delivery, appraisal costs, surveys, title insurance and environmental audit or review costs; (ii) collection, protection or enforcement of any rights in or 2002 at an exercise price equal to the Collateral; (iii) collection of any Liabilities; and (iv) administration and enforcement of any of Bank's rights under this Agreement. Borrower shall also pay all normal service charges with respect to all accounts maintained by Borrower with Bank and any additional services requested by Borrower from Bank. All such costs, expenses and charges shall constitute Loans hereunder, shall be payable by Borrower to Bank on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(q) Borrower shall not purchase or otherwise acquire (including, without limitation, acquisition by way of capitalized lease), or commit to purchase or acquire, any fixed asset if, after giving effect to such purchase or other acquisition, the aggregate cost of all such fixed assets purchased or otherwise acquired would exceed $100,000.00 during any fiscal year of Borrower; ---------- and
(r) Neither Borrower nor any Affiliate shall use any portion of the proceeds of the Loans, either directly or indirectly, for the purpose lesser of (i) purchaisng any securities underwritten or privately placed by ABN AMRO Securities the average closing price of Borrower's common stock on the five (USA5) Inc. ("AASI"), an affiliate business days preceding the date of Bankthis Agreement; or (ii) purchasing from AASI any securities the average closing price of Borrower's common stock on the five (5) business days preceding November 10, 2002. Lenders agree to return 50% of said warrants for cancellation if Borrower is in which AASI makes a market; full compliance with the terms hereof on October 1, 2002 to return the other 50% of said warrants for cancellation if the Obligations are repaid in full on or (iii) refinancing or making payments of principalbefore November 1, interest or dividends on any securities issued by Borrower or any Affiliate, and underwritten, privately placed or dealt in by AASI2002.
Appears in 1 contract
Sources: Forbearance Agreement (Measurement Specialties Inc)
Additional Covenants of Borrower. Until payment or satisfaction in full of all Liabilities and termination of this Agreement, unless Borrower Borrowers or Pledgor obtains BankLender's prior written consent waiving or modifying any of BorrowerBorrowers' or Pledgor's covenants hereunder in any specific instance, Borrower agrees Borrowers and Pledgor agree as follows:
(a) Each Borrower and Pledgor shall at all times keep accurate and complete books, records and accounts with respect to all of such Borrower's and Pledgor's business activities, in accordance with sound accounting practices and generally accepted accounting principles consistently applied, and shall keep such books, records and accounts, and any copies thereof, only at the addresses indicated for such purpose on Exhibit B;accounting
(b) Borrower agrees Marc▇▇ ▇▇▇ees to deliver to Bank Lender the following financial information, all of which shall be prepared in accordance with generally accepted accounting principles consistently applied: :
(i) no later than twenty thirty (2030) days after each calendar month, copies of internally prepared financial statements, including, without limitation, balance sheets and consolidated statements of income, retained earnings and cash flow of Borrower, certified by the Chief Financial Officer of BorrowerMarc▇▇; (ii▇i) no later than thirty (30) 45 days after the end of each of the first three quarters of Borrower's fiscal year a balance sheetMarc▇▇'▇ ▇▇▇cal quarter, operating statement and reconciliation of surplus of Borrower, which quarterly consolidated financial statements may be unaudited but shall be as set forth in its Form 10-QSB for each quarter, certified by the Chief Financial Officer of Borrower; and Marc▇▇, (iii▇ii) no later than seventy-five ninety (7590) days after the end of each of Borrower's Borrowers' fiscal years, audited annual consolidated financial statements with an unqualified opinion certified by independent certified public accountants selected by Borrower and the Chief Financial Officer of Marc▇▇; ▇▇d (iv) such other financial information as Lender shall reasonably satisfactory to Bank, which financial statements shall be accompanied by a letter from such accountants acknowledging that they are aware that a primary intent of Borrower in obtaining such financial statements is to influence Bank and that Bank is relying upon such financial statements in connection with the exercise of its rights hereunder and copies of any management letters sent to the Borrower by such accountantsrequest;
(c) Each Borrower shall promptly advise Bank Lender in writing of any material adverse change in the business, assets or condition, financial or otherwise, of such Borrower, the occurrence of any Event of Default hereunder or the occurrence of any event which, if uncured, will become an Event of Default hereunder after notice or lapse of time (or both) and copies of any material notices given or received in connection with the Asset Purchase Agreement (as defined below);
(d) BankLender, or any Persons designated by it, shall have the right, at any time, to call at any Borrower's or Pledgor's places of business at any reasonable times, and, without hindrance or delay, to inspect the Collateral and to inspect, audit, check and make extracts from such Borrower's or Pledgor's books, records, journals, orders, receipts and any correspondence and other data relating to such Borrower's or Pledgor's business, the Collateral or any transactions between the parties hereto, and shall have the right to make such verification concerning such Borrower's or Pledgor's business as Bank Lender may consider reasonable under the circumstances. Each Borrower and Pledgor shall furnish to Bank Lender such information relevant to BankLender's rights under this Agreement as Bank Lender shall at any time and from time to time reasonably request. Each Borrower and Pledgor authorizes Bank Lender to discuss the affairs, finances and business of such Borrower or Pledgor with any officers, employees or directors of such Borrower or Pledgor or with any Affiliate or the officers, employees or directors of any Affiliate, and to discuss the financial condition of such Borrower or Pledgor with such Borrower's or Pledgor's independent public accountants. Any such discussions shall be without liability to Bank Lender or to such Borrower's or Pledgor's independent public accountants. Borrower Borrowers shall pay to Bank Lender all customary fees and out-of-pocket expenses incurred by Bank Lender in the exercise of its rights hereunder, and all of such fees and expenses shall constitute Loans hereunder, shall be payable on demand and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(e) Borrower shall:
(i) Each Borrower and Pledgor shall keep the Collateral properly housed and shall keep the Collateral insured for the full insurable value thereof against loss or damage by fire, theft, explosion, sprinklers, collision (in the case of motor vehicles) and such other risks as are customarily insured against by Persons engaged in businesses similar to that of Borrower, Borrowers and Pledgor with such companies, in such amounts, with such deductibles, and under policies in such form as shall be satisfactory to Bank. Original (or certified) copies of such policies of insurance have been or shall be delivered to Bank within ninety (90) days after the date hereof, together with evidence of payment of all premiums therefor, and shall contain an endorsement, in form and substance acceptable to Bank, showing loss under such insurance policies payable to Bank. Such endorsement, or an independent instrument furnished to Bank, shall provide that the insurance company shall give Bank at least thirty (30) days written notice before any such policy of insurance is altered or canceled and that no act, whether willful or negligent, or default of Borrower or any other Person shall affect the right of Bank to recover under such policy of insurance in case of loss or damage. In addition, Borrower shall cause to be executed and delivered to Bank an assignment of proceeds of its business interruption insurance policies. Borrower hereby directs all insurers under all policies of insurance to pay all proceeds payable thereunder directly to Bank. Borrower irrevocably makes, constitutes and appoints Bank (and all officers, employees or agents designated by Bank) as Borrower's true and lawful attorney (and agent-in-fact) for the purpose of making, settling and adjusting claims under such policies of insurance, endorsing the name of Borrower on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and making all determinations and decisions with respect to such policies of insurance, provided, however, that if no Event of Default shall have occurred and is continuing, Borrower may make, settle and adjust claims involving less than $50,000 in the aggregate ------ without Bank's consent; andsuch
(ii) Each Borrower shall maintain, at its expense, such public liability and third party property damage insurance as is customary for Persons engaged in businesses similar to that of Borrower Borrowers with such companies and in such amounts, with such deductibles and under policies in such form as shall be satisfactory to Bank and Lender and, at the request of Lender, original (or certified) copies of such policies have been or shall be delivered to Bank within ninety (90) days after the date hereofLender, together with evidence of payment of all premiums therefor; each such policy shall contain an endorsement showing Bank Lender as additional insured thereunder and providing that the insurance company shall give Bank Lender at least thirty (30) days written notice before any such policy shall be altered or canceled. If Borrower Borrowers or Pledgor at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above or to pay any premium in whole or in part relating thereto, then BankLender, without waiving or releasing any obligation or default by Borrower Borrowers or Pledgor hereunder, may (but shall be under no obligation to) obtain and maintain such policies of insurance and pay such premiums and take such other actions with respect thereto as Bank Lender deems advisable. All sums disbursed by Bank Lender in connection with any such actions, including, including without limitation, limitation court costs, expenses, other charges relating thereto and reasonable attorneys' fees, shall constitute Loans hereunder, hereunder and shall be payable on demand by Borrower Borrowers to Bank Lender and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(f) no Borrower or Pledgor shall not use the Collateralits property, or any part thereof, in any unlawful business or for any unlawful purpose or use or maintain any of the Collateral its property in any manner that does or could result in material damage to the environment or a violation of any applicable environmental laws, rules or regulations; shall keep the Collateral in good condition, repair and order, ordinary wear and tear excepted; shall permit Bank to examine any of the Collateral at any time and wherever the Collateral may be located; shall not permit the Collateral, or any part thereof, to be levied upon under execution, attachment, distraint or other legal process; shall not sell, lease, grant a security interest in or otherwise dispose of any of the Collateral except as expressly permitted by this Agreement; shall not settle or adjust any Account identified by Borrower as an Eligible Account or with respect to which the Account Debtor is an Affiliate without the consent of Bank, provided, that following the occurrence of an Event of Default, Borrower shall not settle or adjust any Account without the consent of Bank; and shall not secrete or abandon any of the Collateral, or remove or permit removal of any of the Collateral from any of the locations listed on Exhibit B, except for the removal of Inventory sold in the ordinary course of Borrower's business as permitted herein;any
(g) all monies and other property obtained by Borrower Borrowers from Bank Lender pursuant to this Agreement will be used solely for business purposes of BorrowerBorrowers;
(h) each Borrower and Pledgor shall, at the request of BankLender, indicate on its records concerning the Collateral a notation, in form satisfactory to BankLender, of the security interest of Bank Lender hereunder, and no Borrower or Pledgor shall maintain duplicates or copies of such records at any address other than Borrowers' and Pledgor's principal place of business set forth on the first page of this Agreement;
(i) each Borrower shall file all required tax returns and pay all of its taxes when due subject to any extensions granted by the applicable taxing authoritydue, including, including without limitation, limitation taxes imposed by federal, state or municipal agencies, and shall cause any liens for taxes to be promptly released; provided, that a Borrower shall have the right to contest the payment of such taxes in good faith by appropriate proceedings so long as (i) the amount so contested is shown on such Borrower's financial statements; , (ii) the contesting of any such payment does not give rise to a lien for taxes; , (iii) such Borrower keeps on deposit with Bank Lender (such deposit to be held without interest) an amount of money which, in the sole judgment of BankLender, is sufficient to pay such taxes and any interest or penalties that may accrue thereon or the Borrower maintains adequate reserves on its balance sheet in accordance with generally accepted accounting principles; thereon, and (iv) if such Borrower fails to prosecute such contest with reasonable diligence, Bank Lender may apply the money so deposited in payment of such taxes. If any Borrower fails to pay any such taxes and in the absence of any such contest by such Borrower, Bank Lender may (but shall be under no obligation to) advance and pay any sums required to pay any such taxes and/or to secure the release of any lien therefor, and any sums so advanced by Bank Lender shall constitute Loans hereunder, shall be payable by Borrower Borrowers to Bank Lender on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(j) Borrower Borrowers shall not assume, guarantee or endorse, or otherwise become liable in connection with, the obligations of any Person, except by endorsement of instruments for deposit or collection or similar transactions in the ordinary course of business;
(k) except as set forth in Section 13 below and except for the transactions described on Exhibit F attached hereto, no Borrower shall not (i) enter into any merger or consolidation; (ii) sell, lease or otherwise dispose of any of its assets other than in the ordinary course of business; (iii) purchase all or substantially all of the assets of any Person or division of such Person; or (iv) enter into any other transaction outside the ordinary course of such Borrower's business, including, without limitation, any purchase, redemption or retirement of any shares of any class of its stock or any other equity interest, and any issuance of any shares of, or warrants or other rights to receive or purchase any shares of, any class of its stock or any other equity interest;
(l) except as set forth in Section 13 below and except for the transactions described on Exhibit F attached hereto, no Borrower shall not declare or pay any dividend or other distribution (whether in cash or in kind) of any kind on any class of its stock (if Borrower is a corporation) or on account of any equity interest in Borrower (if Borrower is a partnership, limited liability company or other type of entity)stock;
(m) each Borrower shall not purchase or otherwise acquire, or contract to purchase or otherwise acquire, the obligations or stock of any Person, other than direct obligations of the United States;
(n) Borrower shall not amend its organizational documents or change its fiscal year unless such actions would not have an adverse effect on the Borrower's business, property, assets, operations or condition, financial or otherwise, as determined by Bank in its sole discretion, and Bank has received ten (10) days prior written notice of such amendment or change, or enter into a new line of business materially different from Borrower's current business;
(o) See Exhibit A
(p) Borrower shall reimburse Bank for all costs and expenses, including, without limitation, legal expenses and reasonable attorneys' fees, incurred by Bank in connection with (i) documentation keep in full force and consummation of this transaction effect any and any other transactions between Borrower and Bankall plans which may, includingfrom time to time, come into existence under ERISA, unless such Plans can be terminated without limitation, Uniform Commercial Code and other public record searches, lien filings, overnight courier or other express or messenger delivery, appraisal costs, surveys, title insurance and environmental audit or review costsliability to such Borrower; (ii) collection, protection or enforcement make contributions to all of any rights the Plans in or a timely manner and in a sufficient amount to comply with the Collateralrequirements of ERISA; (iii) collection comply with all material requirements of any LiabilitiesERISA which relate to Plans (including without limitation the minimum funding standards of Section 302 of ERISA); and (iv) administration and enforcement of any of Bank's rights under this Agreement. Borrower shall also pay all normal service charges with respect to all accounts maintained by Borrower with Bank and any additional services requested by Borrower from Bank. All such costs, expenses and charges shall constitute Loans hereunder, shall be payable by Borrower to Bank on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(q) Borrower shall not purchase or otherwise acquire (including, without limitation, acquisition by way of capitalized lease), or commit to purchase or acquire, any fixed asset if, after giving effect to such purchase or other acquisition, the aggregate cost of all such fixed assets purchased or otherwise acquired would exceed $100,000.00 during any fiscal year of Borrower; ---------- and
(r) Neither Borrower nor any Affiliate shall use any portion of the proceeds of the Loans, either directly or indirectly, for the purpose of (i) purchaisng any securities underwritten or privately placed by ABN AMRO Securities (USA) Inc. ("AASI"), an affiliate of Bank; or (ii) purchasing from AASI any securities in which AASI makes a market; or (iii) refinancing or making payments of principal, interest or dividends on any securities issued by Borrower or any Affiliate, and underwritten, privately placed or dealt in by AASI.
