EXECUTION COPY
$2,000,000
TERM LOAN AGREEMENT
(Dated as of July 28, 1995
between
WAHLCO ENVIRONMENTAL SYSTEMS, INC.
as Borrower
and
▇▇▇ ACQUISITION CORP.
as Lender
TABLE OF CONTEXTS
SECTION Page
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1. DEFINITIONS ................................................. 1
2. AMOUNT AND TERMS OF CREDIT .................................. 12
2. l. Term Loan Advance ................................. 12
2.2. Mandatory Prepayment .............................. 13
2.3. Optional Prepayment................................ 13
2.4. Use of Proceeds.................................... 13
2.5. Interest on Term Loan.............................. 13
2.6. Commitment Fee .................................... 14
2.7. Receipt of Payments ............................... 14
2.8. Application of Payments.....,...................... 14
2.9. Accounting.......,................................. 15
2.10. Indemnity.......................................... 15
2.11. Access............................................. 15
2.12. Taxes ............................................. 15
3. CONDITIONS PRECEDENT ........................................ 16
3. l. Conditions to Term Loan ........................... 16
4. REPRESENTATIONS AND WARRANTIES ................................ 18
4. l. Corporate Existence; Compliance with Law .......... 18
4.2. Executive Offices.................................. 18
4.3. Subsidiaries ...................................... 18
4.4. Corporate Power; Authorization; Enforceable
Obligations....................................... 19
4.5. Solvency .......................................... 19
4.6. Financial Statements .............................. 19
4.7. Projections ....................................... 20
4.8. Ownership of Property; Liens ...................... 20
4.9. No Default ........................................ 21
4.10. Burdensome Restrictions ........................... 21
4.11. Labor Matters ..................................... 21
4.12. Other Ventures .................................... 22
4. 13. Taxes ............................................. 22
4.14. ERISA.............................................. 22
4.15. No Litigation...................................... 24
4.16. Employment and Labor Agreements ................... 24
4.17. Patents, Trademarks, Copyrights and Licenses....... 24
4.18. Full Disclosure ................................... 24
4.19. Liens.............................................. 24
4.20. No Material Adverse Effect......................... 24
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SECTION Page
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4.21. Environmental Protection........................... 24
4.22. Real Estate Mortgages.............................. 25
5. FINANCIAL STATEMENTS AND INFORMATION......................... 25
5.1. Reports and Notices ............................... 25
5.2. Communication with Accountants..................... 27
6. AFFIRMATIVE COVENANTS........................................ 27
6.1. Maintenance of Existence and Conduct of Business... 27
6.2. Payment of Obligations ............................ 27
6.3. Financial Covenants ............................... 28
6.4. Lender's Fees ..................................... 29
6.5. Books and Records ................................. 29
6.6. Litigation......................................... 29
6.7. Insurance.......................................... 29
6.8. Compliance with Law................................ 29
6.9. Agreements......................................... 30
6.10. Supplemental Disclosure ........................... 30
6.11. Employee Plans .................................... 30
6.12. SEC Filings; Certain Other Notices................. 31
6.13. Sale of Certain Assets ............................ 31
6.14. Leases; New Real Estate ........................... 31
6.15. Environmental Matters.............................. 32
6.16. Key Man Life Insurance............................. 33
6.17. Additional Security................................ 33
7. NEGATIVE COVENANTS .......................................... 33
7.1. Mergers, Etc....................................... 33
7.2. Investments; Loans and Advances.................... 33
7.3. Indebtedness ...................................... 34
7.4. Employee Loans..................................... 34
7.5. Maintenance of Business ........................... 34
7.6. Guaranteed Indebtedness ........................... 34
7.7. Liens.............................................. 34
7.8. Capital Expenditures............................... 34
7.9. Sales of Assets.................................... 35
7.10. Cancellation of Indebtedness ...................... 35
7.11. Events of Default ................................. 35
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SECTION Page
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7.12. Hedging Transactions ............................. 35
7.13. Restricted Payments .............................. 35
7.14. Compensation ..................................... 35
7.15. ERISA............................................. 35
8. TERM........................................................ 36
8.1. Termination ...................................... 36
8.2. Survival of Obligations Upon Termination of
Financing Arrangement............................. 36
8.3. Termination Prior To Closing Date................. 36
9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ..................... 36
9.1. Events of Default................................. 36
9.2. Remedies ......................................... 38
9.3. Waivers by Borrower .............................. 39
9.4. Right of Set-Off.................................. 39
10. MISCELLANEOUS .............................................. 39
10.1. Complete Agreement; Modification of Agreement;
Sale of Interest ................................. 39
10.2. Fees and Expenses ................................ 40
10.3. No Waiver by Lender .............................. 41
10.4. Remedies ......................................... 41
10.5. Waiver of Jury Trial ............................. 42
10.6. Severability...................................... 42
10.7. Parties........................................... 42
10.8. Conflict of Terms................................. 42
10.9. Authorized Signature.............................. 42
10.10. Governing Law .................................... 42
10.11. Notices .......................................... 42
10.12. Survival.......................................... 43
10.13. Section Titles ................................... 44
10.14. Counterparts ..................................... 44
SIGNATURES ...................................................... 44
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INDEX OF EXHIBITS AND SCHEDULES
Exhibit A - Guaranty
Exhibit B - Patent Assignment
Exhibit C - Security Agreement
Exhibit D - Stock Pledge Agreement
Exhibit E - Term Note
Exhibit F - Trademark Assignment
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TERM LOAN AGREEMENT, dated as of July 28, 1995, between WAHLCO
ENVIRONMENTAL SYSTEMS, INC., a Delaware corporation ("Borrower"), and ▇▇▇
ACQUISITION CORP., a Delaware corporation ("Lender"),
WITNESSETH:
----------
WHEREAS, Lender has entered into a Stock Purchase Agreement dated as
of May 15, 1995 (the "Stock Purchase Agreement"), with Pacific Diversified
Capital Company, a California corporation ("PDC"), pursuant to which Lender will
acquire all of the outstanding common stock of the Borrower owned by PDC (the
"Acquisition"); and
WHEREAS, in connection with the Acquisition, Lender on May 15, 1995
executed a commitment letter (the "Commitment Letter") with Borrower, pursuant
to which Lender agreed, subject to the terms and conditions specified therein,
to provide Borrower with a $2,000,000 secured term loan for ongoing working
capital purposes; and
WHEREAS, pursuant to the Commitment Letter, Lender has previously
advanced to Borrower sum of (i) $1,000,000 pursuant to a note dated June 26,
1995, (ii) 500,000 pursuant to a note dated July 5, 1995, and (iii) $500,000
pursuant to a note dated July 17, 1995 (collectively, the "Interim Notes"); and
WHEREAS, the Commitment Letter contemplated the negotiation and
execution and delivery of definitive loan documentation; and
WHEREAS, Lender has agreed to refinance the indebtedness evidenced by
the Interim Notes, but only upon the terms, and subject to the conditions,
contained herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto agree as follows:
1. DEFINITIONS
In addition to the defined terms appearing above, capitalized terms
used in this Agreement shall have (unless otherwise provided elsewhere in this
Agreement) the following respective meanings when used herein:
"Account Debtor" shall mean any Person who is or who may become
obligated to Borrower or any of its Subsidiaries under, with respect to, or on
account of, an Account.
"Accounts" shall mean all accounts, accounts receivable, other
receivables, contract rights, chattel paper, instruments, documents, and notes,
whether now owned or hereinafter acquired by Borrower or any of its
Subsidiaries.
"Acquisition" shall have the meaning assigned to it in the first
paragraph of the recitals to this Agreement.
"Affiliate" shall mean, with respect to any Person, (i) each Person
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, 5% or more of the Stock having ordinary
voting power in the election of directors of such Person, (ii) each
Person that controls, is controlled by or is under common control with such
Person or any Affiliate of such Person or (iii) each of such Person's
officers, directors, joint venturers and partners. For the purpose of this
definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management
or policies, whether through the ownership of voting securities, by contract
or otherwise.
"Agreement" shall mean this Term Loan Agreement, including all
amendments, modifications and supplements hereto and any appendices, exhibits
or schedules to any of the foregoing, and shall refer to the Agreement as the
same may be in effect at the time such reference becomes operative.
"Assignee Lender" shall mean any holder of any Term Notes other than
Lender.
"BA" shall mean Bank of America. NT & SA.
"Borrower" shall mean Wahlco Environmental Systems, Inc., a Delaware
corporation having an office at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
"Business Day" shall mean any day that is not a Saturday, a Sunday
or a day on which banks are required or permitted to be closed in the State
of New York.
"Capital Expenditures" shall mean all payments for any fixed assets
or improvements or for replacements, substitutions or additions thereto, that
have a useful life of more than one year and which are required to be
capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any lease of
any property (whether real, personal or mixed) by such Person as lessee that,
in accordance with GAAP, either would be required to be classified and
accounted for as a capital lease on a balance sheet of such Person or
otherwise be disclosed as such in a note to such balance sheet, other than,
in the case of Borrower or a Subsidiary of Borrower, any such lease under
which Borrower or such Subsidiary is the lessor.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in
respect of such Capital Lease or otherwise be disclosed in a note to such
balance sheet.
"Cash Equivalents" shall have the meaning assigned to it in Section
7.2 hereof.
"Charges" shall mean all federal, state, county, city, municipal,
local, foreign or other governmental (including, without limitation, PBGC)
taxes at the time due and payable, levies, assessments, charges, liens,
claims or encumbrances upon or relating to (i) the Collateral, (ii) the
Obligations, (iii) Borrower's or any of its Subsidiaries' employees, payroll,
income or gross receipts, (iv) Borrower's or any of its Subsidiaries'
ownership or use of any of its assets, or (v) any other aspect of Borrower's
or any of the Subsidiaries' business.
"Closing Date" shall mean the date of the making by Lender of the
Term Loan Advance hereunder.
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"Code" shall mean the Uniform Commercial Code of the jurisdiction
with respect to which such term is used, as in effect from time to time.
"Collateral" shall mean the collateral covered by the Security
Agreement, the Patent Assignments and the Trademark Assignments, and the
Pledged Collateral covered by the Stock Pledge Agreement (as such term is
defined therein).
"Collateral Documents" shall mean the Security Agreement, the Stock
Pledge Agreement, the Guaranty and the Patent and Trademark Assignment.
"Commitment Fee." shall have the meaning assigned to it in Section
2.6 hereof.
"Commitment Letter" shall have the meaning assigned to it in the
second paragraph of the recitals to this Agreement.
"Commitment Termination Date" shall mean the earliest of (i) May 14,
1998, (ii) the date of termination specified in a notice of termination
provided to Borrower by Lender at least 30 days prior thereto, (iii) the date
of termination of the Commitment pursuant to Section 9.2 and (iv) the date of
prepayment in full by Borrower of the Term Loan in accordance with the
provisions of Section 2.2 or 2.3 hereof.
"Compensation" shall mean, with respect to any Person, all payments
and accruals commonly considered to be compensation, including, without
limitation, all wages, salary, deferred payment arrangements, bonus payments
and accruals, profit sharing arrangements, payments in respect of stock
option or phantom stock option or similar arrangements, stock appreciation
rights or similar rights, incentive payments, pension or employment benefit
contributions or similar payments, made by Borrower to or accrued for the
account of such Person or otherwise for the direct or indirect benefit of
such Person.
"Consolidated Available Cash Flow" shall mean, with respect to any
Person for any period, Consolidated Cash Flow PLUS decreases in Working
Capital MINUS payments made in respect of Capital Expenditures permitted
hereunder, cash interest, scheduled principal payments on the Notes,
principal payments permitted hereunder on other Indebtedness, increases in
Working Capital and payment of taxes.
"Consolidated Cash Flow" shall mean, with respect to any Person for
any period, the consolidated operating income (before extraordinary items,
interest, taxes, depreciation, amortization, and expenses and costs directly
related to the consummation of the transactions contemplated by the Loan
Documents) of such Person and its consolidated Subsidiaries determined in
accordance with GAAP and in a manner consistent with the projections referred
to in Section 4.7 hereof.
"Consolidated Cash Flow to Consolidated Fixed Charges Ratio" shall
mean, at any date of calculation thereof, the ratio of (a) Consolidated Cash
Flow of Borrower for the immediately preceding four consecutive fiscal
quarters to (b) Consolidated Fixed Charges of Borrower for such period.
"Consolidated Fixed Charges" shall mean, with respect to any Person
for any period, the sum of (i) cash interest payable on all Indebtedness of
such Person and its consolidated Subsidiaries during such period plus (ii)
rentals payable by such Person and its consolidated
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Subsidiaries under leases of real or personal, or mixed, property during such
period and (iii) principal amounts of all Indebtedness of such Person and its
consolidated Subsidiaries payable during such period resulting from
borrowings or the granting of credit (other than normal trade credit) plus
(iv) the amount of Capital Expenditures permitted to be paid during such
period pursuant to Section 7.8.
"Consolidated Interest Charges" shall mean, with respect to any
Person for any period, the amount which, in conformity with GAAP, would be
set forth opposite the caption "interest expense" (or any like caption) on a
consolidated income statement of such Person and all other Persons with which
such Person's financial statements are to be consolidated in accordance with
GAAP for the relevant period ended on such date.
"Consolidated Interest Coverage Ratio" shall mean, at any date of
calculation thereof, the ratio of (a) Consolidated Cash Flow of Borrower for
the immediately preceding four consecutive fiscal quarters to (b)
Consolidated Interest Charges of Borrower for such period.
"Consolidated Net Worth" shall mean, with respect to any Person, the
total assets less the total liabilities of such Person and its consolidated
Subsidiaries.
"Consolidated Senior Debt Service" shall mean, with respect to
Borrower for any period, an amount equal to the sum of (i) the Consolidated
Interest Charges on the Senior Debt for such period and (ii) the scheduled
amortization of the Term Loan during such period.
"Consolidated Total Funded Debt" shall mean, with respect to any
Person at any date of determination, the total of all Funded Debt of such
Person and its consolidated Subsidiaries outstanding on such date determined
in accordance with GAAP, after eliminating all intercompany transactions.
"Consolidated Total Funded Debt to Consolidated Cash Flow Ratio"
shall mean, at any date of calculation thereof, the ratio of (a) Consolidated
Total Funded Debt of Borrower to (b) Consolidated Cash Flow of Borrower for
the immediately preceding four consecutive fiscal quarters.
"Default" shall mean any event which, with the passage of time or
notice or both, would, unless cured or waived, become an Event of Default.
"Due Date" shall mean the date on which payment is due with respect
to an Account, as indicated on the invoice or statement of Account rendered
to the Account Debtor.
"Environmental Laws" shall mean all federal, state and local laws,
statutes, ordinances and regulations, now or hereafter in effect, and in each
case as amended or supplemented from time to time, and any judicial or
administrative interpretation thereof, including, without limitation, any
applicable judicial or administrative order, consent decree or judgment,
relative to the applicable Real Estate, relating to the regulation and
protection of human health, safety, the environment and natural resources
(including, without limitation, ambient air, surface water, groundwater,
wetlands, land surface or subsurface strata, wildlife, aquatic species and
vegetation). Environmental Laws include but are not limited to the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended (42 U.S.C. Section 9601 ET SEQ.) ("CERCLA"); the Hazardous
Material Transportation Act, as amended (49 U.S.C. Section 1801 ET SEQ.); the
Federal
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Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. Section 136
ET SEQ.); the Resource Conservation and Recovery Act, as amended (42 U.S.C.
