REVOLVING CREDIT, ACQUISITION TERM LOAN
AND SECURITY AGREEMENT
dated
August 19, 1998
*
among
PHILIPP BROTHERS CHEMICALS, INC.,
as Borrower
and
PHIBRO-TECH, INC., C P CHEMICALS, INC., THE PRINCE MANUFACTURING COMPANY
THE PRINCE MANUFACTURING COMPANY, PRINCE AGRIPRODUCTS, INC.,
MINERAL RESOURCE TECHNOLOGIES, L.L.C., MRT MANAGEMENT CORP.,
KOFFOLK, INC., PHIBRO-CHEM, INC., PHIBROCHEMICALS,
WESTERN MAGNESIUM CORP.
as Guarantors
and
PNC BANK, NATIONAL ASSOCIATION,
as Agent and Lender
and
Other Lenders Listed on Signature Page
as Lenders
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit 2.1(a) Revolving Credit Note
Exhibit 2.2(b) Acquisition Term Note
Exhibit 5.5(b) Financial Projections
Exhibit 8.1(aa) Power of Attorney
Exhibit 8.1(i) Financial Condition Certificate
Exhibit 16.3 Commitment Transfer Supplement
SCHEDULES
Schedule 1.2A Leasehold Interests
Schedule 1.2B Permitted Encumbrances
Schedule 4.5 Equipment and Inventory Locations
Schedule 4.15(c) Location of Executive Offices
Schedule 4.19 Real Property
Schedule 4.19(g) Certain Locations Subject to Environmental
Remediation
Schedule 5.2(a) States of Qualification and Good Standing
Schedule 5.2(b) Subsidiaries
Schedule 5.4 Federal Tax Identification Number
Schedule 5.6 Prior Names
Schedule 5.7 Environmental
Schedule 5.8(b) Litigation
Schedule 5.8(d) Plans
Schedule 5.10 Licenses and Permits
Schedule 5.14 Labor Disputes
Schedule 5.25 Schedule of Other Billing Locations
Schedule 7.3 Guarantees
INDEX
Page
----
I DEFINITIONS..........................................................................................1
1.1 Accounting Terms............................................................................. 1
1.2 General Terms.................................................................................1
1.3 Uniform Commercial Code Terms............................................................... 15
1.4 Certain Matters of Construction..............................................................15
II ADVANCES, CONDITIONS, PAYMENTS......................................................................16
2.1 Revolving Advances/Individual Revolving Advances.............................................16
Discretionary Rights.........................................................................16
Use of Revolving Advances....................................................................16
2.2 Acquisition Term Loan........................................................................17
Use of Acquisition Term Loans................................................................17
2.3 Procedure for Revolving Advances Borrowing...................................................17
2.4 Disbursement of Advance Proceeds.............................................................19
2.5 Acquisition of Acquired Persons..............................................................19
2.6 Maximum Advances.............................................................................20
2.7 Repayment of Advances........................................................................21
2.8 Repayment of Excess Advances.................................................................21
2.9 Statement of Account.........................................................................21
2.10 Letters of Credit............................................................................21
2.11 Issuance of Letters of Credit................................................................22
2.12 Requirements for Issuance of Letters of Credit...............................................22
2.13 Additional Payments..........................................................................23
2.14 Manner of Borrowing and Payment..............................................................23
2.15 Mandatory Prepayments........................................................................25
2.16 Use of Proceeds..............................................................................25
2.17 Defaulting Lender............................................................................25
III INTEREST AND FEES...................................................................................26
3.1 Interest.....................................................................................26
3.2 Letter of Credit Fees........................................................................26
3.3 Closing Fee/Facility Fee.....................................................................26
3.4 Collateral Monitoring Fee....................................................................27
3.5 Computation of Interest and Fees.............................................................27
3.6 Maximum Charges..............................................................................27
3.7 Increased Costs..............................................................................27
3.8 Basis for Determining Interest Rate Inadequate or Unfair.....................................28
3.9 Capital Adequacy.............................................................................28
IV COLLATERAL: GENERAL TERMS...........................................................................29
4.1 Security Interest in the Collateral..........................................................29
4.2 Perfection of Security Interest..............................................................29
4.3 Disposition of Collateral....................................................................29
4.4 Preservation of Collateral...................................................................29
4.5 Ownership of Collateral......................................................................30
4.6 Defense of Agent's and Lenders' Interests....................................................30
4.7 Books and Records............................................................................30
4.8 Financial Disclosure.........................................................................31
4.9 Compliance with Laws.........................................................................31
4.10 Inspection of Premises.......................................................................31
4.11 Insurance....................................................................................31
4.12 Failure to Pay Insurance.....................................................................32
4.13 Payment of Taxes.............................................................................32
4.14 Payment of Leasehold Obligations.............................................................32
4.15 Receivables..................................................................................33
4.16 Inventory....................................................................................35
4.17 Maintenance of Equipment.....................................................................35
4.18 Exculpation of Liability.....................................................................35
4.19 Environmental Matters........................................................................35
4.20 Financing Statements.........................................................................37
4.21 Guaranty.....................................................................................37
V REPRESENTATIONS AND WARRANTIES......................................................................37
5.1 Authority....................................................................................37
5.2 Formation and Qualification..................................................................37
5.3 Survival of Representations and Warranties...................................................38
5.4 Tax Returns..................................................................................38
5.5 Financial Statements.........................................................................38
5.6 Corporate Name...............................................................................39
5.7 O.S.H.A. and Environmental Compliance........................................................39
5.8 Solvency; No Litigation, Violation, Indebtedness or Default..................................39
5.9 Patents, Trademarks, Copyrights and Licenses.................................................40
5.10 Licenses and Permits.........................................................................41
5.11 Default of Indebtedness......................................................................41
5.12 No Default...................................................................................41
5.13 No Burdensome Restrictions...................................................................41
5.14 No Labor Disputes............................................................................41
5.15 Margin Regulations...........................................................................41
5.16 Investment Company Act.......................................................................41
5.17 Disclosure...................................................................................41
5.18 Swaps........................................................................................42
5.19 Conflicting Agreements.......................................................................42
5.20 Application of Certain Laws and Regulations..................................................42
5.21 Business and Property of Borrower............................................................42
5.22 Year 2000....................................................................................42
5.23 Section 20 Subsidiaries......................................................................42
5.24 Interest Expense Allocation..................................................................42
5.25 Other Billing Locations......................................................................42
VI AFFIRMATIVE COVENANTS...............................................................................43
6.1 Payment of Fees..............................................................................43
6.2 Conduct of Business and Maintenance of Existence and Assets..................................43
6.3 Violations...................................................................................43
6.4 Government Receivables.......................................................................43
6.5 Domestic Net Worth...........................................................................43
6.6 Interest Coverage Ratio......................................................................44
6.7 Execution of Supplemental Instruments........................................................44
6.8 Payment of Indebtedness......................................................................44
6.9 Standards of Financial Statements............................................................44
6.10 Domestic Debt Service Ratio..................................................................44
VII NEGATIVE COVENANTS..................................................................................44
7.1 Merger, Consolidation, Acquisition and Sale of Assets........................................45
7.2 Creation of Liens............................................................................45
7.3 Guarantees...................................................................................45
7.4 Investments..................................................................................45
7.5 Loans........................................................................................46
7.6 Capital Expenditures.........................................................................46
7.7 Dividends....................................................................................46
7.8 [Indebtedness]...............................................................................47
7.9 Nature of Business...........................................................................47
7.10 Transactions with Affiliates.................................................................48
7.11 Partnership, Joint Ventures..................................................................48
7.12 Subsidiaries.................................................................................48
7.13 Fiscal Year and Accounting Changes...........................................................48
7.14 Intentionally left blank.....................................................................48
7.15 Amendment of Articles of Incorporation, Bylaws...............................................48
7.16 Compliance with ERISA........................................................................48
7.17 Prepayment of Indebtedness...................................................................49
7.18 Subordinated Debt Payments...................................................................49
7.19 Interest Expense Allocation..................................................................49
VIII CONDITIONS PRECEDENT................................................................................49
8.1 Conditions to Initial Advances...............................................................49
8.2 Conditions to Each Advance...................................................................52
IX INFORMATION AS TO BORROWERS.........................................................................53
9.1 Disclosure of Material Matters...............................................................53
9.2 Schedules....................................................................................53
9.3 Environmental Reports........................................................................53
9.4 Litigation...................................................................................53
9.5 Material Occurrences.........................................................................53
9.6 Government Receivables.......................................................................54
9.7 Annual Financial Statements..................................................................54
9.8 Quarterly Financial Statements...............................................................54
9.9 Monthly Financial Statements.................................................................55
9.10 Other Reports................................................................................55
9.11 Additional Information.......................................................................55
9.12 Projected Operating Budget...................................................................55
9.13 Variances From Operating Budget..............................................................55
9.14 Notice of Suits, Adverse Events..............................................................55
9.15 ERISA Notices and Requests...................................................................56
9.16 Additional Documents.........................................................................56
X EVENTS OF DEFAULT...................................................................................56
XI LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT..........................................................58
11.1 Rights and Remedies..........................................................................58
11.2 Agent's Discretion...........................................................................59
11.3 Setoff.......................................................................................59
11.4 Rights and Remedies not Exclusive............................................................59
XII WAIVERS AND JUDICIAL PROCEEDINGS....................................................................59
12.1 Waiver of Notice.............................................................................59
12.2 Delay........................................................................................60
12.3 Jury Waiver..................................................................................60
XIII EFFECTIVE DATE AND TERMINATION......................................................................60
13.1 Term.........................................................................................60
13.2 Termination..................................................................................60
XIV REGARDING AGENT.....................................................................................61
14.1 Appointment..................................................................................61
14.2 Nature of Duties.............................................................................61
14.3 Lack of Reliance on Agent and Resignation....................................................61
14.4 Certain Rights of Agent......................................................................62
14.5 Reliance.....................................................................................62
14.6 Notice of Default............................................................................62
14.7 Indemnification..............................................................................63
14.8 Agent in its Individual Capacity.............................................................63
14.9 Delivery of Documents........................................................................63
14.10 Borrowers' Undertaking to Agent..............................................................63
XV MISCELLANEOUS.......................................................................................63
15.1 Governing Law................................................................................63
15.2 Entire Understanding.........................................................................64
15.3 Successors and Assigns; Participations; New Lenders..........................................65
15.4 Application of Payments......................................................................66
15.5 Indemnity....................................................................................66
15.6 Notice.......................................................................................67
15.7 Survival.....................................................................................67
15.8 Severability.................................................................................68
15.9 Expenses.....................................................................................68
15.10 Injunctive Relief............................................................................68
15.11 Consequential Damages........................................................................68
15.12 Captions.....................................................................................68
15.13 Counterparts; Telecopied Signatures..........................................................68
15.14 Construction.................................................................................68
15.15 Confidentiality; Sharing Information.........................................................68
15.16 Publicity....................................................................................69
REVOLVING CREDIT, ACQUISITION TERM LOAN
AND SECURITY AGREEMENT
Revolving Credit, Acquisition Term Loan and Security Agreement
dated August 19, 1998 among PHILIPP BROTHERS CHEMICALS, INC., a corporation
organized under the laws of the State of New York, ("Borrower"), Phibro-Tech,
Inc., a corporation organized under the laws of the State of Delaware, C P
Chemicals, Inc., a corporation organized under the laws of the State of New
Jersey, The Prince Manufacturing Company, a corporation organized under the laws
of the State of Pennsylvania, The Prince Manufacturing Company, a corporation
organized under the laws of the State of Illinois, Prince Agriproducts, Inc., a
corporation organized under the laws of the State of Delaware, Mineral Resource
Technologies, L.L.C., a limited liability company organized under the laws of
the State of Delaware, MRT Management Corp., a corporation organized under the
laws of the State of Delaware, Koffolk, Inc., a corporation organized under the
laws of the State of Delaware, Phibro-Chem, Inc., a corporation organized under
the laws of the State of New Jersey, PhibroChemicals, Inc., a corporation
organized under the laws of the State of New York, and Western Magnesium Corp.,
a corporation organized under the laws of the State of California (each a
"Guarantor" and collectively "Guarantors"), the financial institutions which are
now or which hereafter become a party hereto (collectively, the "Lenders" and
individually a "Lender") and PNC BANK, NATIONAL ASSOCIATION, a national banking
association ("PNC"), as agent for Lenders (PNC, in such capacity, the "Agent").
IN CONSIDERATION of the mutual covenants and undertakings herein
contained, Borrower, Guarantors, Lenders and Agent hereby agree as follows:
I. DEFINITIONS.
1.1. Accounting Terms. As used in this Agreement, the Note, or any
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP; provided,
however, whenever such accounting terms are used for the purposes of determining
compliance with financial covenants in this Agreement, such accounting terms
shall be defined in accordance with GAAP as applied in preparation of the
audited financial statements of Obligors for the fiscal year ended June 30,
1998.
1.2. General Terms. For purposes of this Agreement the following terms
shall have the following meanings:
"Accountants" shall have the meaning set forth in Section 9.7
hereof.
"Acquired Person" shall mean any partnership, corporation,
limited liability company or other legal business entity whereby Control of
which will be acquired by the Borrower with the use of the Acquisition Term Loan
or by a domestic Subsidiary of the Borrower with the use of Revolving Advances.
For the purposes of this definition, the term "Control" shall be defined to mean
the power, direct or indirect, (x) to vote fifty percent (50%) or more of the
securities having ordinary voting power for the election of directors or
managers of such Person or (y) to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"Acquisition Term Note" shall mean, collectively, the
promissory notes described in Section 2.2 hereof.
"Acquisition Term Loan" shall mean the Advances made pursuant
to Section 2.2 hereof.
"Acquisition Term Loan Rate" shall mean an interest rate per
annum equal to (a) the sum of the Base Rate plus three-quarters of one percent
(3/4%) with respect to Domestic Rate Loans, and (b) the sum of the Eurodollar
Rate plus two and one-half percent (2 1/2%) with respect to Eurodollar Rate
Loans.
"Advances" shall mean and include the Revolving Advances,
Letters of Credit, as well as the Acquisition Term Loan.
"Advance Rates" shall have the meaning set forth in Section
2.1(a) hereof.
"Affiliate" of any Person shall mean (a) any Person (other
than a Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with such Person, or (b) any Person
who is a director or officer (i) of such Person, (ii) of any Subsidiary of such
Person or (iii) of any Person described in clause (a) above. For purposes of
this definition, control of a Person shall mean the power, direct or indirect,
(x) to vote 50% or more of the securities having ordinary voting power for the
election of directors or managers of such Person, or (y) to direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise.
"Agent" shall have the meaning set forth in the preamble to
this Agreement and shall include its successors and assigns.
"Agreement" shall mean this Revolving Credit, Acquisition Term
Loan and Security Agreement and all exhibits and schedules annexed hereto, all
as from time to time be amended, supplemented, extended and/or restated.
"Applicable Margin" shall mean, initially, two percent (2%),
but shall reduce automatically commencing on July 1, 1999, to the percentage (%)
set forth below in column "B" upon the Obligors obtaining and maintaining the
Interest Coverage Ratio set forth in column "A":
A B
Interest Coverage Ratio %
----------------------- -----
1.50:1 to 2.49:1 2%
2.50:1 to 3.49:1 1 3/4%
3.50:1 to 4.49:1 1 1/2%
4.50:1 and above 1 1/4%
Performance with respect to the foregoing grid shall be tested
on a quarterly basis for the prior four quarters, but not
before July 1, 1998 and the Applicable Margin shall become
effective five (5) Business Days after delivery of the
quarterly financial statement of the Borrower as well as a
covenant calculation.
"Authority" shall have the meaning set forth in Section
4.19(d).
"Base Rate" shall mean the base commercial lending rate of PNC
as publicly announced to be in effect from time to time, such rate to be
adjusted automatically, without notice, on the effective date of any change in
such rate. This rate of interest is determined from time to time by PNC as a
means of pricing some loans to its customers and is neither tied to any external
rate of interest or index nor does it necessarily reflect the lowest rate of
interest actually charged by PNC to any particular class or category of
customers of PNC.
"Blocked Accounts" shall have the meaning set forth in Section
4.15(h).
"Borrower" shall have the meaning set forth in the preamble to
this Agreement and shall extend to all permitted successors and assigns of such
Persons.
"Borrower's Account" shall have the meaning set forth in
Section 2.8.
"Business Day" shall mean, with respect to Eurodollar Rate
Loans, any day on which commercial banks are open for domestic and international
business, including dealings in Dollar deposits in London, England and New York,
New York and with respect to all other matters, any day other than a day on
which commercial banks in New York are authorized or required by law to close.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. "9601 et seq.
"Change of Control" shall mean (a) the occurrence of any event
(whether in one or more transactions) which results in a transfer of control of
a Person to a Person who is not an Original Owner or (b) any merger or
consolidation of or with such Person or sale of all or substantially all of the
property or assets of such Persons. For purposes of this definition, "control of
such Person" shall mean the power, direct or indirect (x) to vote 50% or more of
the securities having ordinary voting power for the election of directors of
such Person or (y) to direct or cause the direction of the management and
policies of such Person by contract or otherwise.
"Charges" shall mean all taxes, charges, fees, imposts, levies
or other assessments, including, without limitation, all net income, gross
income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation
and property taxes, custom duties, fees, assessments, liens, claims and charges
of any kind whatsoever, together with any interest and any penalties, additions
to tax or additional amounts, imposed by any taxing or other authority, domestic
or foreign (including, without limitation, the Pension Benefit Guaranty
Corporation or any environmental agency or superfund), upon the Collateral, any
Obligor or any of its Affiliates.
"Closing Date" shall mean August 19, 1998 or such other date
as may be agreed to by the parties hereto.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time and the regulations promulgated thereunder.
"Collateral" shall mean and include:
(a) all Receivables;
(b) all Inventory;
(c) all of each Obligor's right, title and interest
in and to, to the extent that the following directly relate to (a) or (b) above,
(i) its respective goods including, but not limited to, all merchandise returned
or rejected by Customers; (ii) all of each Obligor's rights as a consignor, a
consignee, an unpaid vendor, mechanic, artisan, or other similar lienor,
including stoppage in transit, setoff, detinue, replevin, reclamation and
repurchase; (iii) all additional amounts due to any Obligor from any Customer
with respect to the sale of Inventory or relating to Receivables; and (iv)
warranty claims relating to any Inventory,
(d) all proceeds and products of (a) or (b) above in
whatever form, including, but not limited to: cash, deposit accounts (whether or
not comprised solely of proceeds), certificates of deposit, insurance proceeds
(including hazard, flood and credit insurance), negotiable instruments and other
instruments for the payment of money, chattel paper, security agreements,
documents, eminent domain proceeds, condemnation proceeds and tort claim
proceeds; and
(e) any other goods, personal property or real
property now owned or hereafter acquired in which any Obligor expressly grants a
security interest to secure the Obligations by a separate agreement, or in any
amendment or supplement hereto or thereto.
Notwithstanding the foregoing, Collateral shall not include
(except to the extent a security interest is specifically granted to secure the
Obligations by a separate agreement or in any amendment or supplement hereto or
thereto) Equipment, General Intangibles, Real Property and Intellectual
Property.
"Commitment Percentage" of any Lender shall mean the
percentage set forth below such Lender's name on the signature page hereof as
same may be adjusted upon any assignment by a Lender pursuant to Section 15.3(b)
hereof.
"Commitment Transfer Supplement" shall mean a document in the
form of Exhibit 16.3 hereto, properly completed and otherwise in form and
substance satisfactory to Agent by which the Purchasing Lender purchases and
assumes a portion of the obligation of Lenders to make Advances under this
Agreement.
"Consents" shall mean all filings and all licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
authorities and other third parties, domestic or foreign, necessary to carry on
any Obligor's business, including, without limitation, any Consents required
under all applicable federal, state or other applicable law.
"Contract Rate" shall mean, as applicable, the Revolving
Interest Rate or the Term Loan Rate.
"Controlled Group" shall mean all domestic members of a
controlled group of corporations and all domestic trades or businesses (whether
or not incorporated) under common control which, together with any Obligor, are
treated as a single employer under Section 414 of the Code.
"Customer" shall mean and include the account debtor with
respect to any Receivable and/or the purchaser of goods, services or both with
respect to any contract or contract right, and/or any party who enters into any
contract or other arrangement with any Obligor, pursuant to which such Obligor
is to deliver any Inventory or perform any services.
"Default" shall mean an event which, with the giving of notice
or passage of time or both, would constitute an Event of Default.
"Default Rate" shall have the meaning set forth in Section 3.1
hereof.
"Defaulting Lender" shall have the meaning set forth in
Section 2.16(a) hereof.
"Depository Accounts" shall have the meaning set forth in
Section 4.15(h) hereof.
"Documents" shall have the meaning set forth in Section 8.1(c)
hereof.
"Dollar" and the sign "$" shall mean lawful money of the
United States of America.
"Domestic Debt Service Coverage" shall be defined as EBITDA of
the Borrower and all of its domestic Subsidiaries, on a consolidated basis,
divided by all scheduled principal and interest payments during the periods in
question with respect to all Funded Indebtedness of the Borrower and all of its
domestic Subsidiaries, on a consolidated basis.
"Domestic Rate Loan" shall mean any Advance that bears
interest based upon the Base Rate.
"Early Termination Date" shall have the meaning set forth in
Section 13.1 hereof.
"Earnings Before Interest and Taxes" shall mean for any period
the sum of (i) net income (or loss) of Obligors on a consolidated basis for such
period (excluding extraordinary gains and including extraordinary losses), plus
(ii) all interest expense of Obligors on a consolidated basis for such period,
plus (iii) all charges against income of Obligors on a consolidated basis for
such period for federal, state and local taxes. Notwithstanding the foregoing,
for the purpose of calculating the financial covenants set forth herein, those
losses resulting from charges for the fiscal year ending 1998 as described as
"Restructuring and Other Charges" in the Offering Memorandum dated June 5, 1998
with respect to $100,000,000 Philipp Brothers Chemicals, Inc. 9 7/8% Senior
Subordinated Notes due 2008, shall not be included as part of or deducted in
computing net income in calculating Earnings Before Interest and Taxes.
"EBITDA" shall mean for any period the sum of (i) Earnings
Before Interest and Taxes for such period plus (ii) depreciation expenses for
such period, plus (iii) amortization expenses for such period. Interest income
shall be included in calculating EBITDA.
"Eligible Inventory" shall mean and include Inventory located
within the Continental United States of America excluding work in process, with
respect to each Obligor valued at the lower of cost or market value, determined
on a first-in-first-out basis, which is not, in Agent's reasonable opinion,
obsolete, slow moving or unmerchantable and which Agent, in its reasonable
discretion, shall not deem ineligible Inventory, based on such considerations as
Agent may from time to time deem reasonably appropriate including, without
limitation, whether the Inventory is subject to a perfected, first priority
security interest in favor of Agent and whether the Inventory conforms to all
standards imposed by any governmental agency, division or department thereof
which has regulatory authority over such goods or the use or sale thereof.
"Eligible Receivables" shall mean and include with respect to
each Obligor, each Receivable of such Obligor arising in the ordinary course of
such Obligor's business and which Agent, in its reasonable credit judgment,
shall deem to be an Eligible Receivable, based on such considerations as Agent
may from time to time reasonably deem appropriate. A Receivable shall not be
deemed eligible unless such Receivable is subject to Agent's first priority
perfected security interest and no other Lien (other than Permitted
Encumbrances), and is evidenced by an invoice or other documentary evidence
reasonably satisfactory to Agent. In addition, no Receivable shall be an
Eligible Receivable if:
(a) it arises out of a sale made by any Obligor to an
Affiliate of any Obligor or to a Person controlled by an Affiliate of any
Obligor;
(b) with respect to sales to Customers not outside the
continental United States of America, Hawaii or Puerto Rico, it is due or unpaid
more than ninety (90) days after the original invoice date, and with respect to
sales to Customers outside the continental United States of America, Hawaii or
Puerto Rico, it is due or unpaid more than one hundred eighty (180) days after
the invoice date and is further excluded pursuant to subparagraph (f) below;
(c) twenty-five percent (25%) or more of the Receivables from
such Customer are not deemed Eligible Receivables hereunder. Such percentage
may, in Agent's reasonable discretion, be increased or decreased from time to
time;
(d) any covenant, representation or warranty contained in this
Agreement with respect to such Receivable has been breached;
(e) the Customer shall (i) apply for, suffer, or consent to
the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its property
or call a meeting of its creditors, (ii) admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease operations of its
present business, (iii) make a general assignment for the benefit of creditors,
(iv) commence a voluntary case under any state or federal bankruptcy laws (as
now or hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi)
file a petition seeking to take advantage of any other law providing for the
relief of debtors, (vii) acquiesce to, or fail to have dismissed, any petition
which is filed against it in any involuntary case under such bankruptcy laws, or
(viii) take any action for the purpose of effecting any of the foregoing;
(f) the sale is to a Customer outside the continental United
States of America, Hawaii or Puerto Rico, unless the sale is on letter of
credit, guaranty or acceptance terms or the sale is subject to credit insurance,
in each case acceptable to Agent in its sole discretion;
(g) the sale to the Customer is on a ▇▇▇▇-and-hold, guaranteed
sale, sale-and-return, sale on approval, consignment or any other repurchase or
return basis or is evidenced by chattel paper;
(h) Agent believes, in its reasonable judgment, that
collection of such Receivable is insecure or that such Receivable may not be
paid by reason of the Customer's financial inability to pay;
(i) the Customer is the United States of America, any state or
any department, agency or instrumentality of any of them, unless the applicable
Obligor assigns its right to payment of such Receivable to Agent pursuant to the
Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq.
and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise complied with other
applicable statutes or ordinances;
(j) the goods giving rise to such Receivable have not been
shipped and delivered to and accepted by the Customer or the services giving
rise to such Receivable have not been performed by the applicable Obligor and
accepted by the Customer or the Receivable otherwise does not represent a final
sale;
(k) the Receivables of the Customer exceed a credit limit
determined by Agent, in its reasonable discretion, to the extent such Receivable
exceeds such limit;
(l) the Receivable is subject to any offset, deduction,
defense, dispute, or counterclaim, the Customer is also a creditor or supplier
of a Obligor or the Receivable is contingent in any respect or for any reason;
(m) the applicable Obligor has made any agreement with any
Customer for any deduction therefrom, except for discounts, allowances or
rebates made in the ordinary course of business, all of which discounts or
allowances are reflected in the calculation of the face value of each respective
invoice related thereto and all of which rebates are reasonably estimated from
time to time on a monthly basis;
(n) shipment of the merchandise or the rendition of services
has not been completed;
(o) any return, rejection or repossession of the merchandise
has occurred;
(p) such Receivable is not payable to a Obligor;
(q) more than fifty percent (50%) in dollar value of the
aggregate Receivables due from a Customer are past due; or
(r) such Receivable is not otherwise satisfactory to Agent as
determined in good faith by Agent in the exercise of its discretion in a
reasonable manner.
"Environmental Complaint" shall have the meaning set forth in
Section 4.19(d) hereof.
"Environmental Laws" shall mean all federal, state and local
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the protection of the
environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances and the rules, regulations, policies, guidelines, interpretations,
decisions, orders and directives of federal, state and local governmental
agencies and authorities with respect thereto.
"Equipment" shall mean and include goods (other than
Inventory) whether now owned or hereafter acquired and wherever located
including, without limitation, all equipment, machinery, apparatus, motor
vehicles,
fittings, furniture, furnishings, fixtures, parts, accessories and all
replacements and substitutions therefor or accessions thereto.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time and the rules and regulations promulgated
thereunder.