Appears in 1 contract
Sources: Loan and Security Agreement (Marcum Natural Gas Services Inc/New)
Additional Covenants of Borrower. Until payment or and satisfaction in full of all Liabilities and termination of this Agreement, unless Borrower obtains Bank's prior written consent waiving or modifying any of Borrower's covenants hereunder in any specific instance, Borrower agrees as follows:
(a) Borrower shall at all times keep accurate and complete books, records and accounts with respect to all of Borrower's business activities, in accordance with sound accounting practices and generally accepted accounting principles consistently applied, and shall keep such books, records and accounts, and any copies thereof, only at the addresses indicated for such purpose on Exhibit B;
(b) Borrower agrees to deliver to Bank the following financial information, all of which shall be prepared in accordance with generally accepted accounting principles consistently applied: :
(i) no later than twenty forty- five (20) days after each calendar month, copies of internally prepared financial statements, including, without limitation, balance sheets and statements of income, retained earnings and cash flow of Borrower, certified by the Chief Financial Officer of Borrower; (ii) no later than thirty (3045) days after the end of each of the first three quarters of Borrower's fiscal year a balance sheet, operating statement and reconciliation of surplus of Borrower, which quarterly financial statements may be unaudited but shall be certified by the Chief Financial Officer of Borrower; and (iiiii) no later than seventy-five one hundred twenty (75120) days after the end of each of Borrower's fiscal years, audited annual financial statements with an unqualified opinion by independent certified public accountants selected by Borrower and reasonably satisfactory to BankBank and (iii) contemporaneously with the furnishing of each of the foregoing quarterly and annual financial statements, which financial statements shall be accompanied by a letter from such accountants acknowledging that they are aware that a primary intent duly completed certificate dated the date of Borrower in obtaining such financial statements is statements, in form and substance satisfactory to influence Bank and that Bank is relying upon such financial statements in connection signed by an authorized officer of Borrower, containing calculations of Borrower's compliance with the exercise financial covenants contained in subparagraph 11(o) of its rights hereunder this Agreement and copies subparagraphs 5, 6 and 7 of any management letters sent to the Borrower by such accountantsExhibit A;
(c) Borrower shall promptly after obtaining knowledge thereof advise Bank in writing of any material adverse change in the business, assets or condition, financial or otherwise, of Borrower, the occurrence of any Event of Default hereunder or the occurrence of any event which, if uncured, will become an Event of Default hereunder after notice or lapse of time (or both);
(d) Bank, or any Persons designated by it, shall have the right, at any time, to call at Borrower's places of business at any reasonable times, and, without hindrance or delay, to inspect the Collateral and to inspect, audit, check and make extracts from Borrower's books, records, journals, orders, receipts and any correspondence and other data relating to Borrower's business, the Collateral or any transactions between the parties hereto, and shall have the right to make such verification concerning Borrower's business as Bank may consider reasonable under the circumstances. Bank agrees, provided no Event of Default has occurred, to limit its collateral audits and field exams to two such audit/exams during any calendar year after the date hereof. Borrower shall furnish to Bank such information relevant to Bank's rights under this Agreement as Bank shall at any time and from time to time request. Borrower authorizes Bank to discuss the affairs, finances and business of Borrower with any officers, employees or directors of Borrower or with any Affiliate or the officers, employees or directors of any Affiliate, and to discuss the financial condition of Borrower with Borrower's independent public accountants. Any such discussions shall be without liability to Bank or to Borrower's independent public accountants. Borrower shall pay to Bank all customary fair and reasonable fees and out-of-pocket expenses incurred by Bank in the exercise of its rights hereunderhereunder (provided that such fees and out-of- pocket expenses incurred by Bank pursuant to this subparagraph 11(d) and subparagraph 11(d) of the FFH Loan Agreement after the date hereof when no Event of Default exists shall not exceed $15,000 in any calendar year), and all of such fees and expenses shall constitute Loans hereunder, shall be payable on demand and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(e) Borrower shall:
(i) keep the Collateral properly housed and insured for the full insurable value thereof against loss or damage by fire, theft, explosion, sprinklers, collision (in the case of motor vehicles) and such other risks as are customarily insured against by Persons engaged in businesses similar to that of Borrower, with such companies, in such amounts, with such deductibles, and under policies in such form as shall be satisfactory to Bank. Original (or certified) copies of such policies of insurance have been or shall be delivered to Bank within ninety (90) days after the date hereof, together with evidence of payment of all premiums therefor, and shall contain an endorsement, in form and substance acceptable to Bank, showing loss under such insurance policies payable to Bank. Such endorsement, or an independent instrument furnished to Bank, shall provide that the insurance company shall give Bank at least thirty (30) days written notice before any such policy of insurance is altered or canceled and that no act, whether willful or negligent, or default of Borrower or any other Person shall affect the right of Bank to recover under such policy of insurance in case of loss or damage. In addition, Borrower shall cause to be executed and delivered to Bank an assignment of proceeds of its business interruption insurance policies. Borrower hereby directs all insurers under all such policies of insurance to pay all proceeds payable thereunder in excess of $100,000 for any occurrence directly to Bank. Borrower irrevocably irrevocably, makes, constitutes and appoints Bank (and all officers, employees or agents designated by Bank) as Borrower's true and lawful attorney (and agent-in-fact) for the purpose of making, settling and adjusting claims under such policies of insurance, endorsing the name of Borrower on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and making all determinations and decisions with respect to such policies of insurance, provided, however, that if no Event of Default shall have occurred and is continuing, Borrower may make, settle and adjust claims involving less than $50,000 in the aggregate ------ without Bank's consent; and
(ii) maintain, at its expense, such public liability and third party property damage insurance as is customary for Persons engaged in businesses similar to that of Borrower with such companies and in such amounts, with such deductibles and under policies in such form as shall be satisfactory to Bank and original (or certified) copies of such policies have been or shall be delivered to Bank within ninety (90) days after the date hereof, together with evidence of payment of all premiums therefor; each such policy shall contain an endorsement showing Bank as additional insured thereunder and providing that the insurance company shall give Bank at least thirty (30) days written notice before any such policy shall be altered or canceled. If Borrower at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above or to pay any premium relating thereto, then Bank, without waiving or releasing any obligation or default by Borrower hereunder, may (but shall be under no obligation to) obtain and maintain such policies of insurance and pay such premiums and take such other actions with respect thereto as Bank deems advisable. All sums disbursed by Bank in connection with any such actions, including, without limitation, court costs, expenses, other charges relating thereto and reasonable attorneys' fees, shall constitute Loans hereunder, shall be payable on demand by Borrower to Bank and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(f) Borrower shall not use the Collateral, or any part thereof, in any unlawful business or for any unlawful purpose or use or maintain any of the Collateral in any manner that does or could result in material damage to the environment or a violation of any applicable environmental laws, rules or regulations; shall keep the Collateral in good condition, repair and order, ordinary wear and tear excepted; shall permit Bank to examine any of the Collateral at any time and wherever the Collateral may be located; shall not permit the Collateral, or any part thereof, to be levied upon under execution, attachment, distraint or other legal process; shall not sell, lease, grant a security interest in or otherwise dispose of any of the Collateral except as expressly permitted by this Agreement; shall not settle or adjust any Account identified by Borrower as an Eligible Account or with respect to which the Account Debtor is an Affiliate without the consent of Bank, provided, that following the occurrence of an Event of Default, Borrower shall not settle or adjust any Account without the consent of Bank; and shall not secrete or abandon any of the Collateral, or remove or permit removal of any of the Collateral from any of the locations listed on Exhibit B, except for the removal of Inventory sold in the ordinary course of Borrower's business as permitted herein;
(g) all monies and other property obtained by Borrower from Bank pursuant to this Agreement will shall be used solely for business purposes of Borrower;
(h) Borrower shall, at the request of Bank, indicate on its records concerning the Collateral a notation, in form satisfactory to Bank, of the security interest of Bank hereunder;
(i) Borrower shall file all required tax returns and pay all of its taxes when due subject to any extensions granted by the applicable taxing authoritydue, including, without limitation, taxes imposed by federal, state or municipal agencies, and shall cause any liens for taxes to be promptly released; provided, that Borrower shall have the right to contest the payment of such taxes in good faith by appropriate proceedings so long as (i) the amount so contested is shown on Borrower's financial statements; , (ii) the contesting of any such payment does not give rise to a lien for taxes; taxes and (iii) Borrower keeps on deposit with Bank (such deposit to be held without interest) has reserved against availability under the Loans an amount of money which, in the sole judgment of Bank, is sufficient to pay such taxes and any interest or penalties that may accrue thereon or the Borrower maintains adequate reserves on its balance sheet in accordance with generally accepted accounting principles; and (iv) if Borrower fails to prosecute such contest with reasonable diligence, Bank may apply the money so deposited in payment of such taxesthereon. If Borrower fails to pay any such taxes and in the absence of any such contest by Borrower, Bank may (but shall be under no obligation to) advance and pay any sums required to pay any such taxes and/or to secure the release of any lien therefor, and any sums so advanced by Bank shall constitute Loans hereunder, shall be payable by Borrower to Bank on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(j) Borrower shall not assume, guarantee or endorse, or otherwise become liable in connection with, the obligations of any Person, except by endorsement of instruments for deposit or collection or similar transactions in the ordinary course of business;
(k) Borrower shall not without the prior written consent of Bank (i) enter into any merger or consolidation; , or (ii) sell, lease or otherwise dispose of any of its assets other than in the ordinary course of businessbusiness and other than asset sales and dispositions involving assets with a value of less than $250,000 in any transaction or series of related transactions; (iii) purchase all or substantially all of the assets of any Person or division of such Person; , or (iv) enter into any other transaction outside the ordinary course of Borrower's business, including, without limitation, any purchase, redemption or retirement of any shares of any class of its or any other Obligor's stock or any other equity interestinterest (including any rights, options or warrants with respect thereto) for consideration in excess of $100,000 in the aggregate during any calendar year, and any issuance of any shares of, or warrants or other rights to receive or purchase any shares of, any class of its stock or any other equity interestinterest other than such issuances made pursuant to the terms of Borrower's employee stock option plan;
(l) Borrower shall not declare or pay any dividend or other distribution (whether in cash or in kind) on any class of its stock (if Borrower is a corporation) or on account of any equity interest in Borrower (if Borrower is a partnership, limited liability company or other type of entity);
(m) Other than the shares of capital stock of FFH and Cramond Investment Company, Ltd. owned by Borrower on the date hereof, Borrower shall not purchase or otherwise acquire, or contract to purchase or otherwise acquire, the obligations or stock of any Person, other than direct obligations of the United States;
(n) Borrower shall not amend its organizational documents in any manner which could have an adverse effect on Bank or its interest in any of the Collateral or change its fiscal year unless such actions would not have an adverse effect on the Borrower's business, property, assets, operations or condition, financial or otherwise, as determined by Bank in its sole discretion, and Bank has received ten (10) days prior written notice of such amendment or change, or enter into a new line of business materially different from Borrower's current business;
(o) See Exhibit A
(p) Borrower's Tangible Net Worth shall at all times be greater than $4,500,000.00. "Tangible Net Worth" shall mean, as of any time the same is to be determined, an amount equal to shareholder's equity in Borrower shall reimburse Bank for reflected on the most recent balance sheet of Borrower prepared in accordance with generally accepted accounting principles consistently applied, less the aggregate book value of all costs and expensesassets which would be classified as intangible assets under generally accepted accounting principles, including, without limitation, legal expenses goodwill, patents, trademarks, trade names, copyrights, franchises and reasonable attorneys' fees, incurred by Bank in connection with (i) documentation and consummation of this transaction and any other transactions between Borrower and Bank, including, without limitation, Uniform Commercial Code and other public record searches, lien filings, overnight courier or other express or messenger delivery, appraisal costs, surveys, title insurance and environmental audit or review costs; (ii) collection, protection or enforcement of any rights in or to the Collateral; (iii) collection of any Liabilities; and (iv) administration and enforcement of any of Bank's rights under this Agreement. Borrower shall also pay all normal service deferred charges with respect to all accounts maintained by Borrower with Bank and any additional services requested by Borrower from Bank. All such costs, expenses and charges shall constitute Loans hereunder, shall be payable by Borrower to Bank on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(q) Borrower shall not purchase or otherwise acquire (including, without limitation, acquisition by way of capitalized lease)unamortized debt discount and expense, or commit to purchase or acquire, any fixed asset if, after giving effect to such purchase or other acquisition, the aggregate organization and cost of all such fixed assets purchased or otherwise acquired would exceed $100,000.00 during any fiscal year of Borrower; ---------- and
(rand deferred research and development expense) Neither Borrower nor any Affiliate shall use any portion of the proceeds of the Loans, either directly or indirectly, for the purpose of (i) purchaisng any securities underwritten or privately placed by ABN AMRO Securities (USA) Inc. ("AASI"), an affiliate of Bank; or (ii) purchasing from AASI any securities in which AASI makes a market; or (iii) refinancing or making payments of principal, interest or dividends on any securities issued by Borrower or any Affiliate, and underwritten, privately placed or dealt in by AASIsimilar assets.
Appears in 1 contract
Sources: Loan and Security Agreement (Amcon Distributing Co)
Additional Covenants of Borrower. Until payment or and satisfaction in full of all Liabilities and termination of this Agreement, unless Borrower obtains BankLender's prior written consent waiving or modifying any of Borrower's covenants hereunder in any specific instance, Borrower agrees as follows:
(a) Borrower shall at all times keep accurate and complete books, records and accounts with respect to all of Borrower's business activities, in accordance with sound accounting practices and generally accepted accounting principles consistently applied, and shall keep such books, records and accounts, and any copies thereof, only at the addresses indicated for such purpose on Exhibit B;
(b) Borrower agrees to deliver to Bank Lender the following financial information, all of which shall be prepared in accordance with generally accepted accounting principles consistently applied, and shall be accompanied by a compliance certificate in the form of Exhibit C hereto, which compliance certificate shall include a calculation of all financial covenants contained in this Agreement: (i) no later than twenty thirty (2030) days after each calendar month, copies of internally prepared financial statements, including, without limitation, balance sheets and statements of income, retained earnings and cash flow of Borrower, certified by the Chief Financial Officer of Borrower; (ii) no later than thirty forty-five (3045) days after the end of each of the first three quarters of Borrower's fiscal year a balance sheet, operating statement and reconciliation of surplus of Borrower, which quarterly financial statements may be unaudited but shall be certified by the Chief Financial Officer of Borrower; and (iii) no later than seventy-five ninety (7590) days after the end of each of Borrower's fiscal years, audited annual financial statements with an unqualified opinion by independent certified public accountants selected by Borrower and reasonably satisfactory to BankLender, which financial statements shall be accompanied by (A) a letter from such accountants acknowledging that they are aware that a primary intent of Borrower in obtaining such financial statements is to influence Bank Lender and that Bank Lender is relying upon such financial statements in connection with the exercise of its rights hereunder hereunder, provided, that Borrower shall only be required to use its reasonable efforts in good faith to obtain such letter; and (B) copies of any management letters sent to the Borrower by such accountants; and (iv) copies of any and all proxy statements, financial statements and reports which Borrower makes available to its stockholders, including without limitation, any filings with the Securities Exchange Commission;
(c) Borrower shall promptly advise Bank Lender in writing of any material adverse change in the business, assets property, assets, operations or condition, financial or otherwise, of Borrower, the occurrence of any Event of Default hereunder or the occurrence of any event which, if uncured, will become an Event of Default hereunder after notice or lapse of time (or both);
(d) BankLender, or any Persons designated by it, shall have the right, at any time, right to call at Borrower's places of business at any reasonable times, and, without hindrance or delay, to inspect the Collateral and to inspect, audit, check and make extracts from Borrower's books, records, journals, orders, receipts and any correspondence and other data relating to Borrower's business, the Collateral or any transactions between the parties hereto, and shall have the right to make such verification concerning Borrower's business as Bank Lender may consider reasonable under the circumstances. Borrower shall furnish to Bank Lender such information relevant to BankLender's rights under this Agreement as Bank Lender shall at any time and from time to time request. Borrower authorizes Bank Lender to discuss the affairs, finances and business of Borrower with any officers, employees or directors of Borrower or with Parent or any Affiliate or the officers, employees or directors of Parent or any Affiliate, and to discuss the financial condition of Borrower with Borrower's independent public accountants. Any such discussions shall be without liability to Bank Lender or to Borrower's independent public accountants. Borrower shall pay to Bank Lender all customary fees and out-of-pocket expenses incurred by Bank Lender in the exercise of its rights hereunder, and all of such fees and expenses shall constitute Loans Liabilities hereunder, shall be payable on demand and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;; provided however, that, except with respect to Lender's initial audit, prior to the occurrence of an Event of Default, the maximum amount Borrower shall be required to pay Lender pursuant to this subparagraph 11(d) shall be Twelve Thousand Five Hundred and No/100 Dollars ($12,500.00) per fiscal year of Borrower.
(e) Borrower shall:
(i) keep the Collateral properly housed and insured for the full insurable value thereof against loss or damage by fire, theft, explosion, sprinklers, collision (in the case of motor vehicles) and such other risks as are customarily insured against by Persons engaged in businesses similar to that of Borrower, with such companies, in such amounts, with such deductibles, and under policies in such form form, as shall be satisfactory to BankLender. Original (or certified) copies of such policies of insurance have been or shall be delivered to Bank be, within ninety (90) days after of the date hereof, delivered to Lender, together with evidence of payment of all premiums therefor, and shall contain an endorsement, in form and substance acceptable to BankLender, showing loss under such insurance policies payable to BankLender. Such endorsement, or an independent instrument furnished to BankLender, shall provide that the insurance company shall give Bank Lender at least thirty (30) days written notice before any such policy of insurance is altered or canceled and that no act, whether willful or negligent, or default of Borrower or any other Person shall affect the right of Bank Lender to recover under such policy of insurance in case of loss or damage. In addition, Borrower shall cause to be executed and delivered to Bank Lender an assignment of proceeds of its business interruption insurance policies. Borrower hereby directs all insurers under all policies of insurance to pay all proceeds payable thereunder directly to BankLender. Borrower irrevocably makes, constitutes and appoints Bank Lender (and all officers, employees or agents designated by BankLender) as Borrower's true and lawful attorney (and agent-in-fact) for the purpose of making, settling and adjusting claims under such policies of insurance, endorsing the name of Borrower on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and making all determinations and decisions with respect to such policies of insurance, provided, however, that if no Event of Default shall have occurred and is continuingoccurred, Borrower may make, settle and adjust claims involving less than $50,000 100,000.00 in the aggregate ------ without BankLender's consent; and
(ii) maintain, at its expense, such public liability and third party property damage insurance as is customary for Persons engaged in businesses similar to that of Borrower with such companies and in such amounts, with such deductibles and under policies in such form as shall be satisfactory to Bank Lender and original (or certified) copies of such policies have been or shall be delivered to Bank be, within ninety (90) days after the date hereof, delivered to Lender, together with evidence of payment of all premiums therefor; each such policy shall contain an endorsement showing Bank Lender as additional insured thereunder and providing that the insurance company shall give Bank Lender at least thirty (30) days written notice before any such policy shall be altered or canceledcancelled. If Borrower at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above or to pay any premium relating thereto, then BankLender, without waiving or releasing any obligation or default by Borrower hereunder, may (but shall be under no obligation to) obtain and maintain such policies of insurance and pay such premiums and take such other actions with respect thereto as Bank Lender deems advisableadvisable upon notice to Borrower. Such insurance, if obtained by Lender, may, but need not, protect Borrower's interests or pay any claim made by or against Borrower with respect to the Collateral. Such insurance may be more expensive than the cost of insurance Borrower may be able to obtain on its own and may be cancelled only upon Borrower providing evidence that it has obtained the insurance as required above. All sums disbursed by Bank Lender in connection with any such actions, including, without limitation, court costs, expenses, other charges relating thereto and reasonable attorneys' fees, shall constitute Loans hereunder, shall be payable on demand by Borrower to Bank Lender and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(f) Borrower shall not use the Collateral, or any part thereof, in any unlawful business or for any unlawful purpose or use or maintain any of the Collateral in any manner that does or could result in material damage to the environment or a violation of any applicable environmental laws, rules or regulationsEnvironmental Laws; shall keep the Collateral in good condition, repair and order, ordinary wear and tear excepted,; shall permit Bank Lender to examine any of the Collateral at any time and wherever the Collateral may be located; except as otherwise set forth herein, shall not permit the Collateral, or any part thereof, to be levied upon under execution, attachment, distraint or other legal process; shall not sell, lease, grant a security interest in or otherwise dispose of any of the Collateral except as expressly permitted by this Agreement; shall not settle or adjust any Account identified by Borrower as an Eligible Account (except for ordinary course discounts, credits or allowances which reduce the availability set forth in Paragraph (1)(a) of Exhibit
A) or with respect to which the Account Debtor is an Affiliate without the consent of BankLender, provided, that following the occurrence of an Event of Default, Borrower shall not settle or adjust any Account without the consent of BankLender; and shall not secrete or abandon any of the Collateral, or remove or permit removal of any of the Collateral from any of the locations listed on Exhibit BB (or such other locations as Borrower shall have notified Lender in writing pursuant to subparagraph 10(c) hereof), except for the removal of Inventory sold in the ordinary course of Borrower's business as permitted herein;
(g) all monies and other property obtained by Borrower from Bank Lender pursuant to this Agreement will shall be used solely for business purposes of Borrower;