Section 6901 ET SEQ.) ("RCRA"); the Toxic Substance Control Act, as amended
(15 U.S.C. Section 2601 ET SEQ.); the Clean Air Act, as amended (42 U.S.C.
Section 740 ET SEQ.); the Federal Water Pollution Control Act, as amended (33
U.S.C. Section 1251 ET SEQ.); the Occupational Safety and Health Act, as
amended (29 U.S.C. Section 651 ET SEQ.) ("OSHA"); and the Safe Drinking Water
Act, as amended (42 U.S.C. Section 300f ET SEQ.), and any and all regulations
promulgated thereunder, and all analogous state and local counterparts or
equivalents and any transfer of ownership notification or approval statutes
such as the New Jersey Environmental Cleanup Responsibility Act (N.J. Stat.
▇▇▇. Section 13:1K-6 ET SEQ.) ("ECRA").
"Environmental Liabilities and Costs" shall mean all liabilities,
obligations, responsibilities, remedial actions, losses, damages, punitive
damages, consequential damages, treble damages, costs and expenses
(including, without limitation, all fees, disbursements and expenses of
counsel, experts and consultants and costs of investigation and feasibility
studies), fines, penalties, sanctions and interest incurred as a result of
any claim, suit, action or demand by any person or entity, whether based in
contract, tort, implied or express warranty, strict liability, criminal or
civil statute or common law (including, without limitation, any thereof
arising under any Environmental Law, permit, order or agreement with any
Governmental Authority) and which relate to any health or safety condition
regulated under any Environmental Law or in connection with any other
environmental matter or Spill or the presence of a hazardous substance or
threatened Spill or hazardous substance.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974 (or any successor legislation thereto), as amended from time to time and
any regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to Borrower, any trade or
business (whether or not incorporated) under common control with Borrower and
which, together with Borrower, are treated as a single employer within the
meaning of Section 414(b), (c), (m) or (o) of the IRC.
"ERISA Event" shall mean, with respect to Borrower or any ERISA
Affiliate, (i) a Reportable Event with respect to a Title IV Plan or a
Multiemployer Plan; (ii) the withdrawal of Borrower, any of its Subsidiaries
or any ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA
during a plan year in which it was a substantial employer, as defined in
Section 4001(a)(2) of ERISA; (iii) the complete or partial withdrawal of
Borrower, any of its Subsidiaries or any ERISA Affiliate from any
Multiemployer Plan; (iv) the filing of a notice of intent to terminate a
Title IV Plan or the treatment of a plan amendment as a termination under
Section 4041 of ERISA; (v) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC; (vi) the failure to make
required contributions to a Qualified Plan; or (vii) any other event or
condition which might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee
to administer, any Title IV Plan or Multiemployer Plan or the imposition of
any liability under Title IV of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA.
"Event of Default" shall have the meaning assigned to it in Section
9.1 hereof.
"Financials" shall mean the financial statements referred to in
Section 4.6(a) hereof.
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"Fiscal Year" shall mean the calendar year. Subsequent changes of
the fiscal year of Borrower shall not change the term "Fiscal Year," unless
the Required Lenders shall consent in writing to such changes.
"Funded Debt" shall mean, with respect to any Person, all
Indebtedness of such Person which by the terms of the agreement governing or
instrument evidencing such Indebtedness matures more than one year from, or
is directly or indirectly renewable or extendible at the option of the debtor
under a revolving credit or similar agreement obligating the lender or
lenders to extend credit over a period of more than one year from, the date
of creation thereof, including current maturities of long-term debt,
revolving credit, and short-term debt extendible beyond one year at the
option of the debtor and, in respect of Borrower, including the Term Loan
Advance.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any
obligation of such Person guaranteeing any indebtedness, lease, dividend, or
other obligation ("primary obligations") of any other Person (the "primary
obligor") in any manner including, without limitation, any obligation or
arrangement of such Person (a) to purchase or repurchase any such primary
obligation, (b) to advance or supply funds (i) for the purchase or payment of
any such primary obligation or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet condition of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation, or (d) to
indemnify the owner of such primary obligation against loss in respect
thereof.
"Guarantor" shall mean each Subsidiary of Borrower, each of which is
executing and delivering to Lender the Guaranty.
"Guaranty" shall mean the agreement made in favor of Lender by each
Guarantor, substantially in the form attached hereto as Exhibit A, including
all amendments, modifications and supplements thereto, and shall refer to the
Guaranty as the same may be in effect at the time such reference becomes
operative.
"Indebtedness" of any Person shall mean (i) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services (including, without limitation, reimbursement and all other
obligations with respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured, but not including obligations to trade
creditors incurred in the ordinary course of business), (ii) all obligations
evidenced by notes, bonds, debentures or similar instruments, (iii) all
indebtedness created or arising under any conditional sale or other title
retention agreements with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement
in the event of default are limited to repossession or sale of such
property), (iv) all Capital Lease Obligations, (v) all Guaranteed
Indebtedness, (vi) all Indebtedness referred to in clause (i), (ii), (iii),
(iv) or (v) above secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be
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secured by) any Lien upon or in property (including, without limitation,
accounts and contract rights) owned by such Person, even though such Person
has not assumed or become liable for the payment of such Indebtedness, (vii)
the Obligations, and (viii) all liabilities under Title IV of ERISA.
"Interest Payment Date" shall have the meaning assigned to such term
in Section 2.5(a) hereof.
"Inventory" shall mean any and all now owned or hereafter acquired
inventory, goods, merchandise, and other tangible personal property intended
for sale or lease, in the custody or possession, actual or constructive, of
Borrower or any of its Subsidiaries, or in transit to Borrower or any of its
Subsidiaries, including such inventory as is on consignment to third parties,
leased to customers of Borrower or any of its Subsidiaries, or otherwise
temporarily out of the custody or possession of Borrower or any of its
Subsidiaries.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and
any successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor
thereto.
"Leases" shall mean all of those leasehold estates in real property
now owned or hereafter acquired by Borrower or any Subsidiary of Borrower, as
lessee.
"Lender" shall mean ▇▇▇ Acquisition Corp. and, if at any time ▇▇▇
Acquisition Corp. shall cease to be a holder of Term Note, such replacement
lender as shall be designated as such by the Required Lenders.
"Letter of Credit Obligations" shall mean all outstanding
obligations incurred by BA at the request of Borrower or any Subsidiary,
whether direct or indirect, contingent or otherwise, due or not due, in
connection with the issuance or guarantee by BA of letters of credit, bank
acceptances in respect of letters of credit, or the like. The amount of such
Letter of Credit Obligations shall equal the maximum amount which may be
payable by BA thereupon or pursuant thereto.
"Letters of Credit" shall mean commercial or standby letters of
credit issued at the request and for the account of Borrower, and bankers'
acceptances issued by Borrower, for which BA has incurred Letter of Credit
Obligations pursuant thereto.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any lease or title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
perfecting a security interest under the Code or comparable law of any
jurisdiction).
"Loan Documents" shall mean this Agreement, the Term Note, the
Collateral Documents, the Guaranty, those other Ancillary Agreements as to
which Lender is a party or a beneficiary on the Closing Date, and all other
agreements, instruments, documents and certificates, including, without
limitation, pledges, powers of attorney, consents, assignments, contracts,
notices, and all other written matter whether heretofore, now or hereafter
executed by or on behalf of
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Borrower or any of its Affiliates, or any employee of Borrower or any of its
Affiliates, and delivered to Lender in connection with this Agreement or the
transactions contemplated hereby, and all amendments or supplements to any of
the foregoing.
"Loan Party" shall mean Borrower and each Subsidiary of Borrower.
"Material Adverse Effect" shall mean material adverse effect on (i)
the business, assets, operations, prospects or financial or other condition
of Borrower and its Subsidiaries taken as a whole, (ii) Borrower's and its
Subsidiaries' collective ability to pay the Obligations in accordance with
the terms thereof, or (iii) the Collateral or Lender's Liens on the
Collateral or the priority of any such Lien.
"Maximum Lawful Rate" shall have the meaning assigned to it in
Section 2.5(c) hereof.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which Borrower, any of its Subsidiaries
or any ERISA Affiliate is making, is obligated to make, has made or been
obligated to make, contributions on behalf of participants who are or were
employed by any of them.
"Net Cash Proceeds" shall have the meaning assigned to it in Section
2.2(a) hereof.
"Obligations" shall mean all loans, advances, debts, liabilities,
and obligations, for monetary amounts (whether or not such amounts are
liquidated or determinable) owing by Borrower or any of its Subsidiaries or
all of them to Lender or any Subsidiary of Lender, and all covenants and
duties regarding such amounts, of any kind or nature, present or future,
whether or not evidenced by any note, agreement or other instrument, arising
under any of the Loan Documents. This term includes, without limitation, all
interest, Commitment Fees, charges, expenses, attorneys' fees and any other
sum chargeable to Borrower or any or all of its Subsidiaries under any of the
Loan Documents.
"Patent Assignment" shall mean the Patent Assignments made in favor
of Lender by Borrower and its Subsidiaries, substantially in the form
attached hereto as Exhibit B.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"Pension Plan" shall mean an employee pension benefit plan, as
defined in Section (3)(2) of ERISA (other than a Multiemployer Plan), which
is not an individual account plan, as defined in Section 3(34) of ERISA, and
which Borrower, any of its Subsidiaries or, if a Title IV Plan, any ERISA
Affiliate maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.
Permitted Dispositions" shall have the meaning assigned to it in
Section 6.13 hereof.
"Permitted Encumbrances" shall mean the following encumbrances: (i)
Liens for taxes or assessments or other governmental charges or levies,
either not yet due and payable or to the extent that nonpayment thereof is
permitted by the terms of this Agreement; (ii) pledges or deposits securing
obligations under workmen's compensation, unemployment insurance, social
security or
- 8 -
public liability laws or similar legislation; (iii) pledges or deposits
securing bids, tenders, contracts (other than contracts for the payment of
money) or leases to which Borrower or any of its Subsidiaries is a party as
lessee made in the ordinary course of business; (iv) deposits securing public
or statutory obligations of Borrower or any of its Subsidiaries; (v)
workers', mechanics', suppliers', carriers', warehousemen's or other similar
liens arising in the ordinary course of business and securing indebtedness
aggregating not in excess of $100,000 at any time outstanding, not yet due
and payable; (vi) deposits securing or in lieu of surety, appeal or customs
bonds in proceedings to which Borrower or any of its Subsidiaries is a party;
(vii) any attachment or judgment lien, unless the judgment it secures shall
not, within 60 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
within 60 days after the expiration of any such stay; (viii) zoning
restrictions, easements, licenses, or other restrictions on the use of real
property or other minor irregularities in title (including leasehold title)
thereto, so long as the same do not materially impair the use, value, or
marketability of such real property, leases or leasehold estates; (ix) Liens
on cash and Cash Equivalents to secure Letter of Credit Obligations; (x)
Liens on the specific items of equipment that are the subject of the SBCC
Lease to secure the Sanwa Obligations.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, entity or government
(whether federal, state, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body or department
thereof).
"Plan" shall mean, with respect to Borrower or any ERISA Affiliate,
at any time, an employee benefit plan, as defined in Section 3(3) of ERISA,
which Borrower or any of its Subsidiaries maintains, contributes to or has an
obligation to contribute to on behalf of participants who are or were
employed by any of them.
"Projections" shall mean the projections referred to in Section 4.7
hereof.
"Qualified Plan" shall mean an employee pension benefit plan, as
defined in Section 3(2) of ERISA, which is intended to be tax-qualified under
Section 401(a) of the IRC, and which Borrower, any of its Subsidiaries or any
ERISA Affiliate maintains, contributes to or has an obligation to contribute
to on behalf of participants who are or were employed by any of them.
"Real Estate" shall mean all of those plots, pieces or parcels of
land now owned or leased or hereafter acquired or leased by Borrower or any
Subsidiary (the "Land"), including, without limitation, those listed on
Schedule 4.8 hereto and more particularly described in the Mortgages,
together with the right, title and interest of Borrower or any Subsidiary, if
any, in and to the streets, the land lying in the bed of any streets, roads
or avenues, opened or proposed, in front of, adjoining, or abutting the Land
to the center line thereof, the air space and development rights pertaining
to the Land and right to use such air space and development rights, all
rights of way, privileges, liberties, tenements, hereditaments, and
appurtenances belonging or in any way appertaining thereto, all fixtures, all
easements now or hereafter benefiting the Land and all royalties and rights
appertaining to the use and enjoyment of the Land, including, without
limitation, all alley, vault, drainage, mineral, water, oil, and gas rights,
together with all of the buildings and other improvements now or hereafter
erected on the Land, and all fixtures and articles of personal property
appertaining thereto and all additions thereto and substitution and
replacement thereof.
- 9 -
"Reportable Event" shall mean any of the events described in Section
4043(b)(1), (2), (3), (5), (6), (8) or (9) or ERISA.
"Required Lenders" shall mean, as of any date, the holders of Notes
evidencing at least a majority of the aggregate unpaid principal amount of the
Term Loan; PROVIDED, HOWEVER, that any amendment to, modification of or
supplement to this Agreement or waiver of a Default or an Event of Default
hereunder that would have the effect of reinstating the obligations to make Term
Loans from and after the date such obligations have been terminated or changing
the terms of, amount of or obligation to make Term Loans shall require the
affirmative consent thereto of ▇▇▇ Acquisition Corp.
"Reserves" shall mean such reserves for doubtful accounts, returns,
allowances and the like as may be established by Borrower or any Subsidiary or
as may otherwise be required in accordance with GAAP.
"Restricted Lease" shall mean, as at any date, any lease of property
(whether real, personal or mixed) other than Capital Leases.
"Restricted Payment" shall mean (i) the declaration of any dividend or the
incurrence of any liability to make any other payment of distribution of cash or
other property or assets in respect of Borrower's Stock or (ii) any payment on
account of the purchase, redemption or other retirement of Borrower's Stock or
any other payment or distribution made in respect thereof, either directly or
indirectly.
"Retiree Welfare Plan" shall refer to any Welfare Plan providing for
continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant's termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the IRC and at the
sole expense of the participant or the beneficiary of the participant.
"Sanwa Obligations" means all amounts payable by Borrower to SBCC pursuant
to (i) that certain letter agreement dated August 31, 1993 (the "SBCC Letter
Agreement") among SBCC, Borrower, Bachmann Companies, Inc., Wahlco, Inc., and
Wahlco Power Products, Inc., (ii) that certain Lease Agreement Number 0339795
dated August 15, 1991 (the "SBCC Lease") among Wahlco, Inc., Pennsylvania
Electric Company and New York State Electric and Gas Corporation, which has been
assigned to SBCC pursuant to the SBCC Letter Agreement, and (iii) that certain
letter agreement dated May 11, 1995 (the "May 11 Letter Agreement") among SBCC,
Borrower, ▇▇▇▇▇▇▇ Companies, Inc., Wahlco, Inc., Wahlco Power Products, Inc.,
and Wexford Capital Corporation.
"SBCC" means Sanwa Business Credit Corporation.
"Security Agreement" shall mean the agreement entered into between Lender
and Borrower and its Subsidiaries, substantially in the form attached hereto as
Exhibit C, including all amendments, modifications and supplements thereto, and
shall refer to the Security Agreement as the same may be in effect at the time
such reference becomes operative.