"Eurodollar Rate" shall mean with respect to any Eurodollar
Rate Loan for any Interest Period, the interest rate per annum determined by the
Agent by dividing (the resulting quotient rounded upward to the nearest 1/100th
of 1% per annum) (i) the rate of interest determined by the Agent in accordance
with its usual procedures (which determination shall be conclusive and binding
upon the Borrower, absent manifest error on the part of the Agent) to be equal
to the offered rates for deposits in Dollars for the applicable Interest Period
which appear on Page 3750 of the TELERATE rate reporting system or other similar
system as of approximately 11:00 a.m., Greenwich Mean Time, two (2) Business
Days prior to the first day of such Interest Period for an amount comparable to
such Eurodollar Rate Loan and having a borrowing date and a maturity comparable
to such Interest Period by (ii) a number equal to 1.00 minus the Reserve
Percentage. The Eurodollar Rate may also be expressed by the following formula:
Offered rate on TELERATE page 3750
Eurodollar Rate = ----------------------------------
1.00 - Reserve Percentage
If more than one offered rate appears on page 3750 of the TELERATE rate
reporting system or similar system, the rate will be the arithmetic mean of such
offered rates.
"Eurodollar Rate Loan" shall mean an Advance at any time that
bears interest based on the Eurodollar Rate.
"Fee Letter" shall mean that certain letter agreement between
the Agent and the Borrower regarding certain fees.
"Event of Default" shall mean the occurrence and continuance
of any of the events set forth in Article X hereof.
"Fixed Charge Coverage Ratio" shall mean the ratio of (a)
EBITDA minus unfinanced capitalized expenditures and cash taxes made during the
period being tested to (b) all scheduled principal and interest payments on all
Funded Indebtedness during the period being tested.
"Funded Indebtedness" shall mean (i) all indebtedness of such
Person for borrowed money or which is evidenced by a note, bond, indenture or
similar instrument, (ii) all obligations of such person to pay the deferred or
unpaid purchase price of property, which purchase price is due more than nine
(9) months after the placing of such property in service or taking delivery and
title thereto, (iii) all capitalized leases of such Person, (iv) all obligations
of such Person with respect to letters of credit, bankers' acceptances issued or
created for the account of such Person, (v) to the extent not otherwise included
in this definition, all net obligations of such Person under any interest rate
swap agreements, interest rate cap agreements, interest rate collar agreements
and other agreements or arrangements designed to protect such Person against
fluctuations in interest rates; (vi) to the extent not otherwise included in
this definition, all net obligations of such Person under all foreign exchange
contracts, currency swap agreements, and other similar agreements or
arrangements to protect such Person against fluctuations in currency values and
(vii) any other debt or obligation of such Person bearing interest (whether paid
or imputed).
"Formula Amount" shall have the meaning set forth in Section
2.1(a).
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.
"General Intangibles" shall mean and include as to each
Obligor all of such Obligor's general intangibles, whether now owned or
hereafter acquired including, without limitation, all chooses in action, causes
of action, corporate or other business records (including, but not limited to,
ledger sheets, ledger cards, files, correspondence, records, books of account,
business papers, computers, computer software (owned by any Obligor or in which
it has an interest), tapes and disks), equipment formulations, manufacturing
procedures, quality control procedures, goodwill, registrations, licenses,
franchises, customer lists, tax refunds, tax refund claims, computer programs,
all claims under guaranties, security interests or other security held by or
granted to such Obligor, all rights of indemnification and all other intangible
property of every kind and nature (other than Receivables).
"Governmental Body" shall mean any nation or government, any
state or other political subdivision thereof or any entity exercising the
legislative, judicial, regulatory or administrative functions of or pertaining
to a government.
"Guarantor" shall mean Phibro-Tech, Inc., C P Chemicals, Inc.,
The Prince Manufacturing Co., The Prince Manufacturing Co., Prince Agriproducts,
Inc., Mineral Resource Technologies, L.L.C., MRT Management Corp., Koffolk,
Inc., PhibroChem, Inc., PhibroChemicals, Inc., and Western Magnesium Corp. and
any other Person who may hereafter guarantee payment or performance of the whole
or any part of the Obligations and "Guarantors" means collectively all such
Persons.
"Guaranty" shall mean the Continuing Unlimited and
Collateralized Guaranty and any other guaranty of the obligations of Borrower
executed by a Guarantor in favor of Agent for the ratable benefit of Lenders.
"Hazardous Discharge" shall have the meaning set forth in
Section 4.19(d) hereof.
"Hazardous Substance" shall mean, without limitation, any
flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde
foam insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or
related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, N.J.S.A.
58:10-23.11(b)(K) and N.J.A.C. 7:1E-1.7 or any other applicable Environmental
Law and in the regulations adopted pursuant thereto.
"Hazardous Wastes" shall mean all waste materials subject to
regulation under CERCLA, RCRA or applicable state law, and any other applicable
Federal and state laws now in force or hereafter enacted relating to hazardous
waste disposal.
"Inactive Subsidiaries" shall mean Phibrochemicals, Inc.,
Phibrochem, Inc. and Western Magnesium Corp.
"Indebtedness" of a Person at a particular date shall mean all
obligations of such Person which in accordance with GAAP would be classified
upon a balance sheet as liabilities (except capital stock and surplus earned or
otherwise) and in any event, without limitation by reason of enumeration, shall
include all debt and other similar monetary obligations of such Person whether
direct or guaranteed, and all premiums, if any, due at the required prepayment
dates of such Indebtedness, and all Indebtedness secured by a Lien on assets
owned by such Person, whether or not such Indebtedness actually shall have been
created, assumed or incurred by such Person, provided, however, if the
obligations secured by a Lien (other than a Permitted Encumbrance not securing
any liability that would itself constitute Indebtedness) or any assets or
property have not been assumed by such Person in full or are not such Person's
legal liability in full, the amount of such Indebtedness for purposes of this
definition shall be limited to the lesser of the amount of Indebtedness secured
by such Lien and the fair market value of the property subject to such Lien. In
addition, Indebtedness shall not include a government grant and any guarantee of
an Obligor required by such grant which obligates the Obligor to repay such
grant at the discretion of such government or upon the failure of the conditions
of such grant specified therein to be fulfilled, but which is forgiven solely by
reason of the passage of time or the fulfillment of such grant conditions (other
than repayment); provided that if the conditions for forgiveness of such
government grant
lapse for whatever reason and the Obligor becomes obligated to repay such grant,
the grant shall be deemed Indebtedness which is incurred at the time such
obligation to repay is triggered. Redeemable preferred securities of any Person
shall not be deemed Indebtedness for the purposes hereof unless carried as a
liability on the balance sheet of such Person in accordance with GAAP.
"Indenture" shall mean a certain Indenture dated June 11, 1998
with respect to the issuance by Philipp Brothers Chemicals, Inc. of up to
$140,000,000 of its 9-7/8% Senior Subordinated Notes due 2008, Series A, and
9-7/8% Senior Subordinated Notes due 2008, Series B, of which the aggregate
principal amount presently outstanding is $100,000,000.
"Ineligible Security" shall mean any security which may not be
underwritten or dealt in by member banks of the Federal Reserve System under
Section 16 of the Banking Act of 1933 (12 U.S.C. section 24, Seventh), as
amended.
"Intellectual Property" all patents, patent applications,
trademarks, trademark applications, service marks, service ▇▇▇▇ applications,
copyrights, copyright applications, design rights, trade names, assumed names,
trade secrets, licenses, know-how, formulae, techniques, operational methods and
strategies owned and/or utilized by the Obligors.
"Interest Coverage Ratio" shall mean EBITDA of Borrower on a
consolidated basis (including all direct and indirect domestic and foreign
Subsidiaries) divided by interest on all Funded Indebtedness of the Borrower on
a consolidated basis (including all direct and indirect domestic and foreign
Subsidiaries).
"Interest Period" shall mean the period provided for any
Eurodollar Rate Loan pursuant to Section 2.2(b).
"Inventory" shall mean and include as to each Obligor all of
such Obligor's now owned or hereafter acquired goods and merchandise wherever
located, to be furnished under any contract of service or held for sale or
lease, all raw materials, work in process, finished goods and materials and
supplies of any kind, nature or description which are or might be used or
consumed in such Obligor's business or used in selling or furnishing such goods
and merchandise and all documents of title or other documents representing them.
"Inventory Advance Rate" shall have the meaning set forth in
Section 2.1(a)(y)(ii) hereof.
"Issuer" shall mean any Person who issues a Letter of Credit
and/or accepts a draft pursuant to the terms hereof.
"Leasehold Interests" shall mean all of each Obligor's right,
title and interest in and to the premises set forth on Schedule 1.2A.
"Lender" and "Lenders" shall have the meaning ascribed to such
term in the preamble to this Agreement and shall include each Person which
becomes a transferee, successor or assign of any Lender.
"Letter of Credit Fees" shall have the meaning set forth in
Section 3.2.
"Letters of Credit" shall have the meaning set forth in
Section 2.10.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, security interest, lien (whether statutory or
otherwise), charge, claim or encumbrance, or priority or other security
agreement or preferential arrangement held or asserted in respect of any asset
of any kind or nature whatsoever including, without limitation, any conditional
sale or other title retention agreement, any lease having substantially the same
economic effect
as any of the foregoing, and the filing of, or agreement to give, any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction.
"Material Adverse Effect" shall mean a material adverse effect
on (a) the condition, operations, assets, business of the Obligors taken as a
whole (b) the Obligors' ability to pay the Obligations in accordance with the
terms thereof, (c) the value of the Collateral, or Agent's Liens on the
Collateral or the priority of any such Lien or (d) the practical realization of
the benefits of Agent's and each Lender's rights and remedies under this
Agreement and the Other Documents.
"Maximum Loan Amount" shall mean $60,000,000.
"Maximum Revolving Advance Amount" shall mean $35,000,000.
"Monthly Advances" shall have the meaning set forth in Section
3.1 hereof.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Sections 3(37) and 4001(a)(3) of ERISA.
"Net Worth" at a particular date, shall mean (a) the aggregate
amount of all assets of Obligors on a consolidated basis as may properly be
classified as such in accordance with GAAP consistently applied and such other
assets as are properly classified as "intangible assets", less (b) the aggregate
amount of all Indebtedness of Obligors.
"Note" shall mean collectively, the Acquisition Term Note and
the Revolving Credit Note.
"Obligations" shall mean and include any and all of each
Obligor's Indebtedness and/or liabilities to Agent or Lenders or any corporation
that directly or indirectly controls or is controlled by or is under common
control with Agent or any Lender, arising out of or in connection with this
Agreement or any Other Document, of every kind, nature and description, direct
or indirect, secured or unsecured, joint, several, joint and several, absolute
or contingent, due or to become due, now existing or hereafter arising,
contractual or tortious, liquidated or unliquidated, regardless of how such
Indebtedness or liabilities arise or by what agreement or instrument they may be
evidenced or whether evidenced by any agreement or instrument.
"Obligor" or "Obligors" shall mean the Borrower and the
Guarantors.
"Original Owners" shall mean (i) ▇▇▇▇ ▇▇▇▇▇▇▇▇, (ii) each of
his spouses, siblings, and sisters, descendants (whether by blood, marriage or
adoption and including stepchildren) and the spouses, siblings, and sisters and
descendants thereof (whether by blood, marriage or adoption, and including
stepchildren) of each such natural persons, the beneficiaries, estates and legal
representatives of any of the foregoing, the trustee of any bona fide trust of
which any of the foregoing, individually or in the aggregate, are the majority
in interest beneficiaries or grantors, and (iii) all Affiliates controlled by
the individual named in clause (i) above.
"Other Billing Location" shall mean each location not owned by
such Person from which billing originates and/or at which books, records and
backup documentation exists with respect to Accounts and Inventory, to the
extent that same does not originate out of or exist at such Person's Chief
Executive Office.
"Other Documents" shall mean the Note, the Guaranty, the Power
of Attorney and any and all other agreements, instruments and documents,
including, without limitation, guaranties, pledges, powers of attorney,
consents, and all other writings heretofore, now or hereafter executed by any
Obligor and/or delivered to Agent or any Lender by any Obligor in respect of the
transactions contemplated by this Agreement, and all as amended, supplemented,
modified, extended and/or restated from time to time.
"Parent" of any Person shall mean a corporation or other
entity owning, directly or indirectly at least 50% of the shares of stock or
other ownership interests having ordinary voting power to elect a majority of
the directors of the Person, or other Persons performing similar functions for
any such Person.
"Participant" shall mean each Person who shall be granted the
right by any Lender to participate in any of the Advances and who shall have
entered into a participation agreement in form and substance satisfactory to
such Lender.
"Payment Office" shall mean initially ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇; thereafter, such other office of
Agent, if any, which it may designate by notice to Borrower and to each Lender
to be the Payment Office.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permitted Encumbrances" shall mean (a) Liens in favor of
Agent for the benefit of Agent and Lenders; (b) Liens for taxes, assessments or
other governmental charges not delinquent or being contested in good faith and
by appropriate proceedings and with respect to which proper reserves have been
taken by Obligors in accordance with GAAP; provided, that, the Lien shall have
no effect on the priority of the Liens in favor of Agent or the value of the
assets in which Agent has such a Lien and a stay of enforcement of any such Lien
shall be in effect; (c) Liens disclosed in the financial statements referred to
in Section 5.5; (d) deposits or pledges to secure obligations under worker's
compensation, social security or similar laws, or under unemployment insurance;
(e) deposits or pledges to secure bids, tenders, contracts (other than contracts
for the payment of money), leases, statutory obligations, surety and appeal
bonds and other obligations of like nature arising in the ordinary course of any
Obligor's business; (f) judgment Liens that have been stayed or bonded and
mechanics', workers', materialmen's or other like Liens arising in the ordinary
course of any Obligor's business with respect to obligations which are not due
or which are being contested in good faith by the applicable Borrower; (g) Liens
placed upon assets (including additions and substitutions therefor and proceeds
thereof) hereafter acquired to secure a portion of the purchase price thereof,
provided that (x) any such lien shall not encumber any other property of the
Obligors and (y) the aggregate amount of Indebtedness secured by such Liens
incurred as a result of such purchases during any fiscal year shall not exceed
the amount provided for in Section 7.6; and (h) Liens disclosed on Schedule
1.2B; (i) Liens arising with respect to capital leases, as permitted by Section
7.6 hereof, (j) Liens on property of foreign Subsidiaries acquired with the
proceeds of the Revolving Loans provided that such Liens do not extend to any
property of any domestic Obligor; (k) Liens in favor of customs and revenue
authorities arising as a matter of the law to secure the payment of customs and
duties in connection with the importation of goods (l) Liens securing
obligations arising from statutory, regulatory, contractual or warranty
requirements of any of the Obligors, including the performance of statutory
obligations, surety or appeal bonds or performance bonds or Landlords',
carriers', warehousemen's, mechanics', suppliers', materialmen's or any other
like Liens, in any case incurred in the ordinary course of business provided
that the foregoing does not apply to Receivables or Inventory; (m) Liens
securing Indebtedness of a Person existing at the time that such person is
merged into or consolidated with the Borrower or a Subsidiary; provided,
however, that such Liens were in existence prior to the contemplation of such
merger or consolidation and do not extend to any assets other than those of such
Person: (n) Liens on property acquired by Borrower or a Subsidiary; provided,
however, that such Liens were in existence prior to the contemplation of such
acquisition and do not extend to any other property other than those of the
Person merged or consolidated with Borrower or such Subsidiary; (o) Liens in
respect of interest rate agreement obligations and currency agreement
obligations entered into the ordinary course of business; (p) Liens in favor of
Borrower or any Subsidiary; (q) leases or subleases granted to others that do
not materially interfere with the ordinary course of business of Borrower and
its Subsidiaries; (r) Liens arising from filing Uniform Commercial Code
financing statements regarding leases; (s) Liens securing Indebtedness incurred
to amend, modify, renew, refund, replace or refinance Indebtedness that has been
secured by a Lien permitted under this Agreement, provided that (1) and such
Lien not extend to or cover any assets or property not securing the Indebtedness
so refinanced and (2) the refinancing Indebtedness secured by such Lien shall
have been permitted to be incurred under this Agreement and (t) pursuant to
Section 7.07 of the Indenture, liens on moneys held by the trustee under the
Indenture securing fees due to the Trustee.
"Person" shall mean any individual, sole proprietorship,
partnership, corporation, business trust, joint stock company, trust,
unincorporated organization, association, limited liability company,
institution, public benefit corporation, joint venture, entity or government
(whether Federal, state, county, city, municipal or otherwise, including any
instrumentality, division, agency, body or department thereof).
"Plan" shall mean any employee benefit plan within the meaning
of Section 3(3) of ERISA, maintained for employees of Obligors or any member of
the Controlled Group or any such Plan to which any Obligor or any member of the
Controlled Group is required to contribute on behalf of any of its employees.
"Power of Attorney" shall mean each Power of Attorney executed
by each Obligor in favor of Agent for the ratable benefit of Lenders.
"Pro Forma Balance Sheet" shall have the meaning set forth in
Section 5.5(a) hereof.
"Pro Forma Financial Statements" shall have the meaning set
forth in Section 5.5(b) hereof.
"Projections" shall have the meaning set forth in Section
5.5(b) hereof.
"Purchasing Lender" shall have the meaning set forth in
Section 16.3 hereof.
"RCRA" shall mean the Resource Conservation and Recovery Act,
42 U.S.C. " 6901 et seq., as same may be amended from time to time.
"Real Property" shall mean all of each Borrower's right, title
and interest in and to the owned and leased premises identified on Schedule 4.19
hereto.
"Receivables" shall mean and include, as to each Obligor, all
of such Obligor's accounts, contract rights, instruments (including those
evidencing Indebtedness owed to Obligors by their Affiliates), documents,
chattel paper, drafts and acceptances, and all other forms of obligations owing
to such Obligor arising out of or in connection with the sale or lease of
Inventory or the rendition of services, all guarantees and other security
therefor, whether secured or unsecured, now existing or hereafter created, and
whether or not specifically sold or assigned to Agent hereunder.
"Receivables Advance Rate" shall have the meaning set forth in
Section 2.1(a)(y)(i) hereof.
"Release" shall have the meaning set forth in Section
5.7(c)(i) hereof.
"Reportable Event" shall mean a reportable event described in
Section 4043(b) of ERISA or the regulations promulgated thereunder.
"Required Lenders" shall mean Lenders holding at least
Sixty-Six and 2/3 percent (66-2/3%) of the Advances and, if no Advances are
outstanding, shall mean Lenders holding Sixty-Six and 2/3 percent (66-2/3%) of
the Commitment Percentages.
"Reserve Percentage" shall mean the maximum effective
percentage in effect on any day as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining the reserve
requirements (including, without limitation, supplemental, marginal and
emergency reserve requirements) with respect to euroccurency funding.
"Revolving Advances" shall mean Advances made other than
Letters of Credit and the Acquisition Term Loan.
"Revolving Credit Note" shall have the meaning set forth in
Section 2.1(a) hereof.
"Revolving Interest Rate" shall mean an interest rate per
annum equal to (a) the sum of the Base Rate with respect to Domestic Rate Loans,
and (b) the sum of the Eurodollar Rate plus the Applicable Margin with respect
to Eurodollar Rate Loans.
"Section 20 Subsidiary" shall mean the Subsidiary of the bank
holding company controlling any Lender, which Subsidiary has been granted
authority by the Federal Reserve Board to underwrite and deal in certain
Ineligible Securities.
"Senior Subordinated Notes" shall mean all notes issued
pursuant to the Indenture.
"Settlement Date" shall mean the Closing Date and thereafter
Wednesday of each week unless such day is not a Business Day in which case it
shall be the next succeeding Business Day.
"Shareholders Agreement" shall mean (i) the Shareholders
Agreement dated December 29, 1987, by and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and the
Borrower; (ii) the Shareholders Agreement dated February 21, 1995, among
Phibro-Tech, Inc., I. ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇;
(iii) the Limited Liability Company Agreement of MRT dated November 21, 1995;
and (iv) each of the Severance Agreements between Phibro- Tech, Inc. and I.
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, respectively, each dated
February 21, 1995; each as amended and in effect on the date hereof and as
hereafter amended, except for any amendment subsequent to the date hereof which
causes the terms of such Agreement to be less favorable to an Obligor, each as
amended and in effect on the date hereof, and as thereafter amended, except for
any amendment subsequent to the date hereof which causes the terms of such
agreement to be less favorable to an Obligor.
"Subordinated Debt Payments" shall mean and include all cash
actually expended to make payments of principal and interest pursuant to the
Indenture.
"Subsidiary" shall mean a corporation or other entity of whose
shares of stock or other ownership interests having ordinary voting power (other
than stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
"Term" shall have the meaning set forth in Section 13.1
hereof.
"Termination Event" shall mean (i) a Reportable Event with
respect to any Plan or Multiemployer Plan; (ii) the withdrawal of any Obligor or
any member of the Controlled Group from a Plan or Multiemployer Plan during a
plan year in which such entity was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to
terminate a Plan in a distress termination described in Section 4041(c) of
ERISA; (iv) the institution by the PBGC of proceedings to terminate a Plan or
Multiemployer Plan; (v) any event or condition (a) which would constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan or Multiemployer Plan, or (b) that may
result in termination of a Multiemployer Plan pursuant to Section 4041A of
ERISA; or (vi) the partial or complete withdrawal within the meaning of Sections
4203 and 4205 of ERISA, of any Obligor or any member of the Controlled Group
from a Multiemployer Plan.
"Toxic Substance" shall mean and include any material present
on the Real Property or the Leasehold Interests which has been shown to have
significant adverse effect on human health or which is subject to regulation
under the Toxic Substances Control Act (TSCA), 15 U.S.C.: 2601 et seq.,
applicable state law, or any other applicable Federal or state laws now in force
or hereafter enacted relating to toxic substances. "Toxic Substance" includes
but is not limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based
paints.
"Transactions" shall have the meaning set forth in Section 5.5
hereof.
"Transferee" shall have the meaning set forth in Section
15.3(b) hereof.
"Undrawn Availability" at a particular date shall mean an
amount equal to (a) the lesser of (i) the Formula Amount or (ii) the Maximum
Revolving Advance Amount, minus (b) the sum of (i) the outstanding amount of
Advances (other than the Acquisition Term Loan) plus (ii) all amounts due and
owing to Obligors' trade creditors which are outstanding sixty (60) days beyond
normal trade terms, all as determined by the Agent.
"Week" shall mean the time period commencing with the opening
of business on a Wednesday and ending on the end of business the following
Tuesday.
1.3. Uniform Commercial Code Terms. All terms used herein and defined
in the Uniform Commercial Code as adopted in the State of New Jersey shall have
the meaning given therein unless otherwise defined herein.
1.4. Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. Wherever appropriate in the context, terms
used herein in the singular also include the plural and vice versa. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. Unless otherwise provided, all
references to any instruments or agreements to which Agent is a party,
including, without limitation, references to any of the Other Documents, shall
include any and all modifications or amendments thereto and any and all
extensions or renewals thereof.
II. ADVANCES, CONDITIONS, PAYMENTS.
2.1. (a) Revolving Advances. Subject to the terms and conditions set
forth in this Agreement, each Lender, severally and not jointly, will make
Revolving Advances to Borrower in aggregate amounts outstanding at any time
equal to such Lender's Commitment Percentage of the lesser of (x) the Maximum
Revolving Advance Amount less the aggregate amount of outstanding Letters of
Credit or (y) an amount equal to the sum of:
(i) 85%, subject to the provisions of Section 2.1(b)
hereof ("Receivables Advance Rate"), of Eligible Receivables, plus
(ii) the lesser of (A) 60%, subject to the provisions
of Section 2.1(b) hereof ("Inventory Advance Rate"), of the value of the
Eligible Inventory (the Receivables Advance Rate and the Inventory Advance Rate
shall be referred to collectively, as the "Advance Rates") or (B) $15,000,000 in
the aggregate at any one time, minus
(iii) the aggregate amount of outstanding Letters of
Credit, minus
(iv) such reserves as Agent may reasonably deem
proper and necessary from time to time.
The amount derived from the sum of (x) Sections 2.1(a)(y)(i) and (ii)
minus (y) Section 2.1 (a)(y) (iv) at any time and from time to time shall be
referred to as the "Formula Amount". The Revolving Advances shall be evidenced
by the secured promissory note ("Revolving Credit Note") substantially in the
form attached hereto as Exhibit 2.1(a).
(b) Discretionary Rights. The Advance Rates may be increased
or decreased by Agent at any time and from time to time in the exercise of its
reasonable discretion. Borrower consents to any such increases or decreases and
acknowledges that decreasing the Advance Rates or increasing the reserves may
limit or restrict Advances requested by Borrower.
(c) Use of Revolving Advances. Revolving Advances may be
utilized for Borrower's working capital purposes and, so long as the provisions
of Section 2.5(b)(i), (ii) and (iii) are satisfied, to make loans to domestic
Subsidiaries of the Obligors, which shall also be or become Obligors; provided
that Revolving Advances lent by the Borrower to domestic Subsidiaries of the
Obligors, which shall also be Obligors, to be utilized to fund the acquisition
of an Acquired Person by such domestic Subsidiary, shall be limited such that:
(x) the aggregate principal amount of such Revolving Advances do not exceed
$25,000,000, (y) there exists an Undrawn Availability after giving effect to
such acquisition of at least $10,000,000, and (z) the Borrower satisfies the
conditions set forth in Section 2.5(b) hereof.
Notwithstanding any contained hereto the contrary, at no time
shall Revolving Advances lent by the Borrower to any domestic Subsidiary of the
Obligor, which shall also be Obligors, exceed the Formula Amount of said
domestic Subsidiary, provided, however, funds lent to a domestic Subsidiary of
an Obligor, which shall also be or become an Obligor, may utilize said proceeds
to fund the acquisition of an Acquired Person (subject to the limitations
described herein) or for any other purpose, including distributing or otherwise
transferring said funds to a parent of such domestic Subsidiary, other than in
satisfaction of such debt, or any other Obligor (without regard to the Formula
Amount referred above, since said Formula Amount has already been satisfied upon
the initial loan of the Revolving Advance made by the Borrower to the original
domestic Subsidiary).
2.2 (a) Acquisition Term Loan. Subject to the terms and conditions set
forth in this Agreement, each Lender, severally and not jointly, will make
Acquisition Term Loans to Borrower, from time to time during the period
commencing on the Closing Date and ending on August 20, 2000, in aggregate
principal amounts outstanding at any time equal to such Lender's Commitment
Percentage of up to $25,000,000.
