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REVOLVING CREDIT LOAN AND SECURITY AGREEMENT
DATED AS OF DECEMBER 22, 1999
by and among
BROOKWOOD COMPANIES INCORPORATED
▇▇▇▇▇▇ INDUSTRIES, INC.
BROOKWOOD LAMINATING, INC.
and
KEYBANK NATIONAL ASSOCIATION
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KEYBANK NATIONAL ASSOCIATION
REVOLVING CREDIT LOAN AND SECURITY AGREEMENT
This Revolving Credit Loan and Security Agreement (this "Agreement")
dated as of December 22, 1999 is entered into by and among KeyBank National
Association, a national banking association having a place of business at ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("Bank") and Brookwood Companies
Incorporated, a Delaware corporation, having a place of business at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Brookwood"), ▇▇▇▇▇▇ Industries, Inc., a
Delaware corporation, having a place of business at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇▇"), and Brookwood Laminating, Inc., a Delaware
corporation, having a place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ("Laminating" and, together with Brookwood and ▇▇▇▇▇▇ being
collectively referred to herein as "Borrower").
WITNESSETH:
WHEREAS, Brookwood, a wholly-owned subsidiary of The Hallwood Group
Incorporated, a Delaware corporation, having a place of business at ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("Hallwood"), owns all of the issued
and outstanding stock of ▇▇▇▇▇▇ and Laminating; and
WHEREAS, Brookwood through a wholly-owned subsidiary proposes to
acquire subsequent to the date hereof, for the purchase price of $1,000,000.00,
from the business and assets of certain corporations controlled by ▇▇▇▇ Chess
("Seller"), Uzzi Amphibious Gear, Inc., a Florida corporation, having a place of
business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, TEK Sportswear,
Inc., a Florida corporation having a place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇ Sportswear, Inc., a Florida
corporation having a place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ (collectively, "Uzzi"); and
WHEREAS, the Borrower has requested that Bank make loans and provide
other financial accommodations to Borrower to support Borrower's working capital
(including the pay-off of certain debt of Borrower to The Bank of New York),
purchase and lease of equipment, and to finance the purchase price required for
the acquisition of Uzzi and the start-up of Uzzi retail stores; and
WHEREAS, Bank is willing to make such loans and provide such financial
accommodations to Borrower, subject to the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Borrower and Bank
agree as follows:
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1. DEFINITIONS
1.1. Certain Definitions. As used herein the following terms have the
meanings set forth below:
"Accounts" means all of Borrower's accounts, accounts receivable, contract
rights, and all other debts, obligations and liabilities in whatever form owing
to Borrower from any Person for goods sold by Borrower or for services rendered
by Borrower, or however otherwise established or created; all guaranties and
security therefor, all right, title and interest of Borrower in the goods or
services which gave rise thereto, including rights to reclamation and stoppage
in transit and all rights of an unpaid seller of goods or services; whether any
of the foregoing be now existing or hereafter arising, now or hereafter received
by or owing or belonging to Borrower.
"Acquisition Commitment Fee" shall have the meaning set forth in Section 2.3.4.
"Acquisition Origination Fee" shall have the meaning set forth in Section 2.3.4.
"Acquisition Revolving Credit Facility" shall have the meaning set forth in
Section 2.3.1.
"Acquisition Revolving Credit Limit" means $2,000,000.00 from the Closing Date
through and including the Acquisition Revolving Credit Maturity Date.
"Acquisition Revolving Credit Loans" shall have the meaning set forth in Section
2.3.1.
"Acquisition Revolving Credit Maturity Date" means December 22, 2002.
"Acquisition Revolving Credit Note" means the promissory note in the form of
Exhibit "C" hereto.
"Affiliate" shall mean any Person which directly or indirectly is in control of,
is controlled by, or is under common control with Borrower.
"Assignee" has the meaning set forth in Section 15.3 hereof.
"Automatic Electronic Fund Transfer Agreement" ("AFT Agreement") has the meaning
set forth in Section 10.10 hereof.
"Bank" has the meaning given such term in the preamble hereto.
"Borrower" has the meaning given such term in the preamble hereto.
"Borrowing Base" has the meaning given such term as Section 2.1.8 hereof.
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"Borrowing Date" as to any Loan shall mean the Business Day on which such Loan
is made.
"Brookwood" shall have the meaning set forth in the preamble hereto.
"Business Day" has the meaning given such term in Section 2.12 hereof.
"Capital Expenditures" shall mean, for any period, amounts included or required
to be included in the fixed assets account on a balance sheet of a Borrower in
accordance with GAAP and shall include Capital Leases and, in the case of a
purchase, the entire purchase price.
"Capital Leases" means capital leases, conditional sales contracts and other
title retention documents relating to the acquisition of capital assets (as
classified in accordance with GAAP).
"Closing Date" means December 22, 1999, the date initial Loans are made pursuant
to this Agreement.
"Collateral" has the meaning given such term in Section 3 hereof.
"Commitment Period" means the period from and including the Closing Date, to but
not including, the Termination Date.
"Commonly Controlled Entities" shall mean entities sharing "common control"
under ERISA.
"Contingent Liability" means any obligation of a Person guaranteeing or in
effect guaranteeing any Indebtedness, leases, dividends or other obligations of
any other Person in any manner, whether directly or indirectly or any obligation
otherwise to assure or hold harmless any other Person against any loss or cost
in respect of services rendered or products furnished and any other contingent
liability or obligation as determined in accordance with GAAP; provided,
however, that the term Contingent Liability shall not include endorsements of
negotiable instruments in the ordinary course of business.
"Current Ratio" shall mean Total Current Assets divided by Total Current
Liabilities.
"Default" means any event or occurrence which, with notice or lapse of time or
both, might become an Event of Default.
"Default Rate" shall have the meaning set forth in Section 2.10.
"Distributions" means, for the applicable period, the aggregate of all amounts
paid or payable (without duplication) as dividends, distributions or owner
withdrawals and includes any purchase, redemption or other retirement of any of
any Borrower's equity interests, directly or indirectly through a subsidiary of
any Borrower or otherwise and includes return of capital by any Borrower to its
equity holders; provided, however, that the following shall not be deemed to be
Distributions hereunder: (a) salary and other compensation paid to equity
holders in their capacities as employees and officers of any Borrower, (b)
expense reimbursement payable to
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officers of any Borrower, and (c) management fees as may be paid by Brookwood to
Hallwood in an amount not to exceed $120,000.00 per annum.
"Earnings" means, for any applicable period, income (loss) from continuing
operations and before all extraordinary and nonrecurring items, determined in
accordance with GAAP.
"Earnings Before Interest, Taxes, Depreciation and Amortization" ("EBITDA")
means, for the trailing twelve-month period, consolidated net income (exclusive
of any extraordinary or non-recurring non-cash gains and extraordinary or
non-recurring non-cash losses and other income which is not from the continuing
operations of the Borrower) of the Borrower and its subsidiaries plus, to the
extent deducted from such consolidated net income, net interest expenses, income
taxes and depreciation/amortization expense, all determined in accordance with
GAAP.
"Eligible Accounts Receivable" shall have the meaning set forth in Section
2.1.8(a).
"Eligible Inventory" shall have the meaning set forth in Section 2.1.8(c).
"Equipment" means all Borrower's now or hereafter acquired equipment, machinery,
plant, furnishings, fixtures, and other fixed assets now owned or hereafter
acquired by any Borrower, including (without limitation) all items of machinery
and equipment of any kind, nature and description, as well as trucks and
vehicles of every description, trailers, handling and delivery equipment and
office furniture, and all additions to, substitutions for, replacements of or
accessions to any of the foregoing items and all attachments, components, parts
(including spare parts) and accessories, whether installed thereon or affixed
thereto, and all fuel for any thereof.
"Equipment Commitment Fee" shall have the meaning set forth in Section 2.2.4.
"Equipment Origination Fee" shall have the meaning set forth in Section 2.2.4.
"Equipment Revolving Credit Facility" shall have the meaning set forth in
Section 2.2.1.
"Equipment Revolving Credit Limit" means $2,000,000 from the Closing Date
through and including the Equipment Revolving Credit Maturity Date.
"Equipment Revolving Credit Loans" shall have the meaning set forth in Section
2.2.1.
"Equipment Revolving Credit Maturity Date" means December 22, 2002.
"Equipment Revolving Credit Note" means the promissory note in the form of
Exhibit "B".
"Equipment Revolving Credit Note Maturity Date" shall mean a date five years
from the execution of an Equipment Revolving Credit Note.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
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"Event of Default" means any event specified in Section 11.
"Factor" or "Factors" as the context may require, shall mean CIT
Group/Commercial Services, Inc. and Banc of America Commercial Services
Corporation, each of which are parties to an Intercreditor Agreement with Bank.
"Factor Receivable" shall mean a receivable due from a Factor.
"GAAP" means generally accepted accounting principles in the United States of
America, consistently applied.
"General Intangibles" means all intangible personal property of Borrower not
included in Accounts or in Instruments and Documents, and Investment Property,
now or hereafter owned or acquired by Borrower, and also means and includes all
right, title and interest of Borrower now or hereafter owned or acquired in
intellectual property, patents, patent applications, goodwill, trademarks,
trademark applications, trade names, trade secrets, service marks, copyrights,
permits, licenses, federal, state, or local tax refunds, claims under insurance
policies (whether or not Proceeds), other rights (if any) to payment, rights of
set off, choses in action, rights under judgments, computer programs and all to,
or of which Borrower is a party or beneficiary, and all leasehold interests of
Borrower in real estate to the extent considered personal property under
applicable law.
"Hallwood" shall have the meaning set forth in the Recitals herein.
"Indebtedness" means (i) Indebtedness for Borrowed Money and (ii) all other
liabilities or obligations which would, in accordance with GAAP, be classified
as liabilities of such Person.
"Indebtedness for Borrowed Money" means (i) all liabilities for borrowed money,
(A) for the deferred purchase price of property or services, and (B) under
leases which are or should be, under GAAP, recorded as Capital Leases, in each
case in respect of which a Person is directly or indirectly, absolutely or
continently liable as obligor, guarantor, endorser or otherwise, or in respect
of which such Person otherwise assures a creditor against loss, and (ii) all
liabilities of the type described in (i) above which are secured by (or for
which the holder has an existing right, contingent or otherwise, to be secured
by) any Lien upon property owned by such Person, whether or not such Person has
assumed or become liable for the payment thereof.
"Instruments and Documents" means all "instruments," "documents," "deposit
accounts," and "chattel paper," as defined in ss.9-105 of the UCC, all
securities, and includes (without limitation) all warehouse receipts and other
documents of title, policies and certificates of insurance, checking, savings,
and other bank accounts, certificates of deposit, checks, notes, drafts, bills,
and acceptances, now or hereafter acquired, to the extent not included in
Accounts or Investment Property.
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"Intangible Assets" means assets that in accordance with GAAP are properly
classified as intangible assets, including, but not limited to, goodwill,
franchises, licenses, patents, trademarks, tradenames and copyrights.
"Intellectual Property" shall have the meaning set forth in Section 4.25.
"Intercreditor Agreement" shall mean each of the Intercreditor Agreements of
even date between the Bank and each of CIT Group/Commercial Services Inc. and
Banc of America Commercial Corporation.
"Interest" means, for the applicable period, all interest paid or payable,
including, but not limited to, interest paid or payable on Indebtedness for
Borrowed Money, determined in accordance with GAAP.
"Interest Period" shall mean, with respect to any LIBOR Loans, the period
commencing on the date such Loans are made or converted from Prime Rate Loans or
the last day of the next preceding Interest Period with respect to such Loans
and ending on the numerically corresponding day in the first, second or third
calendar month thereafter, as the Borrower may select as provided in Section 2.4
hereof, except that each such Interest Period which commences on the last
Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing: (i) no Interest Period may end after the
Termination Date; (ii) each Interest Period which would otherwise end on a day
which is not a Business Day shall end on the next succeeding Business Day (or,
if such next succeeding Business Day falls in the next succeeding calendar
month, on the next preceding Business Day).
"Inventory" means all inventory of whatever name, nature, kind or description,
all goods held for sale or lease or to be furnished under contracts of service,
finished goods, work in process, raw materials, materials used or consumed by
Borrower, supplies, all wrapping, packaging, advertising, labeling, and shipping
materials, rights and documents relating to any of the foregoing, whether any of
the foregoing be now existing or hereafter arising, wherever located, now owned
or hereafter acquired by Borrower.
"Investment" means any transfer of property to, contribution to capital of,
acquisition of stock, other securities or evidences of indebtedness of,
acquisition of businesses or acquisition of property of any Person, other than
in the ordinary course of business.
"Investment Property" means all now owned or hereafter acquired securities,
financial assets, securities entitlements and investment property of the
Borrower, as such terms are defined in Article 9 of the UCC.
"▇▇▇▇▇▇" shall have the meaning set forth in the preamble.
"KeyCorp" means Bank's parent company having a principal place of business at
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇.
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"Laminating" shall have the meaning set forth in the preamble.
"LIBOR Loans" shall mean Revolving Loans which bear interest at a rate based
upon the LIBOR Rate.
"LIBOR Rate" shall mean, with respect to any LIBOR Loan, the rate per annum
(rounded upward, if necessary, to the nearest 1/32 of one percent) as determined
on the basis of the offered rates for deposits in U.S. dollars, for a period of
time comparable to such LIBOR Loan which appears on the Telerate page 3750 as of
11:00 a.m. London time on the day that is two (2) London Banking Days preceding
the first day of such LIBOR Loan; provided, however, if the rate described above
does not appear on the Telerate System on any applicable interest determination
date, the LIBOR Rate shall be the rate (rounded upwards as described above, if
necessary) for deposits in dollars for a period substantially equal to the
interest period on the Reuters Page "LIBO" (or such other page as may replace
the LIBO Page on that service for the purpose of displaying such rates), as of
11:00 a.m. (London Time), on the day that is two (2) London Banking Days prior
to the beginning of such interest period. "London Banking Day" shall mean in
respect to any city, any date on which commercial banks are open for business in
London, England.
If both the Telerate and Reuters system are unavailable, then the rate
for that date will be determined on the basis of the offered rates for deposits
in U.S. dollars for a period of time comparable to such LIBOR Loan which are
offered by four major banks in the London interbank market at approximately
11:00 a.m. London time, on the day that is two (2) London Banking Days preceding
the first day of such LIBOR Loan as selected by the Bank. The principal London
office of each of the four major London banks will be requested to provide a
quotation of its U.S. dollar deposit offered rate. If at least two such
quotations are provided, the rate for that date will be the arithmetic mean of
the quotations. If fewer than two quotations are provided as requested, the rate
for that date will be determined on the basis of the rates quoted for loans in
U.S. dollars to leading European banks for a period of time comparable to such
LIBOR Loan offered by major banks in New York City at approximately 11:00 a.m.
New York City time, on the day that is two London Banking Days preceding the
first day of such LIBOR Loan. In the event that Bank is unable to obtain any
such quotation as provided above, it will be deemed that LIBOR pursuant to a
LIBOR Loan cannot be determined.
In the event that the Board of Governors of the Federal Reserve System
shall impose a Reserve Requirement with respect to LIBOR deposits of Bank then
for any period during which such Reserve Requirement shall apply, LIBOR shall be
equal to the amount determined above divided by an amount equal to 1 minus such
Reserve Requirement.
"Lien" means any mortgage, pledge, assignment, lien, charge, encumbrance or
security interest of any kind whatsoever, or the interest of a vendor or lessor
under a conditional sale, title retention or capital lease agreement.
"Loan" or "Loans" (as the context permits) means any or all of the Revolving
Loans.
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"Loan Documents" means this Agreement, the Notes and any and all other
agreements, instruments and documents relating to, evidencing or securing the
Obligations.
"Material Adverse Effect" shall mean an effect that constitutes a material
adverse change in Borrower's financial condition, operations, business or
prospects, taken as a whole.
"Modified Following Business Day Convention" has the meaning given such term in
Section 2.12 hereof.
"Non-Financed Capital Expenditures" means Capital Expenditures not financed with
additional long-term debt or Capital Leases.
"Note" or "Notes" means (as the context permits) any or all notes evidencing the
Loans, including, without limitation, the Working Capital Revolving Credit Note,
the Equipment Revolving Credit Note(s) and the Acquisition Revolving Credit
Note.
"Obligations" means all loans, advances, interest, fees, debts, liabilities,
obligations (including, without limitation, contingent obligations under
indemnities and guaranties with respect thereto), agreements, undertakings,
covenants and duties owing or to be performed or observed by Borrower to or in
favor of Bank, of every kind and description (whether or not evidenced by any
note or other instrument or arising out of this Agreement, Notes, Loan Documents
or any other agreement between Bank and any Borrower or any other instrument of
any Borrower in favor of Bank), direct or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising, including, without
limitation, all interest, fees, charges, and amounts chargeable to any Borrower
under Section 13. 1.
"Participant" has the meaning given such term in Section 15.7 hereof.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Liens" has the meaning given such term in Section 8.3.
"Person" means any individual, partnership, firm, association, business,
enterprise, trust, estate, company, joint venture, governmental authority,
corporation or other entity.
"Plan" means any employee plan subject to Title IV of ERISA maintained for
employees of any Borrower, any subsidiary of any Borrower or any other trade or
business under common control with any Borrower within the meaning of Section
414(c) of the Internal Revenue Code or the regulations thereunder.
"Prime Rate" shall mean that interest rate established from time to time by Bank
as its Prime Rate, whether or not such rate is publicly announced; and such rate
may not be the lowest interest rate charged by Bank for commercial or other
extensions of credit.
"Prime Rate Loan" shall mean any Revolving Loan bearing interest at a rate based
on the Prime Rate.
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"Proceeds" has the meaning given such term under the UCC and, in any event,
includes (but is not limited to) (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable from time to time with respect to any of
the Collateral, (b) any and all payments (in any form whatsoever) made or due
and payable from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
governmental authority (or any Person acting under color of governmental
authority), (c) whatever is received upon any collection, exchange, sale, lease
or other disposition of any of the Collateral and any property into which any of
the Collateral is converted, whether cash or non-cash proceeds, and (d) any and
all other products of, or any rents, profits or other amounts from time to time
paid or payable under, or in connection with, any of the Collateral.
"Purchase Agreements" means, individually and collectively, the purchase
agreement, as may be entered into between Borrower (or its wholly-owned
subsidiary), Uzzi and Seller, together with any stock certificates, stock
powers, warrants, options, bills of sale, quitclaim deeds, warranty deeds,
assignment and assumption agreements and such other instruments of transfer as
are referred to therein and all side letters with respect thereto, and all
agreements, documents and instruments executed and/or delivered in connection
therewith, as all of the foregoing may thereafter be amended, modified,
supplemented, extended, renewed, restated or replaced; provided however, that
the term "Purchase Agreements" as used herein shall not include any of the "Loan
Documents" as such term is defined herein or in other financing documents.
"Purchased Assets" means all of the business, assets and properties acquired by
Borrower from Uzzi pursuant to the Purchase Agreements.
"Related Collateral" means all of Borrower's goodwill; cash; deposit accounts;
claims under insurance policies (whether or not proceeds of other Collateral);
rights of set off; rights under judgments; tort claims and choses in action;
computer programs and software; books and records (including without limitation
all electronically recorded data); contract rights; and all contracts and
agreements to or of which it is a party or beneficiary, whether any of the
foregoing be now existing or hereafter arising, now or hereafter received by or
belonging to any Borrower.
"Reportable Event" means any reportable event as defined in ERISA.
"Reserve Requirement" shall mean for any LIBOR Loans for any Interest Period
therefor, the maximum marginal percentage prescribed by the Board of Governors
of the Federal Reserve System for determining the reserve requirements for the
Bank in respect of Eurodollar deposits having a maturity equal to the Interest
Period.
"Revolving Loans" means the loans made pursuant to Sections 2.1, 2.2, and 2.3 of
this Agreement.
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"Subsidiary" means with respect to any Person, any limited liability company,
corporation, partnership, trust or other organization, whether or not
incorporated, the majority of the voting stock or voting rights of which is
owned or controlled, directly or indirectly, by such Person.
"Termination Date" means the earlier of (a) December 22, 2002, or (b) a
termination of the Bank's commitments hereunder pursuant to Section 12.1.
"Total Capitalization" means the sum of Total Funded Debt and shareholders
equity as set forth in Borrower's balance sheet determined in accordance with
GAAP.
"Total Current Assets" shall have the meaning as defined by GAAP.
"Total Current Liabilities" shall have the meaning as defined by GAAP, except
current liabilities shall also include the outstanding balances of the Revolving
Loans.
"Total Debt Service" means the sum of interest expense and scheduled payments of
principal on all long-term debt, including payments on Capital Leases and
payments on Subordinated Debt.
"Total Fixed Charges" means the sum of interest expense, required payments of
principal, dividends paid, income taxes paid, and the cash portion of Capital
Expenditures for the trailing twelve month period.
"Total Funded Debt" means the sum of all Indebtedness for Borrowed Money and
similar monetary obligations evidenced by bonds, notes, debentures, overdrafts,
short term debt facilities, notes payable, all liabilities secured by any lien
existing on any property owned or acquired subject thereto, whether or not the
liability secured thereby shall have been assumed, all capitalized lease
obligations, all reimbursement obligations under outstanding letters of credit,
bankers acceptances and similar instruments and all guarantees and other
contingent liabilities with respect to any obligations or liabilities of the
type described above and including, without limitation, Bank debt.
"Treasury Rate" shall mean a rate per annum (computed on the basis of actual
days elapsed and a year of 360 days) equal to the rate determined by the Bank
(such determination to be conclusive, absent manifest error) on the date of such
payment to the yield on United States Treasury securities having the same term
to maturity as the remaining term of such Interest Period (such determination to
be based upon quotes obtained by the Bank from established dealers in such
market).
"UCC" means the Uniform Commercial Code, as adopted and in effect in the State
of Maine.
"Working Capital Commitment Fee" shall have the meaning given such term in
Section 2.1.4.
"Working Capital Origination Fee" shall have the meaning given such term in
Section 2.1.4.
"Working Capital Revolving Credit Facility" shall have the meaning set forth in
Section 2.1.1.
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"Working Capital Revolving Credit Limit" means $17,000,000 from the Closing Date
through and including the Working Capital Revolving Credit Maturity Date.
"Working Capital Revolving Credit Loans" shall have the meaning set forth in
Section 2.1.1.
"Working Capital Revolving Credit Maturity Date" means December 22, 2002.
"Working Capital Revolving Credit Note" means the promissory note in the form of
Exhibit "A" hereto.
1.2. General. All terms used herein which are defined in Article 1 or
Article 9 of the UCC shall have the meanings given therein unless otherwise
defined in this Agreement. All references to the plural herein shall also mean
the singular and to the singular shall also mean the plural. All references to
the Borrower and Bank pursuant to the definitions set forth in the recitals
hereto, or to any other person herein, shall include their respective successors
and assigns. Any accounting term used herein unless otherwise defined in this
Agreement shall have the meanings customarily given to such term in accordance
with GAAP. The words "hereof," "herein," "hereunder," "this Agreement" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not any particular provision of this Agreement and as this Agreement
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
2. LOANS.
2.1. Working Capital Revolving Credit Facility
2.1.1. Availability of Credit Facility and Purpose. During the
Commitment Period, Bank shall make available to Borrower, a Working Capital
Revolving Credit Facility, in an aggregate principal amount not to exceed
$17,000,000.00 outstanding at any one time ("Working Capital Revolving Credit
Facility"), and from time to time, at Borrower's request, shall advance Working
Capital Revolving Credit Loans ("Working Capital Revolving Credit Loans") to
Borrower subject to the terms and conditions contained in this Agreement. The
proceeds of the Working Capital Revolving Credit Loans shall be used by Borrower
to repay certain debt of Borrower to The Bank of New York and to support
Borrower's accounts receivables and inventory.
2.1.2. Working Capital Revolving Credit Note. Working Capital Revolving
Credit Loans shall be evidenced by the Working Capital Revolving Credit Note.
The Working Capital Revolving Credit Note shall be a master note, and the
principal amount of all Working Capital Revolving Loans outstanding shall be
evidenced by the Working Capital Revolving Credit Note.
2.1.3. Limitations on Advances. The aggregate principal amount of
Working Capital Revolving Credit Loans shall not exceed at any time the
aggregate principal amount of $17,000,000.00 outstanding at any one time, the
"Working Capital Revolving Credit Limit" and each advance shall be subject to
the limitations of the Borrowing Base referred to in Section 2.1.8.
