AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT ("Agreement")
is made as of the 25th day of March, 1998, by and among KEYBANK NATIONAL
ASSOCIATION, a national banking association (the "Bank"), with an office at ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇▇▇ DRIVE AWAY, INC., an Indiana
corporation with offices at ▇▇▇▇ ▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
("▇▇▇▇▇▇"); TDI, INC., an Indiana corporation with offices at ▇▇▇▇ ▇▇▇ ▇.▇.
▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("TDI") and INTERSTATE INDEMNITY COMPANY,
a Vermont corporation with offices at ▇▇▇▇ ▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Interstate" and, collectively with ▇▇▇▇▇▇ and TDI, the
"Borrowers", with each being a "Borrower"); and THE ▇▇▇▇▇▇ GROUP, INC., a
Delaware corporation with offices at ▇▇▇▇ ▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Group").
R E C I T A L S:
A. The Borrowers and the Bank are the parties to that certain Revolving
Credit Facility Agreement dated March 27, 1997 (as amended by a First Amendment
thereto dated March 6, 1998, the "Original Credit Agreement").
B. The Borrowers' loan indebtedness to the Bank pursuant to the
Original Credit Agreement, is evidenced by a Master Revolving Note dated March
27, 1997 and amended March 6, 1998 in the principal amount of $13,000,000 (the
"Existing Revolving Loans"), and such loan indebtedness, together with all of
the Borrowers' other indebtedness and obligations to the Bank, is secured by the
Security Agreements of ▇▇▇▇▇▇ and TDI in favor of the Bank and dated March 27,
1997 (collectively, as amended, the "Existing Security Agreements").
C. The Borrowers have requested the Bank to increase the aggregate
principal amount of loans available to the Borrowers, to extend the maturity of
such indebtedness to the Bank and to amend and restate the terms and conditions
of the Original Credit Agreement.
D. Subject to the terms and conditions hereinafter set forth, the Bank
has indicated its willingness to increase such availability, to extend said
maturity and amend and restate the Original Credit Agreement.
E. In addition to the foregoing, from time to time the Borrowers may
request the Bank to issue letters of credit on behalf of some or all of the
Borrowers; however, the Bank has made no commitment to do so.
F. None of the Borrowers' indebtedness and obligations in respect of
the Existing Revolving Loans outstanding as of the date hereof shall be deemed
repaid or otherwise satisfied upon the execution and closing of the transactions
contemplated by this Agreement; but, instead, the loans hereunder are and shall
be deemed to be the same indebtedness as that of the Borrowers under the
Existing Revolving Loans.
A G R E E M E N T S:
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, and of any extension of credit heretofore, now or hereafter made by the
Bank to or for the benefit of the Borrowers and Group, the parties hereto hereby
agree that the Original Credit Agreement and the Existing Security Agreements
are hereby amended and restated in their entirety to provide as follows:
1. GENERAL DEFINITIONS
When used herein, the following terms shall have the following
meanings:
Account(s): Account(s) and any other right to payment for goods sold or
leased or for services rendered which is not a General Intangible or evidenced
by an Instrument, Document or Chattel Paper, whether or not it has been earned
by performance, and includes, without limitation, all rights to payment earned
or unearned under a charter or other contract involving the use or hire of a
vessel and all rights incident to the charter or contract.
Account Debtor: Any Person who, or any of whose property, shall at the
time in question be obligated in respect of all or any part of a Receivable or
any part thereof and includes, without limitation, co-makers, indorsers,
guarantors, pledgors, hypothecators, mortgagors, and any other Person who
agrees, conditionally or otherwise, to make any loan to, purchase from, or
investment in, any other Account Debtor or otherwise assure or guaranty against
loss on any Receivable in which a Borrower now has or hereafter acquires any
rights.
Adjusted LIBOR: A rate per annum equal to the quotient obtained
(rounded upwards, if necessary, to the nearest 1/100th of 1%) by dividing (i)
the applicable LIBOR rate by (ii) 1.00 minus the Reserve Percentage, and which
Adjusted LIBOR shall be automatically adjusted on and as of the effective date
of any change in the Reserve Percentage.
Affiliate: When used with reference to any Person (the "subject"), a
Person that is in control of, under the control of, or under common control
with, the subject, the term "control" meaning the possession, directly or
indirectly, legally or beneficially, of the power to direct the management or
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise. For the purposes of this Agreement, and without limiting
the generality of the foregoing, any holder of Stock in a Borrower or their
parent, Group, shall be deemed to be an Affiliate of a Borrower.
Annualized EBIT: As of the end of any fiscal quarter, EBIT for such
fiscal quarter, plus EBIT for the three (3) immediately preceding fiscal
quarters; provided, however, that (i) as at the end of the fiscal quarter ending
June 30, 1998 only, Annualized EBIT shall be deemed to mean EBIT for such fiscal
quarter, plus EBIT for the immediately preceding fiscal quarter, and (ii) as at
the end of the fiscal quarter ending September 30, 1998 only, Annualized EBIT
shall be deemed to mean EBIT for such fiscal quarter, plus EBIT for the two (2)
immediately preceding fiscal quarters.
Annualized Interest Expense: As of the end of any fiscal quarter, the
aggregate of Consolidated interest expense (including without limitation, that
attributable to capitalized leases in accordance with GAAP) on all Funded Debt,
on a Consolidated basis, for such fiscal quarter, plus Consolidated interest
expense for the three (3) immediately preceding fiscal quarters; provided,
however, that (i) as at the end of the fiscal quarter ending June 30, 1998 only,
Annualized Interest Expense shall be deemed to mean Consolidated interest
expense for such fiscal quarter, plus Consolidated interest expense for the
immediately preceding fiscal quarter, and (ii) as at the end of the fiscal
quarter ending September 30, 1998 only, Annualized Interest Expense shall be
deemed to mean Consolidated interest expense for such fiscal quarter, plus
Consolidated interest expense for the two (2) immediately preceding fiscal
quarters.
Bank Debt: Collectively, all Debt of the Borrowers to the Bank, whether
incurred directly to the Bank or acquired by it by purchase, pledge, or
otherwise, and whether participated to or from the Bank in whole or in part,
including, without limitation, the Borrowers' Debt to the Bank in respect of
letters of credit from time to time issued for a Borrower and any reimbursement
agreement in connection therewith, interest, charges, expenses, attorneys' fees
and other sums chargeable to the Borrowers by the Bank and future advances made
to or for the benefit of a Borrower, whether arising under this Agreement, under
any of the Other Agreements or acquired by the Bank from any other source,
whether evidenced by the Revolving Note or any other instrument, or any note or
instrument in modification, replacement, supplement or substitution thereof,
whether heretofore, now or hereafter owing, arising, due or payable from any
Borrower to the Bank and howsoever evidenced, created, incurred, acquired or
owing, whether primary, secondary, direct, contingent, fixed or otherwise,
including obligations of performance.
Banking Day: Any day of the week, other than Saturday or Sunday, on
which the Bank is open for business in Cleveland, Ohio; provided, however, that,
when used in connection with a LIBOR Loan (other than in the definition of LIBOR
Margin), "Banking Day" shall mean any such day on which banks are open for
dealings in or quoting deposit rates for dollar deposits in the London interbank
market.
Basis Point: One one-hundredth of one percent (0.01%) per annum.
Borrowing Base: At any time and from time to time, an amount equal to
eighty percent (80%) of the sum of (i) the aggregate face value of the
Borrowers' Eligible Accounts at such time, plus (ii) the amount equal to the
remainder of (a) the In Transit Amount at such time, minus (b) the Eligible
Reserve at such time.
Change in Control: After the Closing Date, (i) the acquisition by any
Person or group of Persons (within the meaning of Section 13 or 14 of the
Securities Exchange Act of 1934, as amended), of beneficial ownership (within
the meaning of Rule 13d-3 of the Securities and Exchange Commission under such
Act) or control of __% or more of the outstanding shares of the Stock (on a
fully diluted basis) of any Obligor or (b) during any period of twelve (12)
consecutive calendar months, the ceasing of individuals who were directors of
Group on the first day of such period to constitute a majority of the board of
directors of Group.
Charges: As defined in Section 6.1(D).
Chattel Paper: A writing or writings (other than a charter or other
contract involving the use or hire of a vessel) which evidence both a monetary
obligation and a security interest in or a lease of specific goods, and, when a
transaction is evidenced both by such a security agreement or lease and by an
Instrument or series of Instruments, the group of writings taken together
constitutes Chattel Paper.
Closing Date: As defined in Section 3.3.
Collateral: All of the property and interests in property described in
Section 5.1 and all other property and interests in property which shall, from
time to time, secure the Bank Debt, including, without limitation, the Accounts
and other Receivables, the General Intangibles, the Inventory, and the
Equipment.
Consolidated: Group and its Subsidiaries, including, without
limitation, the Borrowers, taken as a whole.
Consolidated Net Worth: The excess of the net book value of Group's
Consolidated assets over all of Group's Consolidated liabilities, as determined
on an accrual basis and in accordance with GAAP.
Controlled Group: All members of a controlled group of corporations and
all trades or businesses (whether or not incorporated), if any, under common
control which, together with a Borrower, are treated as a single employer under
Section 414(b) or 414(c) of the Internal Revenue Code of 1986, as amended.
Debt: Collectively, all liabilities, indebtedness and other obligations
of the Person or Persons in question, including, without limitation, every such
obligation whether owing by one such Person alone or with one or more other
Persons in a joint, several, or joint and several capacity, whether now owing or
hereafter arising, whether owing absolutely or contingently, whether created by
lease, loan, overdraft, guaranty of payment, or other contract, or by
quasi-contract, tort, statute, other operation of law, or otherwise. Without in
any way limiting the generality of the foregoing, Debt of an Obligor
specifically includes (i) all obligations or liabilities of any Person that are
secured by any Lien upon property owned by such Obligor, even though such
Obligor has not assumed or become liable for the payment thereof; (ii) all
obligations or liabilities created or arising under any lease of real or
personal property, or conditional sale or other title retention agreement in
respect of property used and/or acquired by such Obligor, even though the rights
and remedies of the lessor, seller and/or lender thereunder are limited to
repossession of such property; (iii) all unfunded pension fund obligations and
liabilities; and (iv) deferred taxes.
Debt Service: For any period, the sum of all interest, principal, fees
and other charges, if any, including the current maturities thereof, due and
payable by an Obligor during such period on Funded Debt.
Default Interest Rate: As defined in Section 8.4.
Document: (a) A document that purports to be issued by or addressed to
a bailee and that purports to cover goods that are in the bailee's possession
that are either identified or fungible portions of an identified mass, and
includes a ▇▇▇▇ of lading, dock warrant, dock receipt, warehouse receipt, or
order for the delivery of goods, and any other document that in the regular
course of business or financing is treated as adequately evidencing that the
Person in possession of it is entitled to receive, hold, and dispose of the
document and the goods it covers or (b) a receipt issued by the owner of goods
including distilled spirits or agricultural commodities that are stored under a
statute requiring a bond against withdrawal or a license for the issuance of
receipts in the nature of a warehouse receipt
EBIT: For any period, net income of Group and its Subsidiaries on a
Consolidated basis determined in accordance with GAAP but (i) before deduction
for interest expense on all Funded Debt, (ii) before provision for taxes based
on income, if any, and (iii) excluding the effect of any (a) non-recurring,
non-cash gains and (b) gains and losses from the sale or other disposition of
assets, other than Inventory in the ordinary course of business.
Eligible Accounts: Those Accounts determined by the Bank to be Eligible
Accounts as provided in Section 4.1.
Eligible Reserve: As of any date on which a Borrowing Base certificate
or report of Accounts is delivered to the Bank that portion of those Accounts
included in the In Transit Amount contained in such certificate or report which,
in the Borrowers' reasonable and prudent judgment based upon the Borrowers'
experience with Accounts of such type (but at all times subject to the approval
of the Bank in its sole discretion) are out of period (i.e., as to which, on
such delivery date, the applicable transportation services have not been
completed, necessary Documents in respect thereof have not been delivered, or
both) and which were identified in the Borrower's Borrowing Base Certificate or
report of Accounts (as required by Section 7.1(B)(iv) hereof) as of the end of
the immediately preceding month.
Equipment: All goods that (a) are used or bought for use primarily in
business, including, without limitation, farming or a profession, or by a Person
who is a non-profit organization or a governmental subdivision or agency or (b)
are not Inventory, farm products, or consumer goods, it being the intention that
the term Equipment include, without limitation, machinery, equipment, tools,
furniture, furnishings and fixtures, including, but not limited to, all
manufacturing, fabricating, processing, transporting and packaging equipment,
power systems, heating, cooling and ventilating systems, lighting and
communication systems, fire prevention, alarm and security systems, laundry
systems, and computing and data processing systems.
ERISA: Title IV of the Employee Retirement Income Security Act of 1974,
as amended.
Eurocurrency Liabilities: As that term is defined in Regulation D of
the Board of Governors of the Federal Reserve System, as in effect from time to
time.
Event of Default: As defined in Section 8.1.
Existing Revolving Loans: As defined in Recital B, above.
Existing Security Agreements: As defined in Recital B above.
Fed Funds Rate: For any period, a fluctuating interest rate per annum
equal for each day during such period to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published for such day (or, if such day is
not a Banking Day, for the next preceding Banking Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Banking Day, the average of the quotations for such day on such transactions
received by the Bank from three (3) federal funds brokers of recognized standing
selected by it.
Financials: Those financial statements of Borrowers listed on Schedule
1A hereto, all of which financial statements have been delivered to the Bank in
connection with its review of the Borrowers' request for credit.
Funded Debt: With respect to any Person, without duplication, (a)
obligations for money borrowed including, without limitation, all capitalized
leases, notes payable, drafts accepted representing extensions of credit,
obligations evidenced by bonds, debentures, notes or other similar instruments,
and obligations upon which interest charges are customarily paid or discounted,
(b) obligations to pay the deferred purchase price of property or services, (c)
obligations secured by any Lien on the properties or assets of the Person, (d)
obligations of such Person in respect of currency or interest rate swap or
comparable transactions and (e) obligations under direct or indirect guaranties
in respect of, and obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in clauses (a)
through (d) above, the amount of which indebtedness or obligation under this
clause (e) shall be deemed to be an amount equal to the stated or determinable
amount of such primary obligation, or if less, the maximum amount of such
primary obligation for which such Person may be liable, or if not stated or
determinable, the maximum reasonably anticipated in respect thereof (assuming
such Person is required to perform thereunder).
GAAP: Generally accepted accounting principles as from time to time in
effect which shall include the official interpretations thereof by the Financial
Accounting Standards Board or any successor accounting authority of comparable
standing, consistently applied.
General Intangible: Any personal property, including things in action,
other than goods, Accounts, Chattel Paper, Documents, Instruments, money, and
all other contract rights, choses in action, causes of action, company or other
business records, inventions, designs, patents, patent applications, trademarks,
trade names, trade secrets, good will, copyrights, registrations, licenses,
franchises, permits, tax claims, computer programs, and any guarantee claims,
security interests or other security held by or granted to a Borrower to secure
payment by an Account Debtor of any of the Accounts and all other intangible
personal property of every kind and nature whatsoever. All licenses, patents,
patent applications, copyrights, trademarks and trade names now owned by the
Borrowers which, as of the date hereof, shall serve as Collateral are listed on
Schedule 1B hereto.
Guaranty: As defined in Section 3.1(Q).
In Transit Amount: As of any date during a month, an amount equal to
the lesser of (i) the aggregate amount of Accounts for transportation services
of a Borrower which the Borrowers have included in their Borrowing Base
certificate or report of Accounts (as required by Section 7.1(B)(iv) hereof) as
of the end of the immediately preceding month, which otherwise meet all of the
criteria to be Eligible Accounts, but as to which, although transportation
services in respect thereof were commenced to be performed as of such month end,
not all such transportation services were completed as of such month end or, if
such services were completed as of such month end, not all necessary Documents
were received as of such month end by such Borrower or (ii) $3,500,000.
Instrument: A negotiable instrument, or a certificated security, or any
other writing which evidences a right to the payment of money and is not itself
a security agreement or lease and is of a type which is in the ordinary course
of business transferred by delivery with any necessary indorsement or
assignment.
Interest Coverage Ratio: As of any date, the ratio of (i) Annualized
EBIT as of such date to (ii) Annualized Interest Expense as of such date.
Interest Period: For each LIBOR Loan, the period commencing on the date
of such LIBOR Loan or the date of the Rate Conversion or Rate Continuation of a
Revolving Loan into such LIBOR Loan and ending on the numerically corresponding
day of the period selected by the Borrowers pursuant to the provisions hereof
and each subsequent period commencing on the last day of the immediately
preceding Interest Period in respect of such Revolving Loan and ending on the
last day of the period selected by the Borrowers pursuant to the provisions
hereof. The duration of each such Interest Period shall be one (1), two (2),
three (3) or six (6) months, in each case as the Borrowers may select, upon
delivery to the Bank of a notice therefor in accordance with this Agreement;
provided, however, that:
(i) no Interest Period may end on a date later than the
Revolving Facility Termination Date;
(ii) if there is no such numerically corresponding day in
the month that is such, as the case may be, first,
second, third or sixth month after the commencement
of an Interest Period, such Interest Period shall end
on the last day of such month; and
(iii) whenever the last day of any Interest Period in
respect of a LIBOR Loan would otherwise occur on a
day other than a Banking Day, the last day of such
Interest Period shall be extended to occur on the
next succeeding Banking Day; provided, however, that
if such extension would cause the last day of such
Interest Period to occur in the next following
calendar month, the last day of such Interest Period
shall occur on the immediately preceding Banking Day.
Inventory: Goods that are held by a Person who holds them for sale or
lease or to be furnished under contracts of service or if that Person has so
furnished them, or if they are parts, supplies, raw materials, work in process,
or materials used or consumed in a business, repossessed goods, returned goods
and goods in transit, except that Inventory does not include Equipment.
Leverage Ratio: As of any date, the percentage equivalent of the number
resulting from dividing (i) the amount of Consolidated Funded Debt on such date
by (ii) an amount equal to the sum of (a) the amount of Consolidated Funded Debt
on such date, plus (b) Consolidated Net Worth on such date.