(b) Use of Acquisition Term Loans. Acquisition Term Loans may only
be utilized to fund the acquisition of an Acquired Person, subject to
satisfaction of the conditions set forth in Section 2.5(a) hereof, and each
Acquisition Term Loan shall be evidenced by an Acquisition Term Note
substantially in the form of Exhibit 2.2(b), provided: (x) the Acquired Person
is organized and maintains its principal place of business in the United States,
(y) no Acquisition Term Loan shall be in an amount greater than $10,000,000, (z)
the amount of each Acquisition Term Loan shall be limited to the value, as
determined by the Lenders, of the assets of Acquired Person, (aa) each
Acquisition Term Loan shall be fully secured by all assets of the Acquired
Person, (bb) evidence, in form and substance reasonably satisfactory to the
Agent and the Required Lenders, must be delivered to the Agent showing that the
Borrower, on a consolidated basis (including all direct and indirect domestic
but not foreign Subsidiaries), twelve (12) months before the acquisition, has
maintained a Fixed Charge Coverage Ratio of at least 1.25 to 1.00, (cc)
evidence, in form and substance reasonably satisfactory to the Agent and the
Required Lenders, is delivered to the Agent showing that the Acquired Company,
has maintained for the prior twelve months and is reasonably expected to
maintain a Fixed Charge Coverage Ratio of at least 1.25 to 1.00, and (dd) the
Chief Financial Officer of the Borrower shall deliver a certification to the
Required Lenders on behalf of the Borrower indicating that the Borrower and the
Acquired Company, on a consolidated basis, will continue to maintain a Fixed
Charge Coverage Ratio of at least 1.25 to 1.00 (the Fixed Charge Coverage Ratio
to be calculated under (bb), (cc) and (dd) with respect to said twelve (12)
month period shall be determined on an annual basis), (ee) there exist at the
time of said Acquisition Term Loan, after giving effect to such acquisition,
Undrawn Availability of at least $10,000,000 under the Revolving Loan and (ff)
no Acquisition Term Loan shall be utilized to fund the acquisition of a foreign
person without the prior written consent of the Agent and all Lenders, which
consent shall be in their sole and absolute discretion. Notwithstanding anything
contained herein to the contrary, no proceeds of any Acquisition Term Loan or
those of any Revolving Advances may be utilized collectively to fund the
acquisition of the same Acquired Person.
2.3. Procedure for Obtaining Advances.
(a) Borrower may notify Agent prior to 11:00 a.m. on a
Business Day of Borrower's request to incur, on that day, a Revolving Advance
hereunder. Should any amount required to be paid as interest hereunder, or as
fees or other charges under this Agreement or any other agreement with Agent or
Lenders, or with respect to any other Obligation, become due, same shall be
deemed a request for a Revolving Advance as of the date such payment is due and
are not paid, in the amount required to pay in full such interest, fee, charge
or Obligation under this Agreement or any other agreement with Agent or Lenders,
and such request shall be irrevocable.
(b) Notwithstanding the provisions of (a) above, in the event
any Borrower desires to obtain a Eurodollar Rate Loan, Borrower shall give Agent
at least three (3) Business Days' prior written notice, specifying (i) the
date of the proposed borrowing (which shall be a Business Day), (ii) the type of
borrowing and the amount on the date of such Advance to be borrowed, which
amount shall be an integral multiple of $1,000,000, and (iii) the duration of
the first Interest Period therefor. Eurodollar Rate Loans shall be for one, two
or three months; provided, if an Interest Period would end on a day that is not
a Business Day, it shall end on the next succeeding Business Day unless such day
falls in the next succeeding calendar month in which case the Interest Period
shall end on the next preceding Business Day. No Eurodollar Rate Loan shall be
made available to Borrower during the continuance of a Default or an Event of
Default.
(c) Each Interest Period of a Eurodollar Rate Loan shall
commence on the date such Eurodollar Rate Loan is made and shall end on such
date as Borrower may elect as set forth in (b)(iii) above provided that the
exact length of each Interest Period shall be determined in accordance with the
practice of the interbank market for offshore Dollar deposits and no Interest
Period shall end after the last day of the Term.
Borrower shall elect the initial Interest Period applicable to a
Eurodollar Rate Loan by its notice of borrowing given to Agent pursuant to
Section 2.3(b) or by its notice of conversion given to Agent pursuant to Section
2.3(d), as the case may be. Borrower shall elect the duration of each succeeding
Interest Period by giving irrevocable written notice to Agent of such duration
not less than three (3) Business Days prior to the last day of the then current
Interest Period applicable to such Eurodollar Rate Loan. If Agent does not
receive timely notice of the Interest Period elected by Borrower, Borrower shall
be deemed to have elected to convert to a Domestic Rate Loan subject to Section
2.3(d) hereinbelow.
(d) Provided that no Event of Default shall have occurred and
be continuing, Borrower may, on the last Business Day of the then current
Interest Period applicable to any outstanding Eurodollar Rate Loan, or on any
Business Day with respect to Domestic Rate Loans, convert any such loan into a
loan of another type in the same aggregate principal amount provided that any
conversion of a Eurodollar Rate Loan shall be made only on the last Business Day
of the then current Interest Period applicable to such Eurodollar Rate Loan. If
Borrower desires to convert a loan, Borrower shall give Agent not less than
three (3) Business Days' prior written notice to convert from a Domestic Rate
Loan to a Eurodollar Rate Loan or one (1) Business Day's prior written notice to
convert from a Eurodollar Rate Loan to a Domestic Rate Loan, specifying the date
of such conversion, the loans to be converted and if the conversion is from a
Domestic Rate Loan to any other type of loan, the duration of the first Interest
Period therefor.
(e) At its option and upon three (3) Business Days' prior
written notice, Borrower may prepay the Eurodollar Rate Loans in whole at any
time or in part from time to time, without premium or penalty, but with accrued
interest on the principal being prepaid to the date of such repayment. Borrower
shall specify the date of prepayment of Advances which are Eurodollar Rate Loans
and the amount of such prepayment. In the event that any prepayment of a
Eurodollar Rate Loan is required or permitted on a date other than the last
Business Day of the then current Interest Period with respect thereto, such
Borrower shall indemnify Agent and Lenders therefor in accordance with Section
2.3(f) hereof.
(f) Borrower shall indemnify Agent and Lenders and hold Agent
and Lenders harmless from and against any and all losses or expenses that Agent
and Lenders may sustain or incur as a consequence of any prepayment, conversion
of or any default by Borrower in the payment of the principal of or interest on
any Eurodollar Rate Loan or failure by Borrower to complete a borrowing of, a
prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof
has been given, including, but not limited to, any interest payable by Agent or
Lenders to lenders of funds obtained by it in order to make or maintain its
Eurodollar Rate Loans hereunder. A certificate as to any additional amounts
payable pursuant to the foregoing sentence submitted by Agent or any Lender to
Borrower shall be presumptive evidence absent manifest error.
(g) Notwithstanding any other provision hereof, if any new
applicable law, treaty, regulation or directive, or any change in any new or
existing law, treaty, regulation or directive or in the interpretation or
application thereof, shall make it unlawful for any Lender (for purposes of this
subsection (g), the term "Lender" shall include any Lender and the office or
branch where any Lender or any corporation or bank controlling such Lender makes
or maintains any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate
Loans, the obligation of Lenders to make Eurodollar
Rate Loans hereunder, shall forthwith be canceled and Borrower shall, if any
affected Eurodollar Rate Loans are then outstanding, promptly upon request from
Agent, either pay all such affected Eurodollar Rate Loans or convert such
affected Eurodollar Rate Loans into loans of another type. If any such payment
or conversion of any Eurodollar Rate Loan is made on a day that is not the last
day of the Interest Period applicable to such Eurodollar Rate Loan, Borrower
shall pay Agent, upon Agent's request, such amount or amounts as may be
necessary to compensate Lenders for any loss or expense sustained or incurred by
Lenders in respect of such Eurodollar Rate Loan as a result of such payment or
conversion, including (but not limited to) any interest or other amounts payable
by Lenders to lenders of funds obtained by Lenders in order to make or maintain
such Eurodollar Rate Loan. A certificate as to any additional amounts payable
pursuant to the foregoing sentence submitted by Lenders to Borrower shall be
presumptive evidence absent manifest error.
2.4. Disbursement of Advance Proceeds. All Advances shall be disbursed
from whichever office or other place in the United States of America Agent may
designate from time to time and, together with any and all other Obligations of
Borrower to Agent or Lenders, shall be charged to Borrower's Account on Agent's
books. During the Term, Borrower may use the Revolving Advances by borrowing,
prepaying and reborrowing, all in accordance with the terms and conditions
hereof. The proceeds of each Revolving Advance requested by Borrower or deemed
to have been requested by Borrowers under Section 2.2(a) hereof shall, with
respect to requested Revolving Advances to the extent Lenders make such
Revolving Advances, be made available to the Borrower on the day so requested by
way of credit to such Borrower's operating account at PNC, or such other bank as
Borrower may designate following notification to Agent, in immediately available
federal funds or other immediately available funds or, with respect to Revolving
Advances deemed to have been requested by Borrower, be disbursed to Agent to be
applied to the outstanding Obligations giving rise to such deemed request.
2.5. Acquisition of Acquired Persons.
(a) The Lenders agree to extend the Acquisition Term Loans,
subject to the provisions of Section 2.2, and provided further that:
(i) the Borrower provides the Agent with at least
thirty (30) days notice of its request for said Acquisition Term Loan ; and
(ii) the Borrower provides the Agent with
documentation and information relative to the Acquired Person and the proposed
acquisition in form and substance reasonably satisfactory to the Agent and its
counsel; and
(iii) the Borrower delivers to Agent, in form and
substance reasonably satisfactory to the Agent, (i) evidence that the Agent has
received a first and only perfected security interest in substantially all the
assets of the Acquired Person and (ii) landlords' waivers and consents for the
chief executive office and each Other Billing Location of said Acquired Person
and each location of the Acquired Person where assets borrowed against are
located; and
(iv) each Acquired Person shall deliver a Guaranty to
the Agent, in the form and substance reasonably satisfactory to the Agent, which
Guaranty shall be secured by substantially all assets of the Acquired Company.
Notwithstanding anything contained herein to the contrary, the
Agent and the Lenders reserve the right to perform such due diligence as they
deem necessary prior to including any Acquired Assets in the Advance Formula,
which shall not, in any case, include the assets of any foreign Acquired Person.
(b) The Lenders agree to extend Revolving Advances which may
be relent to domestic Subsidiaries of the Borrower, which are Obligors, to be
utilized to fund the acquisition of Acquired Persons, subject to the provisions
of Subsection 2.1 hereof, and further provided that:
(i) each domestic Subsidiary of an Obligor (including
any new formed domestic Subsidiary of an Obligor, including any domestic
Acquired Person) shall have executed and delivered to the Borrower a grid note
in the amount of $35,000,000, in form and substance satisfactory to the Bank,
each of which grid note shall be assigned and delivered to the Agent; and
(ii) each time such Revolving Advance is made, the
amount of such Revolving Advance shall be noted on the applicable grid note; and
(iii) the Borrower and each domestic Obligor shall
deliver to the Agent, on a monthly basis, a Borrowing Base Certificate in
accordance with Section 9.9 hereof; and
(iv) each newly formed domestic Subsidiary of an
Obligor created to acquire an Acquired Person and each domestic Acquired Person
shall deliver to the Agent a Guaranty, in the form and substance reasonably
satisfactory to the Agent, which Guaranty shall be secured by substantially all
of the assets of said domestic Subsidiary or Acquired Person; and
(v) each newly formed domestic Subsidiary of the
Borrower created to acquire an Acquired Person and each domestic Acquired Person
shall deliver to Agent, in form and substance satisfactory to the Agent, (i)
evidence that the Agent has received a first and only perfected security
interest in substantially all the assets of said domestic Subsidiary and/or
Acquired Person and (ii) landlords' waivers and consents for the chief executive
office and Other Billing Location of said Acquired Person and each location of
said domestic Subsidiary to the extent that the Inventory of such domestic
Subsidiary is to be considered Eligible Inventory.
2.6. Maximum Advances. The aggregate balance of Revolving Advances
outstanding at any time shall not exceed the lesser of (a) Maximum Revolving
Advance Amount or (b) the Formula Amount. The aggregate amount outstanding of
the Acquisition Term Loan shall not exceed $25,000,000 and no single Advance
shall be in an amount of more than $10,000,000 without prior written consent of
the Agent and the Required Lenders, in their sole and absolute discretion.
2.7. Repayment of Advances.
(a) The Revolving Advances shall be due and payable in full on
the last day of the Term subject to earlier prepayment as herein provided. Each
Advance under the Acquisition Term Loan shall be repaid based upon a five-year
amortization of principal and interest with a final payment due and payable on
the last day of the Term.
(b) Borrower recognizes that the amounts evidenced by checks,
notes, drafts or any other items of payment relating to and/or proceeds of
Collateral may not be collectible by Agent on the date received. In
consideration of Agent's agreement to conditionally credit Borrower's Account as
of the Business Day on which Agent receives those items of payment, Borrower
agrees that, in computing the charges under this Agreement, all items of payment
shall be deemed applied by Agent on account of the Obligations one (1) Business
Day after the Business Day Agent receives such payments via wire transfer or
electronic depository check. Agent is not, however, required to credit
Borrower's Account for the amount of any item of payment which is unsatisfactory
to Agent and Agent may charge Borrower's Account for the amount of any item of
payment which is returned to Agent unpaid.
(c) All payments of principal, interest and other amounts
payable hereunder, or under any of the related agreements shall be made to Agent
at the Payment Office not later than 1:00 P.M. (New York Time) on the due date
therefor in lawful money of the United States of America in federal funds or
other funds immediately available to Agent. Agent shall have the right to
effectuate payment on any and all Obligations due and owing hereunder by
charging Borrower's Account or by making Advances as provided in Section 2.3
hereof.
(d) Borrower shall pay principal, interest, and all other
amounts payable hereunder, or under any related agreement, without any deduction
whatsoever, including, but not limited to, any deduction for any setoff or
counterclaim.
2.8. Repayment of Excess Advances. The aggregate balance of Advances
outstanding at any time in excess of the maximum amount of Advances permitted
hereunder shall be immediately due and payable without the necessity of any
demand, at the Payment Office, whether or not a Default or Event of Default has
occurred.
2.9. Statement of Account. Agent shall maintain, in accordance with its
customary procedures, a loan account ("Borrower's Account") in the name of
Borrower in which shall be recorded the date and amount of each Advance made by
Agent and the date and amount of each payment in respect thereof; provided,
however, the failure by Agent to record the date and amount of any Advance shall
not adversely affect Agent or any Lender. Each month, Agent shall send to
Borrower a statement showing the accounting for the Advances made, payments made
or credited in respect thereof, and other transactions between Agent and
Borrower, during such month. The monthly statements shall be deemed correct and
binding upon Borrower in the absence of manifest error and shall constitute an
account stated between Lenders and Borrower unless Agent receives a written
statement of Borrower's specific exceptions thereto within thirty (30) days
after such statement is received by Borrower. The records of Agent with respect
to the loan account shall be presumptive evidence absent manifest error of the
amounts of Advances and other charges thereto and of payments applicable
thereto.
2.10. Letters of Credit. Subject to the terms and conditions hereof,
Agent shall (a) issue or cause the issuance of Letters of Credit ("Letters of
Credit") on behalf of Borrower; provided, however, that Agent will not be
required to issue or cause to be issued any Letters of Credit to the extent that
the face amount of such Letters of Credit would then cause the sum of (i) the
outstanding Revolving Advances plus (ii) outstanding Letters of Credit to exceed
the lesser of (x) the Maximum Revolving Advance Amount or (y) the Formula
Amount. The maximum amount of outstanding Letters of Credit shall not exceed
$7,500,000 in the aggregate at any time. All disbursements or payments related
to Letters of Credit shall be deemed to be Revolving Advances and shall bear
interest at the applicable Contract Rate; Letters of Credit that have not been
drawn upon shall not bear interest.
2.11. Issuance of Letters of Credit.
(a) Borrower, may request Agent to issue or cause the issuance
of a Letter of Credit by delivering to Agent at the Payment Office, Agent's form
of Letter of Credit Application (the "Letter of Credit Application") completed
to the satisfaction of Agent; and, such other certificates, documents and other
papers and information as Agent may reasonably request. Borrower also has the
right to give instructions and make agreements with respect to any application,
any applicable letter of credit and security agreement, any applicable letter of
credit reimbursement agreement and/or any other applicable agreement, any letter
of credit and the disposition of documents, disposition of any unutilized funds,
and to agree with Agent upon any amendment, extension or renewal of any Letter
of Credit.
(b) Each Letter of Credit shall, among other things, (i)
provide for the payment of sight drafts or acceptances of usance drafts when
presented for honor thereunder in accordance with the terms thereof and when
accompanied by the documents described therein and (ii) have an expiry date
(subject to any renewal) not later than twelve (12) months after such Letter of
Credit's date of issuance and in no event later than the last day of the Term.
Each Letter of Credit shall be subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, and any amendments or revision thereof adhered to by the
Issuer and, to the extent not inconsistent therewith, the laws of the State of
New Jersey.
(c) Agent shall use its reasonable efforts to notify Lenders
of the request by Borrower for a Letter of Credit hereunder.
2.12. Requirements For Issuance of Letters of Credit.
(a) In connection with the issuance of any Letter of Credit,
Borrower shall indemnify, save and hold Agent, each Lender and each Issuer
harmless from any loss, cost, expense or liability, including, without
limitation, payments made by Agent, any Lender or any Issuer and expenses and
reasonable attorneys' fees incurred by Agent, any Lender or Issuer arising out
of, or in connection with, any Letter of Credit to be issued or created for
Borrower.
Borrower shall be bound by Agent's or any Issuer's regulations and good faith
interpretations of any Letter of Credit issued or created for Borrower's
Account, although this interpretation may be different from its own; and,
neither Agent, nor any Lender, nor any Issuer nor any of their correspondents
shall be liable for any error, negligence, or mistakes, whether of omission or
commission, in following Borrower's instructions or those contained in any
Letter of Credit or of any modifications, amendments or supplements thereto or
in issuing or paying any Letter of Credit, except for Agent's, any Lender's, any
Issuer's or such correspondents' willful misconduct or gross negligence.
(b) Borrower shall authorize and direct any Issuer to name the
Borrower or any Obligor as the "Applicant" or "Account Party" of each Letter of
Credit. If Agent is not the Issuer of any Letter of Credit, Borrower shall
authorize and direct the Issuer to deliver to Agent all instruments, documents,
and other writings and property received by the Issuer pursuant to the Letter of
Credit and to accept and rely upon Agent's instructions and agreements with
respect to all matters arising in connection with the Letter of Credit, the
application therefor or any acceptance therefor.
(c) In connection with all Letters of Credit issued or caused
to be issued or created by Agent under this Agreement, Borrower hereby appoints
Agent, or its designee, as its attorney, with full power and authority, (i) to
sign and/or endorse Borrower's name upon any warehouse or other receipts, letter
of credit applications and acceptances; (ii) to sign Borrower's name on bills of
lading; (iii) to clear Inventory through the United States of America Customs
Department ("Customs") in the name of Borrower or Agent or Agent's designee, and
to sign and deliver to Customs officials powers of attorney in the name of such
Borrower for such purpose; and (iv) to complete in Borrower's name or Agent's,
or in the name of Agent's designee, any order, sale or transaction, obtain the
necessary documents in connection therewith, and collect the proceeds thereof.
Neither Agent nor its attorneys will be liable for any acts or omissions nor for
any error of judgment or mistakes of fact or law, except for Agent's or its
attorney's willful misconduct or gross negligence. This power, being coupled
with an interest, is irrevocable as long as any Letters of Credit remain
outstanding.
(d) Each Lender shall to the extent of the percentage amount
equal to the product of such Lender's Commitment Percentage times the aggregate
amount of all unreimbursed reimbursement obligations arising from disbursements
made or obligations incurred with respect to the Letters of Credit be deemed to
have irrevocably purchased an undivided participation in each such unreimbursed
reimbursement obligation. In the event that at the time a disbursement is made
the unpaid balance of Revolving Advances exceeds or would exceed, with the
making of such disbursement, the lesser of the Maximum Revolving Advance Amount
or the Formula Amount, and such disbursement is not reimbursed by Borrower
within two (2) Business Days, Agent shall promptly notify each Lender and upon
Agent's demand each Lender shall pay to Agent such Lender's proportionate share
of such unreimbursed disbursement together with such Lender's proportionate
share of Agent's unreimbursed costs and expenses relating to such unreimbursed
disbursement. Upon receipt by Agent of a repayment from any Borrower of any
amount disbursed by Agent for which Agent had already been reimbursed by
Lenders, Agent shall deliver to each Lender that Lender's pro rata share of such
repayment. Each Lender's participation commitment shall continue until the last
to occur of any of the following events: (A) Agent ceases to be obligated to
issue or cause to be issued Letters of Credit hereunder; (B) no Letter of Credit
issued hereunder remains outstanding and uncancelled or (C) all Persons (other
than the Borrower) have been fully reimbursed for all payments made under or
relating to Letters of Credit.
2.13. Additional Payments. Any sums expended by Agent or any Lender due
to Borrower's failure to perform or comply with its obligations under this
Agreement or any Other Document including, without limitation, Borrower's
obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be
charged to Borrower's Account as a Revolving Advance and added to the
Obligations.
2.14. Manner of Borrowing and Payment.
(a) Each borrowing of Revolving Advances shall be advanced
according to the applicable Commitment Percentages of Lenders. The Acquisition
Term Loan shall be advanced according to the Commitment Percentages of Lenders.
(b) Each payment (including each prepayment) by Borrower on
account of the principal of and interest on the Revolving Advances, shall be
applied to the Revolving Advances pro rata according to the applicable
Commitment Percentages of Lenders. Each payment (including each prepayment) by
Borrower on account of the principal of and interest on the Acquisition Term
Note, shall be made from or to, or applied to that portion of the Acquisition
Term Loan evidenced by the Acquisition Term Note pro rata according to the
Commitment Percentages of Lenders. Except as expressly provided herein, all
payments (including prepayments) to be made by any Borrower on account of
principal, interest and fees shall be made without set off or counterclaim and
shall be made to Agent on behalf of the Lenders to the Payment Office, in each
case on or prior to 1:00 P.M., New York time, in Dollars and in immediately
available funds.
(c) (i) Notwithstanding anything to the contrary contained in
Sections 2.14(a) and (b) hereof, commencing with the first Business Day
following the Closing Date, each borrowing of Revolving Advances shall be
advanced by Agent and each payment by Borrower on account of Revolving Advances
shall be applied first to those Revolving Advances advanced by Agent. On or
before 1:00 P.M., New York time, on each Settlement Date commencing with the
first Settlement Date following the Closing Date, Agent and Lenders shall make
certain payments as follows: (I) if the aggregate amount of new Revolving
Advances made by Agent during the preceding Week (if any) exceeds the aggregate
amount of repayments applied to outstanding Revolving Advances during such
preceding Week, then each Lender shall provide Agent with funds in an amount
equal to its applicable Commitment Percentage of the difference between (w) such
Revolving Advances and (x) such repayments and (II) if the aggregate amount of
repayments applied to outstanding Revolving Advances during such Week exceeds
the aggregate amount of new Revolving Advances made during such Week, then Agent
shall provide each Lender with funds in an amount equal to its applicable
Commitment Percentage of the difference between (y) such repayments and (z) such
Revolving Advances.
(ii) Each Lender shall be entitled to earn interest
at the applicable Contract Rate on outstanding Advances which it has funded.
(iii) Promptly following each Settlement Date, Agent
shall submit to each Lender a certificate with respect to payments received and
Advances made during the Week immediately preceding such Settlement Date. Such
certificate of Agent shall be conclusive in the absence of manifest error.
(d) If any Lender or Participant (a "benefitted Lender") shall
at any time receive any payment of all or part of its Advances, or interest
thereon, or receive any Collateral in respect thereof (whether voluntarily or
involuntarily or by set-off) in a greater proportion than any such payment to
and Collateral received by any other Lender, if any, in respect of such other
Lender's Advances, or interest thereon, and such greater proportionate payment
or receipt of Collateral is not expressly permitted hereunder, such benefitted
Lender shall purchase for cash from the other Lenders a participation in such
portion of each such other Lender's Advances, or shall provide such other Lender
with the benefits of any such Collateral, or the proceeds thereof, as shall be
necessary to cause such benefitted Lender to share the excess payment or
benefits of such Collateral or proceeds ratably with each of Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Each Lender so purchasing a portion of another
Lender's Advances may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.
(e) Unless Agent shall have been notified by telephone,
confirmed in writing, by any Lender that such Lender will not make the amount
which would constitute its applicable Commitment Percentage of the Advances
available to Agent, Agent may (but shall not be obligated to) assume that such
Lender shall make such amount available to Agent on the next Settlement Date
and, in reliance upon such assumption, make available to Borrower a
corresponding amount. Agent will promptly notify Borrower of its receipt of any
such notice from a Lender. If such amount is made available to Agent on a date
after such next Settlement Date, such Lender shall pay to Agent on demand an
amount equal to the product of (i) the daily average Federal Funds Rate
(computed on the basis of a year of 360 days) during such period as quoted by
Agent, times (ii) such amount, times (iii) the number of days from and including
such Settlement Date to the date on which such amount becomes immediately
available to Agent. A certificate of Agent submitted to
any Lender with respect to any amounts owing under this paragraph (e) shall be
conclusive, in the absence of manifest error. If such amount is not in fact made
available to Agent by such Lender within three (3) Business Days after such
Settlement Date, Agent shall be entitled to recover such an amount, with
interest thereon at the rate per annum then applicable to such Revolving
Advances hereunder, on demand from Borrower; provided, however, that Agent's
right to such recovery shall not prejudice or otherwise adversely affect
Borrower's rights (if any) against such Lender.
2.15. Mandatory Prepayments.
(a) When any Obligor sells or otherwise disposes of any
Collateral other than Inventory in the ordinary course of business, Borrowers
shall repay the Advances in an amount equal to the net proceeds of such sale
(i.e., gross proceeds less the reasonable costs of such sales or other
dispositions), such repayments to be made promptly but in no event more than one
(1) Business Day following receipt of such net proceeds, and until the date of
payment, such proceeds shall be held in trust for Agent. The foregoing shall not
be deemed to be implied consent to any such sale otherwise prohibited by the
terms and conditions hereof. Such repayments shall be applied first, ratably to
the outstanding principal installments on the Acquisition Term Loan in the
inverse order of the maturities thereof and, second, to the remaining Advances
in such order as Agent may determine, subject to Borrower's ability to reborrow
Revolving Advances in accordance with the terms hereof.
2.16. Use of Proceeds. Borrowers shall apply the proceeds of Advances
for the purposes set forth in Sections 2.1(c) and 2.2(b).
2.17. Defaulting Lender.
(a) Notwithstanding anything to the contrary contained herein,
in the event any Lender (x) has refused (which refusal constitutes a breach by
such Lender of its obligations under this Agreement) to make available its
portion of any Advance or (y) notifies either Agent or Borrower that it does not
intend to make available its portion of any Advance (if the actual refusal would
constitute a breach by such Lender of its obligations under this Agreement)
(each, a "Lender Default"), all rights and obligations hereunder of such Lender
(a "Defaulting Lender") as to which a Lender Default is in effect and of the
other parties hereto shall be modified to the extent of the express provisions
of this Section 2.17 while such Lender Default remains in effect.
(b) Advances shall be incurred pro rata from Lenders (the
"Non-Defaulting Lenders") which are not Defaulting Lenders based on their
respective Commitment Percentages, and no Commitment Percentage of any Lender or
any pro rata share of any Advances required to be advanced by any Lender shall
be increased as a result of such Lender Default. Amounts received in respect of
principal of any type of Advances shall be applied to reduce the applicable
Advances of each Lender pro rata based on the aggregate of the outstanding
Advances of that type of all Lenders at the time of such application; provided,
that, such amount shall not be applied to any Advances of a Defaulting Lender at
any time when, and to the extent that, the aggregate amount of Advances of any
Non-Defaulting Lender exceeds such Non-Defaulting Lender's Commitment Percentage
of all Advances then outstanding.