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2.1.4. Fees. On the Closing Date, Borrower shall pay to Bank a
nonrefundable origination fee of $42,500.00 (against which shall be applied the
sum of $20,000.00, the retainer already paid by Borrower to Bank), which shall
be deemed fully earned on the date thereof (the "Working Capital Origination
Fee"). Borrower shall also pay to Bank a commitment fee of one quarter of one
percent (0.25%) per annum of the amount by which the Working Capital Revolving
Credit Limit exceeds the average daily principal balance of the outstanding
Working Capital Revolving Credit Loans during the immediately preceding calendar
quarter (or part thereof) during the Commitment Period, which unused credit line
commitment fee (the "Working Capital Commitment Fee") shall be payable on the
first day of each calendar quarter in arrears, commencing with March 31, 2000.
2.1.5. Repayment; Security. Working Capital Revolving Credit Loans may
be repaid and reborrowed during the Commitment Period. All Working Capital
Revolving Credit Loans shall be payable on the Termination Date and shall be
secured by all the Collateral.
2.1.6. Interest Payments. Borrower shall pay to Bank interest monthly
on the unpaid principal balance of all Working Capital Revolving Credit Loans at
the rates and in the amount calculated in accordance with Section 2.6.
2.1.7. Facility Maturity. The Working Capital Revolving Credit Facility
shall mature on December __ , 2002 ("Working Capital Revolving Credit Maturity
Date"). In no event shall Bank have any obligation to renew the Working Capital
Revolving Credit Facility after the Working Capital Revolving Credit Maturity
Date. By its execution hereof, the Borrower represents, warrants and agrees that
no representations, assurances or promises have been made regarding any
extension or renewal, or the terms of any extension or renewal, and Borrower
will not rely upon any representations, assurances or promises unless in writing
and signed by Bank.
2.1.8. Borrowing Base. All advances under the Working Capital Revolving
Credit Facility shall be limited by and subject to a Borrowing Base which shall
be the sum of: ninety percent (90%) of Factor Receivables, eighty percent (80%)
of Eligible Receivables, fifty percent (50%) of Eligible Inventory, and seventy
percent (70%) of the appraised orderly liquidation value of Equipment. A reserve
of one hundred percent (100%) of all amounts advanced under the Acquisition
Revolving Credit Facility shall be included in the Borrowing Base for the
Working Capital Revolving Credit Facility.
(a) Eligible Accounts Receivable. For the purposes of determination of
the Borrowing Base, Eligible Accounts Receivables shall be those
Accounts Receivable ("Receivable") meeting the following criteria:
(1) The Receivable arose from a bona fide outright sale of
goods or services performed under an enforceable contract, and such
goods have been shipped to the appropriate account debtor, or the sale
has otherwise been consummated or services have been performed for the
appropriate account debtors in accordance with such order or contract;
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(2) Title to the receivable is in the name of Borrower and
such title is absolute and is not subject to any prior assignment,
claim, lien or security interest;
(3) The amount shown on the books of Borrower with respect to
the Receivable and on any invoice or statement delivered to Bank is
owing to Borrower, and no partial payment has been made thereon by
anyone;
(4) The Receivable is not subject to any claim of reduction,
counterclaim, set-off, recoupment, or any claim for credits, allowances
or adjustments by the account Borrower because of returned, inferior or
damaged goods or unsatisfactory services or for any other reason;
(5) The account debtor has not returned or refused to retain
any of the goods from the sale out of which the Receivable arose;
(6) The Receivable does not arise out of a contract or order
from an account debtor that, by its terms, forbids an assignment or
makes the assignment of the Receivable to Bank void or unenforceable;
(7) Borrower has not received any note, trade acceptance,
draft or other instrument with respect to or in payment of the
receivable or any chattel paper with respect to the goods giving rise
to the receivable;
(8) Borrower has not received any notice of the death of the
account debtor or a partner thereof, nor of the dissolution,
termination of existence, insolvency, business failure, appointment of
a receiver for any part of the property of, assignment for the benefit
of creditors by, or the filing of any petition in bankruptcy or the
commencement of any proceeding under any bankruptcy or insolvency laws
by or against the account debtor of Borrower (not including, however, a
post-petition Receivable which has been ratified and reaffirmed by the
account debtor);
(9) The account debtor is not an affiliate of Borrower and is
not a subsidiary thereof, nor is it under common management or
ownership with Borrower;
(10) The Receivable is not a government receivable from any
government; provided, however, that an account payable by the United
States government may become an Eligible Receivable after compliance
with the Federal Assignment of Claims Act in a manner satisfactory to
Bank;
(11) The Receivable is not governed by the law of a
jurisdiction that does not (i) recognize and conform to the Uniform
Commercial Code with respect to secured transactions, or (ii)
acknowledge perfection of such secured transactions by the filing of a
financing statement in the jurisdiction of the chief executive office
of Borrower;
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(12) The Receivable does not arise under an agreement of
consignment a sale or return, a sale with a right to return for credit,
a "guaranteed sale" or any other arrangement other than an outright,
absolute and final sale; or
(13) The Receivable is not an account that Bank, in its sole
and reasonable discretion and having a rational basis therefor, has
determined to be ineligible in whole or in part and has notified
Borrower thereof.
(b) Ineligible Accounts Receivable. In addition to any Receivable which
does not meet the foregoing criteria, the following Receivables are also
ineligible for the purposes of determination of the Borrowing Base:
(1) Any Receivable which is sixty-one (61) days or more past
the due date, provided that the due date shall be no more than
one-hundred twenty (120) days from the invoice date;
(2) Re-aged credits which represent previously booked
Receivables;
(3) Eighty percent (80%) of "cross aged" receivables, such
that if twenty percent (20%) or more of any account debtor's
receivables are aged more than sixty (60) days from the due date, all
receivables from that account debtor shall be deemed ineligible.
(c) Eligible Inventory. For the purposes of Borrowing Base
determination, Eligible Inventory shall mean and refer to finished roll goods
inventory valued at the lower of cost or market, and having the following
characteristics:
(1) title to which is vested in Borrower free and clear of any
prior assignment, claim, lien or security interest;
(2) of a type ordinarily sold by Borrower in its business and
acquired in the ordinary course of business for resale; and
(3) not subject to any consignment agreement, sale or return
agreement or other similar agreement in any way limiting
Borrower's outright ownership of said inventory.
(d) Ineligible Inventory. In addition to any Inventory which does not
meet the foregoing criteria, the following Inventory is also ineligible for the
purposes of determination of the Borrowing Base:
(1) Fixtures and displays representing display racks sold to
customers to hold and display products of Borrower;
(2) Discontinued products;
(3) Inventory located at third party vendors;
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(4) Proprietary packaging materials that include the name of
the client or which are not of standard size.
2.2. Equipment Revolving Credit Facility
2.2.1. Availability of Credit Facility and Purpose. During the
Commitment Period, Bank shall make available to Borrower an Equipment Revolving
Credit Facility, in an aggregate principal amount not to exceed $2,000,000.00
outstanding at any one time ("Equipment Revolving Credit Facility"), and shall,
from time to time, at Borrower's request, advance Equipment Revolving Credit
Loans ("Equipment Revolving Credit Loans") to Borrower, subject to the terms and
conditions of this Agreement. Equipment Revolving Credit Loans shall be used by
Borrower to finance the purchase or lease of equipment for Borrower's ongoing
operations.
2.2.2. Equipment Revolving Credit Notes. Each advance under the
Equipment Revolving Credit Facility shall be evidenced by separate promissory
notes, individually an "Equipment Revolving Credit Note" and collectively, the
"Equipment Revolving Credit Notes".
2.2.3. Limitation on Advances. Advances under the Equipment Revolving
Credit Facility shall be limited to the lesser of:
(a) eighty percent (80%) of the invoice value for equipment purchase,
one hundred percent (100%) of the accepted collateral value for
equipment lease financing, or
(c) the remaining availability under the Equipment Revolving Credit
Facility.
2.2.4. Fees. On the Closing Date, Borrower shall pay to Bank a
non-refundable origination fee of $5,000.00 (the "Equipment Origination Fee").
Borrower shall also pay to Bank a commitment fee, of one quarter of one percent
(0.25%) per annum of the amount by which the Equipment Revolving Credit Limit
exceeds the average daily principal balance of the outstanding Equipment
Revolving Credit Loans during the immediately preceding calendar quarter (or
part thereof) during the Commitment Period, which unused credit line Commitment
Fee (the "Equipment Commitment Fee") shall be payable on the first day of each
calendar quarter in arrears, commencing with March 31, 2000.
2.2.5. Repayment of Equipment Revolving Credit Loans; Security.
(a) Term; Security. Each Equipment Revolving Credit Note shall
have a term of five years from the date of execution thereof and
Borrower promises to pay and there shall become absolutely due and
payable on the earlier of the Equipment Revolving Credit Note Maturity
Date or the termination of the Bank's commitments hereunder pursuant to
Section 12.1, all principal of such Equipment Revolving Credit Note
outstanding on such date, together with any and all accrued and unpaid
interest and other charges, if any, thereon. All Equipment Revolving
Credit Loans shall be secured by all the Collateral.
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(b) Principal Monthly Payments. Each Equipment Revolving
Credit Note shall be repaid in consecutive, fixed monthly installments
of principal, in accordance with an amortization period of five years,
commencing one (1) month from the date of such Equipment Revolving
Credit Note, and continuing on the 1st Business Day of each month
thereafter, plus accrued interest.
(c) Optional Prepayment of Equipment Revolving Credit Notes.
Borrower shall have the right at any time to prepay any Equipment
Revolving Credit Note on or before such Equipment Revolving Credit Note
Maturity Date, as a whole, or in part, upon not less than five (5)
Business Days prior written notice to Bank, without premium or penalty,
except for LIBOR breakage costs. Any prepayment of principal of any
Equipment Revolving Credit Note shall be applied against the scheduled
installments of principal due on such Equipment Revolving Credit Note
in inverse order of maturity.
2.2.6 Interest. Borrower shall pay to the Bank interest monthly on the
unpaid principal balance of each Equipment Revolving Credit Note at the rates
and in the amounts calculated in accordance with Section 2.6.
2.2.7. Facility Maturity. The Equipment Revolving Credit Facility shall
mature on December 22, 2002 ("Equipment Revolving Credit Facility Maturity
Date"). Any Equipment Revolving Credit Note executed prior to the Equipment
Revolving Credit Facility Maturity Date shall be repaid by Borrower in
accordance with its remaining term. In no event shall Bank have any obligation
to renew the Equipment Revolving Credit Facility after the Equipment Revolving
Credit Facility Maturity Date. By its execution hereof, the Borrower represents,
warrants and agrees that no representations, assurances or promises have been
made regarding any extension or renewal, or the terms of any extension or
renewal, and Borrower will not rely upon any representations, assurances or
promises unless in writing and signed by Bank.
2.3. Acquisition Revolving Credit Facility
2.3.1. Availability of Acquisition Revolving Credit Facility and
Purpose. During the Commitment Period, Bank shall make available to Borrower, an
Acquisition Revolving Credit Facility in an aggregate principal amount not to
exceed $2,000,000.00 outstanding at any one time ("Acquisition Revolving Credit
Facility"), and shall, from time to time, at Borrower's request, advance
Acquisition Revolving Credit Loans ("Acquisition Revolving Credit Loans") to
Borrower, subject to the terms and conditions of this Agreement. The proceeds of
the Acquisition Revolving Loans shall only be used by Borrower as follows:
(a) to finance the acquisition of Uzzi's business and assets, and any
such advance shall not exceed $1,000,000.00, and
(b) to finance the start-up of Uzzi retail stores, and any such advance
shall be expressly subject to the conditions and limitations set forth
in Sections 2.3.3 and 2.3.4 herein.
2.3.2. Acquisition Revolving Credit Note. Acquisition Revolving Credit
Loans shall be
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evidenced by the Acquisition Revolving Credit Note. The Acquisition Revolving
Credit Note shall be a master note, and the principal amount of all Acquisition
Revolving Loans outstanding shall be evidenced by the Acquisition Revolving
Credit Note.
2.3.3. Limitations and Conditions to Advances.
(a) Conditions Precedent to Initial Advance. Prior to the
initial advance under the Acquisition Revolving Credit Facility,
Borrower shall submit for review by Bank, to Bank's satisfaction:
(1) An independent evaluation of financial projections for
Uzzi, which at a minimum shall assess key financial
assumptions in the financial projections, including sales
growth assumptions, operating margin assumptions, marketing
and operating expense budgets for both the
manufacturing-wholesale division and the retail division. Such
independent evaluation shall be performed by a national
accounting firm or other party, in each case a firm or party
satisfactory to Bank.
(2) Written information or other report of findings regarding
Borrower's due diligence, investigation or other examination
in connection with the Uzzi acquisition, including but not
limited to, Uzzi-vendor and customer checkings, manufacturing
backlog/order fulfillment status, current and next season
product lines, and management of Uzzi, and integration of Uzzi
management into Brookwood organizational structure.
(3) Written confirmation (including delivery to Bank of true,
correct and complete copies of the Purchase Agreements and all
schedules thereto) of the terms of the Uzzi acquisition
satisfactory to Bank, including the following terms, and such
other terms as Bank shall request:
(i) Purchase price of $1,000,000.00 and earnout
provisions of 48 months;
(ii) Annual salary of Seller no greater than
$200,000.00;
(iii) Hallwood contribution to Brookwood of
$500,000.00 cash prior to or at the time of
Brookwood's acquisition of Uzzi's assets;
and
(iv) Additional Hallwood contribution to
Brookwood of $500,000.00 cash no later than
one year from the date of Brookwood's
acquisition of Uzzi's assets.
(4) A Certificate, in the form substantially as Exhibit "F"
attached hereto, dated as of the date of the initial advance
under the Acquisition Revolving Credit Facility, executed by
an officer of Borrower on behalf of Borrower, stating that:
(i) The representations and warranties of
Borrower set forth in this Agreement are
true and complete in all material respects
on and as of the date of such Certificate as
though made on and as of the date of such
Certificate; and
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(ii) The Purchase Agreements, and the
transactions contemplated thereunder have
been duly executed, delivered and performed
in accordance with their terms by the
parties thereto in all respects, including
the fulfillment of all conditions precedent
as may be set forth therein and giving
effect to the terms of the Purchase
Agreements; and
(iii) Borrower has acquired and has good and
marketable title to the Purchased Assets,
free and clear of all claims, liens, pledges
and encumbrances of any kind, except as
expressly imposed by, or permitted under
this Agreement; and
(iv) All actions and proceedings required by the
Purchase Agreements, applicable law or
regulation have been taken and the
transactions required thereunder have been
duly and validly taken and consummated; and
(v) No court of competent jurisdiction shall
have issued any injunction, restraining
order or other order which would prohibit
consummation of the transactions described
in the Purchase Agreements and no
governmental or other action or proceeding
has been threatened or commenced, seeking
any injunction, restraining order or other
order which seeks to void or otherwise
modify the transactions described in the
Purchase Agreement; and
(vi) Borrower has delivered, or caused to be
delivered, to Bank, true, correct and
complete copies of the Purchase Agreements
and all schedules thereto; and
(vii) representations and warranties as to such
other matters as Bank shall reasonably
request.
(5) A Stock Pledge and Security Agreement , in form and
substance satisfactory to Bank, pledging the stock owned by
Borrower of any subsidiary(ies) acquiring and/or operating the
business and assets of Uzzi.
(b) Limitations and Conditions to Additional Advances. Any
advance beyond the initial advance for the specific purpose of the
acquisition of Uzzi's business and assets, shall be limited to the
lesser of :
(1) fifty percent (50%) of the start-up costs for each Uzzi
retail store, or
(2) the remaining availability under the Acquisition Revolving
Credit Facility,
and shall be subject to the following conditions:
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(3) Borrower shall submit to Bank, for Bank's review and
approval, a business plan, including pro-forma financial
statements and development cost budget for each new Uzzi
retail store; and
(4) The balance of any start-up costs shall be provided from
cash reserves established and funded by Brookwood, with
confirmation thereof in writing in form and substance
satisfactory to Bank; and
(5) Hallwood has made a cash equity contribution to Brookwood
greater than or equal to fifty percent (50%) of the start up
budget for each Uzzi retail store, with written confirmation
thereof provided to Bank; and
(6) No financial test covenant defaults shall result from such
advance.
Notwithstanding the foregoing, Borrower covenants that in no event
shall the number of new Uzzi retail store openings exceed four per
annum during the term of the Acquisition Revolving Credit Facility.
2.3.4. Fees. On the Closing Date, Borrower shall pay to Bank a
non-refundable origination fee of $5,000.00, which shall be deemed fully earned
on the date thereof ("Acquisition Origination Fee"). Borrower shall also pay to
Bank a commitment fee of one quarter of one percent (0.25%) per annum of the
amount by which the Acquisition Revolving Credit Limit exceeds the average daily
principal balance of the outstanding Acquisition Revolving Credit Loans during
the immediately preceding calendar quarter (or part thereof) during the
Commitment Period, which unused credit line commitment fee (the "Acquisition
Commitment Fee") shall be payable on the first day of each calendar quarter in
arrears, commencing with March 31, 2000.
2.3.5. Repayment; Security. All Acquisition Revolving Loans shall be
payable on the Termination Date and shall be secured by all the Collateral.
There shall further be reserved against the Working Capital Revolving Credit
Facility, the amount of all advances under the Acquisition Revolving Credit
Facility, to secure payment of all Acquisition Revolving Credit Loans.
2.3.6. Interest Payments. Borrower shall pay to Bank interest monthly
on the unpaid principal balance of all Acquisition Revolving Loans at the rates
and in the amount calculated in accordance with Section 2.6.
2.3.7. Facility Maturity. The Acquisition Revolving Credit Facility
shall mature December ___, 2002 ("Acquisition Revolving Credit Facility Maturity
Date"). In no event shall Bank have any obligation to renew the Acquisition
Revolving Credit Facility after the Acquisition Revolving Credit Maturity Date.
By its execution hereof, Borrower represents, warrants and agrees that no
representations, assurances or promises have been made regarding any extension
or renewal, or the terms of any extension or renewal, and Borrower will not rely
upon any representations, assurances or promises unless in writing and signed by
Bank.
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2.4. Borrowing Procedures.
Notices to Bank of borrowings and conversions of Revolving Loans and of
the duration of Interest Periods with respect to LIBOR Loans shall be
irrevocable and shall be effective only if received by Bank in writing not later
than: (A) with respect to borrowings of Prime Rate Loans, prior to 11:00 a.m.
(Portland, Maine time) on the Business Day of the relevant borrowing, or, (B)
with respect to the borrowing of, conversion of or into, or duration of Interest
Period for, LIBOR Loans, two (2) Business Days prior to the date of the relevant
action.
Each notice of borrowing or conversion shall be delivered to Bank by
Borrower and shall specify the amount of the Revolving Loans to be borrowed or
converted, the date of borrowing or conversion (which shall be a Business Day)
and, in the case of LIBOR Loans, the duration of the Interest Period therefor.
Each such notice of duration of an Interest Period shall specify the LIBOR Loans
to which such Interest Period is to relate. In the event that the Borrower fails
to select the duration of any Interest Period for any LIBOR Loans within the
time period and otherwise as provided in this Section 2.4, such Revolving Loans
(if outstanding as LIBOR Loans) will be automatically converted into Prime Rate
Loans on the last day of the then current Interest Period for such Revolving
Loans or (if outstanding as Prime Rate Loans) will remain as, or (if not then
outstanding) will be made as, Prime Rate Loans. Each Prime Rate Loan shall be in
a minimum amount of $10,000 and each LIBOR Loan shall be in a minimum amount of
$100,000 and in integral multiples of $100,000 in excess thereof.
2.5. LIBOR Loans.
(a) Optional Conversions of Revolving Loans. Borrower shall have the
right to convert LIBOR Loans into Prime Rate Loans, or to convert Prime Rate
Loans into LIBOR Loans, at any time or from time to time, provided that: (i)
Borrower shall give Bank notice of each such conversion as provided in Section
2.4 hereof, and (ii) the conversion of any LIBOR Loan shall be subject to
Section 2.5(d) hereof. In the absence of such conversion, a Revolving Loan shall
be a Prime Rate Loan.
(b) Limitation on LIBOR Loans. Anything herein to the contrary
notwithstanding, if, with respect to any LIBOR Loans Bank determines (which
determination shall be conclusive) that the relevant rates of interest referred
to in the definition of "LIBOR Rate" in Section 1 hereof upon the basis of which
the rates of interest for such Revolving Loans are to be determined do not
accurately reflect the cost to Bank of making or maintaining such Revolving
Loans for Interest Periods therefor; then Bank shall promptly notify Borrower
(in the same manner in which Bank notifies its other customers with LIBOR loan
facilities), and so long as such condition remains in effect, Bank shall be
under no obligation to make LIBOR Loans or to convert Prime Rate Loans into
LIBOR Loans and Borrower shall, on the last day(s) of the then current Interest
Period(s) for the outstanding LIBOR Loans, convert such Revolving Loans into
Prime Rate Loans in accordance with Section 2.5(a) hereof.
(c) Illegality. Notwithstanding any other provision of this Agreement
to the contrary, in the event that it becomes unlawful for Bank to (a) honor its
obligation to make LIBOR Loans hereunder, or (b) maintain LIBOR Loans hereunder,
then Bank shall promptly notify Borrower
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thereof (in the same manner in which the Bank notifies its other customers with
LIBOR loan facilities), and Bank's obligation to make LIBOR Loans hereunder
shall be suspended until such time as Bank may again make and maintain LIBOR
Loans (in which case the provisions of Section 2.5(d) hereof shall be
applicable).
(d) Substitute Prime Rate Loans. If the obligation of Bank to make
LIBOR Loans shall be suspended pursuant to Sections 2.5(b), 2.5(c) or 2.5(f)
hereof, all Loans which would otherwise be made by Bank as LIBOR Loans shall be
made instead as Prime Rate Loans (and, if an event referred to in Sections
2.5(b), 2.5(c) or 2.5(f) hereof has occurred and Bank so requests by notice to
Borrower, each LIBOR Loan of Bank then outstanding shall be automatically
converted into a Prime Rate Loan on the date specified by Bank in such notice)
and, to the extent that LIBOR Loans are so made as (or converted into) Prime
Rate Loans, all payments of principal which would otherwise be applied to such
LIBOR Loans shall be applied instead to such Prime Rate Loans.
(e) Compensation for LIBOR Rate Loans. Borrower shall pay to Bank, upon
the request of Bank, such amount or amounts as shall be sufficient (in the
reasonable opinion of Bank) to compensate it for any loss, cost or expense
incurred by it as a result of:
(i) any payment, prepayment or conversion of a LIBOR Loan made
by Bank on a date earlier than the last day of an Interest Period for
such Loan; or
(ii) any failure by Borrower to borrow a LIBOR Loan to be made
by Bank on the date of such borrowing specified in the relevant notice
of borrowing under Section 2.4 hereof if Borrower fails to rescind such
notice at least one (1) Business Day prior to the specified borrowing
debt;
such compensation to include, without limitation, an
amount equal to the excess, if any, of (i) the LIBOR Rate applicable to the
principal amount so repaid, over (ii) the interest which would be earned by
reinvesting the repaid amount at the Treasury Rate for the applicable Interest
Period. A statement of Bank setting forth the formula applied to determine any
amount necessary to compensate Bank under this section shall be delivered to
Borrower and shall be conclusive, except in the case of manifest error, as to
such determination and such amount. Notwithstanding anything to the contrary
contained herein, Bank shall not be required to purchase Dollar deposits in the
London interbank market to fund any LIBOR Loans and the provisions hereof shall
be deemed to apply as if Bank had purchased such deposits to fund the LIBOR
Loans.
(f) Additional Costs.
(i) Borrower shall pay to Bank from time to time such amounts
as Bank may determine to be reasonably necessary to compensate it for any costs
incurred by Bank which Bank determines are attributable to its making or
maintaining of any LIBOR Loans hereunder or its obligation to make any of such
LIBOR Loans hereunder, or any reduction in any amount receivable by Bank
hereunder in respect of any of such LIBOR Loans or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"Additional Costs"),
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resulting from any regulatory change in applicable statutes, regulations, rules,
orders, or decrees applicable to Bank (a "Regulatory Change") which:
(A) changes the basis of taxation of any amounts payable to
Bank under this Agreement or its Note in respect of any of
such Revolving Loans (other than changes which affect taxes
measured by or imposed on the overall net income of Bank); or
(B) imposes or modifies any reserve, special deposit,
insurance assessment or similar requirements relating to any
extensions of credit or other assets of, or any deposits with
or other liabilities of, Bank to Borrower; or
(C) imposes any other condition affecting this Agreement (or
any of such extensions of credit or liabilities).