-10-
"Senior Debt to Consolidated Cash Flow Ratio" shall mean, at any
date of calculation thereof, the ratio of (a) Senior Debt of Borrower
outstanding on such date to (b) Consolidated Cash Flow of Borrower for the
immediately preceding four consecutive fiscal quarters.
"Solvent" shall mean, when used with respect to any Person, that:
(a) the present fair salable value of such Person's assets is in
excess of the total amount of such Person's liabilities;
(b) such Person is able to pay its debts as they become due; and
(c) such Person does not have unreasonably small capital to carry
on such Person's business as theretofore operated and all businesses in
which such Person is about to engage.
"Spill" shall have the meaning assigned to it in Section 4.21.
"Stated Rate" shall have the meaning assigned to it in Section
2.5(a) hereof.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests, participations or other equivalents (regardless of how
designated) of or in a corporation, partnership or equivalent entity whether
voting or nonvoting, including, without limitation, common stock, preferred
stock, or any other "equity security" (as such term is defined in Rule 3a11-1
of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended).
"Stock Pledge Agreement" shall mean the agreement entered into
between Lender and each of Borrower and those Subsidiaries owning Stock of
other Subsidiaries of Borrower, substantially in the form attached hereto as
Exhibit D, including all amendments, modifications and supplements thereto,
and shall refer to the Stock Pledge Agreement as the same may be in effect at
the time such reference becomes operative.
"Stock Purchase Agreement" shall have the meaning assigned to it in
the first paragraph of the recitals to this Agreement.
"Subsidiary" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time, directly or
indirectly, owned legally or beneficially by such Person and/or one or more
Subsidiaries of such Person, and (b) any partnership in which such Person
and/or one or more Subsidiaries of such Person shall have an interest
(whether in the form of voting or participation in profits or capital
contribution) of more than 50%.
"Taxes" shall have the meaning assigned to it in Section 2.12 hereof.
"Term Loan Advance" shall have the meaning assigned to it in Section
2.1(a) hereof.
"Term Note" shall have the meaning assigned to it in Section 2.1
hereof.
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"Termination Date" shall mean the date on which all Senior Debt and
any other Obligations hereunder have been completely discharged and Borrower
shall have no further right to borrow any monies hereunder.
"Title IV Plan" shall mean a Pension Plan, other than a
Multiemployer Plan, which is covered by Title IV of ERISA.
"Trademark Assignment" shall mean the Trademarks and Service Marks
Assignment in the form attached hereto as Exhibit F.
"Welfare Plans" shall mean any welfare plan, as defined in Section
3(1) of ERISA, which is maintained or contributed to by Borrower, any of its
Subsidiaries or any ERISA Affiliate.
▇▇▇ Acquisition Corp. shall mean ▇▇▇ Acquisition Corp., a Delaware
corporation having an address at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Withdrawal Liability" means, at any time, the aggregate amount of
the liabilities, if any, pursuant to Section 4201 of ERISA, and any increase
in contributions pursuant to Section 4243 of ERISA with respect to all
Multiemployer Plans.
Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given such
term in accordance with GAAP, and all financial computations hereunder shall
be computed, unless otherwise specifically provided herein, in accordance
with GAAP consistently applied. That certain terms or computations are
explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. All other undefined terms contained in
this Agreement shall, unless the context indicates otherwise, have the
meanings provided for by the Code as in effect in the State of New York to
the extent the same are used or defined therein. The words "herein," "hereof"
and "hereunder" and other words of similar import refer to this Agreement as
a whole, including the Exhibits and Schedules hereto, as the same may from
time to time be amended, modified or supplemented, and not to any particular
section, subsection or clause contained in this Agreement.
Wherever from the context it appears appropriate, each term stated
in either the singular or plural shall include the singular and the plural,
and pronouns stated in the masculine, feminine or neuter gender shall include
the masculine, the feminine and the neuter.
2. AMOUNT AND TERMS OF CREDIT
2.1. TERM LOAN ADVANCE. (a) Upon and subject to the terms and
conditions hereof, Lender agrees to refinance the Interim Notes, and to make
available until the Commitment Termination Date, for Borrower's use one
advance (the "Term Loan Advance") in an aggregate amount of $2,000,000.
(b) The Term Loan Advance made by Lender shall be evidenced by a
promissory note to be executed and delivered by Borrower at the time of the
Term Loan Advance, the form of which is attached hereto and made a part
hereof as Exhibit E (the "Term Note"). The Term Loan Note shall be payable to
the order of Lender and shall represent the obligation of Borrower to pay the
amount of the Term Loan Advance, with interest thereon as prescribed in
Section 2.5(a). The date and amount of the Term Loan Advance and each payment
of principal with respect thereto shall be
- 12 -
recorded on the books and records of Lender, which books and records shall
constitute PRIMA FACIE evidence of the accuracy of the information therein
recorded. The entire unpaid balance of the Term Loan Advance shall be due and
payable on the Commitment Termination Date.
(c) The Term Loan Advance and all Obligations of Borrower hereunder
shall be subordinate to the payment of any amounts due to SBCC under the SBCC
Letter Agreement and the May ll Letter Agreement which are not paid as and
when due.
2.2. MANDATORY PREPAYMENT. (a) The net cash proceeds realized from
any Permitted Dispositions, after deducting all expenses related thereto (the
"Net Cash Proceeds"), shall, immediately upon receipt thereof, be used by
Borrower to prepay the Term Loan Advances.
(b) Borrower shall prepay the Term Loan Advance in an amount equal
to the lesser of (i) the Obligations or (ii) 100% of the Net Cash Proceeds
received by Borrower from any public offering of its equity securities.
(c) No prepayment fee shall be payable in respect of any mandatory
prepayment under this Section 2.2.
2.3. OPTIONAL PREPAYMENT. Borrower shall have the right at any time,
on 10 days' prior written notice to Lender, to voluntarily prepay the Term
Loan Advance in a minimum amount of $50,000 and integral multiples thereof,
without premium or penalty. If Borrower prepays the Term Loan Advance in
full, Borrower shall have no right to receive additional Term Loan Advances
hereunder. Each prepayment shall be accompanied by the payment of accrued and
unpaid interest on the amount being prepaid, through the date of prepayment.
2.4. USE OF PROCEEDS. Borrower shall apply the proceeds of the Term
Loan Advance as set forth in the recitals of this Agreement.
2.5. INTEREST ON TERM LOAN. (a) Borrower shall pay interest to
Lender quarterly in arrears on the last day of each calendar quarter,
commencing on September 30, 1995 (each, an "Interest Payment Date"), at an
annual rate equal to 13% (the "Stated Rate"), based on a year of 365 days for
the actual number of days elapsed, and based on the amounts outstanding from
time to time under the Term Loan, and as set forth in the following sentence,
the Interim Notes. The Term Note issued pursuant to this Agreement refinances
the outstanding principal amounts of, and accrued but unpaid interest on, the
Interim Notes; accordingly, interest on the Term Note shall accrue (a) on
$1,000,000 principal amount of the indebtedness evidenced hereby from July 1,
1995, (b) on $500,000 principal amount of the indebtedness evidenced hereby
from July 5, 1995, and (c) on $500,000 principal amount of the indebtedness
evidenced hereby from July 17, 1995.
(b) So long as any Event of Default shall be continuing, the
interest rate applicable to the Term Loan Advances shall be increased by two
percentage points per annum above the rate otherwise applicable.
(c) Notwithstanding anything to the contrary set forth in this
Section 2.5, if at any time until payment in full of all of the Obligations
in respect of the Term Loan Advances, the Stated Rate exceeds the highest
rate of interest permissible under any law which a court of competent
- 13 -
jurisdiction shall, in a final determination, deem applicable hereto (the
"Maximum Lawful Rate"), then in such event and so long as the Maximum Lawful
Rate would be so exceeded, the rate of interest payable hereunder shall be
equal to the Maximum Lawful Rate; PROVIDED, HOWEVER, that if at any time
thereafter the Stated Rate is less than the Maximum Lawful Rate, Borrower
shall continue to pay interest hereunder at the Maximum Lawful Rate until
such time as the total interest received by Lender from the making of
advances hereunder is equal to the total interest which Lender would have
received had the Stated Rate been (but for the operation of this paragraph)
the interest rate payable since the Closing Date. Thereafter, the interest
rate payable hereunder shall be the Stated Rate, unless and until the Stated
Rate again exceeds the Maximum Lawful Rate, in which event this paragraph
shall again apply. In no event shall the total interest received by Lender
pursuant to the terms hereof exceed the amount which Lender could lawfully
have received had the interest due hereunder been calculated for the full
term hereof at the Maximum Lawful Rate. In the event the Maximum Lawful Rate
is calculated pursuant to this paragraph, such interest shall be calculated
at a daily rate equal to the Maximum Lawful Rate divided by the number of
days in the year in which such calculation is made. In the event that a court
of competent jurisdiction, notwithstanding the provisions of this Section
2.5(c), shall make a final determination that Lender has received interest
hereunder or under any of the Loan Documents in excess of the Maximum Lawful
Rate, Lender shall, to the extent permitted by applicable law, promptly apply
such excess first to any interest due and not yet paid under the Term Loan,
then to the outstanding principal installments of the Term Note in inverse
order of maturity (without premium or penalty), then to other unpaid
Obligations and thereafter shall refund any excess to Borrower or as a court
of competent jurisdiction may otherwise order.
2.6. COMMITMENT FEE. Borrower shall pay to Lender a fee (the
"Commitment Fee") equal to $30,000, payable on the Closing Date. At Lender's
option, Lender may deduct the amount of the Commitment Fee from the initial
Term Loan Advance.
2.7. RECEIPT OF PAYMENTS. Borrower shall make each payment under
this Agreement not later than 3:00 P.M. (New York City time) on the day when
due in lawful money of the United States of America in immediately available
funds to Lender's depositary bank as designated by Lender from time to time
for deposit in Lender's depositary account. For purposes only of computing
interest hereunder, ail payments shall be applied by Lender on the day
payment has been credited by Lender's depository bank to Lender's account in
immediately available funds.
2.8. APPLICATION OF PAYMENTS. Borrower irrevocably waives the right
to direct the application of any and all payments at any time or times
hereafter received by Lender from or on behalf of Borrower, and Borrower
irrevocably agrees that Lender shall have the continuing exclusive right to
apply any and all such payments against the then due and payable Obligations
of Borrower and in repayment of the Term Loan Advances as Lender may deem
advisable. In the absence of a specific determination by Lender with respect
thereto, the same shall be applied in the following order: (i) then due and
payable fees and expenses; (ii) then due and payable interest payments on the
Term Loan Advances; and (iii) then due and payable principal payments on the
Term Loan Advances. Lender is authorized to, and at its option may, make
advances on behalf of Borrower for payment of all fees, expenses, charges,
costs, principal and interest incurred by Borrower hereunder when and as
Borrower fails to promptly pay any such amounts. At Lender's option and to
the extent permitted by law, any advances so made may be deemed Term Loan
Advances constituting Obligations hereunder.
- 14 -
2.9. ACCOUNTING. Lender will provide a monthly accounting of
transactions hereunder to Borrower. Each and every such accounting shall
(absent manifest error) be deemed final, binding and conclusive upon Borrower
in all respects as to all matters reflected therein, unless Borrower, within
30 days after the date any such accounting is rendered, shall notify Lender
in writing of any objection which Borrower may have to any such accounting,
describing the basis for such objection with specificity. In that event, only
those items expressly objected to in such notice shall be deemed to be
disputed by Borrower. Lender's determination, based upon the facts available,
of any item objected to by Borrower in such notice shall (absent manifest
error) be final, binding and conclusive on Borrower, unless Borrower shall
commence a judicial proceeding to resolve such objection within 30 days
following Lender's notifying Borrower of such determination.
2.10. INDEMNITY. Borrower shall indemnify and hold Lender harmless
from and against any and all suits, actions, proceedings, claims, damages,
losses, liabilities and expenses (including, without limitation, reasonable
attorneys' fees and disbursements, including those incurred upon any appeal)
which may be instituted or asserted against or incurred by Lender as the
result of its having entered into any of the Loan Documents or extended
credit hereunder; PROVIDED, HOWEVER, that Borrower shall not be liable for
such indemnification to such indemnified Person to the extent that any such
suit, action, proceeding, claim, damage, loss, liability or expense results
from such indemnified Person's gross negligence or willful misconduct.
2.11. ACCESS. Lender and each Assignee Lender and any of their
officers, employees and/or agents shall have the right, exercisable as
frequently as Lender or any Assignee Lender determines to be appropriate,
during normal business hours (or at such other times as may reasonably be
requested by Lender or any Assignee Lender), to inspect the properties and
facilities of Borrower and its Subsidiaries and to inspect, audit and make
extracts from all of Borrower's and its Subsidiaries' records, files and
books of account. Borrower shall deliver any document or instrument
reasonably necessary for Lender or any Assignee Lender, as any of them may
request, to obtain records from any service bureau maintaining records for
Borrower or its Subsidiaries, and shall maintain duplicate records or
supporting documentation on media, including, without limitation, computer
tapes and discs owned by Borrower and its Subsidiaries. Borrower shall
instruct its and its Subsidiaries' banking and other financial institutions
to make available to Lender such information and records as Lender and each
Assignee Lender may reasonably request.
2.12. TAXES. (a) Any and all payments by Borrower hereunder or under
the Term Notes shall be made, in accordance with this Section 2.12, free and
clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding taxes imposed on or measured by the net
income of Lender by the jurisdiction under the laws of which Lender is
organized or any political subdivision thereof (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under any
Term Note to Lender, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.12) Lender
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Borrower shall make such deductions, and (iii)
Borrower shall pay the full amount deducted to the relevant taxing or other
authority in accordance with applicable law.
- 15 -
(b) In addition, Borrower agrees to pay any present or future stamp or
documentary taxes or any other sales, transfer, excise, mortgage recording or
property taxes, charges or similar levies that arise from any payment made
hereunder or under the Term Notes or from the execution, sale, transfer,
delivery or registration of, or otherwise with respect to, this Agreement or the
Notes, the Loan Documents and any other agreements and instruments contemplated
thereby (hereinafter referred to as "Other Taxes").
(c) Borrower shall indemnify Lender for the full amount of Taxes or
Other Taxes (including without limitation, any Taxes or Other Taxes imposed by
any jurisdiction on amounts payable under this Section 2.12) paid by Lender and
any liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within 30 days from the
date such Lender makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, Borrower
shall furnish to Lender, at its address referred to in Section 10.11, the
original or a certified copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in this
Section 2.12 shall survive the payment in full of principal and interest
hereunder and under the Notes and the Termination of this Agreement.
3. CONDITIONS PRECEDENT
3.1. CONDITIONS TO TERM LOAN. Notwithstanding any other provision of
this Agreement and without affecting in any manner the rights of Lender
hereunder, Borrower shall have no rights under this Agreement (but shall have
all applicable obligations hereunder), and Lender shall not be obligated to make
the Term Loan hereunder, unless and until all conditions precedent to the
obligations of Borrower in the Stock Purchase Agreement shall have been
fulfilled or (with the consent of Lender) waived, and Borrower shall have
delivered to Lender, in form and substance satisfactory to Lender and (unless
otherwise indicated) each dated the Closing Date:
(a) The Term Note payable to the order of Lender, duly executed by
Borrower.
(b) A favorable opinion of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., counsel to the Loan
Parties.