LIBOR: With respect to any LIBOR Loan for any Interest Period, the per
annum rate of interest, determined by the Bank in accordance with its usual
procedures (which determination shall be conclusive absent manifest error) as of
approximately 11:00 A.M. (London time) two (2) Banking Days prior to the
beginning of such Interest Period pertaining to such LIBOR Loan, appearing on
page 3750 of the Telerate Service (or any successor to or substitute page of
such Service, or any successor to or substitute for such Service providing rate
quotations comparable to those currently provided on such page of such Service,
as determined by the Bank from time to time for purposes of providing quotations
of interest rates applicable to dollar deposits in the London interbank market)
as the rate in the London interbank market for dollar deposits in immediately
available funds with a maturity comparable to such Interest Period. In the event
that such a rate quotation is not available for any reason, then the rate shall
be the rate, determined by the Bank as of approximately 11:00 A.M. (London time)
two (2) Banking Days prior to the beginning of such Interest Period pertaining
to such LIBOR Loan, to be the average (rounded upwards, if necessary, to the
nearest one sixteenth of one percent (1/16th of 1%) of the per annum rates of
interest at which dollar deposits in immediately available funds approximately
equal in principal amount to such LIBOR Loan and for a maturity comparable to
the Interest Period are offered to the Reference Bank by prime banks in the
London interbank market.
LIBOR Loan: Those Revolving Loans described in Sections 2.1(A) and 2.3
hereof on which the Borrowers shall pay interest at a rate based on LIBOR.
LIBOR Margin: (a) Until five (5) Banking Days (or such lesser period as
the Bank may determine in its discretion) after the Borrowers have delivered to
the Bank the Consolidated financial statements and related certificates in
respect of the fiscal year ending December 31, 1998 pursuant to Section 7.1(B),
below, one hundred sixty-five (165) Basis Points, and (b) thereafter, at such
time(s), and from time to time, as Interest Coverage Ratio as at the end of the
immediately preceding fiscal quarter (commencing with the fiscal quarter ending
December 31, 1998) is any of the following ratios, the number of Basis Points
set forth opposite such ratio:
Interest Coverage Ratio LIBOR Margin
Less than 3.00 to 1 LIBOR Loans not available
Equal to or greater than 3.00 to
1 and less than 3.50 to 1 One hundred fifty (150)
Basis Points
Equal to or greater than 3.50 to
1 and less than 4.50 to 1 One hundred twenty-five
(125) Basis Points
Equal to or greater than 4.50 to 1 One hundred (100) Basis
Points.
Decreases in the LIBOR Margin shall be made effective five (5) Banking Days (or
such lesser period as the Bank may determine in its discretion) after the Bank's
receipt of the Obligors' financial statements and related certificates pursuant
to Section 7.1(B), below,; increases in the LIBOR Margin shall be made effective
as of the earlier of (i) five (5) Banking Days (or such lesser period as the
Bank may determine in its discretion) after the Bank's receipt of the Obligors'
financial statements and related certificates pursuant to Section 7.1(B), below,
or (ii) the date on which such statements are due to be delivered to the Bank
pursuant to said Section.
LIBOR Prepayment Compensation Rate: As defined in Section 2.8, below.
Lien: Any mortgage, pledge, assignment, lien, claim, charge,
encumbrance, or security interest of any kind, or the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement.
Lock box Agreement: As defined in Section 5.9(D).
Maximum Commitment: Fifteen Million Dollars ($15,000,000), as such
amount may from time to time be reduced pursuant to Section 2.5, below.
Maximum Revolving Credit: At any time and from time to time, the lesser
of (i) the Maximum Commitment or (ii) the Borrowing Base at such time.
Multiemployer Plan: A "multiemployer plan" as defined in Section
4001(a)(3) of ERISA, under which a Borrower is an employer.
Obligors: Collectively, ▇▇▇▇▇▇, TDI, Interstate, and Group, each being
an "Obligor".
Original Credit Agreement: As defined in Recital A, above.
Other Agreements: The Revolving Note, the Guaranty, subordination or
intercreditor agreements, patent and trademark security agreements and all
Supplemental Documentation and all other documents or writings executed by or on
behalf of any Obligor or delivered to the Bank in connection with the
transaction contemplated hereby.
PBGC: Pension Benefit Guaranty Corporation or any governmental entity
succeeding to the functions thereof.
Permitted Encumbrances: As defined in Section 6.1(B).
Person: Any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, entity, party, or government (whether national,
federal, state, county, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency body or department thereof).
Plan: Any employee pension benefit plan subject to ERISA established or
maintained by a Borrower or any member of the Controlled Group, or any such Plan
to which such Borrower or any member of the Controlled Group is required to
contribute on behalf of any of its employees.
Possible Default: Any event, situation or thing which, with the lapse
of any applicable grace period or the giving of notice or both, would constitute
an Event of Default and which has not been consented to by the Bank in writing.
Prepayment LIBOR: As defined in Section 2.8, below.
Previous Minimum: As at the end of any fiscal quarter, the minimum
Consolidated Net Worth required to be maintained by the Obligors as at the end
of the immediately preceding fiscal quarter pursuant to the provisions of
Section 7.2(G), below.
Prime Rate: The higher of (i) the per annum rate equal to the Fed Funds
Rate plus one hundred fifty (150) Basis Points or (ii) that variable interest
rate established from time to time by the Bank as the Bank's Prime Rate (or
equivalent rate otherwise named), whether or not such rate is publicly
announced; the Prime Rate may not necessarily be the lowest interest rate
charged by Bank for commercial or other extensions of credit.
Prime Rate Loans: Those loans described in Sections 2.1(A) and 2.3
hereof on which the Borrowers shall pay interest at the rate based on the Prime
Rate.
Proceeds: Whatever is received or receivable upon sale, exchange,
collection, or other disposition of any property (including, without limitation,
Collateral) or Proceeds, whether directly or indirectly, and includes, without
limitation, the proceeds of any casualty, liability, or title insurance relating
to any such property and any goods or other property returned after any such
sale, exchange, collection, or other disposition.
Products: Property directly or indirectly resulting from any
manufacturing, processing, assembling, or commingling of any goods.
Quarterly Increase: As at the end of any fiscal quarter, the greater of
(i) an amount equal to fifty percent (50%) of Consolidated net income for such
quarter determined in accordance with GAAP or (ii) zero dollars ($0).
Rate Continuation: A continuation of a LIBOR Loan having a particular
Interest Period as a LIBOR Loan having an Interest Period of the same duration
pursuant to Section 2.1(B) hereof.
Rate Conversion: A conversion pursuant to Section 2.1(B) of a Revolving
Loan of one Type into a Revolving Loan of another Type and, with respect to
LIBOR Loans, from one permissible Interest Period to another permissible
Interest Period.
Rate Conversion/Continuation Request: A request for Rate Conversion or
Rate Continuation made pursuant to Section 2.1(B).
Receivable: Any claim for or right to payment, however arising, whether
classified as an Account, a General Intangible, or otherwise, whether contingent
or fixed, whether or not evidenced by any writing, and, if so evidenced, whether
evidenced by Chattel Paper, one or more Instruments, or otherwise.
Reference Bank: The Cayman Islands branch office of the Bank.
Regulatory Change: As to the Bank, any change in United States federal,
state or foreign laws or regulations or the adoption or making of any
interpretations, directives or requests of or under any United States federal,
state or foreign laws or regulations (whether or not having the force of law) by
any court or governmental authority charged with the interpretation or
administration thereof.
Request: Any of the borrowing request for a Revolving Loan described in
Section 2.1(A), below., or a Rate Conversion or Rate Continuation Request.
Reserve Percentage: For any day, that percentage (expressed as a
decimal) which is in effect on such day, as prescribed by the Board of Governors
of the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, all basic, supplemental,
marginal and other reserves and taking into account any transitional adjustments
or other scheduled changes in reserve requirements) for a member bank of the
Federal Reserve System in Cleveland, Ohio, in respect of "Eurocurrency
Liabilities".
Revolving Credit Facility: As defined in Section 2.1(A).
Revolving Facility Termination Date: As defined in Section 2.1(E).
Revolving Loan(s): As defined in Section 2.1(A).
Revolving Note: As defined in Section 2.1(D).
Special Collateral: As defined in Section 5.2.
Stock: All shares, options, membership interests, partnership
interests, participation or other equivalents or equity interests (howsoever
designated) of or in, as the case may be, a corporation or a limited liability
company, whether voting or non-voting, including without limitation, warrants,
convertible debentures and all agreements, instruments and documents
convertible, in whole or in part, into any one or more or all of the foregoing.
Subordinated Debt: That portion of the Debt of an Obligor which is
subordinated in a manner satisfactory in form and substance to the Bank as to
right and time of payment of principal and interest thereon to any and all of
the Bank Debt.
Subsidiary: Any corporation, limited liability company, partnership,
entity or other Person of which more than 50% of the outstanding capital Stock
having ordinary voting power to vote for directors of such Person (irrespective
of whether, at the time, stock of any other class or classes of such Person
shall have or might have voting power by reason of the happening of any
contingency) is at the time, directly or indirectly, owned by a Person and/or
one or more Subsidiaries of such Person.
Supplemental Documentation: Agreements, instruments, documents,
certificates of title, financing statements, warehouse receipts, bills of
lading, notices of assignment of accounts, schedules of accounts assigned,
mortgages and other written matter necessary or requested by the Bank to perfect
and maintain perfected the Bank's Liens in the Collateral.
Type: When used in respect of any Revolving Loan, LIBOR or Prime Rate
as applicable to such Revolving Loan.
Other Terms. Other terms contained in this Agreement shall, unless the
context indicates otherwise, have the meanings provided for by the Uniform
Commercial Code (the "Code") of the State of Ohio to the extent the same are
used or defined therein. Any accounting terms used in this Agreement which are
not specifically defined herein shall have the meanings customarily given such
terms in accordance with GAAP. The terms "fiscal year" and "fiscal quarter"
shall refer to the fiscal year of the Obligors ending December 31 of each year
and the quarters thereof ending March 31, June 30, September 30 and December 31
of each year. Unless otherwise expressly stated, all references to a time of day
shall be deemed to mean Cleveland, Ohio time.
2. LOANS: GENERAL TERMS
2.1. Revolving Credit; Revolving Note.
(A) Advance of Loans. Subject to the terms and conditions of this
Agreement, on the Closing Date the terms and conditions of the Original Credit
Agreement and the Existing Security Agreements shall be amended and restated in
their entirety to provide for an amended and restated revolving credit facility
(the "Revolving Credit Facility") under which, subject to the terms and
conditions hereof, the Bank shall, from time to time, upon written or oral
(confirmed promptly in writing) request of a Borrower therefor, advance loans to
one or more of the Borrowers (each a "Revolving Loan" and, collectively, the
"Revolving Loans") in the maximum aggregate principal amount at any time
outstanding of not more than the Maximum Revolving Credit. The Borrowers'
requests for Revolving Loans shall be in form and content from time to time
prescribed by the Bank and shall be delivered to the Bank not later than 12:00
noon of the Banking Day on which a Prime Rate Loan is to be advanced and not
later than 12:00 noon three (3) Banking Days prior to the Banking Day on which a
LIBOR Loan is to be advanced. Unless otherwise requested by a Borrower in
writing (and approved by the Bank), all Revolving Loans shall be advanced into
demand deposit account No. ___________, maintained by the Borrowers at an office
of the Bank designated by the Bank and reasonably satisfactory to Borrowers.
Subject to the terms and conditions set forth in this Agreement, the Borrowers
shall have the option to request Revolving Loans comprised of (i) Prime Rate
Loans maturing on or before the Revolving Facility Termination Date, in
aggregate amounts of not less than One Hundred Thousand Dollars ($100,000) or
(ii) LIBOR Loans in aggregate amounts of not less than Two Hundred Fifty
Thousand Dollars ($250,000). Subject to the terms and conditions of this
Agreement, the Borrowers may, during the term of the Revolving Credit Facility,
repay and reborrow the Revolving Loans advanced thereunder.
(B) Rate Conversion and Continuation. The Borrowers shall have the
right to cause a Rate Conversion or Rate Continuation in respect of Revolving
Loans then outstanding, upon request delivered by the Borrowers to the Bank not
later than 12:00 noon (i) on the day which is the Banking Day that the Borrowers
desire to convert any LIBOR Loans into a Prime Rate Loan, (ii) on the day that
is three (3) Banking Days prior to the Banking Day upon which the Borrowers
desire to convert any Prime Rate Loan into a LIBOR Loan for a given Interest
Period, (iii) on the day which is three (3) Banking Days prior to the Banking
Day upon which the Borrowers desire to continue any LIBOR Loan as a LIBOR Loan
for an additional Interest Period of the same duration, (iv) on the day which is
three (3) Banking Days prior to the Banking Day upon which the Borrowers desire
to convert any LIBOR Loan having a particular Interest Period into a LIBOR Loan
having a different permissible Interest Period, provided, however, that each
such Rate Conversion or Rate Continuation shall be subject to the following:
(1) if less than all the outstanding principal amount of a
Revolving Loan is converted or continued, the aggregate principal
amount of such Revolving Credit Loans converted or continued shall be,
(i) in the case of LIBOR Loans, not less than Two Hundred Fifty
Thousand Dollars ($250,000), and (ii) in the case of Prime Rate Loans,
not less than One Hundred Thousand Dollars ($100,000);
(2) each Rate Conversion or Rate Continuation shall be
effected by the Bank's applying the proceeds of the Revolving Loan
resulting from such Rate Conversion or Rate Continuation to the
Revolving Loan being converted or continued, as the case may be, and
the accrued interest on any such Revolving Loan (or portion thereof)
being converted or continued shall be paid to the Bank by the Borrowers
at the time of such Rate Conversion or Rate Continuation;
(3) LIBOR Loans may not be converted or continued at a time
other than the end of the Interest Period applicable thereto unless the
Borrowers shall pay, upon demand, any amounts due to the Bank pursuant
to Section 2.8;
(4) Revolving Loans may not be converted into or continued as
LIBOR Loans (a) at any time during which an Event of Default exists
(provided that this clause shall not be construed to limit any other
right or remedy of the Bank) or (b) less than one month prior to the
Revolving Facility Termination Date or for an Interest Period which
would continue after the Revolving Facility Termination Date;
(5) any LIBOR Loan that cannot be converted into or continued
as a LIBOR Loan by reason of clause (4) shall be automatically
converted at the end of the Interest Period in effect for such LIBOR
Loan into a Prime Rate Loan.
Each such request for a conversion or continuation (a "Rate
Conversion/Continuation Request") in respect of a Revolving Loan shall be
transmitted by the Borrowers to the Bank, by telecopier, telex or cable (in the
case of telex or cable, confirmed in writing prior to the effective date of the
Rate Conversion or Rate Continuation requested), in form and content prescribed
by the Bank, specifying (i) the identity and amount of the Revolving Loan that
the Borrowers request be converted or continued, (ii) the Type of Revolving
Credit Loan into which such Revolving Loan is to be converted or continued,
(iii) if such notice requests a Rate Conversion, the date of the Rate Conversion
(which shall be a Banking Day) and (iv) in the case of a Revolving Loan being
converted into or continued as a LIBOR Loan, the Interest Period for such LIBOR
Loan. The Borrowers may make a Rate Conversion/Continuation Request
telephonically so long as written confirmation thereof is received by the Bank
by 1:00 p.m. on the same day of such telephonic Rate Conversion/Continuation
Request. The Bank may rely on such telephonic Rate Conversion/Continuation
Request to the same extent that the Bank may rely on a written Rate Conversion/
Continuation Request. Each Rate Conversion/Continuation Request, whether
telephonic or written, shall be irrevocable and binding on the Borrowers and
subject to the indemnification provisions of this Article 2. The Borrowers shall
bear all risks related to their giving any Rate Conversion/Continuation Request
telephonically or by such other method of transmission as any Borrower shall
elect.
(C) Failure Of Borrowers To Elect. If no Interest Period is specified
in any Request for a LIBOR Loan, the Borrowers shall be deemed to have selected
an Interest Period with a duration of one (1) month with respect to such LIBOR
Loan. If the Borrowers shall not have given notice in accordance with Section
2.1(B) to continue any LIBOR Loan into a subsequent Interest Period (and shall
not have otherwise delivered a Rate Conversion/Continuation Request in
accordance with Section 2.1(B) to convert such LIBOR Loan), subject to the
limitations set forth in Sections 2.1 and 2.3, such LIBOR Loan shall, at the end
of the Interest Period applicable thereto (unless repaid pursuant to the terms
hereof), automatically shall be converted to a Prime Rate Loan.
(D) Revolving Note. The Borrowers' joint and several Debt under the
Revolving Loans shall be evidenced by an amended and restated promissory note
executed and delivered by the Borrowers to evidence the Revolving Loans (the
"Revolving Note", which term, for the purposes of this Agreement and the Other
Agreements, shall include any and all amendments, modifications, replacements,
supplements and substitutions thereof), which shall be in the form of Exhibit A
attached hereto and made a part hereof.
(E) Term. The Revolving Credit Facility shall have an initial term
commencing on the Closing Date and terminating on April 30, 2001 (as such date
may be extended pursuant to a writing executed by the Borrowers and the Bank, in
the Bank's sole and absolute discretion, the "Revolving Facility Termination
Date").
2.2. Security; Guaranty. The payment of the Bank Debt, including,
without limitation, the Revolving Loans, shall be secured by Liens in favor of
the Bank in the Collateral and shall be guaranteed by Group pursuant to the
Guaranty.
2.3. Interest Rates. The Revolving Loans shall be advanced as Prime
Rate Loans or LIBOR Loans pursuant to Section 2.1, above. The Borrowers shall
pay interest on the unpaid principal amount of each Revolving Loan made by the
Bank from the date of such Revolving Loan until such principal amount shall be
paid in full at the following times and rates per annum:
(i) Prime Rate Loans. During such periods as a Revolving Loan is a
Prime Rate Loan, a rate per annum equal at all times to the
Prime Rate, payable quarterly, in arrears, on the last day of
each calendar quarter and at maturity (whether by reason of
acceleration or otherwise).
(ii) LIBOR Loans. During such periods as a Revolving Loan is a
LIBOR Loan, a rate per annum equal to the sum of the Adjusted
LIBOR, plus the LIBOR Margin from time to time in effect,
payable (a) on the last day of each Interest Period and (b) if
such Interest Period has a duration of more than three months,
three months after the first day of such Interest Period and
(c) on the date such LIBOR Loan shall be converted to a Prime
Rate Loan or to a LIBOR Loan of a different Interest Period or
paid in full and at maturity (whether by reason of
acceleration or otherwise).
Interest on Prime Rate Loans shall be calculated daily on the basis of a 365-day
year, or when applicable 366-day year (that is, computed by obtaining a daily
interest factor at the applicable rate based upon a 365-day (or 366-day) year
and multiplying such factor by the actual number of days elapsed) Interest on
LIBOR Loans shall be calculated daily on the basis of a 360-day year (that is,
computed by obtaining a daily interest factor at the applicable rate based upon
a 360-day year and multiplying such factor by the actual number of days
elapsed). Subject to any maximum interest rate limitation specified by
applicable law, the variable rate of interest provided for herein shall change
automatically without notice to the Borrowers with each change in the Prime
Rate. In no contingency or event whatsoever shall the interest rate charged
pursuant to the terms of this Agreement exceed the highest rate permissible
under any law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto. In the event that such a court determines
that the Bank has received interest hereunder in excess of the highest
applicable rate, the Bank shall promptly refund such excess interest to the
Borrowers; and the Borrowers hereby agrees that the refund of such excess shall
be the Borrowers' sole remedy or claim, at law and in equity, in respect of the
Bank's charging or receipt of interest in excess of that permitted by law.