(h) Borrower shall, at the request of BankLender, indicate on its records concerning the Collateral a notation, in form satisfactory to BankLender, of the security interest of Bank Lender hereunder;
(i) Borrower shall file all required tax returns and pay all of its taxes when due due, subject to any extensions granted by the applicable taxing authority, and provided, that if any taxes are subsequently determined to be owing by Borrower which are not the result of fraud or criminal negligence, such additional taxes are paid when due, including, without limitation, taxes imposed by federal, state or municipal agencies, and shall cause any liens for taxes to be promptly released; provided, that Borrower shall have the right to contest the payment of such taxes in good faith by appropriate proceedings so long as (i) the amount so contested is shown on Borrower's financial statements; (ii) the contesting of any such payment does not give rise to a lien for taxes; (iii) Borrower keeps on deposit with Bank Lender (such deposit to be held without with interest) or a reserve is maintained against Borrower's availability to borrow money under paragraph (1) of Exhibit A, in either case, in an amount of money which, in the sole judgment of BankLender exercised in good faith, is sufficient to pay such taxes and any interest or penalties that may accrue thereon or the Borrower maintains adequate reserves on its balance sheet in accordance with generally accepted accounting principlesthereon; and (iv) if Borrower fails to prosecute such contest with reasonable diligence, Bank Lender may apply the money so deposited or reserved in payment of such taxes. If Borrower fails to pay any such taxes and in the absence of any such contest by Borrower, Bank Lender may (but shall be under no obligation to) advance and pay any sums required to pay any such taxes and/or to secure the release of any lien therefor, and any sums so advanced by Bank Lender shall constitute Loans hereunder, shall be payable by Borrower to Bank Lender on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(j) Borrower shall not assume, guarantee or endorse, or otherwise become liable in connection with, the obligations of any Person, except by endorsement of instruments for deposit or collection or similar transactions in the ordinary course of business;
(k) Borrower shall not (i) enter into any merger or consolidation; (ii) sell, lease or otherwise dispose of any of its assets other than in the ordinary course of business; (iii) purchase the stock or all or substantially all of the assets of any Person or division of such Person; or (iv) enter into any other transaction outside the ordinary course of Borrower's business, including, without limitation, any purchase, redemption or retirement of any shares of any class of its stock or any other equity interest, and any issuance of any shares of, or warrants or other rights to receive or purchase any shares of, any class of its stock or any other equity interest; provided, that Borrower may (a) issue securities to any Person so long as such issuance of securities does not exceed ten percent (10%) of the Borrower's issued and outstanding capital stock, (b) grant options to employees, (c) adopt a stock option plan, (d) issue securities upon the exercise of outstanding stock options and warrants, and (e) file a registration statement on Form S-8 or Form S-3; provided further, that with respect to each of the foregoing, (x) no Event of Default shall be caused by the issuance of any securities, stock or warrants and (y) no put rights or mandatory dividends are granted in connection with such issuance;
(l) Borrower shall not declare or pay any dividend or other distribution (whether in cash or in kind) on any class of its stock (if Borrower is a corporation) or on account of any equity interest in Borrower (if Borrower is a partnership, limited liability company or other type of entity);
(m) Borrower shall not purchase or otherwise acquire, or contract to purchase or otherwise acquire, the obligations or stock of any Person, other than direct obligations of the United States, obligations insured by the Federal Deposit Insurance Corporation and obligations unconditionally guaranteed by the United States;
(n) Borrower shall not amend its organizational documents or change its fiscal year or enter into a new line of business materially different from Borrower's current business, unless (i) such actions would not have an adverse effect on the Borrower's business, property, assets, operations or condition, financial or otherwise, as determined by Bank Lender in its sole discretion, (ii) such actions would not affect the obligations of Borrower to Lender, (iii) such actions would not affect the interpretation of any of the terms of this Agreement or the Other Agreements and Bank (iv) Lender has received ten (10) days prior written notice of such amendment or change, or enter into a new line of business materially different from Borrower's current business;
(o) See Exhibit A
(p) Borrower Borrower's Tangible Net Worth shall reimburse Bank not at any time be less than the "Minimum Tangible Net Worth"; Minimum Tangible Net Worth being defined for all costs and expenses, including, without limitation, legal expenses and reasonable attorneys' fees, incurred by Bank in connection with (i) documentation and consummation purposes of this transaction and any other transactions between Borrower and Banksubparagraph as $6,250,000.00 at all times from March 31, including2001 through June 29, without limitation2001. Commencing June 30, Uniform Commercial Code and other public record searches2001 through September 29, lien filings2001, overnight courier or other express or messenger deliveryMinimum Tangible Net Worth shall be equal to $6,700,000.00. Thereafter, appraisal costsMinimum Tangible Net Worth shall be equal to, surveys, title insurance and environmental audit or review costs; (ii) collection, protection or enforcement of any rights in or to the Collateral; (iii) collection of any Liabilities; and (iv) administration and enforcement of any of Bank's rights under this Agreement. Borrower shall also pay all normal service charges with respect to all accounts maintained by Borrower Measuring Period A, as hereinafter defined, Minimum Tangible Net Worth during the immediately preceding Measuring Period B plus Five Hundred Thousand and No/100 Dollars ($500,000.00) and with Bank and any additional services requested by Borrower from Bank. All such costsrespect to Measuring Period B, expenses and charges shall constitute Loans hereunderas hereinafter defined, Minimum Tangible Net Worth shall be payable by Borrower equal to Bank on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(q) Borrower shall not purchase or otherwise acquire (including, without limitation, acquisition by way of capitalized lease), or commit to purchase or acquire, any fixed asset if, after giving effect to such purchase or other acquisition, the aggregate cost of all such fixed assets purchased or otherwise acquired would exceed $100,000.00 during any fiscal year of Borrower; ---------- and
(r) Neither Borrower nor any Affiliate shall use any portion of the proceeds of the Loans, either directly or indirectly, for the purpose greater of (i1) purchaisng any securities underwritten or privately placed by ABN AMRO Securities (USA) Inc. ("AASI"), an affiliate of Bank; or (ii) purchasing from AASI any securities in which AASI makes a market; or (iii) refinancing or making payments of principal, interest or dividends Borrower's Tangible Net Worth as shown on any securities issued by Borrower or any Affiliate, and underwritten, privately placed or dealt in by AASI.Borrower's fiscal yea
Appears in 1 contract
Sources: Loan and Security Agreement (Singing Machine Co Inc)
Additional Covenants of Borrower. Until payment or and satisfaction in full of all Liabilities and termination of this Agreement, unless Borrower obtains Bank's prior written consent waiving or modifying any of Borrower's covenants hereunder in any specific instance, Borrower agrees as follows:
(a) Borrower shall at all times keep accurate and complete books, records and accounts with respect to all of Borrower's business activities, in accordance with sound accounting practices and generally accepted accounting principles consistently applied, and shall keep such books, records and accounts, and any copies thereof, only at the addresses indicated for such purpose on Exhibit B;
; (b) Borrower agrees to deliver to Bank the following financial information, all of which shall be prepared in accordance with generally accepted accounting principles consistently applied, and shall be accompanied by a compliance certificate in the form of Exhibit C hereto, which compliance certificate shall include a calculation of all financial covenants contained in this Agreement: (i) no later than twenty thirty (2030) days after each calendar month, copies of internally prepared financial statements, including, without limitation, balance sheets and statements of income, retained earnings and cash flow of Borrower, certified by the Chief Financial Officer of Borrower; (ii) no later than thirty forty-five (3045) days after the end of each of the first three quarters of Borrower's fiscal year a balance sheet, operating statement and reconciliation of surplus of Borrower, which quarterly financial statements may be unaudited but shall be certified by the Chief Financial Officer of Borrower; Borrower and (iii) no later than seventy-five ninety (7590) days after the end of each of Borrower's fiscal years, audited annual financial statements with an unqualified opinion by independent certified public accountants selected by Borrower and reasonably satisfactory to Bank, which financial statements shall be accompanied by (A) a letter from such accountants acknowledging that they are aware that a primary intent of Borrower in obtaining such financial statements is to influence Bank and that Bank is relying upon such financial statements in connection with the exercise of its rights hereunder and (B) copies of any management letters sent to the Borrower by such accountants;
; (c) Borrower shall promptly advise Bank in writing writing, after obtaining knowledge thereof, of any material adverse change in the business, assets property, assets, operations or condition, financial or otherwise, of Borrower, the occurrence of any Event of Default hereunder or the occurrence of any event which, if uncured, will become an Event of Default hereunder after notice or lapse of time (or both);
; (d) Bank, or any Persons designated by it, shall have the right, at any time, right to call at Borrower's places of business at any reasonable times, and, without hindrance or delay, to inspect the Collateral and to inspect, audit, check and make extracts from Borrower's books, records, journals, orders, receipts and any correspondence and other data relating to Borrower's business, the Collateral or any transactions between the parties hereto, and shall have the right to make such verification concerning Borrower's business as Bank may consider reasonable under the circumstances. Borrower shall furnish to Bank such information relevant to Bank's rights under this Agreement as Bank shall at any time and from time to time request. Borrower authorizes Bank to discuss the affairs, finances and business of Borrower with any officers, employees or directors of Borrower or with Parent or any Affiliate or the officers, employees or directors of Parent or any Affiliate, and to discuss the financial condition of Borrower with Borrower's independent public accountants. Any such discussions shall be without liability to Bank or to Borrower's independent public accountants. Borrower shall pay to Bank all customary fees and out-of-pocket expenses incurred by Bank in the exercise of its rights hereunder, and all of such fees and expenses shall constitute Loans Liabilities hereunder, shall be payable on demand and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(e) Borrower shall:
(i) keep the Collateral properly housed and insured for the full insurable value thereof against loss or damage by fire, theft, explosion, sprinklers, collision (in the case of motor vehicles) and such other risks as are customarily insured against by Persons engaged in businesses similar to that of Borrower, with such companies, in such amounts, with such deductibles, and under policies in such form as shall be satisfactory to Bank. Original (or certified) copies of such policies of insurance have been or shall be delivered to Bank within ninety (90) days after the date hereof, together with evidence of payment of all premiums therefor, and shall contain an endorsement, in form and substance acceptable to Bank, showing loss under such insurance policies payable to Bank. Such endorsement, or an independent instrument furnished to Bank, shall provide that the insurance company shall give Bank at least thirty (30) days written notice before any such policy of insurance is altered or canceled and that no act, whether willful or negligent, or default of Borrower or any other Person shall affect the right of Bank to recover under such policy of insurance in case of loss or damage. In addition, Borrower shall cause to be executed and delivered to Bank an assignment of proceeds of its business interruption insurance policies. Borrower hereby directs all insurers under all policies of insurance to pay all proceeds payable thereunder directly to Bank. Borrower irrevocably makes, constitutes and appoints Bank (and all officers, employees or agents designated by Bank) as Borrower's true and lawful attorney (and agent-in-fact) for the purpose of making, settling and adjusting claims under such policies of insurance, endorsing the name of Borrower on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and making all determinations and decisions with respect to such policies of insurance, provided, however, that if no Event of Default shall have occurred and is continuing, Borrower may make, settle and adjust claims involving less than $50,000 in the aggregate ------ without Bank's consent; and
(ii) maintain, at its expense, such public liability and third party property damage insurance as is customary for Persons engaged in businesses similar to that of Borrower with such companies and in such amounts, with such deductibles and under policies in such form as shall be satisfactory to Bank and original (or certified) copies of such policies have been or shall be delivered to Bank within ninety (90) days after the date hereof, together with evidence of payment of all premiums therefor; each such policy shall contain an endorsement showing Bank as additional insured thereunder and providing that the insurance company shall give Bank at least thirty (30) days written notice before any such policy shall be altered or canceled. If Borrower at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above or to pay any premium relating thereto, then Bank, without waiving or releasing any obligation or default by Borrower hereunder, may (but shall be under no obligation to) obtain and maintain such policies of insurance and pay such premiums and take such other actions with respect thereto as Bank deems advisable. All sums disbursed by Bank in connection with any such actions, including, without limitation, court costs, expenses, other charges relating thereto and reasonable attorneys' fees, shall constitute Loans hereunder, shall be payable on demand by Borrower to Bank and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(f) Borrower shall not use the Collateral, or any part thereof, in any unlawful business or for any unlawful purpose or use or maintain any of the Collateral in any manner that does or could result in material damage to the environment or a violation of any applicable environmental laws, rules or regulations; shall keep the Collateral in good condition, repair and order, ordinary wear and tear excepted; shall permit Bank to examine any of the Collateral at any time and wherever the Collateral may be located; shall not permit the Collateral, or any part thereof, to be levied upon under execution, attachment, distraint or other legal process; shall not sell, lease, grant a security interest in or otherwise dispose of any of the Collateral except as expressly permitted by this Agreement; shall not settle or adjust any Account identified by Borrower as an Eligible Account or with respect to which the Account Debtor is an Affiliate without the consent of Bank, provided, that following the occurrence of an Event of Default, Borrower shall not settle or adjust any Account without the consent of Bank; and shall not secrete or abandon any of the Collateral, or remove or permit removal of any of the Collateral from any of the locations listed on Exhibit B, except for the removal of Inventory sold in the ordinary course of Borrower's business as permitted herein;
(g) all monies and other property obtained by Borrower from Bank pursuant to this Agreement will be used solely for business purposes of Borrower;
(h) Borrower shall, at the request of Bank, indicate on its records concerning the Collateral a notation, in form satisfactory to Bank, of the security interest of Bank hereunder;
(i) Borrower shall file all required tax returns and pay all of its taxes when due subject to any extensions granted by the applicable taxing authority, including, without limitation, taxes imposed by federal, state or municipal agencies, and shall cause any liens for taxes to be promptly released; provided, that Borrower shall have the right to contest the payment of such taxes in good faith by appropriate proceedings so long as (i) the amount so contested is shown on Borrower's financial statements; (ii) the contesting of any such payment does not give rise to a lien for taxes; (iii) Borrower keeps on deposit with Bank (such deposit to be held without interest) an amount of money which, in the sole judgment of Bank, is sufficient to pay such taxes and any interest or penalties that may accrue thereon or the Borrower maintains adequate reserves on its balance sheet in accordance with generally accepted accounting principles; and (iv) if Borrower fails to prosecute such contest with reasonable diligence, Bank may apply the money so deposited in payment of such taxes. If Borrower fails to pay any such taxes and in the absence of any such contest by Borrower, Bank may (but shall be under no obligation to) advance and pay any sums required to pay any such taxes and/or to secure the release of any lien therefor, and any sums so advanced by Bank shall constitute Loans hereunder, shall be payable by Borrower to Bank on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(j) Borrower shall not assume, guarantee or endorse, or otherwise become liable in connection with, the obligations of any Person, except by endorsement of instruments for deposit or collection or similar transactions in the ordinary course of business;
(k) Borrower shall not (i) enter into any merger or consolidation; (ii) sell, lease or otherwise dispose of any of its assets other than in the ordinary course of business; (iii) purchase all or substantially all of the assets of any Person or division of such Person; or (iv) enter into any other transaction outside the ordinary course of Borrower's business, including, without limitation, any purchase, redemption or retirement of any shares of any class of its stock or any other equity interest, and any issuance of any shares of, or warrants or other rights to receive or purchase any shares of, any class of its stock or any other equity interest;
(l) Borrower shall not declare or pay any dividend or other distribution (whether in cash or in kind) on any class of its stock (if Borrower is a corporation) or on account of any equity interest in Borrower (if Borrower is a partnership, limited liability company or other type of entity);
(m) Borrower shall not purchase or otherwise acquire, or contract to purchase or otherwise acquire, the obligations or stock of any Person, other than direct obligations of the United States;
(n) Borrower shall not amend its organizational documents or change its fiscal year unless such actions would not have an adverse effect on the Borrower's business, property, assets, operations or condition, financial or otherwise, as determined by Bank in its sole discretion, and Bank has received ten (10) days prior written notice of such amendment or change, or enter into a new line of business materially different from Borrower's current business;
(o) See Exhibit A
(p) Borrower shall reimburse Bank for all costs and expenses, including, without limitation, legal expenses and reasonable attorneys' fees, incurred by Bank in connection with (i) documentation and consummation of this transaction and any other transactions between Borrower and Bank, including, without limitation, Uniform Commercial Code and other public record searches, lien filings, overnight courier or other express or messenger delivery, appraisal costs, surveys, title insurance and environmental audit or review costs; (ii) collection, protection or enforcement of any rights in or to the Collateral; (iii) collection of any Liabilities; and (iv) administration and enforcement of any of Bank's rights under this Agreement. Borrower shall also pay all normal service charges with respect to all accounts maintained by Borrower with Bank and any additional services requested by Borrower from Bank. All such costs, expenses and charges shall constitute Loans hereunder, shall be payable by Borrower to Bank on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(q) Borrower shall not purchase or otherwise acquire (including, without limitation, acquisition by way of capitalized lease), or commit to purchase or acquire, any fixed asset if, after giving effect to such purchase or other acquisition, the aggregate cost of all such fixed assets purchased or otherwise acquired would exceed $100,000.00 during any fiscal year of Borrower; ---------- and
(r) Neither Borrower nor any Affiliate shall use any portion of the proceeds of the Loans, either directly or indirectly, for the purpose of (i) purchaisng any securities underwritten or privately placed by ABN AMRO Securities (USA) Inc. ("AASI"), an affiliate of Bank; or (ii) purchasing from AASI any securities in which AASI makes a market; or (iii) refinancing or making payments of principal, interest or dividends on any securities issued by Borrower or any Affiliate, and underwritten, privately placed or dealt in by AASI.
Appears in 1 contract
Sources: Loan and Security Agreement (Colonial Commercial Corp)
Additional Covenants of Borrower. Until payment or satisfaction in full of all Liabilities and termination of this Agreement, unless Borrower obtains Bank's prior written consent waiving or modifying any of Borrower's covenants hereunder in any specific instance, Borrower agrees as follows:
(a) Borrower shall at comply with all times keep accurate and complete books, records and accounts covenants (other than the covenants with respect to all which the Designated Defaults exist) and other obligations of Borrower's business activities, in accordance with sound accounting practices Borrower under the Loan Agreement and generally accepted accounting principles consistently applied, and shall keep such books, records and accounts, and any copies thereof, only at the addresses indicated for such purpose on Exhibit B;Other Documents.
(b) Borrower agrees to deliver to Bank the following financial information, all of which shall be prepared in accordance with generally accepted accounting principles consistently applied: (i) no later than twenty (20) days after each calendar month, copies of internally prepared financial statements, including, without limitation, balance sheets and statements of income, retained earnings and cash flow of Borrower, certified Except as specifically permitted or allowed by the Chief Financial Officer Loan Agreement, Borrower shall not, directly or indirectly, make any payments, repayments or reimbursements, whether in cash, in kind, securities or other property, to any guarantor, affiliate, or any officer, director, shareholder, general partner, limited partner or member of Borrower with respect to (1) any indebtedness of Borrower to such person or entity, (2) any capital contributed by such person to Borrower or (3) any indebtedness incurred by such person or entity on behalf of or for the benefit of Borrower; (ii) no later than thirty (30) days after provided, however, that the end of each of foregoing shall not prevent the first three quarters of Borrower's fiscal year a balance sheetaccrual, operating statement and reconciliation of surplus of Borrower, which quarterly financial statements may be unaudited but shall be certified by the Chief Financial Officer of Borrower; and (iii) no later than seventy-five (75) days after the end of each of Borrower's fiscal years, audited annual financial statements with an unqualified opinion by independent certified public accountants selected by Borrower and reasonably satisfactory to Bank, which financial statements shall be accompanied by a letter from such accountants acknowledging that they are aware that a primary intent of Borrower in obtaining such financial statements is to influence Bank and that Bank is relying upon such financial statements in connection with the exercise of its rights hereunder and copies of any management letters sent as opposed to the Borrower payment, of interest on any such indebtedness owed by such accountants;Borrower.
(c) Notwithstanding anything to the contrary set forth in Section 2.2 of the Loan Agreement, Borrower shall promptly advise Bank in writing not request Eurodollar Rate Loans, extend the duration of any material adverse change in the businessexisting Eurodollar Rate Loans, assets or condition, financial or otherwise, of Borrower, the occurrence of convert any Event of Default hereunder or the occurrence of any event which, if uncured, will become an Event of Default hereunder after notice or lapse of time (or both);Domestic Rate Loan into a Eurodollar Rate Loan.
(d) BankDuring the term of this Forbearance Agreement, or any Persons designated Borrower shall, on a monthly basis, (i) realize cash receipts no less than ten percent (10%) below the cash receipts forecast by itBorrower in the “Version 8 Cash Flow Plan” submitted to Agent on February 8, shall have 2010 (as such may be amended, modified and/or superseded from and after the right, at any time, to call at Borrower's places date of business at any reasonable times, and, without hindrance or delay, to inspect the Collateral and to inspect, audit, check and make extracts from Borrower's books, records, journals, orders, receipts and any correspondence and other data relating to Borrower's businessthis Forbearance Agreement with Agent’s consent, the Collateral or any transactions between the parties hereto“2010 Business Plan”), and shall have (ii) make cash disbursements not more than ten percent (10%) above the right to make such verification concerning Borrower's business as Bank may consider reasonable under the circumstances. cash disbursements forecast by Borrower shall furnish to Bank such information relevant to Bank's rights under this Agreement as Bank shall at any time and from time to time request. Borrower authorizes Bank to discuss the affairs, finances and business of Borrower with any officers, employees or directors of Borrower or with any Affiliate or the officers, employees or directors of any Affiliate, and to discuss the financial condition of Borrower with Borrower's independent public accountants. Any such discussions shall be without liability to Bank or to Borrower's independent public accountants. Borrower shall pay to Bank all customary fees and out-of-pocket expenses incurred by Bank in the exercise of its rights hereunder, and all of such fees and expenses shall constitute Loans hereunder, shall be payable on demand and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;2010 Business Plan.