(c) Resolutions of the boards of directors of each Loan Party,
certified by the Secretary or Assistant Secretary of such Loan Party, as of the
Closing Date, to be duly adopted and in full force and effect on such date,
authorizing (i) the consummation of each of the transactions contemplated by the
Loan Documents and (ii) specific officers to execute and deliver this Agreement
and the other Loan Documents.
(d) Governmental certificates, dated the most recent practicable date
prior to the Closing Date, showing that each Loan Party is organized and in good
standing in the jurisdiction of its organization and is qualified as a foreign
corporation and in good standing in all other jurisdictions in which it is
qualified to transact business.
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(e) A copy of the organizational charter and all amendments thereto of
each Loan Party, certified as of a recent date by the Secretary of State of the
jurisdiction of its organization, and copies of each Loan Party's by-laws,
certified by the Secretary or Assistant Secretary of such Loan Party as true and
correct as of the Closing Date.
(f) The Security Agreement, duly executed and delivered by Borrower;
the Stock Pledge Agreement, duly executed and delivered by Borrower and each
Subsidiary owning Stock of other Subsidiaries of Borrower; the Patent and
Trademark Assignments duly executed by Borrower and its Subsidiaries; and the
Guaranty, duly executed and delivered by each Guarantor; together with:
(i) acknowledgment copies of proper Financing Statements (Form
UCC-1) duly filed under the Uniform Commercial Code of each
jurisdiction as may be necessary or, in the opinion of Lender,
desirable to perfect the security interests created by the Security
Agreement,
(ii) certified copies of Requests for Information or Copies
(Form UCC-11), or equivalent reports, listing the Financing
Statements referred to in paragraph (i) above and all other effective
financing statements which name Borrower or any of its Subsidiaries
(under its present name and any previous name) as debtor and which are
filed in the jurisdictions referred to in said paragraph (i), together
with copies of such other financing statements (none of which shall
cover the Collateral purported to be covered by the Security
Agreement),
(iii) evidence of the completion of all recordings and filings of
the Security Agreement and Patent and Trademark Assignments as may be
necessary or, in the opinion of Lender, desirable to perfect the
security interests and liens created by the Security Agreement and
Patent and Trademark Assignments,
(iv) certificates representing the Pledged Shares referred to in
the Stock Pledge Agreement and undated stock powers for such
certificates executed in blank, and
(v) evidence that all other actions necessary or, in the opinion
of Lender, desirable to perfect and protect the security interests
created by the Security Agreement and Patent and Trademark Assignments
have been taken.
(g) The consolidated financial statements and the Projections
referred to in Sections 4.6 and 4.7, each certified by the chief financial
officer of Borrower, and the letter from Borrower to its accountants referred to
in Section 5.2.
(h) A certificate of the chief executive officer and chief financial
officer of Borrower, satisfactory in form and substance to Lender, stating that
all of the representations and warranties of the Loan Parties contained herein
or in any of the Loan Documents are correct on and as of the Closing Date as
though made on and as of such date, and no event has occurred and is continuing,
or would result from a Term Loan Advance, which constitutes or would constitute
a Default or an Event of Default.
- 17 -
(i) Evidence that the insurance policies provided for in Section 6.7
are in full force and effect, certified by the insurer thereof, together with
appropriate evidence showing a loss payable clause in favor of Lender.
(j) Certificates of the Secretary or an Assistant Secretary of each
Loan Party, dated the Closing Date, as to the incumbency and signatures of the
officers of such Loan Party executing this Agreement, the Term Note, any of the
Loan Documents and any other certificate or other document to be delivered
pursuant hereto or thereto, together with evidence of the incumbency of such
Secretary or Assistant Secretary.
(k) Such additional information and materials as Lender may reasonably
request, including, without limitation, copies of any debt agreements, security
agreements and other material contracts.
4. REPRESENTATIONS AND WARRANTIES
To induce Lender to make the Term Loan Advances, as herein provided
for, Borrower makes the following representations and warranties to Lender, each
and all of which shall be true and correct as of the date of execution and
delivery of this Agreement, and shall survive the execution and delivery of this
Agreement:
4.1. CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Borrower and each
Subsidiary of Borrower (i) is a corporation duly organized, validly existing and
in good standing under the laws of the state of its incorporation; (ii) is duly
qualified as a foreign corporation and in good standing under the laws of each
jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification (except for jurisdictions in which such
failure to so qualify or to be in good standing would not have a Material
Adverse Effect); (iii) has the requisite corporate power and authority and the
legal right to own, pledge, mortgage or otherwise encumber and operate its
properties, to lease the property it operates under lease, and to conduct its
business as now, heretofore and proposed to be conducted; (iv) has all material
licenses, permits, consents or approvals from or by, and has made all material
filings with, and has given all material notices to, all Governmental
Authorities having jurisdiction, to the extent required for such ownership,
operation and conduct; (v) is in compliance with its certificate or articles of
incorporation and by-laws; and (vi) is in compliance with all applicable
provisions of law where the failure to comply would have a Material Adverse
Effect.
4.2. EXECUTIVE OFFICES. The current location of Borrower's and each of
its Subsidiary's executive offices and principal place of business is set forth
in Schedule 4.2 hereto.
4.3. SUBSIDIARIES. There currently exist, and upon consummation of the
Acquisition there shall exist, no Subsidiaries of Borrower other than as set
forth on Schedule 4.3 hereto, which sets forth such Subsidiaries, together with
their respective jurisdictions of organization, and the authorized and
outstanding capital Stock of each such Subsidiary, by class and number and
percentage of each class legally owned by Borrower or a Subsidiary of Borrower
or any other Person, or to be owned by the Closing Date. There are no options,
warrants, rights to purchase or similar rights covering capital Stock for any
such Subsidiary.
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4.4. CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The
execution, delivery and performance by Borrower and its Subsidiaries of the Loan
Documents, Ancillary Documents and all instruments and documents to be delivered
by Borrower and its Subsidiaries, to the extent they are parties thereto,
hereunder and thereunder and the creation of all Liens provided for herein and
therein: (i) are within Borrower's and its Subsidiaries' corporate power; (ii)
have been, or by the Closing Date will be, duly authorized by all necessary or
proper corporate action; (iii) are not in contravention of any provision of
Borrower's or its Subsidiaries' respective certificates or articles of
incorporation or by-laws; (iv) will not violate any law or regulation, or any
order or decree of any court or governmental instrumentality; (v) will not
conflict with or result in the breach or termination of, constitute a default
under or accelerate any performance required by, any indenture, mortgage, deed
of trust, lease, agreement or other instrument to which Borrower or any of its
Subsidiaries is a party or by which Borrower or any of its Subsidiaries or any
of their property is bound; (vi) will not result in the creation or imposition
of any Lien upon any of the property of Borrower or any of its Subsidiaries
other than those in favor of Lender, all pursuant to the Loan Documents; and
(vii) do not require the consent or approval of any Governmental Authority or
any other Person, except for compliance with the filing and waiting period
requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976 and the
rules and regulations promulgated thereunder, which will have been duly
obtained, made or complied with prior to the Closing Date. At or prior to the
Closing Date, each of the Loan Documents shall have been duly executed and
delivered for the benefit of or on behalf of Borrower or its Subsidiaries, as
the case may be, and each shall then constitute a legal, valid and binding
obligation of Borrower or its Subsidiaries, to the extent they are parties
thereto, enforceable against them in accordance with its terms.
4.5. SOLVENCY. After giving effect to the initial Term Loan Advance,
if made on the Closing Date, Borrower and each of its Subsidiaries will be
Solvent as of and on the Closing Date.
4.6. FINANCIAL STATEMENTS.
(a) All of the following balance sheets and statements of income,
retained earnings and cash flows of Borrower, copies of which have been
furnished to Lender prior to the date of this Agreement, have been, except as
noted therein, prepared in conformity with GAAP consistently applied throughout
the periods involved and present fairly the consolidated financial position of
Borrower in each case as at the dates thereof, and the results of operations and
cash flows for the periods then ended (as to the unaudited interim financial
statements, subject to normal year-end audit adjustments):
(i) the unaudited consolidated balance sheet of Borrower as
at March 31, 1995, and the related consolidated statements of
income, retained earnings and cash flows for the three months
ending on such date; and
(ii) the audited consolidated balance sheet of Borrower as
at December 31, 1994, and the related consolidated statements of
income, retained earnings and cash flows for the year then ended,
with the opinion thereon of Ernst & Young, LLP.
(b) Except for the Sanwa Obligations, Borrower, as of March 31, 1995,
had no obligations, contingent liabilities or liabilities for Charges, long-term
leases or unusual forward or long-term commitments which are not reflected in
the consolidated balance sheet of Borrower and its Subsidiaries and which would
have a Material Adverse Effect.
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(c) There has been no material adverse change in the business, assets,
operations, prospects or financial or other condition of Borrower and its
Subsidiaries taken as a whole since March 31, 1995 (it being understood that,
subsequent to the Closing Date, this representation and warranty shall be
subject to the fact that Borrower shall have incurred the Obligations
hereunder). No dividends or other distributions have been declared, paid or made
upon any shares of capital Stock of Borrower or any of the Subsidiaries, nor
have any shares of capital Stock of Borrower or any of the Subsidiaries been
redeemed, retired, purchased or otherwise acquired for value by Borrower or
Subsidiaries since March 31, 1995.
4.7. PROJECTIONS. The Projections of Borrower's annual operating
budgets on a consolidated basis, balance sheets and cash flow statements for the
fiscal years ending on December 31, 1995, 1996, 1997 and 1998, copies of which
have been delivered to Lender, disclose all material assumptions made with
respect to general economic, financial and market conditions in formulating such
Projections. No facts are known to Borrower which would result in any material
change in any of such Projections. The Projections are based upon reasonable
estimates and assumptions, all of which are fair in light of current conditions,
have been prepared on the basis of the assumptions stated therein, and reflect
the reasonable estimate of Borrower, to the best of its ability, of the results
of operations and other information projected therein.
4.8. OWNERSHIP OF PROPERTY; LIENS. (a) Borrower or its Subsidiaries
owns good and marketable fee simple title to all of the Real Estate described
on Schedule 4.8(a) hereto and good, valid and marketable leasehold interests
in the Leases described in Schedule 4.8(b) hereto, and good and marketable
title to, or valid leasehold interests in, all of its other properties and
assets and none of the properties and assets of Borrower or its Subsidiaries,
including, without limitation, the Real Estate and Leases is subject to any
Liens, except (i) Permitted Encumbrances and (ii) from and after the Closing
Date, the Lien in favor of Lender pursuant to the Collateral Documents; and
Borrower and its Subsidiaries have received all deeds, assignments, waivers,
consents, non-disturbance and recognition or similar agreements, bills of
sale and other documents, and duly effected all recordings, filings and other
actions necessary to establish, protect and perfect Borrower's and its
Subsidiaries' right, title and interest in and to all such property except
where the failure to have received such documents or effected such actions
will not, in the aggregate, have a Material Adverse Effect.
(b) All real property owned or leased by Borrower and its Subsidiaries
is set forth on Schedule 4.8(a) and 4.8(b), respectively. Neither Borrower nor
any of its Subsidiaries owns any other real property or is lessee or lessor
under any leases other than as set forth therein. Schedules 4.8(a) and 4.8(b)
are true and correct in all material respects. Part One of Schedule 4.8(b)
hereto sets forth all leases of real property held by Borrower or any Subsidiary
as lessee and Part Two of Schedule 4.8(b) sets forth all leases of real property
held by Borrower or any Subsidiary as lessor together with information regarding
the commencement date, termination date, renewal options (if any) and annual
base rents for the years 1995, 1996, 1997 and 1998. Each of such leases is valid
and enforceable in accordance with its terms and is in full force and effect.
Borrower has delivered to Lender true and complete copies of each of such leases
set forth on Part One and Part Two of Schedule 4.8(b) and all documents
affecting the rights or obligations of Borrower or any Subsidiary which is a
party thereto, including, without limitation, any non-disturbance and
recognition agreements, subordination agreements, attornment agreements and
agreements regarding the term or rental of any of the leases. Neither Borrower
nor the applicable Subsidiary nor any other party to any such lease is in
default of its obligations thereunder or has delivered or received any notice of
default under any such lease, nor has any event occurred which, with the giving
of notice, the passage of
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time or both, would constitute a default under any such lease, except for any
default which would not have a Material Adverse Effect.
(c) Neither Borrower nor any of its Subsidiaries owns or holds, or
is obligated under or a party to, any option, right of first refusal or any
other contractual right to purchase, acquire, sell, assign or dispose of any
real property owned or leased by Borrower or any of its Subsidiaries.
(d) All permits required to have been issued or appropriate to
enable the real property owned or leased by Borrower or its Subsidiaries to
be lawfully occupied and used for all of the purposes for which they are
currently occupied and used, have been lawfully issued and are, as of the
date hereof, in full force and effect.
(e) Neither Borrower nor any of its Subsidiaries has received any
notice, nor has any knowledge, of any pending, threatened or contemplated
condemnation proceeding affecting any real property owned or leased by
Borrower or any of its Subsidiaries or any part thereof, or of any sale or
other disposition of any real property owned or leased by Borrower or any of
its Subsidiaries or any part thereof in lieu of condemnation.
(f) No portion of any real property owned or leased by Borrower or
any of its Subsidiaries has suffered any material damage by fire or other
casualty loss which has not heretofore been completely repaired and restored
to its original condition. No portion of any real property owned or leased by
Borrower or any of its Subsidiaries is located in a special flood hazard area
as designated by any federal, Governmental Authority.
4.9. NO DEFAULT. Neither Borrower nor any of its Subsidiaries is in
default, nor to Borrower's knowledge is any third party in default, under or
with respect to any contract, agreement, lease or other instrument to which
it is a party, except for any default which (either individually or
collectively with other defaults arising out of the same event or events)
would not have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.
4.10. BURDENSOME RESTRICTIONS. No contract, lease, agreement or
other instrument to which Borrower or any of its Subsidiaries is a party or
is bound and no provision of applicable law or governmental regulation has a
Material Adverse Effect, or insofar as Borrower can reasonably foresee may
have a Material Adverse Effect.
4.11. LABOR MATTERS. There are no strikes or other labor disputes
against Borrower or any of its Subsidiaries pending or, to Borrower's
knowledge, threatened which would have a Material Adverse Effect. Hours
worked by and payment made to employees of Borrower and its Subsidiaries have
not been in violation of the Fair Labor Standards Act or any other applicable
law dealing with such matters which would have a Material Adverse Effect. All
payments due from Borrower or any of its Subsidiaries on account of employee
health and welfare insurance which would have a Material Adverse Effect if
not paid have been paid or accrued as a liability on the books of Borrower or
such Subsidiary. Neither Borrower nor any of its Subsidiaries has any
obligation under any collective bargaining agreement or any employment
agreement. There is no organizing activity involving Borrower or any of its
Subsidiaries pending or threatened by any labor union or group of employees.
There are no representation proceedings pending or threatened with the
National Labor Relations Board, and no labor organization or group of
employees of Borrower or any of its Subsidiaries has made a pending demand
for recognition. There are no complaints or charges against
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Borrower or any of its Subsidiaries pending or threatened to be filed with
any federal, state, local or foreign court, governmental agency or arbitrator
based on, arising out of, in connection with, or otherwise relating to the
employment or termination of employment by Borrower or any Subsidiary of any
individual. Neither Borrower nor any of its Subsidiaries is a contractor,
subcontractor or has a legal obligation to engage in affirmative action other
than as required by the rules, regulations, orders, policies, decisions and
procedures of the FCC.