2.4. Payments. Except as otherwise provided in Section 5.9, all
payments to the Bank shall be payable at the Bank's address set forth above or
at such other place or places as the Bank may designate from time to time in
writing to the Borrowers. Subject always to the provisions of Article 8, the
Bank Debt shall be payable as follows:
(A) Interest. Interest payable pursuant to this Agreement shall be due
on the dates specified in Section 2.3, above, or, at the Bank's option, the
amount of interest payable under the Revolving Note shall be added to the
principal balance of the Revolving Note and be deemed an additional Revolving
Loan thereunder; provided, however, that, in addition, all accrued and unpaid
interest in respect of the Revolving Note not theretofore paid shall be due and
payable at maturity, whether by acceleration or otherwise;
(B) Costs, Fees. Costs, fees and expenses payable pursuant to this
Agreement shall be payable as and when provided in this Agreement and, if not
specified, then on demand;
(C) Principal. From and after the Closing Date, principal payable on
account of Revolving Loans shall be due and payable to the extent required
pursuant to Section 7.1(A), below; and, without limiting any other remedy
available to the Bank, upon and during the continuance of an Event of Default,
to the extent and on the date of any collections received with respect to any
Proceeds of the Collateral and not applied to interest, and the entire unpaid
principal balance of all Revolving Loans shall be payable in full on the
Revolving Facility Termination Date;
(D) Other Bank Debt. The balance of the Bank Debt, if any, shall be
payable as and when provided in this Agreement or the Other Agreements and, if
not specified, then on demand.
To the extent, if any, that the Bank renders statements of account relating to
the Revolving Loans and other Bank Debt (and the Bank shall have no obligation
to do so), such statements shall be presumed correct and accurate and shall,
except for the Bank's right to reapply payments, constitute an account stated
between the Borrowers and the Bank, unless thereafter waived in writing by the
Bank or unless, within thirty (30) days after the Bank's mailing thereof, the
Borrowers deliver to the Bank, by registered or certified mail, written
objection thereto specifying the error or errors, if any, contained therein.
Except as provided in the definition of Interest Period, whenever any payment to
be made hereunder, including without limitation any payment to be made on the
Revolving Note, shall be stated to be due on a day which is not a Banking Day,
such payment shall be made on the next succeeding Banking Day and such extension
of time shall in each case be included in the computation of the interest
payable on the Revolving Note. Each Borrower hereby authorizes the Bank,
automatically and without further instruction from such Borrower, to withdraw
from and charge any demand deposit or other account of such Borrower maintained
at the Bank to pay to the Bank any principal, interest or other Bank Debt on the
date on which the same are due and payable, whether at stated maturity or
acceleration.
2.5. Optional Reduction of Commitment. The Borrowers may, at their
option from time to time, reduce the amount of the Maximum Commitment by an
amount which is One Million Dollars ($1,000,000) or an integral multiple
thereof; provided that (i) the Borrowers shall deliver to the Bank written
notice of the amount and effective date of any requested reduction at least
three (3) Banking Days prior to such proposed effective, and (ii) on or prior to
the date on which such reduction is effective, the Borrowers shall have (a) paid
to the Bank such portion of the principal of the Revolving Loans as may be
required by the terms of Section 7.1(A) of this Agreement and (b) executed and
delivered to the Bank such amendments to this Agreement, the Revolving Note and
the Other Agreements as the Bank may reasonably request to reflect such
reduction.
2.6. Closing Fee. On the Closing Date, the Borrowers shall pay to the
Bank a closing fee in the amount of Twenty-five Thousand Dollars ($25,000).
2.7. Facility Fee. The Borrowers agree to pay to the Bank, on the last
day of each calendar quarter during the term of the Revolving Credit Facility
and at earlier maturity, whether by acceleration or otherwise, as a facility
fee, in arrears in respect of the immediately preceding quarter or portion
thereof, an amount equal to twenty-five (25) Basis Points of the Maximum
Commitment, calculated on the basis of a 360-day year (that is, computed by
obtaining a daily factor at such per annum rate based upon a 360-day year and
multiplying such factor by the actual number of days elapsed). In addition to
the foregoing, the Borrowers shall pay, on the quarter end next following the
Closing Date, any and all unpaid facility fee payments accrued under the
Original Credit Agreement as of the Closing Date.
2.8. Prepayment Compensation for LIBOR Loans. In any case of prepayment
of any LIBOR Loan, the Borrowers agree that if Adjusted LIBOR as determined as
of 11:00 a.m. London time, two (2) Banking Days prior to the date of prepayment
of any LIBOR Loan (hereafter, "Prepayment LIBOR") shall be lower than the last
Adjusted LIBOR previously determined for such LIBOR Loan with respect to which
prepayment is intended to be made (hereinafter, "Last LIBOR"), then the
Borrowers shall, upon written notice by the Bank, promptly pay to the Bank, in
immediately available funds, compensation for such prepayment measured by a rate
(the "LIBOR Prepayment Compensation Rate") which shall be equal to the
difference between the Last LIBOR and the Prepayment LIBOR. In determining the
Prepayment LIBOR, the Bank shall apply a rate equal to Adjusted LIBOR for a
deposit approximately equal to the amount of such prepayment which would be
applicable to an Interest Period commencing on the date of such prepayment and
having a duration as nearly equal as practicable to the remaining duration of
the actual Interest Period during which such prepayment is to be made. The LIBOR
Prepayment Compensation Rate shall be applied to all or such part of the
principal amount of the Revolving Note as related to the LIBOR Loan to be
prepaid, and the prepayment compensation shall be computed for the period
commencing with the date on which such prepayment is to be made to that date
which coincides with the last day of the Interest Period previously established
when the LIBOR Loan which is to be prepaid was made. In the event a Borrower
cancels a Request with respect to a LIBOR Loan subsequent to the delivery to the
Bank of such notice, such cancellation shall be treated as a prepayment as to
which the Bank shall be entitled to the aforementioned prepayment compensation
for the full Interest Period which would have been in effect had such Request
not been canceled; provided that, in such case, Prepayment LIBOR shall be
measured on the date on which the Bank receives notice of cancellation and not
two (2) Banking Days prior thereto.
2.9 Reserves; Taxes; Indemnities.
(A) Reserves or Deposit Requirements. If at any time any law, treaty or
regulation (including, without limitation, Regulation D of the Board of
Governors of the Federal Reserve System) or the interpretation thereof by any
governmental authority charged with the administration thereof or any central
bank or other fiscal, monetary or other authority shall impose (whether or not
having the force of law), modify or deem applicable any reserve and/or special
deposit requirement (other than reserves included in the Reserve Percentage, the
effect of which is reflected in the interest rate(s) of the LIBOR Loan(s) in
question) against assets held by, or deposits in or for the amount of any loans
by, the Bank, and the result of the foregoing is to increase the cost (whether
by incurring a cost or adding to a cost) to the Bank of making or maintaining
hereunder LIBOR Loans or to reduce the amount of principal or interest received
by the Bank with respect to such LIBOR Loans, then upon demand by the Bank the
Borrowers shall pay to the Bank from time to time on the dates on which interest
is otherwise due with respect to such loans, as additional consideration
hereunder, additional amounts sufficient to fully compensate and indemnify the
Bank for such increased cost or reduced amount, assuming (which assumption the
Bank need not corroborate) such additional cost or reduced amount was allocable
to such LIBOR Loans. A certificate as to the increased cost or reduced amount as
a result of any event mentioned in this Section 2.9(A), setting forth the
calculations therefor, shall be promptly submitted by the Bank to the Borrowers
and shall, in the absence of manifest error, be conclusive and binding as to the
amount thereof. Notwithstanding any other provision of this Agreement, after any
such demand for compensation by the Bank, the Borrowers, upon at least three (3)
Banking Days' prior written notice to the Bank, may prepay the affected LIBOR
Loans in full or convert all LIBOR Loans to Prime Rate Loans regardless of the
Interest Period of any thereof. Any such prepayment or conversion shall entitle
the Bank to the prepayment compensation provided for in Section 2.8 hereof. The
Bank will notify the Borrowers as promptly as practicable of the existence of
any event which will likely require the payment by the Borrowers of any such
additional amount under this Section.
(B) Imposition Of Taxes. In the event that by reason of any law,
regulation or requirement or in the interpretation thereof by an official
authority, or the imposition of any requirement of any central bank whether or
not having the force of law, the Bank shall, with respect to this Agreement or
any transaction under this Agreement, be subjected to any tax, levy, impost,
charge, fee, duty, deduction or withholding of any kind whatsoever (other than
any tax imposed upon the total net income of the Bank) and if any such measures
or any other similar measure shall result in an increase in the cost to the Bank
of making or maintaining any LIBOR Loan or in a reduction in the amount of
principal, interest or commitment fee receivable by the Bank in respect thereof,
then the Bank shall promptly notify the Borrowers stating the reasons therefor.
The Borrowers shall thereafter pay to the Bank upon demand from time to time on
the dates on which interest is otherwise due with respect to such LIBOR Loans,
as additional consideration hereunder, such additional amounts as will fully
compensate the Bank for such increased cost or reduced amount. A certificate as
to any such increased cost or reduced amount, setting forth the calculations
therefor, shall be submitted by the Bank to the Borrowers and shall, in the
absence of manifest error, be conclusive and binding as to the amount thereof.
Notwithstanding any other provision of this Agreement, after any such demand for
compensation by the Bank, the Borrowers, upon at least three (3) Banking Days
prior written notice to the Bank, may prepay the affected LIBOR Loans in full or
convert all LIBOR Loans to Prime Rate Loans regardless of the Interest Period of
any thereof. Any such prepayment or conversion shall entitle the Bank to
prepayment compensation provided for in Section 2.8 hereof.
(C) Eurodollar Deposit Unavailable or Interest Rate Unascertainable. In
respect of any LIBOR Loan, in the event that the Bank shall have determined that
dollar deposits of the relevant amount for the relevant Interest Period for such
LIBOR Loan are not available to the Reference Bank in the applicable Eurodollar
market or that, by reason of circumstances affecting such market, adequate and
reasonable means do not exist for ascertaining the LIBOR rate applicable to such
Interest Period, the Bank shall promptly give notice of such determination to
the Borrowers and (i) any notice of a new LIBOR Loan (or conversion or
continuation of an existing loan to a LIBOR Loan) previously given by the
Borrowers and not yet borrowed (or converted or continued, as the case may be)
shall be deemed a notice to make a Prime Rate Loan, and (ii) the Borrowers shall
be obligated either to prepay or to convert any outstanding LIBOR Loans on the
last day of the then current Interest Period or Periods with respect thereto.
Any such prepayment or conversion shall entitle the Bank to prepayment
compensation provided for in Section 2.8 hereof.
(D) Indemnity. Without prejudice to any other provisions of this
Article 2, the Borrowers hereby jointly and severally agree to indemnify the
Bank against any loss or expense which the Bank may sustain or incur as a
consequence of any default by the Borrowers in payment when due of any amount
due hereunder in respect of any LIBOR Loan, including, but not limited to, any
loss of profit, premium or penalty incurred by the Bank in respect of funds
borrowed by it for the purpose of making or maintaining such LIBOR Loan, as
determined by the Bank in the exercise of its sole but reasonable discretion. A
certificate as to any such loss or expense shall be promptly submitted by the
Bank to the Borrowers and shall, in the absence of manifest error, be conclusive
and binding as to the amount thereof.
(E) Changes in Law Rendering LIBOR Loans Unlawful. If at any time any
new law, treaty or regulation, or any change in any existing law, treaty or
regulation, or any interpretation thereof by any governmental or other
regulatory authority charged with the administration thereof, shall make it
unlawful for the Bank to fund any LIBOR Loan which it is committed to make
hereunder with moneys obtained in the Eurodollar market, the commitment of the
Bank to fund LIBOR Loans shall, upon the happening of such event forthwith be
suspended for the duration of such illegality, and the Bank shall by written
notice to the Borrowers declare that its commitment with respect to such LIBOR
Loans has been so suspended; and, if and when such illegality ceases to exist,
such suspension shall cease, and the Bank shall similarly notify the Borrowers.
If any such change shall make it unlawful for the Bank to continue in effect the
funding in the applicable Eurodollar market of any LIBOR Loan previously made by
it hereunder, the Bank shall, upon the happening of such event, notify the
Borrowers thereof in writing stating the reasons therefor, and the Borrowers
shall, on the earlier of (i) the last day of the then current Interest Period or
(ii) if required by such law, regulation or interpretation, on such date as
shall be specified in such notice, either convert all LIBOR Loans to Prime Rate
Loans to the extent permissible under this Agreement or prepay all LIBOR Loans
to the Bank in full. Any such prepayment or conversion shall entitle the Bank to
prepayment compensation as provided in Section 2.8 hereof.
(F) Funding. The Bank may, but shall not be required to, make LIBOR
Loans hereunder with funds obtained outside the United States.
2.10. Capital Adequacy. If the Bank shall have determined, that,
whether in effect at the date of this Agreement or hereafter in effect, any
applicable law, rule, regulation or guideline regarding capital adequacy, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the Bank's capital allocated
to the transactions contemplated by this Agreement (or the capital of its
holding company) as a consequence of its obligations hereunder to a level below
that which the Bank (or its holding company) could have achieved but for such
adoption, change or compliance (taking into consideration the Bank's policies or
the policies of its holding company with respect to capital adequacy) by an
amount deemed by the Bank to be material, then from time to time, within fifteen
(15) days after demand by the Bank, the Borrowers shall pay to the Bank such
additional amount or amounts as will compensate the Bank (or its holding
company) for such reduction. The Bank will designate a different lending office
if such designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the judgment of the Bank, be otherwise
disadvantageous to the Bank. A certificate of the Bank claiming compensation
under this Section and setting forth the additional amount or amounts to be paid
to it hereunder shall be conclusive in the absence of manifest error. In
determining such amount, the Bank may use any reasonable averaging and
attribution methods. Failure on the part of the Bank to demand compensation for
any reduction in return on capital with respect to any period shall not
constitute a waiver of the Bank's rights to demand compensation for any
reduction in return on capital in such period or in any other period. The
protection of this Section 2.10 shall be available to the Bank regardless of any
possible contention of the invalidity or inapplicability of the law, regulation
or other condition which shall have been imposed.
2.11. All Advances to Constitute One Debt; Same Debt.
(A) Single Indebtedness. All Revolving Loans and other advances of
credit by the Bank to or for the benefit of any or all of the Borrowers under
this Agreement and the Other Agreements shall constitute one Debt, and all Debt
and obligations of the Borrowers to the Bank under this Agreement and all Other
Agreements shall constitute one general obligation, (i) secured by the Bank's
Lien in the Collateral and by other Liens heretofore, now, or at any time or
times hereafter granted to the Bank by the Borrowers or others, and (ii)
guaranteed by the Guaranty. The Borrowers and Group agree that all of the rights
of the Bank set forth in this Agreement shall apply to any modification of or
supplement to this Agreement and the Other Agreements, unless such rights are
expressly modified by any such modification or supplement.
(B) Same Indebtedness. This Agreement and the Other Agreements shall
not be deemed to provide for or effect a repayment and re-advance of any portion
of the Existing Revolving Loans now outstanding, it being the intention of both
the Borrowers and the Bank hereby that the Indebtedness owing under this
Agreement be and hereby is the same Indebtedness as that owing under the
Original Credit Agreement immediately prior to the effectiveness hereof.
3. CONDITIONS TO ADVANCE OF LOANS
3.1. Conditions to Initial Advance of Revolving Loans. The initial
advance of Revolving Loans, and the performance by the Bank of the other actions
to be taken by it hereunder, are subject to the fulfillment (unless waived by
the Bank) of each of the following conditions precedent:
(A) Representations and Warranties. All of the representations and
warranties in Article 6 shall have been true on the date when made and shall be
true on and as of the Closing Date.
(B) Compliance. The Borrowers shall be in compliance on the Closing
Date with all the applicable terms and provisions of this Agreement and the
Other Agreements to be observed or performed by it, and no Event of Default or
Possible Default shall have occurred and be continuing.
(C) Closing Certificate. The Borrowers shall have delivered to the Bank
a certificate, dated as of the Closing Date and signed by their respective
President or Treasurer certifying compliance with the conditions of subsections
3.1(A) and (B).
(D) Note. The Borrowers shall have executed and delivered to the Bank
the Revolving Note.
(E) Opinion. The Bank shall have received the favorable written opinion
of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel to the Obligors, dated the Closing Date and
addressed to the Bank and substantially to the effect set forth in Exhibit B
hereto, and covering such other matters as the Bank may reasonably request.
(F) Perfection. The Bank shall have received evidence satisfactory to
it of the perfection and priority of the Bank's security interest in the
Collateral by the filing of appropriate financing statements with the
Secretaries of State of Indiana and Vermont and the Recorder of Elkhart County,
Indiana.
(G) Insurance. The Borrowers shall have furnished a certificate or
other satisfactory evidence that the insurance required by Section 7.4 is in
full force and effect.
(H) Entity Certificates. On or before the Closing Date, each Obligor
shall deliver to the Bank the following (provided, however, that at the option
of the Borrowers, the documents required by clauses (ii) and (iii), below, may
be delivered to the Bank not later than sixty (60) days following the Closing
Date):
(i) a certificate of existence for such Obligor from the
Secretary of the state of its incorporation and
certificates of qualification for such Obligor from
the Secretary of State of each other state with which
such Obligor is required to qualify to do business as
a foreign corporation, all dated as of a date as near
to the Closing Date as practicable;
(ii) a true and complete copy of such Obligor's Articles
of Incorporation/Charter certified by the Secretary
of State of the state of its incorporation as of a
date as near to the Closing Date as practicable;
(iii) a certificate of such Obligor signed by its Secretary
dated as of the Closing Date certifying that attached
thereto are true and complete copies of its Code of
Regulations/Bylaws;
(iv) a certificate of such Obligor signed by its Secretary
dated as of the Closing Date certifying (a) that
attached thereto is a complete copy of resolutions
adopted by the directors of such Obligor, authorizing
the execution, delivery and performance of this
Agreement and the Other Agreements to be performed by
such Obligor hereunder, (b) that such resolutions are
in full force and effect, without modification
thereto and (c) the names and signatures of the
officers of such Obligor; and
(v) such other documents as the Bank may reasonably
request in connection with the company proceedings
taken by such Obligor authorizing this Agreement and
the transactions contemplated hereby.