Bank will notify Borrower of any event occurring after the date of this
Agreement which will entitle Bank to compensation pursuant to this Section
2.5(f) as promptly as practicable after it obtains knowledge thereof and
determines to request such compensation. Bank will furnish Borrower with a
statement setting forth the basis and amount of each request by Bank for
compensation under this Section 2.5(f). If Bank requests compensation from
Borrower under this Section 2.5(f), the Borrower may, by notice to Bank, suspend
the obligation of Bank to make additional LIBOR Loans to Borrower until the
Regulatory Change giving rise to such request ceases to be in effect (in which
case the provisions of Section 2.5(f) hereof shall be applicable).
(ii) Without limiting the effect of the foregoing provisions
of this Section 2.5(f), in the event that, by reason of any regulatory change,
Bank either (1) incurs Additional Costs based on or measured by the excess above
a specified level of the amount of a category of deposits or other liabilities
of Bank which includes deposits by reference to which the interest rate on LIBOR
Loans is determined as provided in this Agreement or a category of extensions of
credit or other assets of Bank which includes LIBOR Loans, or (2) becomes
subject generally to restrictions on the amount of such a category of
liabilities or assets which it may hold, then, if Bank so elects by notice to
Borrower, the obligation of Bank to make or continue, or to convert Prime Rate
Loans into LIBOR Loans hereunder shall be suspended until the date Bank
withdraws such notice or such Regulatory Change ceases to be in effect (in which
case the provisions of Section 2.5(d) hereof shall be applicable).
(iii) Determinations and allocations by Bank for purposes of
this Section 2.5(f) of the effect of any regulatory change on its costs of
maintaining its obligations to make Revolving Loans or of making or maintaining
Revolving Loans or on amounts receivable by it in respect of Revolving Loans,
and of the additional amounts required to compensate Bank in respect of any
Additional Costs, shall be conclusive absent manifest error.
2.6 Interest and Payments.
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2.6.1. Interest Rate Pricing Formula for Working Capital
Revolving Credit Loans. The Working Capital Revolving Credit Loans shall bear
interest calculated on the basis of a 360-day year and the actual number of days
elapsed and payable monthly in arrears for the periods from the Borrowing Dates
thereof on the unpaid principal amount thereof from time to time outstanding at
a rate per annum equal to the applicable rate and pricing formula indicated
below:
---------- -------------------------------- ------------------------- ------------------------------
TIER TOTAL FUNDED DEBT PRIME RATE + LIBOR +
TO EBITDA
---------- -------------------------------- ------------------------- ------------------------------
1 >=3.00x 0.25% 2.50%
---------- -------------------------------- ------------------------- ------------------------------
2 >=2.50x <3.00x 0.25% 2.25%
---------- -------------------------------- ------------------------- ------------------------------
3 >=2.00x <2.50x 0.25% 2.00%
---------- -------------------------------- ------------------------- ------------------------------
4 <2.00x 0.25% 1.75%
---------- -------------------------------- ------------------------- ------------------------------
2.6.2. Interest Rate Pricing Formula for Equipment Revolving
Credit Loans and Acquisition Revolving Credit Loans. The Equipment Revolving
Credit Loans and Acquisition Revolving Credit Loans shall bear interest
calculated on the basis of a 360-day year and the actual number of days elapsed
and payable monthly in arrears for the periods from the Borrowing Dates thereof
on the unpaid principal amount thereof from time to time outstanding at a rate
per annum equal to the applicable rate and pricing formula indicated below:
---------- -------------------------------- ------------------------- ------------------------------
TIER TOTAL FUNDED DEBT PRIME RATE + LIBOR +
TO EBITDA
---------- -------------------------------- ------------------------- ------------------------------
1 >=3.00x 0.25% 2.75%
---------- -------------------------------- ------------------------- ------------------------------
2 >=2.50x <3.00x 0.25% 2.50%
---------- -------------------------------- ------------------------- ------------------------------
3 >=2.00x <2.50x 0.25% 2.25%
---------- -------------------------------- ------------------------- ------------------------------
4 <2.00x 0.25% 2.00%
---------- -------------------------------- ------------------------- ------------------------------
2.6.3. Initial Interest Rate Pricing. The interest rate for
all Loans shall be initially set at Tier 2 until Borrower submits a Compliance
Certificate covering the period for March 31, 2000. Future interest rate pricing
is to be based upon trailing twelve month EBITDA to be determined quarterly upon
receipt by Bank of quarterly management-prepared financial statements and fiscal
year-end audited financial statements.
2.6.4. LIBOR Rate Selection. Upon determination of the LIBOR
Rate for any Interest Period selected by Borrower, Bank shall promptly notify
Borrower thereof by telephone or in writing. Such determination shall, absent
manifest error, be final, conclusive and binding on all parties for all
purposes. Following and during the continuance of an Event of Default, interest
on all Loans shall accrue at the Default Rate and be paid on demand.
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2.6.5. Interest Payment Date. Accrued interest on each Loan
shall be payable monthly in arrears on the first Business Day of each month.
Interest on LIBOR Loans shall be due at the conclusion of the Interest Period
but in no event later than ninety (90) days from the date of the LIBOR Loan.
2.6.6. Prime Rate. The effective interest rate applicable to
the Prime Rate Loans shall change on the date of each change in the Prime Rate.
2.7. Payments. Principal and interest on all Loans and payments on all
other Obligations shall be payable at Bank's office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ in lawful money of the United States of America in immediately
available funds without set-off, deduction or counterclaim. Borrower authorizes
Bank to debit its deposit account(s) with Bank for all payments due hereunder,
whether for principal, interest or other amounts payable on account of the
Obligations. Bank will notify Borrower in writing after such debits are made.
2.8. Limitation on Interest. All agreements between Borrower and Bank
are hereby expressly limited so that in no contingency or event whatsoever,
whether by reason of acceleration of maturity of the indebtedness evidenced
hereby or otherwise, shall the amount paid or agreed to be paid to Bank for the
use or the forbearance of the indebtedness evidenced hereby exceed the maximum
permissible under applicable law. As used herein, the term "applicable law"
shall mean the law in effect as of the date hereof, provided, however that in
the event there is a change in the law which results in a higher permissible
rate of interest, then this Agreement shall be governed by such new law as of
its effective date. In this regard, it is expressly agreed that it is the intent
of Borrower and Bank in the execution, delivery and acceptance of the Notes to
contract in strict compliance with the laws of the State of Maine and any other
applicable state from time to time in effect. If, under or from any
circumstances whatsoever, fulfillment of any provision hereof or of any of the
Loan Documents at the time of performance of such provision shall be due, shall
involve transcending the limit of such validity prescribed by applicable law,
then the obligation to be fulfilled shall automatically be reduced to the limits
of such validity, and if under or from circumstances whatsoever Bank should ever
receive as interest an amount which would exceed the then highest lawful rate,
such amount which would be excessive interest shall be applied to the reduction
of the principal balance evidenced hereby and not to the payment of interest.
This provision shall control every other provision of all agreements between
Borrower and Bank.
2.9. Late Charges. If the entire amount of any required principal,
interest or other payment hereunder is not paid in full within fifteen (15) days
after the same is due, Borrower shall pay to Bank a late fee equal to five
percent (5%) of the required payment.
2.10. Default Rate. Without limitation on Bank's other rights and
remedies, upon the earliest to occur of an Event of Default (as provided in
Section 12), or the Termination Date, the Working Capital Revolving Credit
Maturity Date, the Equipment Revolving Credit Note Maturity Date, or the
Acquisition Revolving Credit Maturity Date, Borrower's right to select pricing
options shall cease, and the unpaid principal of all Obligations shall, at the
option of
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Bank, bear interest at a rate per annum equal to four percent (4%) in excess of
the highest applicable interest rate (the "Default Rate").
2.11. One Obligation. The Working Capital Revolving Credit Loans, the
Equipment Revolving Credit Loans, the Acquisition Revolving Credit Loans and
other Obligations shall constitute one obligation of Borrower, and the
commitments of Bank to make the Working Capital Revolving Credit Loans, the
Equipment Revolving Credit Loans and the Acquisition Revolving Credit Loans to
Borrower cannot be separately or individually terminated by Borrower. In the
event that the Borrower intends to terminate any of Bank's commitments
hereunder, the Borrower shall give the Bank thirty (30) days prior irrevocable
written notice thereof and shall repay all the Obligations on the effective date
of such termination.
2.12. Modified Following Business Day Convention. The term "Modified
Following Business Day Convention" means the convention for adjusting any
relevant date if it would not otherwise fall on a day that is not a Business
Day. All dates specified for payments to be made under this Agreement shall be
subject to the Modified Following Business Day Convention. The following terms,
when used in conjunction with the term "Modified Following Business Day
Convention" and a date shall mean that an adjustment will be made if that date
would otherwise fall on a day that is not a Business Day so that the date will
be the first following day that is a Business Day; provided that, in connection
with determining the last day of an Interest Period for a LIBOR Loan, if the
first following day that is a Business Day falls in the next succeeding calendar
month, then an adjustment will be made so that the date will be the next
preceding Business Day. A "Business Day" means, in respect of any date that is
specified in this Agreement to be subject to adjustment in accordance with
applicable Business Day Convention, a day on which commercial banks settle
payments in New York or, if the payment obligation is calculated with reference
to the LIBOR Rate, in London.
3. GRANT OF SECURITY INTEREST. As security for the prompt performance,
observance and payment in full of all Obligations, Borrower hereby grants to
Bank a continuing first priority, perfected security interest in and lien on and
assigns, transfers, sets over and pledges to the Bank all property of Borrower,
whether now owned by Borrower or hereafter acquired or existing, and wherever
located (collectively, the "Collateral"), including without limitation:
(a) all Accounts;
(b) all Inventory;
(c) all Equipment;
(d) all General Intangibles;
(e) all Contracts (as set forth in Schedule 3);
(f) all Investment Property;
(g) all Instruments and Documents;
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(h) all Related Collateral;
(i) all accessions to and additions to, substitutions
for, replacements, products; and
(j) products and proceeds of any and all of the
foregoing.
(k) Hallwood's shares of stock in Brookwood and
Brookwood's shares of stock in ▇▇▇▇▇▇ and Laminating;
The term "Collateral" shall also refer to and include any other
property in which Bank is granted a Lien to secure any of the Obligations
pursuant to an agreement supplemental hereto or otherwise (whether or not such
agreement makes reference to this Agreement or the Obligations of Borrower
hereunder).
4. REPRESENTATIONS AND WARRANTIES. Borrower jointly and severally represents and
warrants (and at the time of each Loan hereunder shall be deemed to represent
and warrant) for itself and for each other Borrower to Bank as follows:
4.1. Organization, Existence, Good Standing. Each Borrower (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, (ii) has obtained all material licenses, permits,
approvals and consents and has filed all registrations necessary for the lawful
operation of its business, (iii) has the power and authority and the legal right
to own, lease and operate its property and to conduct the business in which it
is currently engaged, and (iv) is duly qualified to do business and is in good
standing as a foreign entity in each other jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not have a
Material Adverse Effect. Schedule 4.1 lists all states and other locations where
Borrower is qualified or authorized to do business.
4.2. Consents. No consent, permit, license, approval or authorization
of, or registration, declaration or filing with or notice to, any governmental
authority, bureau or agency or any other Person is required in connection with
the execution, delivery or performance by Borrower, or the validity or
enforceability against Borrower, of any Loan Document to which it is a party,
except for the consents and approvals which have been obtained and are listed on
Schedule 4.2.
4.3. No Legal Bar. The execution, delivery and performance by Borrower
of the Loan Documents, and each agreement, certificate, document, instrument or
other paper delivered pursuant thereto, to which Borrower is a party, does not
conflict with or cause a breach of any provision of any existing law, rule or
regulation, order, judgment, award or decree of any court, arbitrator or
governmental authority, bureau or agency, or of the Certificate of Incorporation
or By-Laws of, or any security issued by Borrower or of any material mortgage,
deed of trust,
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indenture, lease, contract or other agreement or undertaking to which Borrower
is a party or by which any of its properties may be bound, and will not result
in the creation or imposition of any Lien on Borrower's revenues or properties,
except in favor of Bank.
4.4. Compliance with Charter and Agreements. Borrower (i) is subject to
no charter, organizational or other legal restriction, or any judgment, award,
decree, order, governmental rule or regulation or contractual restriction which
could have a Material Adverse Effect, and (ii) is in compliance with its
Certificate of Incorporation and By-Laws and all contractual requirements of a
material nature by which it or any of its properties may be bound.
4.5. Negative Pledges. Neither Borrower nor any of its Subsidiaries is
a party to or bound by any agreement, indenture, or other instrument which
prohibits the creation, incidence or allowance to exist of any mortgage, deed of
trust, pledge, lien, security interest or other encumbrance or conveyance upon
any of Borrower's property.
4.6. Title to Property. Borrower has good and marketable title to, or
valid leasehold interests in, all of the assets reflected in the balance sheet
(referred in 4.12), including, without limitation, the Collateral, and all such
assets are subject to no Liens except (i) in favor of Bank, or (ii) Permitted
Liens.
4.7. Books and Records. All of Borrower's charter documents have been
duly filed and are in proper order. All of Borrower's books and records,
including without limitation, minute books and books of account, are accurate
and up-to-date.
4.8. Power and Authority; Due Execution. Borrower has (i) full power,
authority and legal right to execute, deliver and perform its obligations under
the Loan Documents to which it is a party and to borrow hereunder, (ii) taken
all necessary actions to authorize the execution, delivery and performance by
Borrower of each Loan Document to which such Borrower is a party and to
authorize its borrowings hereunder, and (iii) caused to be duly executed and
delivered on behalf of such Borrower each of the Loan Documents to which
Borrower is a party.
4.9. Legal, Valid, Binding Obligation. Each of the Loan Documents and
each agreement, certificate, document, instrument or other paper to which
Borrower is a party, constitute the legal, valid, and binding obligation of
Borrower, enforceable against Borrower in accordance with its terms.
4.10. Name. Borrower's exact legal name is as set forth at the end of
this Agreement and Borrower has not used or been known by or is using any
fictitious or other name or trade name or style, except as set forth on Schedule
4.10 hereto.
4.11. Subsidiaries and Investments. Except as set forth on Schedule
4.11 hereto, Borrower has no Subsidiaries or Investments in any other Person.
Schedule 4.11 accurately sets forth the authorized capitalization and the number
of issued and outstanding membership interests and/or shares of stock for the
Borrower and each Subsidiary of Borrower.
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4.12. Financial Statements, No Change. The balance sheet of Borrower as
of September 30, 1999 attached as Schedule 4.12 hereto was prepared in
accordance with GAAP and fairly presents Brookwood's financial position as at
the date thereof, after giving effect to the initial Loans to be made hereunder.
Since the date thereof there has occurred no change that would have a Material
Adverse Effect.
4.13. Taxes. Borrower has made or filed all tax returns, reports and
declarations relating to any material tax liability required by any jurisdiction
to which it is subject (any tax liability which may result in a Lien on any
Collateral, other than a Permitted Lien, being hereby deemed material); has paid
all taxes shown or determined to be due thereon except those being contested in
good faith; and has made adequate provision for the payment of all taxes so
contested. The federal tax identification number of Borrower is set forth on
Schedule 4.13 hereto.
4.14. Litigation. Except as set forth on Schedule 4.14 hereto, there is
no action, suit, proceeding or investigation pending before or by any court or
other governmental authority or, to Borrower's knowledge, threatened against or
affecting (i) the Loan Documents or the transactions contemplated herein or (ii)
the Borrower or any of Borrower's assets which, if determined adversely to
Borrower, would have a Material Adverse Effect.
4.15. Chief Executive Office. Borrower's chief executive office and the
office where it keeps its books and records and records concerning its Accounts
and other places of business or locations where it keeps, maintains, processes
or stores its assets is set forth on Schedule 4.15 hereto. Borrower has no other
place of business or place where assets are kept, maintained, processed or
stored.
4.16. ERISA. All Plans of Borrower are set forth on Schedule 4.16
hereto. Borrower, all Commonly Controlled Entities, and all their Plans are and
have been in substantial compliance with the provisions of ERISA, the
qualification requirements of IRC Section 401(a), and the published
interpretations thereunder. No notice of intent to terminate a Plan has been
filed under Section 4041 of ERISA, nor has any Plan been terminated under
Section 4041(e) of ERISA which resulted in substantial liability to Borrower or
any of its Commonly Controlled Entities. The PBGC has not instituted proceedings
to terminate, or appointed a trustee to administer, a Plan and no event has
occurred or condition exists which might constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Plan. Neither Borrower nor any Commonly Controlled Entities would be liable
for any amount pursuant to Sections 4063 or 4064 of ERISA if all Plans
terminated as of the most recent valuation dates of such Plans. Neither Borrower
nor any Commonly Controlled Entities has: withdrawn from a multi-employer Plan
during a plan year for which it was a substantial employer, as defined in
Section 4001(a)(2) of ERISA; or failed to make a payment to a Plan required
under Section 302(f)(1) of ERISA such that security would have to be provided
pursuant to Section 307 of ERISA. No lien upon the assets of Borrower has arisen
with respect to a Plan. To the best knowledge of Borrower, no prohibited
transaction or Reportable Event has occurred with respect to a Plan. Borrower
and each Commonly Controlled Entity has made all contributions required to be
made by them to any Plan or multi-employer Plan when due. There is no
accumulated funding deficiency in any Plan, whether or not waived.
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4.17. No Default. Neither Borrower nor any of Borrower's Subsidiaries
is in default in any respect in the payment or performance of any of its
Indebtedness for Borrowed Money or under any mortgage, deed of trust, indenture,
lease, contract or other agreement or undertaking to which it is a party or by
which it or any of its property may be bound or affected and no Default or Event
of Default has occurred and is continuing. Neither Borrower nor any of
Borrower's Subsidiaries is in default under any order, award or decree of any
court, arbitrator or governmental authority binding upon or affecting it or by
which any of its property may be bound or affected, and no such order, award or
decree has or could reasonably be expected to have a Material Adverse Effect.
4.18. No Burdensome Restrictions. Neither Borrower nor any of
Borrower's Subsidiaries is a party to or bound by any contract, agreement or
instrument or subject to any corporate restriction (including any restriction
set forth in its Certificate of Incorporation or By-Laws) or order, award or
decree of any court, arbitrator or governmental authority that would have a
Material Adverse Effect.
4.19. Regulation U; Etc. Neither Borrower nor any of Borrower's
Subsidiaries is engaged or will engage, principally or as one of its important
activities, in the business of extending credit for the purpose of "purchasing"
or "carrying" any "margin stock" (within the respective meanings of each of the
quoted terms under Regulations U, T, or X of the Board of Governors of the
Federal Reserve System and any successors thereto as now and from time to time
hereafter in effect), and no part of the proceeds of any Loan hereunder will be
used for "purchasing" or "carrying" any "margin stock" as so defined or for any
purpose which violates, or which would be inconsistent with, the provisions of
Regulation U or Regulation G of the Federal Reserve Board.
4.20. Investment Company Act, Etc. Borrower is not an "investment
company" registered or required to be registered under the Investment Company
Act of 1940, or a company "Controlled" (within the meaning of such Investment
Company Act) by such an "investment company". Borrower is not subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, or to any other federal or state statute or regulation limiting
Borrower's ability to borrow money.
4.21. Indebtedness. Except as set forth in Schedule 4.21, neither
Borrower nor any of Borrower's Subsidiaries has Indebtedness of any type except
Indebtedness incurred under this Agreement and that which is permitted under
Section 8.2 of this Agreement.
4.22. Compliance with Laws. Except as set forth on Schedule 4.22
hereto, Borrower is in compliance in all material respects with all laws, rules
and regulations, orders of court or other governmental bodies, applicable to it
including, without limitation, all environmental, health and safety statutes and
regulations and specifically the Federal Resource Conservation and Recovery Act,
the Federal Comprehensive Environmental Response, Compensation and Liability
Act, the Federal Clean Water Act, the Clean Air Act, the requirements and
regulations of the Nuclear Regulatory Commission, the Federal Food, Drug and
Cosmetic Act, and the Federal Occupational Safety and Health Act. Borrower is
not subject to any judicial or administrative proceedings alleging the violation
of any applicable law or regulation. Borrower, to the best of
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Borrower's knowledge, is not the subject of any federal, state or local
investigation regarding, among other matters, the release of any hazardous or
toxic chemical, material, or substance or oil into the environment, the results
of which could have a Material Adverse Effect. Borrower has not filed any notice
under any applicable law indicating past or present treatment, storage,
disposal, generation, transportation or reporting a spill or release into the
environment of any hazardous or toxic chemical, material or substance or oil
into the environment which could reasonably be expected to have a Material
Adverse Effect on Borrower's financial condition business, prospects or the
value of the Collateral. Neither Borrower nor, to the knowledge of Borrower, any
other owner of any real property owned or used by or on behalf of Borrower or
such other owner, has placed or disposed of, used, generated or transported any
hazardous or toxic chemical, material or substance or oil, in violation of any
applicable law or regulation, upon or over any of Borrower's real property and
Borrower or such other owner, as the case may be, has no knowledge of such
hazardous or toxic chemical, material or substance or oil on such real property.
4.23. Contingent Liabilities. Except as set forth on Schedule 4.23
hereto, Borrower has no Contingent Liabilities.
4.24. Bonds, Indemnities. Except as set forth on Schedule 4.24 hereto,
Borrower is not obligated under any surety or similar bond, indemnity or other
contract issued nor has Borrower entered into or any agreement to assure
payment, performance or completion of performance of any undertaking or
obligation of any Person.
4.25. Intellectual Property. Borrower owns or licenses the rights to
intellectual property necessary or used in the operation of its businesses (the
"Intellectual Property"). All of such Intellectual Property is listed on
Schedule 4.25 hereto. Except as set on Schedule 4.25, none of such Intellectual
Property is subject to any license or agreement for use by any other Person.
4.26. Leases. Schedule 4.26 hereto is a complete listing of all capital
leases and operating leases of Borrower. All such leases are in full force and
effect and no material default has occurred thereunder.
4.27. Labor Contracts/Relations. Except as described in Schedule 4.27
hereto, Borrower is not a party to any collective bargaining agreement. There
are no material grievances, disputes or controversies with any union or any
other organization of Borrower's employees, or threats of strikes, work
stoppages or any asserted pending demands for collective bargaining by any union
or organization.
4.28. Trade Relations. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship between Borrower and any customer or any group of
customers whose purchases individually or in the aggregate are material to the
business of Borrower or with any material supplier, and there exists no present
condition or state of facts or circumstances which would materially and
adversely affect Borrower or prevent Borrower from conducting such business
after the consummation of the transaction contemplated by this Agreement in
substantially the same manner in which it has heretofore been conducted.
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4.29. Capitalization.
(a) All of the issued and outstanding stock of Borrower is
directly and beneficially owned and held by the Persons listed on Schedule 4.29
hereto and all of such stock has been duly authorized and is fully paid and
non-assessable, free and clear of all claims, liens, pledges and encumbrances of
any kind, except as set forth in Schedule 4.29.
(b) Borrower is solvent and will continue to be solvent after
the creation of the Obligations, the security interests of Bank and the other
transactions contemplated hereunder, is able to pay its debts as they mature and
has (and has reason to believe it will continue to have) sufficient capital (and
not unreasonably small capital) to carry on its business and all businesses in
which it is about to engage. The assets and properties of Borrower at a fair
valuation and at their present fair salable value as part of a business going
concern are, and will be, greater than the Indebtedness of Borrower, and
including subordinated and contingent liabilities computed at the amount which,
to the best of Borrower's knowledge, represents an amount which can reasonably
be expected to become an actual or matured liability.
4.30. Real Property. All of the real property owned or leased by
Borrower is listed on Schedule 4.30 (the "Real Property"). Borrower has good
record and marketable title in fee simple to all owned Real Property, or a valid
leasehold interest in all leased Real Property, free and clear of any and all
Liens, except Permitted Liens, and all such Liens are set forth on Schedule 8.3.