(c) A Defaulting Lender shall not be entitled to give
instructions to Agent or to approve, disapprove, consent to or vote on any
matters relating to this Agreement and the Other Documents. All amendments,
waivers and other modifications of this Agreement and the Other Documents may be
made without regard to a Defaulting Lender and, for purposes of the definition
of "Required Lenders", a Defaulting Lender shall be deemed not to be a Lender
and not to have Advances outstanding.
(d) Other than as expressly set forth in this Section 2.17,
the rights and obligations of a Defaulting Lender (including the obligation to
indemnify Agent) and the other parties hereto shall remain unchanged. Nothing in
this Section 2.17 shall be deemed to release any Defaulting Lender from its
obligations under this Agreement and the Other Documents, shall alter such
obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which Borrower, Agent or any Lender may
have against any Defaulting Lender as a result of any default by such Defaulting
Lender hereunder.
(e) In the event a Defaulting Lender retroactively cures to
the satisfaction of Agent the breach which caused a Lender to become a
Defaulting Lender, such Defaulting Lender shall no longer be a Defaulting Lender
and shall be treated as a Lender under this Agreement.
III. INTEREST AND FEES.
3.1. Interest. Interest on Advances shall be payable in arrears on the
last day of each month with respect to Domestic Rate Loans and, with respect to
Eurodollar Rate Loans, at the end of each Interest Period. Interest charges
shall be computed on the actual principal amount of Advances outstanding during
the month (the "Monthly Advances") at a rate per annum equal to (i) with respect
to Revolving Advances, the Revolving Interest Rate and (ii) with respect to the
Acquisition Term Loan, the Acquisition Term Loan Rate (as applicable, the
"Contract Rate"). Whenever, subsequent to the date of this Agreement, the Base
Rate is increased or decreased, the applicable Contract Rate for Domestic Rate
Loans shall be similarly changed without notice or demand of any kind by an
amount equal to the amount of such change in the Base Rate during the time such
change or changes remain in effect. The Eurodollar Rate shall be adjusted with
respect to Eurodollar Rate Loans without notice or demand of any kind on the
effective date of any change in the Reserve Percentage as of such effective
date. Upon and after the occurrence of an Event of Default, and during the
continuation thereof, the Obligations shall bear interest at the applicable
Contract Rate plus two (2%) percent per annum, (the "Default Rate").
3.2. Letter of Credit Fees.
(a) Borrower shall pay (x) to Agent, for the benefit of
Lenders, fees for each Letter of Credit for the period from and excluding the
date of issuance of same to and including the date of expiration or termination,
equal to the average daily face amount of each outstanding Letter of Credit
multiplied by two percent (2%) per annum with respect to Standby Letters of
Credit and by one-half of one percent (1/2%) with respect to Documentary Letters
of Credit, such fees to be calculated on the basis of a 360-day year for the
actual number of days elapsed and to be payable monthly in arrears on the first
day of each month and on the last day of the Term and (y) to the Issuer, any and
all customary fees and expenses as agreed upon by the Issuer and the Borrower in
connection with any Letter of Credit, including, without limitation, in
connection with the opening, amendment or renewal of any such Letter of Credit
and any acceptances created thereunder and shall reimburse Agent for any and all
customary fees and expenses, if any, paid by Agent to the Issuer (all of the
foregoing fees, the "Letter of Credit Fees"). All such charges shall be deemed
earned in full on the date when the same are due and payable hereunder and shall
not be subject to rebate or proration upon the termination of this Agreement for
any reason. Any such charge in effect at the time of a particular transaction
shall be the charge for that transaction, notwithstanding any subsequent change
in the Issuer's prevailing charges for that type of transaction.
3.3. Facility Fee. If, for any month during the Term, the average daily
unpaid balance of the Advances for each day of such month does not equal the
Maximum Loan Amount, then Borrower shall pay to Agent for the ratable benefit of
Lenders a fee at a rate equal to 3/8 of one percent (3/8%) per annum on the
amount by which the Maximum Loan Amount exceeds such average daily unpaid
balance. Such fee shall be payable to Agent in arrears on the last day of each
month.
3.4 Fee Letter. The Borrower shall pay to the Agent all fees set forth
in the Fee Letter.
3.5. Computation of Interest and Fees. Interest and fees hereunder
shall be computed on the basis of a year of 360 days and for the actual number
of days elapsed. If any payment to be made hereunder becomes due and payable on
a day other than a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and interest thereon shall be payable at the
applicable Contract Rate during such extension.
3.6. Maximum Charges. In no event whatsoever shall interest and other
charges charged hereunder exceed the highest rate permissible under law. In the
event interest and other charges as computed hereunder would otherwise exceed
the highest rate permitted under law, such excess amount shall be first applied
to any unpaid principal balance
owed by Borrower, and if the then remaining excess amount is greater than the
previously unpaid principal balance, Lenders shall promptly refund such excess
amount to Borrower and the provisions hereof shall be deemed amended to provide
for such permissible rate.
3.7. Increased Costs. In the event that any new applicable law, treaty
or governmental regulation, or any change in any new or existing law, treaty,
regulation or directive or in the interpretation or application thereof, or
compliance by any Lender (for purposes of this Section 3.7, the term "Lender"
shall include Agent or any Lender and any corporation or bank controlling Agent
or any Lender) and the office or branch where Agent or any Lender (as so
defined) makes or maintains any Eurodollar Rate Loans with any request or
directive (whether or not having the force of law) from any central bank or
other financial, monetary or other authority, shall:
(a) subject Agent or any Lender to any tax of any kind
whatsoever with respect to this Agreement or any Other Document or change the
basis of taxation of payments to Agent or any Lender of principal, fees,
interest or any other amount payable hereunder or under any Other Documents
(except for changes in the rate of tax on the net income of Agent or any Lender
by any jurisdiction in which it maintains its principal office);
(b) impose, modify or hold applicable any reserve, special
deposit, assessment or similar requirement against assets held by, or deposits
in or for the account of, advances or loans by, or other credit extended by, any
office of Agent or any Lender, including (without limitation) pursuant to
Regulation D of the Board of Governors of the Federal Reserve System; or
(c) impose on Agent or any Lender or the London interbank
Eurodollar market any other condition with respect to this Agreement or any
Other Document;
and the result of any of the foregoing is to increase the cost to Agent or any
Lender of making, renewing or maintaining its Advances hereunder by an amount
that Agent or such Lender reasonably deems to be material or to reduce the
amount of any payment (whether of principal, interest or otherwise) in respect
of any of the Advances by an amount that Agent or such Lender reasonably deems
to be material, then, in any case Borrower shall promptly pay Agent or such
Lender, upon its demand, such additional amount as will compensate Agent or such
Lender for such additional cost or such reduction, as the case may be. Agent or
such Lender shall certify the amount of such additional cost or reduced amount
to Borrower, and such certification shall be presumptive evidence absent
manifest error.
3.8. Basis For Determining Interest Rate Inadequate or Unfair. In the
event that Agent or any Lender shall have determined that:
(a) reasonable means do not exist for ascertaining the
Eurodollar Rate applicable pursuant to Section 2.3 hereof for any Interest
Period; or
(b) Dollar deposits in the relevant amount and for the
relevant maturity are not available in the London interbank Eurodollar market,
with respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate
Loan, or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate
Loan;
then Agent shall give Borrower prompt written, telephonic or telegraphic notice
of such determination. If such notice is given, (i) any such requested
Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrower
shall notify Agent no later than 10:00 a.m. (New York City time) two (2)
Business Days prior to the date of such proposed borrowing, that its request for
such borrowing shall be canceled or made as an unaffected type of Eurodollar
Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have
been converted to an affected type of Eurodollar Rate Loan shall be continued as
or converted into a Domestic Rate Loan, or, if Borrower shall notify Agent, no
later than 10:00 a.m. (New York City time) two (2) Business Days prior to the
proposed conversion, shall be maintained as an unaffected type of Eurodollar
Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans shall be
converted into a Domestic Rate Loan, or, if Borrower shall notify Agent, no
later than 10:00 a.m. (New York City time) two (2) Business Days prior to the
last Business Day of the then current Interest Period applicable to such
affected Eurodollar
Rate Loan, shall be converted into an unaffected type of Eurodollar Rate Loan,
on the last Business Day of the then current Interest Period for such affected
Eurodollar Rate Loans. Until such notice has been withdrawn, Lenders shall have
no obligation to make an affected type of Eurodollar Rate Loan or maintain
outstanding affected Eurodollar Rate Loans and Borrower shall have the right to
convert a Domestic Rate Loan or an unaffected type of Eurodollar Rate Loan into
an affected type of Eurodollar Rate Loan.
3.9. Capital Adequacy.
(a) In the event that Agent or any Lender shall have
determined that any new applicable law, rule, regulation or guideline regarding
capital adequacy, or any change in any new or existing law, rule, regulation or
guideline regarding capital adequacy, 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 Agent or any Lender (for purposes of this Section 3.9, the term "Lender"
shall include Agent or any Lender and any corporation or bank controlling Agent
or any Lender) and the office or branch where Agent or any Lender (as so
defined) makes or maintains any Eurodollar Rate Loans 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 Agent or any Lender's capital as a
consequence of its obligations hereunder to a level below that which Agent or
such Lender could have achieved but for such adoption, change or compliance
(taking into consideration Agent's and each Lender's policies with respect to
capital adequacy) by an amount reasonably deemed by Agent or any Lender to be
material, then, from time to time, Borrower shall pay upon demand to Agent or
such Lender such additional amount or amounts as will compensate Agent or such
Lender for such reduction. In determining such amount or amounts, Agent or such
Lender may use any reasonable averaging or attribution methods. The protection
of this Section 3.9 shall be available to Agent and each Lender regardless of
any possible contention of invalidity or inapplicability with respect to the
applicable law, regulation or condition.
(b) A certificate of Agent or such Lender setting forth such
amount or amounts as shall be necessary to compensate Agent or such Lender with
respect to Section 3.9(a) hereof when delivered to Borrower shall be presumptive
evidence absent manifest error.
IV. COLLATERAL AND GUARANTY: GENERAL TERMS
4.1. Security Interest in the Collateral. To secure the prompt payment
and performance to Agent and each Lender of the Obligations, each Obligor hereby
assigns, pledges and grants to Agent for the ratable benefit of each Lender a
continuing security interest in and to all of its Collateral, whether now owned
or existing or hereafter acquired or arising and wheresoever located. Each
Obligor shall ▇▇▇▇ its books and records as may be necessary or appropriate to
evidence, protect and perfect Agent's security interest and shall cause its
financial statements to reflect such security interest.
4.2. Perfection of Security Interest. Each Obligor shall take all
action that may be necessary or desirable, or that Agent may request, so as at
all times to maintain the validity, perfection, enforceability and priority of
Agent's security interest in the Collateral or to enable Agent to protect,
exercise or enforce its rights hereunder and in the Collateral, including, but
not limited to, (i) immediately discharging all Liens other than Permitted
Encumbrances, (ii) obtaining landlords' or mortgagees' lien waivers, (iii)
delivering to Agent, endorsed or accompanied by such instruments of assignment
as Agent may specify, and stamping or marking, in such manner as Agent may
specify, any and all chattel paper, instruments, letters of credits and advices
thereof and documents evidencing or forming a part of the Collateral, (iv)
entering into warehousing, lockbox and other custodial arrangements satisfactory
to Agent, and (v) executing and delivering financing statements, instruments of
pledge, mortgages with respect to Collateral, notices and assignments, in each
case in form and substance reasonably satisfactory to Agent, relating to the
creation, validity, perfection, maintenance or continuation of Agent's security
interest under the Uniform Commercial Code or other applicable law. Agent is
hereby authorized to file financing statements signed by Agent instead of
Borrower in accordance with Section 9-402(2) of Uniform Commercial Code as
adopted in the State of New Jersey. All charges, expenses and fees Agent may
incur in doing any of the foregoing, and any local taxes relating thereto, shall
be charged to Borrower's Account as a Revolving Advance of a Domestic Rate Loan
and added to the Obligations, or, at Agent's option, shall be paid to Agent for
the ratable benefit of Lenders immediately upon demand.
4.3. Disposition of Collateral. Each Obligor will safeguard and protect
all Collateral for Agent's general account and make no disposition thereof
whether by sale, lease or otherwise except the sale of Inventory in the ordinary
course of business.
4.4. Preservation of Collateral. In addition to the rights and remedies
set forth in Section 11.1 hereof, Agent, to the extent the Agent deems it
reasonably necessary to protect the Agent's interest in and to preserve the
Collateral: (a) may hire of such security guards or place other security
protection measures as Agent may deem reasonably appropriate; (b) may employ and
maintain at any Obligor's premises a custodian who shall have full authority to
do all acts necessary to protect Agent's interests in the Collateral; (c) may
lease warehouse facilities to which Agent may move all or part of the
Collateral; (d) may use any Obligor's owned or leased lifts, hoists, trucks and
other facilities or equipment for handling or removing the Collateral; and (e)
shall have, and is hereby granted, a right of ingress and egress to the places
where the Collateral is located, and may proceed over and through any of
Obligor's owned or leased property. Each Obligor shall cooperate fully with
Agent's efforts to preserve the Collateral and will take such actions to
preserve the Collateral as Agent may reasonably direct. All of Agent's expenses
of preserving the Collateral, including any expenses relating to the bonding of
a custodian, shall be charged to Obligor's Account as a Revolving Advance of a
Domestic Rate Loan and added to the Obligations.
4.5. Ownership of Collateral. With respect to the Collateral, at the
time the Collateral becomes subject to Agent's security interest: (a) each
Obligor shall be the sole owner of and fully authorized and able to sell,
transfer, pledge and/or grant a first priority security interest in each and
every item of the its respective Collateral to Agent, subject to Permitted
Encumbrances, and, except for Permitted Encumbrances, the Collateral shall be
free and clear of all Liens and encumbrances whatsoever; (b) each document and
agreement executed by each Obligor or delivered to Agent or any Lender in
connection with this Agreement shall be true and correct in all material
respects; (c) all signatures and endorsements of each Obligor that appear on
such documents and agreements shall be genuine and each Obligor shall have full
capacity to execute same; and (d) each Obligor's Inventory shall be located as
set forth on Schedule 4.5 and shall not be removed from such location(s) without
prior written notice to Agent except with respect to the sale, manufacture or
processing of Inventory in the ordinary course of business, provided, however,
that no such removal shall be effected before all filings required to preserve
the first priority security interest of the Agent in the Inventory shall have
been made and landlord's waivers and/or warehousemen's waivers, in form and
substance satisfactory to the Agent, for such new locations shall have been
delivered to the Agent to the extent that such Inventory is to be considered
Eligible Inventory.
4.6. Defense of Agent's and Lenders' Interests. Until (a) payment and
satisfaction in full of all payment Obligations (whether in the form of
principal, interest, reimbursement obligations, fees, charges, expenses,
penalties or otherwise) with the exception of indemnification obligations
arising under this Agreement for which no claim subject thereto has been made
and has not been terminated, satisfied released or withdrawn and (b) termination
of this Agreement, Agent's interests in the Collateral shall continue in full
force and effect. During such period no Obligor shall, without Agent's prior
written consent, pledge, sell (except Inventory in the ordinary course of
business to the extent permitted in Section 4.3 hereof), assign, transfer,
create or suffer to exist a Lien upon or encumber or allow or suffer to be
encumbered in any way except for Permitted Encumbrances, any part of the
Collateral. Each Obligor shall defend Agent's interests in the Collateral
against any and all Persons whatsoever. At any time following demand by Agent in
accordance with the terms hereof for payment of all Obligations, Agent shall
have the right to take possession of the indicia of the Collateral and the
Collateral in whatever physical form contained, including without limitation:
labels, stationery, documents, instruments and advertising materials. If Agent
exercises this right to take possession of the Collateral, Obligors shall, upon
demand, assemble it in the best manner possible and make it available to Agent
at a place reasonably convenient to Agent. In addition, with respect to all
Collateral, Agent and Lenders shall be entitled to all of the rights and
remedies set forth herein and further provided by the Uniform Commercial Code or
other applicable law. Each Obligor shall, and Agent may, at its option, instruct
all suppliers, carriers, forwarders, warehouses or others
receiving or holding cash, checks, Inventory, documents or instruments in which
Agent holds a security interest to deliver same to Agent and/or subject to
Agent's order and if they shall come into any Obligor's possession, they, and
each of them, shall be held by such Borrower in trust as Agent's trustee, and
such Obligor will immediately deliver them to Agent in their original form
together with any necessary endorsement.
4.7. Books and Records. Each Obligor shall (a) keep proper books of
record and account in which full, true and correct entries will be made of all
dealings or transactions of or in relation to its business and affairs; (b) set
up on its books accruals with respect to all taxes, assessments, charges, levies
and claims; and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables, advances and investments and
all other proper accruals (including without limitation by reason of
enumeration, accruals for premiums, if any, due on required payments and
accruals for depreciation, obsolescence, or amortization of properties), which
should be set aside from such earnings in connection with its business. All
determinations pursuant to this subsection shall be made in accordance with, or
as required by, GAAP consistently applied in the opinion of such independent
public accountant as shall then be regularly engaged by Obligors.
4.8. Financial Disclosure. Each Obligor hereby irrevocably authorizes
and directs all accountants and auditors employed by such Obligor at any time
during the Term to exhibit and deliver to Agent and each Lender, at the request
of Agent and/or such Lenders, copies of any of any Obligor's financial
statements, trial balances or other accounting records of any sort in the
accountant's or auditor's possession, and to disclose to Agent and each Lender
any information such accountants may have concerning such Obligor's financial
status and business operations. Each Obligor hereby authorizes all federal,
state and municipal authorities to furnish to Agent and each Lender copies of
reports or examinations relating to such Obligor, whether made by such Obligor
or otherwise; however, Agent and each Lender will attempt to obtain such
information or materials directly from such Obligor prior to obtaining such
information or materials from such accountants or such authorities.
4.9. Compliance with Laws. Each Obligor shall comply with all acts,
rules, regulations and orders of any legislative, administrative or judicial
body or official applicable to its respective Collateral or any part thereof or
to the operation of such Borrower's business the non-compliance with which could
reasonably be expected to have a Material Adverse Effect. The Collateral at all
times shall be maintained in accordance with the requirements of all insurance
carriers which provide insurance with respect to the Collateral so that such
insurance shall remain in full force and effect.
4.10. Inspection of Premises. At all reasonable times Agent and each
Lender shall have full access to and the right to audit, check, inspect and make
abstracts and copies from each Obligor's books, records, audits, correspondence
and all other papers relating to the Collateral and the operation of each
Obligor's business. Agent, any Lender and their agents may enter upon any of
Obligor's premises at any time during business hours and at any other reasonable
time, and from time to time, for the purpose of inspecting the Collateral and
any and all records pertaining thereto and the operation of such Obligor's
business.
4.11. Insurance. Each Obligor shall bear the full risk of any loss of
any nature whatsoever with respect to the Collateral. At each Obligor's own cost
and expense in amounts and with carriers reasonably acceptable to Agent, each
Borrower shall (a) keep all its material insurable properties and properties in
which each Obligor has an interest insured against the hazards of fire, flood
(where customary or if required by law), sprinkler leakage, those hazards
covered by extended coverage insurance and such other hazards, and for such
amounts, as is customary in the case of companies engaged in businesses similar
to such Obligor's including, without limitation, business interruption
insurance;, (b) maintain a bond in such amounts as is customary in the case of
companies engaged in businesses similar to such Obligor insuring against
larceny, embezzlement or other criminal misappropriation of insured's officers
and employees who may either singly or jointly with others at any time have
access to the assets or funds of such Obligor either directly or through
authority to draw upon such funds or to direct generally the disposition of such
assets; (c) maintain public and product liability insurance against claims for
personal injury, death or property damage suffered by others as is customary in
the case of entities engaged in businesses similar to such Obligor; (d) maintain
all such worker's compensation or similar insurance as may be required under the
laws of any state or jurisdiction in which such Obligor is engaged in business;
(e) furnish Agent with (i) copies of all policies and evidence of the
maintenance of such policies by the renewal
thereof at least thirty (30) days before any expiration date, and (ii)
appropriate loss payable endorsements in form and substance reasonably
satisfactory to Agent, naming Agent as lender loss payee with respect to all
insurance coverage referred to in clause (a) above as it relates to the
Collateral and an additional insured with respect to all insurance coverage
referred to in clause (c) above, and providing (A) that all proceeds thereunder
(except proceeds of insurance referred to in clause (a) above not relating to
the Collateral, proceeds of insurance referred to in clause (a) above relating
to the Collateral to the extent said proceeds are less than $50,000 and proceeds
of insurance referred to in clause (c) provided said proceeds are paid to the
party seeking damages such that neither the Agent nor any Lender shall have any
liability to said party) shall be payable to Agent, (B) no such insurance shall
be affected by any act or neglect of the insured or owner of the property
described in such policy, and (C) that such policy and lender loss payable and
additional insured clauses may not be canceled, amended or terminated unless at
least thirty (30) days' prior written notice is given to Agent. Except as
provided for in (A) above, in the event of any loss or claim the carriers named
therein hereby are directed by Agent and the applicable Obligor to make payment
for such loss to Agent and not to such Obligor and Agent jointly. If any such
insurance losses are paid by check, draft or other instrument payable to any
Obligor and Agent jointly, Agent may endorse such Obligor's name thereon and do
such other things as Agent may deem advisable to reduce the same to cash. Agent
is hereby authorized to adjust and compromise claims under insurance coverage
referred to in clauses (a) and (b) above. Except as hereinafter provided, all
loss recoveries received by Agent upon any Collateral may be applied to the
Obligations, in such order as Agent in its sole discretion shall determine. Any
surplus shall be paid by Agent to Obligors or applied as may be otherwise
required by law. Any deficiency thereon shall be paid by Obligors to Agent, on
demand.
4.12. Failure to Pay Insurance. If any Obligor fails to obtain
insurance as hereinabove provided, or to keep the same in force, Agent, if Agent
so elects, may obtain such insurance and pay the premium therefor on behalf of
Borrower, and charge Obligors' Account therefor as a Revolving Advance of a
Domestic Rate Loan and such expenses so paid shall be part of the Obligations.
4.13. Payment of Taxes. Each Obligor will pay, when due, all taxes,
assessments and other Charges lawfully levied or assessed upon such Obligor or
any of the Collateral including, without limitation, real and personal property
taxes, assessments and charges and all franchise, income, employment, social
security benefits, withholding, and sales taxes, except if being contested in
good faith and by appropriate proceedings and with respect to which proper
reserves have been taken by the Obligors. If any tax by any governmental
authority is or may be imposed on or as a result of any transaction between any
Obligor and Agent or any Lender which Agent or any Lender may be required to
withhold or pay or if any taxes, assessments, or other Charges remain unpaid
after the date fixed for their payment, or if any claim shall be made which, in
Agent's or any Lender's reasonable opinion, may create a valid Lien on the
Collateral, Agent may without notice to Obligors pay the taxes, assessments or
other Charges and each Obligor hereby indemnifies and holds Agent and each
Lender harmless in respect thereof. Agent will not pay any taxes, assessments or
Charges to the extent that any Obligor has contested or disputed those taxes,
assessments or Charges in good faith, by expeditious protest, administrative or
judicial appeal or similar proceeding provided that any related tax lien is
stayed and sufficient reserves are established to the reasonable satisfaction of
Agent to protect Agent's security interest in or Lien on the Collateral. The
amount of any payment by Agent under this Section 4.13 shall be charged to
Borrower's Account as a Revolving Advance and added to the Obligations and,
until Borrower shall furnish Agent with an indemnity therefor (or supply Agent
with evidence satisfactory to Agent that due provision for the payment thereof
has been made), Agent may hold without interest any balance standing to
Borrower's credit and Agent shall retain its security interest in any and all
Collateral held by Agent.
4.14. Payment of Leasehold Obligations. Each Obligor shall at all times
pay, when and as due, its rental obligations under all leases under which it is
a tenant, and shall otherwise comply, in all material respects, with all other
terms of such leases and keep them in full force and effect and, at Agent's
request will provide evidence of having done so, where the failure to so pay,
comply or keep in full force and effect could reasonably be expected to have a
Material Adverse Effect.
4.15. Receivables.
(a) Nature of Receivables. Each of the Eligible Receivables
shall be a bona fide and valid account representing a bona fide Indebtedness
incurred by the Customer therein named, for a fixed sum as set forth in the
invoice relating thereto (provided immaterial or unintentional invoice errors
shall not be deemed to be a breach hereof) with respect to an absolute sale or
lease and delivery of goods upon stated terms of a Obligor, or work, labor or
services theretofore rendered by a Obligor as of the date each Receivable is
created. Same shall be due and owing in accordance with the applicable Obligor's
standard terms of sale without dispute, setoff or counterclaim except as may be
stated on the accounts receivable schedules delivered by Obligors to Agent.
(b) Solvency of Customers. Each Customer, to the best of each
Obligor's knowledge, as of the date each Eligible Receivable is created, is and
is expected to be solvent and able to pay all Eligible Receivables on which the
Customer is obligated in full when due or with respect to such Customers of any
Obligor who are not solvent such Obligor has set up on its books and in its
financial records bad debt reserves adequate to cover such Receivables in
accordance with GAAP.
(c) Locations of Borrower. Each Obligor's chief executive
office is located at the addresses set forth on Schedule 4.15(c) hereto. Until
written notice is given to Agent by Borrower of any Other Billing Location at
which any Obligor keeps its records pertaining to Receivables, all such records
shall be kept at such executive office. No Obligor shall change its chief
executive office or Other Billing Location without prior written notice to the
Agent, provided, however, that no such change shall be effected before all
filings required to preserve the first priority security interest of the Agent
in the Collateral shall have been made and landlord waivers and/or
warehousemen's waivers, as the case may be, in form and substance reasonably
satisfactory to the Agent, for such new location shall have been delivered to
the Agent.
(d) Collection of Receivables. Until any Obligor's authority
to do so is terminated by Agent (which notice Agent may give at any time
following the occurrence of an Event of Default or a Default or when Agent in
its reasonable discretion deems it to be in Lenders' best interest to do so),
each Obligor will, at such Obligor's sole cost and expense, but on Agent's
behalf and for Agent's account, collect as Agent's property and in trust for
Agent all amounts received on Receivables, and shall not commingle such
collections with any Obligor's funds or use the same except to pay Obligations.
Each Obligor shall, upon request, deliver to Agent, or deposit in the Blocked
Account, in original form and on the date of receipt thereof, all checks,
drafts, notes, money orders, acceptances, cash and other evidences of
Indebtedness received in respect of Receivables.
(e) Notification of Assignment of Receivables. Agent shall
have the right (at any time following the occurrence and during the continuance
of an Event of Default or a Default or when Agent in its reasonable discretion
deems it to be in Lenders' best interest to do so) to send notice of the
assignment of, and Agent's security interest in, the Receivables to any and all
Customers or any third party holding or otherwise concerned with any of the
Collateral. Thereafter, Agent shall have the sole right to collect the
Receivables, take possession of the Collateral, or both. Agent's actual
collection expenses, including, but not limited to, stationery and postage,
telephone and telegraph, secretarial and clerical expenses and the salaries of
any collection personnel used for collection, may be charged to Borrowers'
Account and added to the Obligations.