(I) Special Counsel. All legal matters incident to this Agreement and
the consummation of the transactions contemplated hereby shall be reasonably
satisfactory to Berick, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ Co., L.P.A., Cleveland, Ohio, special
counsel to the Bank.
(J) Landlord Waivers. Each Borrower shall have delivered to the Bank a
landlord consent and waiver agreement in the form of Exhibit C hereto from each
lessor or licensor of real property occupied by such Borrower or at which any
Collateral is located.
(K) Guaranty. Group shall have executed and delivered to the Bank its
Amended and Restated Continuing Guaranty in the form of Exhibit D hereto (the
"Guaranty").
(L) Opening Eligible Accounts. The Borrowers shall have delivered to
the Bank an opening borrowing base certificate, in form prescribed by the Bank,
attached to which shall be an aging of the Borrowers' Accounts meeting the
criteria set forth in Section 7.1(B)(iv), reflecting such Accounts as of the
close of business February 28, 1998.
(M) Closing Fee. The Bank shall have received the closing fee required
by Section 2.6 hereof in immediately available funds.
(N) Other Matters. The Bank shall have received such other
certificates, opinions, agreements and documents, in form and substance
satisfactory to it, as the Bank may request.
3.2. Conditions Precedent to Subsequent Revolving Loans. The advance of
Revolving Loans after the Closing Date shall be subject to the fulfillment of
each of the following conditions precedent:
(A) Representations and Warranties. The representations and warranties
contained in this Agreement shall be true in all material respects on and as of
the date of such subsequent Revolving Loan, with the same effect as if made on
and as of such date.
(B) No Default. No Event of Default or Possible Default shall have
occurred and be continuing.
(C) Documents. The Bank shall have received such Requests, other
certificates (including, without limitation, borrowing certificates), agreements
and documents, in form and substance satisfactory to it, as the Bank may
reasonably request.
3.3. Closing. The closing of the initial advance of Revolving Loans
hereunder shall, subject to the terms and conditions of this Agreement,
including, without limitation, Section 3.1, take place at the offices of Berick,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ Co., L.P.A., 1350 ▇▇▇▇▇ Center, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇ a date mutually agreed upon by the Borrowers and the Bank,
but not later than April 3, 1998, at 11:00 a.m., or at such other time and place
as the parties may agree (such date of initial advance being referred to as the
"Closing Date").
4. ELIGIBLE ACCOUNTS
4.1. Eligible Accounts. On the report of Accounts (delivered to the
Bank monthly pursuant to Section 7.1(B)(iv) and as provided in Section 5.6), the
Borrowers shall designate which of the Accounts listed thereon the Borrowers
believe to be Eligible Accounts pursuant to the criteria (other than that set
forth on clause (J), below). The Bank shall review such report and determine, in
its sole discretion (exercised in good faith), which Accounts listed thereon
shall be deemed an "Eligible Account"; the Bank shall have no obligation
whatsoever to accept the designations of the Borrowers.
In determining which Accounts will be "Eligible Accounts", the Bank
may, inter alia, consider the following requirements:
The Account is subject to a perfected first priority Lien in favor of
the Bank and is due no more than thirty (30) days from the date of invoice under
the original terms of shipment or service, arises from the delivery of goods or
performance of services by a Borrower in the ordinary course of its business,
conforms to the warranties and representations set forth in Section 6.2 and:
(A) is an Account upon which such Borrower's right to receive payment
is absolute and not contingent upon any further performance or delivery or the
fulfillment of any condition whatsoever (e.g., consignment or guaranteed sale)
and does not include any sales or other taxes, and such Borrower has possession
of, or has delivered or will deliver as required hereunder to the Bank, copies
of invoices, shipping and delivery receipts evidencing such performance or
shipment;
(B) is unpaid for not more than thirty (30) days following the due date
of the invoice therefor;
(C) does not arise from a sale or sales to an Affiliate or from a
consumer transaction (being one for primarily personal, family or household
purposes);
(D) is not the obligation of an Account Debtor located in a foreign
country other than Canada, except those foreign Accounts supported by a letter
of credit acceptable to the Bank which letter of credit is confirmed or issued
by a United States bank or other bank acceptable to the Bank or is an Eligible
Account insured by the Foreign Credit Insurance Association, provided that the
letter of credit or insurance in respect of such foreign Accounts is assigned to
the Bank by assignments in form and substance satisfactory to the Bank;
(E) does not arise from a contract containing a prohibition against the
assignment or grant of a security interest therein;
(F) is not an Account from the United States of America or any state
thereof, or any department, administration, agency or instrumentality of any
thereof, unless the Bank is satisfied that its security interest in such Account
has been perfected pursuant to the Federal Assignment of Claims Act or
equivalent state statute;
(G) is not an Account of an Account Debtor who has suspended business,
made a general assignment for the benefit of creditors, committed any act of
insolvency, filed or has had filed against it any petition under any bankruptcy
law or any other law or laws for the relief of debtors;
(H) is not evidenced by an Instrument, Chattel Paper or other written
agreement (other than invoices), unless the Instrument or Chattel Paper
evidencing the Account has been delivered to and endorsed in favor of the Bank;
(I) is not an Account of an Account Debtor who shall have objected to
paying such Account, or any portion thereof, as a result of an objection to the
quality or quantity of goods or services provided by such Borrower, or shall
have rejected, returned or refused to accept such goods or services;
(J) is not an Account which is, in the Bank's good faith judgment, (i)
the Account of an Account Debtor which is an undue credit risk or (ii) otherwise
unacceptable to the Bank.
5. COLLATERAL: GENERAL TERMS
5.1. Security Interest.
(A) Grant. To secure the prompt payment to the Bank and performance of
the Bank Debt, on the Closing Date, (1) all of the terms, conditions and
provisions of each Security Agreement are hereby merged into, and amended and
restated in their entirety by, this Agreement, and (2) each Borrower hereby
regrants (or, in the case of Interstate, grants) to the Bank a continuing
security interest in and to all of the following property and interests in
property of such Borrower, whether now owned or existing, hereafter acquired or
arising, or in which such Borrower now or hereafter has any rights, and
wheresoever located:
(i) All Accounts and other Receivables, Instruments,
Documents, Chattel Paper and General Intangibles;
(ii) All Equipment;
(iii) All Inventory;
(iv) All monies, residues and property of any kind, now or
at any time or times hereafter, in the possession or
under control of the Bank or a bailee of the Bank;
(v) All accessions to, substitutions for and all
replacements, Products and Proceeds of the foregoing,
including, without limitation, proceeds of insurance
policies insuring the Collateral; and
(vi) All books and records (including, without limitation,
customer lists, credit files, computer programs,
print-outs and other computer materials and records)
of such Borrower pertaining to any of the foregoing.
5.2. Special Collateral. Immediately upon a Borrower's receipt of that
portion of the Collateral which is or becomes evidenced by an agreement,
instrument and/or document, including, without limitation, promissory notes,
trade acceptances, documents of title and warehouse receipts (the "Special
Collateral"), such Borrower shall deliver the original thereof to the Bank,
together with appropriate endorsements and/or other specific evidence (in form
and substance acceptable to the Bank) of assignment thereof to the Bank.
5.3. Further Assurances. At the Bank's request, each Borrower shall
execute and/or deliver to the Bank, at any time hereafter, all Supplemental
Documentation that the Bank may reasonably request, in form and substance
acceptable to the Bank, and pay the costs of any recording or filing of the
same. Without limiting the generality of the foregoing, at the Bank's request,
each Borrower shall execute and deliver for filing a Patent and Trademark
Security Agreement in form and substance satisfactory to the Bank upon such
Borrower's acquisition of any patent or registered ▇▇▇▇ or interest therein or
rights thereto. The Borrowers agree that a carbon, photographic, or other
reproduction of a financing statement, is sufficient as a financing statement.
Each Borrower immediately on demand therefor by the Bank, shall deliver to the
Bank evidence of ownership, if any, of any of the Collateral.
5.4. Preservation of Collateral. The Borrowers will keep the Collateral
and all rights with respect thereto and proceeds of both free from any adverse
Lien, except for Permitted Encumbrances, and, subject to ordinary wear and tear
and obsolescence, in good condition, and will not waste or destroy any of the
same. The Borrowers will not use the Collateral in violation of any applicable
statute or ordinance.
5.5. Verification of Collateral; Inspections; Audit.
(A) Any of the Bank's officers, employees or agents shall have the
right, at any time or times hereafter, in the Bank's name or in the name of a
Borrower to verify the validity, amount or any other matter relating to any
Collateral by mail, telephone, telegraph or otherwise. The Bank shall endeavor
to give the Borrowers prompt notice of the names of Account Debtors with whom
the Bank has conducted such verification, provided that the Bank's failure to do
so shall not give rise to any claim or defense against the Bank.
(B) The Bank (by any of its officers, employees and/or agents) shall
have the right, at any time or times during usual business hours, to inspect the
Collateral, all records related thereto (and to make extracts from such records)
and the premises upon which any of the Collateral is located, to discuss
Borrower's affairs and finances with any attorney, accountant, Account Debtor or
creditor of a Borrower and to verify the amount, quality, quantity, value and
condition of, or any other matter relating to, the Collateral.
5.6. Assignments; Records and Reports of Accounts. Each Borrower shall
keep accurate and complete records of its Accounts; and, on the date specified
in Section 7.1(B)(iii) below (and upon earlier demand by the Bank), each
Borrower shall deliver to the Bank, in form and substance acceptable to the
Bank, a detailed aged trial balance of all then existing Accounts specifying the
names, face value and dates of invoice(s) for each Account Debtor obligated on
an Account so listed and, upon demand by the Bank, the original copy of all
documents, including, without limitation, repayment histories and present status
reports, relating to the Accounts so scheduled and such other matters and
information relating to the status of the Accounts as the Bank shall in its
discretion request.
5.7. Federal and State Accounts. Upon the Bank's request, the Borrowers
shall, if any Accounts arise out of contracts with the United States of America
or any state thereof or any department, administration, agency or
instrumentality of any thereof, immediately notify the Bank thereof in writing
and execute any and all instruments and take all steps required by the Bank in
order that all monies due and to become due under such contract shall be
assigned to the Bank and notice thereof given to the Government under the
Federal Assignment of Claims Act, as amended. Or equivalent state statute.
5.8. Inventory and Equipment. The Borrowers shall at all reasonable
times and from time to time allow the Bank, by or through any of its officers,
agents, attorneys or accountants, to examine or inspect the Inventory and the
Equipment and all records concerning the same wherever located and shall furnish
to the Bank such other information with respect thereto as the Bank may
reasonably request.
5.9. Collections; Notice of Assignment; Lock Box. Upon and during the
continuance of an Event of Default, without limiting or otherwise impairing the
Bank's right to exercise any other right or remedy which may be available to the
Bank, the Bank may, upon notice to the Borrowers, require that the following
provisions shall become effective:
(A) So long as the Bank does not request that the Account
Debtors on the Accounts be notified of the assignment thereof to the
Bank, the Borrowers may make collections on the Accounts, and hold the
proceeds for the Bank in the exact form in which they are received from
collections in trust for the Bank, and turn over such proceeds to the
Bank in the exact form in which they are received, together with
endorsements in favor of the Bank and a collection report in a form
acceptable to the Bank. Said proceeds shall be deposited with the Bank
in a collections account(s) maintained with the Bank or other
nationally chartered bank acceptable to the Bank over which the Bank
alone shall have power of withdrawal, pursuant to an account agreement
in form and substance satisfactory to the Bank. The Bank may in its
discretion at least once a Banking Day apply the whole or any part of
the funds on deposit in such collections account(s) against the
principal and/or interest of any Revolving Loans or any other Bank Debt
which is then due, and any portion of said funds on deposit in such
collection account(s) which the Bank elects not to apply to such Bank
Debt shall be paid over and deposited by the Bank to the Borrowers'
commercial account, provided, however, that no such transfer from the
collections account(s) will be made of funds deposited in the
collections account(s) less than one (1) Banking Day before the date of
such transfer.
(B) The Bank may notify Account Debtors on any Accounts that
the Accounts have been assigned to the Bank and shall be paid to the
Bank. Upon request of the Bank at any time, the Borrowers will so
notify such Account Debtors and will indicate on all ▇▇▇▇▇▇▇▇ to such
Account Debtors that the Accounts are payable to the Bank. The Bank is
hereby authorized to make any endorsement on any collection on a
Borrower's behalf.
(C) To evidence the Bank's rights hereunder, each Borrower
will upon request of the Bank assign or endorse the Accounts or
proceeds thereof to the Bank as the Bank may request. The Bank shall
have full power to collect, compromise, endorse, sell or otherwise deal
with the Accounts or proceeds thereof in its own name or that of a
Borrower. The cost of collection and enforcement of Accounts, or any
Instrument belonging to a Borrower for goods sold or services rendered,
including attorneys' fees and out-of-pocket expenses, shall be borne
solely by the Borrowers, whether the same are incurred by the Bank or a
Borrower.
(D) Each Borrower shall cause all Accounts to be collected
through a lock-box arrangement with the Bank and shall execute a
lock-box agreement in form and substance satisfactory to the Bank (the
"Lock-box Agreement"). In the event that a Borrower shall default on
its obligation to have Accounts collected through a lock-box
arrangement, the Bank may forthwith notify all or any Account Debtors
of the security interest granted to the Bank and request said Account
Debtors to send all payments to be made in respect of Accounts to said
lock box, or to otherwise remit the same to the Bank. The Bank in such
event shall have full power and authority to endorse Borrower's name on
any check, draft, note or other instrument for the payment of money
which shall be received from an Account Debtor. Each Borrower also
agrees upon the Bank's request to execute and deliver to the Bank a
power of attorney in form satisfactory to the Bank authorizing any
officer of the Bank to notify postal authorities to change the address
for delivery of such Borrower's mail to an address designated by the
Bank, and authorizing the Bank to open all such mail delivered to the
designated address with full power to endorse such Borrower's name on
any check, draft or other instrument for the payment of money from an
Account Debtor for collection, provided that the Bank promptly provides
a list of all such instruments for the payment of money endorsed by the
Bank and delivers all other unrelated mail promptly to such Borrower.
5.10. Additional Collateral. Any and all deposits or other sums at any
time credited by or due from the Bank to the Borrowers or any of them shall at
all times constitute additional security for the Bank Debt and may be set off
against any such Bank Debt at any time, whether or not it is then due, or
whether or not other security held by the Bank is considered by the Bank to be
adequate. Any and all Instruments, documents, policies, certificates of
insurance, securities, goods, accounts receivable, choses in action, Chattel
Paper, cash, property and the proceeds thereof (whether or not the same are
Collateral or the proceeds thereof) owned by a Borrower or in which a Borrower
has an interest, which now or hereafter are at any time in possession or control
of the Bank, in transit by mail or carrier to or from the Bank, or in the
possession of any third party acting in the Bank's behalf, without regard to
whether the Bank received the same in pledge for safekeeping, as agent for
collection or transmission or otherwise, or whether the Bank has conditionally
released the same, shall constitute additional security for the Bank Debt and
may be applied at any time to any such Bank Debt which is then due, whether by
acceleration or otherwise. In addition, all other collateral security given by a
Borrower in favor of the Bank, whether by pledge, mortgage lien or security
interest, shall secure all of the Bank Debt as if expressly stated in the
agreement or document relating to such collateral security.
5.11. Proceeds of Collateral. The Borrowers shall not, without the
prior written consent of the Bank, sell, lease, grant a security interest in or
otherwise dispose of or encumber (other than Permitted Encumbrances) the
Collateral, or any part thereof or interest therein, except for the sale of
Inventory in the normal course of the Borrowers' business and the sale or other
disposition of Equipment which is obsolete or otherwise in need of replacement.
In the event any Collateral is sold, transferred or otherwise disposed of as
herein provided, the Borrowers shall deliver all of the cash proceeds of any
such sale, transfer or disposition to the Bank, which proceeds shall be applied
to the repayment of the Bank Debt in such order as the Bank may determine;
provided that, so long as no Event of Default or Possible Default then exists,
the Borrowers may utilize such proceeds for the acquisition of replacement
Equipment of like kind and utility.
6. WARRANTIES AND REPRESENTATIONS
6.1. General Warranties and Representations. Each Obligor hereby
warrants and represents that:
(A) Organization. Each Obligor is a corporation duly organized, validly
existing and in good standing under the laws of the State of its incorporation
and is qualified or licensed to do business and is in good standing in every
other jurisdiction wherein failure to so qualify would have a material adverse
effect on the financial condition, operations, business or property of such
Obligor;
(B) Title. Each Borrower has good, indefeasible and merchantable title
to and ownership of all Collateral, free and clear of all Liens except those of
the Bank and those, if any, listed on Schedule 6.1(B) hereto (the "Permitted
Encumbrances");
(C) ERISA. No Obligor has received any notice to the effect that it is
not in full compliance with any of the requirements of ERISA, and the
regulations promulgated thereunder and, to the best of its knowledge there
exists no event described in Section 4043(b)(3) thereof ("Reportable Event"). No
Obligor now has, or ever has had, any obligation to contribute to a
Multiemployer Plan;
(D) Taxes. Each Obligor has filed all federal, state and local tax
returns and other reports required by law and has paid, to the extent due and
payable, all federal, state, county, municipal, and other governmental
(including, but not limited to, the PBGC) taxes, levies, assessments, or Liens
upon or relating to the Collateral, the Bank Debt, its employees, payroll,
income and gross receipts, its ownership or use of any of its assets, and any
other aspect of its business (hereinafter referred to collectively as the
"Charges");
(E) Locations. The offices and/or locations where each Borrower keeps
its respective Inventory, Equipment and books and records relating to
Collateral, including, without limitation, computer programs, printouts and
other computer materials and records concerning the Collateral, are at the
locations listed on Schedule 6.1(E) hereto; the chief executive office of each
Borrower is located at ▇▇▇▇ ▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
except that ▇/▇ ▇▇▇▇▇▇▇ International Risk Management, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, Vermont 05406-4649 is also an address at which certain
records of Interstate may be located from time to time.