(e) Borrower shall:
shall furnish to Agent a weekly report, based upon the 2010 Business Plan and otherwise in form acceptable to Agent in its sole and absolute discretion, to be provided not later than the second Business Day of each week, which sets forth (i1) keep an updated thirteen week cash flow projection whereby the Collateral properly housed first week shall be deleted and insured updated with the week immediately succeeding the last week included in the previous report, (2) a detailed reconciliation analysis of the actual results as compared to the results projected in the 2010 Business Plan for the full insurable value thereof against loss or damage by fire, theft, explosion, sprinklers, collision (in the case of motor vehicles) and such other risks as are customarily insured against by Persons engaged in businesses similar to that of Borrower, with such companies, in such amounts, with such deductiblesprior week, and under policies in such form as shall be satisfactory to Bank. Original (or certified3) copies of such policies of insurance have been or shall be delivered to Bank within ninety (90) days after the date hereof, together with evidence of payment written explanation of all premiums therefor, and shall contain an endorsement, in form and substance acceptable to Bank, showing loss under such insurance policies payable to Bank. Such endorsement, or an independent instrument furnished to Bank, shall provide that the insurance company shall give Bank at least thirty (30) days written notice before any such policy of insurance is altered or canceled and that no act, whether willful or negligent, or default of Borrower or any other Person shall affect the right of Bank to recover under such policy of insurance in case of loss or damage. In addition, Borrower shall cause to be executed and delivered to Bank an assignment of proceeds of its business interruption insurance policies. Borrower hereby directs all insurers under all policies of insurance to pay all proceeds payable thereunder directly to Bank. Borrower irrevocably makes, constitutes and appoints Bank (and all officers, employees or agents designated by Bank) as Borrower's true and lawful attorney (and agent-in-fact) for the purpose of making, settling and adjusting claims under such policies of insurance, endorsing the name of Borrower on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and making all determinations and decisions with respect to such policies of insurance, provided, however, that if no Event of Default shall have occurred and is continuing, Borrower may make, settle and adjust claims involving less than $50,000 in the aggregate ------ without Bank's consent; and
(ii) maintain, at its expense, such public liability and third party property damage insurance as is customary for Persons engaged in businesses similar to that of Borrower with such companies and in such amounts, with such deductibles and under policies in such form as shall be satisfactory to Bank and original (or certified) copies of such policies have been or shall be delivered to Bank within ninety (90) days after the date hereof, together with evidence of payment of all premiums therefor; each such policy shall contain an endorsement showing Bank as additional insured thereunder and providing that the insurance company shall give Bank at least thirty (30) days written notice before any such policy shall be altered or canceled. If Borrower at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above or to pay any premium relating thereto, then Bank, without waiving or releasing any obligation or default by Borrower hereunder, may (but shall be under no obligation to) obtain and maintain such policies of insurance and pay such premiums and take such other actions with respect thereto as Bank deems advisable. All sums disbursed by Bank in connection with any such actions, including, without limitation, court costs, expenses, other charges relating thereto and reasonable attorneys' fees, shall constitute Loans hereunder, shall be payable on demand by Borrower to Bank and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;material variances.
(f) Borrower shall not use the CollateralNo later than February 19, or any part thereof, in any unlawful business or for any unlawful purpose or use or maintain any of the Collateral in any manner that does or could result in material damage to the environment or a violation of any applicable environmental laws, rules or regulations; shall keep the Collateral in good condition, repair and order, ordinary wear and tear excepted; shall permit Bank to examine any of the Collateral at any time and wherever the Collateral may be located; shall not permit the Collateral, or any part thereof, to be levied upon under execution, attachment, distraint or other legal process; shall not sell, lease, grant a security interest in or otherwise dispose of any of the Collateral except as expressly permitted by this Agreement; shall not settle or adjust any Account identified by Borrower as an Eligible Account or with respect to which the Account Debtor is an Affiliate without the consent of Bank, provided, that following the occurrence of an Event of Default2010, Borrower shall not settle or adjust any Account without engage, and at all times during the consent of Bank; Forbearance Period maintain the engagement of, a Chief Restructuring Officer, who shall be acceptable to Agent in its sole and shall not secrete or abandon any of absolute discretion, on terms acceptable to Agent in its sole and absolute discretion (such Chief Restructuring Officer, as so retained, the Collateral“CRO”), or remove or permit removal of any of the Collateral from any of the locations listed on Exhibit B, except for the removal of Inventory sold in purpose of, among other things, (1) analyzing and reporting on the ordinary course present and projected business operations and financial condition of Borrower's , and (2) assisting and advising Borrower in developing and implementing the 2010 Business Plan, the Long-Term Business Plan (as defined below), such other business plans as permitted herein;may be requested or required by Agent, and any and all Transactions (as defined below).
(g) No later than February 26, 2010, Borrower shall engage, and at all monies times during the Forbearance Period maintain the engagement of, an Investment Banker, who shall be acceptable to Agent in its sole and absolute discretion, on terms acceptable to Agent in its sole and absolute discretion (such Investment Banker, as so retained, the “IB”), for the purpose of, among other property obtained by things, advising and assisting Borrower from Bank pursuant with respect to this Agreement will be used solely a transaction or transactions with third parties for business purposes the recapitalization of Borrower;, the refinancing of the Obligations and/or the sale of substantially all of Borrower’s assets (a “Transaction”).
(h) Borrower shallshall provide, at and hereby grants, Agent prompt and direct access to the request of Bank, indicate on its records concerning the Collateral a notation, in form satisfactory to Bank, work product and personnel of the security interest CRO and the IB, respectively, with respect to all matters as to which each has been engaged by Borrower. In furtherance and not in limitation of Bank hereunder;the matters set forth in the immediately preceding sentence and/or the matters set forth in the immediately preceding two subparagraphs, Borrower shall cause the terms and conditions of its respective retentions of the CRO and the IB to recognize and acknowledge such rights of prompt and direct access. All information received as a result of such access shall be kept confidential consistent with Agent’s present responsibilities arising from its existing business relationship between the parties, but no confidentiality agreements shall be otherwise required as a condition of such access.
(i) Borrower shall file all required tax returns In furtherance and pay all not in limitation of its taxes when due subject to any extensions granted by the applicable taxing authority, including, without limitation, taxes imposed by federal, state or municipal agencies, and shall cause any liens for taxes to be promptly released; provided, that Borrower shall have the right to contest the payment of such taxes in good faith by appropriate proceedings so long as (i) the amount so contested is shown on Borrower's financial statements; (ii) the contesting of any such payment does not give rise to a lien for taxes; (iii) Borrower keeps on deposit with Bank (such deposit to be held without interest) an amount of money which, matters set forth in the sole judgment of Bankimmediately preceding three subparagraphs, is sufficient to pay such taxes and any interest or penalties that may accrue thereon or the Borrower maintains adequate reserves on its balance sheet in accordance with generally accepted accounting principles; and (iv) if Borrower fails to prosecute such contest with reasonable diligence, Bank may apply the money so deposited in payment of such taxes. If Borrower fails to pay any such taxes and in the absence of any such contest by Borrower, Bank may (but shall be under no obligation to) advance and pay any sums required to pay any such taxes and/or to secure the release of any lien therefor, and any sums so advanced by Bank shall constitute Loans hereunder, shall be payable by Borrower to Bank on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(j1) Borrower shall not assumecause the CRO to deliver to Agent, guarantee or endorseno later than March 3, or otherwise become liable in connection with2010, the obligations of any Person, except by endorsement of instruments for deposit or collection or similar transactions in the ordinary course of business;
(k) Borrower shall not (i) enter into any merger or consolidation; (ii) sell, lease or otherwise dispose of any of its assets other than in the ordinary course of business; (iii) purchase all or substantially all of the assets of any Person or division of such Person; or (iv) enter into any other transaction outside the ordinary course of Borrower's business, including, without limitation, any purchase, redemption or retirement of any shares of any class of its stock or any other equity interest, and any issuance of any shares of, or warrants or other rights to receive or purchase any shares of, any class of its stock or any other equity interest;
(l) Borrower shall not declare or pay any dividend or other distribution (whether in cash or in kind) on any class of its stock (if Borrower is a corporation) or on account of any equity interest in Borrower (if Borrower is a partnership, limited liability company or other type of entity);
(m) Borrower shall not purchase or otherwise acquire, or contract to purchase or otherwise acquire, the obligations or stock of any Person, other than direct obligations of the United States;
(n) Borrower shall not amend its organizational documents or change its fiscal year unless such actions would not have an adverse effect on the Borrower's business, property, assets, operations or condition, financial or otherwise, as determined by Bank in its sole discretion, and Bank has received ten (10) days prior written notice of such amendment or change, or enter into a new line of business materially different from Borrower's current business;
(o) See Exhibit A
(p) Borrower shall reimburse Bank for all costs and expenses, including, without limitation, legal expenses and reasonable attorneys' fees, incurred by Bank in connection with (i) documentation and consummation of this transaction and any other transactions between Borrower and Bank, including, without limitation, Uniform Commercial Code and other public record searches, lien filings, overnight courier or other express or messenger delivery, appraisal costs, surveys, title insurance and environmental audit or review costs; (ii) collection, protection or enforcement of any rights in or to the Collateral; (iii) collection of any Liabilities; and (iv) administration and enforcement of any of Bank's rights under this Agreement. Borrower shall also pay all normal service charges initial assessment with respect to all accounts maintained by Borrower with Bank Borrower’s present and any additional services requested by Borrower from Bank. All such costs, expenses projected business operations and charges shall constitute Loans hereunder, shall be payable by Borrower to Bank on demandfinancial condition, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(q) Borrower shall not purchase or otherwise acquire (including, without limitation, acquisition by way of capitalized lease), or commit to purchase or acquire, any fixed asset if, after giving effect to such purchase or other acquisition, the aggregate cost of all such fixed assets purchased or otherwise acquired would exceed $100,000.00 during any fiscal year of Borrower; ---------- and
(r) Neither Borrower nor any Affiliate shall use any portion of the proceeds of the Loans, either directly or indirectly, for the purpose of (i) purchaisng any securities underwritten or privately placed by ABN AMRO Securities (USA) Inc. ("AASI"), an affiliate of Bank; or (ii) purchasing from AASI any securities in which AASI makes a market; or (iii) refinancing or making payments of principal, interest or dividends on any securities issued by Borrower or any Affiliate, and underwritten, privately placed or dealt in by AASI.
Appears in 1 contract
Sources: Forbearance and Amendment Agreement (P&f Industries Inc)
Additional Covenants of Borrower. Until payment or and satisfaction in full of all Liabilities and termination of this Agreement, Agreement unless Borrower obtains Bank's prior written consent waiving or modifying any of Borrower's Borrowers covenants hereunder in any specific instance, Borrower agrees as follows:
(a) Borrower shall at all al times keep accurate and complete books, records and accounts with respect to all of Borrower's business activities, in accordance with sound accounting practices and generally accepted accounting principles consistently applied, and shall keep such books, records and accounts, and any copies thereof, only at the addresses indicated for such purpose on Exhibit B;
(b) Borrower agrees to deliver to Bank the following financial information, all of which shall be prepared in accordance with generally accepted accounting principles consistently applied: (i) no later than twenty (20) days after after-each calendar month, copies of internally prepared financial statements, including, without limitation, balance sheets and statements of income, retained earnings and cash flow of Borrower, certified by the Chief Financial Officer of Borrower; , (ii) no later than thirty (30) days after the end of each of the first three quarters of Borrower's fiscal year a balance sheet, sheet operating statement and reconciliation of surplus of Borrower, which quarterly financial statements may be unaudited but shall be certified by the Chief Financial Officer of Borrower; , and (iii) no later than seventy-five (75) days after the end of each of Borrower's fiscal years, audited annual financial statements with an unqualified opinion by independent certified public accountants selected by Borrower and reasonably satisfactory to Bank, which financial statements shall be accompanied by a letter from such accountants acknowledging that they are aware that a primary intent of Borrower in obtaining such financial statements is to influence Bank and that Bank is relying upon such financial statements in connection with the exercise of its rights hereunder and copies of any management letters sent to the Borrower by such accountants;
(c) Borrower shall promptly advise Bank in writing of any material adverse change in the business, assets or condition, financial or otherwise, of Borrower, the occurrence of any Event of Default hereunder or the occurrence of any event which, if d uncured, will become an Event of Default hereunder after notice or lapse of time (or both);
(d) Bank, Bank or any Persons designated by it, it shall have the right, right at any time, to call at Borrower's Borrowers places of business at any reasonable times, and, without hindrance or delay, to inspect the Collateral and to inspect, audit, inspect audit check and make extracts from Borrower's Borrowers books, records, journals, orders, receipts and any correspondence and other data relating to Borrower's Borrowers business, the Collateral or any transactions between the parties hereto, . and shall have the right to make such verification concerning Borrower's Borrowers business as Bank may consider reasonable under the circumstances. Borrower shall furnish to Bank such information relevant to Bank's rights under this Agreement as Bank shall at any time and from time to time request. request Borrower authorizes Bank to discuss the affairs, finances and business of Borrower with any officers, employees or directors of Borrower or with any Affiliate or the officers, employees or directors of any Affiliate, and to discuss the financial condition of Borrower with Borrower's Borrowers independent public pubic accountants. Any such discussions shall be without liability to Bank or to Borrower's independent public accountants. Borrower shall pay to Bank all customary fees and out-of-pocket expenses incurred by Bank in the exercise of its Its rights hereunder, and all al of such fees and expenses shall constitute Loans hereunder, shall be payable on demand and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(e) Borrower shall:
(i) keep the Collateral properly property housed and insured for the full insurable value thereof against loss or damage by fire, theft, theft explosion, sprinklers, collision (in the case of motor vehicles) and such other risks as are customarily insured against by Persons engaged in businesses similar to that of Borrower, with such companies, in such amounts, with such deductiblesdeductions, and under policies in such form as shall be satisfactory to Bank. Bank Original (or certified) copies of such policies of insurance have been or shall be delivered to Bank within ninety (90) days after the date hereof, together with evidence of payment of all premiums therefor, and shall contain an endorsement, endorsement in form and substance acceptable to Bank, showing loss under such insurance policies payable to Bank. Such endorsement, or an independent instrument furnished to Bank, shall provide that the insurance company shall give Bank at least thirty (30) days written notice before any such policy of insurance is altered or canceled and that no act, whether willful or negligent, or default of Borrower or any other Person shall affect the right fight of Bank to recover under such policy of insurance in case of loss or damage. In addition, Borrower shall cause to be executed and delivered to Bank an assignment of proceeds of its business interruption insurance policies. Borrower hereby directs all insurers under all al policies of insurance to pay all proceeds payable thereunder directly to Bank. Borrower irrevocably makes, constitutes and appoints Bank (and all officers, employees or agents designated by Bank) as Borrower's true and lawful attorney (and agent-in-fact) for the purpose of making, settling setting and adjusting claims under such policies of insurance, endorsing the name of Borrower on any check, draft, draft instrument or other item of payment for the proceeds of such policies of insurance and making all determinations and decisions with respect to such policies of insurance, provided, however, that if no Event of Default shall have occurred and is continuingoccurred, Borrower may make, settle and adjust claims involving less than the $50,000 50,000.00 in the aggregate ------ without Bank's consent; and
and (ii) maintain, at its expense, such public liability and third party property damage insurance as is customary for Persons engaged in businesses similar to that of Borrower with such companies and in such amounts, with such deductibles and under policies in such form as shall shag be satisfactory to Bank and original (or certified) copies of such policies have been or shall be delivered to Bank within ninety (90) days after the date hereof, together with evidence of payment of all premiums therefor; each such policy shall contain an endorsement showing Bank as additional insured thereunder and providing that the insurance company shall give Bank at least thirty (30) days written notice before any such policy shall be altered or canceled. If Borrower at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above or to pay any premium relating thereto, then Bank, Bank without waiving or releasing any obligation or default by Borrower hereunder, may (but shall be under no obligation to) obtain and maintain such policies of insurance and pay such premiums and take such other actions with respect thereto as Bank deems advisable. All Any sums disbursed by Bank in connection with any such actions, including, without limitation, . court costs, expenses, other charges relating thereto and reasonable attorneys' fees, shall constitute Loans hereunder, shall be payable on demand by Borrower to Bank and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(f) Borrower shall not use the Collateral, or any part thereof, in any unlawful business or for any unlawful purpose or use or maintain any of the Collateral in any manner that does or could result in material damage to the environment or a violation of any applicable environmental laws, rules or regulations; shall keep the Collateral in good condition, repair and order, ordinary wear and tear excepted; , shall permit Bank to examine any of the Collateral at any time and wherever the Collateral may be located; shall not permit the Collateral, or any part thereof, to be levied upon under execution, attachment, attachment distraint or other legal process; shall not sell, lease, grant a security interest in or otherwise dispose of any of the Collateral except as expressly permitted by this Agreement; shall not settle or adjust any Account identified by Borrower as an Eligible Account or with respect to which the Account Debtor is an Affiliate without the consent of Bank, provided, . that following the occurrence of an Event of Default, Default Borrower shall not settle or adjust any Account without the consent of Bank; : and shall not secrete or abandon any of the Collateral, or remove or permit removal of any of the Collateral from any of the locations listed on Exhibit B8, except for the removal of Inventory sold in the ordinary course of Borrower's business as permitted herein;
(g) all monies and other property obtained by Borrower from Bank pursuant to this Agreement will shall be used solely for business purposes of Borrower;
(h) Borrower shall, at the request of Bank, indicate on its records concerning the Collateral a notation, in form satisfactory to Bank, of the security interest of Bank hereunder;; subject to an extensions granted by the applicable taxing authority.