(f) Power of Agent to Act on Obligors' Behalf. Agent shall
have the right to receive, endorse, assign and/or deliver in the name of Agent
or any Obligor any and all checks, drafts and other instruments for the payment
of money relating to the Receivables, and each Obligor hereby waives notice of
presentment, protest and non-payment of any instrument so endorsed. Each Obligor
hereby constitutes Agent or Agent's designee as such Obligor's attorney with
power (i) to endorse such Obligor's name upon any notes, acceptances, checks,
drafts, money orders or other evidences of payment or Collateral; (ii) to sign
such Obligor's name on any invoice or ▇▇▇▇ of lading relating to any of the
Receivables, drafts against Customers, assignments and verifications of
Receivables; (iii) to send verifications of Receivables to any Customer; (iv) to
sign such Obligor's name on all financing statements or any other documents or
instruments deemed necessary or appropriate by Agent to preserve, protect, or
perfect Agent's interest in
the Collateral and to file same; (v) to demand payment of the Receivables; (vi)
to enforce payment of the Receivables by legal proceedings or otherwise; (vii)
to exercise all of Borrowers' rights and remedies with respect to the collection
of the Receivables and any other Collateral; (viii) to settle, adjust,
compromise, extend or renew the Receivables; (ix) to settle, adjust or
compromise any legal proceedings brought to collect Receivables; (x) to prepare,
file and sign such Obligor's name on a proof of claim in bankruptcy or similar
document against any Customer; (xi) to prepare, file and sign such Obligor's
name on any notice of Lien, assignment or satisfaction of Lien or similar
document in connection with the Receivables; and (xii) to do all other acts and
things necessary to carry out this Agreement; provided that with respect to
items (v) through (xii) above, said power shall be exercised by the Agent at any
time following the occurrence and during the continuance of an Event of Default
or a Default or when Agent in its reasonable discretion deems it to be in the
Lenders' best interests to do so. No power of Attorney shall be utilized by the
Agent in a manner contrary to the foregoing provisions. All acts of said
attorney or designee are hereby ratified and approved, and said attorney or
designee shall not be liable for any acts of omission or commission nor for any
error of judgment or mistake of fact or of law, unless done maliciously or with
gross (not mere) negligence; this power being coupled with an interest is
irrevocable while any of the Obligations remain unpaid. Agent shall have the
right at any time to change the address for delivery of mail addressed to any
Obligor to such address as Agent may designate and to receive, open and dispose
of all mail addressed to any Obligor.
(g) No Liability. Neither Agent nor any Lender shall, under
any circumstances or in any event whatsoever, have any liability for any error
or omission or delay of any kind occurring in the settlement, collection or
payment of any of the Receivables or any instrument received in payment thereof,
or for any damage resulting therefrom. Agent may, without notice or consent from
any Obligor, ▇▇▇ upon or otherwise collect, extend the time of payment of,
compromise or settle for cash, credit or upon any terms any of the Receivables
or any other securities, instruments or insurance applicable thereto and/or
release any obligor thereof. At any time following the occurrence and during an
Event of Default or a Default or when Agent in its reasonable discretion deems
it to be in the Lenders' best interest to do so, Agent is authorized and
empowered to accept the return of the goods represented by any of the
Receivables, without notice to or consent by any Obligor, all without
discharging or in any way affecting any Borrower's liability hereunder.
(h) Establishment of a Lockbox Account, Dominion Account. All
proceeds of Collateral shall, at the direction of Agent, be deposited by
Obligors into a lockbox account, dominion account or such other "blocked
account" maintained with the Agent ("Blocked Accounts"). All funds deposited in
such "blocked account" shall immediately become the property of Agent. Neither
Agent nor any Lender assumes any responsibility for such "blocked account"
arrangement, including without limitation, any claim of accord and satisfaction
or release with respect to deposits accepted by any bank thereunder.
Alternatively, notwithstanding the foregoing, until such time as the Undrawn
Availability is less than $10,000,000 or an Event of Default has occurred, the
Borrower shall establish with the Agent (i) its primary operating accounts
("Operating Accounts") and (ii) depository accounts ("Depository Accounts") and
Obligors shall deposit all proceeds of Collateral or cause same to be deposited,
in kind, in such Depository Accounts.
(i) Adjustments. No Obligor will, without Agent's consent,
compromise or adjust any Receivables (or extend the time for payment thereof) or
accept any returns of merchandise or grant any additional discounts, allowances
or credits thereon except for those compromises, adjustments, returns,
discounts, credits and allowances as have been heretofore customary in the
business of such Obligor.
4.16. Inventory. To the extent Inventory held for sale or lease has
been produced by any Obligor, it has been and will be produced by such Obligor
materially in accordance with the Federal Fair Labor Standards Act of 1938, as
amended, and all rules, regulations and orders thereunder.
4.17. Maintenance of Equipment. The Equipment shall be maintained in
good operating condition and repair (reasonable wear and tear excepted) and all
necessary replacements of and repairs thereto shall be made so that all
Equipment materially necessary for each Obligor to properly operate and conduct
its business shall be maintained and preserved in all material respects. No
Obligor shall use or operate the Equipment in violation of any law, statute,
ordinance, code, rule or regulation where such use or operation could reasonably
be expected have a Material Adverse
Effect. Each Obligor shall have the right to sell Equipment in the ordinary
course of its business so long as the sale of such Equipment could not
reasonably be expected to have a Material Adverse Effect.
4.18. Exculpation of Liability. Nothing herein contained shall be
construed to constitute Agent or any Lender as any Obligor's agent for any
purpose whatsoever, nor shall Agent or any Lender be responsible or liable for
any shortage, discrepancy, damage, loss or destruction of any part of the
Collateral wherever the same may be located and regardless of the cause thereof.
Neither Agent nor any Lender, whether by anything herein or in any assignment or
otherwise, assume any of any Obligor's obligations under any contract or
agreement assigned to Agent or such Lender, and neither Agent nor any Lender
shall be responsible in any way for the performance by any Obligor of any of the
terms and conditions thereof.
4.19. Environmental Matters. (a) Except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect, Obligors
shall ensure that the Real Property remains in compliance in all material
respects with all Environmental Laws and they shall not place or permit to be
placed any Hazardous Substances on any Real Property except as not prohibited by
applicable law or appropriate governmental authorities.
(b) Except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect, Obligors shall establish and
maintain a system to assure and monitor continued compliance in all material
respects with all applicable Environmental Laws which system shall include
periodic reviews of such compliance.
(c) Except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect, obligors shall (i) employ in
connection with the use of the Real Property appropriate technology necessary to
maintain compliance with any applicable Environmental Laws and (ii) dispose of
any and all Hazardous Waste generated at the Real Property only at facilities
and with carriers that maintain valid permits under RCRA and any other
applicable Environmental Laws. Except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect, obligors shall use
their best efforts to obtain required certificates of disposal, such as
hazardous waste manifest receipts, from all treatment, transport, storage or
disposal facilities or operators employed by Obligors in connection with the
transport or disposal of any Hazardous Waste generated at the Real Property.
(d) In the event any Obligor obtains, gives or receives notice
of any Release or threat of Release of a reportable quantity of any Hazardous
Substances at the Real Property (any such event being hereinafter referred to as
a "Hazardous Discharge") or receives any notice of violation, request for
information or notification that it is potentially responsible for investigation
or cleanup of environmental conditions at the Real Property, demand letter or
complaint, order, citation, or other written notice with regard to any Hazardous
Discharge or violation of Environmental Laws affecting the Real Property or any
Obligor's interest therein (any of the foregoing is referred to herein as an
"Environmental Complaint") from any Person, including any state agency
responsible in whole or in part for environmental matters in the state in which
the Real Property is located or the United States Environmental Protection
Agency (any such person or entity hereinafter the "Authority"), and the facts
and circumstances surrounding such Hazardous Discharge or Environmental
Complaint could reasonably be expected to have a Material Adverse Effect, then
Borrower shall, within five (5) Business Days, give written notice of same to
Agent detailing facts and circumstances of which any Obligor is aware giving
rise to the Hazardous Discharge or Environmental Complaint. Such information is
not intended to create nor shall it create any obligation upon Agent or any
Lender with respect thereto.
(e) Obligors shall promptly forward to Agent copies of any
request for information, notification of potential liability, demand letter
relating to potential responsibility with respect to the investigation or
cleanup of Hazardous Substances which could be reasonably be expected to have a
Material Adverse Effect at any other site owned, operated or used by any Obligor
to dispose of Hazardous Substances and shall continue to forward copies of
correspondence between any Borrower and the Authority regarding such claims to
Agent until the claim is settled. Obligors shall promptly forward to Agent
copies of all documents and reports concerning a Hazardous Discharge at the Real
Property that any Borrower is required to file under any Environmental Laws
which could be reasonably be expected to have a Material Adverse Effect . Such
information is to be provided solely to allow Agent to protect Agent's security
interest in the Collateral.
(f) Obligors shall respond promptly to any Hazardous Discharge
or Environmental Complaint ifthe facts and circumstances surrounding said
Hazardous Discharge or Environmental Complaint could reasonably be expected to
have a Material Adverse Effect and take all necessary action in order to
safeguard the health of any Person and to avoid subjecting the Collateral or
Real Property to any Lien (other than Permitted Encumbrances). If any Obligor
shall fail to respond promptly to any Hazardous Discharge or Environmental
Complaint and the facts and circumstances surrounding said Hazardous Discharge
or Environmental Complaint could reasonably be expected to have a Material
Adverse Effect or any Obligor shall fail to comply with any of the requirements
of any Environmental Laws and failure could reasonably be expected to have a
Material Adverse Effect, Agent on behalf of Lenders may, but without the
obligation to do so, for the sole purpose of protecting Agent's interest in
Collateral: (A) give such notices or (B) enter onto the Real Property (or
authorize third parties to enter onto the Real Property) and take such actions
as Agent (or such third parties as directed by Agent) deem reasonably necessary
or advisable, to clean up, remove, mitigate or otherwise deal with any such
Hazardous Discharge or Environmental Complaint. All reasonable costs and
expenses incurred by Agent and Lenders (or such third parties) in the exercise
of any such rights, including any sums paid in connection with any judicial or
administrative investigation or proceedings, fines and penalties, together with
interest thereon from the date expended at the Default Rate for Domestic Rate
Loans constituting Revolving Advances shall be paid upon demand by Borrower, and
until paid shall be added to and become a part of the Obligations secured by the
Liens created by the terms of this Agreement or any other agreement between
Agent, any Lender and any Obligor.
(g) Promptly upon the written request of Agent and after the
occurrence of a Default, Obligors shall provide Agent, at Obligors' expense,
with an environmental site assessment or environmental audit report prepared by
an environmental engineering firm acceptable in the reasonable opinion of Agent,
to assess with a reasonable degree of certainty the existence of a Hazardous
Discharge and the potential costs in connection with abatement, cleanup and
removal of any Hazardous Substances found on, under, at or within the Real
Property. Any report or investigation of such Hazardous Discharge proposed and
acceptable to an appropriate Authority that is charged to oversee the clean-up
of such Hazardous Discharge shall be acceptable to Agent. Except with respect to
the amounts and locations disclosed on Schedule 4.19(g) hereof, if such
estimates, individually or in the aggregate, exceed $1,000,000, Agent shall have
the right to require Obligors to post a bond, letter of credit or other security
reasonably satisfactory to Agent to secure payment of these costs and expenses.
(h) Obligors shall defend and indemnify Agent and Lenders and
hold Agent, Lenders and their respective employees, agents, directors and
officers harmless from and against all loss, liability, damage and expense,
claims, costs, fines and penalties, including attorney's fees, suffered or
incurred by Agent or Lenders under or on account of any Environmental Laws,
including, without limitation, the assertion of any Lien thereunder, with
respect to any Hazardous Discharge, the presence of any Hazardous Substances
affecting the Real Property, whether or not the same originates or emerges from
the Real Property or any contiguous real estate, including any loss of value of
the Real Property as a result of the foregoing except to the extent such loss,
liability, damage and expense is attributable to any Hazardous Discharge
resulting from actions on the part of Agent or any Lender. Borrowers'
obligations under this Section 4.19 shall arise upon the discovery of the
presence of any Hazardous Substances at the Real Property, whether or not any
federal, state, or local environmental agency has taken or threatened any action
in connection with the presence of any Hazardous Substances. Obligors'
obligation and the indemnifications hereunder shall survive the termination of
this Agreement.
(i) For purposes of Section 4.19 and 5.7, all references to
Real Property shall be deemed to include all of Obligors' right, title and
interest in and to its owned and leased premises.
4.20. Financing Statements. Except as respects the financing statements
filed by Agent and the financing statements described on Schedule 1.2, no
financing statement covering any of the Collateral or any proceeds thereof is on
file in any public office.
4.21 Guaranty. The Guarantors shall guaranty the Obligations of the
Borrower and to secure said guaranty, shall assign, pledge and grant to the
Agent for the ratable benefit of each Lender a continuing security interest in
and to all of their Collateral, whether now owned or existing or hereafter
acquired or arising and wheresoever located.
V. REPRESENTATIONS AND WARRANTIES.
Each Obligor represents and warrants as follows:
5.1. Authority. Each Obligor has full power, authority and legal right
to enter into this Agreement and the Other Documents and to perform all its
respective Obligations hereunder and thereunder. The execution, delivery and
performance of this Agreement and of the Other Documents (a) are within such
Obligor's corporate powers, have been duly authorized, are not in contravention
of law or the terms of such Obligor's bylaws, certificate of incorporation or
other applicable documents relating to such Obligor's formation or to the
conduct of such Obligor's business or of any material agreement or undertaking
to which such Obligor is a party or by which such Obligor is bound, and (b) will
not conflict with nor result in any breach in any of the provisions of or
constitute a default under or result in the creation of any Lien except
Permitted Encumbrances upon any asset of such Obligor under the provisions of
any agreement, charter document, instrument, by-law, or other instrument to
which such Obligor or its property is a party or by which it may be bound.
5.2. Formation and Qualification. (a) Each Obligor is duly incorporated
and in good standing (other than Inactive Subsidiaries) under the laws of the
state listed on Schedule 5.2(a) and is qualified to do business and is in good
standing in the states listed on Schedule 5.2(a) which constitute all states in
which qualification and good standing are necessary for such Obligor to conduct
its business and own its property and where the failure to so qualify could
reasonably be expected to have a Material Adverse Effect. Each Obligor has
delivered to Agent true and complete copies of its certificate of incorporation
and by-laws and will promptly notify Agent of any amendment or changes thereto.
(b) As of the date of this Agreement, the only Subsidiaries of
each Obligor are listed on Schedule 5.2(b). The Obligors shall supplement said
Schedule upon the formation of any new Subsidiaries, as permitted by the terms
hereof.
5.3. Survival of Representations and Warranties. All representations
and warranties of such Obligor contained in this Agreement and the Other
Documents shall be true at the time of such Obligor's execution of this
Agreement and the Other Documents, and shall survive the execution, delivery and
acceptance thereof by the parties thereto and the closing of the transactions
described therein or related thereto.
5.4. Tax Returns. Each Obligor's federal tax identification number is
set forth on Schedule 5.4. Each Borrower has filed all federal, state and local
tax returns and other material reports each is required by law to file and has
paid all taxes, assessments, fees and other governmental charges that are due
and payable. Federal, state and local income tax returns of each Obligor have
been examined and reported upon by the appropriate taxing authority or closed by
applicable statute and satisfied for all fiscal years prior to and including the
fiscal year ending June 30, 1997. The provision for taxes on the books of each
Obligor are adequate in all material respects for all years not closed by
applicable statutes, and for its current fiscal year, and no Borrower has any
knowledge of any material deficiency or additional material assessment in
connection therewith not provided for on its books.
5.5. Financial Statements.
(a) The pro forma balance sheet of Obligors on a consolidated
and consolidating basis (the "Pro Forma Balance Sheet") heretofore furnished to
Agent reflects the consummation of the transactions contemplated under this
Agreement (the "Transactions") and fairly reflects the financial condition of
Obligors on a consolidated and consolidating basis as of the Closing Date after
giving effect to the Transactions, and has been prepared in accordance with
GAAP, consistently applied. The Pro Forma Balance Sheet has been certified as
fairly reflecting the financial condition of the Obligors, on behalf of the
Obligors by the Chief Financial Officer of Borrower. All financial statements
referred to in this subsection 5.5(a), including the related schedules and notes
thereto, have been prepared, in accordance with GAAP, except for the absence of
year-end and normal audit adjustments and notes thereto and as may be disclosed
in such financial statements.
(b) The twelve-month cash flow projections of the Obligors on
a consolidated and consolidating basis and their projected balance sheets as of
the Closing Date, copies of which are annexed hereto as Exhibit 5.5(b) (the
"Projections") were prepared on behalf of the Obligors by the Chief Financial
Officer of Borrower, are based on underlying assumptions which are believed to
provide a reasonable basis for the projections contained therein and reflect
Obligors' judgment based on present circumstances of the most likely set of
conditions and course of action for the projected period. The cash flow
Projections together with the Pro Forma Balance Sheet, are referred to as the
"Pro Forma Financial Statements".
(c) The consolidated and consolidating balance sheets of the
Obligors, and such other Persons described therein as of December 31, 1997, and
the related statements of income, changes in stockholder's equity, and changes
in cash flow for the period ended on such date, all (except for consolidating
statements) accompanied by reports thereon containing opinions without
qualification by independent certified public accountants, copies of which have
been delivered to Agent, have been prepared in accordance with GAAP,
consistently applied (except for changes in application in which such
accountants concur and present fairly the financial position of the Obligors at
such date and the results of their operations for such period. Since December
31, 1997 there has been no change in the condition, financial or otherwise, of
Obligors as shown on the consolidated balance sheet as of such date and no
change in the aggregate value of machinery, equipment and Real Property owned by
Obligors, except changes in the ordinary course of business, none of which
individually or in the aggregate could reasonably be expected to have a Material
Adverse Effect.
5.6. Corporate Name. No Obligor has been known by any other corporate
name in the past five years and does not sell Inventory under any other name
except as set forth on Schedule 5.6, nor has any Obligor been the surviving
corporation of a merger or consolidation or acquired all or substantially all of
the assets of any Person during the preceding five (5) years.
5.7. O.S.H.A. and Environmental Compliance.
Except as disclosed on Schedule 5.7 hereto:
(a) Each Obligor has duly complied with, and its facilities,
business, assets, property, leaseholds and Equipment are in compliance in all
respects with, the provisions of the Federal Occupational Safety and Health Act,
the Environmental Protection Act, RCRA and all other Environmental Laws except
where the failure to so comply could not reasonably be expected to have a
Material Adverse Effect; there have been no outstanding citations, notices or
orders of non-compliance issued to any Obligor or relating to its business,
assets, property, leaseholds or Equipment under any such laws, rules or
regulations except where the facts and circumstances surrounding said citations,
notices or notices could not reasonably be expected to have a Material Adverse
Effect.
(b) Each Obligor has been issued all required federal, state
and local licenses, certificates or permits relating to all applicable
Environmental Laws where the failure to be so issued could reasonably be
expected to have a Material Adverse Effect.
(c) (i) There are no visible signs of releases, spills,
discharges, leaks or disposal (collectively referred to as "Releases") of
Hazardous Substances at, upon, under or within any Real Property or any premises
leased by any Obligor where said Releases could reasonably be expected to have a
Material Adverse Effect; (ii) there are no underground storage tanks or
polychlorinated biphenyls on the Real Property or any premises leased by any
Obligor, except in all material respects in accordance with applicable laws;
(iii) neither the Real Property nor any premises leased by any Obligor have ever
been used as a treatment, storage or disposal facility of Hazardous Waste,
except in all material respects in accordance with applicable laws; and (iv) no
Hazardous Substances are present on the Real Property or any premises leased by
Borrower, excepting such quantities as are handled in accordance with all
applicable manufacturer's instructions and governmental regulations and in
proper storage containers and as are necessary for the operation of the
commercial business of any Obligor or of its tenants, except in each case where
the failure to do so could not reasonably be expected to have a Material Adverse
Effect.
5.8. Solvency; No Litigation, Violation, Indebtedness or Default.
(a) Obligors are solvent, able to pay their debts as they
mature, have capital sufficient to carry on their business and all businesses in
which they are about to engage, and (i) as of the Closing Date, the fair present
saleable value of their assets, calculated on a going concern basis, is in
excess of the amount of their liabilities and (ii) subsequent to the Closing
Date, the fair saleable value of their assets (calculated on a going concern
basis) will be in excess of the amount of their liabilities.
(b) Except as disclosed in Schedule 5.8(b), no Obligor has (i)
any pending or, to Obligors' knowledge, threatened litigation, arbitration,
actions or proceedings which involve the possibility of having a Material
Adverse Effect, and (ii) any liabilities nor Indebtedness for borrowed money
other than the Obligations.
(c) No Obligor is in violation of any applicable statute,
regulation or ordinance in any respect which could reasonably be expected to
have a Material Adverse Effect, nor is any Obligor in violation of any order of
any court, governmental authority or arbitration board or tribunal which could
reasonably be expected to have a Material Adverse Effect.
(d) No Obligor nor any member of the Controlled Group
maintains or contributes to any domestic Plan other than those listed on
Schedule 5.8(d) hereto. Except as set forth in Schedule 5.8(d), (i) no Plan has
incurred any "accumulated funding deficiency," as defined in Section 302(a)(2)
of ERISA and Section 412(a) of the Code, whether or not waived, and each Obligor
and each member of the Controlled Group has met all applicable minimum funding
requirements under Section 302 of ERISA in respect of each Plan, (ii) each Plan
which is intended to be a qualified plan under Section 401(a) of the Code as
currently in effect has been determined by the Internal Revenue Service to be
qualified under Section 401(a) of the Code and the trust related thereto is
exempt from federal income tax under Section 501(a) of the Code, (iii) no
Obligor nor any member of the Controlled Group has incurred any material
liability to the PBGC other than for the payment of premiums, and there are no
premium payments which have become due which are unpaid, (iv) no Plan has been
terminated by the plan administrator thereof nor by the PBGC, and there is no
occurrence which would cause the PBGC to institute proceedings under Title IV of
ERISA to terminate any Plan, (v) at this time, the current value of the assets
of each Plan exceeds the present value of the accrued benefits and other
liabilities of such Plan and no Obligor nor any member of the Controlled Group
knows of any facts or circumstances which would materially change the value of
such assets and accrued benefits and other liabilities, (vi) no Obligor nor any
member of the Controlled Group has breached any of the responsibilities,
obligations or duties imposed on it by ERISA with respect to any Plan, (vii) no
Obligor nor any member of a Controlled Group has incurred any significant
liability for any excise tax arising under Section 4972 or 4980B of the Code,
and no fact exists which could give rise to any such liability, (viii) no
Obligor nor any member of the Controlled Group nor any fiduciary of, nor any
trustee to, any Plan, has engaged in a "prohibited transaction" described in
Section 406 of the ERISA or Section 4975 of the Code nor taken any action which
would constitute or result in a Termination Event with respect to any such Plan
which is subject to ERISA, (ix) each Obligor and each member of the Controlled
Group has made all contributions due and payable with respect to each Plan, (x)
there exists no event described in Section 4043(b) of ERISA, for which the
thirty (30) day notice period contained in 29 CFR '2615.3 has not been waived,
(xi) no Obligor nor any member of the Controlled Group has any fiduciary
responsibility for investments with respect to any plan existing for the benefit
of persons other than employees or former employees of any Borrower and any
member of the Controlled Group, and (xii) no Obligor nor any member of the
Controlled Group has withdrawn, completely or partially, from any Multiemployer
Plan so as to incur liability under the Multiemployer Pension Plan Amendments
Act of 1980.
5.9. Patents, Trademarks, Copyrights and Licenses. The Obligors own or
have the right to use all patents, patent applications, trademarks, trademark
applications, service marks, service ▇▇▇▇ applications, copyrights, copyright
applications, design rights, trade names, assumed names, trade secrets and
licenses owned or utilized by any Obligor which are necessary for the operation
of its business and where the failure to do so could reasonably be expected to
have a Material Adverse Effect; there is no objection to or pending challenge to
the validity of any such material patent, trademark, copyright, design right,
trade name, trade secret or license and no Obligor is aware of any grounds for
any challenge where such objection or challenge could reasonably be expected to
have a Material Adverse Effect. Each
patent, patent application, patent license, trademark, trademark application,
trademark license, service ▇▇▇▇, service ▇▇▇▇ application, service ▇▇▇▇ license,
copyright, copyright application and copyright license owned or held by any
Obligor and all trade secrets used by any Obligor consist of original material
or property developed by such Obligor or was lawfully acquired or licensed by
such Obligor, except where the failure to do so or to have done so could not
reasonably be expected to have a Material Adverse Effect. Each of such items has
been maintained so as to preserve the value thereof from the date of creation or
acquisition thereof.
5.10. Licenses and Permits. Except as set forth in Schedule 5.10, each
Obligor (a) is in compliance with and (b) has procured and is now in possession
of, all material licenses or permits required by any applicable federal, state,
or local law or regulation for the operation of its business in each
jurisdiction wherein it is now conducting or proposes to conduct business and
where the failure to comply with or procure such licenses or permits could have
a Material Adverse Effect.
5.11. Default of Indebtedness. No Obligor is in default in the payment
of the principal of or interest on any Indebtedness, which individual and/or
collectively aggregates $250,000 or more, or under any instrument or agreement
under or subject to which any Indebtedness, which individual and/or collectively
aggregates [$250,000] or more, has been issued and no event has occurred under
the provisions of any such instrument or agreement which with or without the
lapse of time or the giving of notice, or both, constitutes or would constitute
an event of default thereunder.
5.12. No Default. No Obligor is in default in the payment or
performance of any of its contractual obligations where such default could
reasonably be expected to have a Material Adverse Effect.
5.13. No Burdensome Restrictions. No Obligor is party to any contract
or agreement the performance of which could reasonably be expected to have a
Material Adverse Effect. No Obligor has agreed or consented to cause or permit
in the future (upon the happening of a contingency or otherwise) any of its
property, whether now owned or hereafter acquired, to be subject to a Lien which
is not a Permitted Encumbrance.
5.14. No Labor Disputes. No Obligor is involved in any labor dispute;
there are no strikes or walkouts or union organization of any Obligor's
employees threatened or in existence and no labor contract is scheduled to
expire during the Term other than as set forth on Schedule 5.14 hereto.
5.15. Margin Regulations. No Obligor is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" within
the respective meanings of each of the quoted terms under Regulation U or
Regulation G of the Board of Governors of the Federal Reserve System as now and
from time to time hereafter in effect. No part of the proceeds of any Advance
will be used for "purchasing" or "carrying" "margin stock" as defined in
Regulation U of such Board of Governors.
5.16. Investment Company Act. No Obligor is an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, nor is it controlled by such a company.
5.17. Disclosure. No representation or warranty made by any Obligor in
this Agreement or in any financial statement, report, certificate or any other
document furnished in connection herewith contains any untrue statement of a
material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading. There is no fact known to Obligors
or which reasonably should be known to Obligors which Obligors have not
disclosed to Agent in writing with respect to the transactions contemplated by
this Agreement which could reasonably be expected to have a Material Adverse
Effect.
5.18. Swaps. No Obligor is a party to, nor will it be a party to, any
swap agreement whereby such Obligor has agreed or will agree to swap interest
rates or currencies unless same provides that damages upon termination following
an event of default thereunder are payable on an unlimited "two-way basis"
without regard to fault on the part of either party.
5.19. Conflicting Agreements. No provision of any material mortgage,
indenture, contract, agreement, judgment, decree or order binding on any Obligor
or affecting the Collateral materially conflicts with, or requires any Consent
which has not already been obtained to, or would in any way prevent the
execution, delivery or performance of, the terms of this Agreement or the Other
Documents.