(F) Other Names. No Borrower has, during the preceding five (5) years,
been known as or used any other company or fictitious name; no Borrower has any
Subsidiaries;
(G) Stock. 100% of all outstanding shares or units of Stock of each
Borrower are owned by Group, and all such shares or units have been duly
authorized and are validly issued, fully paid for and non-assessable and have
been issued in compliance with all applicable federal and state laws, rules and
regulations, including, without limitation, all so-called "Blue-Sky" laws;
(H) Real Property. Certain of the Borrowers own parcels of real
property at various locations throughout the United States; however, none is
deemed by the Borrowers to be material on a Consolidated basis, other than the
premises owned by ▇▇▇▇▇▇ known as ▇▇▇▇ ▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇; and no Borrower is a party to any material lease for real property;
(I) Authorization; Valid and Binding. Each Obligor has full power and
authority and is duly authorized and empowered to enter into, execute, deliver
and perform this Agreement and the Other Agreements to which it is a party, and
its officers executing and delivering this Agreement and the Other Agreements
are duly authorized and empowered to do so; and each of this Agreement and the
Other Agreements upon delivery to the Bank, will be valid and binding obligation
of such Obligor enforceable in accordance with its respective terms; provided,
however, such enforceability may be (i) limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally (except that the Bank Debt and Liens in favor of
the Bank described or set forth in or created by this Agreement and the Other
Agreements are not void ab initio or voidable), and (ii) subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law);
(J) No Violation. The execution, delivery and performance by each
Obligor of this Agreement and the Other Agreements to which it is a party shall
not, by the lapse of time, the giving of notice or otherwise, constitute a
violation of any applicable law or a breach of any provision contained in such
Obligor's Articles of Incorporation/Charter or Code of Regulations/Bylaws or
contained in any agreement, instrument or document to which such Obligor is now
a party or by which it is bound;
(K) Financials. The Financials have been prepared in accordance with
GAAP and fairly present in all material respects the assets, liabilities and
financial condition and results of operations of each Borrower and Group as of
the dates thereof; there are no omissions or other facts or circumstances which
are or may be material and there has been no material and adverse change in the
assets, liabilities or financial condition of any Obligor since the date of the
Financials; there exist no equity or long-term investments in, or outstanding
advances to, any Person by any Obligor not reflected in the Financials; there
exist no actions or proceedings pending or threatened against any Obligor, nor
has any Obligor guaranteed the obligations of any other Person;
(L) Judgments; Decrees. No Obligor is in default in respect of any
judgment, order, writ, injunction, decree or decision of any governmental body,
which default would have a material adverse effect on the financial condition,
operations, business or property of such Obligor; and each Obligor is in
compliance in all material respects with all applicable statutes and
regulations, a violation of which would have a material adverse effect upon the
financial condition, operations, business or property of such Obligor;
(M) Valid Liens. Upon execution and delivery of this Agreement and the
Other Agreements, the Liens in favor of the Bank provided for hereunder and
thereunder will constitute a duly perfected first priority Lien in the property
described therein (to the extent, as to personal property, that a security
interest therein can be perfected by the filing of financing statements) subject
to no prior or equal Liens, except for the Permitted Encumbrances; and
(N) Fed Regulations. Each Obligor's execution and delivery of this
Agreement and the Other Agreements to which it is a party does not directly or
indirectly violate or result in a violation of Regulations G, U or X of the
Board of Governors of the Federal Reserve System, and no Borrower owns nor
intends to purchase or carry any "margin security", as defined in said
Regulations.
6.2. Account Warranties and Representations. Each Borrower hereby
warrants and represents to the Bank, that the Bank may, in determining which
Accounts listed on or included or reflected in any borrowing certificate or
report of Accounts are Eligible Accounts, rely on all statements or
representations made by the Borrowers on or with respect to any such Certificate
or report and, unless otherwise indicated in writing by a Borrower, that:
(A) Genuine. They are genuine, are in all respects what they purport to
be, are not evidenced by a judgment and are evidenced by only one, if any,
executed original instrument, agreement, contract or document, which has been
delivered to the Bank;
(B) Complete Transactions. Except for Accounts included in the In
Transit Amount, they represent bona fide transactions completed in accordance
with the terms and provisions contained in any documents related thereto;
(C) Due and Owing. The face amounts included in or shown on any
schedule of Accounts provided to the Bank, and/or all invoices and statements
delivered to the Bank with respect to any Account are, except for Accounts
included in the In Transit Amount, actually and absolutely owing to a Borrower
and are not contingent for any reason;
(D) No Setoff. To the best of such Borrower's knowledge, there are no
setoffs, counterclaims or disputes existing or asserted in respect thereof, and
such Borrower has not made any agreement with any Account Debtor thereunder for
any deduction therefrom, except a discount or allowance allowed in the ordinary
course of business for prompt payment, all of which discounts or allowances are
reflected in the calculation of the face value of each respective invoice
related thereto;
(E) No Impairment. To the best of such Borrower's knowledge, except for
Accounts included in the Eligible Reserve, there are no facts, events or
occurrences which in any way impair the validity or enforcement thereof or tend
to reduce the amount payable thereunder included in or shown on any borrowing
certificate or report of Accounts, and on all contracts, invoices and statements
delivered to the Bank in respect thereof;
(F) Capacity. To the best of such Borrower's knowledge, all Account
Debtors thereunder had the capacity to contract at the time any contract or
other document giving rise to the Account was executed;
(G) No Liens. They are not subject to any Lien except for the security
interest in favor of the Bank created hereby; and
(H) Valid. Such Borrower has no knowledge of any fact of circumstance
which would impair the validity or collectibility thereof, except for Accounts
included in the Eligible Reserve.
6.3. Warranty and Reaffirmation of Warranties and Representations;
Survival of Warranties and Representations. Except as otherwise disclosed in
writing by the Borrowers to the Bank, each request for an advance made by a
Borrower pursuant to this Agreement shall constitute (i) a warranty and
representation by the Borrowers to the Bank that there does not then exist an
Event of Default or Possible Default, and (ii) a reaffirmation by the Borrowers
as of the date of said request of the representations and warranties contained
in Sections 6.1 and 6.2 with respect to Collateral then existing. All
representations and warranties of the Borrowers and the other Obligors contained
in this Agreement and the Other Agreements shall survive the execution, delivery
and acceptance thereof by the parties thereto and the closing of the
transactions described therein or related thereto.
7. COVENANTS AND CONTINUING AGREEMENTS
7.1. Affirmative Covenants. The Borrowers jointly and severally
covenant and agree, and where indicated the other Obligors jointly and severally
covenant and agree, that they shall:
(A) Collateral Maintenance. The Borrowers shall maintain as minimum
security for the Revolving Loans, Eligible Accounts having, in the aggregate, a
Borrowing Base (as determined pursuant to the definition thereof, above) not
less than the aggregate unpaid principal of all Revolving Loans; and, if not,
immediately pay to the Bank the difference between the Borrowing Base at such
time and the aggregate unpaid principal amount of the Revolving Loans;
(B) Financial Reporting. The Obligors shall keep and maintain accurate
books of account and financial records in respect of their respective businesses
and property and cause to be furnished to the Bank the following:
(i) as soon as available, but not later than ninety (90)
days after the close of each fiscal year of Group
hereafter, audited financial statements of Group on a
Consolidated basis and of Interstate as at the end of
such year prepared in accordance with generally
accepted auditing principles by a firm of independent
certified public accountants of recognized standing,
acceptable to the Bank and selected by Group or
Interstate, as the case may be, which financial
statements shall include a balance sheet, statements
of income and surplus, statements of cash flow, a
reconciliation of capital accounts, any management
letters written by such accountants and consolidating
financial statements for each of the other Obligors;
(ii) concurrently with the delivery of the financial
statements described in Subsection (i) above, a
certificate of such certified public accountants
certifying to the Bank that, based upon their
examination of the affairs of Group and its
Subsidiaries or of Interstate, as the case may be,
performed in connection with the preparation of said
financial statements, they are not aware of the
existence of any Event of Default or Possible
Default, or, if they are aware of such condition or
event, the nature thereof;
(iii) as soon as available, but not later than forty-five
(45) days after the end of each fiscal quarter of
Group, as of the end of such quarter (a) unaudited
interim financial statements of Group on a
Consolidated basis, including a balance sheet and
statements of income and surplus (together with
consolidating statements for each of the other
Obligors), fairly representing in all material
respects Group's Consolidated financial condition as
of the end of such month and (b) a certificate in
form and substance satisfactory to the Bank executed
by the chief financial officer of each Borrower,
certifying as to compliance by the Borrowers with the
covenants contained in Sections 7.2 (F), (G) and (H)
of this Agreement, which certificate shall set forth
in detail satisfactory to the Bank calculations
evidencing such compliance;
(iv) as soon as available, but not later than twenty (20)
days after the end of each month, (a) a Borrowing
Base certificate (in form and substance designated by
the Bank from time to time) duly completed and which
shall contain the In Transit Amount and the Eligible
Reserve as of such month end and (b) upon the Bank's
request, a report as to each Borrower's Accounts with
a supporting aged trial balance listing for each
Account Debtor, the number and dollar amount of the
Accounts due from such Account Debtor that are past
due for not more than thirty (30) days, past due for
not more than sixty (60) days, past due for not more
than ninety (90) days, and past due for more than
ninety (90) days, with the total dollar amount of
each of the foregoing;
(v) not later than thirty (30) days after the end of each
fiscal year of the Borrowers, a business plan of each
Borrower in respect of the immediately succeeding
fiscal year, which shall have been approved by the
Board of Directors of such Borrower, and which shall
include a projection of such Borrower's balance
sheet, earnings/loss and cash flow for each fiscal
quarter during such succeeding fiscal year;
(vi) immediately upon becoming aware of the existence of
an Event of Default, a written notice specifying the
nature and period of existence thereof and what
action the Obligor in question is taking or proposing
to take in respect thereof; and
(vii) promptly, such other data and information (financial
and otherwise) as the Bank, from time to time,
reasonably may require;
(C) Existence; Qualification. Each Obligor shall maintain (i) its
corporate existence in the jurisdiction of its formation and (ii) its
qualification in each other jurisdiction in which the failure so to do would
have a material adverse effect on its financial condition, business, operations
or property;
(D) Charges. The Obligors shall pay and discharge promptly when due (i)
all Charges and (ii) all lawful Debt, obligations and claims for labor,
materials and supplies or otherwise which, if unpaid, might have a material
adverse effect on its financial condition, operations, business or property,
provided that Obligors shall not be required to pay and discharge or cause to be
paid and discharged any such Charges, Debt (other than the Bank Debt),
obligations or claims so long as the validity thereof shall be contested in good
faith and by appropriate proceedings diligently conducted, and further provided
that a reserve or other appropriate provision as shall be in accordance with
GAAP shall have been made therefor;
(E) Compliance with Laws. The Obligors shall observe and comply in all
material respects with all laws (including ERISA), ordinances, orders,
judgments, rules, regulations, certifications, franchises, permits, licenses,
directions and requirements of all governmental bodies, which now or at any time
hereafter may be applicable to it, a violation of which might have a material
adverse effect on its financial condition, operations, business or property;
(F) Inspection. Each Obligor shall permit representatives of the Bank
to visit its offices during normal business hours to examine the books and
records thereof and accountants' reports relating thereto, and to make copies or
extracts therefrom, and to discuss the affairs of such Obligor with the officers
thereof, at all reasonable times, and, at all reasonable times, to meet and
discuss the affairs of such Obligor with Group's accountants;
(G) Material Commitments. Each Borrower shall maintain in full force
and effect, all material agreements, including, without limitation, all leases,
franchises, copyrights, patents, licenses, permits, applications, reports,
authorizations and other rights, as are necessary for the conduct of its
business;
(H) Account Notification. The Borrowers shall, immediately upon a
Borrower's learning thereof, inform the Bank, in writing, of (i) any material
delay in a Borrower's performance of any of its obligations to any Account
Debtor and of any assertion of any material claims, offsets or counterclaims by
any Account Debtor and of any allowances, credits (other than as permitted in
Section 6.2(D)) or other monies granted by a Borrower to any Account Debtor;
(ii) all material adverse information relating to the financial condition of any
Account Debtor; (iii) any facts relating to any Account which would render
untrue, in any material respects, any representation or warranty made pursuant
to Section 6.2; (iv) any litigation affecting a Borrower, whether or not the
claim is considered by the Borrowers to be covered by insurance, and of the
institution of any suit or administrative proceeding which may materially and
adversely affect the operations, financial condition or business of a Borrower
or the Bank's security interest in the Collateral;
(I) Taxes. The Borrowers shall pay all stamp and any other similar
excise taxes claimed payable by any Federal or state authority with respect to
this Agreement or the Revolving Note, which obligation shall survive the
termination of this Agreement and payment of the Bank Debt;
(J) Discharge Liens. The Borrowers shall promptly after discovery of
existence discharge any Liens against the Collateral, other than the Permitted
Encumbrances;
(K) Repair. The Borrowers shall keep and maintain all tangible
Collateral in good operating order and repair, ordinary wear and tear and
obsolescence excepted; and
(L) Other Covenants. The Borrowers shall perform, observe and comply
with such other covenants as the Bank may from time to time reasonably require
of the Borrowers to assure the repayment in full of all of the Bank Debt or the
complete and timely performance by the Borrowers of all the provisions of the
Borrowers hereunder.
7.2. Negative Covenants. The Borrowers jointly and severally covenant
and agree, and where indicated the other Obligors jointly and severally covenant
and agree, that they shall not:
(A) Other Debt. No Borrower shall incur, create, assume, or have
outstanding any Funded Debt, except (i) instruments creating or securing
Permitted Encumbrances, (ii) the Revolving Note, (iii) notes for Debt otherwise
owing to the Bank, (iv) Subordinated Debt, (v) Funded Debt shown as liabilities
of one or more of the Obligors on the Consolidated balance sheet of Group as of
December 31, 1997 delivered to the Bank prior to the Closing Date, and (vi)
Funded Debt, in addition to that described in clauses (i) through (v), above,
which does not at any time in the aggregate exceed $750,000 on a Consolidated
basis;
(B) Sale and Leaseback; Liens. Except as provided in Section 5.11, no
Borrower shall enter into any sale and leaseback transaction or arrangement with
any Person with respect to any of the assets of such Borrower or its
Subsidiaries, or grant a security interest, mortgage, pledge, hypothecate or
otherwise voluntarily place a Lien upon any assets for any obligation of such
Borrower, except for Permitted Encumbrances;
(C) Merger; Consolidation; Sale. No Obligor shall merge or consolidate
with or into, or enter into any merger agreement with any other entity, or
lease, sell or transfer all or substantially all its property, assets and
business to any other entity, other than another Obligor;
(D) Investments. No Obligor shall make any advance to, or investment of
any kind in, or loan any money to, or guarantee any obligation of any other
Person or purchase any evidence of Debt or securities (including Stock) or the
business or substantially all of the property of any other Person or hereafter
make prepayments or advances to others except for (i) endorsements of
instruments or items of payment for deposit to the general account of such
Obligor in the ordinary course of business or for delivery to the Bank on
account of the Bank Debt, (ii) loans to officers of a Borrower the proceeds of
which are used to fund his or her obligations in connection with his or her
exercise of rights under an employee stock option plan, so long as the aggregate
amount of all such loans at any time outstanding does not exceed $600,000 on a
Consolidated basis, (iii) advances to employees (other than of the type
described in clause (ii), above) made in the ordinary course of such Obligor's
business in the aggregate amount of not more than $150,000 at any time
outstanding on a Consolidated basis, (iv) the obligations of such Obligor under
and pursuant to this Agreement and the Other Agreements and (v) Subsidiaries of
Group which are guarantors of the Bank Debt pursuant to a Guaranty in the form
of Exhibit D hereto;
(E) Assignment of Accounts. No Obligor shall sell, assign or transfer
any notes, accounts receivable or money due or to become due either as security
or otherwise, except to secure the Debt of the Obligors hereunder or other Debt
now or hereafter owing to the Bank;
(F) Leverage. The Obligors shall not allow the Leverage Ratio as at the
end of any fiscal quarter to be greater than forty-five percent (45%).
(G) Net Worth. The Obligors shall not allow Consolidated Net Worth (i)
as at the end of the fiscal quarter ending March 31, 1998 to be less than an
amount equal to the sum of (a) $12,000,000, plus (b) the Quarterly Increase for
such fiscal quarter; and (ii) as at the end of any fiscal quarter thereafter to
be less than an amount equal to the sum of (a) the Previous Minimum for such
fiscal quarter, plus (b) the Quarterly Increase for such fiscal quarter.
(H) Interest Coverage. The Obligors shall not allow the Interest
Coverage Ratio as of the end of any fiscal quarter, commencing June 30, 1998, to
be less than (a) as at the end of the fiscal quarters ending June 30, and
September 30, 1998, 2.50 to 1, and (b) as at the end of any fiscal quarter
thereafter, 3.00 to 1;
(I) Drafts; Trade Acceptances. No Obligor shall accept any drafts or
trade acceptances against it;
(J) Records and Collateral Locations. No Borrower shall remove its
books and records and/or the Collateral from the location(s) set forth in
Schedule 6.1(E) or keep any of such books and records and/or the Collateral at
any other office(s) or location(s) unless (i) such Borrower gives the Bank
written notice thereof and of the new location of said books and records and/or
the Collateral at least thirty (30) days prior thereto and (ii) the other office
or location is within the continental United States of America; or
(K) Plans. No Obligor shall terminate any Plan which would (i) result
in any liability of any Obligor to the PBGC, or (ii) permit the occurrence of
any Reportable Event (as defined in Section 6.1(C)), or any other event or
condition, which presents a risk of such a termination by the PBGC of any Plan,
or (iii) withdraw or effect a partial withdrawal from a Multiemployer Plan if
such withdrawal would result in any Obligor's incurring any withdrawal liability
in excess of $100,000.
7.3. Payment of Charges and Claims. If an Obligor at any time or times
hereafter, shall fail to pay the Charges when due or promptly obtain the
discharge of such Charges or of any Lien asserted against the Collateral, the
Bank may, without waiving or releasing any obligation or liability of the
Obligors or any Event of Default, in its sole discretion, at any time or times
thereafter, make such payment, or any part thereof, or obtain such discharge and
take any other action with respect thereto which the Bank deems advisable. All
sums paid by the Bank hereunder and any expenses, including reasonable
attorneys' fees, court costs, expenses and other charges relating thereto, shall
be payable, upon demand, by the Borrowers to the Bank and shall be additional
Bank Debt hereunder secured by the Collateral.
7.4. Insurance, Payment of Premiums.
(A) Maintenance of Insurance. Each Borrower shall, at its sole cost and
expense, keep and maintain (i) the tangible Collateral and the records relating
to the Accounts insured for their full insurable value against loss or damage by
fire (including so-called "extended coverage"), theft, explosion, sprinkler
leakage and all other hazards and risks ordinarily insured against by other
prudent owners or users of such properties in similar businesses (sometimes
referred to herein as "casualty insurance"), and (ii) insurance for liability
from personal injury and property damage in such amounts as similar businesses
maintain. The Borrowers shall notify the Bank promptly of any event or
occurrence causing a material loss or decline in value of such Collateral and
the estimated (or actual, if available) amount of such loss or decline. All
policies of insurance on such Collateral shall be in form and with insurers
recognized as adequate by prudent business persons and all such policies shall
provide such coverages and be in such amounts as may be reasonably satisfactory
to the Bank.