4.31. Accuracy of Information. All information furnished by or on
behalf of Borrower in writing to Bank in connection with the Loan Documents and
the transactions contemplated hereunder is true and correct in all material
respects on the date of which such information is dated or certified and does
not omit any material fact necessary in order to make such information not
misleading. No event or circumstance has occurred which has or could reasonably
be expected to have a Material Adverse Effect, which has not been fully and
accurately disclosed to Bank in writing.
4.32. Software; Year 2000 Compliance. Borrower has taken all reasonable
precautions to ensure that all its software, computer hardware equipment and
systems acquired, purchased, leased or utilized by Borrower, are designed to be
used prior to, during, and after the calendar year 2000 A.D., and without human
intervention will, as of the date of this Agreement, correctly recognize,
calculate, process, sequence, store and transmit date data without error or
interruption, including leap years, and including errors or interruptions from
functions which may involve date data from more than one century. Date
calculations involving either a single century or multiple centuries will
neither cause an, abnormal ending nor generate incorrect or unexpected results.
When sorting by date, all records will be sorted in accurate sequence and, when
the date is used as a key, records will be read and written in accurate
sequence. As used in the previous sentence, accurate sequence means, by way of
example, that records will be read, written, and sorted in ascending order so
that the year 1999 is before the year 2000. All such software will calculate,
process and display leap year information according to the following algorithm:
(a) leap year will have twenty-nine days in the month of February: and (b) a
leap year occurs in all years divisible by 400 or, evenly divisible by 4 and not
evenly divisible by 100. Borrower has
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taken all reasonable precautions to ensure that its software and is media will
not contain any "computer viruses" or other harmful or destructive codes and
will perform as required by Borrower's business and operations.
4.33. Business Purpose of Loans. The Working Capital Revolving Credit
Loans, the Equipment Revolving Credit Loans and the Acquisition Revolving Credit
Loans, are loans for business and commercial purposes of Borrower.
5. BORROWER'S REPORTS AND NOTICES. Borrower will deliver to Bank:
5.1. Monthly Reports. Within twenty (20) days after the end of each
month, a Monthly Borrowing Base Certificate for each Borrower, executed by the
president and/or chief financial officer of each respective Borrower, in the
form attached as Exhibit D.
5.2. [Intentionally Deleted]
5.3. Annual Financial Statements. Annually, as soon as available but in
any event within one hundred twenty (120) days after the last day of each fiscal
year of Borrower, an audited consolidated and consolidating financial statement
of Borrower including, without limitation, audited consolidated and
consolidating balance sheets of Borrower as at the end of such year and audited
consolidated and consolidating statements of income and retained earnings and of
cash flow of Borrower prepared in accordance with GAAP accurately and fairly
reflecting the results of its operations during such year prepared by and with
an unqualified opinion thereon from Borrower's independent certified public
accountants.
5.4. Annual Financial Budgets. Annually, as soon as available but in
any event prior to March 31 of each year, consolidated and consolidating
financial projections and a management-prepared budget for Borrower on a monthly
basis for each following year, with segment detail and explanation of key
assumptions.
5.5. Quarterly Financial Statements. As soon as available but in any
event within forth-five (45) days after the end of such quarterly period,
unaudited consolidated and consolidating financial statements, including,
without limitation, consolidated and consolidating balance sheets and unaudited
consolidated and consolidating income statements and retained earnings for the
fiscal quarter and year to date and unaudited consolidated statements of cash
flow of Borrower prepared in accordance with GAAP subject to year-end audit
adjustments, certified as true and correct by Borrower's Chief Financial
Officer, which quarterly statements shall compare actual period results with
results for the same period for the prior year and with budget.
5.6. Compliance Certificate. Simultaneously with the delivery of the
financial statements described in Sections 5.3 and 5.5, a Compliance Certificate
in the form of Exhibit E hereto, certified by the Chief Financial Officer of
Brookwood, and setting forth in reasonable detail computations evidencing
compliance with the covenants in Section 9, along with supporting schedules.
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5.7. Additional Information. Promptly, after reasonable notice thereof
from Bank, such other information concerning Borrower, the Collateral, the
operation of Borrower's business or its financial condition and copies of such
governmental filings and other documentation as Bank may from time to time
reasonably request;
5.8. Notices. Immediately, notice of:
(a) any Default or Event of Default;
(b) the institution or commencement of any action, suit,
proceeding or investigation against or affecting Borrower or
any of its assets which, if determined adversely to Borrower,
could result in judgment in excess of $100,000;
(c) any judgment, award, decree, order or determination
relating thereto in an amount in excess of $100,000;
(d) the imposition or creation of any Lien against any asset
of Borrower except in favor of Bank or Permitted Liens;
(e) any capital or operating lease to which Borrower becomes a
party, together with a copy of each such lease, which requires
payments in excess of $100,000 per annum;
(f) any Reportable Event, together with a statement of the
Borrower's President or Chief Financial Officer as to the
details thereof, and a copy of its notice thereof to the PBGC;
(g) any known release or potential release or threat of
release of hazardous or toxic chemicals, materials or
substances or oil from, on or onto any site owned or used by
Borrower or the incurrence of any expense or loss in
connection therewith, or upon Borrower's obtaining knowledge
of the incurrence of any expense or loss by any governmental
authority in connection with the containment or removal of any
hazardous or toxic chemical, material or substance or oil for
which expense or loss Borrower may be liable or potentially
responsible; and
(h) any loss or destruction of Collateral or other assets,
whether or not covered by insurance, if the value of such loss
or destruction or of such Collateral affected exceeds
$100,000;
5.9. ERISA Notices. Immediately after receipt or filing, a copy of (i)
any notice Borrower may receive from the PBGC relating to the PBGC's intention
to terminate or appoint a trustee to administer any Plan and (ii) any report or
notice relating to any Reportable Event which Borrower may file under ERISA with
the PBGC, the Internal Revenue Service or the United States Department of Labor;
and
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5.10. Taxes. If requested by Bank, within ten (10) days after the
accrual in accordance with applicable law of Borrower's obligation to make
deposits for F.I.C.A. and withholding taxes, evidence satisfactory to Bank that
such deposits have been made as required.
6. BANK'S REPORTS. Periodically, Bank will render to Borrower statements of
Borrower's loan account(s) with Bank hereunder, showing applicable credits and
debits. Each statement shall be considered correct and, except for manifest
error, to have been accepted by and conclusively binding upon Borrower as an
account stated in respect of all charges, debits and credits of whatsoever
nature contained therein under this Agreement, and the closing balance shown
therein, unless Borrower notifies Bank in writing of any discrepancy within
thirty (30) days from the date of any such statement.
7. BORROWER'S AFFIRMATIVE COVENANTS. Borrower agrees that it will at all times
that any amount is unpaid on any Loan or any other Obligation or any commitment
of Bank to make Loans is in effect:
7.1. Legal Existence, Compliance with Laws. Preserve, renew and keep in
full force and effect its legal existence and rights and franchises with respect
thereto and maintain in full force and effect all permits, licenses, trademarks,
tradenames, approvals, authorizations, leases and contracts necessary to carry
on its business as presently or proposed to be conducted. Borrower shall
preserve, renew and keep in full force and effect its qualification to do
business in good standing in every state or location in which such qualification
may be necessary by reason of the nature or location of its assets or
operations.
7.2. Insurance. (a) keep its properties insured against fire and other
hazards (so called "All Risk" coverage) in amounts and with companies
satisfactory to Bank to the same extent and covering such risks as is customary
in the same or a similar business, but in no event in an amount less than the
full insurable value thereof, which policies shall name Bank as additional
insured and loss payee as its interest may appear, (b) maintain public liability
coverage against claims for personal injuries or death and (c) maintain all
worker's compensation, employment or similar insurance as may be required by
applicable law. Such All Risk property and public liability insurance coverage
shall provide for a minimum of thirty (30) days written cancellation notice to
Bank (except that, if the basis for cancellation is non-payment of premiums, the
minimum written cancellation notice may be ten (10) days). Borrower agrees to
deliver copies of all of the aforesaid insurance policies to Bank. In the event
of any loss or damage to any of Borrower's assets, including any Collateral
securing the Loan, Borrower shall give immediate written notice to Bank and to
Borrower's insurers of such loss or damage and shall promptly file proofs of
loss with said insurers.
7.3. Compliance with Contracts and Laws. Comply with its Certificate of
Incorporation and By-Laws, all material contractual requirements by which it or
any of its properties may be bound and all applicable laws, rules, regulations
licenses, permits, approvals and orders of any federal, state or local
governmental authority applicable to it (including, without limitation, ERISA
and those relating to environmental protection and health and safety)
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other than contractual requirements or laws, rules or regulations the failure to
comply with which cannot reasonably be expected to have a Material Adverse
Effect.
7.4. Business. Continue to engage in its business as now conducted, and
maintain and preserve all of its properties reasonably necessary for the conduct
thereof in good working order and condition, ordinary wear and tear excepted.
7.5. Taxes. Pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or against it or its income or properties, or
upon this Agreement or any notes evidencing Obligations, including, without
limitation, taxes, assessments, charges or levies relating to real and personal
property, the Collateral, franchises, income, unemployment, old age benefits,
withholding, or sales or use, prior to the date on which penalties attach
thereto, and all lawful claims (whether for any of the foregoing or otherwise)
which, if unpaid, might give rise to a Lien upon any property of Borrower,
except any of the foregoing which is being contested in good faith and by
appropriate proceedings, for which Borrower has established and is maintaining
adequate reserves, and as to which no Lien having priority over Bank's Liens
arises. Borrower shall indemnify and hold harmless Bank with respect to the
foregoing and agrees to pay Bank on demand the amount thereof and until paid by
Borrower such amount shall be deemed to be added to the Obligations; provided
that nothing contained herein shall be construed to require Borrower to pay any
income taxes of Bank attributable to any amounts charged or paid to Bank
hereunder. This indemnity shall survive the repayment of the Obligations.
7.6. Deposit Accounts. Maintain its primary depository, operating and
disbursement accounts at Bank.
7.7. Accounts Covenants.
(a) Notify Bank immediately of: (i) any material delay in
Borrower's performance of any of its obligations to any account debtor or the
assertion of any material claims, offsets, defenses or counterclaims by any
account debtor, or any material disputes with account debtors, or any settlement
adjustment or compromise thereof, and (ii) all material adverse information
relating to the financial condition of any account debtor. No credit, discount,
allowance or extension or agreement for any of the foregoing shall be granted to
any account debtor without Bank's consent, except in the ordinary course of
Borrower's business in accordance with practices and policies previously
disclosed in writing to Bank. So long as no Event of Default exists or has
occurred and is continuing, Borrower shall settle, adjust or compromise any
claim, offset, counterclaim or dispute with any account debtor. At any time that
an Event of Default exists or has occurred and is continuing, Bank shall, at its
option, have the exclusive right to settle, adjust or compromise any claim,
offset, counterclaim or dispute with account debtors or grant any credits,
discounts or allowances.
(b) Promptly report to Bank any return of Inventory by an
account debtor having a sales price in excess of $100,000. In the event any
account debtor returns Inventory when an Event of Default exists or has occurred
and is continuing, Borrower shall, upon Bank's request, (i) hold the returned
Inventory in trust for Bank, (ii) segregate all returned Inventory from all of
its other property, (iii) dispose of the returned Inventory solely according to
Bank's
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instructions, and (iv) not issue any credits, discounts or allowances with
respect thereto without Bank's prior written consent.
7.8. Inventory Covenants. With respect to the Inventory: (a) Borrower
shall at all times maintain inventory records reasonably satisfactory to Bank,
keeping correct and accurate records itemizing and describing the kind, type,
quality and quantity of Inventory, Borrower's cost therefor and daily
withdrawals therefrom and additions thereto; (b) Borrower shall conduct a
physical count of the Inventory at least once each year, but at any time or
times as Bank may request on or after an Event of Default, and promptly
following such physical inventory shall supply Bank with a report in the form
and with such specificity as may be reasonably satisfactory to Bank concerning
such physical count; (c) Borrower shall not remove any Inventory from the
locations set forth or permitted herein, without the prior written consent of
Bank, except for sales of Inventory in the ordinary course of Borrower's
business and except to move Inventory directly from one location set forth or
permitted herein to another such location; (d) upon Bank's request, Borrower
shall, at its expense, as Bank may request on or after an Event of Default,
deliver or cause to be delivered to Bank written reports or appraisals as to the
Inventory in form, scope and methodology acceptable to Bank and by an appraiser
acceptable to Bank, addressed to Bank or upon which Bank is expressly permitted
to rely; (e) Borrower shall produce, use, store and maintain the Inventory, with
all reasonable care and caution and in accordance with applicable standards of
any insurance and in conformity with applicable laws (including, but not limited
to, the requirements of the Federal Fair Labor Standards Act of 1938, as amended
and all rules, regulations and orders related thereto); (f) Borrower assumes all
responsibility and liability arising from or relating to the production, use,
sale or other disposition of the Inventory; (g) other than in the ordinary
course of business as disclosed to Bank by Borrower from time to time, Borrower
shall not sell Inventory to any customer on approval, or any other basis which
entitles the customer to return or may obligate Borrower to repurchase such
Inventory; (h) Borrower shall keep the Inventory in good and marketable
condition; and (i) Borrower shall not, without prior written notice to Bank,
acquire or accept any Inventory on consignment or approval.
7.9. Equipment Covenants. With respect to the Equipment: (a) upon
Bank's request, Borrower shall, at its expense, at any time or times as Bank may
request on or after an Event of Default, deliver or cause to be delivered to
Bank written reports or appraisals as to the Equipment in form, scope and
methodology acceptable to Bank and by an appraiser acceptable to Bank; (b)
Borrower shall keep the Equipment in good order, repair, running and marketable
condition (ordinary wear and tear excepted); (c) Borrower shall use the
Equipment with all reasonable care and caution and in accordance with applicable
standards of any insurance and in conformity with all applicable laws; (d) the
Equipment is and shall be used in Borrower's business and not for personal,
family, household or farming use; (e) Borrower shall not remove any Equipment
from the locations set forth or permitted herein, except to the extent necessary
to have any Equipment repaired or maintained in the ordinary course of the
business of Borrower or to move Equipment directly from one location set forth
or permitted herein to another such location and except for the movement of
motor vehicles used by or for the benefit of Borrower in the ordinary course of
business; (f) the Equipment is now and shall remain personal property and
Borrower shall not permit any of the Equipment to be or become a part of or
affixed to real property; and (g) Borrower assumes all responsibility and
liability arising from the use of the Equipment.
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8. BORROWER'S NEGATIVE COVENANTS. Borrower will not at any time that
any amount is unpaid on any Loan or any other Obligation or any commitment of
the Bank to make Loans to Borrower is in effect, except with the prior written
consent of the Bank:
8.1. Disposition of Assets. Sell, assign, exchange or otherwise dispose
of any of its assets or of any stock or equity interests or Indebtedness of any
other Person held by it or any interest therein to any other Person (except for
(i) sales of Inventory in the ordinary course of Borrower's business; (ii)
dispositions of obsolete or worn out Equipment or Equipment no longer used in
its business; and (iii) sales of other Equipment, provided such Equipment is
promptly replaced with Equipment of equal or greater value and utility to the
Borrower).
8.2. Indebtedness. Create, incur, assume or allow to exist any
Indebtedness except: (i) Indebtedness owing to or held by Bank; (ii) unsecured
Indebtedness of Borrower existing on the Closing Date and disclosed in the
financial statements attached as Schedule 4.12, provided that none of such
Indebtedness shall be renewed, extended or otherwise modified in any material
respect; (iii) unsecured current liabilities (not the result of borrowing)
incurred in the ordinary course of business and not overdue; (iv) Capital Leases
and other purchase money financing of capital assets permitted under Section
8.3(vii); and (v) other Indebtedness incurred after the Closing Date with prior
notice to and the consent of Bank.
8.3. Liens. Create, permit to be created or suffer to exist any Lien
upon any of the Collateral or any other property of Borrower, now owned or
hereafter acquired, except: (i) landlords', carriers', warehousemen's,
mechanics' and other similar Liens arising by operation of law in the ordinary
course of Borrower's business; provided, however, that all such Liens shall be
discharged or bonded off within sixty (60) days from the filing thereof; (ii)
Liens arising out of pledge or deposits under worker's compensation,
unemployment insurance, old age pension, social security, retirement benefits or
other similar legislation; (iii) Liens in favor of Bank; (iv) Liens for taxes
(excluding any Lien imposed pursuant to any provision of ERISA) not yet due or
which are being contested in good faith by appropriate proceedings and Borrower
maintains appropriate reserves in respect thereto provided that in Bank's
judgment such Lien does not adversely affect Bank's rights or the priority of
Bank's Lien in the Collateral; (v) easements, rights of way, restrictions and
other similar charges or Liens relating to real property and not interfering in
a material way with the ordinary conduct of Borrower's business; (vi) Liens set
forth on Schedule 8.3 hereto; (vii) Liens to secure purchase money financing of
capital assets provided that the liens only secure payment of the Indebtedness
so incurred and extend only to the capital asset purchased (collectively,
"Permitted Liens").
8.4. Distributions. Pay any Distributions or commit or agree to do so
at any time without the prior written consent of Bank, excepting only, Brookwood
payments to Hallwood for dividends and federal income taxes per quarterly
calculations of fixed charge coverage, and only if such payments do not result
in a default of any financial covenants herein.
8.5. Loans. Make any loans or advances to any Person, including without
limitation, Hallwood, any of any Borrower's members, directors, officers,
employees, stockholders and Affiliates, except advances to employees with
respect to expenses incurred by them in the
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ordinary course of their duties which are properly reimbursable by Borrower (not
to exceed $50,000 in the aggregate during the term of this Agreement).
8.6. Guaranties. Assume, guaranty, endorse or otherwise become directly
or contingently liable in respect of (including, without limitation by way of
agreement, contingent or otherwise, to purchase, provide funds to or otherwise
invest in a debtor or otherwise to assure a creditor against loss), any
Indebtedness of any Person (except guaranties by endorsement of instruments for
deposit or collection in the ordinary course of business and guaranties in favor
of Bank).
8.7. Investments. (i) Use any Loan proceeds to purchase or carry any
"margin stock" (as defined in Regulation U of the Board of Governors of the
Federal Reserve System) or (ii) make any Investment in or otherwise purchase any
stock, Indebtedness or securities of any Person except (x) readily marketable
direct obligations of, or obligations guaranteed by, the United States of
America or any agency thereof, or (y) time deposits with or certificates of
deposit issued by Bank.
8.8. Subsidiaries. Form or acquire any Subsidiary, excepting only a
Subsidiary(ies) formed or acquired for the purpose of acquiring and/or operating
the assets of Uzzi as contemplated hereby.
8.9. Mergers and Acquisitions. Merge or consolidate with any Person, or
sell, lease, transfer or otherwise dispose of all or any substantial part of its
assets (whether in one or more transactions) or purchase or acquire all or
substantially all of the assets of any Person other than the acquisition of the
assets of Uzzi as contemplated hereby.
8.10. Affiliates. Directly or indirectly, transfer, sell, lease, assign
or otherwise dispose of any material assets to an Affiliate; purchase or acquire
any assets from an Affiliate; enter into any management agreement, service or
consulting agreement with an Affiliate or make any payment thereon; or enter
into any other transaction directly or indirectly with or for the benefit of an
Affiliate (including, without limitation, guaranties or assumptions of
obligations of an Affiliate); except, in each case, in the ordinary course of
Borrower's business and pursuant to the reasonable requirements of the
respective Borrower's business and upon fair and reasonable terms no less
favorable to the Borrower as would be obtained by Borrower in a comparable arm's
length commercial transaction with an independent non-Affiliated Person.
8.11. Limitation on Use of Proceeds. Shall not permit any of the
proceeds of the Loans to be used directly or indirectly for any purposes other
than the purposes expressly set forth in this Agreement, or by any party other
than Borrowers.
9. Financial Covenants. Borrower covenants and agrees that, as long as any
amount is unpaid with respect to the Loans or any other Obligation, and while
any commitment of Bank to make Loans is in effect, it will meet or exceed the
following financial covenants tested quarterly, on a fully consolidated basis:
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9.1. Current Ratio. Borrower shall maintain a minimum Total Current
Assets to Total Current Liabilities Ratio of 1.40:1,with
outstanding balances of the Revolving Loans treated as current
liabilities.
9.2. Total Funded Debt to Total Capitalization . Borrower shall
maintain its Total Funded Debt to no greater than 45% of its
Total Capitalization.
9.3 EBITDA to Total Fixed Charge Ratio. Borrower shall maintain a
minimum EBITDA (trailing four quarters) to Total Fixed Charge
Ratio of 1.10x. (Upon consummation of the Uzzi acquisition,
the minimum EBITDA to Total Fixed Charge Ratio shall be
1.25x.)
10. ADDITIONAL COVENANTS AND ASSURANCES.
10.1. No Overadvances. The amount of the Working Capital Revolving
Credit Loans shall not at anytime exceed the Working Capital Revolving Credit
Limit, the amount of the Equipment Revolving Credit Loans shall not at anytime
exceed the Equipment Revolving Credit Limit, and the amount of the Acquisition
Revolving Credit Loans shall not at anytime exceed the Acquisition Revolving
Credit Limit, in effect, and Borrower shall immediately make such principal
payments as may at any time be necessary to repay any such excess.
10.2. Notice of Changes. Borrower will notify Bank, at least thirty
(30) days prior to any change in Borrower's legal name, any change in its
place(s) of business or location(s) or Collateral as set forth in Section 4.15
or its establishment of any new place of business or location of its assets or
office where its records concerning Accounts and other assets are kept.
10.3. Additional Assurances. At Bank's request, Borrower at its expense
will promptly and duly execute and deliver such documents and assurances and
take such actions as may be reasonably necessary or desirable or as Bank may
reasonably request in order to correct any defect, error or omission which may
at any time be discovered or to more effectively carry out the intent and
purpose of this Agreement and to establish, perfect and protect Bank's security
interest, rights and remedies created or intended to be created hereunder.
Without limiting the generality of the above, Borrower will join with Bank in
executing financing and continuation statements pursuant to the Uniform
Commercial Code or other notices appropriate under applicable Federal or state
law in form reasonably satisfactory to Bank and filing the same in all public
offices and jurisdictions wherever and whenever requested by Bank. Moreover,
Borrower appoints Bank and its agents and designees, as Borrower's
attorney-in-fact, to execute in Borrower's name and on Borrower's behalf any UCC
financing statements or amendments thereto for any of the foregoing purposes,
which power is coupled with an interest, and irrevocable, until all Obligations
have been paid in full. Borrower releases Bank and its officers, employees,
agents and designees from any liability arising from any act or acts in
connection with such action(s) or in furtherance thereof, whether of admission
or omission except to the extent arising from the Bank's willful misconduct or
gross negligence.
10.4. Additional Collateral Actions. Borrower shall obtain for each
location that is not owned and controlled by Borrower an agreement in writing
from the Person in possession of
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Borrower's assets and/or the owner or operator of such premises, in form and
substance satisfactory to Bank, acknowledging Bank's first priority security
interest in the Collateral, waiving security interests and claims by such Person
in the Collateral and permitting the Bank access to, and the right to remain on
such premises, so as to exercise the Bank's rights and remedies and otherwise
deal with the Collateral.
10.5. Verification of Accounts. Bank may at any time in its own name or
in the name of others communicate with account debtors in order to verify with
them to Bank's satisfaction the existence, amount and terms of any Accounts and
the absence of any reductions, discounts, defenses or offsets with respect
thereto.
10.6. Power of Attorney. Upon the occurrence and continuation of an
Event of Default, Borrower does hereby make, constitute and appoint any officer
or agent of Bank as Borrower's true and lawful attorney-in-fact, with full power
of substitution: (a) to endorse the name of Borrower or any of its members,
officers or agents upon any notes, checks, drafts, money orders, or other
instruments of payment (including under any policy of insurance on Collateral)
or Collateral that may come into possession of Bank in full or part payment of
any amounts owing to Bank; (b) to sign and endorse the name of Borrower or any
of its officers or agents upon any invoice, freight or express ▇▇▇▇, ▇▇▇▇ of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts, and any instruments or
documents relating thereto or to Borrower's rights therein; (c) to give written
notice to such offices and officials of the United States Postal Service to
effect such change or changes of address so that all mail addressed to Borrower
may be delivered directly to Bank; (d) to take any and all other actions
necessary or appropriate to collect, compromise, settle, sell or otherwise deal
with any or all of the Collateral or proceeds thereof, and (e) to obtain,
adjust, settle and cancel any insurance referred to in Section 7.2; hereby
granting to each said substitute full power to do any and all things necessary
or appropriate to be done in and about the premises as fully and effectively as
Borrower might or could do, and hereby ratifying all that any said
attorney-in-fact or his substitute shall lawfully do or cause to be done by
virtue hereof.