5.20. Application of Certain Laws and Regulations. No Obligor nor any
domestic Affiliate of any Obligor is subject to any statute, rule or regulation
which regulates the incurrence of any Indebtedness, including without
limitation, statutes or regulations relative to common or interstate carriers or
to the sale of electricity, gas, steam, water, telephone, telegraph or other
public utility services.
5.21. Business and Property of Borrower. Upon and after the Closing
Date, Obligors do not propose to engage in any business other than manufacturing
and marketing specialty and industrial chemicals and activities necessary to
conduct or reasonably related or complementary to the foregoing. On the Closing
Date, each Obligor will own all the property and possess all of the rights and
Consents necessary for the conduct of the business of such Obligor where the
failure to so own and/or possess could reasonably be expected to have a Material
Adverse Effect.
5.22. Year 2000. The Obligors and their Subsidiaries have reviewed the
areas within their business and operations which could be materially and
adversely affected by, and have developed or are developing a program to address
on a timely basis, the risk that certain computer applications used by the
Obligors, or their Subsidiaries (or any of their respective material suppliers,
customers or vendors) may be unable to recognize and perform properly
date-sensitive functions involving dates prior to and after December 31, 1999
(the "Year 2000 Problem"). The Year 2000 Problem will not have a Material
Adverse Effect.
5.23. Section 20 Subsidiaries. The Borrower does not intend to use and
shall not use any portion of the proceeds of the Advances, directly or
indirectly, to purchase during any underwriting period, or for 30 days
thereafter, Ineligible Securities being underwritten by a Section 20 Subsidiary.
5.24. Interest Expense Allocation. Interest expense with respect to the
Indenture will be allocated to the Borrower and each Obligor based upon that
portion of Indebtedness evidenced by the Senior Subordinated Notes being
assigned to the same parties in accordance with GAAP.
5.25. Other Billing Locations. Other than the chief executive offices
of the Obligors, and except as disclosed on Schedule 5.25 attached hereto, there
are no Other Billing Locations.
5.26. Western Magnesium Corporation does not presently and shall not in
the future conduct any business activity in any State.
VI. AFFIRMATIVE COVENANTS.
Unless the prior written consent of the Required Lenders shall have
been obtained, each Obligor shall, until payment and satisfaction in full of all
payment Obligations (whether in the form of principal, interest, reimbursement
obligations, fees, penalties, charges, expenses or otherwise) with the exception
indemnification obligations under this Agreement for which no claim recited
thereunder has arisen) and termination of this Agreement:
6.1. Payment of Fees. Pay to Agent on demand all usual and customary
fees and expenses which Agent incurs in connection with (a) the forwarding of
Advance proceeds and (b) the establishment and maintenance of any Blocked
Accounts or Depository Accounts as provided for in Section 4.15(h). Agent may,
without making demand, charge Obligors' Account for all such fees and expenses.
6.2. Conduct of Business and Maintenance of Existence and Assets. (a)
Conduct continuously and operate actively its business and maintain all of its
properties in good working order and condition (reasonable wear and tear
excepted and except as may be disposed of as permitted by with the terms of this
Agreement), including, without limitation, all licenses, patents, copyrights,
design rights, trade names, trade secrets and trademarks and take all actions
necessary to enforce and protect the validity of any intellectual property right
or other right, where the failure to so operate or maintain could reasonably be
expected to have a Material Adverse Effect; (b) keep in full force and effect
its existence and comply in all material respects with the laws and regulations
governing the conduct of its business where the failure to do so could
reasonably be expected to have a Material Adverse Effect; and (c) make all such
reports and pay all such franchise and other taxes and license fees and do all
such other acts and things as may be lawfully required to maintain its rights,
licenses, leases, powers and franchises under the laws of the United States or
any political subdivision thereof, where the failure to do so could reasonably
be expected to have a Material Adverse Effect.
6.3. Violations. Promptly notify Agent in writing of any violation of
any law, statute, regulation or ordinance of any Governmental Body, or of any
agency thereof, applicable to any Obligor which could reasonably be expected to
have a Material Adverse Effect.
6.4. Government Receivables. Except to the extent not included as part
of the Formula Amount, take all steps necessary to protect Agent's interest in
the Collateral under the Federal Assignment of Claims Act or other applicable
state or local statutes or ordinances and deliver to Agent appropriately
endorsed, any instrument or chattel paper connected with any Receivable arising
out of contracts between any Obligor and the United States, any state or any
department, agency or instrumentality of any of them.
6.5. Domestic Net Worth. Maintain with respect to the Borrower and each
of its direct and indirect domestic Subsidiaries, at all times, to be tested
monthly, minimum Net Worth in an amount not less than the Net Worth on the
Closing Date of the Borrower and all direct and indirect domestic Subsidiaries
of the Borrower, to increase annually by fifty percent (50%) of the net earnings
of the Borrower and all said domestic Subsidiaries (before equity pick-up from
earnings of foreign Subsidiaries), and no event less than the prior years'
ending said Net Worth (except that during the course of year, said Net Worth may
temporarily decline below the prior years ending Net Worth but no event less
than the following percentages of said prior years ending Net Worth):
Year 1 50%
Year 2 65%
Year 3 thru 5 75%
In no event may the Borrower and any of direct or indirect domestic
Subsidiaries, on a consolidated basis, sustain any annual net loss. Furthermore,
in calculating the Net Worth of the Borrower and each of its direct and indirect
subsidiaries all foreign assets owned by said entities and foreign liabilities
and operations shall be excluded from the calculation of their Net Worth.
6.6. Interest Coverage Ratio. Maintain at all times a Interest Coverage
Ratio of not less than 1.5 to 1.0, to be tested on a rolling four (4) quarters
basis.
6.7. Execution of Supplemental Instruments. Execute and deliver to
Agent from time to time, upon demand, such supplemental agreements, statements,
assignments and transfers, or instructions or documents relating to the
Collateral, and such other instruments as Agent may request, in order that the
full intent of this Agreement may be carried into effect.
6.8. Payment of Indebtedness. Pay, discharge or otherwise satisfy at or
before maturity (subject, where applicable, to specified grace periods and, in
the case of the trade payables, to normal payment practices) all its obligations
and liabilities of whatever nature, except when the failure to do so could not
reasonably be expected to have a Material Adverse Effect or when the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and each Obligor shall have provided for reserves in accordance with
GAAP, subject at all times to any applicable subordination arrangement in favor
of Lenders.
6.9. Standards of Financial Statements. Cause all financial statements
referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.13 and 9.14 as to
which GAAP is applicable to fairly present in all material respects (subject, in
the
case of interim financial statements, to normal year-end audit adjustments) the
financial condition of such companies and to be prepared in reasonable detail
and in accordance with GAAP applied consistently throughout the periods
reflected therein (except as concurred in by such reporting accountants or
officer, as the case may be, and disclosed therein).
6.10. Domestic Debt Service Ratio. In the event that the Borrower
utilizes the Acquisition Line, maintain at all such times a Domestic Debt
Service Coverage of not less than 1.20 to 1.00, to be tested on a rolling four
quarter basis.
6.11 Movement of Inventory. If at any time the value of the Inventory
is located within the States of Illinois, South Carolina, California,
Pennsylvania, New Jersey, Texas and Delaware is less than eighty percent (80%)
of the Inventory for all of the Obligors or the chief executive office of any
Obligor is changed to another state, the Obligors shall, if requested by the
Agent, deliver such opinions of counsel, in form and substance reasonably
satisfactory to the Agent, stating that the Agent has a perfected security
interest in all Collateral which has been moved to such jurisdictions or has
been affected by such move.
VII. NEGATIVE COVENANTS.
Without the prior written consent of the Required Lenders, no Obligor
shall, until satisfaction in full of the payment Obligations (whether in the
form of principal, interest, reimbursement obligations, fees, penalties,
charges, expenses or otherwise) with the exception of indemnification
obligations under this Agreement for which no claim subject thereto has been
made and has not been terminated, satisfied released or withdrawn) and
termination of this Agreement:
7.1. Merger, Consolidation, Acquisition and Sale of Assets.
(a) Enter into any merger, consolidation or other
reorganization with or into any other Person or acquire all or a substantial
portion of the assets or stock of any Person or permit any other Person to
consolidate with or merge with it, except as permitted by the terms of Sections
2.1(c) and 2.2(b) hereof, and except that (i) Obligors may acquire or form a
foreign Subsidiary without the use of the proceeds of either Revolving Advances
or Acquisition Term Loans provided that, said Obligors shall provide the Agent
with evidence, in form and substance reasonably satisfactory to the Agent, of
the source of funds for said acquisition or formation and at the time of said
acquisition or formation no Default or Event of Default has occurred and is
continuing and (ii) Obligors may acquire or form domestic Subsidiaries without
the use of the proceeds of either Revolving Advances or Acquisition Term Loans,
provided that (A) said Obligors cause said domestic Subsidiary to execute and
deliver to the Agent a guaranty, in form and substance reasonably satisfactory
to the Agent, which guaranty shall be secured by those assets of the domestic
Subsidiary consisting of Collateral, said Obligors shall provide the Agent with
evidence, in form and substance satisfactory to the Agent, of the source of
funds for said acquisition or formation and at the time of said acquisition or
formation no Default or Event of Default has occurred and is continuing or (B)
said Obligors receive the written consent of the Agent and the Required Lenders,
which consent shall be granted if to the satisfaction of the Agent and the
Required Lenders (i) inventory and receivables of said domestic Subsidiary shall
not be deemed Eligible Inventory or Eligible Receivables, (ii) said domestic
Subsidiary shall be prohibited from receiving from any Obligor advances, loans,
extensions of credit, guarantees, funds or other personal property unless
otherwise specifically permitted hereunder with respect to an unaffiliated party
of such Obligor, (iii) said domestic Subsidiary shall be treated as an
unaffiliated party of each Obligor with respect to the Obligors' rights and
obligations hereunder, including all financial covenants set forth herein, (iv)
the Obligors shall provide for adjustments to all financial statements and other
reporting requirements hereunder to account for said domestic Subsidiary's
status as an unaffiliated party, and (v) such other requirements are satisfied,
as requested by the Required Lenders.
(b) Sell, lease, transfer or otherwise dispose of any of its
properties or assets, except (1) in the case of properties or assets
constituting Collateral (i) in the ordinary course of its business and (ii) out
of the ordinary course of business up to $250,000 per fiscal year provided that
the proceeds received from said sales out of the ordinary
course of business shall be utilized to prepay the outstanding principal amount
of Revolving Advances and/or Acquisition Term Loans and (2) in the case of
properties or assets not constituting Collateral where the disposition thereof
could not reasonably be expected to have a Material Adverse Effect.
7.2. Creation of Liens. Create or suffer to exist any Lien or transfer
upon or against any of its property or assets now owned or hereafter acquired,
except Permitted Encumbrances.
7.3. Guaranties. Become liable upon the obligations of any Person by
assumption, endorsement or guaranty thereof or otherwise (other than to Lenders)
except (i) as contemplated by the terms hereof, (ii) as disclosed on Schedule
7.3,(iii) the endorsement of checks in the ordinary course of business, (iv)
guaranties by the Obligors with respect to any of their or their Subsidiaries'
obligations, provided that said guaranties are unsecured; and (v) to the extent
any said assumption, endorsement or guarantee otherwise qualifies as a Permitted
Encumbrance.
7.4. Investments. Purchase or acquire obligations or stock of, or any
other interest in, any Person, except (a) obligations issued or guaranteed by
the United States of America or any agency thereof, (b) commercial paper with
maturities of not more than 180 days and a published rating of not less than A-1
or P-1 (or the equivalent rating), (c) certificates of time deposit and bankers'
acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of a commercial bank if
(i) such bank has a combined capital and surplus of at least $500,000,000, or
(ii) its debt obligations, or those of a holding company of which it is a
Subsidiary, are rated not less than A (or the equivalent rating) by a nationally
recognized investment rating agency, (d) U.S. money market funds that invest
solely in obligations issued or guaranteed by the United States of America or an
agency thereof, (e) investments in any Subsidiary of an Obligor, whether foreign
or domestic and (f) non-majority interests in any corporation or other entity
involved in a business related to that of any Obligor; so long as the aggregate
amount per fiscal year invested shall not exceed, together with the limitations
imposed under Section 7.11 with respect to contributions to Partnerships, Joint
Ventures, $3,000,000 provided that to the extent in any given fiscal year the
Obligors invest less than said $3,000,000 amount, said unused portion may be
carried forward for one additional year, provided that no more than $6,000,000
is utilized for the purposes hereof in any fiscal year, (g) any investment in or
in securities of a Person engaged in a related business (an "Invested Person")
if, as a result of such investment, (i) the Invested Person, subject to the
provisions of Section 7.1 hereof, becomes a wholly owned Subsidiary, or (ii) the
Invested Person either (1) is merged, consolidated or amalgamated with or into
an Obligor and an Obligor is the surviving person, or (2) transfers or conveys
substantially all of its assets to, or is liquidated into, an Obligor; (h) any
notes, obligations or other securities received in connection with an asset sale
that complies with Section 7.1(b) above; and (i) interest rate agreement
obligations and currency agreement obligations permitted pursuant to Section
7.8; (j) investments in or acquisitions of capital stock or similar interests in
Persons received in the bankruptcy or reorganization of or by such Person or any
exchange of such investment with the issuer thereof or taken in settlement of or
other resolution of claims or disputes.
7.5. Loans. Make advances, loans or extensions of credit to any Person,
including without limitation, any Parent, Subsidiary or Affiliate except with
respect to (a) the extension of commercial trade credit in connection with the
sale of Inventory in the ordinary course of its business, (b) loans to its
employees in the ordinary course of business not to exceed the aggregate amount
of $500,000 at any time outstanding, (c) advances, loans or extensions of credit
to Subsidiaries of the Obligors (whether domestic or foreign) and (d) as
otherwise permitted by the terms of Section 7.4 hereof.
7.6. Capital Expenditures. Contract for, purchase or make any
expenditure or commitments for fixed or capital assets (including capitalized
leases, but excluding acquisitions permitted under Section 7.1 hereof) in an
amount in excess of $15,000,000 for any fiscal year provided that to the extent
in any given fiscal year, the Obligors utilize less than $15,000,000, said
unused portion, up to $5,000,000, may be carried forward for one additional year
provided that no more than $20,000,000 is utilized for the purposes hereof in
any fiscal year.
7.7. Dividends. Declare, pay or make any dividend or distribution on
any shares of the common stock or preferred stock of any Obligor (other than
dividends or distributions payable in its stock, or split-ups or
reclassifications
of its stock) or apply any of its funds, property or assets to the purchase,
redemption or other retirement of any common or preferred stock, or of any
options to purchase or acquire any such shares of common or preferred stock of
any Obligor, except for (a) dividends or distributions to the Borrower or any
other Obligor; (b) up to fifty percent (50%) of the net earnings (minus those
net earnings utilized pursuant to Section 7.7(b) hereof) per fiscal year of the
Borrower and all of its domestic Subsidiaries, but in no event more than
$2,000,000 per fiscal year, provided that if more than $1,000,000 is to be
distributed from said net earnings there must exist at said time at least
$5,000,000 of Undrawn Availability after giving affect to said dividends and/or
distributions; (c) to pay the redemption price of stock being redeemed pursuant
to the Shareholders Agreement, provided that during the Term the aggregate
amount of all said redemptions shall not exceed $5,000,000 plus up to 50% of the
net earnings (minus those net earnings utilized in Section 7.7(b) hereof) per
fiscal year of the Borrower and all of its domestic Subsidiaries, and each time
said redemption occurs there shall exist at least $2,500,000 of Undrawn
Availability after giving effect to said redemption; (d) to pay the redemption
price of stock being redeemed to the extent that said redemption is funded by
insurance proceeds; and (e) to pay shareholders' "S" corporation or members'
limited liability company tax liability associated with the income derived from
the respective Obligor.
7.8. Indebtedness. Create, incur, assume or suffer to exist any Funded
Indebtedness (exclusive of trade debt) except in respect of (i) Funded
Indebtedness to Lenders; (ii) Funded Indebtedness incurred for capital
expenditures permitted under Section 7.6 hereof; (iii) Funded Indebtedness due
under the Indenture; (iv) any other Funded Indebtedness so long as the aggregate
principal amount of the same outstanding at any time does not exceed $5,000,000;
(v) Funded Indebtedness representing the redemption price of stock being
redeemed pursuant to the Shareholders Agreement to the extent that payment
thereof is restricted by the terms of Section 7.7(c) hereof, (vi) Indebtedness
owned or issued by any Subsidiary to Borrower or to another Subsidiary, or owed
or issued by Borrower to any Subsidiary; provided, however, that any such
Indebtedness shall at all times be held by a Person which is either Borrower or
a Subsidiary; provided, further, however, that upon either (a) the transfer or
other disposition of any such Indebtedness to a Person other than Borrower or
another Subsidiary or (b) the sale, lease, transfer or other disposition of
shares of capital stock (including by consolidation or merger) of any such
Subsidiary to a Person other than the Borrower or another Subsidiary, the
incurrence of such Indebtedness shall be deemed to be an incurrence that is not
permitted by this clause; (vii) Indebtedness arising with respect to interest
rate agreement obligations and currency agreement obligations incurred for the
purpose of fixing or hedging interest rate risk or currency risk with respect to
any fixed or floating rate indebtedness that is permitted by the terms of this
Agreement to be outstanding or with respect to any receivable or liability the
payment of which is determined by reference to a foreign currency; (viii)
Indebtedness represented by performance, completion, guarantee, surety and
similar bonds and assurances provided by or for Borrower or any Subsidiary in
the ordinary course of business; (ix) any Indebtedness incurred in connection
with or given in exchange for the renewal, extension, substitution, refunding,
defeasance, refinancing or replacement, in whole or in part (a "refinancing"),
of any Indebtedness incurred or permitted under this Agreement ("Refinancing
Indebtedness"); provided, however, that (a) the principal amount of such
Refinancing Indebtedness shall not exceed the principal amount (or accreted
amount, if less, or in the case of a revolving credit facility the maximum
amount of the facility, if more) of the Indebtedness so refinanced (plus the
premiums and reasonable expenses to be paid in connection therewith, which, with
respect to such premiums, shall not exceed the stated amount of any premium or
other payment required to be paid in connection with such a refinancing pursuant
to the terms of the Indebtedness being refinanced); and (b) the obligor on such
Refinancing Indebtedness shall be the obligor on the Indebtedness being
refinanced or the Borrower; (x) Indebtedness in respect of purchase money
obligations for property acquired, constructed or improved in the ordinary
course of business and any refinancings thereof, which taken together in the
aggregate principal amount do not exceed the greater of (i) $5.0 million and
(ii) 5% of consolidated tangible assets of Borrower at any one time outstanding;
(xi) commodity agreements entered into in the ordinary course of business to
protect against fluctuations in the price of raw materials and not for
speculative purposes; and (xii) Indebtedness incurred by Borrower or any
Subsidiary constituting reimbursement obligations with respect to letters of
credit issued in the ordinary course of business, including, without limitation,
letters of credit in respect of workers' compensation claims or self-insurance,
or other Indebtedness with respect to reimbursement-type obligations regarding
workers' compensation claims or self-insurance.
7.9. Nature of Business. Substantially change the nature of the
business in which it is presently engaged, which shall not prohibit any Obligor
from engaging in any business that is reasonably related to or complementary to
its present business, nor except as specifically permitted hereby, purchase or
invest, directly or indirectly, in any assets or property other than in the
ordinary course of business for assets or property which are useful in,
necessary for and are to be used in such business.
7.10. Transactions with Affiliates. Directly or indirectly, purchase,
acquire or lease any property from, or sell, transfer or lease any property to,
or otherwise deal with, any Affiliate, except transactions disclosed in the
ordinary course of business, on an arm's-length basis on terms no less favorable
than terms which would have been obtainable from a Person other than an
Affiliate, and except (i) employment agreements or compensation or employee
benefit arrangements with any officer, director or employee of Borrower or any
of its Subsidiaries entered into in the ordinary course of business (including
customary benefits thereunder and including reimbursement or advancement of
out-of-pocket expenses, and director's and officer's liability insurance), (ii)
any transaction entered into by or among Borrower or one of its Subsidiaries
with one or more Subsidiaries of Borrower, (iii) any transaction permitted by
Section 7.5, 7.7 or 7.11, (iv) transactions permitted by, and complying with,
the provisions described under Section 7.1, and (v) any transactions described
under the caption "Use of Proceeds" in the Offering Memorandum delivered in
connection with the Senior Subordinated Notes.
7.11 Partnership, Joint Ventures. Enter into any partnership, joint
venture or similar arrangement, except for a joint venture and/or joint ventures
which do not in aggregate require commitments, contributions and/or transfers of
moneys or assets, together with the limitations imposed under Section 7.4 with
respect to Investments, in excess of $3,000,000 per fiscal year (provided the
Obligors may carry forward the unutilized portion of said $3,000,000 for one
year additional fiscal year, provided that no more than $6,000,000 is utilized
for said purposes in any fiscal year), provided that (i) no such commitment,
contribution and/or transfer shall involve any of the Collateral and (ii)
notwithstanding the foregoing Intellectual Property of MRT may be contributed or
licensed to joint ventures.
7.12. Subsidiaries.
Form any domestic Subsidiary unless (i) such Subsidiary
expressly joins in this Agreement as a borrower or guarantor and becomes jointly
and severally liable for the obligations of Obligors hereunder, under the Note,
and under any other agreement between any Obligor and Lenders and (ii) Agent
shall have received all documents, including legal opinions, it may reasonably
require to establish compliance with each of the foregoing conditions.
7.13. Fiscal Year and Accounting Changes. Change its fiscal year from
June 30 or make any significant change without providing the Agent at least
thirty (30) days prior written notice (i) in accounting treatment and reporting
practices except as required by GAAP or (ii) in tax reporting treatment except
as required by law, provided that Obligors shall cooperate with and agree to
such amendments to the Loan Documents as is reasonably required by the Agent to
take into account such changes and make the Loan Documents, including the
financial covenants, consistent with the parties original intentions.
7.14. Intentionally left blank.
7.15. Amendment of Articles of Incorporation, Bylaws. Amend, modify or
waive any term or material provision of its Articles of Incorporation or Bylaws
unless required by law in any manner which could reasonably be expect to have a
Material Adverse Effect on such Obligor.
7.16. Compliance with ERISA. In each case if the failure to do so could
be reasonably expected to have a Material Adverse Effect, (i) (x) Maintain, or
permit any member of the Controlled Group to maintain, or (y) become obligated
to contribute, or permit any member of the Controlled Group to become obligated
to contribute, to any Plan, other than those Plans disclosed on Schedule 5.8(d),
(ii) engage, or permit any member of the Controlled Group to engage, in any
non-exempt "prohibited transaction", as that term is defined in section 406 of
ERISA and Section 4975 of the Code, (iii) incur, or permit any member of the
Controlled Group to incur, any "accumulated funding deficiency", as that term is
defined in Section 302 of ERISA or Section 412 of the Code, (iv) terminate, or
permit any member of the Controlled Group to terminate, any Plan where such
event could result in any liability of any Obligor or any member of
the Controlled Group or the imposition of a lien on the property of any Obligor
or any member of the Controlled Group pursuant to Section 4068 of ERISA, (v)
assume, or permit any member of the Controlled Group to assume, any obligation
to contribute to any Multiemployer Plan not disclosed on Schedule 5.8(d), (vi)
incur, or permit any member of the Controlled Group to incur, any withdrawal
liability to any Multiemployer Plan; (vii) fail promptly to notify Agent of the
occurrence of any Termination Event, (viii) fail to comply, or permit a member
of the Controlled Group to fail to comply, with the requirements of ERISA or the
Code or other applicable laws in respect of any Plan, (ix) fail to meet, or
permit any member of the Controlled Group to fail to meet, all minimum funding
requirements under ERISA or the Code or postpone or delay or allow any member of
the Controlled Group to postpone or delay any funding requirement with respect
of any Plan.
7.17. Prepayment of Indebtedness. Except as permitted pursuant to
Section 7.18 hereof, , directly or indirectly, prepay any Indebtedness (other
than to Lenders), or repurchase, redeem, retire or otherwise acquire any
Indebtedness of any Obligor if a Default or an Event of Default would result
therefrom or at such time there exists a Default or an Event of Default.
7.18. Subordinated Debt Payments. At any time, directly or indirectly,
pay, prepay, repurchase, redeem, retire or otherwise acquire, or make any
payment on account of any principal of, interest on or premium payable in
connection with the repayment or redemption of the Subordinated Debt Payment,
except as expressly permitted by the terms of the Indenture as in effect on the
Closing Date.
7.19 Interest Expense Allocation. At any time, change the interest
expense allocation with respect to the Indenture other than in accordance with
Subsection 5.24.
VIII. CONDITIONS PRECEDENT.
8.1. Conditions to Initial Advances. The agreement of Lenders to make
the initial Advance requested to be made on the Closing Date is subject to the
satisfaction, or waiver by Lenders, immediately prior to or concurrently with
the making of such Advance, of the following conditions precedent:
(a) Note. Agent shall have received the Note duly executed and
delivered by an authorized officer of each Borrower;
(b) Filings, Registrations and Recordings. Each document
(including, without limitation, any Uniform Commercial Code financing statement)
required by this Agreement, any related agreement or under law or reasonably
requested by the Agent to be filed, registered or recorded in order to create,
in favor of Agent, a perfected security interest in or lien upon the Collateral
shall have been properly filed, registered or recorded in each jurisdiction in
which the filing, registration or recordation thereof is so required or
requested, and Agent shall have received an acknowledgment copy, or other
evidence satisfactory to it, of each such filing, registration or recordation
and satisfactory evidence of the payment of any necessary fee, tax or expense
relating thereto;
(c) Corporate Proceedings of Obligors. Agent shall have
received a copy of the resolutions in form and substance reasonably satisfactory
to Agent, of the Board of Directors of each Obligor authorizing (i) the
execution, delivery and performance of this Agreement, the Note, the Guaranty,
the Power of Attorney, and any related agreements, (collectively the
"Documents") and (ii) the granting by each Obligor of the security interests in
and liens upon the Collateral in each case certified on behalf of such Obligor
by the Secretary or an Assistant Secretary of such Obligor as of the Closing
Date; and, such certificate shall state that the resolutions thereby certified
have not been amended, modified, revoked or rescinded as of the date of such
certificate;
(d) Incumbency Certificates of Obligors. Agent shall have
received a certificate of the Secretary or an Assistant Secretary on behalf of
each Obligor, dated the Closing Date, as to the incumbency and signature of the
officers of such Obligor executing this Agreement, any certificate or other
documents to be delivered by it pursuant hereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary;
(e) Certificates. Agent shall have received a copy of the
Articles or Certificate of Incorporation of each Obligor, and all amendments
thereto, certified on behalf of each Obligor by the Secretary of State or other
appropriate official of its jurisdiction of incorporation together with copies
of the By-Laws of each Obligor and all agreements of each Obligor's shareholders
certified on behalf of such Obligor as accurate and complete by the Secretary of
such Obligor;
(f) Good Standing Certificates. Agent shall have received good
standing certificates for each Obligor dated not more than 30 days prior to the
Closing Date, issued by the Secretary of State or other appropriate official of
each Obligor's jurisdiction of incorporation and each jurisdiction where the
conduct of each Borrower's business activities or the ownership of its
properties necessitates qualification;
(g) Legal Opinion. Agent shall have received the executed
legal opinion of Golenbock, Eiseman, Assor & ▇▇▇▇ in form and substance
satisfactory to Agent which shall cover such matters incident to the
transactions contemplated by this Agreement, the Note, and related agreements as
Agent may reasonably require and each Obligor hereby authorizes and directs such
counsel to deliver such opinions to Agent and Lenders;
(h) No Litigation. Except as disclosed on the schedules
attached to this Agreement: (i) No litigation, investigation or proceeding
before or by any arbitrator or Governmental Body shall be continuing or
threatened against any Obligor or against the officers or directors of any
Obligor (A) in connection with the Other Documents or any of the transactions
contemplated thereby and which, in the reasonable opinion of Agent, is deemed
material or (B) which could, in the reasonable opinion of Agent, have a Material
Adverse Effect; and (ii) no injunction, writ, restraining order or other order
of any nature materially adverse to any Obligor or the conduct of its business
or inconsistent with the due consummation of the Transactions shall have been
issued by any Governmental Body;
(i) Financial Condition Certificates. Agent shall have
received an executed Financial Condition Certificate in the form of Exhibit
8.1(i).