4.12. OTHER VENTURES. Except as set forth in Schedule 4.12, neither
Borrower nor any Subsidiary is engaged in any joint venture or partnership
with any other Person.
4.13. TAXES. All federal, state, local and foreign tax returns,
reports and statements required to be filed by Borrower and its Subsidiaries
have been filed with the appropriate Governmental Authority and all Charges
and other impositions shown thereon to be due and payable have been paid
prior to the date on which any fine, penalty, interest or late charge may be
added thereto for nonpayment thereof, or any such fine, penalty, interest,
late charge or loss has been paid. Each of Borrower and its Subsidiaries has
paid when due and payable all Charges required to be paid by it. Proper and
accurate amounts have been withheld by Borrower and its Subsidiaries from
their respective employees for all periods in full and complete compliance
with the tax, social security and unemployment withholding provisions of
applicable federal, state, local and foreign law and such withholdings have
been timely paid to the respective governmental agencies. Schedule 4.13 sets
forth, for each of Borrower and its Subsidiaries, those taxable years for
which its tax returns are currently being audited by the IRS or any other
applicable Governmental Authority. Neither Borrower nor any of its
Subsidiaries has executed or filed with the IRS or any other Governmental
Authority any agreement or other document extending, or having the effect of
extending, the period for assessment or collection of any Charges. Neither
Borrower nor any of its Subsidiaries has filed a consent pursuant to IRC
Section 341(f) or agreed to have IRC Section 341(f)(2) apply to any
dispositions of subsection (f) assets (as such term is defined in IRC Section
341(f)(4)). None of the property owned by Borrower or any of its Subsidiaries
is property which such company is required to treat as being owned by any
other Person pursuant to the provisions of IRC Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended, and in effect immediately prior to
the enactment of the Tax Reform Act of 1986 or is "tax-exempt use property"
within the meaning of IRC Section 168(h). Neither Borrower nor any of its
Subsidiaries has agreed or has been requested to make any adjustment under
IRC Section 481(a) by reason of a change in accounting method or otherwise.
Neither Borrower nor any of its Subsidiaries has any obligation under any
written tax sharing agreement.
4.14. ERISA. (a) Schedule 4.14 lists all Plans maintained or
contributed to by Borrower and its Subsidiaries and all Qualified Plans
maintained or contributed to by any ERISA Affiliate, and separately
identifies the Title IV Plans, Multiemployer Plans, any multiple employer
plans subject to Section 4064 of ERISA, unfunded Pension Plans and Retiree
Welfare Plans.
(b) Each Qualified Plan has been determined by the IRS to qualify
under Section 401 of the IRC, and the trusts created thereunder have been
determined to be exempt from tax under the provisions of Section 501 of the
IRC, and to the best knowledge of Borrower nothing has occurred which would
cause the loss of such qualification or tax-exempt status.
(c) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA and the IRC, including the filing of reports
required under the IRC or ERISA which are
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true and correct in all material respects as of the date filed, and with respect
to each Plan, other than a Qualified Plan, all required contributions and
benefits have been paid in accordance with the provisions of each such Plan.
(d) None of Borrower, its Subsidiaries or any ERISA Affiliate, with
respect to any Qualified Plan, has failed to make any contribution or pay any
amount due as required by Section 412 of the IRC or Section 302 of ERISA or the
terms of any such plan.
(e) With respect to all Retiree Welfare Plans, the present value of
future anticipated expenses pursuant to the latest actuarial projections of
liabilities does not exceed $100,000, and copies of such latest projections have
been provided to Lender.
(f) There are no pending, or to the knowledge of Borrower or any of
its Subsidiaries, threatened claims, actions or lawsuits (other than claims for
benefits in the normal course), asserted or instituted against (i) any Plan or
its assets, (ii) any fiduciary with respect to any Plan or (iii) Borrower, any
of its Subsidiaries or any ERISA Affiliate with respect to any Plan.
(g) Except as set forth on Schedule 4.14, none of Borrower, any of its
Subsidiaries or any ERISA Affiliate has incurred or reasonably expects to incur
any Withdrawal Liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 of ERISA as a result of a complete or partial withdrawal from a
Multiemployer Plan.
(h) Except as set forth in Schedule 4.14, within the last five years
none of Borrower, any of its Subsidiaries or any ERISA Affiliate has engaged in
a transaction which resulted in a Title IV Plan with Unfunded Liabilities being
transferred outside of the "controlled group" (within the meaning of Section
4001(a)(14) of ERISA) of any such entity.
(i) Except as set forth on Schedule 4.14, no plan which is a Retiree
Welfare Plan provides for continuing benefits or coverage for any participant or
any beneficiary of a participant after such participant's termination of
employment (except as may be required by Section 4980B of the IRC and at the
sole expense of the participant or the beneficiary of the participant) which
would result in a liability in an amount which would have a Material Adverse
Effect. Borrower, its Subsidiaries and each ERISA Affiliate have complied with
the notice and continuation coverage requirements of Section 4980B of the IRC
and the regulations thereunder except where the failure to comply would not
result in any Material Adverse Effect.
(j) Neither Borrower nor any of its Subsidiaries has engaged in a
prohibited transaction, as defined in Section 4975 of the IRC or Section 406 of
ERISA, in connection with any Plan, which would subject Borrower or any of its
Subsidiaries (after giving effect to any exemption) to a material tax on
prohibited transactions imposed by Section 4975 of the IRC or any other material
liability.
(k) Except as set forth on Schedule 4.14, no liability under any Plan
has been funded, nor has such obligation been satisfied with, the purchase of a
contract from an insurance company that is not rated AAA by Standard & Poor's
Corporation and the equivalent by each other nationally recognized rating
agency.
- 23 -
4.15. NO LITIGATION. Except as set forth on Schedule 4.15 hereto, no
action, claim or proceeding is now pending or, to the knowledge of Borrower,
threatened against Borrower or any of its Subsidiaries, at law, in equity or
otherwise, before any court, board, commission, agency or instrumentality of any
federal, state, or local government or of any agency or subdivision thereof, or
before any arbitrator or panel of arbitrators, which, if determined adversely,
could have a Material Adverse Effect, nor to the knowledge of Borrower does a
state of facts exist which is reasonably likely to give rise to such
proceedings. None of the matters set forth therein questions the validity of any
of the Loan Documents or any action taken or to be taken pursuant thereto, or
would have either individually or in the aggregate a Material Adverse Effect.
4.16. EMPLOYMENT AND LABOR AGREEMENTS. Except as set forth on Schedule
4.16, there are no employment, consulting or management agreements covering
management of Borrower or any of its Subsidiaries and there are no collective
bargaining agreements or other labor agreements covering any employees of
Borrower or any of its Subsidiaries. A true and complete copy of each such
agreement has been furnished to Lender.
4.17. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. Borrower and its
Subsidiaries own all material licenses, patents, patent applications,
copyrights, service marks, trademarks, trademark applications, and trade names
necessary to continue to conduct their business as heretofore conducted by them,
now conducted by them and proposed to be conducted by them, each of which is
listed, together with Patent and Trademark Office application or registration
numbers, where applicable, on Schedule 4.17 hereto. Borrower and its
Subsidiaries conduct their respective businesses without infringement or claim
of infringement of any license, patent, copyright, service ▇▇▇▇, trademark,
trade name, trade secret or other intellectual property right of others, except
where such infringement or claim of infringement would not have a Material
Adverse Effect. To Borrower's knowledge, there is no infringement or claim of
infringement by others of any material license, patent, copyright, service ▇▇▇▇,
trademark, trade name, trade secret or other intellectual property right of
Borrower or any of its Subsidiaries.
4.18. FULL DISCLOSURE. No information contained in this Agreement, the
other Loan Documents, the Financial Statements or any written statement
furnished by or on behalf of Borrower or its Subsidiaries pursuant to the terms
of this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which made.
4.19. LIENS. Except for Permitted Encumbrances, the Liens granted to
Lender pursuant to the Collateral Documents will at the Closing Date be fully
perfected first priority Liens in and to the Collateral described therein. The
Liens granted to Lender pursuant to the Mortgages and Leasehold Mortgages will
be fully perfected first priority Liens in and to the Collateral therein
described upon their recording.
4.20. NO MATERIAL ADVERSE EFFECT. No event has occurred since March
31, 1995 and is continuing which has had or could have a Material Adverse
Effect.
4.21. ENVIRONMENTAL PROTECTION. Except as set forth on Schedule 4.21
attached hereto, to Borrower's knowledge without independent investigation, all
Real Estate owned and all real property leased pursuant to the Leases by
Borrower or any of Borrower's Subsidiaries is free of contamination from any
substance or material currently identified to be toxic or hazardous pursuant to
- 24 -
Environmental Laws, including, without limitation, any asbestos, pcb,
radioactive substance, methane, volatile hydrocarbons, industrial solvents, or
any other material or substance which has in the past or could at any time in
the future cause or constitute a health, safety, or environmental hazard to any
Person or property. Neither Borrower nor any of Borrower's Subsidiaries has
caused or suffered to occur any discharge, spillage, uncontrolled loss, seepage,
or filtration of oil or petroleum or chemical liquids or solids, liquid or
gaseous products, or hazardous waste, or hazardous substance in violation of the
Environmental Laws (a "Spill") at, under, or within any real property owned or
leased by any such Person. Neither Borrower nor any of Borrower's Subsidiaries
is involved in operations which could lead to the imposition of any liability or
Lien on any such Person or any owner of any premises occupied by such Person
under the Environmental Laws and neither Borrower nor any of Borrower's
Subsidiaries permitted any tenant or occupant of such premises to engage in any
such activity.
4.22. REAL ESTATE MORTGAGES. Schedule 4.8 hereto sets forth with
respect to any Real Estate (i) the amount of existing Indebtedness secured by a
Lien on each property (each such property being a "Mortgaged Property"), (ii)
the current monthly payment of interest and principal in respect of such
Indebtedness, (iii) the current interest payable in respect of such
Indebtedness, and (iv) the estimated fair market values thereof as set forth in
certain appraisals prepared by third party appraisers, copies of which have
heretofore been furnished to Lender. Borrower has no reason to believe that the
amounts specified in the preceding sentence are not accurate. Borrower is not in
default of its obligations under any such Indebtedness nor has any event
occurred which, with the giving of notice, the passage of time or both, would
constitute a default under any such Indebtedness.
5. FINANCIAL STATEMENTS AND INFORMATION
5.1. REPORTS AND NOTICES. Borrower covenants and agrees that from and
after the Closing Date and until the Termination Date, it shall deliver to
Lender:
(a) Within 30 days after the end of each fiscal month, (i) a copy of
the unaudited consolidated and consolidating balance sheets of Borrower and its
Subsidiaries as of the end of such month and the related consolidated and
consolidating statements of income and cash flows for that portion of the Fiscal
Year ending as of the end of such month, and (ii) a copy of the unaudited
consolidated and consolidating statements of income of Borrower and its
Subsidiaries for such month, all prepared in accordance with GAAP (subject to
normal year-end adjustments), setting forth in comparative form in each case the
projected consolidated and consolidating figures for such period and accompanied
by (A) a statement in reasonable detail showing the calculations used in
determining the financial covenants under Sections 6.3 and 7.8 hereof, and (B)
the certification of the chief executive officer and chief financial officer of
Borrower that all such financial statements are complete and correct and present
fairly in accordance with GAAP (subject to normal year-end adjustments), the
consolidated and consolidating financial position, the consolidated and
consolidating results of operations and the consolidated and consolidating
statements of cash flows of Borrower and its Subsidiaries as at the end of such
month and for the period then ended, and that there was no Default or Event of
Default in existence as of such time.
(b) Within 45 days after the end of each fiscal quarter, (i) a copy of
the unaudited consolidated and consolidating balance sheets of Borrower and its
Subsidiaries as of the close of such quarter and the related consolidated and
consolidating statements of income and cash flows for that portion of the Fiscal
Year ending as of the close of such quarter, and (ii) a copy of the unaudited
consolidated and consolidating statements of income of Borrower and its
Subsidiaries for such quarter,
- 25 -
all prepared in accordance with GAAP (subject to normal year-end adjustments)
and accompanied by (A) a statement in reasonable detail showing the calculations
used in determining the financial covenants under Sections 6.3 and 7.8 hereof,
and (B) the certification of the chief executive officer, chief financial
officer and chief accounting officer of Borrower that all such financial
statements are complete and correct and present fairly in accordance with GAAP
(subject to normal year-end adjustments), the consolidated and consolidating
financial position, the consolidated and consolidating results of operations and
the consolidated and consolidating statements of cash flows of Borrower and its
Subsidiaries as at the end of such quarter and for the period then ended, and
that there was no Default or Event of Default in existence as of such time.
(c) Within 90 days after the close of each Fiscal Year, a copy of the
annual audited consolidated and unaudited consolidating financial statements of
Borrower and its Subsidiaries, consisting of consolidated and consolidating
balance sheets and consolidated and consolidating statements of income and
retained earnings and cash flows, setting forth in comparative form in each case
the consolidated and consolidating figures for the previous fiscal year, which
financial statements shall be prepared in accordance with GAAP, certified (only
with respect to the consolidated financial statements) without qualification by
the independent certified public accountants regularly retained by Borrower, or
any other firm of independent certified public accountants of recognized
national standing selected by Borrower and acceptable to Lender, and accompanied
by (i) a schedule in reasonable detail showing the calculations used in
determining the financial covenants under Section 6.3 and 7.8 hereof, occurred
and (ii) a certification of the chief executive officer, chief financial officer
and chief accounting officer of Borrower that all such financial statements are
complete and correct and present fairly in accordance with GAAP the consolidated
and consolidating financial position, the consolidated and consolidating results
of operations and the consolidated and consolidating statements of cash flows of
Borrower and its Subsidiaries as at the end of such year and for the period then
ended and that there was no Default or Event of Default in existence as of such
time.
(d) As soon as practicable, but in any event within one (1) Business
Day after Borrower becomes aware of the existence of any Default or Event of
Default, or any development or other information which would have a Material
Adverse Effect, telephonic or telegraphic notice specifying the nature of such
Default or Event of Default or development or information, including the
anticipated effect thereof, which notice shall be promptly confirmed in writing
within three (3) days.
(e) Within 90 days prior to the beginning of each Fiscal Year:
(i) projected consolidated balance sheet of Borrower and its
Subsidiaries and projected consolidating balance sheet of Borrower and its
Subsidiaries for such Fiscal Year, on a monthly basis;
(ii) projected consolidated and consolidating cash flow statements
of Borrower and its Subsidiaries, including summary details of cash
disbursements (including for Capital Expenditures), for such Fiscal Year,
on a monthly basis; and
(iii) projected consolidated and consolidating income statements of
Borrower and its Subsidiaries for such Fiscal Year, on a monthly basis;
- 26 -
together with appropriate supporting details as requested by Lender.
(f) If requested by Lender, copies of all federal, state, local and
foreign tax returns and reports in respect of income, franchise or other taxes
on or measured by income (excluding sales, use or like taxes) filed by Borrower
or any of its Subsidiaries.
(g) Such other information respecting Borrower's or any of its
Subsidiaries' business, financial condition or prospects as Lender or any
Assignee Lender may, from time to time, reasonably request.