(B) Evidence; Requirements; Power of Attorney. At the Bank's request,
the Borrowers shall deliver to the Bank the original (or certified copy) of each
policy of insurance required hereunder and evidence of payment of all premiums
therefor. Such policies of casualty insurance shall contain a mortgagee
endorsement or provision, in form and substance acceptable to the Bank, and
shall show loss payable to the Bank. Such policies, or an independent instrument
furnished to the Bank, shall provide that the insurance companies will give the
Bank at least thirty (30) days prior written notice before any such policy or
policies of insurance shall be altered or canceled and that no act or default of
a Borrower, or any other Person shall affect the right of the Bank to recover
under such policy or policies of insurance in case of loss or damage. Each
Borrower hereby directs all insurers under such policies of casualty insurance
to pay all proceeds payable thereunder directly to the Bank. Each Borrower
irrevocably makes, constitutes and appoints the Bank (and all officers,
employees or agents designated by the Bank) as such Borrower's true and lawful
attorney and agent-in-fact for the purpose of making, settling and adjusting
claims under such policies of casualty insurance, endorsing the name of such
Borrower on any check, draft, instrument or other items of payment for the
proceeds of such policies of casualty insurance and for making all
determinations and decisions with respect to such policies of casualty
insurance. In the event a Borrower, at any time hereafter, shall fail to obtain
or maintain any of the policies of insurance required above or to pay any
premium in whole or in part relating thereto, then the Bank, without waiving or
releasing any obligations or Event of Default, may at any time thereafter (but
shall be under no obligation to) obtain and maintain such policies of insurance
and pay such premium and take any other action with respect thereto which the
Bank deems advisable. All sums so disbursed by the Bank, including reasonable
attorneys' fees, court costs, expenses and other charges relating thereto, shall
be payable on demand by the Borrowers to the Bank and shall be additional Bank
Debt hereunder secured by the Collateral.
7.5. Use of Proceeds. The Borrowers covenant and agree that the
proceeds of the Revolving Loans for working capital for corporate purposes and
the conduct of their respective businesses.
7.6. Survival of Obligations Upon Termination of Agreement. Except as
otherwise expressly provided for in this Agreement and in the Other Agreements,
no termination or cancellation (regardless of cause or procedure) of this
Agreement or the Other Agreements shall in any way affect or impair the powers,
obligations, duties, rights, and liabilities of the Obligors or the Bank
relating to any transaction or event occurring prior to such termination or
cancellation.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
8.1. Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
(A) Payment. If the Borrowers shall fail to pay (i) when due, or within
five (5) days thereafter, any principal (including, without limitation,
principal due pursuant to Section 7.1(A), above) or interest under the Revolving
Note or (ii) any other portion of the Bank Debt within ten (10) days after the
Bank sends to the Borrowers written demand therefor;
(B) Other Covenants. If an Obligor (i) shall fail or omit to perform,
observe or satisfy any of the warranties, covenants, agreements or conditions
contained in Section 7.2, above or (ii) shall fail or omit to perform, observe
or satisfy any of the warranties, covenants, agreements or conditions (other
than those referred to in Paragraph (A) or in clause (i) of this Paragraph (B))
contained in this Agreement or any of the Other Agreements and such failure or
omission shall not have been fully corrected within thirty (30) days after the
giving of written notice thereof to the Borrowers by the Bank that the specified
Possible Default is to be remedied; provided, however, that if any such failure
or omission is not of the type which is susceptible to correction within said 30
day period, then such failure or omission shall be deemed an Event of Default as
of the date of occurrence thereof;
(C) Representations and Warranties. Any warranty, representation or
written statement made or furnished to the Bank by or on behalf of an Obligor
proves to have been false in any material respect when made or furnished;
(D) Cross Default. If any event occurs which allows the acceleration of
the maturity of the Debt of any Obligor for Funded Debt owing to Persons other
than the Bank in excess of $500,000, including, without limitation, the
Subordinated Debt;
(E) Levy. If any Collateral is levied upon, seized or attached
judicially, and, in any of such events, the Bank does not immediately receive
substitute or replacement Collateral satisfactory to the Bank in its sole
discretion;
(F) Obligor Insolvency. If any Obligor shall suspend business, or if
any Obligor shall become insolvent or shall file a voluntary petition in
bankruptcy, or shall file a voluntary petition or an answer admitting the
jurisdiction of the court and the material allegations of, or shall consent to,
any involuntary petition pursuant to or purporting to be pursuant to any
bankruptcy, reorganization or insolvency law of any jurisdiction, or shall make
an assignment for the benefit of creditors, or shall apply for or consent to the
appointment of any receiver or trustee of all or a substantial part of the
property of such Obligor;
(G) Obligor Involuntary Proceedings. If an order shall be entered
against any Obligor (without the application, approval or consent of such
Obligor) and shall not be dismissed or stayed within thirty (30) days from its
entry pursuant to or purporting to be pursuant to any bankruptcy, reorganization
or insolvency law of any jurisdiction (i) approving an involuntary petition
seeking reorganization or liquidation; or (ii) approving an involuntary petition
seeking an arrangement with creditors of such Obligor; or (iii) appointing any
receiver or trustee of all or a substantial part of the property of such
Obligor;
(H) Other Insolvency. Default by any other surety or guarantor for an
Obligor in any obligation or liability to the Bank or the occurrence of any
event described in Section 8.1(F) or (G) in respect of any such guarantor or
surety;
(I) Loss of Collateral. Any material portion of the Collateral is
damaged or lost by fire, theft or other casualty which is uninsured, and the
Borrowers do not immediately, upon demand, furnish additional security
satisfactory to the Bank;
(J) Change of Control. A Change of Control shall occur;
(K) Judgments. Final judgment for the payment of money in excess of
$100,000 shall be rendered against any Obligor, and the same shall remain
undischarged for a period of thirty (30) days during which execution shall not
be effectively stayed;
(L) Subordinated Default. Any obligee of Subordinated Debt shall (i)
fail to materially comply with the subordination provisions of the instruments
evidencing such Subordinated Debt or any separate subordination agreement, or
(ii) initiate judicial proceedings against a Borrower or take any action seeking
to obtain possession of any assets of a Borrower without the consent of the
Bank; or
(M) ERISA. If (i) any Reportable Event occurs and the Bank in its
reasonable determination deems such Reportable Event to constitute grounds (A)
for the termination of any Plan by the PBGC or (B) for the appointment by the
appropriate United States district court of a trustee to administer any Plan and
such Reportable Event shall not have been fully corrected or remedied to the
full satisfaction of the Bank within thirty (30) days after giving of written
notice of such determination to the Borrowers by the Bank or (ii) any Plan shall
be terminated within the meaning of title IV of ERISA, or (iii) a trustee shall
be appointed by the appropriate United States district court to administer any
Plan, or (iv) the PBGC shall institute proceedings to terminate any Plan or to
appoint a trustee to administer any Plan.
8.2. Acceleration of the Bank Debt.
(A) Optional Acceleration. Upon the occurrence of an Event of Default
described in Section 8.1(A), (B), (C), (D), (E), (H), (I), (J), (K), (L), or (M)
and at any time thereafter, if any such Event of Default shall then be
continuing, the Revolving Loans and all other Bank Debt shall, at the option of
the Bank and without demand, notice, or legal process of any kind, be declared,
and thereupon immediately shall become, due and payable in full, and the Bank
shall have no further obligation to advance Revolving Loans hereunder.
(B) Automatic Acceleration. Upon the occurrence of an Event of Default
described in Section 8.1(F) or (G), all of the Bank Debt shall automatically
without any declaration or other action by the Bank, and without demand, notice
or legal process of any kind, be declared, and immediately shall become, due and
payable, and the Bank shall have no further obligation to advance Revolving
Loans hereunder.
8.3. Remedies. Upon, and thereafter during the continuance of, an Event
of Default, the Bank shall have the following other rights and remedies:
(A) Cumulative Remedies. In addition to any other rights and remedies
contained in this Agreement and in all of the Other Agreements, all of the
rights and remedies of a secured party under the Code or other applicable law,
all of which rights and remedies (under this Agreement, the Other Agreements,
the Code and at law and in equity) shall be cumulative and nonexclusive, to the
extent permitted by law;
(B) Mail. The right to open the mail of the Borrowers and collect any
and all amounts due from the Account Debtors;
(C) Entry; Assembly of Collateral. The right to (i) enter upon the
premises of the Borrowers without any obligation to pay rent, through self-help
and without judicial process, without first obtaining a final judgment or giving
notice and opportunity for a hearing on the validity of the Bank's claim, or any
other place or places where the Collateral is located and kept, and remove the
Collateral therefrom to the premises of the Bank or any agent of the Bank, for
such time as the Bank may desire, in order to collect or liquidate effectively
the Collateral, or (ii) require the Borrowers to assemble the Collateral and
make it available to the Bank at a place to be designated by the Bank, in its
sole discretion;
(D) Collection, Compromise of Accounts. The right to (i) demand payment
of the Accounts; (ii) enforce payment of the Accounts, by legal proceedings or
otherwise; (iii) exercise all of a Borrower's rights and remedies with respect
to the collection of the Accounts and Special Collateral; (iv) settle, adjust,
compromise, extend or renew the Accounts; (v) settle, adjust or compromise any
legal proceedings brought to collect the Accounts; (vi) if permitted by
applicable law, sell or assign the Accounts and Special Collateral upon such
terms, for such amounts and at such time or times as the Bank deems advisable;
(vii) discharge and release the Accounts and Special Collateral; (viii) take
control, in any manner, of any item of payment or proceeds referred to in
Section 5.9; (ix) prepare, file and sign each Borrower's name on any Proof of
Claim in bankruptcy or similar document against any Account Debtor; (x) prepare,
file and sign each Borrower's name on any Notice of Lien, Assignment or
Satisfaction of Lien or similar document in connection with the Accounts and
Special Collateral; (xi) do all acts and things necessary in the Bank's sole
discretion, and at its option to fulfill each Borrower's obligations under this
Agreement; (xii) endorse the name of each Borrower upon any chattel paper,
document, instrument, invoice, freight ▇▇▇▇, ▇▇▇▇ of lading or similar document
or agreement relating to the Collateral; (xiii) use each Borrower's stationery
and sign the name of such Borrower to verifications of the Accounts and notices
thereof to Account Debtors and (xiv) use the information recorded on or
contained in any data processing equipment and computer hardware and software
relating to the Collateral to which such Borrower has access; and
(E) Sale; Disposition. The right to (i) sell or to otherwise dispose of
all or any Collateral in its then condition or after any further modification or
processing thereof, at public or private sale or sales, in lots or in bulk, for
cash or on credit, all as the Bank, in its sole discretion, may deem advisable;
(ii) adjourn such sales from time to time with or without notice; (iii) conduct
such sales on a Borrower's premises or elsewhere and use a Borrower's premises
without charge for such sales for such time or times as the Bank may see fit.
The Bank is hereby granted a license or other right to use, without charge, each
Borrower's labels, copyrights, rights of use of any name, trade secrets, trade
names, trademarks and advertising matter, or any property of a similar nature as
it pertains to the Collateral, in advertising for sale and selling any
Collateral, and each Borrower's rights under all licenses, permits and all
franchise agreements which are Collateral shall inure to the Bank's benefit. The
Bank shall have the right to sell, lease or otherwise dispose of the Collateral,
or any part thereof, for cash, credit or any combination thereof, and the Bank
may purchase all or any part of the Collateral at public or, if permitted by
law, private sale and, in lieu of actual payment of such purchase price, may
setoff the amount of such price against the Bank Debt. The proceeds realized
from the sale of any Collateral shall be applied first to the reasonable costs,
expenses and attorneys' fees and expenses incurred by the Bank for collection
and for acquisition, completion, protection, removal, storage, sale and delivery
of the Collateral; second to interest due upon any of the Bank Debt; third to
the principal of the Revolving Loans; and fourth to the remaining Bank Debt, if
any. Subject to any applicable order of court or other requirement of law, any
surplus shall be paid to the Borrowers or other claimants as their interests may
appear. If any deficiency shall arise, the Borrowers shall remain liable to the
Bank therefor.
8.4. Interest Rate in the Event of Default. Upon the occurrence and
during the continuance of an Event of Default, the rate of interest accruing on
the Bank Debt (the "Default Interest Rate") shall, at the Bank's option, be
increased to a rate per annum which shall be three hundred (300) Basis Points in
excess of the rate of interest which would otherwise accrue pursuant to Section
2.3.
8.5. Notice. Any notice required to be given by the Bank of a sale,
lease, other disposition of the Collateral or any other intended action by the
Bank, if given five (5) days prior to such proposed action, shall constitute
commercially reasonable and fair notice thereof to the Borrowers.
8.6. Rights Cumulative. The Bank's rights and remedies herein are
cumulative and non-exclusive; and no such right or remedy specified in this
Article 8 shall be deemed to limit, before or after the occurrence of an Event
of Default, the exercise of any right of the Bank provided for elsewhere in this
Agreement or in the Other Agreements, including, without limitation Article 5,
above, or at law or in equity.
9. MISCELLANEOUS
9.1. Appointment of the Bank as Lawful Attorney. Each Borrower
irrevocably designates, makes, constitutes and appoints the Bank (and all
persons designated by the Bank) as such Borrower's true and lawful attorney (and
agent-in-fact) and the Bank, or the Bank's agent, may, without notice to such
Borrower:
(A) At such time or times hereafter as the Bank or said agent, in its
sole discretion, may determine, in such Borrower's or the Bank's name, endorse
such Borrower's name on any checks, notes, drafts or any other payment relating
to and/or proceeds of the Collateral which come into the possession of the Bank
or under the Bank's control; and
(B) Sign the name of such Borrower on any of the Supplemental
Documentation and deliver any of the Supplemental Documentation to such Persons
as the Bank, in its sole discretion, may elect.
9.2. Modification of Agreement; Sale of Interest. This Agreement and
the Other Agreements may not be modified, altered or amended, except by an
agreement in writing signed by the Obligors and the Bank. No Borrower may sell,
assign or transfer this Agreement, or the Other Agreements or any portion
thereof, including, without limitation, such Borrower's rights, title, interest,
remedies, powers, and/or duties hereunder or thereunder. Each Obligor hereby
consents to the Bank's participation, sale, assignment, transfer or other
disposition, at any time or times hereafter of this Agreement, or the Other
Agreements, or of any portion hereof or thereof, including, without limitation,
the Bank's rights, title, interest, remedies, powers, and/or duties hereunder or
thereunder.
9.3. Expenses (Including Attorneys' Fees). The Borrowers shall pay, and
upon demand reimburse the Bank, for all of the Bank's costs and expenses
incidental to the extension of credit and the administration or modification
thereof (including, without limitation, the collection of any and all Bank Debt
and the negotiation, preparation and enforcement of this Agreement and all of
the Other Agreements) provided for in this Agreement or any Other Agreement
including reasonable fees and out-of-pocket expenses of the Bank's counsel,
title fees, survey fees, inspection fees, revenue, stamp, excise, note and
mortgage taxes claimed payable by any federal, state or local authority, with
obligation to pay all such costs to survive the termination of this Agreement
and payment of the Bank Debt. All such expenses paid by the Bank hereunder shall
be additional Bank Debt secured by the Collateral.
9.4. Waiver by the Bank. The Bank's failure, at any time or times
hereafter, to require strict performance by an Obligor of any provision of this
Agreement or the Other Agreements shall not waive, affect or diminish any right
of the Bank thereafter to demand strict compliance and performance. Any
suspension or waiver by the Bank of an Event of Default under this Agreement or
the Other Agreements shall not suspend, waive or affect any other Event of
Default under this Agreement or the Other Agreements, and no Event of Default
under this Agreement or the Other Agreements shall be deemed to have been
suspended or waived by the Bank, unless such suspension or waiver is by an
instrument in writing signed by an officer of the Bank, directed to the
Borrowers and specifying such suspension or waiver.
9.5. Severability. Wherever possible, each provision of this Agreement
and the Other Agreements shall be interpreted in such manner as to be effective
and valid under applicable law. If, however, any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement, unless the ineffectiveness of such provision materially and adversely
alters the benefits accruing to any party hereunder.
9.6. Parties. This Agreement and the Other Agreements shall be binding
upon and inure to the benefit of the Obligors and the Bank and their respective
successors and assigns. This provision, however, shall not be deemed to modify
Section 9.2 hereof.
9.7. Conflict of Terms. The Other Agreements and all Exhibits hereto
are incorporated in this Agreement by this reference thereto. Except as
otherwise provided in this Agreement and except as otherwise provided in the
Other Agreements by specific reference to the applicable provision of this
Agreement, if any provision contained in this Agreement is in conflict with, or
inconsistent with, any provision in the Other Agreements, the provision
contained in this Agreement shall govern and control.
9.8. Waivers by Obligors. Except as otherwise provided for in this
Agreement, each Obligor waives (i) presentment, demand and protest and notice of
presentment, protest, default, non-payment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties at any
time held by the Bank on which such Obligor may in any way be liable and hereby
ratifies and confirms whatever the Bank may do in this regard; (ii) all rights
to notice of a hearing prior to the Bank's taking possession or control of, or
to the Bank's replevy, attachment or levy upon, the Collateral or any bond or
security which might be required by any court prior to allowing the Bank to
exercise any of the Bank's remedies; and (iii) the benefit of all valuation,
appraisement and exemption laws. Each Obligor acknowledges that it has been
advised by counsel of its choice with respect to this Agreement and the
transactions evidenced by this Agreement.
9.9. Governing Law. THIS AGREEMENT IS EXECUTED AND DELIVERED IN THE
STATE OF OHIO, THE LAWS OF WHICH SHALL GOVERN THE VALIDITY, ENFORCEMENT, AND
INTERPRETATION HEREOF AND OF THE OTHER AGREEMENTS. EACH OBLIGOR HEREBY CONSENTS
TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF
OHIO OR ANY JURISDICTION IN WHICH COLLATERAL IS LOCATED, AND WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON ITSELF, AND CONSENTS THAT ALL SUCH SERVICE
OF PROCESS BE MADE BY REGISTERED OR CERTIFIED MAIL DIRECTED TO SUCH OBLIGOR AT
THE ADDRESS OF SUCH OBLIGOR SET FORTH IN SECTION 9.11, BELOW, AND SERVICE SO
MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF.
9.10. WAIVER OF JURY TRIAL. EACH OF THE BANK, ▇▇▇▇▇▇, TDI, INTERSTATE
AND GROUP, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, BETWEEN THE BANK AND ANY OF THE OBLIGORS ARISING OUT OF, IN
CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN ANY AND ALL OF THE OBLIGORS AND THE BANK IN CONNECTION WITH THIS
AGREEMENT OR ANY OF THE OTHER AGREEMENTS OR THE TRANSACTIONS RELATED THERETO.