(i) Borrower shall file all required tax returns and pay all of its taxes when due subject to any extensions granted by the applicable taxing authority, including, without limitation, taxes imposed by federal, state or municipal agencies, and shall cause any liens for taxes to be promptly released; provided, that Borrower shall have the right to contest the payment of such taxes in good faith by appropriate proceedings so long as (i) the amount so contested is shown on Borrower's Borrowers financial statements; (ii) the contesting of any such payment does not give rise to a lien for taxes; (iii) Borrower keeps on deposit with Bank (such deposit to be held without interest) an amount of money which, in the sole judgment of Bank, is sufficient to pay such taxes and any interest or penalties that may accrue thereon or thereon, or, the Borrower maintains adequate reserves on its balance sheet in accordance with generally accepted accounting principles; principals and (iv) if Borrower fails to prosecute such contest with reasonable diligence, Bank may apply the money so deposited in payment t of such taxes. If if Borrower fails to pay any such taxes and in the absence of any such contest by Borrower, . Bank may (but shall be under no obligation to) advance and pay any sums required to pay any such taxes and/or to secure the release of any lien therefor, and any sums so advanced by Bank shall constitute Loans hereunder, shall be payable by Borrower to Bank on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(j) Borrower shall not assume, guarantee or endorse, or otherwise become liable in connection with, the obligations of any Person, except by endorsement of instruments for deposit or collection or similar transactions in the ordinary course of business;
(k) Borrower shall not (i) enter into any merger or consolidation; : (ii) sell, lease or otherwise dispose of any of its assets other than in the ordinary course of business; (iiiii) purchase all or substantially all of the assets of any Person or division of such Person; or (iv) enter into any other transaction outside the ordinary course of Borrower's business, including, without limitation, any purchase, redemption or retirement of any shares of any class of its stock or any other equity interest, interest and any issuance of any shares of, or warrants or other rights fights to receive or purchase any shares of, any class of its stock or any other equity interest;
(l) Borrower shall not declare or pay any dividend or other distribution (whether in cash or in kind) on any class of its stock (if K Borrower is a corporation) or on account of any equity interest in Borrower (if Borrower is a partnership, limited liability company or other type of entity);
(m) Borrower shall shag not purchase or otherwise acquire, or contract to purchase or otherwise acquire, the obligations or stock of any Person, other than direct obligations of the United States;
(n) Borrower shall not amend its organizational documents or change its fiscal year year/or enter into a new line of business materially different from Borrowers current business;
(o) See Exhibit A unless such actions would not have an adverse effect on the Borrower's business, property, assets, operations or condition, financial or otherwise, as determined by Bank in its sole discretion, and Bank has received ten (10) days prior written notice of such amendment or of change, or enter into and "TANGIBLE NET WORTH" being defined for purposes of this subparagraph as Borrowers shareholders' equity (including retained earnings) LESS the book value of all intangible assets as determined solely by Bank on a new line consistent basis plus the amount of business materially different from Borrower's current businessany LIFO reserve plus the amount of any debt subordinated to Bank, all as determined under generally accepted accounting principles applied on a basis consistent with the financial statement dated July 31, 1998 except as set forth herein;
(o) See Exhibit A
(p) Borrower shall shag reimburse Bank for all costs and expenses, including, without limitation, legal expenses and reasonable attorneys' attorney's fees, incurred by Bank in connection with the (i) documentation and consummation of this transaction and any other transactions between Borrower and Bank, including, without limitation, Uniform Commercial Code and other public record searches, lien filingssearches and flings, overnight courier or other express or messenger delivery, appraisal costs, surveys, title insurance and environmental audit or review costs; (ii) collection, protection or enforcement of any rights in or to the Collateral; (iii) collection of any Liabilities; and (iv) administration and enforcement of any of Bank's rights under this Agreement. Agreement Borrower shall also pay all normal service charges with respect to all accounts maintained by Borrower with Bank and any additional services requested by Borrower from Bank. All such costs, expenses and charges shall constitute Loans hereunder, shall be payable by Borrower to Bank on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;,
(q) Borrower shall not purchase or otherwise acquire (including, without limitation, acquisition by way of capitalized lease), or commit to purchase or acquire, any fixed asset if, after giving effect to such purchase or other acquisition, the aggregate cost of all such fixed assets purchased or otherwise acquired would exceed $100,000.00 during any fiscal year of Borrower; ---------- and
(r) Neither Borrower nor any Affiliate shall use any portion of the proceeds of the Loans, either directly or indirectly, for the purpose of (i) purchaisng purchasing any securities underwritten or privately placed by ABN AMRO Securities (USA) Inc. ("AASI"), an affiliate of Bank; or (ii) purchasing from AASI any securities in which AASI makes a market; market or (iii) refinancing or making payments of principal, interest or dividends on any securities issued by Borrower or any Affiliate, and underwritten, privately placed or dealt in by AASI.
Appears in 1 contract
Additional Covenants of Borrower. Until payment or and satisfaction in full of all Liabilities and termination of this Agreement, unless Borrower obtains Bank's prior written consent waiving or modifying any of Borrower's covenants hereunder in any specific instance, Borrower agrees as follows:
(a) Borrower shall at all times keep accurate and complete books, records and accounts with respect to all of Borrower's business activities, in accordance with sound accounting practices and generally accepted accounting principles consistently applied, and shall keep such books, records and accounts, and any copies thereof, only at the addresses indicated for such purpose on Exhibit B;
(b) Borrower agrees to deliver to Bank the following financial information, all of which shall be prepared in accordance with generally accepted accounting principles consistently applied: :
(i) no later than twenty forty- five (20) days after each calendar month, copies of internally prepared financial statements, including, without limitation, balance sheets and statements of income, retained earnings and cash flow of Borrower, certified by the Chief Financial Officer of Borrower; (ii) no later than thirty (3045) days after the end of each of the first three quarters of Borrower's fiscal year a balance sheet, operating statement and reconciliation of surplus of Borrower, which quarterly financial statements may be unaudited but shall be certified by the Chief Financial Officer of Borrower; and (iiiii) no later than seventy-five one hundred twenty (75120) days after the end of each of Borrower's fiscal years, audited annual financial statements with an unqualified opinion by independent certified public accountants selected by Borrower and reasonably satisfactory to BankBank and (iii) contemporaneously with the furnishing of each of the foregoing quarterly and annual financial statements, which financial statements shall be accompanied by a letter from such accountants acknowledging that they are aware that a primary intent duly completed certificate dated the date of Borrower in obtaining such financial statements is statements, in form and substance satisfactory to influence Bank and that Bank is relying upon such financial statements in connection signed by an authorized officer of Borrower, containing calculations of Borrower's compliance with the exercise financial covenants contained in subparagraph 11(o) of its rights hereunder this Agreement and copies subparagraphs 5, 6 and 7 of any management letters sent to the Borrower by such accountantsExhibit A;
(c) Borrower shall promptly promptly, after obtaining knowledge thereof, advise Bank in writing of any material adverse change in the business, assets or condition, financial or otherwise, of Borrower, the occurrence of any Event of Default hereunder or the occurrence of any event which, if uncured, will become an Event of Default hereunder after notice or lapse of time (or both);
(d) Bank, or any Persons designated by it, shall have the right, at any time, to call at Borrower's places of business at any reasonable times, and, without hindrance or delay, to inspect the Collateral and to inspect, audit, check and make extracts from Borrower's books, records, journals, orders, receipts and any correspondence and other data relating to Borrower's business, the Collateral or any transactions between the parties hereto, and shall have the right to make such verification concerning Borrower's business as Bank may consider reasonable under the circumstances. Bank agrees, provided no Event of Default has occurred, to limit its collateral audits and field exams to two such audit/exams during any calendar year after the date hereof. Borrower shall furnish to Bank such information relevant to Bank's rights under this Agreement as Bank shall at any time and from time to time request. Borrower authorizes Bank to discuss the affairs, finances and business of Borrower with any officers, employees or directors of Borrower or with any Affiliate or the officers, employees or directors of any Affiliate, and to discuss the financial condition of Borrower with Borrower's independent public accountants. Any such discussions shall be without liability to Bank or to Borrower's independent public accountants. Borrower shall pay to Bank all customary fair and reasonable fees and out-of-pocket expenses incurred by Bank in the exercise of its rights hereunderhereunder (provided that such fees and out-of- pocket expenses incurred by Bank pursuant to this subparagraph 11(d) and subparagraph 11(d) of the AMCON Loan Agreement after the date hereof when no Event of Default exists shall not exceed $15,000 in any calendar year), and all of such fees and expenses shall constitute Loans hereunder, shall be payable on demand and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(e) Borrower shall:
(i) keep the Collateral properly housed and insured for the full insurable value thereof against loss or damage by fire, theft, explosion, sprinklers, collision (in the case of motor vehicles) and such other risks as are customarily insured against by Persons engaged in businesses similar to that of Borrower, with such companies, in such amounts, with such deductibles, and under policies in such form as shall be satisfactory to Bank. Original (or certified) copies of such policies of insurance have been or shall be delivered to Bank within ninety (90) days after the date hereof, together with evidence of payment of all premiums therefor, and shall contain an endorsement, in form and substance acceptable to Bank, showing loss under such insurance policies payable to Bank. Such endorsement, or an independent instrument furnished to Bank, shall provide that the insurance company shall give Bank at least thirty (30) days written notice before any such policy of insurance is altered or canceled and that no act, whether willful or negligent, or default of Borrower or any other Person shall affect the right of Bank to recover under such policy of insurance in case of loss or damage. In addition, Borrower shall cause to be executed and delivered to Bank an assignment of proceeds of its business interruption insurance policies. Borrower hereby directs all insurers under all such policies of insurance to pay all proceeds payable thereunder in excess of $100,000 for any occurrence directly to Bank. Borrower irrevocably irrevocably, makes, constitutes and appoints Bank (and all officers, employees or agents designated by Bank) as Borrower's true and lawful attorney (and agent-in-fact) for the purpose of making, settling and adjusting claims under such policies of insurance, endorsing the name of Borrower on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and making all determinations and decisions with respect to such policies of insurance, provided, however, that if no Event of Default shall have occurred ; and is continuing, Borrower may make, settle and adjust claims involving less than $50,000 in the aggregate ------ without Bank's consent; and
(ii) maintain, at its expense, such public liability and third party property damage insurance as is customary for Persons engaged in businesses similar to that of Borrower with such companies and in such amounts, with such deductibles and under policies in such form as shall be satisfactory to Bank and original (or certified) copies of such policies have been or shall be delivered to Bank within ninety (90) days after the date hereof, together with evidence of payment of all premiums therefor; each such policy shall contain an endorsement showing Bank as additional insured thereunder and providing that the insurance company shall give Bank at least thirty (30) days written notice before any such policy shall be altered or canceled. If Borrower at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above or to pay any premium relating thereto, then Bank, without waiving or releasing any obligation or default by Borrower hereunder, may (but shall be under no obligation to) obtain and maintain such policies of insurance and pay such premiums and take such other actions with respect thereto as Bank deems advisable. All sums disbursed by Bank in connection with any such actions, including, without limitation, court costs, expenses, other charges relating thereto and reasonable attorneys' fees, shall constitute Loans hereunder, shall be payable on demand by Borrower to Bank and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(f) Borrower shall not use the Collateral, or any part thereof, in any unlawful business or for any unlawful purpose or use or maintain any of the Collateral in any manner that does or could result in material damage to the environment or a violation of any applicable environmental laws, rules or regulations; shall keep the Collateral in good condition, repair and order, ordinary wear and tear excepted; shall permit Bank to examine any of the Collateral at any time and wherever the Collateral may be located; shall not permit the Collateral, or any part thereof, to be levied upon under execution, attachment, distraint or other legal process; shall not sell, lease, grant a security interest in or otherwise dispose of any of the Collateral except as expressly permitted by this Agreement; shall not settle or adjust any Account identified by Borrower as an Eligible Account or with respect to which the Account Debtor is an Affiliate without the consent of Bank, provided, that following the occurrence of an Event of Default, Borrower shall not settle or adjust any Account without the consent of Bank; and shall not secrete or abandon any of the Collateral, or remove or permit removal of any of the Collateral from any of the locations listed on Exhibit B, except for the removal of Inventory sold in the ordinary course of Borrower's business as permitted herein;
(g) all monies and other property obtained by Borrower from Bank pursuant to this Agreement will shall be used solely for business purposes of Borrower;
(h) Borrower shall, at the request of Bank, indicate on its records concerning the Collateral a notation, in form satisfactory to Bank, of the security interest of Bank hereunder;
(i) Borrower shall file all required tax returns and pay all of its taxes when due subject to any extensions granted by the applicable taxing authoritydue, including, without limitation, taxes imposed by federal, state or municipal agencies, and shall cause any liens for taxes to be promptly released; provided, that Borrower shall have the right to contest the payment of such taxes in good faith by appropriate proceedings so long as (i) the amount so contested is shown on Borrower's financial statements; , (ii) the contesting of any such payment does not give rise to a lien for taxes; taxes and (iii) Borrower keeps on deposit with Bank (such deposit to be held without interest) has reserved against availability under the Loans an amount of money which, in the sole judgment of Bank, is sufficient to pay such taxes and any interest or penalties that may accrue thereon or the Borrower maintains adequate reserves on its balance sheet in accordance with generally accepted accounting principles; and (iv) if Borrower fails to prosecute such contest with reasonable diligence, Bank may apply the money so deposited in payment of such taxesthereon. If Borrower fails to pay any such taxes and in the absence of any such contest by Borrower, Bank may (but shall be under no obligation to) advance and pay any sums required to pay any such taxes and/or to secure the release of any lien therefor, and any sums so advanced by Bank shall constitute Loans hereunder, shall be payable by Borrower to Bank on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(j) Borrower shall not assume, guarantee or endorse, or otherwise become liable in connection with, the obligations of any Person, except by endorsement of instruments for deposit or collection or similar transactions in the ordinary course of business;
(k) Borrower shall not without the prior written consent of Bank (i) enter into any merger or consolidation; , or (ii) sell, lease or otherwise dispose of any of its assets other than in the ordinary course of businessbusiness and other than asset sales and dispositions involving assets with a value of less than $250,000 in any transaction or series of related transactions; (iii) purchase all or substantially all of the assets of any Person or division of such Person; , or (iv) enter into any other transaction outside the ordinary course of Borrower's business, including, without limitation, any purchase, redemption or retirement of any shares of any class of its or any other Obligor's stock or any other equity interestinterest (including any rights, options or warrants with respect thereto), and any issuance of any shares of, or warrants or other rights to receive or purchase any shares of, any class of its stock or any other equity interest;
(l) Borrower shall not declare or pay any dividend or other distribution (whether in cash or in kind) on any class of its stock (if Borrower is a corporation) or on account of any equity interest in Borrower (if Borrower is a partnership, limited liability company or other type of entity);
(m) Borrower shall not purchase or otherwise acquire, or contract to purchase or otherwise acquire, the obligations or stock of any Person, other than direct obligations of the United States;
(n) Borrower shall not amend its organizational documents in any manner which could have an adverse effect on Bank or its interest in any of the Collateral or change its fiscal year unless such actions would not have an adverse effect on the Borrower's business, property, assets, operations or condition, financial or otherwise, as determined by Bank in its sole discretion, and Bank has received ten (10) days prior written notice of such amendment or change, or enter into a new line of business materially different from Borrower's current business;
(o) See Exhibit A
(p) Borrower's Tangible Net Worth shall at all times be greater than $2,000,000.00. "Tangible Net Worth" shall mean, as of any time the same is to be determined, an amount equal to shareholder's equity in Borrower shall reimburse Bank for reflected on the most recent balance sheet of Borrower prepared in accordance with generally accepted accounting principles consistently applied, less the aggregate book value of all costs and expensesassets which would be classified as intangible assets under generally accepted accounting principles, including, without limitation, legal expenses goodwill, patents, trademarks, trade names, copyrights, franchises and reasonable attorneys' fees, incurred by Bank in connection with (i) documentation and consummation of this transaction and any other transactions between Borrower and Bank, including, without limitation, Uniform Commercial Code and other public record searches, lien filings, overnight courier or other express or messenger delivery, appraisal costs, surveys, title insurance and environmental audit or review costs; (ii) collection, protection or enforcement of any rights in or to the Collateral; (iii) collection of any Liabilities; and (iv) administration and enforcement of any of Bank's rights under this Agreement. Borrower shall also pay all normal service deferred charges with respect to all accounts maintained by Borrower with Bank and any additional services requested by Borrower from Bank. All such costs, expenses and charges shall constitute Loans hereunder, shall be payable by Borrower to Bank on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(q) Borrower shall not purchase or otherwise acquire (including, without limitation, acquisition by way of capitalized lease)unamortized debt discount and expense, or commit to purchase or acquire, any fixed asset if, after giving effect to such purchase or other acquisition, the aggregate organization and cost of all such fixed assets purchased or otherwise acquired would exceed $100,000.00 during any fiscal year of Borrower; ---------- and
(rand deferred research and development expense) Neither Borrower nor any Affiliate shall use any portion of the proceeds of the Loans, either directly or indirectly, for the purpose of (i) purchaisng any securities underwritten or privately placed by ABN AMRO Securities (USA) Inc. ("AASI"), an affiliate of Bank; or (ii) purchasing from AASI any securities in which AASI makes a market; or (iii) refinancing or making payments of principal, interest or dividends on any securities issued by Borrower or any Affiliate, and underwritten, privately placed or dealt in by AASIsimilar assets.