5.2. COMMUNICATION WITH ACCOUNTANTS. Borrower authorizes Lender and
each Assignee Lender to communicate directly with its independent certified
public accountants and tax advisors and authorizes those accountants to disclose
to Lender and each Assignee Lender any and all financial statements and other
supporting financial documents and schedules including copies of any management
letter with respect to the business, financial condition and other affairs of
Borrower and any of its Subsidiaries. At or before the Closing Date, Borrower
shall deliver a letter addressed to such accountants and tax advisors
instructing them to comply with the provisions of this Section 5.2.
6. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, unless the Required Lenders shall
otherwise consent in writing, from and after the date hereof and until the
Termination Date:
6.1. MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS. Borrower shall,
and shall cause each of its Subsidiaries to: (a) do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence, and its rights and franchises; (b) continue to conduct its business
substantially as now conducted or as otherwise permitted hereunder; (c) at all
times maintain, preserve and protect all of its material trademarks and trade
names, and preserve all the remainder of its property, in use or useful in the
conduct of its business and keep the same in good repair, working order and
condition (taking into consideration ordinary wear and tear) and from time to
time make, or cause to be made, all needful and proper repairs, renewals and
replacements, betterments and improvements thereto consistent with applicable
industry practices, so that the business carried on in connection therewith may
be properly and advantageously conducted at all times; and (d) transact business
only in such names set forth on Schedule 6.1, or such other names as Borrower or
any Subsidiary of Borrower shall specify to Lender in writing not less than
thirty (30) days prior to the first date such name is used by Borrower or any
Subsidiary of Borrower.
6.2. PAYMENT OF OBLIGATIONS. (a) Borrower shall, and shall cause each
of its Subsidiaries to: (i) pay and discharge or cause to be paid and discharged
all its Indebtedness, including, without limitation, all the Obligations, as and
when due and payable, and (ii) pay and discharge or cause to be paid and
discharged promptly all (A) Charges imposed upon it, its income and profits, or
any of its property (real, personal or mixed), and (B) lawful claims for labor,
materials, supplies and services or otherwise before any thereof shall become in
default.
(b) Borrower and its Subsidiaries may in good faith contest, by proper
legal actions or proceedings, the validity or amount of any Charges or claims
arising under Section 6.2(a)(ii), provided that at the time of commencement of
any such action or proceeding, and during the pendency thereof (i) no Default or
Event of Default shall have occurred; (ii) adequate Reserves with
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respect thereto are maintained on the books of Borrower or such Subsidiary,
in accordance with GAAP; (iii) such contest operates to suspend collection of
the contested Charges or claims and is maintained and prosecuted continuously
with diligence; (iv) none of the Collateral would be subject to forfeiture or
loss or any Lien by reason of the institution or prosecution of such contest;
(v) no Lien shall exist for such Charges or claims during such action or
proceeding; (vi) Borrower or such Subsidiary shall promptly pay or discharge
such contested Charges and all additional charges, interest, penalties and
expenses, if any, and shall deliver to Lender evidence acceptable to Lender
of such compliance, payment or discharge, if such contest is terminated or
discontinued adversely to Borrower or such Subsidiary; and (vii) Lender has
not advised Borrower in writing that Lender reasonably believes that
nonpayment or nondischarge thereof would have a Material Adverse Effect.
(c) Notwithstanding anything to the contrary contained in Section
6.2(b) above, Borrower and each of its Subsidiaries shall have the right to
pay the charges or claims arising under Section 6.2(a)(ii) and in good faith
contest, by proper legal actions or proceedings, the validity or amount of
such Charges or claims.
6.3. FINANCIAL COVENANTS. Borrower and its Subsidiaries shall, on
a consolidated basis:
(a) maintain at all times, such maintenance to be evidenced as at
the end of any fiscal quarter of Borrower, a Consolidated Total Funded Debt
to Consolidated Cash Flow Ratio equal to or less than:
6.0:1.0 for the Fiscal Year ended
December 31, 1995
3.0:1.0 for the Fiscal Year ending
December 31, 1996; and
2.0:1.0 thereafter;
(b) maintain at all times, such maintenance to be evidenced as at
the end of any fiscal quarter of Borrower, a Senior Debt to Consolidated Cash
Flow Ratio equal to or less than:
5.0:1.0 for the Fiscal Year ending
December 31, 1995;
2.5:1.0 for the Fiscal Year ending
December 31, 1996; and
1.5:1.0 thereafter;
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(c) maintain at all times, such maintenance to be evidenced as at the
end of any fiscal quarter of Borrower, a Consolidated Interest Coverage Ratio
equal to or greater than:
1.0:1.0 for the Fiscal Year ending
December 31, 1995;
2.5:1.0 for the six months ending
June 30, 1996;
3.0:1.0 for the six months ending
December 31, 1996; and
5.0:1.0 thereafter;
(d) have a Consolidated Cash Flow equal to or greater than:
$1,500,000 for the three months ending
September 30, 1995;
$3,000,000 for the Fiscal Year ending
December 31, 1996;
$4,000,000 for each Fiscal Year thereafter.
6.4. LENDER'S FEES. Borrower shall pay to Lender, on demand, any and
all fees, costs or expenses that Lender shall pay to a bank or other similar
institution arising out of or in connection with the forwarding to Borrower or
any other Person on behalf of Borrower by Lender of proceeds of the Term Loan
Advances.
6.5. BOOKS AND RECORDS. Borrower shall, and shall cause each of its
Subsidiaries to, keep adequate records and books of account with respect to
its business activities, in which proper entries, reflecting all of their
financial transactions, are made in accordance with GAAP and on a basis
consistent with the Financials referred to in Section 4.6(b) hereof.
6.6. LITIGATION. Borrower shall notify Lender in writing, promptly
upon learning thereof, of any litigation commenced against Borrower and/or
any of the Subsidiaries, and of the institution against any of them of any
suit or administrative proceeding that may have a Material Adverse Effect.
6.7. INSURANCE. Borrower shall and shall cause each Subsidiary of
Borrower to maintain insurance covering, without limitation, fire, theft,
burglary, public liability, property damage, product liability, workers'
compensation, and insurance on all property and assets, all in amounts customary
for its industry and under policies issued by insurers and pursuant to policies
satisfactory to Lender and in any event in compliance with any insurance
requirements under any Loan Documents and with a lender's loss payable clause
for the benefit of Lender. Borrower shall, and shall cause each of its
Subsidiaries to, pay all insurance premiums payable by them.
6.8. COMPLIANCE WITH LAW. Borrower shall and shall cause each of its
Subsidiaries to comply with all federal, state and local laws and regulations
applicable to it, including, without
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limitation. ERISA, those regarding the collection, payment and deposit of
employees' income, unemployment and social security taxes and those relating to
environmental matters where the failure to comply may have a Material Adverse
Effect.
6.9. AGREEMENTS. Borrower shall and shall cause each of its
Subsidiaries to perform, within all required time periods (after giving effect
to any applicable grace periods), all of its obligations and enforce all of its
rights under each agreement to which it is a party, including, without
limitation, any leases to which any such company is a party, where the failure
to so perform and enforce would have a Material Adverse Effect. Borrower shall
not and shall cause each of its Subsidiaries not to terminate or modify in any
manner adverse to any such company any provision of any agreement to which it is
a party which termination or modification could have a Material Adverse Effect.
6.10. SUPPLEMENTAL DISCLOSURE. From time to time as may be necessary
(in the event that such information is not otherwise delivered by Borrower to
Lender pursuant to this Agreement), so long as there are Obligations outstanding
hereunder, Borrower will supplement each Schedule or representation herein with
respect to any matter hereafter arising which, if existing or occurring at the
date of this Agreement, would have been required to be set forth or described in
such Schedule or as an exception to such representation or which is necessary to
correct any information in such Schedule or representation which has been
rendered inaccurate thereby; PROVIDED, HOWEVER, that such supplement to such
Schedule or representation shall not be deemed an amendment thereof unless
otherwise consented to by the Required Lenders.
6.11. EMPLOYEE PLANS. (a) With respect to other than a Multiemployer
Plan, for each Qualified Plan hereafter adopted or maintained by Borrower,
any of its Subsidiaries or any ERISA Affiliate, Borrower shall (i) seek, or
cause its Subsidiaries or ERISA Affiliates to seek, and receive determination
letters from the IRS to the effect that such Qualified Plan is qualified
within the meaning of Section 401(a) of the IRC; and (ii) from and after the
adoption of any such Qualified Plan, cause such plan to be qualified within
the meaning of Section 401(a) of the IRC and to be administered in all
material respects in accordance with the requirements of ERISA and Section
401(a) of the IRC.
(b) With respect to each Welfare Plan hereafter adopted or maintained
by Borrower, any of its Subsidiaries or any ERISA Affiliate, Borrower shall
comply, or cause its Subsidiaries or ERISA Affiliates to comply, with the notice
and continuation coverage requirements of Section 4980B of the IRC and the
regulations thereunder.
(c) (i) Promptly and in any event within thirty (30) days after
Borrower, any of its Subsidiaries or any ERISA Affiliate knows or has reason to
know that any ERISA Event has occurred, and (ii) promptly and in any event
within ten (10) days after Borrower, any of its Subsidiaries or any ERISA
Affiliate knows or has reason to know that a request for a minimum funding
waiver under Section 412 of the IRC has been filed with respect to any Qualified
Plan, Borrower shall furnish to Lender a written statement of the chief
financial officer or other appropriate officer of Borrower describing such ERISA
Event or waiver request and the action, if any, which Borrower, any of its
Subsidiaries or any ERISA Affiliate proposes to take with respect thereto and a
copy of any notice filed with the PBGC or the IRS pertaining thereto.
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(d) Promptly and in any event within thirty (30) days after receipt
thereof. Borrower shall furnish to Lender a copy of any adverse notice,
determination letter, ruling or opinion Borrower any of its Subsidiaries or
any ERISA Affiliate receives from the PBGC, the United States Department of
Labor or IRS with respect to any Qualified Plan.
(e) Promptly and in any event within ten (10) Business Days after
receipt thereof, Borrower shall furnish to Lender a copy of any correspondence
Borrower, any of its Subsidiaries or any ERISA Affiliate receives from the plan
sponsor (as defined by Section 4001(a)(10) of ERISA) of any Multiemployer Plan
concerning potential Withdrawal Liability of Borrower, any of its Subsidiaries
or any ERISA Affiliate, or notice of any reorganization, with respect to any
Multiemployer Plan, together with a written statement of the chief financial
officer or other appropriate officer of Borrower of the action which Borrower,
any of its Subsidiaries or any ERISA Affiliate proposes to take with respect
thereto.
(f) Promptly and in any event within thirty (30) Business Days after
the adoption thereof, Borrower shall furnish to Lender notice of (i) any
amendment to a Title IV Plan which results in an increase in benefits or the
adoption of any new Title IV Plan, and (ii) any amendment to, or adoption of, a
new Welfare Plan which Borrower or any of its Subsidiaries maintains,
contributes or has an obligation to contribute to, and which results in an
increase in benefits.
(g) Promptly and in any event after receipt of written notice of
commencement thereof, Borrower shall furnish to Lender notice of any action,
suit or proceeding before any court or other governmental authority affecting
Borrower, any of its Subsidiaries or any ERISA Affiliate with respect to any
Plan, except those which, in the aggregate, if adversely determined, could not
have a Material Adverse Effect.
(h) Promptly and in any event within thirty (30) days after notice or
knowledge thereof, Borrower shall furnish to Lender notice that Borrower or any
of its Subsidiaries becomes subject to the tax on prohibited transactions
imposed by Section 4975 of the IRC, together with a copy of Form 5330.
6.12. SEC FILINGS; CERTAIN OTHER NOTICES. Borrower shall furnish to
Lender (i) promptly after the filing thereof with the Securities and Exchange
Commission. a copy of each report, notice or other filing, if any, by
Borrower with the Securities and Exchange Commission and (ii) a copy of each
written communication received by Borrower from or delivered by Borrower to
(A) the Securities and Exchange Commission or (B) any holder of publicly held
subordinated debt of Borrower, in each case promptly after each such receipt
or delivery.
6.13. SALE OF CERTAIN ASSETS. Borrower shall use its best efforts to
sell within 36 months after the Closing Date the assets and businesses listed on
Schedule 6.13 hereof ("Permitted Dispositions"), the terms and conditions of
which shall be subject to Lender's approval.
6.14. LEASES: NEW REAL ESTATE. (a) Borrower shall provide, or shall
cause the applicable subsidiary to provide, Lender with copies of all leases of
real property or similar agreements (and all amendments thereto) entered into by
Borrower or any Subsidiary after the Closing Date, whether as lessor or lessee.
Borrower shall comply and shall cause each of its Subsidiaries to comply in all
material respects with all of its and their obligations under all Leases now
existing or hereafter entered into by it or them with respect to, real property
including, without limitation, all
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Leases listed on Schedule 4.8 hereto. Borrower shall, or shall cause the
appropriate Subsidiary to, (i) provide Lender with a copy of each notice of
default received by Borrower or such Subsidiary under any such lease immediately
upon receipt of any such notice and deliver to Lender a copy of each notice of
default sent by Borrower or such Subsidiary under any such lease simultaneously
with its delivery of such notice under such lease: (ii) notify Lender, not later
than 30 days prior to the date of the expiration of the term of any such lease,
of intention either to renew or not renew any such lease, and, if Borrower or
such Subsidiary shall intend to renew such lease, the terms and conditions of
such renewal lease; and (iii) notify Lender at least 14 days prior to the date
Borrower or such Subsidiary takes possession of or becomes liable under any new
leased premises or lease, whichever is earlier.
(b) From time to time at the request of Lender, Borrower and
Subsidiaries shall execute a first priority Mortgage (subordinate only to such
mortgages as are necessary to permit Borrower or such Subsidiary to purchase
such Real Estate) in favor of Lender covering any Real Estate now or hereafter
owned or held by Borrower or its Subsidiaries, in form and substance
satisfactory to Lender and provide Lender with title insurance satisfactory to
Lender covering such Real Estate in an amount equal to the purchase price of
such Real Estate as well as a current ALTA survey thereof, together with a
surveyor's certificate in form and substance satisfactory to Lender.
6.15. ENVIRONMENTAL MATTERS. (a) Borrower shall and shall cause each
of its Subsidiaries to (i) comply in all material respects with the
Environmental Laws applicable to it, (ii) notify Lender promptly after
knowledge in the event of any Spill upon any premises owned or occupied by
such Person, and (iii) promptly forward to Lender a copy of any order,
notice, permit, application, or any other communication or report received by
Borrower or any of its Subsidiaries in connection with any such Spill or any
other matter relating to the Environmental Laws as they may affect such
premises.
(b) Borrower shall indemnify Lender and hold Lender harmless from
and against any loss, liability, damage, or expense, including attorneys'
fees, suffered or incurred by Lender, whether as mortgagee pursuant to any
Leasehold Mortgage. as mortgagee in possession, or as successor in interest
to Borrower or any of its Subsidiaries as owner or lessee of any premises
owned or occupied by Borrower or any of its Subsidiaries by virtue of
foreclosure or acceptance in lieu of foreclosure (i) under or on account of
the Environmental Laws, including the assertion of any Lien thereunder; (ii)
with respect to any Spill affecting such premises, whether or not the same
originates or emanates from such premises or any contiguous real estate,
including any loss of value of such premises as a result of a Spill; (iii)
with respect to any liability for personal injury or property damage arising
under any statutory or common law tort theory, including, without limitation,
damages assessed for the maintenance of public or private nuisance of the
carrying on of an abnormally dangerous activity at or near any Real Estate;
and (iv) with respect to any other Environmental Liabilities and Costs with
respect to any other matter affecting such premises within the jurisdiction
of any federal, state, or municipal official administering the Environmental
Laws.