THIS WAIVER SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY THE
BANK'S ABILITY TO PURSUE REMEDIES PURSUANT TO ANY CONFESSION OF JUDGMENT OR
COGNOVIT PROVISION CONTAINED IN THE REVOLVING NOTE, ANY GUARANTY OF PAYMENT OR
ANY OTHER AGREEMENT, INSTRUMENT OR DOCUMENT RELATED THERETO.
9.11. Notice. All notices, requests, demands, directions and other
communications given to or made upon any party hereto under the provisions of
this Agreement shall be in writing (including telecopied communication) and
shall be hand delivered or sent by certified mail, return receipt requested, or
first class "Express Mail" or overnight courier service, with receipt for
delivery thereof, or by telex, telecopy or telegram with confirmation in writing
by certified mail, return receipt requested or Express Mail or overnight courier
service, with receipt for delivery thereof, in all cases with postage or charges
prepaid, to the applicable party, addressed as follows:
If to the Bank: KeyBank National Association
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
With a copy to: Berick, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ Co., L.P.A.
1350 ▇▇▇▇▇ Center
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇., Esq.
If to an Obligor: c/o The ▇▇▇▇▇▇ Group, Inc.
▇▇▇▇ ▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
600 1st Source Bank Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. Lake, Esq.
or in accordance with any unrevoked written direction from any party to each of
the other parties hereto. Each such notice shall be deemed to have been given or
received on the date received, except when sent by Express Mail or overnight
courier service, in which case such notice shall be deemed to have been received
on the next business day thereafter, and except further when sent by certified
mail, in which case such notice shall be deemed to have been received on the
third business day thereafter.
9.12. Section Titles. The Section titles contained in this Agreement
are and shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreement between the parties hereto.
9.13. No Assurance of Extension or Renewal. The Borrowers confirm that
the Bank has not made or given any agreement, understanding or other assurance
that the Bank will agree to extend or renew the term of the Revolving Credit
Facility beyond its maturity stated above. Without limiting the generality of
the foregoing sentence, the Borrowers also confirm that the inclusion in this
Agreement of certain covenants or other provisions containing or contemplating
dates which are after such stated maturity of the Revolving Credit Facility were
included herein solely for convenience in the event that such term is extended
or renewed and shall not be construed to imply that the Bank has made or given
any agreement, understanding or other assurance that it will extend or renew
such term.
10. JOINT AND SEVERAL
The Borrowers agree and acknowledge that their liability to pay all
Bank Debt and to perform all other obligations under this Agreement and each
Other Agreement to which they are a party is and shall be joint and several. No
Borrower shall have any right of subrogation, reimbursement or similar right in
respect of its payment of any sum or its performance of any other obligation
hereunder unless and until all Bank Debt has been paid in full and the Bank has
no further obligation hereunder. In addition, each Borrower confirms that upon
the Bank's advance of the Revolving Loans, it will have received adequate
consideration and reasonably equivalent value for the Debt incurred and other
agreements made in the this Agreement and the Other Agreements in that (i) their
businesses are operated as an integrated group, (ii) due to the nature of such
businesses, it is highly unlikely that the Borrowers could be financed
separately upon terms as favorable as they are under a unified credit facility,
and (iii) without the financing provided by the Bank hereunder to the Borrowers
jointly, no Borrower could reasonably expect to obtain financing separately on
terms as favorable as those provided for herein.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first set forth above.
BANK BORROWERS
KEYBANK NATIONAL ASSOCIATION ▇▇▇▇▇▇ DRIVE AWAY, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------- ----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Vice President Chief Financial Officer
GUARANTOR
THE ▇▇▇▇▇▇ GROUP, INC. TDI, INC.
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------- ----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Chief Financial Officer Chief Financial Officer
INTERSTATE INDEMNITY COMPANY
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Vice President
SCHEDULES AND EXHIBITS
Schedules:
Schedule 1A Financials
Schedule 1B Licenses, Patents, Etc.
Schedule 6.1(B) Permitted Encumbrances
Schedule 6.1(E) Locations of Inventory, Equipment,
Books and Records Relating to Collateral
Exhibits:
Exhibit A Form of Revolving Note
Exhibit B Form of Opinion of Borrower's Counsel
Exhibit C Form of Landlord Waiver
Exhibit D Form of Continuing Guaranty
EXHIBIT A
AMENDED AND RESTATED REVOLVING CREDIT NOTE
$15,000,000 Cleveland, Ohio
March 31, 1998
FOR VALUE RECEIVED, the undersigned ▇▇▇▇▇▇ DRIVE AWAY, INC., TDI, INC.,
and INTERSTATE INDEMNITY COMPANY (each a "Borrower" and, collectively, the
"Borrowers"), jointly and severally, promise to pay to the order of KEYBANK
NATIONAL ASSOCIATION (together with any subsequent holder of all or any portion
of this Note, the "Bank"), at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ or such
other address as the Bank may from time to time designate in writing, on April
30, 2001 the principal sum of FIFTEEN MILLION DOLLARS ($15,000,000) or the
aggregate unpaid principal amount of all loans evidenced by this Note made by
the Bank to the Borrowers or any of them pursuant to the Credit Agreement (as
hereinafter defined), whichever is less, in lawful money of the United States of
America. Capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed to such terms in that certain Amended and Restated
Credit Agreement and Security Agreement dated March 25, 1998 (as the same may
from time to time be amended, supplemented, restated or otherwise modified, the
"Credit Agreement"), among the Borrowers, the Bank and The ▇▇▇▇▇▇ Group, Inc.
The Borrowers jointly and severally promise to pay interest on the
unpaid principal amount of each Revolving Loan evidenced hereby from the date of
such Revolving Loan until principal amount is paid in full, at such interest
rates, computed in such manner, and payable at such times, as are specified in
the Credit Agreement. The Borrowers jointly and severally promise to pay on
demand interest on any overdue principal and, to the extent permitted by law,
overdue interest from their due dates at the rate or rates set forth in the
Credit Agreement; and upon and during the continuance of an Event of Default,
the indebtedness evidenced hereby shall bear interest at the Default Interest
Rate.
The portions of the principal sum hereof from time to time representing
Prime Rate Loans and LIBOR Loans, and payments of principal of any thereof, will
be shown on a ledger or other record of the Bank or by such other method as the
Bank may generally employ; provided, however, that failure to make any such
entry or any error in such entries shall in no way detract from the Borrowers'
obligations under this Note.
This Note is the Revolving Note referred to in the Credit Agreement.
Reference is made to the Credit Agreement for a description of the right of the
Borrowers to anticipate payments hereof, the right of the Bank to declare this
Note due prior to its stated maturity, and other terms and conditions upon which
this Note is issued. Without limiting the generality of the foregoing, upon the
occurrence of an Event of Default of the type described in Section 8.1(F) or (G)
of the Credit Agreement, the maturity of the obligations evidenced hereby shall,
automatically and without any action by the Bank, be accelerated, and such
obligations shall be immediately due and payable. Upon the occurrence of any
other Event of Default, the Bank may, at its option, without notice or demand,
accelerate the maturity of the obligations evidenced hereby, which obligations
shall become immediately due and payable. In the event the Bank shall institute
any action for the enforcement or collection of the obligations evidenced
hereby, the undersigned agrees to pay all costs and expenses of such action,
including reasonable attorneys' fees, to the extent permitted by law.
The indebtedness evidenced by this Note is secured by a Lien in the
Collateral pursuant to the Credit Agreement and is guaranteed by the Guaranty of
The ▇▇▇▇▇▇ Group, Inc.
This Note evidences the Borrowers' indebtedness for Revolving
Loans and amends and restates in its entirety the Master Revolving Note of
▇▇▇▇▇▇ and TDI in the face amount of $13,000,000 in favor of the Bank dated
March 27, 1997 (as amended by an amendment dated March 6, 1998, the "Prior
Note")(with Interstate joining in this Note pursuant to the Credit Agreement),
provided that this Note shall not be construed to evidence a payment and
readvance of the Revolving Loans evidenced thereby and hereby, it being the
intention of the Borrowers and, by its acceptance hereof, the Bank that both
such Notes evidence the same indebtedness. In addition to the foregoing, this
Note also evidences the indebtedness of the Borrowers for accrued and unpaid
interest due under the Prior Note which remains unpaid on the date hereof, all
of which interest shall be due and payable in full on March 31, 1998.
The Borrowers and each endorser, surety and guarantor hereby waive
diligence, presentment, demand, protest and notice of any kind whatsoever. The
failure to exercise or delay in exercise by the Bank of any of its rights
hereunder in any particular instance shall not constitute a waiver in that or
any subsequent instance.
The joint and several obligations of each of the Borrowers under this
Note shall be absolute and unconditional and shall remain in full force and
effect until all of the obligations hereunder shall have been paid or deemed
paid and, until such payment has been made, shall not be discharged, affected,
modified or impaired upon the happening from time to time of any event,
including without limitation, any of the following, whether or not with notice
to or the consent of any of the Borrowers:
(a) the waiver, compromise, indulgence, settlement, release,
termination, modification or amendment (including, without
limitation, any extension or postponement of the time for
payment or performance or renewal or refinancing) of any or
all of the obligations, covenants or agreements of any of the
Borrowers under this Note, the Credit Agreement or any of the
Other Agreements;
(b) the failure to give notice to any or all of the Borrowers of
the occurrence of an Event of Default;
(c) the release, substitution or exchange by the Bank of any
security held by it for the payment of any of the Liabilities
or the acceptance by the Bank of any additional security for
the Bank Debt or the availability, or claimed availability, of
any other security, collateral or source of repayment;
(d) the voluntary or involuntary liquidation, dissolution, sale or
other disposition of all or substantially all of the assets,
marshaling of assets and liabilities, receivership,
insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition with
creditors or readjustment of, or other similar proceedings
affecting, any or all of the Borrowers or any other person or
entity who, or any of whose property, shall at any time in
question be obligated in respect of the Liabilities or any
part thereof;
(e) any failure, omission, delay or neglect by the Bank in
enforcing asserting or exercising any right, power or remedy
under this Note, the Credit Agreement or any of the Other
Agreements or at law or in equity;
(f) the release of any person primarily or secondarily liable for
all or any part of the Bank Debt;
(g) any nonperfection or other impairment of any security;
(h) any assignment or transfer by the Bank of all or any interest
in this Note;
(i) the invalidity or unenforceability of any term or provision in
this Note, the Credit Agreement or any of the Other
Agreements; or
(j) to the extent permitted by law, any event or action that
would, in the absence of the provisions hereof, result in the
release or discharge of any or all of the Borrowers from the
performance or observance of any obligation, covenant or
agreement contained in this Note, the Credit Agreement or any
of the Other Agreements.
Without limiting the foregoing, it is the intention of the parties that any
modification, limitation, or discharge of the obligations of any of the
Borrowers arising out of or by virtue of any bankruptcy, reorganization, or
similar proceeding for relief of debtors under federal or state law shall not
affect, modify, limit or discharge the liability of any other co-Obligor in any
manner whatsoever, and this Note shall remain and continue in full force and
effect and shall be enforceable against such co-Obligors to the same extent and
with the same force and effect as if any such proceedings had not been
instituted, and the other co-Obligors shall be jointly and severally liable to
the Bank under this Note for the full amount payable hereunder, irrespective of
any modification, limitation, or discharge of the liability of any co-Obligor
that may result from any such proceeding. The obligations of the Borrowers to
the Bank pursuant hereto include and apply to any payment or repayments received
by the Bank on account of the liabilities evidenced hereby which payment or
payments or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be paid to a trustee,
receiver, or any other person or entity under any bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar law or equitable
doctrine. If any action or proceeding seeking such repayment is pending or, in
the Bank's sole judgment, threatened, this Note and, any security interest
herefor, shall remain in full force and effect notwithstanding that one, or more
or all of the Borrowers may not then be obligated to the Bank. The joint and
several obligations of the Borrowers to the Bank under and pursuant to this Note
and any security therefor, shall remain in full force and effect until the Bank
has received payment in full of all obligations hereunder and the expiration of
any applicable preference or similar period pursuant of any bankruptcy,
insolvency, reorganization, moratorium or similar law, or at law or in equity,
without any claim having been made before the expiration of such period
asserting an interest in all or any part of any payments received by the Bank.
If any of the terms or provisions of this Note shall be deemed
unenforceable, the enforceability of the remaining terms and provisions shall
not be affected. This Note shall be governed by and construed in accordance with
the law of the State of Ohio.
Each Borrower (a) hereby irrevocably submits to the jurisdiction of the
state courts of the State of Ohio and to the jurisdiction of the United States
District Court for the Northern District of Ohio, for the purpose of any suit,
action or other proceeding arising out of or based upon this Note or the subject
matter hereof brought by the Bank or its successors or assigns and (b) hereby
waives, and agrees not to assert, by way of motion, as a defense, or otherwise,
in any such suit, action or proceeding, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that its property is
exempt or immune from attachment or execution, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that this Note or the subject matter hereof
may not be enforced in or by such court and (c) hereby waives and agrees not to
seek any review by any court of any other jurisdiction which may be called upon
to grant an enforcement of the judgment of any such Ohio state or federal court.
Each Borrower agrees that its submission to jurisdiction and its consent to
service of process by mail is made for the express benefit of the Bank. Final
judgment against any Borrower in any such action, suit or proceeding may be
enforced in other jurisdictions (a) by suit, action or proceeding on the
judgment, or (b) in any other manner provided by or pursuant to the laws of such
other jurisdiction; provided, however, that the Bank may at its option bring
suit, or institute other judicial proceedings, against a Borrower in any state
or federal court of the United States or of any country or place where such
Borrower or its property may be found.
EACH BORROWER AND, BY ACCEPTANCE HEREOF, THE BANK , TO THE EXTENT
PERMITTED BY LAW WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE BANK AND
SUCH BORROWER ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED BETWEEN SUCH BORROWER (AND, IF APPLICABLE, THE
OTHER BORROWERS AND ▇▇▇▇▇▇ GROUP, INC.) AND THE BANK IN CONNECTION WITH THIS
NOTE, THE CREDIT AGREEMENT OR ANY OTHER AGREEMENT, INSTRUMENT, OR DOCUMENT
EXECUTED OR DELIVERED IN CONNECTION THEREWITH OR THE TRANSACTIONS RELATED
THERETO.
▇▇▇▇▇▇ DRIVE TDI, INC. INTERSTATE INDEMNITY
AWAY, INC. COMPANY
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------- --------------------- ----------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Chief Financial Chief Financial Vice President
Officer Officer
EXHIBIT C
LANDLORD ESTOPPEL CERTIFICATE, WAIVER AND CONSENT
This Landlord Estoppel Certificate, Waiver and Consent is made this __
day of March, 1998, by ____________________________, a _______________________
("Landlord"), for the benefit of KEYBANK NATIONAL ASSOCIATION, a national
banking association, and its successors and assigns ("Bank").
Landlord has entered into a certain Lease Agreement dated
_____________, 199__ ("Lease") with ______________________, a __________
corporation ("Borrower"), as lessee or tenant, for certain premises consisting
of _______ square feet located at ________________________________, ___________,
_______, ___________ County, _____ _____ ("Premises").
Bank is about to enter into a financing arrangement with Borrower and
as a condition to Bank's financing, Bank requires, among other things, certain
liens and security interests in and to all of Borrower's personal property, now
owned or hereafter acquired, including, without limitation, all of Borrower's
existing and future contract rights, accounts, accounts receivable, general
intangibles and all goods, inventory, machinery, equipment, fixtures, cash,
documents, instruments and chattel paper now owned or hereafter acquired by
Borrower, wherever located, including all proceeds of any and all of the
foregoing and all payments under insurance policies with respect to any of the
foregoing (collectively, the "Personal Property").
In addition, Bank requires, as a condition to its agreement to enter
into the above-referenced transaction, among other things, certain agreements
from Landlord with respect to the Lease and the Premises.
In consideration of the foregoing and of Landlord's ongoing business
relationship with Borrower, Landlord hereby represents and agrees as follows:
1. The Lease, a true and complete copy of which is attached
hereto as Exhibit A, is at present in full force and effect on
the date hereof; it has not been amended, supplemented,
extended or renewed in any respect except for such amendments
as may be included in said Exhibit; and there is no other
agreement or instrument to which Landlord is a party, which is
binding upon Borrower and which relates to the Premises,
including any assignment of the Lease. The terms of the Lease
include the following:
a. The term of the Lease is __ (__) years. The
commencement date is ____________________. The
expiration date is ________________.
b. The Lease provides for the following renewal or
expansion options:
============================
c. The initial annual base rent payable under the Lease
is $____________ payable in equal monthly
installments of $_____________.
d. The Lease provides for payment by Borrower of
additional rent as follows:
-----------------------------
e. The amount of the security deposit or any other
deposit of Borrower being held by Landlord tinder the
Lease is: $___________
2. There is no action, whether voluntary or otherwise, pending against
Landlord under bankruptcy or insolvency laws of the United States or
any state thereof which would prevent Landlord from fulfilling its
obligations under the Lease.
3. Landlord represents that Landlord is not in default under the Lease and
that Landlord has no knowledge that Borrower is currently in default
thereunder.
4. Landlord waives and relinquishes all rights of levy or distraint for
rent.
5. The Personal Property may be stored, utilized and/or installed in the
Premises and will not be deemed to be a fixture, real property or part
of the Premises, but rather will at all times be considered personal
property.
6. Landlord disclaims any interest in the Personal Property and agrees to
assert no claim to the Personal Property while Borrower is indebted to
Bank. Landlord represents and warrants to Bank that the Personal
Property is not subject to any lien or claim in favor of any mortgagee
of the Premises, and Landlord agrees that any future mortgage or lien
in favor of any mortgagee of the Premises will not create a security
interest or lien against the Personal Property.
7. Bank or its representatives may enter upon the Premises at any
reasonable time to inspect or remove the Personal Property provided,
however, that Bank shall repair at its own expense any injury to the
Premises caused by such removal, and may advertise and conduct a public
auction or private sale on the Premises.
8. In the event of a default by Borrower under any of its agreements or
other financial arrangements with Bank and notice of such default
having been given to the Landlord, at the option of Bank, the Personal
Property may remain on the Premises for up to one hundred eighty (180)
days at the base rental provided under the Lease, without Bank
incurring any other obligations of Borrower under the Lease and without
Bank being deemed to be in possession of the Premises.