Appears in 1 contract
Sources: Loan and Security Agreement (Amcon Distributing Co)
Additional Covenants of Borrower. Until payment or satisfaction in full of all Liabilities and termination of this Agreement, unless Borrower obtains BankLender's prior written consent waiving or modifying any of Borrower's covenants hereunder in any specific instance, Borrower agrees as follows:
(a) Borrower shall at all times keep accurate and complete books, records and accounts with respect to all of Borrower's business activities, in accordance with sound accounting practices and generally accepted accounting principles consistently applied, and shall keep such books, records and accounts, and any copies thereof, only at the addresses indicated for such purpose on Exhibit BEXHIBIT A;
(b) Borrower agrees to deliver to Bank Lender the following financial information, all of which shall be prepared in accordance with generally accepted accounting principles consistently applied: :
(i) no later than twenty forty-five (2045) days after each calendar month, copies of internally prepared financial statements, including, without limitation, balance sheets and statements of income, retained earnings and cash flow of Borrower, certified by the Chief Financial Officer of Borrower; (ii) no later than thirty ninety (30) days after the end of each of the first three quarters of Borrower's fiscal year a balance sheet, operating statement and reconciliation of surplus of Borrower, which quarterly financial statements may be unaudited but shall be certified by the Chief Financial Officer of Borrower; and (iii) no later than seventy-five (7590) days after the end of each of Borrower's fiscal years, audited annual financial statements with an unqualified opinion audited by independent certified public accountants selected by Borrower and reasonably satisfactory to BankLender; (iii) quarterly, which financial statements shall be accompanied by within forty-five (45) days after the end of each quarter, a letter from such accountants acknowledging that they are aware that covenant compliance certificate in a primary intent of Borrower in obtaining such financial statements is form acceptable to influence Bank and that Bank is relying upon such financial statements in connection Lender confirming Borrower's compliance with the exercise of its rights hereunder financial covenants set forth in Section 12(s) below, and copies of any management letters sent to the Borrower by (iv) such accountantsother financial information as Lender shall reasonably request;
(c) Borrower shall promptly advise Bank Lender in writing of any material adverse change in the business, assets or condition, financial or otherwise, of Borrower, the occurrence of any Event of Default hereunder or the occurrence of any event which, if uncured, will become an Event of Default hereunder after notice or lapse of time (or both);
(d) BankLender, or any Persons designated by it, shall have the right, at any time, to call at Borrower's places of business at any reasonable times, and, without hindrance or delay, to inspect the Collateral and to inspect, audit, check and make extracts from Borrower's books, records, journals, orders, receipts and any correspondence and other data relating to Borrower's business, the Collateral or any transactions between the parties hereto, and shall have the right to make such verification concerning Borrower's business as Bank Lender may consider reasonable under the circumstances. Borrower shall furnish to Bank Lender such information relevant to BankLender's rights under this Agreement as Bank Lender shall at any time and from time to time request. Borrower authorizes Bank Lender to discuss the affairs, finances and business of Borrower with any officers, employees or directors of Borrower or with any Affiliate or the officers, employees or directors of any Affiliate, and to discuss the financial condition of Borrower with Borrower's independent public accountants. Any such discussions shall be without liability to Bank Lender or to Borrower's independent public accountants. Borrower shall pay to Bank Lender all customary fees and out-of-pocket expenses incurred by Bank Lender in the exercise of its rights hereunder, and all of such fees and expenses shall constitute Revolving Loans hereunder, shall be payable on demand and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(e) Borrower shall:
(i) keep the Collateral properly housed and shall keep the Collateral insured for the full insurable value thereof against loss or damage by fire, theft, explosion, sprinklers, collision (in the case of motor vehicles) and such other risks as are customarily insured against by Persons engaged in businesses similar to that of Borrower, Borrower with such companies, in such amounts, with such deductibles, amounts and under policies in such form as shall be satisfactory to BankLender. Original At the request of Lender, original (or certified) copies of such policies of insurance have been or shall be delivered to Bank within ninety (90) days after the date hereofLender, together with evidence of payment of all premiums therefor, and shall contain an endorsement, in form and substance acceptable to BankLender, showing loss under such insurance policies payable to BankLender. Such endorsement, or an independent instrument furnished to BankLender, shall provide that the insurance company shall give Bank Lender at least thirty (30) days written notice before any such policy of insurance is altered or canceled cancelled and that no act, whether willful or negligent, or default of Borrower or any other Person shall affect the right of Bank Lender to recover under such policy of insurance in case of loss or damage. In addition, Borrower shall cause to be executed and delivered to Bank an assignment of proceeds of its business interruption insurance policies. Borrower hereby directs all insurers under all such policies of insurance to pay all proceeds payable thereunder directly to BankLender and all proceeds received by Lender may be applied to the Liabilities in such order and manner as Lender shall determine. Borrower irrevocably irrevocably, makes, constitutes and appoints Bank Lender (and all officers, employees or agents designated by BankLender) as Borrower's true and lawful attorney (and agent-in-fact) for the purpose of making, settling and adjusting claims under such policies of insurance, endorsing the name of Borrower on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and making all determinations and decisions with respect to such policies of insurance, provided, however, that if no Event of Default shall have occurred and is continuing, Borrower may make, settle and adjust claims involving less than $50,000 in the aggregate ------ without Bank's consent; and
(ii) maintain, at its expense, such public liability and third party property damage insurance as is customary for Persons engaged in businesses similar to that of Borrower with such companies and in such amounts, with such deductibles and under policies in such form as shall be satisfactory to Bank and Lender and, at the request of Lender, original (or certified) copies of such policies have been or shall be delivered to Bank within ninety (90) days after the date hereofLender, together with evidence of payment of all premiums therefor; each such policy shall contain an endorsement showing Bank Lender as additional insured thereunder and providing that the insurance company shall give Bank Lender at least thirty (30) days written notice before any such policy shall be altered or canceledcancelled. If Borrower at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above or to pay any premium in whole or in part relating thereto, then BankLender, without waiving or releasing any obligation or default by Borrower hereunder, may (but shall be under no obligation to) obtain and maintain such policies of insurance and pay such premiums and take such other actions with respect thereto as Bank Lender deems advisable. All sums disbursed by Bank Lender in connection with any such actions, including, without limitation, court costs, expenses, other charges relating thereto and reasonable attorneys' fees, shall constitute Revolving Loans hereunder, hereunder and shall be payable on demand by Borrower to Bank Lender and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(f) Borrower shall not use the Collateralits property, or any part thereof, in any unlawful business or for any unlawful purpose or use or maintain any of the Collateral its property in any manner that does or could result in material damage to the environment or a violation of any applicable environmental laws, rules or regulations; shall keep the Collateral its property in good condition, repair and order, ordinary wear and tear excepted; shall permit Bank Lender to examine any of the Collateral its property at any time and wherever the Collateral may be locatedtime; shall not permit the Collateralits property, or any part thereof, to be levied upon under execution, attachment, distraint or other legal process; shall not sell, lease, grant a security interest in or suffer to exist a lien on any of its property other than the Permitted Liens; shall not sell, lease, transfer or otherwise dispose of any of its property except in the Collateral except as expressly permitted by this Agreement; shall not settle or adjust any Account identified by Borrower as an Eligible Account or with respect to which the Account Debtor is an Affiliate without the consent ordinary course of Bank, provided, that following the occurrence of an Event of Default, Borrower shall not settle or adjust any Account without the consent of Bankits business; and shall not secrete or abandon any of the Collateralits property, or remove or permit removal of any of the Collateral its property from any of the locations listed on Exhibit BSchedule 1 of EXHIBIT A or in any written notice to Lender pursuant to paragraph 10(b) hereof, except for the removal of Inventory sold in the ordinary course of Borrower's business as permitted hereinbusiness;
(g) all monies and other property obtained by Borrower from Bank Lender pursuant to this Agreement will be used solely for business purposes of Borrower;
(h) Borrower shall, at the request of BankLender, indicate on its records concerning the Collateral a notation, in form satisfactory to BankLender, of the security interest of Bank Lender hereunder, and Borrower shall not maintain duplicates or copies of such records at any address other than Borrower's principal place of business set forth on the first page of this Agreement;
(i) Borrower shall file all required tax returns and pay all of its taxes when due subject to any extensions granted by the applicable taxing authoritydue, including, without limitation, taxes imposed by federal, state or municipal agencies, and shall cause any liens for taxes to be promptly released; provided, that Borrower shall have the right to contest the payment of such taxes in good faith by appropriate proceedings so long as (i) the amount so contested is shown on Borrower's financial statements; , (ii) the contesting of any such payment does not give rise to a lien for taxes; , (iii) Borrower keeps on deposit with Bank Lender (such deposit to be held without interestbear interest at a rate reasonably determined by Lender) an amount of money which, in the sole judgment of BankLender, is sufficient to pay such taxes and any interest or penalties that may accrue thereon or the Borrower maintains adequate reserves on its balance sheet in accordance with generally accepted accounting principles; thereon, and (iv) if Borrower fails to prosecute such contest with reasonable diligence, Bank Lender may apply the money so deposited in payment of such taxes. If Borrower fails to pay any such taxes and in the absence of any such contest by Borrower, Bank Lender may (but shall be under no obligation to) advance and pay any sums required to pay any such taxes and/or to secure the release of any lien therefor, and any sums so advanced by Bank Lender shall constitute Revolving Loans hereunder, shall be payable by Borrower to Bank Lender on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(j) Borrower shall not assume, guarantee or endorse, or otherwise become liable in connection with, the obligations of any Person, except by endorsement of instruments for deposit or collection or similar transactions in the ordinary course of business;
(k) Borrower shall not (i) enter into any merger or consolidation; (ii) sell, lease or otherwise dispose of any of its assets other than in the ordinary course of business; (iii) purchase all or substantially all of the assets of any Person or division of such Person; or (iv) enter into any other transaction outside the ordinary course of Borrower's business, including, without limitation, any purchase, redemption or retirement of any shares of any class of its stock or any other equity intereststock, and any issuance of any shares of, or warrants or other rights to receive or purchase any shares of, any class of its its
(1) the granting of options, and the issuance of stock or upon the exercise of such options, pursuant to any other equity interest;stock option plan duly adopted by the Borrower's shareholders; (2) the issuance of common stock upon the exercise of currently outstanding warrants to purchase up to 300,000 shares of such stock; and (3) the future issuance of warrants to purchase up to 100,000 shares of common stock per year, and the issuance of stock upon exercise of such warrants.
(l) Borrower shall not declare or pay any dividend or other distribution (whether in cash or in kind) on any class of its stock (if Borrower is a corporation) or on account of any equity interest in Borrower (if Borrower is a partnership, limited liability company or other type of entity)stock;
(m) After the date of this Agreement, Borrower shall not make any loans or similar advances to any of its officers or any Person related to any such officer;
(n) Borrower shall (i) keep in full force and effect any and all plans which may, from time to time, come into existence under ERISA, unless such Plans can be terminated without liability to Borrower; (ii) make contributions to all of the Plans in a timely manner and in a sufficient amount to comply with the requirements of ERISA; (iii) comply with all material requirements of ERISA which relate to Plans (including, without limitation, the minimum funding standards of Section 302 of ERISA); and (iv) notify Lender immediately upon receipt by Borrower of any notice of the institution of any proceeding or other action which may result in the termination of any Plans;
(o) Borrower shall not invest in, purchase or otherwise acquire, or contract to invest in, purchase or otherwise acquire, the obligations or stock of any Person, other than direct obligations of the United States;
(np) Borrower shall not amend its organizational documents or change its fiscal year unless such actions would not have an adverse effect on the Borrower's business, property, assets, operations or condition, financial or otherwise, as determined by Bank in its sole discretion, and Bank has received ten (10) days prior written notice of such amendment or change, or enter into a new line of business materially different from Borrower's current businessyear;
(o) See Exhibit A
(pq) Borrower shall reimburse Bank Lender for all costs and expenses, including, without limitation, legal expenses and reasonable attorneys' fees, incurred by Bank Lender in connection with (i) documentation and consummation of this transaction and any other transactions between Borrower and BankLender, including, without limitation, Uniform Commercial Code and other public record searches, lien filings, overnight courier Federal Express or other similar express or messenger delivery, appraisal costs, surveys, title insurance and environmental audit or review costs; (ii) collection, protection and in seeking to administer, collect, protect or enforcement of enforce any rights in or to the Collateral; (iii) collection of Collateral or incurred by Lender in seeking to collect any Liabilities; Liabilities and (iv) administration and enforcement of to administer, participate, assign and/or enforce any of BankLender's rights under this Agreement. Borrower shall also pay all normal service charges with respect to all accounts maintained by Borrower with Bank Agreement and any additional services requested by Borrower from Bankthe Other Agreements. All such costs, expenses and charges shall constitute Revolving Loans hereunder, shall be payable by Borrower to Bank Lender on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(qr) Borrower at all times shall comply with the following financial covenants:
(i) Borrower shall not purchase make or otherwise acquire incur any capital expenditures (including, without limitation, acquisition by way of capitalized leaseas such term is defined in accordance with GAAP), or commit to purchase or acquire, any fixed asset if, after giving effect to such purchase or other acquisition, exceeding $1,500,000 in the aggregate cost of all such fixed assets purchased or otherwise acquired would exceed $100,000.00 during any fiscal year (beginning with the fiscal year ending December 31, 1997).
(ii) Borrower shall achieve net profit after taxes and before extraordinary gains (as such terms are defined in accordance with GAAP) for each fiscal year of at least $500,000 per fiscal year beginning with the fiscal year ending December 31, 1997.
(iii) Borrower shall achieve net profit before extraordinary gains (as such terms are defined in accordance with GAAP) of at least zero ($0) for each fiscal quarter beginning with the fiscal quarter commencing on April 1, 1997.
(iv) Total liabilities of Borrower to tangible net worth of Borrower (as such term is defined in accordance with GAAP) shall not exceed 2.50 to 1.0 at any time.
(v) Borrower's minimum tangible net worth (as such term is defined in accordance with GAAP) shall not be less than (A) $6,600,000 for the fiscal year ended December 31, 1996 and (B) for each fiscal quarter (calculated at the end of the fiscal quarter), commencing with the fiscal quarter beginning January 1, 1997, $6,600,000 plus 90% of net income after taxes from and after January 1, 1997 plus any additional new equity contributed to Borrower or invested in Borrower after January 1, 1997. The calculation of tangible net worth pursuant to this subsection (v) shall exclude all intangible assets and other similar assets and shall include the Subordinated Debt.
(vi) Borrower shall maintain a ratio of earnings before interest and taxes to interest expense (as such terms are defined in accordance with GAAP) of at least 2.0 to 1 for each fiscal quarter, calculated at the end of each fiscal quarter, commencing with the quarter beginning April 1, 1997;
(s) Within fifteen days after the making of any Equipment Loan, Borrower shall provide to Lender evidence that the proceeds of such Equipment Loan have been used to acquire Acceptable Equipment, which evidence may include, but shall not be limited to a ▇▇▇▇ of sale or certificate of title; ---------- and
(rt) Neither Immediately upon request by Lender, Borrower nor shall take all actions necessary to comply with the Assignment of Claims Act of 1940, as amended.
(u) Immediately upon request of Lender, Borrower shall provide a list of each location at which any Affiliate Equipment or other Collateral is located (which list shall use any portion of the proceeds of the Loans, either directly or indirectly, for the purpose of (iinclude not only offices but each individual job site) purchaisng any securities underwritten or privately placed and immediately take all actions required by ABN AMRO Securities (USA) Inc. ("AASI"), an affiliate of Bank; or (ii) purchasing from AASI any securities Lender and execute all UCC Financing Statements required by Lender in which AASI makes a market; or (iii) refinancing or making payments of principal, interest or dividends on any securities issued by Borrower or any Affiliate, and underwritten, privately placed or dealt order to allow Lender to be fully perfected in by AASIeach such jurisdiction.
Appears in 1 contract
Sources: Loan and Security Agreement (Cet Environmental Services Inc)
Additional Covenants of Borrower. Until payment Except as otherwise contemplated in this Agreement or satisfaction in full of all Liabilities and termination of necessary to comply with this AgreementAgreement or the Other Agreements, unless Borrower obtains Bank's Lender’s prior written consent waiving or modifying any of Borrower's ’s covenants hereunder in any specific instance, Borrower agrees as follows:
(a) Borrower shall at all times keep accurate and complete books, records and accounts with respect to all of Borrower's ’s business activities, in accordance with sound accounting practices and generally accepted accounting principles consistently applied, and shall keep such books, records and accounts, and any copies thereof, only at the addresses indicated for such purpose on Exhibit BJ;
(b) Borrower agrees to deliver to Bank Lender the following financial information, all of which shall be prepared in accordance with generally accepted accounting principles consistently applied: (i) no later than twenty thirty (2030) days after each calendar month, copies of internally prepared financial statements, including, including without limitation, limitation balance sheets and statements of income, retained earnings and cash flow of Borrower, certified with a Compliance Certificate in the form of Exhibit Q hereto, acknowledged by the Chief Financial Officer of BorrowerBorrower to be true and correct and free from material error, as well as detailed accounts payable and accounts receivable agings; (ii) no later than thirty ninety (30) days after the end of each of the first three quarters of Borrower's fiscal year a balance sheet, operating statement and reconciliation of surplus of Borrower, which quarterly financial statements may be unaudited but shall be certified by the Chief Financial Officer of Borrower; and (iii) no later than seventy-five (7590) days after the end of each of Borrower's ’s fiscal years, audited annual financial statements with an unqualified opinion audited by independent certified public accountants selected by Borrower and reasonably satisfactory to BankLender, which financial statements shall be accompanied by a letter from such accountants acknowledging that they are aware that a primary intent of Borrower in obtaining such financial statements is to influence Bank and that Bank Lender is relying upon such financial statements in connection with the exercise of its rights hereunder and a Compliance Certificate acknowledged by the Chief Financial Officer of Borrower to be true and correct and free from material error; (iii) no later than the end of each fiscal year of Borrower, Borrower shall deliver to Lender projected balance sheets, income statements and projections of EBITDA (“EBITDA Projections”) for the succeeding fiscal year, such projections to be prepared showing monthly calculations; (iv) within ten (10) days after the filing thereof, copies of any management letters sent to the Borrower by Borrower’s United States corporate income tax returns; and (v) such accountantsother financial information as Lender shall reasonably request;
(c) Borrower shall promptly advise Bank Lender in writing of any material adverse change in the business, assets or condition, financial or otherwise, of Borrowerevent that has had a Material Adverse Effect, the occurrence of any Event of Default hereunder or the occurrence of any event which, if uncured, will become an Event of Default hereunder after notice or lapse of time (or both), and such written advise under this Paragraph 12(c) shall not be deemed to cure or waive and an Event of Default;
(d) BankLender, or any Persons designated by it, shall have the right, at any timeupon providing the Borrower or its Subsidiaries, as the case may be, with no less than one day prior written notice, to call at Borrower's ’s places of business at any reasonable times, and, without hindrance or delay, to inspect the Collateral and to inspect, audit, check and make extracts from Borrower's ’s books, records, journals, orders, receipts and any correspondence and other data relating to Borrower's ’s business, the Collateral or any transactions between the parties hereto, and shall have the right to make such verification concerning Borrower's ’s business as Bank Lender may consider reasonable under the circumstances. Borrower shall furnish to Bank Lender such information relevant to Bank's Lender’s rights under this Agreement as Bank Lender shall at any time and from time to time request. Borrower authorizes Bank Lender to discuss the affairs, finances and business of Borrower with any officers, employees or directors of Borrower or with any Affiliate or the officers, employees or directors of any Affiliate, and to discuss the financial condition of Borrower with Borrower's ’s independent public accountants. Any such discussions shall be without liability to Bank or to Borrower's independent public accountants. Borrower shall pay to Bank all customary fees and out-of-pocket expenses incurred by Bank in the exercise of its rights hereunder, and all of such fees and expenses shall constitute Loans hereunder, shall be payable on demand and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(e) Borrower shall:
(i) keep the Collateral properly housed and shall keep the Collateral insured for the full insurable value thereof against loss or damage by fire, theft, explosion, sprinklers, collision (in the case of motor vehicles) and such other risks as are customarily insured against by Persons engaged in businesses similar to that of Borrower, Borrower with such companies, in such amounts, with such deductibles, amounts and under policies in such form as shall be reasonably satisfactory to BankLender. Original At the request of Lender, original (or certified) copies of such policies of insurance have been or shall be delivered to Bank within ninety (90) days after the date hereofLender, together with evidence of payment of all premiums therefor, and shall contain an endorsement, in form and substance acceptable to BankLender, showing loss under such insurance policies payable to BankLender. Such endorsement, or an independent instrument furnished to BankLender, shall provide that the insurance company shall give Bank Lender at least thirty (30) days written notice before any such policy of insurance is altered or canceled cancelled and that no act, whether willful or negligent, or default of Borrower or any other Person shall affect the right of Bank Lender to recover under such policy of insurance in case of loss or damage. In addition, Borrower shall cause to be executed and delivered to Bank Lender an assignment of proceeds of its business interruption insurance policies. Borrower hereby directs all insurers under all such policies of insurance to pay all proceeds payable thereunder directly to Bank. Borrower irrevocably makes, constitutes and appoints Bank (and all officers, employees or agents designated by Bank) as Borrower's true and lawful attorney (and agent-in-fact) for the purpose of making, settling and adjusting claims under such policies of insurance, endorsing the name of Borrower on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and making all determinations and decisions with respect to such policies of insurance, provided, however, that if no Event of Default shall have occurred and is continuing, Borrower may make, settle and adjust claims involving less than $50,000 in the aggregate ------ without Bank's consentLender; and
(ii) maintain, at its expense, such public liability and third party property damage insurance as is customary for Persons engaged in businesses similar to that of Borrower with such companies and in such amounts, with such deductibles and under policies in such form as shall be satisfactory to Bank and Lender and, at the request of Lender, original (or certified) copies of such policies have been or shall be delivered to Bank within ninety (90) days after the date hereofLender, together with evidence of payment of all premiums therefor; each such policy shall contain an endorsement showing Bank Lender as additional insured thereunder and providing that the insurance company shall give Bank Lender at least thirty (30) days written notice before any such policy shall be altered or canceledcancelled. If Borrower at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above or to pay any premium in whole or in part relating thereto, then BankLender, without waiving or releasing any obligation or default by Borrower hereunder, may (but shall be under no obligation to) obtain and maintain such policies of insurance and pay such premiums and take such other actions with respect thereto as Bank Lender deems advisable. Such insurance, if obtained by Lender, may, but need not protect Borrower’s interests or pay any claim made by or against Borrower with respect to the Collateral. Such insurance may be more expensive than the cost of insurance Borrower may be able to obtain on its own and may be cancelled only upon Borrower providing evidence that it has obtained the insurance as required above. All sums disbursed by Bank Lender in connection with any such actions, including, including without limitation, limitation court costs, expenses, other charges relating thereto and reasonable attorneys' ’ fees, shall constitute Loans hereunder, shall be payable on demand by Borrower to Bank Lender and, until paid, shall bear interest at the highest rate then applicable to the Term Loans hereunder;