(c) In the event of any Spill affecting any premises occupied by
Borrower or any of its Subsidiaries, whether or not the same originated or
emanates from such premises or any contiguous real estate. and if Borrower or
such Subsidiary shall fail to comply with any of the requirements of the
Environmental Laws, if required to do so under the applicable lease, Lender
may, but shall not be obligated to, give such notices or cause such work to
be performed or take any and all actions deemed necessary or desirable to
remedy such Spill or cure such failure to comply and any
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amounts paid as a result thereof, together with interest thereon at the rate
set forth in Section 2.5 hereof, shall be immediately due and payable by
Borrower and, until paid, shall be added to the Obligations.
The provisions of this Section 6.15 shall apply whether or not the
Environmental Protection Agency, any other federal agency or any state or
local environmental agency has taken or threatened any action in connection
with the presence of any Spills or hazardous substances.
6.16. KEY MAN LIFE INSURANCE. If requested by Lender, Borrower shall
obtain a term life insurance policy with respect to the lives of each of
▇▇▇▇▇ ▇▇▇▇ and C. ▇▇▇▇▇▇▇ ▇▇▇▇ in an amount of not less than $2,000.000.
6.17. ADDITIONAL SECURITY. If requested by Lender, Borrower shall
cause any Subsidiary designated by Lender to enter into a security agreement
and/or one or more mortgages for the benefit of Lender, pursuant to which
security agreement and mortgages such Subsidiary shall grant Lender a first
priority security interest in substantially all of such Subsidiary's real and
personal property assets. In connection therewith, if Lender shall so
request, such Subsidiary shall execute and deliver security agreements,
mortgages and such further documents and instruments and make such filings as
Lender shall request to enable Lender to perfect its security interest and
Liens in such Subsidiary's assets.
7. NEGATIVE COVENANTS
Borrower covenants and agrees that, without the Required Lenders'
prior written consent, from and after the date hereof and until the
Termination Date:
7.1. MERGERS, ETC. Neither Borrower nor any Subsidiary of Borrower
shall directly or indirectly, by operation of law or otherwise, merge with,
consolidate with, acquire all or substantially all of the assets or capital
stock of, or otherwise combine with, any Person nor form any Subsidiary.
7.2. INVESTMENTS; LOANS AND ADVANCES. Except as otherwise permitted
by Section 7.3 or 7.4 hereof, Borrower shall not and shall not permit any
Subsidiary of Borrower to make any investment in, or make or accrue loans or
advances of money to any Person, through the direct or indirect holding of
securities or otherwise; PROVIDED, HOWEVER, that Borrower shall be permitted
hereunder and may permit hereunder its Subsidiaries to make one or more
investments in, or make or accrue loans or advances of money to, Borrower or
any other Subsidiary and PROVIDED, FURTHER, that Borrower and its
Subsidiaries may make and own investments in (i) marketable direct
obligations issued or unconditionally guaranteed by the United States of
America or any agency thereof maturing within one year from the date of
acquisition thereof; (ii) commercial paper maturing no more than one year
from the date of creation thereof and at the time of their acquisition having
the highest rating obtainable from either Standard & Poor's Corporation or
▇▇▇▇▇'▇ Investors Service, Inc.; and (iii) certificates of deposit, maturing
no more than one year from the date of creation thereof, issued by commercial
banks incorporated under the laws of the United States of America, each
having combined capital, surplus and undivided profits of not less than
$200,000,000 and having a rating of "A" or better by a nationally recognized
rating agency (the investments described in the preceding clauses (i)-(iii)
being hereinafter referred to as "Cash Equivalents").
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7.3. INDEBTEDNESS. (a) Except as otherwise expressly permitted by
this Section 7.3 or by any other section of this Agreement. Borrower shall
not, nor shall it permit any of its Subsidiaries to, create, incur, assume
or permit to exist any Indebtedness, except (i) Indebtedness secured by Liens
permitted under Section 7.10 hereof, (ii) the Term Loan Advances, (iii) the
Letter of Credit Obligations in an amount not to exceed (A) $3,500,000 for
the three months ending September 30, 1995; (B) $2,800,000 for the three
months ending December 31, 1995; (C) $2,400,000 for the three months ending
March 31, 1996; (D) $1,300,000 for the nine months ending December 31, 1996;
and (E) $200,000 thereafter, (iv) the Sanwa Obligations, (v) all deferred
taxes, (vi) all unfunded pension fund and other employee benefit plan
obligations and liabilities but only to the extent they are permitted to
remain unfunded under applicable law, (vii) intercompany debt to any
Guarantor or to Borrower, and (viii) Indebtedness of Subsidiaries of Borrower
created under the Guaranty.
(b) Except as otherwise expressly permitted by Sections 6.13 and 7.9
hereof. Borrower shall not and shall not permit any Subsidiary of Borrower to
sell or transfer, either with or without recourse, any assets, of any nature
whatsoever, in respect of which a Lien is granted or to be granted pursuant
to any Loan Document or engage in any sale-leaseback or similar transaction
involving any of such assets.
7.4. EMPLOYEE LOANS. Schedule 7.4 attached hereto shows the
outstanding amount of all loans to employees, including the identity of the
employee, the principal amount of and interest rate of the indebtedness, and
the maturity date thereof. Except as set forth on Schedule 7.4, Borrower
shall not, and shall not permit any Subsidiary of Borrower to, make or accrue
any loans or other advances of money to any employee of Borrower or such
Subsidiary in excess at any one time of $50,000 in the aggregate for all such
loans, provided that such loans are made only in the ordinary course of
Borrower's or such Subsidiary's business.
7.5. MAINTENANCE OF BUSINESS. Borrower shall not and shall not
permit any Subsidiary of Borrower to engage in any business other than the
business currently engaged in by Borrower or such Subsidiary.
7.6. GUARANTEED INDEBTEDNESS. Borrower shall not and shall not
permit any Subsidiary of Borrower to incur any Guaranteed Indebtedness
(excluding the Guaranteed Indebtedness pursuant to the Guaranty) except (i)
by endorsement of instruments or items of payment for deposit to the general
account of Borrower or such Subsidiary, and (ii) for Guaranteed Indebtedness
incurred for the benefit of Borrower or any Subsidiary of Borrower if the
primary obligation is permitted by this Agreement.
7.7. LIENS. Borrower shall not and shall not permit any Subsidiary
of Borrower to create or permit any Lien on any of its properties or assets
except:
(a) presently existing or hereafter created Liens in favor of Lender;
and
(b) Permitted Encumbrances.
7.8. CAPITAL EXPENDITURES. Borrower shall not and shall not permit
any of its Subsidiaries to make Capital Expenditures that, in the aggregate,
shall exceed $100,000 for the period
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from and after the Closing Date through and including December 31, 1995, and
for each Fiscal Year thereafter.
7.9. SALES OF ASSETS. Except as otherwise provided in Section 6.13.
Borrower shall not and shall not permit any Subsidiary of Borrower to sell,
transfer, convey or otherwise dispose of any assets or properties: PROVIDED,
HOWEVER, that the foregoing shall not prohibit (i) the sale of Inventory in
the ordinary course of business, (ii) the sale of surplus or obsolete
equipment and fixtures, and (iii) transfers resulting from any casualty or
condemnation of assets or properties.
7.10. CANCELLATION OF INDEBTEDNESS. Borrower shall not and shall not
permit any Subsidiary of Borrower to cancel any claim or debt owing to it,
except for reasonable consideration and in the ordinary course of business.
7.11. EVENTS OF DEFAULT. Borrower shall not and shall not permit any
Subsidiary of Borrower to take or omit to take any action, which act or
omission would constitute (i) a default or an event of default pursuant to,
or noncompliance with any of, the terms of any of the Loan Documents or the
Ancillary Agreements or (ii) a material default or an event of default
pursuant to, or noncompliance with any other contract, lease, mortgage, deed
of trust or instrument to which it is a party or by which it or any of its
property is bound, or any document creating a Lien, unless such default,
event of default or non-compliance would not have a Material Adverse Effect.
7.12. HEDGING TRANSACTIONS. Borrower shall not and shall not permit
any of its Subsidiaries to engage in any speculative interest rate hedging
swaps, caps or similar transaction other than currency hedging in the
ordinary course of business.
7.13. RESTRICTED PAYMENTS. Borrower shall not and shall not permit
any Subsidiary of Borrower to make any Restricted Payments nor shall Borrower
permit any Subsidiary to make such payments with respect to Borrower's Stock.
7.14. COMPENSATION. Borrower shall not and shall not permit any
Subsidiary of Borrower to, increase the salary and bonus in any year of the
ten highest paid employees of Borrower and its Subsidiaries, if as a result
of such increase, any such employee's total cash Compensation would increase
by more than five percent (5%) of his total cash Compensation for the prior
year.
7.15. ERISA. Neither Borrower nor any of its Subsidiaries shall
establish or become obligated to any new Retiree Welfare Plan, or modify any
existing Retiree Welfare Plan, which would result in the present value of
future liabilities under any such plans to increase by more than $100.000.
Neither Borrower nor any of its Subsidiaries shall establish or become
obligated to any new unfunded Pension Plan, or modify any existing unfunded
Pension Plan, which would result in the present value of future liabilities
under any such plans to increase by more than $100,000. Borrower shall not
directly or indirectly, and shall not permit its Subsidiaries or any ERISA
Affiliate to (a) satisfy any liability under any Qualified Plan by purchasing
annuities from an insurance company or (b) invest the assets of any Qualified
Plan with an insurance company, unless, in each case, such insurance company
is rated AAA by Standard & Poor's Corporation and the equivalent by each
other nationally recognized rating agency at the time of the investment.
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8. TERM
8.1 TERMINATION. Subject to the provisions of Section 2 hereof, the
financing arrangement contemplated hereby in respect of the Term Loan
Advances shall be in effect until the Commitment Termination Date; PROVIDED,
HOWEVER, that in the event of a prepayment of the entire Term Loan prior to
the Commitment Termination Date with funds borrowed from any Person other
than Lender, Borrower shall simultaneously therewith pay to Lender, in
immediately available funds, all Obligations in full, in accordance with the
terms of the agreements creating and instruments evidencing such Obligations.
8.2. SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING
ARRANGEMENT. Except as otherwise expressly provided for in the Loan
Documents, no termination or cancellation (regardless of cause or procedure)
of any financing arrangement under this Agreement shall in any way affect or
impair the powers, obligations, duties, rights and liabilities of Borrower
or the rights of Lender relating to any transaction or event occurring prior
to such termination. Except as otherwise expressly provided herein or in any
other Loan Document, all undertakings, agreements, covenants, warranties and
representations contained in the Loan Documents shall survive such
termination or cancellation and shall continue in full force and effect until
such time as all of the Obligations have been paid in full in accordance with
the terms of the agreements creating such Obligations, at which time the same
shall terminate.
8.3. TERMINATION PRIOR TO CLOSING DATE. Borrower hereby covenants
and agrees with Lender that Borrower will: (a) use its best efforts to
satisfy, and to cause to be satisfied, fully and promptly each of the
conditions set forth in Sections 3.1, 3.2 and 3.3 hereof and to consummate
each of the transactions contemplated by this Agreement; (b) refrain from
taking, or permitting to be taken, any action, of any nature whatsoever,
which shall impede, preclude or otherwise interfere with the satisfaction of
any such condition; and (c) indemnify and hold Lender harmless from and
against any and all claims, damages, liabilities and expenses which may be
incurred by or asserted against Lender in connection with or arising out of
any investigation, litigation or proceeding relating to this Agreement, any
other Loan Document or any transaction contemplated hereby or thereby, except
to the extent that any such claim, damage. liability or expense is the result
of the gross negligence or willful misconduct of Lender.
9. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
9.1. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an
"Event of Default" hereunder:
(a) Borrower shall fail to make any payment of principal of, or
interest on or any other amount owing in respect of, the Term Loan or any of
the other Obligations when due and payable or declared due and payable,
except that with respect to expenses payable under this Agreement, or other
Obligations owing under any Loan Document other than this Agreement, such
failure shall have remained unremedied for a period of ten (10) days after
Borrower has received notice of such failure from Lender.
(b) Borrower shall fail or neglect to perform, keep or observe any
of the provisions of Section 6.3 ("Financial Covenants") or Section 7 of this
Agreement.
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(c) Borrower shall fail or neglect to perform, keep or observe
any other provision of this Agreement or of any of the other Loan Documents, or
any other Loan Party shall fail or neglect to perform, keep or observe any of
the provisions of any other Loan Document and the same shall remain
unremedied for a period ending on the first to occur of ten (10) days after
Borrower shall receive written notice of any such failure from any Lender or
thirty (30) days after Borrower shall become aware thereof.
(d) A default shall occur under any other agreement, document or
instrument to which any Loan Party is a party or by which any Loan Party or
any Loan Party's property is bound, and such default (i) involves the failure
to make any payment (whether of principal, interest or otherwise) due
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) in respect of any Indebtedness of any Loan Party in an aggregate
amount exceeding $25,000, or (ii) causes (or permits any holder of such
Indebtedness or a trustee to cause) such Indebtedness or a portion thereof in
an aggregate amount exceeding $25,000, to become due prior to its stated
maturity or prior to its regularly scheduled dates of payment.
(e) Any representation or warranty herein or in any Loan Document or
in any written statement pursuant thereto or hereto, report, financial
statement or certificate made or delivered to Lender by any Loan Party shall
be untrue or incorrect in any material respect, as of the date when made or
deemed made (including those made or deemed made pursuant to Section 3.3).
(f) Any of the assets of any Loan Party shall be attached, seized,
levied upon or subjected to a writ or distress warrant, or come within the
possession of any receiver, trustee, custodian or assignee for the benefit of
creditors of any Loan Party and shall remain unstayed or undismissed for
thirty (30) consecutive days; or any Person other than any Loan Party shall
apply for the appointment of a receiver, trustee or custodian for any of the
assets of any Loan Party and shall remain unstayed or undismissed for thirty
(30) consecutive days; or any Loan Party shall have concealed, removed or
permitted to be concealed or removed, any part of its property, with intent
to hinder, delay or defraud its creditors or any of them or made or suffered
a transfer of any of its property or the incurring of an obligation which may
be fraudulent under any bankruptcy, fraudulent conveyance or other similar
law.
(g) A case or proceeding shall have been commenced against any Loan
Party in a court having competent jurisdiction seeking a decree or order in
respect of such Loan Party (i) under title 11 of the United States Code, as
now constituted or hereafter amended, or any other applicable federal, state
or foreign bankruptcy or other similar law, (ii) appointing a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official)
of such Loan Party or of any substantial part of its or their properties, or
(iii) ordering the winding-up or liquidation of the affairs of such Loan
Party and such case or proceeding shall remain undismissed or unstayed for
thirty (30) consecutive days or such court shall enter a decree or order
granting the relief sought in such case or proceeding.
(h) Any Loan Party shall (i) file a petition seeking relief under
title 11 of the United States Code, as now constituted or hereafter amended,
or any other applicable federal, state or foreign bankruptcy or other similar
law, (ii) consent to the institution of proceedings thereunder or to the
filing of any such petition or to the appointment of or taking possession by
a custodian, receiver, liquidator, assignee, trustee or sequestrator (or
similar official) of Borrower or such Loan Party or of
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any substantial part of its properties, (iii) fail generally to pay its debts
as such debts become due, or (iv) take any corporate action in furtherance of
any such action.