(j) Collateral Examination. Agent shall have completed
Collateral examinations and received appraisals, the results of which shall be
satisfactory in form and substance to Lenders, of the Receivables, Inventory,
and General Intangibles, of each Obligor and all books and records in connection
therewith;
(k) Fees. Agent shall have received all fees payable to Agent
and Lenders on or prior to the Closing Date pursuant to Article III hereof;
(l) Pro Forma Financial Statements. Agent shall have received
a copy of the Pro Forma Financial Statements;
(m) Guaranties, Other Documents. Agent shall have received
executed Guaranties and all Other Documents;
(n) Insurance. Agent shall have received in form and substance
reasonably satisfactory to Agent, certified copies of Obligors' casualty
insurance policies, together with loss payable endorsements on Agent's standard
forms of loss payee endorsement naming Agent as loss payee to the extent
required by Section 4.11, and certified copies of Borrowers' liability insurance
policies, together with endorsements naming Agent as a additional insured;
(o) Power of Attorney. Agent shall have received executed
Powers of Attorney from each Obligor in the form of Exhibit 8.1(aa); and
(p) Payment Instructions. Agent shall have received written
instructions from Obligors directing the application of proceeds of the initial
Advances made pursuant to this Agreement;
(q) Blocked Accounts. Agent shall have received duly executed
agreements establishing the Blocked Accounts or Depository Accounts with
financial institutions acceptable to Agent for the collection or servicing of
the Receivables and proceeds of the Collateral;
(r) Consents. Agent shall have received any and all Consents
necessary to permit the effectuation of the transactions contemplated by this
Agreement and the Other Documents; and, Agent shall have received such Consents
and waivers of such third parties (excluding landlords' and warehousemen's
waivers) as might assert claims with respect to the Collateral, as Agent and its
counsel shall deem necessary;
(s) No Adverse Material Change. (i) Since December 31, 1997,
there shall not have occurred any event, condition or state of facts which could
reasonably be expected to have a Material Adverse Effect and (ii) no
representations made or written information supplied to Agent shall have been
proven to be inaccurate or misleading in any material respect;
(t) Leasehold Agreements. Agent shall have received landlord,
mortgagee or warehouseman agreements satisfactory to Agent with respect to all
premises leased by Obligors which is the chief executive office or Other Billing
Location of any Obligor or where Inventory is located to the extent such
Inventory is to be considered Eligible Inventory;
(u) Indenture. Agent shall have received final executed copies
of the Indenture which shall contain such terms and provisions including,
without limitation, subordination terms, satisfactory to Agent;
(v) Net Worth. Agent shall have received an audited Balance
Sheet of the Borrower and all of its domestic Subsidiaries as of June 30, 1998,
within forty-five (45) days of the date hereof, reflecting a Net Worth for the
Borrower and all direct and indirect domestic Subsidiaries of the Borrower
excluding the Subordinated Indebtedness after giving effect to the Transactions
of at least $2,000,000 (for purposes of calculating the financial covenants
hereunder said actual Net Worth reflected on said Balance Sheet shall be
utilized);
(w) Contract Review. Agent shall have reviewed all material
contracts of Obligors including, without limitation, leases, union contracts,
labor contracts, vendor supply contracts, license agreements and distributorship
agreements and such contracts and agreements shall be satisfactory in all
respects to Agent;
(x) Closing Certificate. Agent shall have received a closing
certificate signed on behalf of each Obligor by the Chief Financial Officer of
such Obligor dated as of the date hereof, stating that (i) all representations
and warranties set forth in this Agreement and the Other Documents are true and
correct in all material respects on and as of such date, (ii) Obligors are on
such date in compliance in all material respects with all the terms and
provisions set forth in this Agreement and the Other Documents and (iii) on such
date no Default or Event of Default has occurred or is continuing;
(y) Borrowing Base. Agent shall have received evidence from
Obligors that the aggregate amount of Eligible Receivables and Eligible
Inventory is sufficient in value and amount to support as contemplated by
Section 2.1(c) hereof, Revolving Advances and the advances of the same to
domestic Subsidiaries of the Borrower to be made on the Closing Date;
(z) Undrawn Availability. After giving effect to the initial
Advances hereunder, Obligors shall have Undrawn Availability of at least
$10,000,000;
(aa) Landlord's and Warehousemen's Waivers. Landlords waivers
and warehousemen's waivers, in form and substance reasonably satisfactory to the
Agent, with respect to each location leased or warehoused by any Obligor which
location is the chief executive office or Other Billing Location of any Obligor
or where Inventory is maintained to the extent that said Inventory is to be
considered Eligible Inventory.
(bb) Grid Notes and Assignments. Grid notes from each domestic
Subsidiary of the Borrower and assignments thereof to the Bank, as contemplated
by Section 2.5(b) hereof.
(cc) Other. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
Transactions shall be reasonably satisfactory in form and substance to Agent and
its counsel.
8.2. Conditions to Each Advance. The agreement of Lenders to make any
Advance requested to be made on any date (including, without limitation, the
initial Advance), is subject to the satisfaction of the following conditions
precedent as of the date such Advance is made:
(a) Representations and Warranties. Each of the
representations and warranties made by any Obligor in or pursuant to this
Agreement and any related agreements to which it is a party, and each of the
representations and warranties contained in any certificate, document or
financial or other statement furnished at any time under or in connection with
this Agreement or any Other Document shall be true and correct in all material
respects on and as of such date as if made on and as of such date, except for
changes or other matters permitted under this Agreement;
(b) No Default. No Event of Default or Default shall have
occurred and be continuing on such date, or would exist after giving effect to
the Advances requested to be made, on such date; provided, however that Lenders,
in their sole discretion, may continue to make Advances notwithstanding the
existence of an Event of Default or Default and that any Advances so made shall
not be deemed a waiver of any such Event of Default or Default; and
(c) Maximum Advances. In the case of any Advances requested to
be made, after giving effect thereto, the aggregate Advances shall not exceed
the maximum amount of Advances permitted under Section 2.1 hereof.
Each request for an Advance by any Obligor hereunder shall constitute a
representation and warranty by each Obligor as of the date of such Advance that
the conditions contained in this subsection shall have been satisfied.
IX. INFORMATION AS TO OBLIGORS.
Each Obligor shall, until satisfaction in full of the payment
Obligations (whether in the form of principal, interest, reimbursement
obligations, fees, penalties, charges, expenses or otherwise) with the exception
of indemnification obligations under this Agreement for which no claim recited
thereunder has arisen) and the termination of this Agreement:
9.1. Disclosure of Material Matters. Immediately upon learning thereof,
report to Agent all matters materially affecting the value, enforceability or
collectibility of any portion of the Collateral including, without limitation,
any Obligor's reclamation or repossession of, or the return to any Obligor of, a
material amount of goods or claims or disputes asserted by any Customer or other
obligor.
9.2. Schedules. Deliver to Agent on or before the twentieth (20th) day
of each month as and for the prior month (a) accounts receivable ageings, (b)
accounts payable schedules and (c) Inventory reports. In addition, each Obligor
will deliver to Agent at such intervals as Agent may require: (i) confirmatory
assignment schedules, (ii) copies of Customer's invoices, (iii) evidence of
shipment or delivery, and (iv) such further schedules, documents and/or
information regarding the Collateral as Agent may require including, without
limitation, trial balances and test verifications. Agent shall have the right to
confirm and verify all Receivables by any reasonable manner and through any
medium it considers advisable and do whatever it may deem reasonably necessary
to protect its interests hereunder. The items to be provided under this Section
are to be in form satisfactory to Agent and executed by each Obligor and
delivered to Agent from time to time solely for Agent's convenience in
maintaining records of the Collateral, and any Obligor's failure to deliver any
of such items to Agent shall not affect, terminate, modify or otherwise limit
Agent's Lien with respect to the Collateral.
9.3. Environmental Reports. Furnish Agent, concurrently with the
delivery of the financial statements referred to in Sections 9.7 and 9.8, with a
certificate signed on behalf of each Obligor by an Executive Officer of each
Obligor stating, to the best of his knowledge, that each Obligor is in
compliance in all respects with all federal, state and local laws relating to
environmental protection and control and occupational safety and health, except
where the failure to be in compliance could not reasonably be expected to have a
Material Adverse Effect. To the extent any Obligor is not in compliance with the
foregoing laws as discussed above, the certificate shall set forth with
specificity all areas of non-compliance and the proposed action such Obligor
will implement in order to achieve full compliance.
9.4. Litigation. Promptly notify Agent in writing of any litigation,
suit or administrative proceeding affecting any Obligor, whether or not the
claim is covered by insurance, and of any suit or administrative proceeding,
which in any such case could reasonably be expected to have a Material Adverse
Effect.
9.5. Material Occurrences. Promptly notify Agent in writing upon the
occurrence of (a) any Event of Default or Default; (b) any event of default
under the Indenture; (c) any event which with the giving of notice or lapse of
time, or both, would constitute an event of default under the Indenture; (d) any
event, development or circumstance whereby any financial statements or other
reports furnished to Agent fail in any material respect to present fairly, in
accordance with GAAP consistently applied, the financial condition or operating
results of any Obligor as of the date of such statements; (e) any accumulated
retirement plan funding deficiency which, if such deficiency continued for two
plan years and was not corrected as provided in Section 4971 of the Code, could
subject any Obligor to a tax imposed by Section 4971 of the Code; (f) each and
every default by any Obligor which might result in the acceleration of the
maturity of any Indebtedness, which when added to all other such Indebtedness
aggregates $500,000 or more, including the names and addresses of the holders of
such Indebtedness with respect to which there is a default existing or with
respect to which the maturity has been or could be accelerated, and the amount
of such Indebtedness; and (g) any other development in the business or affairs
of any Obligor which could reasonably be expected to have a Material Adverse
Effect; in each case describing the nature thereof and the action Obligors
propose to take with respect thereto.
9.6. Government Receivables. Notify Agent immediately if any of its
Receivables included in the Formula Amount arise out of contracts between any
Obligor and the United States, any state, or any department, agency or
instrumentality of any of them.
9.7. Annual Financial Statements. Furnish Agent within ninety (90) days
after the end of each fiscal year of Obligors, financial statements of the
Borrower and all of its direct and indirect Subsidiaries, and financial
statements of the Borrower and all of its domestic Subsidiaries, all on a
consolidating and consolidated basis including, but not limited to, statements
of income and stockholders' equity and cash flow from the beginning of the
current fiscal year to the end of such fiscal year and the balance sheet as at
the end of such fiscal year, all prepared in accordance with GAAP applied on a
basis consistent with prior practices, and in reasonable detail and reported
upon (except for the consolidating statements) without qualification by an
independent certified public accounting firm selected by Obligors and
satisfactory to Agent (the "Accountants"). The report of the Accountants shall
be accompanied by a statement of the Accountants certifying that (i) they have
caused the Loan Agreement to be reviewed, (ii) in making the examination upon
which such report was based either no information came to their attention which
to their knowledge constituted an Event of Default or a Default under this
Agreement or any related agreement or, if such information came to their
attention, specifying any such Default or Event of Default, its nature, when it
occurred and whether it is continuing, and such report shall contain or have
appended thereto calculations which set forth Obligors' compliance with the
requirements or restrictions imposed by Sections 6.5, 6.6, 6.7, 6.8, 7.6 and
7.11 hereof. In addition, the reports shall be accompanied by a certificate on
behalf of each Obligor by its Chief Financial Officer which shall state that,
based on an examination sufficient to permit him to make an informed statement,
no Default or Event of Default exists, or, if such is not the case, specifying
such Default or Event of Default, its nature, when it occurred, whether it is
continuing and the steps being taken by such Obligor with respect to such event,
and such certificate shall have appended thereto calculations which set forth
Obligors' compliance with the requirements or restrictions imposed by Sections
6.5, 6.6, 7.6 and 7.11 hereof.
9.8. Quarterly Financial Statements. Furnish Agent within 45 days after
the end of each fiscal quarter, an unaudited balance sheet of the Borrower and
all of its direct and indirect Subsidiaries, and an unaudited balance sheet
statement of the Borrower and all of its domestic Subsidiaries, all on a
consolidated and consolidating basis and unaudited statements of income and
stockholders' equity and cash flow of for each of the same, on a consolidated
and consolidating basis reflecting results of operations from the beginning of
the fiscal year to the end of such quarter and for such quarter, prepared on a
basis consistent with prior practices and fairly present, in all material
respects such financial condition, subject to normal year end and audit
adjustments. The reports shall be accompanied by a certificate on behalf of each
Obligor by the Chief Financial Officer of such Obligor, which shall state that,
based on an examination sufficient to permit him to make an informed statement,
no Default or Event of Default exists, or, if such is not the case, specifying
such Default or Event of Default, its nature, when it occurred, whether it is
continuing and the steps being taken by Obligors with respect to such default
and, such certificate shall have appended thereto calculations which set forth
Obligors' compliance with the requirements or restrictions imposed by Sections
6.5, 6.6, 7.6 and 7.11 hereof.
9.9. Monthly Financial Statements and Borrowing Base Certificates.
Furnish Agent within thirty (30) days after the end of each month, an unaudited
statement of profit and loss of the Borrower and all of its direct and indirect
Subsidiaries and of the Borrower and all of its domestic Subsidiaries, all on a
consolidated and consolidating basis reflecting results of operations from the
beginning of the fiscal year to the end of such month and for such month,
prepared on a basis consistent with prior practices and fairly present, in all
material respects such financial condition, subject to normal year end and audit
adjustments. The reports shall be accompanied by a certificate on behalf of each
Obligor by the Chief Financial Officer of such Obligor, which shall state that,
based on an examination sufficient to permit it to make an informed statement,
no Default or Event of Default exists, or, if such is not the case, specifying
such Default or Event of Default, its nature, when it occurred, whether it is
continuing and the steps being taken by Obligors with respect to such event and,
such certificate shall have appended thereto calculations which set forth
Obligors' compliance with the requirements or restrictions imposed by Sections
6.5, 6.6, 7.6 and 7.11 hereof. Furnish Agent within three (3) days after the end
of each month a Borrowing Base Certificate for the Borrower and its domestic
Subsidiaries, on a consolidated basis, and for each domestic Obligor, in form
and reasonably satisfactory to the Agent.
9.10. Other Reports. Furnish Agent as soon as available, but in any
event within ten (10) days after the issuance thereof, (i) with copies of such
financial statements, reports and returns as each Obligor shall send to its
stockholders and (ii) copies of all notices sent pursuant to the Indenture.
9.11. Additional Information. Furnish Agent with such additional
information as Agent shall reasonably request in order to enable Agent to
determine whether the terms, covenants, provisions and conditions of this
Agreement and the Note have been complied with by Obligors including, without
limitation and without the necessity of any request by Agent, (a) copies of all
materially adverse environmental audits and reviews, (b) at least thirty (30)
days prior thereto, notice of any Obligor's opening of any new office or place
of business or any Borrower's closing of any existing office or place of
business, and (c) promptly upon any Borrower's learning thereof, notice of any
labor dispute to which any Obligor may become a party, any strikes or walkouts
relating to any of its plants or other facilities, and the expiration of any
labor contract to which any Obligor is a party or by which any Obligor is bound.
9.12. Projected Operating Budget. Furnish Agent, no later than thirty
(30) days prior to the beginning of each Borrower's fiscal years commencing with
fiscal year 1998, a quarter by quarter projected operating budget and cash flow
of Obligors on a consolidated and consolidating basis for such fiscal year
(including an income statement for each quarter and a balance sheet as at the
end of the last quarter), such projections to be accompanied by a certificate
signed on behalf of Obligors by the President or Chief Financial Officer of each
Obligor to the effect that such projections have been prepared on the basis of
reasonable financial planning practice.
9.13. Variances From Operating Budget. Furnish Agent, concurrently with
the delivery of the financial statements referred to in Section 9.7 and each
quarterly report, a written report summarizing all material variances from
budgets submitted by Obligors pursuant to Section 9.12 and a discussion and
analysis by management with respect to such variances.
9.14. Notice of Suits, Adverse Events. Furnish Agent with prompt notice
of (i) any lapse or other termination of any Consent issued to any Obligor by
any Governmental Body or any other Person that is material to the
operation of any Borrower's business, (ii) any refusal by any Governmental Body
or any other Person to renew or extend any such Consent; and (iii) copies of any
periodic or special reports filed by any Obligor with any Governmental Body or
Person, if such reports indicate any material change in the business,
operations, affairs or condition of any Obligor, or if copies thereof are
requested by Lender, and (iv) copies of any material notices and other
communications from any Governmental Body or Person which specifically relate to
any Obligor.
9.15. ERISA Notices and Requests. Furnish Agent with immediate written
notice in the event, which event could reasonably be expected to have a Material
Adverse Effect, that (i) any Borrower or any member of the Controlled Group
knows or has reason to know that a Termination Event has occurred, together with
a written statement describing such Termination Event and the action, if any,
which such Obligor or member of the Controlled Group has taken, is taking, or
proposes to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, Department of Labor or PBGC with
respect thereto, (ii) any Obligor or any member of the Controlled Group knows or
has reason to know that a prohibited transaction (as defined in Sections 406 of
ERISA and 4975 of the Code) has occurred together with a written statement
describing such transaction and the action which such Obligor or any member of
the Controlled Group has taken, is taking or proposes to take with respect
thereto, (iii) a funding waiver request has been filed with respect to any Plan
together with all communications received by any Borrower or any member of the
Controlled Group with respect to such request, (iv) any increase in the benefits
of any existing Plan or the establishment of any new Plan or the commencement of
contributions to any Plan to which any Obligor or any member of the Controlled
Group was not previously contributing shall occur, (v) any Obligor or any member
of the Controlled Group shall receive from the PBGC a notice of intention to
terminate a Plan or to have a trustee appointed to administer a Plan, together
with copies of each such notice, (vi) any Obligor or any member of the
Controlled Group shall receive any unfavorable determination letter from the
Internal Revenue Service regarding the qualification of a Plan under Section
401(a) of the Code, together with copies of each such letter; (vii) any Obligor
or any member of the Controlled Group shall receive a notice regarding the
imposition of withdrawal liability, together with copies of each such notice;
(viii) any Obligor or any member of the Controlled Group shall fail to make a
required installment or any other required payment under Section 412 of the Code
on or before the due date for such installment or payment; (ix) any Obligor or
any member of the Controlled Group knows that (a) a Multiemployer Plan has been
terminated, (b) the administrator or plan sponsor of a Multiemployer Plan
intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted or
will institute proceedings under Section 4042 of ERISA to terminate a
Multiemployer Plan.
9.16. Additional Documents. Execute and deliver to Agent, upon request,
such documents and agreements as Agent may, from time to time, reasonably
request to carry out the purposes, terms or conditions of this Agreement.
X. EVENTS OF DEFAULT.
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
10.1. failure by any Obligor to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant
to the terms of this Agreement or by notice of intention to prepay, or by
required prepayment or failure to pay any other liabilities or make any other
payment, fee or charge provided for herein when due or in any Other Document;
10.2. any representation or warranty made or deemed made by any Obligor
in this Agreement or any related agreement or in any certificate, document or
financial or other statement furnished at any time in connection herewith or
therewith shall prove to have been misleading in any material respect on the
date when made or deemed to have been made;
10.3. failure by any Obligor to (i) furnish financial information
within fifteen (15) days of when due, or (ii) permit the inspection of its books
or records;
10.4. issuance of a notice of Lien (other than Permitted Encumbrances),
levy, assessment, injunction or attachment against a material portion of any
Obligor's property, which within thirty (30) days of receipt by any Obligor of
such notice is not either satisfied, stayed, fully bonded or discharged of
record;
10.5. except as otherwise provided for in Sections 10.1 and 10.3,
failure or neglect of any Obligor to perform, keep or observe any term,
provision, condition, covenant herein contained, or contained in any other
agreement or arrangement, now or hereafter entered into between any Obligor and
Agent or any Lender;
10.6. any judgment or judgments are rendered or judgment liens filed
against any Obligor for an aggregate amount in excess of $$1,000,000 which
within thirty (30) days of such rendering or filing is not either satisfied,
stayed, fully bonded or discharged of record;
10.7. any Obligor shall (i) apply for, consent to or suffer the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of creditors, (iii)
commence a voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a
petition seeking to take advantage of any other law providing for the relief of
debtors, (vi) acquiesce to, or fail to have dismissed, within thirty (30) days,
any petition filed against it in any involuntary case under such bankruptcy
laws, or (vii) take any action for the purpose of effecting any of the
foregoing;
10.8. any Obligor shall admit in writing its inability, or be generally
unable, to pay its debts as they become due or, with the exception of Inactive
Subsidiaries, cease operations of its present business;
10.9. Intentionally Omitted.
10.10. any change in any Obligor's condition or affairs (financial or
otherwise) which in Agent's opinion has a Material Adverse Effect;
10.11. any Lien created hereunder or provided for hereby or under any
related agreement for any reason ceases to be or is not a valid and perfected
Lien having a first priority interest (subject to Permitted Encumbrances);
10.12. an event of default has occurred and been declared under the
Indenture which default shall not have been cured or waived within any
applicable grace period;
10.13. a default by one or more Obligors or by any foreign Subsidiary
of any Obligor with respect to Indebtedness, individually or collectively
aggregating $500,000 or more, or a default of the obligations of any Obligor or
any foreign Subsidiary of any Obligor under any other agreement to which it is a
party shall occur which in the reasonable judgment of Agent, would have a
Material Adverse Effect, which defaults are not cured within any applicable
grace period;
10.14. termination or breach of any Guaranty or similar agreement
executed and delivered to Agent in connection with the Obligations of any
Obligor, or if any Guarantor attempts to terminate, challenges the validity of,
or its liability under, any such Guaranty or similar agreement;
10.15. any Change of Control shall occur;
10.16. any material provision of this Agreement shall, for any reason,
cease to be valid and binding on any Obligor, or any Obligor shall so claim in
writing to Agent;
10.17. (i) any Governmental Body shall (A) revoke, terminate, suspend
or adversely modify any license, permit, patent trademark or trade name of any
Obligor, the continuation of which is material to the continuation of any
Obligor's business, or (B) commence proceedings to suspend, revoke, terminate or
adversely modify any such license,
permit, trademark, trade name or patent and such proceedings shall not be
dismissed or discharged within sixty (60) days, or (c) schedule or conduct a
hearing on the renewal of any license, permit, trademark, trade name or patent
necessary for the continuation of any Obligor's business and the staff of such
Governmental Body issues a report recommending the termination, revocation,
suspension or material, adverse modification of such license, permit, trademark,
trade name or patent; (ii) any agreement which is necessary or material to the
operation of any Borrower's business shall be revoked or terminated and not
replaced by a substitute acceptable to Agent within thirty (30) days after the
date of such revocation or termination, and such revocation or termination and
non-replacement would reasonably be expected to have a Material Adverse Effect
on any Obligor;
10.18. any portion of the Collateral shall be seized or taken by a
Governmental Body, or any Obligor or the title and rights of any Obligor or any
Original Owner which is the owner of any material portion of the Collateral
shall have become the subject matter of litigation which is reasonably likely,
in the reasonable opinion of Agent, upon final determination, result in
impairment or loss of the security provided by this Agreement or the Other
Documents;
10.19. the operations of any Obligor's manufacturing facility are
interrupted which interruption could reasonably be expected to have a Material
Adverse Effect; or
10.20. an event or condition specified in Sections 7.16 or 9.15 hereof
shall occur or exist with respect to any Plan and, as a result of such event or
condition, together with all other such events or conditions, any Obligor or any
member of the Controlled Group shall incur a liability to a Plan or the PBGC (or
both) which, in the reasonable judgment of Agent, would have a Material Adverse
Effect.
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.
11.1. Rights and Remedies. Upon the occurrence of (i) an Event of
Default pursuant to Section 10.7 all Obligations shall be immediately due and
payable and this Agreement and the obligation of Lenders to make Advances shall
be deemed terminated; and, (ii) any of the other Events of Default and at any
time thereafter (such default not having previously been cured), at the option
of Required Lenders all Obligations shall be immediately due and payable and
Lenders shall have the right to terminate this Agreement and to terminate the
obligation of Lenders to make Advances and (iii) a filing of a petition against
Obligor in any involuntary case under any state or federal bankruptcy laws, the
obligation of Lenders to make Advances hereunder shall be terminated other than
as may be required by an appropriate order of the bankruptcy court having
jurisdiction over any Obligor. Upon the occurrence of any Event of Default,
Agent shall have the right to exercise any and all other rights and remedies
provided for herein, under the Uniform Commercial Code and at law or equity
generally, including, without limitation, the right to foreclose the security
interests granted herein and to realize upon any Collateral by any available
judicial procedure and/or to take possession of and sell any or all of the
Collateral with or without judicial process. Agent may enter any of Obligor's
premises or other premises without legal process and without incurring liability
to any Obligor therefor, and Agent may thereupon, or at any time thereafter, in
its discretion without notice or demand, take the Collateral and remove the same
to such place as Agent may deem advisable and Agent may require Obligors to make
the Collateral available to Agent at a convenient place. With or without having
the Collateral at the time or place of sale, Agent may sell the Collateral, or
any part thereof, at public or private sale, at any time or place, in one or
more sales, at such price or prices, and upon such terms, either for cash,
credit or future delivery, as Agent may elect. Except as to that part of the
Collateral which is perishable or threatens to decline speedily in value or is
of a type customarily sold on a recognized market, Agent shall give Obligors
reasonable notification of such sale or sales, it being agreed that in all
events written notice mailed to Obligors at least five (5) days prior to such
sale or sales is reasonable notification. At any public sale Agent or any Lender
may bid for and become the purchaser, and Agent, any Lender or any other
purchaser at any such sale thereafter shall hold the Collateral sold absolutely
free from any claim or right of whatsoever kind, including any equity of
redemption and such right and equity are hereby expressly waived and released by
each Obligor. The proceeds realized from the sale of any Collateral shall be
applied as follows: first, to the reasonable costs, expenses and attorneys' fees
and expenses incurred by Agent for collection and for acquisition, completion,
protection, removal, storage, sale and delivery of the Collateral; second, to
interest due upon any of the Obligations and any fees payable under this
Agreement; and, third,
to the principal of the Obligations. If any deficiency shall arise, Obligors
shall remain liable to Agent and Lenders therefor. The Agent shall return any
surplus to the Obligors, subject to any duty imposed by law upon the Agent
and/or Lenders, including but not limited to any duty owed to the holder of a
subordinated security interest in any Collateral. Each Obligor hereby assigns,
transfers and conveys to the Agent, for the benefit of the Lenders, effective
upon the occurrence of any Event of Default hereunder, the right and license to
use all Intellectual Property, Equipment and General Intangibles owned or used
by such Obligor to the extent necessary to enable the Agent to dispose of the
Inventory, for the purpose of completing the manufacturing of unfinished goods,
collecting Receivables or to otherwise liquidate, transfer or realize on the
Collateral. Such right and license is granted free of charge, without
requirement of any monetary payment whatsoever to be made to any Obligor by the
Agent. The Obligors shall cooperate with all reasonable directions of and
execute and deliver all documentation reasonably requested by the Agent for the
purpose of implementing the foregoing provisions.