(f) Borrower shall not use the Collateralits property, or any part thereof, in any unlawful business or for any unlawful purpose or use or maintain any of the Collateral its property in any manner that does or could result in material damage to the environment or a violation of any applicable environmental laws, rules or regulations; shall keep the Collateral its property in good condition, repair and order, ordinary wear and tear excepted; shall permit Bank Lender to examine any of the Collateral its property at any time and wherever the Collateral may be locatedtime; shall not permit the Collateralits property, or any part thereof, to be levied upon under execution, attachment, distraint or other legal process; shall not sell, lease, grant a security interest in or suffer to exist a lien on any of its property; shall not sell, lease, transfer or otherwise dispose of any of its property except for the Collateral except as expressly permitted by this Agreement; shall not settle or adjust any Account identified by Borrower as an Eligible Account or with respect to which sale of Inventory in the Account Debtor is an Affiliate without the consent ordinary course of Bank, provided, that following the occurrence of an Event of Default, Borrower shall not settle or adjust any Account without the consent of Bankits business; and shall not secrete or abandon any of the Collateralits property, or remove or permit removal of any of the Collateral its property from any of the locations listed on Exhibit BJ or in any written notice to Lender pursuant to Paragraph 11(b) hereof, except for the removal of Inventory sold in the ordinary course of Borrower's business as permitted herein’s business;
(g) all monies and other property obtained by Borrower from Bank Lender pursuant to this Agreement will be used solely for business purposes of BorrowerBorrower as set forth in its Securities Exchange Act reports;
(h) Borrower shall, at the request of BankLender, indicate on its records concerning the Collateral a notation, in form satisfactory to BankLender, of the security interest of Bank Lender hereunder, and Borrower shall not maintain duplicates or copies of such records at any address other than Borrower’s principal place of business set forth on the first page of this Agreement;
(i) Borrower shall file all required tax returns and pay all of its taxes when due subject to any extensions granted by the applicable taxing authoritydue, including, including without limitation, limitation taxes imposed by federal, state or municipal agencies, and shall cause any liens for taxes to be promptly released; provided, that Borrower shall have the right to contest the payment of such taxes in good faith by appropriate proceedings so long as (i) the amount so contested is shown on Borrower's ’s financial statements; , (ii) the contesting of any such payment does not give rise to a lien for taxes; , (iii) Borrower keeps on deposit with Bank (such deposit to be held without interest) Lender an amount of money which, in the sole judgment of BankLender, is sufficient to pay such taxes and any interest or penalties that may accrue thereon or the Borrower maintains adequate reserves on its balance sheet in accordance with generally accepted accounting principles; thereon, and (iv) if Borrower fails to prosecute such contest with reasonable diligence, Bank Lender may apply the money so deposited in payment of such taxes. If Borrower fails to pay any such taxes and in the absence of any such contest by Borrower, Bank Lender may (but shall be under no obligation to) advance and pay any sums required to pay any such taxes and/or to secure the release of any lien therefor, and any sums so advanced by Bank shall constitute Loans hereunder, Lender shall be payable by Borrower to Bank Lender on demand, and, until paid, shall bear interest at the highest rate then applicable to the Term Loans hereunder;
(j) Borrower shall not assume, guarantee or endorse, or otherwise become liable in connection with, the obligations of any Person, except by endorsement of instruments for deposit or collection or similar transactions in the ordinary course of business;
(k) Except for the payment of dividends to the holders of the Borrower’s Series A or Series B Preferred Stock, Borrower shall not (i) enter into not, except as expressly contemplated by this Agreement, directly or indirectly declare or pay any merger dividends or consolidation; (ii) sell, lease or otherwise dispose of make any distributions upon any of its assets other than Common Shares;
(l) Except in accordance with the ordinary course of business; (iii) purchase all or substantially all rights and preferences of the assets of Series A and Series B Preferred Stock, Borrower shall not, directly or indirectly redeem, purchase or otherwise acquire, or permit any Person Subsidiary to redeem, purchase or division of such Person; or (iv) enter into otherwise acquire, any other transaction outside the ordinary course of Borrower's business, ’s Common Shares (including, without limitation, any purchasewarrants, redemption or retirement of any shares of any class of its stock or any other equity interest, options and any issuance of any shares of, or warrants or other rights to receive or purchase any shares of, any class of its stock or any other equity interest;
(l) Borrower shall not declare or pay any dividend or other distribution (whether in cash or in kind) on any class of its stock (if Borrower is a corporation) or on account of any equity interest in Borrower (if Borrower is a partnership, limited liability company or other type of entityacquire Common Shares);
(m) Borrower shall not purchase not, except as expressly contemplated by this Agreement, authorize, issue, sell or otherwise acquireenter into any agreement providing for the issuance (contingent or otherwise), or contract permit any Subsidiary to purchase authorize, issue, sell or otherwise acquireenter into any agreement providing for the issuance (contingent or otherwise) of, (i) any notes or debt securities containing equity features (including, without limitation, any notes or debt securities convertible into or exchangeable for Common Shares, issued in connection with the issuance of Common Shares or containing profit participation features), (ii) any Common Shares (or any securities convertible into or exchangeable for any Common Shares) or rights to acquire any Common Shares, except in connection with any existing obligations or stock of any Person, other than direct obligations issued and outstanding securities as of the United Statesdate hereof that may be convertible or exchangeable into Common Shares of the Borrower, in accordance with their terms, or (iii) any Preferred Shares or rights to acquire any Preferred Shares;
(n) Borrower shall not amend its organizational documents merge or change its fiscal year unless such actions would not have an adverse effect on the Borrower's business, property, assets, operations consolidate with any Person or condition, financial permit any Subsidiary to merge or otherwise, as determined by Bank in its sole discretion, and Bank has received ten consolidate with any Person (10) days prior written notice of such amendment or change, or enter into other than a new line of business materially different from Borrower's current businesswholly-owned Subsidiary);
(o) See Exhibit ABorrower shall not sell, lease or otherwise dispose of, or permit any Subsidiary to sell, lease or otherwise dispose of, more than 5% of the consolidated assets of Borrower and its Subsidiaries (computed on the basis of book value, determined in accordance with GAAP or fair market value, determined by the Board in its reasonable good faith judgment) in any transaction or series of related transactions (other than sales of inventory in the ordinary course of business);
(p) Borrower shall not liquidate, dissolve or effect a recapitalization or reorganization in any form of transaction (including, without limitation, any reorganization into partnership form);
(q) Borrower shall not enter into, or permit any Subsidiary to enter into, the ownership, active management or operation of any business other than the business of Borrower as set forth in its Securities Exchange Act reports;
(r) Borrower shall not enter into, or permit any Subsidiary to enter into, any transaction with any of its or any of its Subsidiary’s officers, directors, employees or Affiliates except in the ordinary course of its business;
(s) Borrower shall not create, incur, assume or suffer to exist, or permit any Subsidiary to create, incur, assume or suffer to exist, indebtedness for borrowed money except as contemplated in this Agreement;
(t) Borrower shall (i) keep in full force and effect any and all Plans which may, from time to time, come into existence under ERISA, unless such Plans can be terminated without liability to Borrower; (ii) make contributions to all of the Plans in a timely manner and in a sufficient amount to comply with the requirements of ERISA; (iii) comply with all material requirements of ERISA which relate to Plans (including without limitation the minimum funding standards of Section 302 of ERISA); and (iv) notify Lender immediately upon receipt by Borrower of any notice of the institution of any proceeding or other action which may result in the termination of any Plans;
(u) Borrower shall reimburse Bank Lender for all costs and expenses, including, including without limitation, limitation legal expenses and reasonable attorneys' ’ fees, incurred by Bank Lender in connection with (i) documentation and consummation of this transaction and any other future transactions between Borrower and BankLender, including, including without limitation, limitation Uniform Commercial Code and other public record searches, lien filings, overnight courier Federal Express or other similar express or messenger delivery, appraisal costs, surveys, title insurance and environmental audit or review costs; (ii) collection, protection and in seeking to administer, collect, protect or enforcement of enforce any rights in or to the Collateral; (iii) collection of Collateral or incurred by Lender in seeking to collect any Liabilities; Liabilities and (iv) administration and enforcement of to administer and/or enforce any of Bank's Lender’s rights under this Agreement. Borrower shall also pay all normal service charges with respect to all accounts maintained by Borrower with Bank Agreement and any additional services requested by Borrower from Bankthe Other Agreements. All such costs, expenses and charges shall constitute Loans hereunder, shall be payable by Borrower to Bank Lender on demand, and, until paid, shall bear interest at the highest rate then applicable to the Term Loans hereunder;
(qv) Borrower shall not purchase or otherwise acquire (including, including without limitation, limitation acquisition by way of capitalized lease), or commit to purchase or otherwise acquire, any fixed asset asset, if, after giving effect affect to such purchase or other acquisition, the aggregate cost costs of all such fixed assets purchased or otherwise acquired by Borrower would exceed Two Hundred Fifty Thousand Dollars ($100,000.00 250,000) during any fiscal year of Borrower; ---------- and;
(rw) Neither As required by federal law and the Lender’s policies and practices, the Lender may need to obtain, verify and record certain customer identification information and documentation in connection with opening or maintaining accounts, or establishing or continuing to provide services and Borrower nor any Affiliate agrees to provide such information. In addition, and without limiting the foregoing sentence, the Borrower shall use any portion of (a) ensure, and cause each Subsidiary to ensure, that no Person who owns a controlling interest in or otherwise controls the proceeds of the Loans, either directly or indirectly, for the purpose of (i) purchaisng any securities underwritten or privately placed by ABN AMRO Securities (USA) Inc. ("AASI"), an affiliate of Bank; or (ii) purchasing from AASI any securities in which AASI makes a market; or (iii) refinancing or making payments of principal, interest or dividends on any securities issued by Borrower or any Affiliate, and underwritten, privately placed or dealt in by AASI.S
Appears in 1 contract
Sources: Loan Agreement (Sequiam Corp)
Additional Covenants of Borrower. Until payment or satisfaction in full of all Liabilities and termination of this Agreement, unless Borrower obtains BankBorrowers obtain Lender's prior written consent waiving or modifying any of Borrower's Borrowers' covenants hereunder in any specific instance, Borrower agrees Borrowers agree as follows:
(a) Each Borrower shall at all times keep accurate and complete books, records and accounts with respect to all of such Borrower's business activities, in accordance with sound accounting practices and generally accepted accounting principles consistently applied, and shall keep such books, records and accounts, and any copies thereof, only at the addresses indicated for such purpose on Exhibit EXHIBIT B;
(b) Each Borrower agrees to deliver to Bank Lender the following financial information, all of which shall be prepared in accordance with generally accepted accounting principles consistently applied: (i) no later than twenty twenty-five (2025) days after each calendar month, copies of internally prepared financial statements, including, including without limitation, limitation balance sheets and statements of income, income and retained earnings and cash flow of such Borrower, certified by the Chief Financial Officer chief financial officer or other officer of Borrowersuch Borrower approved by Lender; (ii) no later than thirty ninety (3090) days after the end of each of the first three quarters of Borrower's fiscal year a balance sheet, operating statement and reconciliation of surplus of Borrower, which quarterly financial statements may be unaudited but shall be certified by the Chief Financial Officer of Borrower; and (iii) no later than seventy-five (75) days after the end of each of such Borrower's fiscal years, audited annual financial statements with an unqualified opinion certified by independent certified public accountants selected by such Borrower and reasonably satisfactory to BankLender, which financial statements shall be accompanied by consolidating business projections prepared by such Borrower for the following fiscal year; and (iii) such other financial information as Lender shall reasonably request. Borrowers shall use their best efforts to obtain a letter from the foregoing accountants which acknowledges that such accountants acknowledging that they are aware that a primary intent of Borrower in obtaining such financial statements is to influence Bank and that Bank Lender is relying upon such the foregoing financial statements in connection with the exercise of its rights hereunder and copies of any management letters sent to the Borrower by such accountantshereunder;
(c) Each Borrower shall promptly advise Bank Lender in writing of any material adverse change in the business, assets or condition, financial or otherwise, of any Borrower, the occurrence of any Event of Default hereunder or the occurrence of any event which, if uncured, will become an Event of Default hereunder after notice or lapse of time (or both);occurrence
(d) BankLender, or any Persons designated by it, shall have the right, upon reasonable notice prior to the occurrence of an Event of Default and at any timetime thereafter, to call at Borrower's Borrowers' places of business at any reasonable times, and, without hindrance or delay, to inspect the Collateral and to inspect, audit, check and make extracts from Borrower's Borrowers' books, records, journals, orders, receipts and any correspondence and other data relating to Borrower's businessBorrowers' businesses, the Collateral or any transactions between the parties hereto, and shall have the right to make such verification concerning Borrower's business Borrowers' businesses as Bank Lender may consider reasonable under the circumstances. Each Borrower shall furnish to Bank Lender such information relevant to BankLender's rights under this Agreement as Bank Lender shall at any time and from time to time request. Each Borrower authorizes Bank Lender to discuss the affairs, finances and business of such Borrower with any officers, employees or directors of such Borrower or with any Affiliate or the officers, employees or directors of any Affiliate, and to discuss the financial condition of such Borrower with such Borrower's independent public accountants. Any such discussions shall be without liability to Bank Lender or to such Borrower's independent public accountants. Borrower Borrowers shall pay to Bank all customary Lender the fees and out-of-pocket expenses incurred by Bank Lender and described in the exercise SECTION 3(E) of its rights hereunderthis Agreement, and all of such fees and expenses shall constitute Loans hereunder, shall be payable on demand and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(e) Borrower Borrowers shall:
(i) keep the Collateral properly housed and shall keep the Collateral insured for the full insurable value thereof against loss or damage by fire, theft, explosion, sprinklers, collision (in the case of motor vehicles) and such other risks as are customarily insured against by Persons engaged in businesses similar to that of Borrower, Borrowers with such companies, in such amounts, with such deductibles, amounts and under policies in such form as shall be satisfactory to BankLender. Original At the request of Lender, original (or certified) copies of such policies of insurance have been or shall be delivered to Bank within ninety (90) days after the date hereofLender, together with evidence of payment of all premiums therefor, and shall contain an endorsement, in form and substance acceptable to BankLender, showing loss under such insurance policies payable to BankLender. Such endorsement, or an independent instrument furnished to BankLender, shall provide that the insurance company shall give Bank Lender at least thirty (30) days written notice before any such policy of insurance is altered or canceled cancelled and that no act, whether willful or negligent, or default of any Borrower or any other Person shall affect the right of Bank Lender to recover under such policy of insurance in case of loss or damage. In addition, Borrower shall cause to be executed and delivered to Bank an assignment of proceeds of its business interruption insurance policies. Borrower Borrowers hereby directs direct all insurers under all policies of insurance to pay all proceeds payable thereunder directly to Bank. Borrower irrevocably makes, constitutes and appoints Bank (and all officers, employees or agents designated by Bank) as Borrower's true and lawful attorney (and agent-in-fact) for the purpose of making, settling and adjusting claims under such policies of insurance, endorsing the name of Borrower on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and making all determinations and decisions with respect to such policies of insurance, provided, however, that if no Event of Default shall have occurred and is continuing, Borrower may make, settle and adjust claims involving less than $50,000 in the aggregate ------ without Bank's consent; andsuch
(ii) maintain, at its expense, such public liability and third party property damage insurance as is customary for Persons engaged in businesses similar to that of Borrower Borrowers with such companies and in such amounts, with such deductibles and under policies in such form as shall be satisfactory to Bank and Lender and, at the request of Lender, original (or certified) copies of such policies have been or shall be delivered to Bank within ninety (90) days after the date hereofLender, together with evidence of payment of all premiums therefor; each such policy shall contain an endorsement showing Bank Lender as additional insured thereunder and providing that the insurance company shall give Bank Lender at least thirty (30) days written notice before any such policy shall be altered or canceledcancelled. If Borrower Borrowers at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above or to pay any premium in whole or in part relating thereto, then BankLender, without waiving or releasing any obligation or default by Borrower Borrowers hereunder, may (but shall be under no obligation to) obtain and maintain such policies of insurance and pay such premiums and take such other actions with respect thereto as Bank Lender deems advisable. All sums disbursed by Bank Lender in connection with any such actions, including, including without limitation, limitation court costs, expenses, other charges relating thereto and reasonable attorneys' fees, shall constitute Loans hereunder, hereunder and shall be payable on demand by Borrower Borrowers to Bank Lender and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(f) No Borrower shall not use the Collateralits property, or any part thereof, in any unlawful business or for any unlawful purpose or use or maintain any of the Collateral its property in any manner that does or could result in material damage to the environment or a violation of any applicable environmental laws, rules or regulations; shall keep the Collateral its property in good condition, repair and order, ordinary wear and tear excepted; ;
(g) Each Borrower shall permit Bank Lender to examine any of the Collateral its or any other Borrower's property at any time and wherever [subject to the Collateral may be locatedrestrictions set forth in subsection (d) above]; shall not permit the Collateralits property, or any part thereof, to be levied upon under execution, attachment, distraint or other legal process; shall not sell, lease, grant a security interest in or otherwise dispose of any of the Collateral except as expressly permitted by this Agreement; shall not settle or adjust any Account identified by Borrower as an Eligible Account or with respect to which the Account Debtor is an Affiliate without the consent of Bank, provided, that following the occurrence of an Event of Default, Borrower shall not settle or adjust any Account without the consent of Bank; and shall not secrete or abandon any of the Collateral, or remove or permit removal of any of the Collateral from any of the locations listed on Exhibit B, except for the removal of Inventory sold in the ordinary course of Borrower's business as permitted herein;not
(gh) all All monies and other property obtained by any Borrower from Bank Lender pursuant to this Agreement will be used solely for the business purposes of such Borrower;
(hi) Each Borrower shall, at the request of BankLender, indicate on its records concerning the Collateral a notation, in form satisfactory to BankLender, of the security interest of Bank Lender hereunder, and such Borrower shall not maintain duplicates or copies of such records at any address other than such Borrower's principal place of business set forth on the first page of this Agreement;
(ij) Each Borrower shall file all required tax returns and pay all of its taxes when due subject to any extensions granted by the applicable taxing authoritydue, including, including without limitation, limitation taxes imposed by federal, state or municipal agencies, and shall cause any liens for taxes to be promptly released; provided, that such Borrower shall have the right to contest the payment of such taxes in good faith by appropriate proceedings so long as as: (i) the amount so contested is shown on such Borrower's financial statements; , (ii) the contesting of any such payment does not give rise to a lien for taxes; , (iii) such Borrower keeps on deposit with Bank Lender (such deposit to be held without interest) an amount of money which, in the sole judgment of BankLender, is sufficient to pay such taxes and any interest or penalties that may accrue thereon or the Borrower maintains adequate reserves on its balance sheet in accordance with generally accepted accounting principles; thereon, and (iv) if such Borrower fails to prosecute such contest with reasonable diligence, Bank Lender may apply the money so deposited in payment of such taxes. If such Borrower fails to pay any such taxes and in the absence of any such contest by such Borrower, Bank Lender may (but shall be under no obligation to) advance and pay any sums required to pay any such taxes and/or to secure the release of any lien therefor, and any sums so advanced by Bank Lender shall constitute Loans hereunder, shall be payable by such Borrower to Bank Lender on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(jk) No Borrower shall not assume, guarantee or endorse, or otherwise become liable in connection with, the obligations of any Person, except except: (i) by endorsement of instruments for deposit or collection or similar transactions in the ordinary course of business;
(k) Borrower shall not (i) enter into any merger or consolidation; , and (ii) sell, lease for guarantees of Affiliate obligations consented to by Lender which consent shall be granted or otherwise dispose of any of its assets other than denied by Lender acting in the ordinary course of business; (iii) purchase all or substantially all of the assets of any Person or division of such Person; or (iv) enter into any other transaction outside the ordinary course of Borrower's business, including, without limitation, any purchase, redemption or retirement of any shares of any class of its stock or any other equity interest, and any issuance of any shares of, or warrants or other rights to receive or purchase any shares of, any class of its stock or any other equity interestgood faith;
(l) Except for The Coastal Corporation's acquisition of up to fifty percent (50%) of Westec Denver, Inc. stock and the acquisition of assets permitted in SECTION 11(p) of this Agreement, no Borrower shall permit any change in its ownership or control or engage in any merger or acquisition without obtaining the prior written consent of Lender which consent may be withheld by Lender acting in good faith;
(m) Borrowers shall not declare or pay any dividend or other distribution (whether in cash or in kind) on any class of its their stock unless no Event of Default has occurred or would be caused by such dividend or distribution and Borrowers' dividends and distributions for any fiscal year do not exceed fifty percent (if Borrower is a corporation50%) or of Portfield's net income as reported on account of any equity interest in Borrower (if Borrower is a partnership, limited liability company or other type of entity);
(m) Borrower shall not purchase or otherwise acquire, or contract to purchase or otherwise acquire, the obligations or stock of any Person, other than direct obligations of the United Statesaudited financial statement for such fiscal year;
(n) Each Borrower shall: (i) keep in full force and effect any and all Plans which may, from time to time, come into existence under ERISA, unless such Plans can be terminated without liability to such Borrower; (ii) make contributions to all of the Plans in a timely manner and in a sufficient amount to comply with the requirements of ERISA; (iii) comply with all material requirements of ERISA which relate to Plans (including without limitation the minimum funding standards of Section 302 of ERISA); and (iv) notify Lender immediately upon receipt by such Borrower of any notice of the institution of any proceeding or other action which may result in the termination of any Plans;
(o) No Borrower shall not amend its organizational documents or change its fiscal year unless such actions would not have an adverse effect (which shall end on the Borrower's business, property, assets, operations February 28th or condition, financial or otherwise, as determined by Bank in its sole discretion, and Bank has received ten (10) days prior written notice 29th of such amendment or change, or enter into a new line of business materially different from Borrower's current businesseach year);
(o) See Exhibit A
(p) Each Borrower shall reimburse Bank for shall, at all costs times, comply in all material respects with all laws, rules, regulations, licenses, permits, approvals and expensesorders applicable to it and duly observe all requirements of any Federal, State or local governmental authority, including, without limitation, the Employee Retirement Security Act of 1974, as amended, the Occupational Safety and Hazard Act of 1970, as amended, the Fair Labor Standards Act of 1938, as amended, and all statutes, rules, regulations, orders, permits and stipulations relating to environmental pollution and employee health and safety, including, without limitation, all of the Environmental Laws;
(q) Each Borrower shall establish and maintain, at its expense, a system to assure and monitor its continued material compliance with all Environmental Laws in all of its operations, which system shall include annual reviews of such compliance by employees or agents of such Borrower who are familiar with the `requirements of the Environmental Laws. Copies of all environmental surveys, audits, assessments, feasibility studies and results of remedial investigations shall be promptly furnished, or caused to be furnished, by Borrowers to Lender. Each Borrower shall take prompt and appropriate action to respond to any non-compliance with any of the Environmental Laws and shall regularly report to Lender on such response.