10.7. Insurance Assignment. Upon the occurrence and continuation of an
Event of Default, Borrower hereby assigns to Bank all sums, including without
limitation, return of premiums, which may become payable under any and all of
Borrower's policies of insurance and directs each insurance company issuing any
such policy to make payment thereof directly to Bank.
10.8. Government Accounts. If any Accounts arise from contracts with
the United States or any department, agency or instrumentality thereof, Borrower
will immediately notify Bank thereof and execute any instruments and take any
steps requested by Bank in order that all monies due and to become due
thereunder shall be assigned to Bank and notice thereof given to the Federal
authorities under the Federal Assignment of Claims Act.
10.9. Payments by Bank. In its sole discretion, Bank may upon notice to
Borrower and Borrower's failure within ten (10) business days to pay any of the
following (or such lesser period of time if imposition of a Lien, loss of
insurance or tax lien is imminent): (i) discharge taxes that Borrower fails to
pay (except taxes being contested in good faith and by appropriate
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proceedings, for which Borrower has established and is maintaining appropriate
reserves, and as to which no Lien having priority over Bank's Lien arises) and
Liens levied or placed on Collateral; (ii) pay for insurance of Borrower that
Borrower fails to pay or the maintenance and preservation thereof; or (iii) if
Borrower shall fail to make deposits in respect of F.I.C.A. and withholding
taxes referred to in Section 5.10, make such deposits or pay such taxes, in
whole or in part, or set up such reserves as Bank shall in its sole discretion
deem necessary in respect of Borrower's liability therefor. Any amount so paid,
deposited or reserved for shall constitute a Revolving Loan for all purposes
hereunder. Nothing herein shall be deemed to obligate Bank to do any of the
foregoing and the making of any one or more such payments, deposits or reserves
shall not constitute an agreement by Bank to take any further or similar action
or a waiver of any right of Bank hereunder.
10.10. Debits to Borrower's Accounts. In its sole discretion and
without notice to Borrower, Bank may at any time or from time to time debit
Borrower's account(s) at Bank in the amount of any Obligation or Obligations
then due and payable by Borrower. Nothing herein shall be deemed to obligate
Bank to do any of the foregoing and the making of any such debit shall not
constitute an agreement by Bank to take any further or similar action or a
waiver of any right of Bank hereunder. On or before the date hereof, Bank and
Borrower shall execute an Automatic Electronic Fund Transfer Agreement ("AFT
Agreement") by which Borrower has authorized Bank to electronically debit all
payments due under the Notes from Borrower's designated account.
10.11. Access to Records. Borrower will at all times keep accurate
records of the Collateral and will permit Bank or its agents or representatives
at Bank's election at any time during normal business hours from time to time in
Bank's reasonable discretion, at Borrower's expense to visit Borrower's place(s)
of business, without hindrance or delay, to inspect Collateral and examine check
audit and make copies and abstracts from Borrower's records and books of account
(including, without limitation, corporate minutes, and records, journals,
orders, receipts and correspondence relating to Collateral, account debtors,
transactions unrelated to collateral and Borrower's general financial condition,
business and affairs); to remove any of such books and records temporarily for
the purpose of having copies made; and to discuss with any of Borrower's
appropriate members, directors, officers, accountants and other agents or
representatives the Collateral and Borrower's general financial condition,
business and affairs. In connection with such examinations by Bank or its
representatives, Borrower shall pay Bank's examination fees plus such costs and
expenses as may be reasonably incurred by Bank in connection therewith.
10.12. License to Use Premises. Borrower hereby grants to Bank, for a
term commencing on the Closing Date and continuing so long as any of the
Obligations remain outstanding, at a rental of $1.00 for such entire term, the
right to the use of all premises or places of business which Borrower now or
hereafter may have and where any Collateral may be located for the purpose of
exercising its rights and remedies hereunder to realize on the Collateral;
provided that Bank agrees not to exercise such right unless and until an Event
of Default occurs and is continuing.
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10.13. Instruments Evidencing Accounts. If any Accounts are at any time
evidenced by promissory notes, trade acceptances or other instruments for the
payment of money, Borrower will immediately deliver the same to Bank
appropriately endorsed to Bank's order and, regardless of the form of such
endorsement, Borrower hereby waives presentment, demand, notice of dishonor,
protest, notice of protest and all other notices with respect thereto.
10.14. Security Interest in Deposits; Set-off. Borrower hereby grants
to Bank a lien, security interest and right of setoff as security for all
liabilities and obligations to Bank, whether now existing or hereafter arising,
upon and against all deposits, credits, collateral and property, now or
hereafter in the possession, custody, safekeeping or control of Bank or any
entity under the control of KeyCorp, or in transit to any of them. At any time
that an Event of Default exists, without demand or notice, Bank may set off the
same or any part thereof and apply the same to any liability or obligation of
Borrower even though unmatured and regardless of the adequacy of any other
collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE BANK TO
EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH
SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO
SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER OR ANY GUARANTOR, ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
10.15. No Bank Liability. Notwithstanding anything to the contrary set
forth herein, Bank shall not have any obligation or liability under any Accounts
or other Collateral arising out of this Agreement or Bank's exercise of its
rights and remedies or Borrower's performance of its obligations hereunder, nor
shall Bank have any obligation to make any inquiry as to the nature or
sufficiency of any payment received by it, or to file any claim or take any
action to enforce the payment or performance of any portion of the Collateral.
Beyond the safe custody thereof, Bank shall have no duty as to any Collateral in
its or its nominee's possession or any income thereon, or as to the preservation
of rights against other parties or otherwise.
10.16. Transfer of Investment Property to Bank's Name. Bank may
transfer Investment Property of the Borrower into its name or that of its
nominee and may receive the income and any distributions' thereon and hold the
same as Collateral for the Obligations, or apply the same to any defaulted
Obligation, whether or not a Default or an Event of Default has occurred.
11. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute
an Event of Default:
(a) failure by Borrower to pay any principal, interest or
other amount due on account of the Loans, within fifteen (15) days of
the date when due, including failure by Borrower to comply with the
terms and conditions of its AFT Agreement; provided, however, that no
Event of Default shall be created if Bank fails to electronically debit
any payment due without fault of Borrower;
(b) failure by Borrower to perform or comply with the
covenants set forth in Sections 8, 9 or 10 hereof.
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(c) failure by Borrower to pay any payment Obligation other
than those described in Section 11 (a) within fifteen (15) days of
notice by Bank that such other payment Obligation is due;
(d) failure by Borrower to perform or discharge, observe or
comply with any of its other covenants or agreements set forth herein
or in the Loan Documents, or any other Obligation, within thirty (30)
days of the date Borrower became aware of such failure or receives
notice thereof from the Bank;
(e) any representation, warranty or statement of Borrower to
Bank in connection with any Obligation (including, without limitation,
any made in any document provided by Borrower under Section 5) is found
to have been false or misleading in any material respect as of the time
when made;
(f) occurrence of any event of default (subject to any
applicable grace period) as defined in any other instrument evidencing
or governing Indebtedness for Borrowed Money in excess of, in the
aggregate, $100,000, of Borrower (other than Obligations) now or
hereafter outstanding; or any event or condition which gives any holder
or trustee of such Indebtedness for Borrowed Money the right to
accelerate its maturity;
(g) Borrower's or any guarantor's or endorser's liquidation,
termination, dissolution or ceasing to carry on actively any
substantial part of its current business or the death of any guarantor
or endorser;
(h) commencement by Borrower or any guarantor or endorser of a
voluntary proceeding seeking relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law, or seeking
appointment of a trustee, receiver, liquidator or other similar
official for it or any substantial part of its assets; or its consent
to any of the foregoing in an involuntary proceeding against it; or
Borrower or any guarantor or endorser shall generally not be paying its
debts as they become due or admit in writing its inability to do so; or
an assignment for the benefit of, or the offering to or entering into
by, Borrower or any guarantor or endorser of any composition,
extension, reorganization or other agreement or arrangement with, its
creditors;
(i) commencement of an involuntary proceeding against Borrower
or any guarantor or endorser seeking relief with respect to it or its
debts under any bankruptcy, insolvency or other similar law, or seeking
appointment of a trustee, receiver, liquidator or other similar
official for it or any substantial part of its assets, which proceeding
is not dismissed or stayed within sixty (60) days,
(j) service upon Bank of a writ of levy or attachment, or
naming Bank as trustee for Borrower, or of any other similar process of
attachment which is not dismissed within thirty (30) days;
(k) entry of any judgment(s) against Borrower in an aggregate
amount greater than $100,000 which are not covered by insurance (and
for this purpose a judgment shall
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be deemed "covered by insurance" only if the insurance company has
formally advised Borrower in writing that the judgment in its entirety
is covered by insurance and no action is being taken to execute such
judgment against any of Borrower's assets) and shall remain
undischarged or unvacated for a period in excess of sixty (60) days or
execution shall at any time not be effectively stayed;
(l) attachments of any Liens (other than a Permitted Lien)
exceeding, in the aggregate, $100,000, upon property of Borrower not in
favor of Bank without Bank's prior written consent which Lien is not
discharged in thirty (30) days;
(m) entry of any court order which enjoins, restrains, or in
any way prevents Borrower from conducting all or any substantial part
of Borrower's business;
(n) any change in the controlling ownership of Borrower;
(o) any material loss, theft, damage or destruction to or of
any asset(s) of Borrower not covered by insurance;
(p) reclamation or repossession constituting a Material
Adverse Effect of any asset(s) of Borrower;
(q) the occurrence of any event having a Material Adverse
Effect on Borrower;
(r) there shall occur and be continuing any Reportable Event
which constitutes grounds for termination of or for appointment by a
United States District Court of a trustee to administer any Plan; the
PBGC shall institute proceedings to terminate or to appoint a trustee
to administer any Plan; a United States District Court shall appoint a
trustee to administer any Plan; or any Plan shall be terminated in
circumstances giving rise to liabilities having a Material Adverse
Effect on Borrower's financial condition; or
(s) termination of, failure to make any payment required under
or any other default under any guaranty of or other instrument or
agreement securing any of the Obligations.
Borrower acknowledges and agrees that each and every Event of
Default described above shall be of equal weight and significance, and
equally and fully shall allow Bank to exercise its rights and remedies
hereunder. Borrower acknowledges and agrees that each such Event of
Default has been a material inducement for Bank to enter into this
Agreement and that Bank would be irreparably harmed if Bank, in any
way, were unable to exercise its rights and remedies on the basis that
certain Events of Default (for example, Events of Default not relating
to payment) were of less weight or significance than certain other
Events of Default (for example, Events of Default relating to payment).
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12. BANK'S RIGHTS AND REMEDIES. Upon the occurrence of an Event of Default:
12.1. Exercise of Remedies. Bank may by notice to Borrower decline to
make any or all further Revolving Loans hereunder and terminate all its
commitments hereunder; Bank may by notice to Borrower accelerate the payment of
all Obligations and demand payment thereof (provided that no such notice shall
be required if the Event of Default is under Section 11(h) or (i)); Borrower's
right to select pricing options under Section 2.4 shall cease; Bank may proceed
to enforce payment of any of the foregoing and shall have and may exercise any
and all rights under the UCC or which are afforded to Bank herein or otherwise;
and all Obligations (including, without limitation, principal, past due
interest, amounts payable under Section 12 or 13 or upon entry of any judgment)
shall bear interest, payable on demand, at the Default Rate provided under
Section 2.10.
12.2. Disposition of Collateral. Upon the occurrence of an Event of
Default, Bank may notify account debtors that the Collateral has been assigned
to Bank and that payments by such account debtors shall be made directly to
Bank. At Bank's request, Borrower will notify any or all such debtors of such
assignment, give instructions and/or indicate on ▇▇▇▇▇▇▇▇ to such debtors that
their Accounts shall be paid to Bank and/or supply such debtors with a copy of
this Agreement. Bank may sell, lease or otherwise dispose of and deliver any or
all Collateral at public or private sale, for cash, upon credit or otherwise, at
such prices and upon such terms as Bank deems advisable in its sole discretion.
Any requirement of reasonable notice shall be met if such notice is mailed
postage prepaid to Borrower at its address set forth herein at least ten (10)
days before the time of sale or other disposition. Bank may be the purchaser at
any such sale, if it is public, and in such event Bank shall have all rights of
a good faith, bona fide purchaser for value from a secured party after default.
The proceeds of any sale may be applied (in whatever order and manner Bank
elects in its sole discretion) to all costs and expenses of sale (including,
without limitation, reasonable attorneys' fees and disbursements) and to the
payment of Obligations, and any remaining proceeds shall be applied in
accordance with Article 9, Part 5 of the UCC. Borrower shall remain liable to
Bank for any deficiency.
12.3. Possession Following Event of Default. Bank will at any time
following the occurrence of an Event of Default and during the continuation
thereof have the right to take physical possession of the Collateral and to
maintain such possession on Borrower's premises or to remove the Collateral or
any part thereof to such other places as Bank may desire. If Bank exercises such
right, Borrower shall at its sole expense upon Bank's request assemble the same
and make it available to Bank at a place reasonably convenient to Bank. If any
Inventory is in the possession or control of any of Borrower's agents or
processors, Borrower shall, at Bank's request (before or after the occurrence of
an Event of Default), notify them of Bank's security interest therein and, at
Bank's request, instruct them to hold the same for Bank's account and subject to
Bank's instructions. At any time following the occurrence of an Event of Default
and during the continuation thereof, Bank shall have full power, in its own name
or that of Borrower, to collect, endorse, compromise, settle, sell or otherwise
deal with any or all of the Collateral or proceeds thereof.
13. EXPENSES; INDEMNIFICATION, ETC.
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13.1. Payment of Expenses. Borrower agrees to pay Bank on demand any
and all costs, expenses, losses, claims, damages, liabilities, penalties, suits,
judgments or disbursements of any nature (including, without limitation,
reasonable attorneys' fees and disbursements and appraisal costs) which may be
incurred by, imposed on or asserted against Bank in connection with: preparation
of this Agreement, and all instruments and documents relating hereto; all other
amendments, modifications or waivers hereof, appraisal fees and environmental
assessment fees incurred in connection with this Agreement; taxes and other
governmental charges payable by reason of this Agreement, documents and filings
relating hereto and Collateral (excluding income and franchise taxes payable by
Bank); exercise of Bank's rights with respect to Collateral or any guarantor or
surety of Borrower; any exercise of Bank's right of acceleration; any
enforcement, collection or other proceedings with respect to the Obligations or
from any negotiations or other measures to preserve Bank's rights hereunder; any
investigative, administrative or judicial proceeding (whether or not Bank is
designated as a party thereto) relating to Borrower or the Obligations, relating
to or arising out of this Agreement or any other transaction between the Bank
and the Borrower or any obligor on the Obligations; or any bankruptcy,
insolvency or other similar proceedings relating to Borrower.
13.2. Indemnification. Borrower shall indemnify and hold Bank and each
Participant and Assignee, and their directors, agents, employees and counsel,
harmless from and against any, and shall pay on demand all, losses, claims,
damages, liabilities, costs or expenses imposed on, incurred by or asserted
against any of them in connection with any litigation, investigation, claim or
proceeding commenced or threatened related to the delivery, enforcement,
performance or administration of this Agreement, any other Loan Documents, or
any undertaking or proceeding related to any of the hereby or otherwise or any
act, omission, event or transaction related or attendant thereto, including,
without limitation, amounts paid in settlement, court costs, and the reasonable
fees and expenses of counsel. To the extent that the undertaking to indemnify,
pay and hold harmless set forth in this Section may be unenforceable because it
violates any law or public policy, Borrower shall pay the maximum portion which
it is permitted to pay under applicable law to Bank in satisfaction of
indemnified matters under this Section. Borrower's obligation to make any
payments to Bank under the foregoing indemnity shall be net of any collateral
liquidation proceeds, eminent domain proceeds and insurance proceeds (not
including, however, any tax benefits) actually received by Bank. The foregoing
indemnity shall survive the payment of the Obligations and the termination or
non-renewal of this Agreement.
13.3. Authority for Loan Requests. Bank shall be authorized to make
Loans hereunder upon the oral (followed promptly by written confirmation) or
written request in the name of Borrower by: the Person executing this Agreement
on Borrower's behalf; any Person(s) from time to time holding the offices of
President or Chief Financial Officer of Borrower, and such other Persons as
Borrower may from time to time designate in appropriate documents delivered to
Bank (including, without limitation, certificates of resolutions as requested by
Bank). All such Loans shall be conclusively deemed to have been authorized by
Borrower and to have been made pursuant to duly authorized requests therefor on
their behalf. Bank shall further be entitled to rely on any communication,
instrument or document believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person(s), and with respect to all legal
matters shall be entitled to rely on advice of legal counsel.
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13.4. Exculpation. In the absence of willful misconduct taken or
omitted in bad faith, or gross negligence, neither Bank nor any attorney-in-fact
pursuant to Sections 10.3 or 10.6 shall be liable to Borrower or any other
Person for any act or omission, any mistake of fact or any error of judgment in
exercising any right or remedy granted herein.
13.5. Collateral Secures Indemnification. Bank shall be entitled to
retain Collateral or require substitution therefor to the extent required to
assure Bank of satisfaction of Borrower's Obligations under this Section 13.
14. CONDITIONS PRECEDENT.
14.1. Conditions to Initial Loans. Borrower acknowledges and agrees
that the satisfaction of each of the following in a manner satisfactory to Bank
is a condition precedent to the making of the Revolving Loans hereunder:
(a) Delivery of Documents. Borrower shall have delivered, or
caused to be delivered to Bank all documents, instruments and
agreements as Bank shall reasonably request in connection herewith,
duly executed by all parties thereto and substance reasonably
satisfactory to Bank and Bank's counsel, including but not limited to,
the following:
(i) this Agreement, together with all Schedules and
Exhibits hereto;
(ii) the Working Capital Revolving Credit Note;
(iii) the Equipment Revolving Credit Note;
(iv) the Acquisition Revolving Credit Note;
(v) the Stock Pledge and Security Agreement
(Brookwood stock) executed by Hallwood;
(vi) the Intercreditor Agreement (Brookwood stock)
among Bank One N.A., First Bank of Texas, N.A., and Bank;
(vii) the Stock Pledge and Security Agreement (▇▇▇▇▇▇
stock) executed by Brookwood;
(viii) the Stock Pledge and Security Agreement
(Laminating stock) executed by Brookwood;
(ix) Hallwood's Assignment Separate from Certificate,
with delivery of Brookwood stock certificate(s);
(x) Brookwood's Assignment Separate from Certificate,
with delivery of ▇▇▇▇▇▇ stock certificate(s);
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(xi) Brookwood's Assignment Separate from
Certificate, with delivery of Laminating stock certificate(s);
(xii) the UCC financing statements of Borrower;
(xiii) the terminations and other personal property
title clearing instruments;
(xiv) the Intercreditor Agreement among Bank and CIT
Group/Commercial Services, Inc.;
(xv) the Intercreditor Agreement among Bank and Banc
of America Commercial Corporation;
(xvi) Assignment of Credit Balances Agreement;
(xvii) Notice of Assignment (to CIT Group/Commercial
Services, Inc.)
(xviii) Notice of Assignment (to Banc of America
Commercial Corporation)
(xix) the landlord waivers and consents and similar
agreements from all owners and operators of locations at which
Collateral is stored or maintained and not owned by Borrower;
(xx) the opinion letter of counsel to Borrower with
respect to the Intercreditor Agreements, the Loan Documents
and security interest and liens of Bank with respect to the
Collateral and such other matters as Bank may reasonably
request;
(xxi) Incumbency Certificate of Borrower, with
authorizing resolutions, and certified copies of the
Certificates of Incorporation, By-Laws, certificates of legal
existence and good standing, and certificates of foreign good
standing and qualification of Borrower;
(xxii) Environmental Indemnity Agreement;
(xxiii) UCC and tax lien searches satisfactory to the
Bank;
(xxiv) Commercial Property and Casualty (All-Risk)
and Commercial General Liability certificates naming Bank as
additional insured and loss payee and containing
non-cancellation provision without ten (10) days notice to
Bank;
(xxv) the balance sheet attached hereto as Schedule
4.12;
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(xxvi) an Officer's Certificate for Borrower in a
form acceptable to Bank;
(xxvii) Borrowing Base Certificate in the form of
Exhibit D hereto;
(xxviii) Compliance Certificate for Borrower, as of
the date of execution, in the form of Exhibit E hereto;
(xxix) Consent in writing from Hallwood, regarding
its agreement to limitations of Distributions from Brookwood;
(xxx) all such other documents and instruments as may
be required by the Bank in its reasonable discretion.
(b) Perfection of Security Interests. Borrower shall have
taken, or caused to be taken, all action that Bank requests in order to
create and perfect Bank's Liens in the Collateral in all jurisdictions
designated by Bank and Bank shall have received evidence, satisfactory
to Bank, thereof;
(c) Required Approvals. Bank shall have received certified
copies of all consents or approvals of any governmental authority or
other person or entity which are required in connection with the
transactions contemplated by the Loan Documents;
(e) No Material Adverse Change. There shall not have occurred
any material adverse change in Borrower's business, assets, operations,
prospects and financial condition, taken as a whole, or in the value of
the Collateral, since the date of the last financial statements
provided to Bank and Bank shall have received certificates signed by
Borrower to such effect;
(f) Proceedings. All proceedings to be taken in connection
with the transactions contemplated by the Loan Documents and all
documents contemplated in connection herewith, shall be satisfactory in
form and substance to Bank and Bank's counsel; and
(g) Reimbursement of Fees and Costs. The Borrower shall have
paid to Bank all expenses, costs and fees, including legal fees,
appraisal fees and other costs, lien search fees, and filing fees
incurred by the Bank relating to the preparation of this Agreement, the
Loan Documents, all instruments and documents relating hereto, and the
closing of the transactions contemplated thereby.
14.2. Conditions Precedent to All Loans. Borrower acknowledges and
agrees that each of the following shall be conditions precedent to Bank making
any Loan or extension of credit hereunder:
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(a) Representations and Warranties. Borrower's representations
and warranties contained herein shall be true, correct and complete in
all material respects on the date thereof;
(b) No Defaults or Events of Default. There shall exist no
Default or Event of Default; and
(c) Reimbursement of Fees and Costs. The Borrower shall have
paid to Bank, all expenses, costs and fees, including legal fees,
appraisal fees and other costs, lien search fees, and filing fees
incurred by the Bank in connection with any advance, Loan or extension
of credit.
15. MISCELLANEOUS PROVISIONS.
15.1. Notices. Unless otherwise specified herein, all notices hereunder
shall be in writing directed to the addresses shown at the beginning of this
Agreement. Written notices and communications shall be effective and shall be
deemed received on the day when delivered by hand or sent by facsimile
transmission; on the next day, if by commercial overnight courier; and on the
third day, if by registered or certified mail, postage prepaid.
15.2. No Waiver. No failure to exercise and no delay in exercising, on
the part of Bank, any right or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right or remedy. Waiver by
Bank of any right or remedy on any one occasion shall not be construed as a bar
to or waiver thereof or of any other right or remedy on any future occasion.
Without limiting the generality of the foregoing, Borrower expressly agrees that
no failure by Bank to detect or to communicate with Borrower or take action in
response to any failure by Borrower to perform or observe any Obligation shall
operate as a waiver of any right or remedy of Bank. Any waivers by Bank must be
in writing and no officer or employee of Bank is authorized to grant any oral
waiver. Bank's rights and remedies hereunder, under any agreement or instrument
supplemental hereto or under any other agreement or instrument, shall be
cumulative, may be exercised singly or concurrently, and are not exclusive of
any rights or remedies provided by law.