11.2. Agent's Discretion. Agent shall have the right in its sole
discretion to determine which rights, Liens, security interests or remedies
Agent may at any time pursue, relinquish, subordinate, or modify or to take any
other action with respect thereto and such determination will not in any way
modify or affect any of Agent's or Lenders' rights hereunder.
11.3. Setoff. In addition to any other rights which Agent or any Lender
may have under applicable law, upon the occurrence of an Event of Default
hereunder, Agent and such Lender shall have a right to apply any Obligor's
property held by Agent and such Lender to reduce the Obligations.
11.4. Rights and Remedies not Exclusive. The enumeration of the
foregoing rights and remedies is not intended to be exhaustive and the exercise
of any right or remedy shall not preclude the exercise of any other right or
remedies provided for herein, in any Guaranty or otherwise provided by law, all
of which shall be cumulative and not alternative.
XII. WAIVERS AND JUDICIAL PROCEEDINGS.
12.1. Waiver of Notice. Each Obligor hereby waives notice of
non-payment of any of the Receivables, demand, presentment, protest and notice
thereof with respect to any and all instruments, notice of acceptance hereof,
notice of loans or advances made, credit extended, Collateral received or
delivered, or any other action taken in reliance hereon, and all other demands
and notices of any description, except such as are expressly provided for
herein.
12.2. Delay. No delay or omission on Agent's or any Lender's part in
exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.
12.3. Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
XIII. EFFECTIVE DATE AND TERMINATION.
13.1. Term. This Agreement, which shall inure to the benefit of and
shall be binding upon the respective successors and permitted assigns of each
Obligor, Agent and each Lender, shall become effective on the date hereof and
shall continue in full force and effect until August 19, 2003 (the "Term")
unless sooner terminated as herein provided. Borrower may terminate this
Agreement at any time upon sixty (60) days' prior written notice upon payment in
full of the payment Obligations (whether in the form of principal, interest,
reimbursement obligations, fees, penalties, charges, expenses or otherwise) with
the exception of indemnification obligations under this Agreement for which no
claim recited thereunder has arisen) . In the event the Obligations are prepaid
in full prior to third anniversary date of the Closing Date (the date of such
prepayment hereinafter referred to as the "Early Termination Date"), Borrower
shall pay to Agent for the benefit of Lenders an early termination fee in an
amount equal to $350,000 if the Early Termination Date occurs on or after the
Closing Date to and including the date immediately preceding the third
anniversary of the Closing Date.
13.2. Termination. The termination of the Agreement shall not affect
any Obligor's, Agent's or any Lender's rights, or any of the Obligations having
their inception prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have been fully
disposed of, concluded or liquidated. The security interests, Liens and rights
granted to Agent and Lenders hereunder and the financing statements filed
hereunder shall continue in full force and effect, notwithstanding the
termination of this Agreement or the fact that Borrower's Account may from time
to time be temporarily in a zero or credit position, until all of the payment
Obligations (whether in the form of principal, interest, reimbursement
obligations, fees, penalties, charges, expenses or otherwise) with the exception
of indemnification obligations under this Agreement for which no claim subject
thereto has been made and has not been terminated, satisfied released or
withdrawn) of each Obligor have been paid and satisfied in full after the
termination of this Agreement or each Obligor has furnished Agent and Lenders
with an indemnification satisfactory to Agent and Lenders with respect thereto.
Accordingly, each Obligor waives any rights which it may have under Section
9-404(1) of the Uniform Commercial Code to demand the filing of termination
statements with respect to the Collateral, and Agent shall not be required to
send such termination statements to each Obligor, or to file them with any
filing office, unless and until this Agreement shall have been terminated in
accordance with its terms and all payment Obligations (whether in the form of
principal, interest, reimbursement obligations, fees, penalties, charges,
expenses or otherwise) with the exception of indemnification obligations under
this Agreement for which no claim subject thereto has been made and has not been
terminated, satisfied released or withdrawn) paid in full in immediately
available funds. All representations, warranties, covenants, waivers and
agreements contained herein shall survive termination hereof until all
Obligations are paid or performed in full. Notwithstanding anything contained
herein to the contrary all indemnification obligations under this Agreement
shall survive termination of this Agreement.
XIV. REGARDING AGENT.
14.1. Appointment. Each Lender hereby designates PNC to act as Agent
for such Lender under this Agreement and the Other Documents. Each Lender hereby
irrevocably authorizes Agent to take such action on its behalf under the
provisions of this Agreement and the Other Documents and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal and interest, fees (except the fees set forth in Sections
3.2(a), charges and collections (without giving effect to any collection days)
received pursuant to this Agreement, for the ratable benefit of Lenders. Agent
may perform any of its duties hereunder by or through its agents or employees.
As to any matters not expressly provided for by this Agreement (including
without limitation, collection of the Note) Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding; provided, however, that Agent shall not be
required to take any action which exposes Agent to liability or which is
contrary to this Agreement or the Other Documents or applicable law unless Agent
is furnished with an indemnification reasonably satisfactory to Agent with
respect thereto.
14.2. Nature of Duties. Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement and the Other Documents.
Neither Agent nor any of its officers, directors, employees or agents shall be
(i) liable for any action taken or omitted by them as such hereunder or in
connection herewith, unless caused by their gross (not mere) negligence or
willful misconduct, or (ii) responsible in any manner for any recitals,
statements, representations or warranties made by any Obligor or any officer
thereof contained in this Agreement, or in any of the Other Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any of the
Other Documents or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, or any of the Other Documents
or for any failure of any Obligor to perform its obligations hereunder. Agent
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any of the Other Documents, or to inspect the
properties, books or records of any Borrower. The duties of Agent as respects
the Advances to Borrower shall be mechanical and administrative in nature; Agent
shall not have by reason of this Agreement a fiduciary relationship in respect
of any Lender; and nothing in this Agreement, expressed or implied, is intended
to or shall be so construed as to impose upon Agent any obligations in respect
of this Agreement except as expressly set forth herein.
14.3. Lack of Reliance on Agent and Resignation. Independently and
without reliance upon Agent or any other Lender, each Lender has made and shall
continue to make (i) its own independent investigation of the financial
condition and affairs of each Obligor in connection with the making and the
continuance of the Advances hereunder and the taking or not taking of any action
in connection herewith, and (ii) its own appraisal of the creditworthiness of
each Obligor. Agent shall have no duty or responsibility, either initially or on
a continuing basis, to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession before making of the
Advances or at any time or times thereafter except as shall be provided by any
Obligor pursuant to the terms hereof. Agent shall not be responsible to any
Lender for any recitals, statements, information, representations or warranties
herein or in any agreement, document, certificate or a statement delivered in
connection with or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any Other
Document, or of the financial condition of any Obligor, or be required to make
any inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement, the Note, the Other Documents or the
financial condition of any Borrower, or the existence of any Event of Default or
any Default.
Agent may resign on sixty (60) days' written notice to each of Lenders
and Borrower and upon such resignation, the Required Lenders will promptly
designate a successor Agent reasonably satisfactory to Borrower.
Any such successor Agent shall succeed to the rights, powers and duties
of Agent, and the term "Agent" shall mean such successor agent effective upon
its appointment, and the former Agent's rights, powers and duties as Agent shall
be terminated, without any other or further act or deed on the part of such
former Agent. After any Agent's resignation as Agent, the provisions of this
Article XIV shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
14.4. Certain Rights of Agent. If Agent shall request instructions from
Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any Other Document, Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have
received instructions from the Required Lenders; and Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, Lenders shall not have any right of action whatsoever against Agent
as a result of its acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders.
14.5. Reliance. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, order or other
document or telephone message believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters pertaining to this Agreement and the Other Documents and
its duties hereunder, upon advice of counsel selected by it. Agent may employ
agents and attorneys-in-fact and shall not be liable for the default or
misconduct of any such agents or attorneys-in-fact selected by Agent with
reasonable care.
14.6. Notice of Default. Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder or under
the Other Documents, unless Agent has received notice from a Lender or a Obligor
referring to this Agreement or the Other Documents, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that Agent receives such a notice, Agent shall give notice thereof to
Lenders. Agent shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required Lenders; provided, that,
unless and until Agent shall have received such directions, Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of Lenders.
14.7. Indemnification. To the extent Agent is not reimbursed and
indemnified by Obligors, each Lender will reimburse and indemnify Agent in
proportion to its respective portion of the Advances (or, if no Advances are
outstanding, according to its Commitment Percentage), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against Agent in performing its
duties hereunder, or in any way relating to or arising out of this Agreement or
any Other Document; provided that, Lenders shall not be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent's gross
(not mere) negligence or willful misconduct.
14.8. Agent in its Individual Capacity. With respect to the obligation
of Agent to lend under this Agreement, the Advances made by it shall have the
same rights and powers hereunder as any other Lender and as if it were not
performing the duties as Agent specified herein; and the term "Lender" or any
similar term shall, unless the context clearly otherwise indicates, include
Agent in its individual capacity as a Lender. Agent may engage in business with
any Obligor as if it were not performing the duties specified herein, and may
accept fees and other consideration from any Obligor for services in connection
with this Agreement or otherwise without having to account for the same to
Lenders.
14.9. Delivery of Documents. To the extent Agent receives financial
statements required under Sections 9.7, 9.8, and 9.9 from any Obligor pursuant
to the terms of this Agreement, Agent will promptly furnish such documents and
information to Lenders.
14.10. Borrower's Undertaking to Agent. Without prejudice to their
respective obligations to Lenders under the other provisions of this Agreement,
Borrower hereby undertakes with Agent to pay to Agent from time to time on
demand all amounts from time to time due and payable by it for the account of
Agent or Lenders or any of them pursuant to this Agreement to the extent not
already paid. Any payment made pursuant to any such demand shall pro tanto
satisfy the relevant Borrower's obligations to make payments for the account of
Lenders or the relevant one or more of them pursuant to this Agreement.
XV. MISCELLANEOUS.
15.1. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New Jersey applied to contracts to
be performed wholly within the State of New Jersey. Any judicial proceeding
brought by or against any Borrower with respect to any of the Obligations, this
Agreement or any related agreement may be brought in any court of competent
jurisdiction in the State of New Jersey, United States of America, and, by
execution and delivery of this Agreement, each Obligor accepts for itself and in
connection with its properties, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement. Each Obligor hereby
waives personal service of any and all process upon it and consents that all
such service of process may be made by registered mail (return receipt
requested) directed to Borrower at its address set forth in Section 15.6 shall
be deemed completed five (5) days after the same shall have been so deposited in
the mails of the United States of America. Nothing herein shall affect the right
to serve process in any manner permitted by law or shall limit the right of
Agent or any Lender to bring proceedings against any Obligor in the courts of
any other jurisdiction. Each Obligor waives any objection to jurisdiction and
venue of any action instituted hereunder and shall not assert any defense based
on lack of jurisdiction or venue or based upon forum
non conveniens. Any judicial proceeding by any Obligor against Agent or any
Lender involving, directly or indirectly, any matter or claim in any way arising
out of, related to or connected with this Agreement or any related agreement,
shall be brought only in a federal or state court located in the County of
Middlesex, State of New Jersey.
15.2. Entire Understanding. (a) This Agreement and the documents
executed concurrently herewith contain the entire understanding between each
Obligor, Agent and each Lender and supersedes all prior agreements and
understandings, if any, relating to the subject matter hereof. Any promises,
representations, warranties or guarantees not herein contained and hereinafter
made shall have no force and effect unless in writing, signed by each Obligor's,
Agent's and each Lender's respective officers. Neither this Agreement nor any
portion or provisions hereof may be changed, modified, amended, waived,
supplemented, discharged, canceled or terminated orally or by any course of
dealing, or in any manner other than by an agreement in writing, signed by the
party to be charged. Each Obligor acknowledges that it has been advised by
counsel in connection with the execution of this Agreement and Other Documents
and is not relying upon oral representations or statements inconsistent with the
terms and provisions of this Agreement.
(b) The Required Lenders, Agent with the consent in writing of
the Required Lenders, and Borrower may, subject to the provisions of this
Section 15.2 (b), from time to time enter into written supplemental agreements
to this Agreement or the Other Documents executed by Obligors, for the purpose
of adding or deleting any provisions or otherwise changing, varying or waiving
in any manner the rights of Lenders, Agent or Obligors thereunder or the
conditions, provisions or terms thereof of waiving any Event of Default
thereunder, but only to the extent specified in such written agreements;
provided, however, that no such supplemental agreement shall, without the
consent of all Lenders:
(i) increase the Commitment Percentage or Commitment
Amount of any Lender.
(ii) extend the maturity of any Note or the due date
for any amount payable hereunder, or decrease the rate of interest or reduce any
fee payable by Obligors to Lenders pursuant to this Agreement.
(iii) alter the definition of the term Required
Lenders or alter, amend or modify this Section 15.2(b).
(iv) release any Collateral during any calendar year
(other than in accordance with the provisions of this Agreement) having an
aggregate value in excess of $1,000,000.
(v) change the rights and duties of Agent.
(vi) permit any Revolving Advance to be made if after
giving effect thereto the total of Advances outstanding hereunder would exceed
the Formula Amount for more than sixty (60) consecutive Business Days or exceed
one hundred and ten percent (110%) of the Formula Amount.
(vii) increase the Advance Rates above the Advance
Rates in effect on the Closing Date.
(viii) increase the Maximum Revolving Advance Amount
or permit any Revolving Advance to be made if after giving effect thereto the
total of Revolving Advances outstanding hereunder would exceed the Formula
Amount for more than sixty (60) consecutive Business Days or exceed one hundred
ten percent (110%) of the Formula Amount.
Any such supplemental agreement shall apply equally to each Lender and shall be
binding upon Obligor, Lenders and Agent and all future holders of the
Obligations. In the case of any waiver, Obligors, Agent and Lenders shall be
restored to their former positions and rights, and any Event of Default waived
shall be deemed to be cured and not continuing, but no waiver of a specific
Event of Default shall extend to any subsequent Event of Default (whether or not
the subsequent Event of Default is the same as the Event of Default which was
waived), or impair any right consequent thereon.
In the event that Agent requests the consent of a Lender in writing
pursuant to this Section 15.2 and such Lender shall not respond or reply to
Agent in writing within ten (10) days of delivery of such request, such Lender
shall be deemed to have consented to matter that was the subject of the request.
In the event that Agent requests the consent of a Lender pursuant to this
Section 15.2 and such consent is denied, then PNC may, at its option, require
such Lender to assign its interest in the Advances to PNC or to another Lender
or to any other Person designated by the Agent (the "Designated Lender"), for a
price equal to the then outstanding principal amount thereof plus accrued and
unpaid interest and fees due such Lender, which interest and fees shall be paid
when collected from Borrower. In the event PNC elects to require any Lender to
assign its interest to PNC or to the Designated Lender, PNC will so notify such
Lender in writing within forty five (45) days following such Lender's denial,
and such Lender will assign its interest to PNC or the Designated Lender no
later than five (5) days following receipt of such notice pursuant to a
Commitment Transfer Supplement executed by such Lender, PNC or the Designated
Lender, as appropriate, and Agent.
15.3. Successors and Assigns; Participations; New Lenders.
(a) This Agreement shall be binding upon and inure to the
benefit of Obligors, Agent, each Lender, all future holders of the Obligations
and their respective successors and assigns, except that no Obligor may assign
or transfer any of its rights or obligations under this Agreement without the
prior written consent of Agent and each Lender.
(b) Each Obligor acknowledges that in the regular course of
commercial banking business one or more Lenders may at any time and from time to
time sell participating interests in the Advances to other financial
institutions (each such transferee or purchaser of a participating interest, a
"Transferee"). Each Transferee may exercise all rights of payment (including
without limitation rights of set-off) with respect to the portion of such
Advances held by it or other Obligations payable hereunder as fully as if such
Transferee were the direct holder thereof provided that Obligors shall not be
required to pay to any Transferee more than the amount which it would have been
required to pay to Lender which granted an interest in its Advances or other
Obligations payable hereunder to such Transferee had such Lender retained such
interest in the Advances hereunder or other Obligations payable hereunder and in
no event shall Obligors be required to pay any such amount arising from the same
circumstances and with respect to the same Advances or other Obligations payable
hereunder to both such Lender and such Transferee. Each Obligor hereby grants to
any Transferee a continuing security interest in any deposits, moneys or other
property actually or constructively held by such Transferee as security for the
Transferee's interest in the Advances.
(c) Any Lender may with the consent of Agent which shall not
be unreasonably withheld or delayed sell, assign or transfer all or any part of
its rights under this Agreement and the Other Documents to one or more
additional banks or financial institutions and one or more additional banks or
financial institutions may commit to make Advances hereunder (each a "Purchasing
Lender"), in minimum amounts of not less than $5,000,000, pursuant to a
Commitment Transfer Supplement, executed by a Purchasing Lender, the transferor
Lender, and Agent and delivered to Agent for recording. Upon such execution,
delivery, acceptance and recording, from and after the transfer effective date
determined pursuant to such Commitment Transfer Supplement, (i) Purchasing
Lender thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement, have the rights and obligations of a Lender
thereunder with a Commitment Percentage as set forth therein, and (ii) the
transferor Lender thereunder shall, to the extent provided in such Commitment
Transfer Supplement, be released from its obligations under this Agreement, the
Commitment Transfer Supplement creating a novation for that purpose. Such
Commitment Transfer Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such
Purchasing Lender and the resulting adjustment of the Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under this Agreement and the
Other Documents. Obligors hereby consent to the addition of such Purchasing
Lender and the resulting adjustment of the Commitment Percentages arising from
the purchase by such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this Agreement and the Other
Documents. Obligors shall execute and deliver such further documents and do such
further acts and things in order to effectuate the foregoing.
(d) Agent shall maintain at its address a copy of each
Commitment Transfer Supplement delivered to it and a register (the "Register")
for the recordation of the names and addresses of the Advances owing to each
Lender from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and Obligors, Agent and Lenders may treat each
Person whose name is recorded in the Register as the owner of the Advance
recorded therein for the purposes of this Agreement. The Register shall be
available for inspection by Obligors or any Lender at any reasonable time and
from time to time upon reasonable prior notice. Agent shall receive a fee in the
amount of $3,500 payable by the applicable Purchasing Lender upon the effective
date of each transfer or assignment to such Purchasing Lender.
(e) Obligors authorize each Lender to disclose, on a
confidential basis, to any Transferee or Purchasing Lender and any prospective
Transferee or Purchasing Lender any and all financial information in such
Lender's possession concerning Obligors which has been delivered to such Lender
by or on behalf of Obligors pursuant to this Agreement or in connection with
such Lender's credit evaluation of Obligors.
15.4. Application of Payments. Agent shall have the continuing and
exclusive right to apply or reverse and re-apply any payment and any and all
proceeds of Collateral to any portion of the Obligations. To the extent that any
Obligor makes a payment or Agent or any Lender receives any payment or proceeds
of the Collateral for any Obligor's benefit, which are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, debtor in possession, receiver, custodian or any other party under
any bankruptcy law, common law or equitable cause, then, to such extent, the
Obligations or part thereof intended to be satisfied shall be revived and
continue as if such payment or proceeds had not been received by Agent or such
Lender.
15.5. Indemnity. Each Obligor shall indemnify Agent, each Lender and
each of their respective officers, directors, Affiliates, employees and agents
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind or nature whatsoever (including, without limitation, fees and disbursements
of counsel) which may be imposed on, incurred by, or asserted against Agent or
any Lender in any litigation, proceeding or investigation instituted or
conducted by any governmental agency or instrumentality or any other Person with
respect to any aspect of, or any transaction contemplated by, or referred to in,
or any matter related to, this Agreement or the Other Documents, whether or not
Agent or any Lender is a party thereto, except to the extent that any of the
foregoing arises out of the willful misconduct or gross negligence of the party
being indemnified.
15.6. Notice. Any notice or request hereunder may be given to any
Obligor or to Agent or any Lender at their respective addresses set forth below
or at such other address as may hereafter be specified in a notice designated as
a notice of change of address under this Section. Any notice or request
hereunder shall be given by (a) hand delivery, (b) overnight courier, (c)
registered or certified mail, return receipt requested, (d) telex or telegram,
subsequently confirmed by registered or certified mail, or (e) telecopy to the
number set out below (or such other number as may hereafter be specified in a
notice designated as a notice of change of address) with electronic confirmation
of its receipt. Any notice or other communication required or permitted pursuant
to this Agreement shall be deemed given (a) when personally delivered to any
officer of the party to whom it is addressed, (b) on the earlier of actual
receipt thereof or three (3) days following posting thereof by certified or
registered mail, postage prepaid, or (c) upon actual receipt thereof when sent
by a recognized overnight delivery service or (d) upon actual receipt thereof
when sent by telecopier to the number set forth below with electronic
confirmation of its receipt, in each case addressed to each party at its address
set forth below or at such other address as has been furnished in writing by a
party to the other by like notice:
(A) If to Agent or PNC Bank, National Association
PNC at: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇. Vice President
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: Wilentz, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
(B) If to a Lender other than Agent, as specified on the signature
pages hereof
(C) If to Obligors at: Philipp Brothers Chemicals, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, CFO
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: Golenbock, Eiseman, Assor & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
15.7. Survival. The obligations of Borrowers under Sections 2.3(f),
3.7, 3.8, 3.9, 4.19(h), 14.7 and 15.5 shall survive termination of this
Agreement and the Other Documents and payment in full of the Obligations.
15.8. Severability. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.
15.9. Expenses. All costs and expenses including, without limitation,
reasonable attorneys' fees (including the allocated costs of in house counsel)
and disbursements incurred by Agent, Agent on behalf of Lenders and Lenders (a)
in all efforts made to enforce payment of any Obligation or effect collection of
any Collateral, or (b) in connection with the entering into, modification,
amendment, administration and enforcement of this Agreement or any consents or
waivers hereunder and all related agreements, documents and instruments, or (c)
in instituting, maintaining, preserving, enforcing and foreclosing on Agent's
security interest in or Lien on any of the Collateral, whether through judicial
proceedings or otherwise, or (d) in defending or prosecuting any actions or
proceedings arising out of or relating to Agent's or any Lender's transactions
with any Obligor, or (e) in connection with any advice given to Agent or any
Lender with respect to its rights and obligations under this Agreement and all
related agreements, may be charged to Borrower's Account and shall be part of
the Obligations.
15.10. Injunctive Relief. Each Obligor recognizes that, in the event
any Obligor fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to Lenders; therefore, Agent, if Agent so requests, shall be entitled to
temporary and permanent injunctive relief in any such case without the necessity
of proving that actual damages are not an adequate remedy.
15.11. Consequential Damages. Neither Agent nor any Lender, nor any
agent or attorney for any of them, shall be liable to any Obligor for
consequential damages arising from any breach of contract, tort or other wrong
relating to the establishment, administration or collection of the Obligations.
15.12. Captions. The captions at various places in this Agreement are
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.
15.13. Counterparts; Telecopied Signatures. This Agreement may be
executed in any number of and by different parties hereto on separate
counterparts, all of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.
15.14. Construction. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
15.15. Confidentiality; Sharing Information. (a) Agent, each Lender and
each Transferee shall hold all non-public information obtained by Agent, such
Lender or such Transferee pursuant to the requirements of this Agreement in
accordance with Agent's, such Lender's and such Transferee's customary
procedures for handling confidential information of this nature; provided,
however, Agent, each Lender and each Transferee may disclose such confidential
information (a) to its examiners, affiliates, outside auditors, counsel and
other professional advisors, (b) to Agent, any Lender or to any prospective
Transferees and Purchasing Lenders, and (c) as required or requested by any
Governmental Body or representative thereof or pursuant to legal process;
provided, further that (i) unless specifically prohibited by applicable law or
court order, Agent, each Lender and each Transferee shall use its best efforts
prior to disclosure thereof, to notify the applicable Obligor of the applicable
request for disclosure of such non-public information (A) by a Governmental Body
or representative thereof (other than any such request in connection with an
examination of the financial condition of a Lender or a Transferee by such
Governmental Body) or (B) pursuant to legal process and (ii) in no event shall
Agent, any Lender or any Transferee be obligated to return any materials
furnished by any Obligor other than those documents and instruments in
possession of Agent or any Lender in order to perfect its Lien on the Collateral
once the Obligations have been paid in full and this Agreement has been
terminated.
(b) Borrower acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
such Obligor or one or more of its Affiliates (in connection with this Agreement
or otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such
Lender and each Obligor hereby authorizes each Lender to share any information
delivered to such Lender by such Obligor and its Subsidiaries pursuant to this
Agreement, or in connection with the decision of such Lender to enter into this
Agreement, to any such Subsidiary or Affiliate of such Lender, it being
understood that any such Subsidiary or Affiliate of any Lender receiving such
information shall be bound by the provision of Section 15.15 as if it were a
Lender hereunder. Such authorization shall survive the repayment of the other
Obligations and the termination of the Loan Agreement.
15.16. Publicity. Agent may, with the prior written consent of the
Borrower, which consent shall not be unreasonably withheld, make appropriate
announcements of the financial arrangement entered into among Obligors, Agent
and Lenders, including, without limitation, announcements which are commonly
known as tombstones, in such publications and to such selected parties
designated by Agent.
Each of the parties has signed this Agreement as of the day and year
first above written.
PHILIPP BROTHERS CHEMICALS, INC.
ATTEST:
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------- ------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇, ▇.▇. ▇▇▇▇▇
PHIBRO-TECH, INC.
ATTEST:
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------- -----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇, ▇.▇. ▇▇▇▇▇
C P CHEMICALS, INC.
ATTEST:
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------- ------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇, ▇.▇. ▇▇▇▇▇
THE PRINCE MANUFACTURING COMPANY (PA)
ATTEST:
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------- -------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, P.A. 18030
THE PRINCE MANUFACTURING COMPANY (IL)
ATTEST:
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------- -------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇. 62306
PRINCE AGRIPRODUCTS, INC.
ATTEST:
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------- -------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇. 62306
MINERAL RESOURCE TECHNOLOGIES, L.L.C.
By: MRT MANAGEMENT CORP.,
as Managing Member
ATTEST:
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------- -------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, G.A. 30339
MRT MANAGEMENT CORP.
ATTEST:
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------- -------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, G.A. 30339
KOFFOLK, INC.
ATTEST:
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------- -------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇, ▇.▇. ▇▇▇▇▇
PHIBRO-CHEM, INC.
ATTEST:
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------- -------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇, ▇.▇. ▇▇▇▇▇
PHIBROCHEMICALS, INC.
ATTEST:
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------- -------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇, ▇.▇. ▇▇▇▇▇
WESTERN MAGNESIUM CORP.
ATTEST:
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------- -------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇, ▇.▇. ▇▇▇▇▇
PNC BANK, NATIONAL ASSOCIATION, as
Lender and as Agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: VICE PRESIDENT
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Commitment Percentage: 100%