9. Landlord agrees that simultaneously with any written notice to Borrower
of any default by Borrower of any of the provisions of the Lease, the
Landlord will give a copy of such written notice to Bank at:
KeyBank National Association
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Upon receipt of the notice, Bank will have at least thirty (30) days to
cure the default (in which event the Lease shall remain in full force
and effect), but Bank will have no obligation to do so.
10. Landlord consents to the grant by Borrower of an assignment of
Borrower's leasehold interest in the Lease in favor of Bank as security
for the financing extended to Borrower. Landlord hereby further
consents to acquisition by Bank, at Bank's option (which option is to
be exercised in writing within thirty (30) days of Bank's receipt of
notice of default as provided in Section 9, above, with notice to the
Landlord), of the absolute ownership of Borrower's interest in the
Lease, and does hereby agree that if Bank (or any purchaser under or
through Bank, including a purchaser by foreclosure or deed in lieu
thereof) takes possession of the leasehold estate, Bank (or such
purchaser) will, pursuant to the aforementioned notice, be recognized
as the lessee under the Lease. If Bank shall become the lessee
hereunder, Bank may sublease or assign the Lease for any lawful
purpose, subject to Landlord's consent as to the sublessee or assignee,
and the assignment of the Lease shall release and relieve Bank of all
obligations under the Lease.
11. This Waiver and Consent is binding on Landlord and the heirs, personal
representatives, successors and assigns of Landlord and inures to the
benefit of Bank and the successors and assigns of Bank.
12. The agreements contained herein shall continue in force until all of
Borrower's obligations and liabilities to Bank are paid and satisfied
in full and Bank's financing commitments to Borrower have been
terminated.
13. Landlord will notify all successor owners, transferees, purchasers and
mortgagees of the Premises of which Landlord is aware of the existence
of this Waiver and Consent. Landlord shall not agree to subordinate the
Lease to the right of any present or future lender or mortgagee of
Landlord unless such subordination includes a provision that in the
event of foreclosure or other right asserted under the mortgage, the
Lease and the rights of Borrower thereunder shall continue in full
force and effect and shall not be disturbed unless Borrower is in
default under the Lease.
14. The agreements contained herein may not be modified or terminated
orally.
IN WITNESS WHEREOF, Landlord has hereunto set its hand as of the date
first above written.
LANDLORD:
------------------------
By:_______________________
Its:_________________
BORROWER'S ACKNOWLEDGMENT
Borrower hereby acknowledges and concurs with the foregoing agreements
by Landlord as of this ___ day of March, 1998
------------------------
By:_____________________
Its:_______________
Acknowledgment
STATE OF ______________ )
)
COUNTY OF ____________ )
BEFORE ME, a Notary Public for said county and state, personally
appeared _______________________________, a ________________, by its
_____________, ______________________, who acknowledged that he/she signed the
foregoing Waiver and Consent and that the same is the free act and deed of said
___________ and of him/her personally and as such ___________.
Witness my hand at _______________, _________, this ____ day of March,
1998.
-----------------------------
NOTARY PUBLIC
My Commission expires:
EXHIBIT D
AMENDED AND RESTATED CONTINUING GUARANTY
WHEREAS, ▇▇▇▇▇▇ DRIVE AWAY, INC., TDI, INC., and INTERSTATE INDEMNITY
COMPANY (each a "Company" and, collectively, the "Companies"), have entered into
a certain Amended and Restated Credit and Security Agreement dated March 25,
1998 (as hereafter amended and supplemented, the "Credit Agreement") with
KeyBank National Association, a national banking association (the "Bank"),
pursuant to which the Companies have executed and delivered the Revolving Note
(as this and other capitalized terms not otherwise herein are defined in the
Credit Agreement) in evidence of its obligations thereunder to the Bank;
WHEREAS, the undersigned (the "Guarantor") is the record and beneficial
holder of all of the issued and outstanding Voting Stock of each Company; and
the Guarantor will derive benefits as a result of the Credit Agreement and the
Revolving Loans to be advanced thereunder; and
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement that the Guarantor execute and deliver this Guaranty; and the
Guarantor desires that the Credit Agreement become effective;
NOW, THEREFORE, in order to induce the Bank to enter into the Credit
Agreement, and in consideration of the benefits expected to accrue to the
Guarantor by reason thereof, and for other good and valuable consideration,
receipt and sufficiency of which are hereby acknowledged, the Guarantor hereby
represents and warrants to, and covenants and agrees with the Bank, as follows:
The Guarantor does hereby irrevocably and unconditionally guarantee to
the Bank the punctual payment of the full amount, when due (whether by demand,
acceleration or otherwise), of (i) the principal and interest on the Revolving
Note issued by the Companies pursuant to the Credit Agreement, and any amendment
or supplement thereto whether now outstanding or hereafter issued (including
interest accruing thereon after the commencement of any case or proceeding under
any federal or state bankruptcy, insolvency or similar law (a "Proceeding")
whether or not a claim for such interest is allowable in such Proceeding
("Post-Petition Interest")), and (ii) all other obligations and liabilities of
the Companies to the Bank under the Credit Agreement or under any other
agreement or instrument, including, without limitation, in respect of any letter
of credit or any reimbursement agreement in connection therewith, whether now or
hereafter existing, due or to become due, direct or contingent, joint, several
or independent, secured or unsecured and whether matured or unmatured (including
Post-Petition Interest ) (all of the liabilities included in clauses (i) and
(ii) of this Paragraph are hereinafter collectively referred to as the
"Guaranteed Obligations"). This is a guaranty of payment and not of collection
and is the primary obligation of the Guarantor; and the Bank may enforce this
Guaranty against the Guarantor without any prior pursuit or enforcement of the
Guaranteed Obligations against the Companies, any collateral, any right of
set-off or similar right, any other guarantor or other obligor or any other
recourse or remedy in the power of the Bank.
All payments made by the Guarantor under or by virtue of this Guaranty
shall be paid to the Bank at its office at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇ or such other place as the Bank may hereafter designate in writing. The
Guarantor hereby agrees to make all payments under or by virtue of this Guaranty
to the Bank as aforesaid no later than ten (10) days following the date on which
the Bank sends written demand hereunder to the Guarantor.
The Guarantor hereby waives (i) notice of acceptance of this Guaranty,
notice of the creation, renewal or accrual of any of the Guaranteed Obligations
and notice of any other liability to which it may apply, and notice of or proof
of reliance by the Bank upon this Guaranty, (ii) diligence, protest, notice of
protest, presentment, demand of payment, notice of dishonor or nonpayment of any
of the Guaranteed Obligations, suit or taking other action or making any demand
against, and any other notice to the Companies or any other party liable
thereon, (iii) any defense based upon any statute or rule of law to the effect
that the obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal, (iv) any defense based upon
the Bank's administration or handling of the Guaranteed Obligations, except
behavior which amounts to bad faith, and (v) to the fullest extent permitted by
law, any defenses or benefits which may be derived from or afforded by law which
limit the liability of or exonerate guarantors or sureties, or which may
conflict with terms of this Guaranty.
So far as the Guarantor is concerned, the Bank may, at any time and
from time to time, without the consent of, or notice to, the Guarantor, and
without impairing or releasing any of the Guaranteed Obligations hereunder, upon
or without any terms or conditions and in whole or in part:
1. modify or change the manner, place or terms of, and/or change
or extend the time of payment of, renew or alter, any of the
Guaranteed Obligations, any security therefor, or any
liability incurred directly or indirectly in respect thereof,
and this Guaranty shall apply to the Guaranteed Obligations as
so modified, changed, extended, renewed or altered;
2. request, accept, sell, exchange, release, subordinate,
surrender, realize upon or otherwise deal with, in any manner
and in any order, (a) any other guaranty by whomsoever at any
time made of the Guaranteed Obligations or any liabilities
(including any of those hereunder) incurred directly or
indirectly in respect thereof or hereof, and/or any offset or
right with respect thereto, and (b) any property by whomsoever
at any time pledged, mortgaged or otherwise encumbered to
secure, or howsoever securing, the Guaranteed Obligations or
any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or
any offset or right with respect thereto;
3. exercise or refrain from exercising any rights against the
Companies or against any collateral or others (including,
without limitation, any other guarantor) or otherwise act or
refrain from acting;
4. settle or compromise any of the Guaranteed Obligations, and
security therefor or any liability (including any of those
hereunder) incurred directly or indirectly in respect thereof
or hereof, and subordinate the payment of all or any part
thereof to the payment of any liability (whether due or not)
of any Company to creditors of such Company other than the
Bank when, in the Bank's sole judgment, it considers such
subordination necessary or helpful in the protection of its
interest or the exercise of its remedies, including, without
limitation, the sale or other realization upon collateral;
5. apply in the manner determined by the Bank any sums by
whomsoever paid or howsoever realized to any of the Guaranteed
Obligations, regardless of what liability or liabilities of
the Companies remain unpaid; and
6. amend or otherwise modify, consent to or waive any breach of,
or any act, omission or default or Event of Default under the
Credit Agreement or the Revolving Note, or any agreements,
instruments or documents referred to therein or executed and
delivered pursuant thereto or in connection therewith.
This Guaranty and the obligations of the Guarantor hereunder shall be
valid and enforceable and shall not be subject to limitation, impairment or
discharge for any reason (other than the payment in full of the Guaranteed
Obligations), including, without limitation, the occurrence of any of the
following, whether or not the Guarantor shall have had notice or knowledge of
any of them: (i) any failure to assert or enforce or agreement not to assert or
enforce, or the stay or enjoining, by order of court, by operation of law or
otherwise, of the exercise or enforcement of, any claim or demand of any right
power or remedy with respect to the Guaranteed Obligations or any agreement
relating thereto or with respect to any other guaranty thereof or security
therefor, (ii) any waiver, amendment or modification of, or any consent to
departure from, any of the terms or provisions (including, without limitation,
provisions relating to Events of Default) of the Credit Agreement, the Revolving
Note or any other agreement at any time executed in connection therewith, (iii)
the Guaranteed Obligations or any portion thereof at any time being found to be
illegal, invalid or unenforceable in any respect, (iv) the application of
payments received from any source to the payment of indebtedness other than the
Guaranteed Obligations, even though the Bank might have elected to apply such
payment to the payment of all or any part of the Guaranteed Obligations, (v) any
failure to perfect or continue perfection of a security interest in any
collateral which secures any of the Guaranteed Obligations, (vi) any defenses,
set-offs or counterclaims which any Company may allege or assert against the
Bank in respect of the Guaranteed Obligations, (vii) the avoidance or
voidability of the Guaranteed Obligations under the Bankruptcy Code or other
applicable laws, and (viii) any other act or thing or omission which may or
might in any manner or to any extent vary the risk of the Guarantor as an
obligor in respect of the Guaranteed Obligations.
The Guarantor makes the following representations and warranties, which
shall survive the execution and delivery of this Guaranty:
The execution, delivery and performance of this Guaranty has
been duly authorized by all necessary action of the
Guarantor's shareholders and directors.
Neither the execution and delivery of this Guaranty nor the
consummation of the transactions herein contemplated, nor
compliance with the terms and provisions hereof, will
contravene any provision of the Guarantor's charter or by-laws
or of any law, statute, rule or regulation to which the
Guarantor is subject or any judgment, decree, award,
franchise, order or permit, or will conflict or will be
inconsistent with, or will result in any breach of, any of the
terms, covenants or provisions of, or constitute a default
under, or result in the creation or imposition of any lien,
security interest, charge or other encumbrance upon any of the
properties or assets of the Guarantor pursuant to the terms of
any indenture, mortgage, deed of trust, agreement or other
instrument to which the Guarantor is a party or by which it is
bound or to which it may be subject.
Any and all rights and claims of the Guarantor against any
Company or any of its property, arising by reason of any payment by the
Guarantor to the Bank pursuant to the provisions of this Guaranty, shall be
subordinate and subject in right of payment to the prior and indefeasible
payment in full of all Guaranteed Obligations to the Bank, and until such time,
the Guarantor shall have no right of subrogation, contribution, reimbursement or
similar right and hereby waives any right to enforce any remedy the Bank or the
Guarantor may now or hereafter have against the Companies, any endorser or any
other guarantor of all or any part of the Guaranteed Obligations of the
Companies and any right to participate in, or benefit from, any security given
to the Bank to secure any Guaranteed Obligations. Any promissory note evidencing
such liability of any Company to the undersigned shall be non-negotiable and
shall expressly state that it is subordinated pursuant to this Guaranty. All
liens and security interests of the Guarantor, whether now or hereafter arising
and however existing, in any assets of any Company or any assets securing
Guaranteed Obligations shall be and hereby are subordinated to the rights and
interests of the Bank in those assets until the prior and indefeasible payment
in full of all Guaranteed Obligations to the Bank and termination of all
financing arrangements between the Companies and the Bank, provided that the
provisions of this sentence shall not be construed as a waiver or modification
of the provisions of Section 7.2 of the Credit Agreement restricting each
Company's right to grant or permit liens or encumbrances on its property.
The Guarantor hereby agrees to indemnify and hold harmless the Bank from
and against any losses, costs or expenses (including, without limitation,
reasonable attorneys' fees and litigation costs) ("Loss and Expense") incurred
by the Bank in connection with the Bank's collection of any sum due hereunder or
its enforcement of its rights hereunder.
All notices, requests, demands or other communications hereunder shall be
in writing, either by letter (delivered by hand or commercial delivery service
or sent by certified mail, return receipt requested), addressed as follows:
If to the Guarantor: ▇▇▇▇ ▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
If to the Bank: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Any notice, request, demand or other communication hereunder shall be
deemed to have been duly given when delivered, in the case of hand delivery or
commercial delivery service, and three (3) business days following deposit in
the mails, postage prepaid. The Bank and any Guarantor may change the person or
address to whom or which notices are to be given hereunder, by notice duly given
hereunder.
No delay on the part of the Bank in exercising any of its options, powers
or rights, and no partial or single exercise thereof, whether arising hereunder,
under the Credit Agreement, the Revolving Note, or otherwise, shall constitute a
waiver thereof or affect any right hereunder. No waiver of any such rights and
no modification, amendment or discharge of this Guaranty shall be deemed to be
made by the Bank or shall be effective unless the same shall be in writing
signed by the Bank, and then such waiver shall apply only with respect to the
specific instance involved and shall in no way impair the rights of the Bank or
the obligations of the Guarantor to the Bank in any other respect at any other
time.
Whenever the Bank shall credit any payment to the Guaranteed Obligations
or any part thereof, whatever the source or form of payment, the credit shall be
conditional as to the Guarantor unless and until the payment shall be final and
valid and indefeasible as to all the world. Without limiting the generality of
the foregoing, the Guarantor agrees that if any check or other instrument so
applied shall be dishonored by the drawer or any party thereto, or if any
proceeds of collateral so applied shall thereafter be recovered by any trustee
in bankruptcy or anyone else, the Bank in each case may reverse any entry
relating thereto in its books, and the Guarantor shall remain liable therefor
even if the Bank may no longer have in its possession any evidence of the
Guaranteed Obligations to which the payment in question was applied.
This Guaranty and the respective rights and obligations of the Bank and
the Guarantor hereunder shall be construed and enforced in accordance with the
laws of the State of Ohio applicable to contracts made and to be performed
wholly within such state. The Guarantor irrevocably consents that service of
notice, summons or other process in any action or suit in any court of record to
enforce this Guaranty may be made upon the Guarantor by mailing a copy of the
summons to the Guarantor by certified or registered mail, at the address
specified above. The Guarantor hereby waives the right to interpose
counterclaims or set-offs of any kind and description in any such action or suit
arising hereunder or in connection herewith.
It is the intention of the Guarantor hereby, and by acceptance of this
Guaranty the Lender agrees, that this Guaranty amends and restates in its
entirety the existing guaranty of the Guarantor in favor of the Bank dated March
27, 1997, which, subject to the effectiveness of this Guaranty, shall be deemed
to be superseded and of no further effect.
This Guaranty shall be binding upon the Guarantor and its successors and
assigns, and shall inure to the benefit of the Bank and its successors and
assigns. This Guaranty embodies the entire agreement and understanding between
the Bank and the Guarantor and supersedes all prior agreements and
understandings relating to the subject matter hereof.
If this Guaranty by the Guarantor is held or determined to be void,
invalid or unenforceable, in whole or in part, such holding or determination
shall not impair or affect the validity and enforceability of any clause or
provision not so held to be void, invalid or unenforceable. If this Guaranty as
to the Guarantor would be held or determined by a court or tribunal having
compe-tent jurisdiction to be void, invalid or unenforceable on account of the
amount of its aggregate liability under this Guaranty, then, notwithstanding any
other provision of this Guaranty to the contrary, the aggregate amount of the
liability of the Guarantor under this Guaranty shall, without any further action
by the Guarantor, the Bank or any other person, be automatically limited and
reduced to an amount which is valid and enforceable.
The Guarantor (a) hereby irrevocably submits to the jurisdiction of the
state courts of the State of Ohio and to the jurisdiction of the United States
District Court for the Northern District of Ohio, for the purpose of any suit,
action or other proceeding arising out of or based upon this Guaranty or the
subject matter hereof brought by the Bank or its successors or assigns and (b)
hereby waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that the suit, action
or proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that this Guaranty or the subject matter
hereof may not be enforced in or by such court and (c) hereby waives and agrees
not to seek any review by any court of any other jurisdiction which may be
called upon to grant an enforcement of the judgment of any such Ohio state or
federal court. The Guarantor agrees that its submission to jurisdiction and its
consent to service of process by mail is made for the express benefit of the
Bank. Final judgment against the Guarantor in any such action, suit or
proceeding may be enforced in other jurisdictions (a) by suit, action or
proceeding on the judgment, or (b) in any other manner provided by or pursuant
to the laws of such other jurisdiction; provided, however, that the Bank may at
its option bring suit, or institute other judicial proceedings, against the
Guarantor in any state or federal court of the United States or of any country
or place where the Guarantor or its property may be found.
Unless the context otherwise requires, all capitalized terms used in this
Guaranty without definition shall have the meanings provided therefor in the
Credit Agreement.
Without limiting the effect or intentions of the warrant of attorney
contained in the following paragraph, THE GUARANTOR AND, BY ITS ACCEPTANCE OF
THIS GUARANTY, THE BANK HEREBY IRREVOCABLY AGREE TO WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THE CREDIT AGREEMENT, ANY NOTE, OR THIS GUARANTY OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THE CREDIT AGREEMENT, ANY NOTE OR THIS
GUARANTY AND THE RELATIONSHIPS THEREBY ESTABLISHED. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including,
without limitation, contract claims, tort claims, breach of duty claims, and all
other statutory and common law claims. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS OF THIS GUARANTY. In the
event of litigation, this provision may be filed as a written consent to a trial
by the court.
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly
executed as fully written above as of this 31st day of March, 1998.
THE ▇▇▇▇▇▇ GROUP, INC.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Chief Financial Officer