15.3. Assignment. This Agreement shall be binding upon and shall inure
to the benefit of Borrower and Bank and their respective heirs, legal
representatives, successors and assigns; provided that Borrower may not assign
or transfer any rights or Obligations hereunder without Bank's prior written
consent. Bank shall have the unrestricted right at any time or from time to
time, and without Borrower's consent, to assign all or any portion of its rights
and obligations hereunder to one or more banks or other financial institutions
(each, an "Assignee"), and Borrower agrees that it shall execute, or cause to be
executed, such documents, including without limitation, amendments to this
Agreement and to any other documents, instruments and agreements executed in
connection herewith as Bank shall deem necessary to effect the foregoing. In
addition, at the request of Bank and any such Assignee, Borrower shall issue one
or more new promissory notes, as applicable, to any such Assignee and, if Bank
has retained any of its rights and obligations hereunder following such
assignment, to Bank, which new promissory
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notes shall be issued in replacement of, but not in discharge of, the
liability evidenced by the promissory note held by Bank prior to such assignment
and shall reflect the amount of the respective commitments and loans held by
such Assignee and Bank after giving effect to such assignment. Upon the
execution and delivery of appropriate assignment documentation, amendments and
any other documentation required by Bank in connection with such assignment and
the payment by Assignee of the purchase price agreed to by Assignee, such
Assignee shall be a party to this Agreement and shall have all of the rights and
obligations of Bank hereunder (and executed in connection herewith) to the
extent that such rights and obligations have been assigned by Bank pursuant to
the assignment documentation such Assignee, and Bank shall be released from its
obligations hereunder and thereunder to a corresponding extent.
15.4. Headings. The headings contained herein are for convenience only
and shall not affect the construction hereof. If one or more provisions of this
Agreement (or the application thereof) shall be invalid, illegal or
unenforceable in any respect in any jurisdiction, the same shall not, to the
fullest extent permitted by applicable law, invalidate or render illegal or
unenforceable such provision (or its application) in any other jurisdiction or
any other provision of this Agreement (or its application). This Agreement is
the entire agreement of the parties with respect to the subject matter hereof
and supersedes any prior written or verbal communications or instruments
relating thereof.
15.5. Waiver of Remedies. Borrower acknowledges that the transactions
contemplated hereby are commercial transactions and waives, to the fullest
extent it may do so under applicable law, such rights as it may have or
hereafter have to notices and/or hearings under applicable federal or state laws
relating to exercise of any of Bank's rights, including, without limitation, the
right to deprive Borrower of or affect Borrower's use, possession or enjoyment
of property prior to rendition of a final judgment against Borrower.
15.6. Pledge to Federal Reserve. Bank may at any time pledge all or any
portion of its rights under the Loan Documents, including any portion of the
Notes, to any of the twelve (12) Federal Reserve Banks organized under Section 4
of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or enforcement
thereof shall release Bank from its obligations under any of the Loan Documents.
15.7. Participations. Bank shall have the unrestricted right at any
time and from time to time, and without the consent of or notice to Borrower, to
grant to one or more banks or other financial institutions (each, a
"Participant") participating interests in Bank's obligation to lend hereunder
and/or any or all of the loans held by Bank hereunder. In the event of any such
grant by Bank of a participating interest to a Participant, whether or not upon
notice to Borrower, Bank shall remain responsible for the performance of its
obligations hereunder and Borrower shall continue to deal solely and directly
with Bank in connection with Bank's rights and obligations hereunder. Bank may
furnish any information concerning Borrower in its possession from time to time
to prospective Assignees and Participants, provided that Bank shall require any
such prospective Assignee or Participant to agree in writing to maintain the
confidentiality of such information.
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15.8. Replacement Notes. Upon receipt of an affidavit of any officer of
Bank as to the loss, theft, destruction or mutilation of any of the Notes or any
other security document which is not of public record, and, in the case of any
such loss, theft, destruction or mutilation, upon the surrender and cancellation
of such Note or other security document, the Borrower will issue, in lieu
thereof, a replacement Note or other security document in the same principal
amount thereof and otherwise of like tenor. Bank agrees to indemnify Borrower
for any double payment or increased liability caused by Bank's loss of any
original Note.
16. GOVERNING LAW, JURISDICTION.
16.1. Governing Law. This Agreement shall take effect as a sealed
instrument and shall be governed by and construed in accordance with the laws of
the State of Maine (without giving effect to its conflict of laws rules except
as provided under the provisions of the Uniform Commercial Code with respect to
the perfection and enforcement of security interests).
16.2. Jurisdiction. Borrower irrevocably submits to the non-exclusive
jurisdiction of any federal or state court sitting in the State of Maine, over
any suit, action or proceeding arising out of or relating to this Agreement and
agrees that such courts shall have exclusive jurisdiction over any suit, action
or proceeding against Bank. Borrower irrevocably waives, to the fullest extent
it may do so under applicable law, any objection it may have or hereafter have
to the laying of the venue of any such suit, action or proceeding brought in any
such court and any claim that the same has been brought in an inconvenient
forum.
16.3. Waiver of Counterclaims. Borrower waives all rights to interpose
any claims, deductions, setoffs or counterclaims of any nature (other than
compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
17. CAUTION.
Caution: Read Before Signing. Great effort has been spent to make sure
that this Agreement fully and accurately documents the understanding between the
parties. If you believe that you have an implicit or oral understanding or
agreement not fully and accurately set forth in this Agreement, DO NOT SIGN IT.
You should also understand that no officer or employee of the Bank has
any authority to modify, alter or amend this Agreement orally. Rather, any and
all changes would have to be put in writing and approved by appropriate
officials at the Bank. If at some future date you believe that this Agreement
needs to be changed in any respect, insist that the change be in writing and
signed by an appropriate officer of the Bank; otherwise, misunderstandings might
occur.
Finally, all signatories to this Agreement are urged to have their own
legal counsel review it on their behalf.
18. NOTICE.
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Under Maine law, no promise, contract or agreement to lend money,
extend credit, forbear from collection of a debt, or make any other
accommodation for the repayment of a debt for more than $250,000 may be enforced
in court against the Bank unless the promise, contract or agreement is in
writing and signed by the Bank. Accordingly, the Borrower cannot enforce any
oral promise unless it is contained in any of the Loan Documents signed by the
Bank, nor can any change, forbearance, or other accommodation relating to the
Loans, this Agreement or any other Loan Documents be enforced unless it is in
writing and signed by the Bank. Borrower also understands that all future
promises, contracts or agreements of the Bank relating to any other transaction
between Borrower and Bank cannot be enforced in court unless they are in writing
and signed by the Bank.
19. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each
executed counterpart constituting an original, but all counterparts when joined
together constituting but one and the same agreement.
[The balance of this page is intentionally left blank]
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Executed as an instrument under seal on the date set forth above.
BORROWER:
WITNESS:
BROOKWOOD COMPANIES INCORPORATED
By:
------------------------- -----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President Finance
Chief Financial Officer
WITNESS:
▇▇▇▇▇▇ INDUSTRIES, INC.
By:
------------------------- -----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer and Secretary
WITNESS:
BROOKWOOD LAMINATING, INC.
By:
------------------------- -----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer and Secretary
BANK:
WITNESS: KEYBANK NATIONAL ASSOCIATION
By:
------------------------- -----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
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Schedule 3
Contracts
Wholesale Maturity Factoring Agreement dated July 17, 1992, between The
CIT Group/Commercial Services, Inc. and Brookwood Companies Incorporated.
Factoring Agreement dated August 24, 1993 between The CIT
Group/Commercial Services, Inc. and Brookwood Companies Incorporated.
Factoring Agreement (Wholesale) dated February 21, 1990, between Banc
of America Commercial Corporation and Brookwood Companies Incorporated.
Factoring Agreement (Wholesale) dated February 21, 1990, between Banc
of America Commercial Corporation and First Performance Fabrics, Inc.
Factoring Agreement (Wholesale) dated February 21, 1990, between Banc
of America Commercial Corporation and Brookwood Roll Goods Incorporated.
Factoring Agreement (Wholesale) dated February 21, 1990, between Banc
of America Commercial Corporation and ▇▇▇▇▇▇ Industries, Inc.
Factoring Agreement (Export Receivables) dated February 20, 1991,
between Banc of America Commercial Corporation and Brookwood Companies
Incorporated.
Factoring Agreement (Export Receivables) dated February 22, 1991,
between Banc of America Commercial Corporation and First Performance Fabrics,
Inc.
Factoring Agreement (Export Receivables) dated February 20, 1991,
between Banc of America Commercial Corporation and Brookwood Roll Goods
Incorporated.
Factoring Agreement (Export Receivables) dated February 20, 1991,
between Banc of America Commercial Corporation and ▇▇▇▇▇▇ Industries, Inc.
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KeyBank National Association/Brookwood Companies Incorporated, et al.
Schedule 4.1
States And Other Locations Where Authorized to do Business
BORROWER JURISDICTIONS WHERE
AUTHORIZED TO DO BUSINESS
1. Brookwood Companies Incorporated, New York, Rhode Island,
a Delaware Corporation New Jersey, California
2. ▇▇▇▇▇▇ Industries, Inc., Rhode Island
a Delaware Corporation
3. Brookwood Laminating, Inc., Rhode Island
a Delaware Corporation
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KeyBank National Association/Brookwood Companies Incorporated, et al.
Schedule 4.2
Consents
None Required.
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KeyBank National Association/Brookwood Companies Incorporated, et al.
Schedule 4.10
Name
BORROWER ASSUMED NAME
1. Brookwood Companies Incorporated Brookwood; Brookwood Roll Goods;
First Performance Fabrics
2. ▇▇▇▇▇▇ Industries, Inc. ▇▇▇▇▇▇; KDP INC.
3. Brookwood Laminating, Inc. [None]
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KeyBank National Association/Brookwood Companies Incorporated, et al.
Schedule 4.11
Subsidiaries and Investments
BORROWER SUBSIDIARIES AUTHORIZED CAPITALIZATION # OF SHARES OF ISSUED AND
OUT-STANDING STOCK
1. Brookwood Companies See below. Preferred 200,000 130,000
Incorporated Common 15,000,000 10,000,000
2. ▇▇▇▇▇▇ Industries, Inc. None 3,000 3,000
3. Brookwood Laminating, None 3,000 100
Inc.
NO. OF SHARES HELD/OWNED BY
BROOKWOOD COMPANIES
INCORPORATED
1. Brookwood Companies ▇▇▇▇▇▇ Industries, Inc. 3,000
Incorporated*
Brookwood Laminating, 100
Inc.
*Brookwood plans to form a subsidiary(ies) to acquire and/or operate the
business and assets of Uzzi.
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KeyBank National Association/Brookwood Companies Incorporated, et al.
Schedule 4.12
Financial Statements; No Change
Attached hereto is Balance Sheet of Borrower as of September 30, 1999 and 1998.
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KeyBank National Association/Brookwood Companies Incorporated, et al.
Schedule 4.13
Taxes
BORROWER TAX I.D. NO.
1. Brookwood Companies ▇▇-▇▇▇ ▇▇▇▇
Incorporated
2. ▇▇▇▇▇▇ Industries, Inc. ▇▇-▇▇▇ ▇▇▇▇
3. Brookwood Laminating, Inc. ▇▇-▇▇▇ ▇▇▇▇
61
63
KeyBank National Association/Brookwood Companies Incorporated, et al.
Schedule 4.14
Litigation
None
62
64
KeyBank National Association/Brookwood Companies Incorporated, et al.
Schedule 4.15
Chief Executive Office of Each Borrower
BORROWER OFFICES
1. Brookwood Companies Incorporated ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Building 14 Warehouse ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Roll Goods Warehouse ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Books and Records ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2. ▇▇▇▇▇▇ Industries, Inc. ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
3. Brookwood Laminating, Inc. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
63
65
KeyBank National Association/Brookwood Companies Incorporated, et al.
Schedule 4.16
ERISA
1. Textile Workers Pension Fund National Plan Sub-Fund
2. Textile Workers Pension Fund National Plus Plan
3. Brookwood Companies Incorporated Tax Favored Savings Plan
64
66
KeyBank National Association/Brookwood Companies Incorporated, et al.
Schedule 4.21
Indebtedness
THE BANK OF NEW YORK
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Amount Date Due Reference No.
------ -------- -------------
$32,593.54 1/07/00 Bankers Acceptance/Letter of Credit
No. 00142029
$ 9,204.00 1/10/00 Bankers Acceptance/Letter of Credit
No. 00142052
$31,173.05 1/24/00 Bankers Acceptance No. ▇▇▇▇▇▇▇▇
$27,608.68 2/3/00 Bankers Acceptance No. ▇▇▇▇▇▇▇▇(b)
KEYBANK NATIONAL ASSOCIATION
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Amount Date Due Reference No.
------ -------- -------------
$49,855.00 Letter of Credit No. NIL 994694
$23,250.00 Letter of Credit No. NIL 994693
Contingent Payable
$51,907.14 Due 1/29/00 ▇▇▇▇ of Exchange for Documents
accepted No. ICE 71654
65
67
KeyBank National Association/Brookwood Companies Incorporated, et al.
Schedule 4.22
Compliance with Laws
Environmental Matters
1. Notice of Violation #R10-177. ▇▇▇▇▇▇ Industries, Inc. ("▇▇▇▇▇▇") is
presently the subject of a Notice of Violation issued by the Rhode Island
Department of Environmental Management for wastewater treatment violations.
▇▇▇▇▇▇ is diligently pursuing the terms and conditions of a Consent Agreement
entered into to settle the Notice of Violation and order by way of adhering to
the modified order of Approval dated July 21, 1997.
2. The Rose Hill Superfund site in South Kingstown, Rhode Island names
▇▇▇▇▇▇'▇ predecessor, ▇▇▇▇▇▇ Piece and Dye, as a Potentially Responsible Party.
▇▇▇▇▇▇ Industries, Inc. (a Delaware corporation) may be a potential party in the
event the United States Government, State or other Potentially Responsible
parties choose to bring ▇▇▇▇▇▇ in as a successor in interest.
3. The Department of Health ("DOH") has issued a Notice of Violation
for drinking water contamination. The ▇▇▇▇▇▇ facility and a small number of
private homes supplied by the ▇▇▇▇▇▇ ▇▇▇▇▇ must use bottled water. ▇▇▇▇▇▇ is
complying with this request. The long-term resolution to this problem remains
open.
4. Amended Letter of Responsibility, Case No. 99-021, dated September
20, 1999. Brookwood Companies, Inc. d/b/a ▇▇▇▇▇▇ industries received an amended
letter of Responsibility from the Rhode Island Department of Environmental
Management dated September 20, 1999 alleging that the corporation is a
"responsible party" under the rules and regulation for the investigation or
remediation of hazardous materials. This Letter of Responsibility also requires
the company to undertake certain investigative studies at the site located at
▇▇▇▇▇▇▇ Avenue, Charlestown, Rhode Island. The corporation is complying with
this request and has engaged environmental consultants to that end.
5. Rhode Island Department of Health Notice of Violation. ▇▇▇▇▇▇
received a February 16, 1999 Notice of Violation from the Rhode Island
Department of Health for the property at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in Richmond, Rhode
Island based on the presence of lead exposure hazards disclosed during the
January 18, 1999 inspection. ▇▇▇▇▇▇ is diligently pursuing compliance and has
been in contact with the Department of Health on a periodic basis. ▇▇▇▇▇▇ is
considering demolition of the subject property, which would obviate the need to
do the work requested in the Notice of Violation.
6. OSHA has investigated an accident on November 11, 1999 and will
probably issue a citation. It is expected that any possible fine will not exceed
$10,000.
66
68
KeyBank National Association/Brookwood Companies Incorporated, et al.
Schedule 4.23
Contingent Liabilities
See Schedule 4.21 Indebtedness
67
69
KeyBank National Association/Brookwood Companies Incorporated, et al.
Schedule 4.24
Bonds, Indemnities
None
68
70
KeyBank National Association/Brookwood Companies Incorporated, et al.
Schedule 4.25
Intellectual Property
Trademark
---------
ECO-KOTE Reg. No. 1,899,506 June 13, 1995
CYCLED PREMIER Reg. No. 2,070,551 June 10, 1997
ENVIRO-KOTE Reg. No. 1,960,695 March 5, 1996
STORM-TECH Reg. No. 2,076,074 July 1, 1997
WEATHER TEK Reg. No. 2,074,394 June 24, 1997
HYDRO-TEX Reg. No. 2084932 July 29, 1997
Patent Application pending:
Breathable Waterproof Laminate App. No. 60/099,446
69
71
KeyBank National Association/Brookwood Companies Incorporated, et al.
Schedule 4.26
Leases
LESSOR LEASED ITEM MONTHLY PAYMENT EXPIRATION
------ ----------- --------------- ----------
Dashal Madison LLC 10th Floor $12,187.02 8/31/06
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇
Peacedale Mill Associates 49,390 Sq. Ft. $16,424.97 12/31/00
Quagletti Family Trust Warehouse Building $7,217.45 4/30/01
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇. (2-year renewal option)
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. Ma Apt. 9H $1,600.00 12/19/00
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇, ▇▇
70
72
KeyBank National Association/Brookwood Companies Incorporated, et al.
Schedule 4.27
Labor Contracts/Relations
Agreement between ▇▇▇▇▇▇ Industries, Inc. and Union of Needletrades, Industrial
and Textile Employees dated February 28, 1998.
71
73
KeyBank National Association/Brookwood Companies Incorporated, et al.
Schedule 4.29
Capitalization
Brookwood Companies Incorporated 100% of issued and outstanding stock is owned by
The Hallwood Group Incorporated, which issued
and outstanding stock is subject to that certain
Intercreditor Agreement of even date by and among
Bank, Bank One N.A., and First Bank Texas ▇.▇.
▇▇▇▇▇▇ Industries, Inc. 100% of the issued and outstanding stock is owned by
Brookwood Companies Incorporated.
Brookwood Laminating, Inc. 100% of the issued and outstanding stock is owned by
Brookwood Companies Incorporated.
72
74
KeyBank National Association/Brookwood Companies Incorporated, et al.
Schedule 4.30
Real Property
Real Property Owned
Town Map Description
Charlestown, RI 029-006 N/S South County Trail
029-007 ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇-▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇-▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ 10E-12 ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (factory)
10E-12-13C Parking Lot and right of way
▇▇▇-▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
10E-12 ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (post office)
10E-10 ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇▇▇▇▇▇▇)
10E-4 ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (13 acres)
▇▇▇-▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (barn)
Real Property Leased
For leased space see Schedule 4.26, Leases
73
75
KeyBank National Association/Brookwood Companies Incorporated, et al.
Schedule 8.3
Liens
1. Factors' Liens as reported by CT Corporation System in Search Reports dated
November 22, 1999, November 23, 1999 and November 29,1999:
CIT Group/Commercial Services , Inc.
CIT Group/Commercial Services, Inc. (as successor in interest to ▇▇▇▇▇▇
Financial, Inc.)
Banc of America Commercial Corporation
2. Federal Tax Lien as reported by CT Corporation System:
August 5, 1991 No. 166775 Internal Revenue Service $5,749.02
Borrower has represented and warranted that the Federal Tax Lien set forth above
shall be discharged and released, with written evidence of such discharge and
release, in form and substance satisfactory to Bank, to be provided to Bank
within thirty (30) days of this Agreement, unless extended in writing by Bank.
74
76
EXHIBIT A
KEYBANK NATIONAL ASSOCIATION
Revolving Credit Note
December ___, 1999
$17,000,000.00 Portland, Maine
The undersigned (collectively, the "Borrower"), for value received,
hereby promise to pay to KEYBANK NATIONAL ASSOCIATION, a national banking
association (the "Bank"), or order, on or before December __, 2002, the
principal amount of SEVENTEEN MILLION DOLLARS ($17,000,000.00) (the "Working
Capital Revolving Credit Limit"), or such lesser amount as may, at the maturity
hereof, whether by declaration, acceleration or otherwise, be the aggregate
unpaid principal amount of all Working Capital Revolving Credit Loans made by
the Bank to the Borrower pursuant to the Loan Agreement referred to below.
This Note shall bear interest (computed on the basis of the actual
number of days elapsed over a 360-day year) on the unpaid principal amount
hereof at the rate or rates per annum specified in the Loan Agreement referred
to below, payable monthly in arrears on the first Business Day of each month
commencing on January 1, 2000 (Except as to LIBOR Loans having an Interest
Period of 180 days, which shall be payable on the last Business Day of every
third month of said Interest Period and on the last day of said Interest Period;
otherwise, LIBOR loans are payable on the last day of the applicable Interest
Period), and at maturity (whether by declaration, acceleration or otherwise);
provided that during the continuance of any Event of Default, at the election of
the Bank, the Borrower shall pay the holder of this Note, on demand by such
holder, interest on the unpaid and overdue principal of and (to the extent
permitted by law) on the unpaid interest on this Note at a rate per annum equal
to the Default Rate; and provided further that in no event shall the amount
contracted for and agreed to be paid by the Borrower as interest on this Note
exceed the highest lawful rate permissible under any law applicable hereto.
This Note evidences a loan or loans under, and is expressly subject to
the provisions of, a certain Revolving Credit Loan and Security Agreement dated
as of December __, 1999 (as amended from time to time, the "Loan Agreement") by
and between the Borrower and the Bank. The holder of this Note is entitled to
the benefits of the Loan Agreement, and to the benefits of the other Loan
Documents referred to therein. Neither this reference to such Loan Agreement nor
any provision thereof shall affect or impair the absolute and unconditional
obligation of the Borrower to pay the principal of and interest on this Note as
otherwise provided herein. All payments of principal of and interest on this
Note shall be payable in immediately available funds at the address of the Bank
set forth in the Loan Agreement without deduction, setoff or counterclaim.
Capitalized terms used herein without definition shall have the respective
meanings ascribed to them in the Loan Agreement.
This Note is subject to prepayment in whole or in part and to
acceleration on Default at the times and in the manner specified in the Loan
Agreement. The maker and all endorsers of this Note hereby waive presentment
demand, notice, protest, notice of intent to accelerate, notice to accelerate,
and all other demands and notices in connection with the delivery, acceptance,
performance or enforcement of this Note. In case of an Event of Default
including, without
75
77
limitation, a Default in the payment of any principal of or interest on this
Note, the Borrower will pay to the Bank such further amount as shall be
sufficient to cover the cost and expense of collection including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
The Borrower hereby grants to Bank, a lien, security interest and right
of set off as security for all liabilities and obligations to Bank, whether now
existing or hereafter arising, upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Bank or any entity under the control of KeyCorp, or in
transit to any of them. At any time that an Event of Default exists, without
demand or notice, Bank may set off the same or any part thereof and apply the
same to any liability or obligation of the Borrower and any guarantor even
though unmatured and regardless of the adequacy of any other collateral securing
the Loan. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO
EXERCISING ITS RIGHT OF SET OFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF THE BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED.
This Note shall be construed in accordance with and governed by the
internal laws of the State of Maine (without giving effect to conflicts of laws
principles) and is executed as a sealed instrument as of the date first above
written.
WITNESS: BROOKWOOD COMPANIES
INCORPORATED
By:
---------------------------- -----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President Finance
Chief Financial Officer
WITNESS:
▇▇▇▇▇▇ INDUSTRIES, INC.
By:
---------------------------- -----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer and Secretary
WITNESS:
BROOKWOOD LAMINATING, INC.
By:
---------------------------- -----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer and Secretary
76
78
EXHIBIT B
KEYBANK NATIONAL ASSOCIATION
Revolving Credit Note
[date]
$[amount] Portland, Maine
The undersigned (collectively, the "Borrower"), for value received,
hereby promise to pay to KEYBANK NATIONAL ASSOCIATION, a national banking
association (the "Bank"), or order, on or before ______________, a maturity date
five years from the date hereof, the principal amount of ____________ DOLLARS
($___________.00), or such lesser amount as may, at the maturity hereof, whether
by declaration, acceleration or otherwise, be the aggregate unpaid principal
amount of the Equipment Revolving Credit Loan made by the Bank to the Borrower
pursuant to the Loan Agreement referred to below.
This Note shall bear interest (computed on the basis of the actual
number of days elapsed over a 360-day year) on the unpaid principal amount
hereof at the rate or rates per annum specified in the Loan Agreement referred
to below. Commencing on _________________, and on the 1st Business Day of each
month thereafter, Borrower agrees to pay to Bank fixed monthly payments of
principal, based upon a standard five-year amortization schedule, in the amount
of $____________, plus accrued interest, until and including the maturity
(whether by declaration, acceleration or otherwise). During the continuance of
any Event of Default, at the election of the Bank, the Borrower shall pay the
holder of this Note on demand by such holder, interest on the unpaid and overdue
principal of and (to the extent permitted by law) on the unpaid interest on this
Note at a rate per annum equal to the Default Rate; and provided further that in
no event shall the amount contracted for and agreed to be paid by the Borrower
as interest on this Note exceed the highest lawful rate permissible under any
law applicable hereto.