(r) Each Borrower shall give both oral and written notice to Lender immediately upon such Borrower's receipt of any notice of, or such Borrower's otherwise obtaining knowledge of any of the following events involving a liability or exposure equal to or exceeding $200,000.00 in the aggregate: (i) the occurrence of any event involving the release, spill or discharge, threatened or actual, of any Hazardous Material; (ii) any investigation, proceeding, complaint, order, directive, claims, citation or notice with respect to: (A) any non-compliance with or violation of any Environmental Law by any Borrower or (B) the release, spill or discharge, threatened or actual, of any Hazardous Material or (C) the generation, use, storage, treatment, transportation, manufacture, handling, production or disposal of any Hazardous Materials or (D) any other environmental, health or safety matter, which affects any Borrower or its business, operations or assets or any properties at which any Borrower transported, stored or disposed of any Hazardous Materials;
(s) Without limiting the generality of the foregoing, whenever Lender reasonably determines that there is material non-compliance, or any condition which requires any action by or on behalf of any Borrower in order to avoid any material non-compliance, with any Environmental Law, such Borrower shall, at Lender's request and such Borrower's expense:
(i) cause an independent environmental engineer acceptable to Lender to conduct such tests of the site where any Borrower's non-compliance or alleged non-compliance with such Environmental Laws has occurred as to such non-compliance and prepare and deliver to Lender a report as to such non-compliance setting forth the results of such tests, a proposed plan for responding to any environmental problems described therein, and an estimate of the costs thereof and (ii) provide to Lender a supplemental report of such engineer whenever the scope of such non- compliance, or such Borrower's response thereto or the estimated costs thereof, shall change in any material respect;
(t) Borrowers shall indemnify and hold harmless Lender, its directors, officers, employees, agents, invitees, representatives, successors and assigns, from and against any and all losses, claims, damages, liabilities, costs, and expenses (including attorneys' fees and legal expenses) directly or indirectly arising out of or attributable to the use, generation, manufacture,
(u) Borrowers shall reimburse Lender for all reasonable costs and expenses, including without limitation legal expenses and reasonable attorneys' fees, incurred by Bank Lender in connection with (i) documentation and consummation of this transaction and any other transactions between Borrower Borrowers and BankLender, including, including without limitation, limitation Uniform Commercial Code and other public record searches, lien filings, overnight courier Federal Express or other similar express or messenger delivery, appraisal costs, surveys, title insurance insurance, engineering reports and inspections, and environmental audit or review costs; (ii) collection, protection and in seeking to administer, collect, protect or enforcement of enforce any rights in or to the Collateral; (iii) collection of Collateral or incurred by Lender in seeking to collect any Liabilities; Liabilities and (iv) administration and enforcement of to administer, participate, assign and/or enforce any of BankLender's rights under this Agreement. Borrower shall also pay all normal service charges with respect to all accounts maintained by Borrower with Bank Agreement and any additional services requested by Borrower from Bankthe Other Agreements. All such costs, expenses and charges shall constitute Loans hereunder, shall be payable by Borrower Borrowers to Bank Lender on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(qv) Borrower Borrowers shall not purchase or otherwise acquire incur more than $3,500,000.00 in capital expenditures (including, without limitation, excluding expenditures incurred as a result of Borrowers' acquisition by way of capitalized lease), or commit to purchase or acquire, any fixed asset if, after giving effect to such purchase or other acquisition, the aggregate cost assets of all such fixed assets purchased or otherwise acquired would exceed $100,000.00 another business) during any the first fiscal year of Borrower; ---------- and
this Agreement, more than $5,500,000.00 in capital expenditures (r) Neither Borrower nor any Affiliate shall use any portion excluding expenditures incurred as a result of the proceeds of the Loans, either directly or indirectly, for the purpose of (i) purchaisng any securities underwritten or privately placed by ABN AMRO Securities (USA) Inc. ("AASI"), an affiliate of Bank; or (ii) purchasing from AASI any securities in which AASI makes a market; or (iii) refinancing or making payments of principal, interest or dividends on any securities issued by Borrower or any Affiliate, and underwritten, privately placed or dealt in by AASI.Borrowers' a
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Additional Covenants of Borrower. Until payment or satisfaction in full of all Liabilities and termination of this Agreement, unless Borrower obtains Bank's the prior written consent of the Lender waiving or modifying any of Borrower's covenants hereunder in any specific instance, Borrower agrees as follows:
(a) Borrower shall at all times keep accurate and complete books, records and accounts with respect to all of Borrower's business activities, in accordance with sound accounting practices and generally accepted accounting principles consistently applied, and shall keep such books, records and accounts, and any copies thereof, only at the addresses indicated for such purpose on Exhibit B;
(b) Borrower agrees to deliver to Bank Lender the following financial information, all of which shall be prepared in accordance with generally accepted accounting principles consistently applied: (i) no later than twenty twenty- five (2025) days after each calendar month, copies of internally prepared financial statements, including, without limitation, balance sheets and statements of income, retained earnings and cash flow of Borrower, on a consolidated basis, certified by the Chief Financial Officer of Borrower; (ii) no later than thirty forty-five (3045) days after the end of each of the first three quarters of Borrower's fiscal year a balance sheet, operating statement and reconciliation of surplus of Borrower, each on a consolidated and consolidating basis, which quarterly financial statements may be unaudited but shall be certified by the Chief Financial Officer of Borrower; (iii) together with each financial statement delivered pursuant to clauses (i) and (iiiii) of this subparagraph 11(b), a certificate executed by the Chief Financial Officer of Borrower stating that no Event of Default or event which with notice or the passage of time or both would become an Event of Default has occurred (or, if an Event of Default or any such other event has occurred, describing such event and stating what actions Borrower has taken or intends to take as a result thereof) and showing the calculations made to demonstrate that Borrower has complied with all financial covenants contained in this Agreement and Exhibit A; (iv) no later than seventy-five ninety (7590) days after the end of each of Borrower's fiscal yearsyears (including the fiscal year ended July 31, audited 1996), annual financial statements on a consolidated and consolidating basis with an unqualified opinion by independent certified public accountants selected by Borrower and reasonably satisfactory to Bank, which financial statements shall be accompanied by Lender; and (v) a letter from such accountants acknowledging that they are aware that a primary intent of Borrower in obtaining such financial statements is to influence Bank and that Bank is relying upon such financial statements in connection with the exercise of its rights hereunder and copies copy of any management letters sent to the Borrower by such accountants;
(c) Borrower shall promptly advise Bank Lender in writing of any material adverse change in the business, assets or condition, financial or otherwise, of Borrower, the occurrence of any Event of Default hereunder or the occurrence of any event which, if uncuredincurred, will become an Event of Default hereunder after notice or lapse of time (or both);
(d) BankLender, or any Persons designated by it, shall have the right, at any time, to call at Borrower's places of business at any reasonable times, and, without hindrance or delay, to inspect the Collateral and to inspect, audit, check and make extracts from Borrower's books, records, journals, orders, receipts and any correspondence and other data relating to Borrower's business, the Collateral or any transactions between the parties hereto, and shall have the right to make such verification concerning Borrower's business as Bank Lender may consider reasonable under the circumstances. Borrower shall furnish to Bank such information relevant to Bank's rights under this Agreement as Bank shall at any time and from time to time request. Borrower authorizes Bank to discuss the affairs, finances and business of Borrower with any officers, employees or directors of Borrower or with any Affiliate or the officers, employees or directors of any Affiliate, and to discuss the financial condition of Borrower with Borrower's independent public accountants. Any such discussions shall be without liability to Bank or to Borrower's independent public accountants. Borrower shall pay to Bank all customary fees and out-of-pocket expenses incurred by Bank in the exercise of its rights hereunder, and all of such fees and expenses shall constitute Loans hereunder, shall be payable on demand and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(e) Borrower shall:
(i) keep the Collateral properly housed and insured for the full insurable value thereof against loss or damage by fire, theft, explosion, sprinklers, collision (in the case of motor vehicles) and such other risks as are customarily insured against by Persons engaged in businesses similar to that of Borrower, with such companies, in such amounts, with such deductibles, and under policies in such form as shall be satisfactory to Bank. Original (or certified) copies of such policies of insurance have been or shall be delivered to Bank within ninety (90) days after the date hereof, together with evidence of payment of all premiums therefor, and shall contain an endorsement, in form and substance acceptable to Bank, showing loss under such insurance policies payable to Bank. Such endorsement, or an independent instrument furnished to Bank, shall provide that the insurance company shall give Bank at least thirty (30) days written notice before any such policy of insurance is altered or canceled and that no act, whether willful or negligent, or default of Borrower or any other Person shall affect the right of Bank to recover under such policy of insurance in case of loss or damage. In addition, Borrower shall cause to be executed and delivered to Bank an assignment of proceeds of its business interruption insurance policies. Borrower hereby directs all insurers under all policies of insurance to pay all proceeds payable thereunder directly to Bank. Borrower irrevocably makes, constitutes and appoints Bank (and all officers, employees or agents designated by Bank) as Borrower's true and lawful attorney (and agent-in-fact) for the purpose of making, settling and adjusting claims under such policies of insurance, endorsing the name of Borrower on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and making all determinations and decisions with respect to such policies of insurance, provided, however, that if no Event of Default shall have occurred and is continuing, Borrower may make, settle and adjust claims involving less than $50,000 in the aggregate ------ without Bank's consent; and
(ii) maintain, at its expense, such public liability and third party property damage insurance as is customary for Persons engaged in businesses similar to that of Borrower with such companies and in such amounts, with such deductibles and under policies in such form as shall be satisfactory to Bank and original (or certified) copies of such policies have been or shall be delivered to Bank within ninety (90) days after the date hereof, together with evidence of payment of all premiums therefor; each such policy shall contain an endorsement showing Bank as additional insured thereunder and providing that the insurance company shall give Bank at least thirty (30) days written notice before any such policy shall be altered or canceled. If Borrower at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above or to pay any premium relating thereto, then Bank, without waiving or releasing any obligation or default by Borrower hereunder, may (but shall be under no obligation to) obtain and maintain such policies of insurance and pay such premiums and take such other actions with respect thereto as Bank deems advisable. All sums disbursed by Bank in connection with any such actions, including, without limitation, court costs, expenses, other charges relating thereto and reasonable attorneys' fees, shall constitute Loans hereunder, shall be payable on demand by Borrower to Bank and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(f) Borrower shall not use the Collateral, or any part thereof, in any unlawful business or for any unlawful purpose or use or maintain any of the Collateral in any manner that does or could result in material damage to the environment or a violation of any applicable environmental laws, rules or regulations; shall keep the Collateral in good condition, repair and order, ordinary wear and tear excepted; shall permit Bank to examine any of the Collateral at any time and wherever the Collateral may be located; shall not permit the Collateral, or any part thereof, to be levied upon under execution, attachment, distraint or other legal process; shall not sell, lease, grant a security interest in or otherwise dispose of any of the Collateral except as expressly permitted by this Agreement; shall not settle or adjust any Account identified by Borrower as an Eligible Account or with respect to which the Account Debtor is an Affiliate without the consent of Bank, provided, that following the occurrence of an Event of Default, Borrower shall not settle or adjust any Account without the consent of Bank; and shall not secrete or abandon any of the Collateral, or remove or permit removal of any of the Collateral from any of the locations listed on Exhibit B, except for the removal of Inventory sold in the ordinary course of Borrower's business as permitted herein;
(g) all monies and other property obtained by Borrower from Bank pursuant to this Agreement will be used solely for business purposes of Borrower;
(h) Borrower shall, at the request of Bank, indicate on its records concerning the Collateral a notation, in form satisfactory to Bank, of the security interest of Bank hereunder;
(i) Borrower shall file all required tax returns and pay all of its taxes when due subject to any extensions granted by the applicable taxing authority, including, without limitation, taxes imposed by federal, state or municipal agencies, and shall cause any liens for taxes to be promptly released; provided, that Borrower shall have the right to contest the payment of such taxes in good faith by appropriate proceedings so long as (i) the amount so contested is shown on Borrower's financial statements; (ii) the contesting of any such payment does not give rise to a lien for taxes; (iii) Borrower keeps on deposit with Bank (such deposit to be held without interest) an amount of money which, in the sole judgment of Bank, is sufficient to pay such taxes and any interest or penalties that may accrue thereon or the Borrower maintains adequate reserves on its balance sheet in accordance with generally accepted accounting principles; and (iv) if Borrower fails to prosecute such contest with reasonable diligence, Bank may apply the money so deposited in payment of such taxes. If Borrower fails to pay any such taxes and in the absence of any such contest by Borrower, Bank may (but shall be under no obligation to) advance and pay any sums required to pay any such taxes and/or to secure the release of any lien therefor, and any sums so advanced by Bank shall constitute Loans hereunder, shall be payable by Borrower to Bank on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(j) Borrower shall not assume, guarantee or endorse, or otherwise become liable in connection with, the obligations of any Person, except by endorsement of instruments for deposit or collection or similar transactions in the ordinary course of business;
(k) Borrower shall not (i) enter into any merger or consolidation; (ii) sell, lease or otherwise dispose of any of its assets other than in the ordinary course of business; (iii) purchase all or substantially all of the assets of any Person or division of such Person; or (iv) enter into any other transaction outside the ordinary course of Borrower's business, including, without limitation, any purchase, redemption or retirement of any shares of any class of its stock or any other equity interest, and any issuance of any shares of, or warrants or other rights to receive or purchase any shares of, any class of its stock or any other equity interest;
(l) Borrower shall not declare or pay any dividend or other distribution (whether in cash or in kind) on any class of its stock (if Borrower is a corporation) or on account of any equity interest in Borrower (if Borrower is a partnership, limited liability company or other type of entity);
(m) Borrower shall not purchase or otherwise acquire, or contract to purchase or otherwise acquire, the obligations or stock of any Person, other than direct obligations of the United States;
(n) Borrower shall not amend its organizational documents or change its fiscal year unless such actions would not have an adverse effect on the Borrower's business, property, assets, operations or condition, financial or otherwise, as determined by Bank in its sole discretion, and Bank has received ten (10) days prior written notice of such amendment or change, or enter into a new line of business materially different from Borrower's current business;
(o) See Exhibit A
(p) Borrower shall reimburse Bank for all costs and expenses, including, without limitation, legal expenses and reasonable attorneys' fees, incurred by Bank in connection with (i) documentation and consummation of this transaction and any other transactions between Borrower and Bank, including, without limitation, Uniform Commercial Code and other public record searches, lien filings, overnight courier or other express or messenger delivery, appraisal costs, surveys, title insurance and environmental audit or review costs; (ii) collection, protection or enforcement of any rights in or to the Collateral; (iii) collection of any Liabilities; and (iv) administration and enforcement of any of Bank's rights under this Agreement. Borrower shall also pay all normal service charges with respect to all accounts maintained by Borrower with Bank and any additional services requested by Borrower from Bank. All such costs, expenses and charges shall constitute Loans hereunder, shall be payable by Borrower to Bank on demand, and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder;
(q) Borrower shall not purchase or otherwise acquire (including, without limitation, acquisition by way of capitalized lease), or commit to purchase or acquire, any fixed asset if, after giving effect to such purchase or other acquisition, the aggregate cost of all such fixed assets purchased or otherwise acquired would exceed $100,000.00 during any fiscal year of Borrower; ---------- and
(r) Neither Borrower nor any Affiliate shall use any portion of the proceeds of the Loans, either directly or indirectly, for the purpose of (i) purchaisng any securities underwritten or privately placed by ABN AMRO Securities (USA) Inc. ("AASI"), an affiliate of Bank; or (ii) purchasing from AASI any securities in which AASI makes a market; or (iii) refinancing or making payments of principal, interest or dividends on any securities issued by Borrower or any Affiliate, and underwritten, privately placed or dealt in by AASI.the
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