(i) Both of ▇▇▇▇▇ ▇▇▇▇, the Chairman and Chief Executive Officer of
Borrower, and C. ▇▇▇▇▇▇▇ ▇▇▇▇, shall, for any reason, cease to be active
full-time employees of Borrower.
(j) Final judgment or judgments (after the expiration of all times
to appeal therefrom) for the payment of money in excess of $25,000 in the
aggeregate shall be rendered against Borrower or any of its Subsidiaries and
the same shall not be (i) fully covered by insurance in accordance with
Section 6.8 hereof, or (ii) vacated, stayed, bonded, paid or discharged for a
period of fifteen (15) days.
(k) Any other event shall have occurred which would have a Material
Adverse Effect and Lender shall have given Borrower at least ten (10) days
notice thereof.
(l) (i) With respect to any Plan, a prohibited transaction within
the meaning of Section 4975 of the IRC or Section 406 of ERISA occurs which
in the reasonable determination of Lender could result in direct or indirect
liability to Borrower or any of its Subsidiaries, (ii) with respect to any
Title IV Plan, the filing of a notice to voluntarily terminate any such plan
in a distress termination, (iii) with respect to any Multiemployer Plan,
Borrower, any of its subsidiaries or any ERISA Affiliate shall incur any
Withdrawal Liability, (iv) with respect to any Qualified Plan, Borrower, any
of its Subsidiaries or any ERISA Affiliate shall incur an accumulated funding
deficiency or request a funding waiver from the IRS, or (v) with respect to
any Title IV Plan or Multiemployer Plan which has an ERISA Event not
described in clauses (ii) - (iv) hereof, in the reasonable determination of
Lender there is a reasonable likelihood for termination of any such plan by
the PBGC; PROVIDED, HOWEVER, that the events listed in clauses (i) - (v)
hereof shall constitute Events of Default only if the liability, deficiency
or waiver request of Borrower, any of its Subsidiaries or any ERISA
Affiliate, whether or not assessed, exceeds $100,000 in any case set forth in
(i) - (v) above, or exceeds $100,000 in the aggregate for all such cases.
(m) Any provision of any Collateral Document or the Guaranty, after
delivery thereof pursuant to Section 3.1. shall for any reason cease to be
valid or enforceable in accordance with its terms, or any security interest
created under any Collateral Document shall cease to be a valid and perfected
first priority security interest or Lien (except as otherwise stated therein)
in any of the Collateral purported to be covered thereby.
9.2. REMEDIES. If any Event of Default shall have occurred and be
continuing, Lender shall at the request, or may with the consent, of the
Required Lenders, without notice, (i) terminate this facility with respect to
further Term Loan Advances, whereupon no Term Loan Advances may be made
hereunder, and/or (ii) declare all Obligations to be forthwith due and
payable, whereupon all Obligations shall become and be due and payable,
without presentment, demand, protest or further notice of any kind, all of
which are expressly waived by Borrower; PROVIDED, HOWEVER, that upon the
occurrence of an Event of Default specified in Section 9.1(f), (g) or (h)
hereof, the Obligations shall become due and payable without declaration,
notice or demand by Lender. Lender shall take such action with respect to any
Default or Event of Default as shall be directed by the Required Lenders;
PROVIDED that, unless and until Lender shall have received such directions,
Lender may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it
shall deem advisable in the best interests
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of Lender and the Assignee Lenders taken as a whole, including any action (or
the failure to act) pursuant to the Loan Documents.
9.3. WAIVERS BY BORROWER. Except as otherwise provided for in
this Agreement and applicable law, Borrower waives (i)) presentment, demand
and protest and notice of presentment, dishonor, notice of intent to
accelerate, notice of acceleration, protest, default, nonpayment, maturity,
release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, contract rights, documents, instruments, chattel
paper and guaranties at any time held by Lender or any Assignee Lender on
which Borrower may in any way be liable and hereby ratifies and confirms
whatever Lender or any Assignee Lender may do in this regard, (ii) all rights
to notice and a hearing prior to Lender's taking possession or control of, or
to Lender's replevy, attachment or levy upon, the Collateral or any bond or
security which might be required by any court prior to allowing Lender to
exercise any of its remedies, and (iii) the benefit of all valuation,
appraisal and exemption laws, Borrower acknowledges that it has been advised
by counsel of its choice with respect to this Agreement, the other Loan
Documents and the transactions evidenced by this Agreement and the other Loan
Documents.
9.4. RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default, Lender and each Assignee Lender is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by Lender or such Assignee Lender to or for
the credit or the account of Borrower against any and all of the obligations
of Borrower now or hereafter existing under this Agreement, and the Notes
held by Lender or such Assignee Lender irrespective of whether or not Lender
or such Assignee Lender shall have made any demand under this Agreement or
any such Note and although such obligations may be unmatured. Lender and each
Assignee Lender agrees promptly to notify Borrower after any such set-off and
application made by Lender or such Assignee Lender; PROVIDED, HOWEVER, that
the failure to give such notice shall not affect the validity of such set-off
and application. The rights of Lender and each Assignee Lender under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which Lender and each Assignee Lender
may have.
10. MISCELLANEOUS
10.1. COMPLETE AGREEMENT: MODIFICATION OF AGREEMENT: SALE OF
INTEREST. (a) The Loan Documents constitute the complete agreement between
the parties with respect to the subject matter hereof and may not be
modified, altered or amended except by an agreement in writing signed by
Borrower and Lender in accordance with Section 10.1(d) hereof. Borrower may
not sell, assign or transfer any of the Loan Documents or any portion
thereof, including, without limitation, Borrower's rights, title, interests,
remedies, powers and duties hereunder or thereunder. Borrower hereby consents
to Lender's and each Assignee Lender's sale of participations, assignment,
transfer or other disposition, at any time or times, of any of the Loan
Documents or of any portion thereof or interest therein, including, without
limitation, Lender's and each Assignee Lender's rights, title, interests,
remedies, powers or duties thereunder, whether evidenced by a writing or not.
Borrower agrees that it will use its best efforts to assist and cooperate
with Lender in any manner reasonably requested by Lender to effect the sale
of participations in or assignments of any of the Loan Documents or of any
portion thereof or interest therein.
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(b) In the event Lender or any Assignee Lender assigns or otherwise
transfers all or any part of any Term Note, Borrower shall, upon the request
of Lender or such Assignee Lender, issue new Term Notes to effectuate such
assignment or transfer.
(c) Lender may sell, assign, transfer or negotiate to one or more
other lenders, commercial banks insurance companies, other financial
institutions or any other Person all or a portion of its rights and
obligations under any Term Note held by Lender and this Agreement. From and
after the effective date of such an assignment, the assignees thereunder
shall, in addition to the rights and obligations hereunder held by it
immediately prior to such effective date, have the rights and obligations
hereunder that have been assigned to it pursuant to such assignment,
relinquish its rights and be released from its obligations under the
Agreement (and, in the case of an assignment and acceptance covering all or
the remaining portion of an assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto).
(d) No amendment or waiver of any provision of this Agreement or any
Term Notes or any other Loan Document, nor consent to any departure by
Borrower therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Required Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; PROVIDED, HOWEVER, that no amendment, waiver or
consent shall, unless in writing and signed by Lender and all Assignee
Lenders affected thereby do any of the following: (i) increase the amount of
Lender's commitment to make Term Loan Advances hereunder or subject Lender or
any Assignee Lender to any additional obligations, (ii) reduce the principal
of, or interest on, any Term Notes or other amounts payable hereunder other
than those payable only to ▇▇▇ Acquisition Corp. which may be reduced by ▇▇▇
Acquisition Corp. unilaterally, (iii) postpone any date fixed for any payment
of principal of, or interest on, any Term Notes or other amounts payable
hereunder, other than those payable only to ▇▇▇ Acquisition Corp. which may
be postponed by ▇▇▇ Acquisition Corp. unilaterally, (iv) change the aggregate
unpaid principal amount of any Term Notes, or the number of Lenders and
Assignee Lenders which shall be required for the Lenders and Assignee Lenders
or any of them to take any action hereunder, (v) release or discharge any
Person liable for the performance of any obligations of any Loan Party
hereunder or under any of the Loan Documents, or (vi) amend this Section
10.1(d); and PROVIDED, FURTHER, HOWEVER, that no amendment, waiver or consent
shall, unless in writing and signed by all Lenders holding Term Notes,
increase the amount of the commitment to make Term Loan Advances hereunder;
and PROVIDED, FURTHER, HOWEVER, that no amendment, waiver or consent shall
unless in writing and signed by Lender in addition to the Required Lenders
required above to take such action, affect the rights or duties of Lender
under this Agreement, any Term Note or any Loan Document.
10.2. FEES AND EXPENSES. Borrower shall pay all reasonable
out-of-pocket expenses of Lender in connection with the preparation of the
Loan Documents (including the reasonable fees and expenses of all of its
counsel and advisors retained in connection with the Loan Documents and the
transactions contemplated thereby and advice in connection therewith). If, at
any time or times, regardless of the existence of an Event of Default (except
with respect to paragraphs (iii) and (iv), which shall be subject to an Event
of Default having occurred and be continuing), Lender (or in the case of
paragraphs (iii) and (iv) below, any Assignee Lender) shall employ counsel or
other advisors for advice or other representation or shall incur reasonable
legal or other costs and expenses in connection with:
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(i) any amendment, modification or waiver, or consent with
respect to, any of the Loan Documents or advice in connection with the
administration of the loans made pursuant hereto or its rights
hereunder or thereunder;
(ii) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Lender or any Assignee Lender, Borrower,
any Subsidiary of Borrower or any other Person) in any way relating to
the Collateral, any of the Loan Documents or any other agreements to
be executed or delivered in connection herewith;
(iii) any attempt to enforce any rights of Lender or any Assignee
Lender against Borrower, any Subsidiary of Borrower or any other
Person, that may be obligated to any Lender by virtue of any of the
Loan Documents;
(iv) any attempt to verify, protect, collect, sell, liquidate or
otherwise dispose of the Collateral;
then, and in any such event, the attorneys' and other parties' fees arising
from such services, including those of any appellate proceedings, and all
expenses, costs, charges and other fees incurred by such counsel and others
in any way or respect arising in connection with or relating to any of the
events or actions described in this Section 10.2 shall be payable, on demand,
by Borrower to Lender (or as provided above to an Assignee Lender) and shall
be additional Obligations secured under this Agreement and the other Loan
Documents. Without limiting the generality of the foregoing, such expenses,
costs, charges and fees may include: paralegal fees, costs and expenses;
accountants' and investment bankers' fees, costs and expenses; court costs
and expenses; photocopying and duplicating expenses; court reporter fees,
costs and expenses; long distance telephone charges; air express charges;
telegram charges; secretarial overtime charges; and expenses for travel,
lodging and food paid or incurred in connection with the performance of such
legal services.
10.3. NO WAIVER BY LENDER. Lender's or any Assignee Lender's
failure, at any time or times, to require strict performance by any Loan
Party of any provision of this Agreement and any of the other Loan Documents
shall not waive, affect or diminish any right of Lender thereafter to demand
strict compliance and performance therewith. Any suspension or waiver by
Lender or Assignee Lender of an Event of Default by any Loan Party under the
Loan Documents shall not suspend, waive or affect any other Event of Default
by any Loan Party under this Agreement and any of the other Loan Documents
whether the same is prior or subsequent thereto and whether of the same or of
a different type. None of the undertakings, agreements, warranties, covenants
and representations of any Loan Party contained in this Agreement or any of
the other Loan Documents and no Event of Default by Borrower under this
Agreement and no defaults by any Loan Party under any of the other Loan
Documents shall be deemed to have been suspended or waived by Lender or
Assignee Lender, unless such suspension or waiver is by an instrument in
writing signed by an officer of Lender and Required Lenders and directed to
such Loan Party specifying such suspension or waiver.
10.4. REMEDIES. Lender's and each Assignee Lender's rights and
remedies under this Agreement shall be cumulative and nonexclusive of any
other rights and remedies which Lender and Assignee Lenders may have under
any other agreement, including without limitation, the Loan Documents, by
operation of law or otherwise. Recourse to the Collateral shall not be
required.
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10.5. WAIVER OF JURY TRIAL. The parties hereto waive all right to
trial by jury in any action or proceeding to enforce or defend any rights
under the Loan Documents.
l0.6. SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
10.7. PARTIES. This Agreement and the other Loan Documents shall be
binding upon, and inure to the benefit of, the successors of Borrower.
Lender and any Assignee Lender and the assigns, transferees and endorsees of
Lender and any Assignee Lenders.
10.8. CONFLICT OF TERMS. Except as otherwise provided in this
Agreement or any of the other Loan Documents by specific reference to the
applicable provisions of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision in any of
the other Loan Documents, the provision contained in this Agreement shall
govern and control.
10.9. AUTHORIZED SIGNATURE. Until Lender shall be notified by
Borrower to the contrary, the signature upon any document or instrument
delivered pursuant hereto of an officer of Borrower listed in Schedule 10.9
hereto shall bind Borrower and be deemed to be the act of Borrower affixed
pursuant to and in accordance with resolutions duly adopted by Borrower's
Board of Directors.
10.10. GOVERNING LAW. Except as otherwise expressly provided in any
of the Loan Documents, in all respects, including all matters of
construction, validity and performance, this Agreement and the Obligations
arising hereunder shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York applicable to contracts
made and performed in such state, without regard to the principles thereof
regarding conflict of laws, and any applicable laws of the United States of
America. Lender, each Assignee Lender and Borrower agree to submit to
personal jurisdiction and to waive any objection as to venue in the County of
New York, State of New York. Service of process on Borrower, Lender or any
Assignee Lender in any action arising out of or relating to any of the Loan
Documents shall be effective if mailed to such party at the address listed in
Section 10.11 hereof. Nothing herein shall preclude Lender, any Assignee
Lender or Borrower from bringing suit or taking other legal action in any
other jurisdiction.
10.11. NOTICES. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon
any of the parties by another, or whenever any of the parties desires to give
or serve upon another any communication with respect to this Agreement, each
such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and either shall be delivered in person
with receipt acknowledged or by registered or certified mail, return receipt
requested, postage prepaid, or telecopied and confirmed by telecopy
answerback addressed as follows:
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(a) If to the Lender, at:
▇▇▇ Acquisition Corp.
c/o Wexford Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Berlack, Israels & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Borrower, at:
Wahlco Environmental Systems, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice, demand,
request, consent, approval, declaration or other communication hereunder
shall be deemed to have been duly given or served on the date on which
personally delivered, with receipt acknowledged, telecopied and confirmed by
telecopy answerback or three (3) Business Days after the same shall have been
deposited in the United States mail. Failure or delay in delivering copies of
any notice, demand, request, consent, approval, declaration or other
communication to the persons designated above to receive copies shall in no
way adversely affect the effectiveness of such notice, demand, request,
consent, approval, declaration or other communication.
10.12. SURVIVAL. The representations and warranties of Borrower in
this Agreement shall survive the execution, delivery and acceptance hereof by
the parties hereto and the closing of the transactions described herein or
related hereto.
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10.13. SECTION TITLES. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between
the parties hereto.
10.14. COUNTERPARTS. This Agreement may be executed in any number of
separate counterparts, each of which shall, collectively and separately,
constitute one agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
WAHLCO ENVIRONMENTAL SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chairman & CEO
▇▇▇ ACQUISITION CORP.
By: /s/ illegible
--------------------------------
Name:
Title:
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