This Note evidences a loan or loans under, and is expressly subject to
the provisions of, a certain Revolving Credit Loan and Security Agreement dated
as of December __, 1999 (as amended from time to time, the "Loan Agreement") by
and between the Borrower and the Bank. The holder of this Note is entitled to
the benefits of the Loan Agreement, and to the benefits of the other Loan
Documents referred to therein. Neither this reference or such Loan Agreement nor
any provision thereof shall affect or impair the absolute and unconditional
obligation of the Borrower to pay the principal of and interest on this Note as
otherwise provided herein. All payments of principal of and interest on this
Note shall be payable in immediately available funds at the address of the Bank
set forth in the Loan Agreement without deduction, setoff or counterclaim.
Capitalized terms used herein without definition shall have the respective
meanings ascribed to them in the Loan Agreement.
This Note is subject to prepayment in whole or in part and to
acceleration on Default at times and in the manner specified in the Loan
Agreement. The maker and all endorsers of this Note hereby waive presentment,
demand, notice, protest, notice of intent to accelerate, notice to accelerate,
and all other demands and notices in connection with the delivery, acceptance,
77
79
performance or enforcement of this Note. In case of an Event of Default
including, without limitation, a Default in the payment of any principal of or
interest on this Note, the Borrower will pay to the Bank such further amount as
shall be sufficient to cover the cost and expense of collection including,
without limitation, reasonable attorneys' fees, expenses and disbursements.
The Borrower hereby grants to Bank, a lien, security interest and right
of set off as security for all liabilities and obligations to Bank, whether now
existing or hereafter arising, upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Bank or any entity under the control of KeyCorp, or in
transit to any of them. At any time that an Event of Default exists, without
demand or notice, Bank may set off the same or any part thereof and apply the
same to any liability or obligation of the Borrower and any guarantor even
though unmatured and regardless of the adequacy of any other collateral securing
the Loan. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO
EXERCISING ITS RIGHT OF SET OFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF THE BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED.
This Note shall be construed in accordance with and governed by the
internal laws of the State of Maine (without giving effect to conflicts of laws
principles) and is executed as a sealed instrument as of the date first above
written.
WITNESS:
BROOKWOOD COMPANIES INCORPORATED
By:
---------------------------- -----------------------------------
Name:
Title:
WITNESS:
▇▇▇▇▇▇ INDUSTRIES, INC.
By:
---------------------------- -----------------------------------
Name:
Title:
WITNESS:
BROOKWOOD LAMINATING, INC.
By:
---------------------------- -----------------------------------
Name:
Title:
78
80
EXHIBIT C
KEYBANK NATIONAL ASSOCIATION
Revolving Credit Note
December __, 1999
$2,000,000.00 Portland, Maine
The undersigned (collectively, the "Borrower"), for value received,
hereby promise to pay to KEYBANK NATIONAL ASSOCIATION, a national banking
association (the "Bank"), or order, on or before December __, 2002, the
principal amount of TWO MILLION DOLLARS ($2,000,000.00) (the "Acquisition
Revolving Credit Limit"), or such lesser amount as may, at the maturity hereof,
whether by declaration, acceleration or otherwise, be the aggregate unpaid
principal amount of all Acquisition Revolving Credit Loans made by the Bank to
the Borrower pursuant to the Loan Agreement referred to below.
This Note shall bear interest (computed on the basis of the actual
number of days elapsed over a 360-day year) on the unpaid principal amount
hereof at the rate or rates per annum specified in the Loan Agreement referred
to below, payable monthly in arrears on the first Business Day of each month
commencing on January 1, 2000 (Except as to LIBOR Loans having an Interest
Period of 180 days, which shall be payable on the last Business Day of every
third month of said Interest Period and on the last day of said Interest Period;
otherwise, LIBOR loans are payable on the last day of the applicable Interest
Period), and at maturity (whether by declaration, acceleration or otherwise);
provided that during the continuance of any Event of Default, at the election of
the Bank, the Borrower shall pay the holder of this Note, on demand by such
holder, interest on the unpaid and overdue principal of and (to the extent
permitted by law) on the unpaid interest on this Note at a rate per annum equal
to the Default Rate; and provided further that in no event shall the amount
contracted for and agreed to be paid by the Borrower as interest on this Note
exceed the highest lawful rate permissible under any law applicable hereto.
This Note evidences a loan or loans under, and is expressly subject to
the provisions of, a certain Revolving Credit Loan and Security Agreement dated
as of December __, 1999 (as amended from time to time, the "Loan Agreement") by
and between the Borrower and the Bank. The holder of this Note is entitled to
the benefits of the Loan Agreement, and to the benefits of the other Loan
Documents referred to therein. Neither this reference to such Loan Agreement nor
any provision thereof shall affect or impair the absolute and unconditional
obligation of the Borrower to pay the principal of and interest on this Note as
otherwise provided herein. All payments of principal of and interest on this
Note shall be payable in immediately available funds at the address of the Bank
set forth in the Loan Agreement without deduction, setoff or counterclaim.
Capitalized terms used herein without definition shall have the respective
meanings ascribed to them in the Loan Agreement.
This Note is subject to prepayment in whole or in part and to
acceleration on Default at the times and in the manner specified in the Loan
Agreement. The maker and all endorsers of this Note hereby waive presentment
demand, notice, protest, notice of intent to accelerate, notice to accelerate,
and all other demands and notices in connection with the delivery, acceptance,
79
81
performance or enforcement of this Note. In case of an Event of Default
including, without limitation, a Default in the payment of any principal of or
interest on this Note, the Borrower will pay to the Bank such further amount as
shall be sufficient to cover the cost and expense of collection including,
without limitation, reasonable attorneys' fees, expenses and disbursements.
The Borrower hereby grants to Bank, a lien, security interest and right
of set off as security for all liabilities and obligations to Bank, whether now
existing or hereafter arising, upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Bank or any entity under the control of KeyCorp, or in
transit to any of them. At any time that an Event of Default exists, without
demand or notice, Bank may set off the same or any part thereof and apply the
same to any liability or obligation of the Borrower and any guarantor even
though unmatured and regardless of the adequacy of any other collateral securing
the Loan. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO
EXERCISING ITS RIGHT OF SET OFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF THE BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED.
This Note shall be construed in accordance with and governed by the
internal laws of the State of Maine (without giving effect to conflicts of laws
principles) and is executed as a sealed instrument as of the date first above
written.
WITNESS:
BROOKWOOD COMPANIES INCORPORATED
By:
---------------------------- -----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President Finance
Chief Financial Officer
WITNESS:
▇▇▇▇▇▇ INDUSTRIES, INC.
By:
---------------------------- -----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer and Secretary
WITNESS:
BROOKWOOD LAMINATING, INC.
By:
---------------------------- -----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer and Secretary
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82
EXHIBIT D
KEYBANK NATIONAL ASSOCIATION
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
FAX (▇▇▇) ▇▇▇-▇▇▇▇
BORROWING BASE CERTIFICATE
In furtherance of the requirements of the Revolving Credit Loan and Security
Agreement dated as of December __, 1999 ("Agreement") by and among Brookwood
Companies Incorporated, ▇▇▇▇▇▇ Industries, Inc., Brookwood Laminating, Inc. and
KeyBank National Association, the undersigned certifies that, as of the close of
business on _______________, the following computations are true and correct:
Borrowing Base is defined in the Agreement.
Maximum Credit Available: $17,000,000
WORKING CAPITAL REVOLVER:
-------------------------
AMOUNT PERCENT TOTAL
DUE FROM FACTORS
BROOKWOOD COMPANIES
------------------
UZZI
------------------
TOTAL 90% $
------------------ ------------------
ELIGIBLE RECEIVABLES (<60
DAYS)
BROOKWOOD COMPANIES 80% $
------------------ ------------------
UZZI NONE
FINISHED ROLL GOODS
INVENTORY 50% $
------------------ ------------------
ORDERLY LIQUIDATION VALUE
OF 70% $
------------------ ------------------
EQUIPMENT PER APPRAISAL
GROSS W/C REVOLVER
AVAILABILITY $
----------------------------
LESS:
ACQUISITION REVOLVER OUTSTANDING $
----------------------------
(RESERVE AS CALCULATED BELOW)
81
83
NET W/C REVOLVER AVAILABILITY $
----------------------------
ACQUISITION REVOLVER:
---------------------
INITIAL DRAW AMOUNT FOR PURCHASE (UP TO $1,000,000) $
-----------------
START UP COSTS FOR EACH STORE: AMOUNT PERCENT ACTUAL DRAW
AMOUNT
#1 50% $
------------------ ------------------ -----------------
#2 50% $
------------------ ------------------ -----------------
#3 50% $
------------------ ------------------ -----------------
#4 50% $
------------------ ------------------ -----------------
ACQUISITION REVOLVER OUTSTANDING: $
---------------------
The undersigned, authorized to act and acting for and on behalf of Brookwood
Companies Incorporated hereby certifies that the foregoing Borrowing Base
Certificate is true and correct to the best of his/her knowledge.
Date: Authorized Signature:
------------------- -----------------------
Name:
Title: Vice President Finance and Chief
Financial Officer
Brookwood Companies Incorporated
The undersigned, authorized to act and acting for and on behalf of ▇▇▇▇▇▇
Industries, Inc. hereby certifies that the foregoing Borrowing Base Certificate
is true and correct to the best of his/her knowledge.
Date: Authorized Signature:
------------------- -----------------------
Name:
Title: Treasurer and Secretary
▇▇▇▇▇▇ Industries, Inc.
The undersigned, authorized to act and acting for and on behalf of Brookwood
Laminating, Inc. hereby certifies that the foregoing Borrowing Base Certificate
is true and correct to the best of his/her knowledge.
Date: Authorized Signature:
------------------- -----------------------
Name:
Title: Treasurer and Secretary
Brookwood Laminating, Inc.
82
84
EXHIBIT E
BROOKWOOD COMPANIES INCORPORATED
▇▇▇▇▇▇ INDUSTRIES, INC.
BROOKWOOD LAMINATING, INC.
Compliance Certificate
The undersigned, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President and Chief Financial
Officer of Brookwood Companies Incorporated, the Treasurer and Secretary of
▇▇▇▇▇▇ Industries, Inc., and the Treasurer and Secretary of Brookwood
Laminating, Inc. (the "Borrower"), hereby certifies on behalf of the Borrower as
of the date hereof the following:
1. No Defaults. I have read a copy of the Revolving Credit Loan and
Security Agreement dated December 22, 1999 (the "Loan Agreement")
between the Borrower and KeyBank National Association ("Bank"). Terms
used herein and not otherwise defined herein shall have the meanings
set forth in Section I of the Loan Agreement. The Borrower is not in
default in the performance or observance of any of the covenants, terms
or provisions of the Loan Agreement or any of the other Loan Documents.
Attached hereto as Appendix I are all relevant calculations needed to
determine whether the Borrower is in compliance with Section 9 of the
Loan Agreement.
2. No Material Changes, Etc. Except as disclosed on Appendix II hereto,
since ________________ [Date of most recent financial statements
furnished to the Bank], there have occurred no materially adverse
changes in the financial condition or business of the Borrower as shown
on or reflected in the balance sheet of the Borrower as at such date
other than (a) changes in the ordinary course of business that have not
had any materially adverse effect, either individually or in the
aggregate, on the business or financial condition of the Borrower, and
(b) changes resulting from the making of the Loan and the transactions
contemplated by the Loan Agreement.
3. No Materially Adverse Contracts, Etc. The Borrower is not subject to
any charter, organizational, or other legal restriction, or any
judgment, decree, order, rule or regulation, that has or is expected,
in the reasonable judgment of the Borrower's members, managers,
officers and directors, in the future to have a materially adverse
effect on the business, assets or financial condition of the Borrower.
The Borrower is not a party to any contract or ,agreement that has or
is expected, in the reasonable judgment of the Borrower's officers and
directors, to have any materially adverse effect on the business,
assets of financial condition of the Borrower.
83
85
Date: BROOKWOOD COMPANIES
INCORPORATED
By:
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President Finance
Chief Financial Officer
▇▇▇▇▇▇ INDUSTRIES, INC.
By:
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer and Secretary
BROOKWOOD LAMINATING, INC.
By:
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer and Secretary
84
86
APPENDIX I
BROOKWOOD COMPANIES INCORPORATED
▇▇▇▇▇▇ INDUSTRIES, INC.
BROOKWOOD LAMINATING, INC.
LENDING REVOLVING CREDIT LOAN AND SECURITY AGREEMENT (DATED AS OF DECEMBER
__, 1999) WITH KEYBANK, N.A.
COMPLIANCE CERTIFICATE
For the Period Ended: __________
All covenants applying to Brookwood Companies Incorporated, Inc. and its
subsidiaries are on a fully consolidated basis.
QUARTERLY CURRENT RATIO
Current Assets
---------------
DIVIDED BY:
Current Liabilities*
---------------
*Revolving Lines treated as current
liability. =
---------------
MINIMUM REQUIRED: 1.40X COMPLIANCE: ___Y ___N
QUARTERLY TOTAL FUNDED DEBT / TOTAL CAPITALIZATION
Total Liabilities
---------------
Plus:
All Letters of Credit +
---------------
Less:
Trade Accounts Payable -
---------------
Accrued Expenses -
---------------
TOTAL FUNDED DEBT (A) =
---------------
DIVIDED BY:
Total Funded Debt (as defined above)
---------------
Plus:
Shareholders Equity +
---------------
TOTAL CAPITALIZATION (B) =
---------------
85
87
A / B =
---------------
MAXIMUM ALLOWED 45% COMPLIANCE: ___Y___N
QUARTERLY EBITDA / TOTAL FIXED CHARGES (TRAILING 12 MONTH BASIS)
4th Previous Q 3rd Previous Q 2nd Previous Q Current Q Total
Net Income
-------------- -------------- -------------- -------------- --------------
Plus:
Interest +
-------------- -------------- -------------- -------------- --------------
Income Taxes +
-------------- -------------- -------------- -------------- --------------
Depreciation +
-------------- -------------- -------------- -------------- --------------
EBITDA (C) =
--------------
DIVIDED BY:
4th Previous Q 3rd Previous Q 2nd Previous Q Current Q Total
Interest
-------------- -------------- -------------- -------------- --------------
Plus:
Required
Principal +
-------------- -------------- -------------- -------------- --------------
Cash CAPEX +
-------------- -------------- -------------- -------------- --------------
Dividends* +
-------------- -------------- -------------- -------------- --------------
Income Taxes* +
-------------- -------------- -------------- -------------- --------------
TOTAL FIXED CHARGES (D) =
--------------
C / D =
--------------
MINIMUM REQUIRED WITHOUT UZZI ACQUISITION 1.10X COMPLIANCE: ___Y ___N
MINIMUM REQUIRED WITH UZZI ACQUISITION 1.25X COMPLIANCE: ___Y ___N
*Payment of dividends and/or federal income tax liabilities to Hallwood will be
allowed only to the extent that said cash outflows do not constitute a default
of the quarterly Fixed Charge covenant or TFD/TC ratio.
86
88
QUARTERLY PRICING TIER
Total Funded Debt (as calculated above--A)
---------------
DIVIDED BY:
EBITDA (as calculated above--C)
---------------
TOTAL FUNDED DEBT / EBITDA =
---------------
TIER TFD / EBITDA FACILITY #1 FACILITY #2 AND #3
I > = 3.00x LIB + 2.50% LIB + 2.75%
II > = 2.50x and < 3.00x LIB + 2.25% LIB + 2.50%
III > = 2.00 and < 2.50x LIB + 2.00% LIB + 2.25%
IV < 2.00x LIB + 1.75% LIB + 2.00%
APPROPRIATE PRICING TIER: _____I _____II _____ III _____ IV
AFFIRMATIONS
1) ACQUISITION OF UZZI IS SUBSTANTIALLY COMPLETE AS OF __________.
COMPLIANCE: ___ Y ___ N
2) INJECTION OF $500,000 MADE BY THE HALLWOOD GROUP, INC. AT TIME OF ACQUISITION
OF UZZI. COMPLIANCE: ___ Y ___ N
3) INJECTION OF $500,000 MADE BY THE HALLWOOD GROUP, INC. DURING FIRST YEAR
AFTER ACQUISITION OF UZZI. COMPLIANCE: ___ Y ___ N
4) LOANS OR ADVANCES TO THE HALLWOOD GROUP, INC. (PARENT CORPORATION) ARE
EXPRESSLY FORBIDDEN WITHOUT THE PRIOR CONSENT IN WRITING OF KEYBANK, N.A. ANY
UPSTREAM PAYMENTS OF DIVIDENDS AND/OR CALCULATED FEDERAL INCOME TAX LIABILITY
WILL BE LIMITED SUCH THAT SAID PAYMENTS DO NOT CREATE A DEFAULT OF ANY FINANCIAL
COVENANT BETWEEN BROOKWOOD COMPANIES INCORPORATED, INC. AND THE BANK.
COMPLIANCE: ___ Y ____ N
87
89
--------------------------------------------------------------------------------
REASONS FOR COVENANT DEFAULTS AND MANAGEMENT'S REMEDIES TO CURE:
--------------------------------------------------------------------------------
THE UNDERSIGNED CERTIFIES THAT THE INFORMATION PRESENTED ABOVE IS CORRECT.
DATE
------------------------ ------------------------------
SIGNATURE
NAME:
TITLE: VICE PRESIDENT FINANCE
CHIEF FINANCIAL OFFICER
BROOKWOOD COMPANIES INCORPORATED
DATE
------------------------ ------------------------------
SIGNATURE
NAME:
TITLE: TREASURER AND SECRETARY
▇▇▇▇▇▇ INDUSTRIES, INC.
DATE
------------------------ ------------------------------
SIGNATURE
NAME:
TITLE: TREASURER AND SECRETARY
BROOKWOOD LAMINATING, INC.
▇▇
▇▇
▇▇▇▇▇▇▇▇ ▇▇
▇▇
▇▇
Exhibit F
Certificate
Reference is made to the Revolving Credit Loan and Security Agreement,
dated as of December 22, 1999 ("Loan Agreement") by and among Brookwood
Companies Incorporated, ▇▇▇▇▇▇ Industries, Inc. ("▇▇▇▇▇▇"), Brookwood
Laminating, Inc. ("Laminating" and together with Brookwood and ▇▇▇▇▇▇,
collectively referred to herein as "Borrower"), and KeyBank National Association
("Bank").
This Certificate is being delivered to the Bank pursuant to Section
2.3.3(a)(4) of the Loan Agreement. Terms not otherwise defined herein have the
meaning assigned in the Loan Agreement.
The undersigned, _________________________, the duly qualified and
elected ______________ of Borrower and authorized representative of Borrower,
hereby certifies on behalf of Borrower that, to his/her knowledge:
(i) The representations and warranties of Borrower set forth
in the Loan Agreement are true and complete in all material respects as
though each such representation and warranty were made on and as of the
date hereof; there exists no Default or Event of Default;
(ii) The Purchase Agreements, and the transactions
contemplated thereunder, have been duly executed, delivered and
performed in accordance with their terms by the parties thereto in all
respects, including the fulfillment of all conditions precedent as may
be set forth therein and giving effect to the terms of the Purchase
Agreements; and
(iii) Borrower has acquired and has good and marketable title
to the Purchased Assets, free and clear of all claims, liens, pledges
and encumbrances of any kind, except as expressly imposed by, or
permitted under the Loan Agreement; and
(iv) All actions and proceedings required by the Purchase
Agreements, applicable law and regulation have been taken and the
transactions required thereunder have been duly and validly taken and
consummated; and
(v) No court of competent jurisdiction has issued any
injunction, restraining order or other order which would prohibit
consummation of the transactions described in the Purchase Agreements
and no governmental or other action or proceeding has been threatened
or commenced, seeking any injunction, restraining order or other order
which seeks to void or otherwise modify the transactions described in
the Purchase Agreements; and
(vi) Attached hereto as Exhibit A are true, correct and
complete copies of the Purchase Agreements and all schedules thereto;
and
90
92
(vii) The undersigned is authorized to sign this Certificate
by each of the Borrower.
Dated: BROOKWOOD COMPANIES INCORPORATED
-----------------------
By:
------------------------------
Name:
Its:
▇▇▇▇▇▇ INDUSTRIES, INC.
By:
------------------------------
Name:
Its:
BROOKWOOD LAMINATING, INC.
By:
------------------------------
Name:
Its:
91
93
KEYBANK NATIONAL ASSOCIATION
Revolving Credit Note
December ___, 1999
$17,000,000.00 Portland, Maine
The undersigned (collectively, the "Borrower"), for value received,
hereby promise to pay to KEYBANK NATIONAL ASSOCIATION, a national banking
association (the "Bank"), or order, on or before December __, 2002, the
principal amount of SEVENTEEN MILLION DOLLARS ($17,000,000.00) (the "Working
Capital Revolving Credit Limit"), or such lesser amount as may, at the maturity
hereof, whether by declaration, acceleration or otherwise, be the aggregate
unpaid principal amount of all Working Capital Revolving Credit Loans made by
the Bank to the Borrower pursuant to the Loan Agreement referred to below.
This Note shall bear interest (computed on the basis of the actual
number of days elapsed over a 360-day year) on the unpaid principal amount
hereof at the rate or rates per annum specified in the Loan Agreement referred
to below, payable monthly in arrears on the first Business Day of each month
commencing on January 1, 2000 (Except as to LIBOR Loans having an Interest
Period of 180 days, which shall be payable on the last Business Day of every
third month of said Interest Period and on the last day of said Interest Period;
otherwise, LIBOR loans are payable on the last day of the applicable Interest
Period), and at maturity (whether by declaration, acceleration or otherwise);
provided that during the continuance of any Event of Default, at the election of
the Bank, the Borrower shall pay the holder of this Note, on demand by such
holder, interest on the unpaid and overdue principal of and (to the extent
permitted by law) on the unpaid interest on this Note at a rate per annum equal
to the Default Rate; and provided further that in no event shall the amount
contracted for and agreed to be paid by the Borrower as interest on this Note
exceed the highest lawful rate permissible under any law applicable hereto.
This Note evidences a loan or loans under, and is expressly subject to
the provisions of, a certain Revolving Credit Loan and Security Agreement dated
as of December __, 1999 (as amended from time to time, the "Loan Agreement") by
and between the Borrower and the Bank. The holder of this Note is entitled to
the benefits of the Loan Agreement, and to the benefits of the other Loan
Documents referred to therein. Neither this reference to such Loan Agreement nor
any provision thereof shall affect or impair the absolute and unconditional
obligation of the Borrower to pay the principal of and interest on this Note as
otherwise provided herein. All payments of principal of and interest on this
Note shall be payable in immediately available funds at the address of the Bank
set forth in the Loan Agreement without deduction, setoff or counterclaim.
Capitalized terms used herein without definition shall have the respective
meanings ascribed to them in the Loan Agreement.
This Note is subject to prepayment in whole or in part and to
acceleration on Default at the times and in the manner specified in the Loan
Agreement. The maker and all endorsers of this Note hereby waive presentment
demand, notice, protest, notice of intent to accelerate, notice to accelerate,
and all other demands and notices in connection with the delivery, acceptance,
performance or enforcement of this Note. In case of an Event of Default
including, without limitation, a Default in the payment of any principal of or
interest on this Note, the Borrower will
94
pay to the Bank such further amount as shall be sufficient to cover the cost and
expense of collection including, without limitation, reasonable attorneys' fees,
expenses and disbursements.
The Borrower hereby grants to Bank, a lien, security interest and right
of set off as security for all liabilities and obligations to Bank, whether now
existing or hereafter arising, upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Bank or any entity under the control of KeyCorp, or in
transit to any of them. At any time that an Event of Default exists, without
demand or notice, Bank may set off the same or any part thereof and apply the
same to any liability or obligation of the Borrower and any guarantor even
though unmatured and regardless of the adequacy of any other collateral securing
the Loan. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO
EXERCISING ITS RIGHT OF SET OFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF THE BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED.
This Note shall be construed in accordance with and governed by the
internal laws of the State of Maine (without giving effect to conflicts of laws
principles) and is executed as a sealed instrument as of the date first above
written.
WITNESS:
BROOKWOOD COMPANIES INCORPORATED
By:
---------------------------- -------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President Finance
Chief Financial Officer
WITNESS:
▇▇▇▇▇▇ INDUSTRIES, INC.
By:
---------------------------- -------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer and Secretary
WITNESS:
BROOKWOOD LAMINATING, INC.
By:
---------------------------- -------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer and Secretary
2
95
KEYBANK NATIONAL ASSOCIATION
Revolving Credit Note
[date]
$[amount] Portland, Maine
The undersigned (collectively, the "Borrower"), for value received, hereby
promise to pay to KEYBANK NATIONAL ASSOCIATION, a national banking association
(the "Bank"), or order, on or before ______________, a maturity date five years
from the date hereof, the principal amount of ____________ DOLLARS
($___________.00), or such lesser amount as may, at the maturity hereof, whether
by declaration, acceleration or otherwise, be the aggregate unpaid principal
amount of the Equipment Revolving Credit Loan made by the Bank to the Borrower
pursuant to the Loan Agreement referred to below.
This Note shall bear interest (computed on the basis of the actual number of
days elapsed over a 360 -day year) on the unpaid principal amount hereof at the
rate or rates per annum specified in the Loan Agreement referred to below.
Commencing on _________________, and on the 1st Business Day of each month
thereafter, Borrower agrees to pay to Bank fixed monthly payments of principal,
based upon a standard five-year amortization schedule, in the amount of
$____________, plus accrued interest, until and including the maturity (whether
by declaration, acceleration or otherwise). During the continuance of any Event
of Default, at the election of the Bank, the Borrower shall pay the holder of
this Note on demand by such holder, interest on the unpaid and overdue principal
of and (to the extent permitted by law) on the unpaid interest on this Note at a
rate per annum equal to the Default Rate; and provided further that in no event
shall the amount contracted for and agreed to be paid by the Borrower as
interest on this Note exceed the highest lawful rate permissible under any law
applicable hereto.
This Note evidences a loan or loans under, and is expressly subject to the
provisions of, a certain Revolving Credit Loan and Security Agreement dated as
of December __, 1999 (as amended from time to time, the "Loan Agreement") by and
between the Borrower and the Bank. The holder of this Note is entitled to the
benefits of the Loan Agreement, and to the benefits of the other Loan Documents
referred to therein. Neither this reference or such Loan Agreement nor any
provision thereof shall affect or impair the absolute and unconditional
obligation of the Borrower to pay the principal of and interest on this Note as
otherwise provided herein. All payments of principal of and interest on this
Note shall be payable in immediately available funds at the address of the Bank
set forth in the Loan Agreement without deduction, setoff or counterclaim.
Capitalized terms used herein without definition shall have the respective
meanings ascribed to them in the Loan Agreement.
This Note is subject to prepayment in whole or in part and to acceleration
on Default at times and in the manner specified in the Loan Agreement. The maker
and all endorsers of this Note hereby waive presentment, demand, notice,
protest, notice of intent to accelerate, notice to accelerate, and all other
demands and notices in connection with the delivery, acceptance, performance or
enforcement of this Note. In case of an Event of Default including, without
limitation, a Default in the payment of any principal of or interest on this
Note, the Borrower will
96
pay to the Bank such further amount as shall be sufficient to cover the cost and
expense of collection including, without limitation, reasonable attorneys' fees,
expenses and disbursements.
The Borrower hereby grants to Bank, a lien, security interest and right of
set off as security for all liabilities and obligations to Bank, whether now
existing or hereafter arising, upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Bank or any entity under the control of KeyCorp, or in
transit to any of them. At any time that an Event of Default exists, without
demand or notice, Bank may set off the same or any part thereof and apply the
same to any liability or obligation of the Borrower and any guarantor even
though unmatured and regardless of the adequacy of any other collateral securing
the Loan. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO
EXERCISING ITS RIGHT OF SET OFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF THE BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED.
This Note shall be construed in accordance with and governed by the internal
laws of the State of Maine (without giving effect to conflicts of laws
principles) and is executed as a sealed instrument as of the date first above
written.
WITNESS:
BROOKWOOD COMPANIES INCORPORATED
By:
----------------------------- ---------------------------------
Name:
Title:
WITNESS:
▇▇▇▇▇▇ INDUSTRIES, INC.
By:
----------------------------- ---------------------------------
Name:
Title:
WITNESS:
BROOKWOOD LAMINATING, INC.
By:
----------------------------- ---------------------------------
Name:
Title:
2
97
KEYBANK NATIONAL ASSOCIATION
Revolving Credit Note
December __, 1999
$2,000,000.00 Portland, Maine
The undersigned (collectively, the "Borrower"), for value received,
hereby promise to pay to KEYBANK NATIONAL ASSOCIATION, a national banking
association (the "Bank"), or order, on or before December __, 2002, the
principal amount of TWO MILLION DOLLARS ($2,000,000.00) (the "Acquisition
Revolving Credit Limit"), or such lesser amount as may, at the maturity hereof,
whether by declaration, acceleration or otherwise, be the aggregate unpaid
principal amount of all Acquisition Revolving Credit Loans made by the Bank to
the Borrower pursuant to the Loan Agreement referred to below.
This Note shall bear interest (computed on the basis of the actual
number of days elapsed over a 360-day year) on the unpaid principal amount
hereof at the rate or rates per annum specified in the Loan Agreement referred
to below, payable monthly in arrears on the first Business Day of each month
commencing on January 1, 2000 (Except as to LIBOR Loans having an Interest
Period of 180 days, which shall be payable on the last Business Day of every
third month of said Interest Period and on the last day of said Interest Period;
otherwise, LIBOR loans are payable on the last day of the applicable Interest
Period), and at maturity (whether by declaration, acceleration or otherwise);
provided that during the continuance of any Event of Default, at the election of
the Bank, the Borrower shall pay the holder of this Note, on demand by such
holder, interest on the unpaid and overdue principal of and (to the extent
permitted by law) on the unpaid interest on this Note at a rate per annum equal
to the Default Rate; and provided further that in no event shall the amount
contracted for and agreed to be paid by the Borrower as interest on this Note
exceed the highest lawful rate permissible under any law applicable hereto.
This Note evidences a loan or loans under, and is expressly subject to
the provisions of, a certain Revolving Credit Loan and Security Agreement dated
as of December __, 1999 (as amended from time to time, the "Loan Agreement") by
and between the Borrower and the Bank. The holder of this Note is entitled to
the benefits of the Loan Agreement, and to the benefits of the other Loan
Documents referred to therein. Neither this reference to such Loan Agreement nor
any provision thereof shall affect or impair the absolute and unconditional
obligation of the Borrower to pay the principal of and interest on this Note as
otherwise provided herein. All payments of principal of and interest on this
Note shall be payable in immediately available funds at the address of the Bank
set forth in the Loan Agreement without deduction, setoff or counterclaim.
Capitalized terms used herein without definition shall have the respective
meanings ascribed to them in the Loan Agreement.
This Note is subject to prepayment in whole or in part and to
acceleration on Default at the times and in the manner specified in the Loan
Agreement. The maker and all endorsers of this Note hereby waive presentment
demand, notice, protest, notice of intent to accelerate, notice to accelerate,
and all other demands and notices in connection with the delivery, acceptance,
performance or enforcement of this Note. In case of an Event of Default
including, without
98
limitation, a Default in the payment of any principal of or interest on this
Note, the Borrower will pay to the Bank such further amount as shall be
sufficient to cover the cost and expense of collection including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
The Borrower hereby grants to Bank, a lien, security interest and right
of set off as security for all liabilities and obligations to Bank, whether now
existing or hereafter arising, upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Bank or any entity under the control of KeyCorp, or in
transit to any of them. At any time that an Event of Default exists, without
demand or notice, Bank may set off the same or any part thereof and apply the
same to any liability or obligation of the Borrower and any guarantor even
though unmatured and regardless of the adequacy of any other collateral securing
the Loan. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO
EXERCISING ITS RIGHT OF SET OFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF THE BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED.
This Note shall be construed in accordance with and governed by the
internal laws of the State of Maine (without giving effect to conflicts of laws
principles) and is executed as a sealed instrument as of the date first above
written.
WITNESS:
BROOKWOOD COMPANIES INCORPORATED
By:
------------------------------ ---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President Finance
Chief Financial Officer
WITNESS:
▇▇▇▇▇▇ INDUSTRIES, INC.
By:
------------------------------ ---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer and Secretary
WITNESS:
BROOKWOOD LAMINATING, INC.
By:
------------------------------ ---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer and Secretary
2
99
STOCK PLEDGE AND SECURITY AGREEMENT
This Stock Pledge and Security Agreement ("Agreement") made by
Brookwood Companies Incorporated, a Delaware corporation with a principal place
of business at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Pledgor"),
in favor of KeyBank National Association, a national banking association having
a place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("Pledgee").
RECITALS:
The following facts set forth the background to this Agreement:
A. The Pledgor is owner of 3,000 shares of the outstanding
common stock of ▇▇▇▇▇▇ Industries, Inc. (the "Corporation"), a Delaware
corporation, which shares constitute 100% of the total issued and outstanding
common stock of the Corporation.
B. As part of a Revolving Credit Loan and Security Agreement
between Pledgor and Pledgee, inter alia, dated December ___, 1999 ("Loan
Agreement"), the Pledgor has agreed to grant the Pledgee the security interests
hereinafter described.
NOW, THEREFORE, in consideration of the premises, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Pledgor agrees with the Pledgee as follows:
Section 1. Pledge of Stock. In consideration of the Loans from Pledgee
to Pledgor, evidenced by the Notes executed and delivered by Pledgor to Pledgee
in accordance with the terms and conditions of the Loan Agreement, Pledgor
hereby pledges, assigns, grants a security interest in, and delivers to the
Pledgee, at its address specified above, the 3,000 shares of the common stock
of the Corporation owned by the Pledgor as evidenced by Certificate No. 1 in
the Corporation's Stock Register book, which Stock Certificate, accompanied by
instruments of assignment thereof duly executed in blank by the Pledgor, have
been delivered contemporaneously herewith to the Pledgee.
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In the event the Pledgor shall acquire any additional shares of the
capital stock of any class of the Corporation, or of any corporation which is
the successor of the Corporation, or any securities exchangeable for or
convertible into shares of such capital stock of any class of the Corporation,
or of any successor to the Corporation, by purchase, stock dividend,
distribution of capital or otherwise, the Pledgor shall forthwith pledge such
additional shares to the Pledgee under this Agreement (all such stock being
hereinafter collectively referred to as the "Stock" or the "Collateral").
Section 2. Definitions. Unless otherwise defined herein, capitalized
terms used herein without definition shall have the respective meanings
ascribed to them in the Loan Agreement.
Section 3. Security for Obligations. This Agreement and the pledge of
the Collateral hereunder is made with the Pledgee as security for the
Obligations.
Section 4. Liquidation, Recapitalization, Etc. All sums of money and
property paid or distributed in respect of the Stock, whether by dividend or
sums paid upon such a liquidation, dissolution, recapitalization or
reclassification of the Corporation, may be paid or distributed to Pledgor as
long as there is no Event of Default under the Loan Agreement and provided such
payment or distribution does not cause or create an Event of Default;
otherwise, all such payments and distributions which are received by the
Pledgor shall, until paid or delivered to the Pledgee, be held in trust for the
Pledgee as security for the Obligations.
Section 5. Warranty of Title. The Pledgor warrants that Pledgor has
good and marketable title to the Stock described in Section 1 hereof, subject
to no pledges, liens, security interests, charges, options, restrictions or
other encumbrances except (a) such liens as shall be released upon and in
connection with the closing of the Loan Agreement and (b) the security interest
created by this Agreement, and any other agreements executed in connection
herewith, and that Pledgor has full power, authority and legal right to pledge
all of such Stock pursuant to this Agreement. The Pledgor covenants that
Pledgor will defend the Pledgee's rights and security interest in such Stock
against the claims and demands of all persons whomsoever, and
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the Pledgor covenants that Pledgor will have the like title to and right to
pledge any other Collateral hereunder and will likewise defend the Pledgee's
rights and security interest therein.
Section 6. Voting, Etc., Prior to Maturity. Unless and until a Default
shall have occurred and be continuing, the Pledgee shall be entitled to vote
the Stock and to give consents, waivers and ratifications in respect of the
Stock; provided, however, that no vote shall be cast, or consent, waiver or
ratification given or action taken, which would be inconsistent with or violate
any provisions of this Agreement or any instrument or agreement evidencing or
securing any of the Obligations; and provided further that the Pledgee after
Default, which Default is not cured within any applicable grace period, may
cause the Stock to be transferred into Pledgee's own name as collateral
security. All such rights of the Pledgor to vote and give consents, waivers and
ratifications with respect to the Stock shall, at the Pledgee's option, as
evidenced by the Pledgee's notifying Pledgor of such election, cease in case a
Default shall have occurred and be continuing.
Section 7. Remedies. If any Default shall have occurred and be
continuing, the Pledgee shall thereafter have the following rights and remedies
(to the extent permitted by applicable law), in addition to the rights and
remedies of a secured party under the Uniform Commercial Code as adopted in the
State of Maine, all such rights and remedies being cumulative, not exclusive,
and enforceable alternatively, successively or concurrently, at such time or
times as the Pledgee deems expedient:
(a) If the Pledgee so elects and gives notice of such
election to the Pledgor, the Pledgee may vote any or all of the Stock (whether
or not the same shall have been transferred into Pledgee's name or the name of
its nominee or nominees) and give all consents, waivers and ratifications in
respect of the Stock and otherwise act with respect thereto as though it were
the outright owner thereof (the Pledgor hereby irrevocably constituting and
appointing the Pledgee the proxy and attorney-in-fact of the Pledgor, with full
power of substitution, to do so);
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(b) the Pledgee may demand, ▇▇▇ for, collect or make any
compromise or settlement the Pledgee deems suitable in respect of any
Collateral held by it hereunder;
(c) the Pledgee may sell, resell, assign and deliver, or
otherwise dispose of any or all of the Collateral, for cash and/or credit, and
upon such terms, at such place or places and at such time or times and to such
persons, firms, companies or corporations as the Pledgee deems expedient, all
without demand for performance by the Pledgor or any notice or advertisement
whatsoever except as may be required by law; and
(d) the Pledgee may cause all or any part of the Stock held
by it to be transferred into Pledgee's name or the name of its nominee or
nominees, if it has not already done so. The Pledgee may buy any part or all of
the Collateral at any public sale, and if any part or all of the Collateral is
of a type customarily sold in a recognized market or is of the type which is
the subject of widely-distributed standard price quotations, the Pledgee may
buy at private sale and may make payments thereof by any means. The Pledgee may
apply the cash proceeds actually received from any sale or other disposition to
the expenses of retaking, holding, preparing for sale, selling and the like, to
reasonable attorneys' fees and all reasonable legal, travel and other expenses
which may be incurred by the Pledgee in attempting to collect the Obligations
or to enforce this Agreement, or in the prosecution or defense of any action or
proceeding related to the subject matter of this Agreement and to the
Obligations secured hereby.
The Pledgor recognizes that the Pledgee may be unable to effect a
public sale of the Stock by reason of certain prohibitions contained in the
Securities Act of 1933, as amended, but may be compelled to resort to one or
more private sales thereof to a restricted group of purchasers. The Pledgor
agrees that any such private sales may be at prices and other terms less
favorable to the Seller than if sold at public sales and that such private
sales shall not by reason thereof be deemed not to have been made in a
commercially reasonable manner. The Pledgee shall be under no obligation to
delay a sale of any of the Stock for the period of time necessary to permit the
issuer of such securities to register such securities for public sale under the
Securities Act of 1933, as amended, even if the issuer would agree to do so.
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Section 8. Marshalling. The Pledgee shall not be required to ▇▇▇▇▇▇▇▇
any present or future security for (including, but not limited to, this
Agreement and the Collateral pledged hereunder), or guaranties of, the
Obligations or any of them, or to resort to such security or guaranties in any
particular order. All of Pledgee's rights hereunder and in respect of such
securities and guaranties shall be cumulative and in addition to all other
rights, however existing or arising. To the extent that Pledgor lawfully may do
so, the Pledgor hereby agrees that Pledgor will not invoke any law relating to
the marshalling of collateral which might cause delay in or impede the
enforcement of the Pledgee's rights under this Agreement or under any other
instrument evidencing any of the Obligations or under which any of the
Obligations is outstanding or by which any the Obligations is secured or
guaranteed. To the extent that Pledgor lawfully may do so, the Pledgor hereby
irrevocably waives the benefits of all such laws.
Section 9. Pledgor's Obligations Not Affected. The Obligations of the
Pledgor hereunder shall remain in full force and effect without regard to, and
shall not be impaired by: (a) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation, or the like of any
Borrower or the Pledgor; (b) any exercise or nonexercise, or any waiver, by the
Pledgee of any right, remedy, power or privilege under or in respect of any of
the Obligations or any security thereof (including this Agreement); (c) any
amendment to or modification of any of the instruments or agreements evidencing
or securing any of the Obligations; or (d) the taking of additional security
for, or any guaranty of, any of the Obligations, or the release or discharge or
termination of any security or guaranty for any of the Obligations, whether or
not the Pledgor shall have notice or knowledge of any of the foregoing.
Section 10. Transfer, Etc., By Pledgor. Without the prior written
consent of the Pledgee, the Pledgor will not sell, assign, transfer or
otherwise dispose of, grant any option with respect to, or pledge or grant any
security interest in or otherwise encumber any of the Collateral or any
interest therein, except for the pledge thereof provided for in this Agreement.
Section 11. Further Assurances. The Pledgor will do all such acts, and
will furnish to the Pledgee all such financing statements, certificates, legal
opinions and other documents and
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will obtain all such governmental consents and corporate approvals and will do
or cause to be done all such other things as the Pledgee may reasonably request
from time to time in order to give full effect to this Agreement and to secure
the rights of the Pledgee hereunder.
Section 12. Pro-Rata Security. All amounts owing with respect to the
Obligations shall be equally and ratably secured by, and proportionately
entitled to the benefits of, the Collateral, provided that the reasonable
costs, fees and expenses of the Pledgee in enforcing its rights hereunder,
including reasonable attorneys' fees, shall constitute a first claim on all the
Collateral and be entitled to priority over all other Obligations in respect of
all distributions of any proceeds from any portion of the Collateral.
Section 13. Pledgee's Exoneration. Under no circumstances shall the
Pledgee be deemed to assume any responsibility for or obligation or duty with
respect to any part of all of the Collateral of any nature or kind, other than
the physical custody thereof, or any matter or proceedings arising out of or
relating thereto. The Pledgee shall not be required to take any action of any
kind to collect, preserve or protect the Pledgee's or the Pledgor's rights in
the Collateral or against other parties thereto. The Pledgee's prior recourse
to any part of all of the Collateral shall not constitute a condition of any
demand, suit or proceeding for payment of collection of the Obligations.
Section 14. No Waiver, Etc. No act, failure or delay by the Pledgee
shall constitute a waiver of its rights and remedies hereunder or otherwise. No
single or partial waiver by the Pledgee of any default, right or remedy which
it may have shall operate as a waiver of any other default, right or remedy or
of the same default, right or remedy on a future occasion. The Pledgor hereby
waives presentment, notice of dishonor and protest of all instruments, included
in or evidencing any of the Obligations or the Collateral, and any and all
other notices and demands whatsoever (except as expressly provided herein).
Section 15. Notice, Etc. All notices, requests and other
communications hereunder shall be in conformity with the terms and conditions
of the Loan Agreement, addressed to the Pledgor and the Pledgee at their
respective addresses indicated at the beginning of this Agreement or to
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such other address as the party to receive any such communication or notice may
have designated by written notice to the other party.
Section 16. Termination. Upon the payment and performance in full of
the Obligations in accordance with their terms and the performance by the
Pledgor of all of its covenants and agreements hereunder, this Agreement shall
terminate and the Pledgor shall be entitled to the return of such Collateral in
the possession or control of the Pledgee as has not theretofore been disposed
of pursuant to the provisions hereof, together with any moneys and other
property at the time held by the Pledgee hereunder.
Section 17. Miscellaneous Provisions. Neither this Agreement nor any
term hereof may be changed, waived, discharged or terminated except by a
written instrument expressly referring to this Agreement and to the provisions
so modified or limited, and executed by the party to be charged. This Agreement
and all Obligations of the Pledgor shall be binding upon the successors and
assigns of the Pledgor, and shall, together with the rights and remedies of the
Pledgee hereunder, inure to the benefit of the Pledgee, and its successors and
assigns. This Agreement and the Obligations of the Pledgor hereunder shall be
governed by and construed in accordance with the laws of State of Maine.
Pledgor agrees that the venue for adjudication of any dispute or controversy
arising under this Agreement shall be any court of competent jurisdiction in
the State of Maine, all as more specifically set forth in the Loan Agreement.
The descriptive section headings have been inserted for convenience of
reference only and do not define or limit the provisions hereof. If any term of
this Agreement shall be held to be invalid, illegal or unenforceable, the
validity of all other terms hereof shall be in no way affected thereby, and
this Agreement shall be construed and be enforceable as if such invalid,
illegal or unenforceable term had not been included herein. The Pledgor
acknowledges receipt of a copy of this Agreement. Terms used herein without
definition which are defined in the Uniform Commercial Code have such defined
meanings herein, unless the context otherwise indicates or requires. This
Agreement is intended to take effect as a sealed instrument.
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IN WITNESS WHEREOF, the Pledgor and Pledgee have executed this
Agreement under seal on the _____ day of December, 1999.
WITNESS: PLEDGOR:
Brookwood Companies Incorporated
By:
---------------------------------- ---------------------------------
Name:
Title:
PLEDGEE:
KeyBank National Association
By:
---------------------------------- ---------------------------------
Name:
Title:
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CONSENT AND AGREEMENT
This Consent and Agreement ("Agreement") is made as of the ___ day of
December, 1999 by The Hallwood Group Incorporated, a corporation organized
under the laws of the State of Delaware, having a place of business at ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("Hallwood").
WITNESSETH:
WHEREAS, Brookwood Companies Incorporated, a corporation organized
under the laws of the State of Delaware and having a place of business at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Brookwood") is a wholly owned
subsidiary of Hallwood; and
WHEREAS, Brookwood and its wholly owned subsidiaries, ▇▇▇▇▇▇
Industries, Inc., a corporation organized under the laws of the State of
Delaware, having a place of business at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ("▇▇▇▇▇▇"), and Brookwood Laminating, Inc., a corporation organized under
the laws of the State of Delaware, having a place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ("Laminating"), have requested that
KeyBank National Association, a national banking association having a place of
business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("Bank") make loans and
provide other financial accommodations; and
WHEREAS, Bank is willing to make such loans and provide such financial
accommodations to Brookwood, ▇▇▇▇▇▇ and Laminating subject to the terms and
conditions of that certain Revolving Credit Loan and Security Agreement by and
among Bank, Brookwood, ▇▇▇▇▇▇ and Laminating, dated as of December ___, 1999
("Loan Agreement"); and
WHEREAS, to induce Bank to make such loans and provide such financial
accommodations to Brookwood, ▇▇▇▇▇▇ and Laminating, Hallwood desires to provide
its consent and agreement as provided herein;
NOW, THEREFORE, in consideration of the loans and financial
accommodations to Brookwood, ▇▇▇▇▇▇ and Laminating, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Hallwood agrees as follows:
1. Hallwood hereby consents and agrees that so long as any amount
remains outstanding and unpaid under the Loan Agreement, Brookwood shall not
make any Distributions to Hallwood; provided, however, that payments to
Hallwood of dividends or for federal income taxes based upon quarterly
calculations of fixed charge coverage as may have been paid or payable by
Brookwood to Hallwood, may be made so long as such payment by Brookwood does
not result in a default of any financial covenants as described in the Loan
Agreement.
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2. Hallwood agrees that so long as any amounts remain outstanding and
unpaid under the Loan Agreement, there shall be no loans or advances to
Hallwood from Brookwood, ▇▇▇▇▇▇ or Laminating; nor shall any part of advances
or loan proceeds to Brookwood, ▇▇▇▇▇▇ or Laminating under the Loan Agreement,
be utilized by Hallwood.
3. This Agreement shall be binding upon Hallwood and its successors
and assigns and shall inure to the benefit of the Bank and its successors and
assigns.
4. Capitalized terms not defined herein shall have the meaning set
forth in the Loan Agreement.
IN WITNESS WHEREOF, this Agreement is executed as of the date first
above written.
THE HALLWOOD GROUP INCORPORATED
By:
--------------------------------
Its: