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EXHIBIT 10.26
LOAN AND SECURITY AGREEMENT
Dated as of April __, 1999
between
SIGMATRON INTERNATIONAL, INC.
as Borrower,
and
LASALLE NATIONAL BANK
as Bank
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TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is attached but
is inserted for convenience only.
1. DEFINITIONS AND TERMS.........................................................................................1
1.1 Certain Definitions...........................................................................1
1.2 Certain UCC and Accounting Terms.............................................................13
2. LOANS: BANK'S COMMITMENTS AND BORROWING PROCEDURES..........................................................14
2.1 Revolving Credit Commitment..................................................................14
2.2 Equipment Loan Credit Commitment.............................................................14
2.3 Letters of Credit............................................................................14
2.4 Borrowing Procedures.........................................................................15
2.5 Conditions for Issuance of Letters of Credit.................................................15
2.6 Procedure for Issuance of Letters of Credit..................................................16
2.7 Reimbursement Obligations for Letter of Credit...............................................17
2.8 Nature of Obligations........................................................................18
2.9 Letter of Credit Collateral Account..........................................................18
2.10 All Loans to Constitute One Obligation.......................................................20
2.11 Use of Proceeds..............................................................................20
3. LOANS: NOTES EVIDENCING LOANS...............................................................................20
3.1 Revolving Note...............................................................................20
3.2 Equipment Note...............................................................................20
3.3 Recordation..................................................................................20
3.4 Loan Evidence................................................................................20
4. LOANS: AMOUNTS; INTEREST; CHANGE IN CIRCUMSTANCES, ETC......................................................21
4.1 Interest Rates; Applicable Borrowing Amounts; Default Rate...................................21
4.2 Computation of Interest......................................................................22
4.3 Conversion and Reborrowing of Loans; Interest Periods........................................22
4.4 Change of Law................................................................................22
4.5 Unavailability of Deposits or Inability to Ascertain the LIBOR Rate or
Adjusted LIBOR Rate..........................................................................22
4.6 Yield Protection, Etc........................................................................23
4.7 Funding Indemnity............................................................................24
4.8 Discretion of Bank as to Manner of Funding...................................................24
4.9 Interest Laws................................................................................24
5. LOANS: GENERAL TERMS........................................................................................25
5.1 Payments to Bank; Defaulting Bank............................................................25
5.2 Automatic Debit..............................................................................25
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5.3 Application of Payment.......................................................................25
5.4 Conditions Precedent Events..................................................................25
5.5 Offset.......................................................................................26
5.6 Discretionary Disbursements..................................................................26
5.7 Credit Termination Date; Continuance of Obligations, Etc.....................................26
5.8 Over-Advances................................................................................26
5.9 Lock-Box and Blocked Account.................................................................27
5.10 Unused Portion Fee...........................................................................27
5.11 Fees.........................................................................................27
6. LOANS: CONDITIONS TO LENDING................................................................................28
6.1 Initial Loan Conditions Precedent............................................................28
7. COLLATERAL: GENERAL TERMS...................................................................................30
7.1 Grant of Security Interest...................................................................30
7.2 Perfection of Security Interests.............................................................30
7.3 Inspection of Collateral and Visitation Rights...............................................30
7.4 First Lien and Locations of Collateral.......................................................31
7.5 Constructive Trust...........................................................................31
7.6 Application of Proceeds of Collateral........................................................31
7.7 Third Party Collateral Claims................................................................31
7.8 Additional Collateral........................................................................32
7.9 No Custom or Waiver..........................................................................32
7.10 Special Collateral...........................................................................32
8. COLLATERAL: ACCOUNTS RECEIVABLE.............................................................................32
8.1 Account Representations and Warranties.......................................................32
8.2 Verification of Accounts Receivable..........................................................32
8.3 Account Restrictions.........................................................................33
8.4 Enforcement of Right to Accounts Receivable..................................................33
8.5 Appointment as Attorney-in-Fact..............................................................33
9. COLLATERAL: INVENTORY.......................................................................................34
9.1 Inventory Representations and Warranties.....................................................34
9.2 Ordinary Course Sales........................................................................34
10. COLLATERAL: EQUIPMENT.......................................................................................34
10.1 Equipment Representations and Warranties.....................................................34
10.2 Maintenance..................................................................................34
10.3 Evidence of Ownership........................................................................35
11. REPRESENTATIONS AND WARRANTIES; COVENANTS;INDEMNIFICATION; CONTINUING OBLIGATION.............................35
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11.1 Representations and Warranties of Borrower...................................................35
11.2 Affirmative Covenants........................................................................40
11.3 Negative Covenants...........................................................................47
11.4 Maintenance of Accounts......................................................................48
12. DEFAULT.....................................................................................................49
12.1 Events of Default............................................................................49
12.2 Cumulative Remedies..........................................................................50
12.3 Acceleration and Termination of Loans........................................................50
12.4 Rights of Secured Creditor...................................................................50
12.5 Assembly of Collateral; Injunctive Relief....................................................50
12.6 Notice of Collateral Disposition.............................................................51
12.7 Matters Regarding Sale of Collateral.........................................................51
12.8 Replevin.....................................................................................51
12.9 Application of Proceeds......................................................................51
13. GENERAL.....................................................................................................52
13.1 Payment Application Date.....................................................................52
13.2 Statement of Account.........................................................................52
13.3 Manner of Application; Waiver of Setoff Prohibition..........................................52
13.4 Survival of Representations and Warranties...................................................52
13.5 Integration; Amendment; Assignment...........................................................52
13.6 No Waiver....................................................................................53
13.7 Severability.................................................................................53
13.8 Successors and Assigns.......................................................................53
13.9 Conflict with Other Agreements...............................................................53
13.10 No Impairment by Termination.................................................................53
13.11 Waivers......................................................................................53
13.12 Costs, Fees and Expenses Related to Agreement and Other Agreements...........................54
13.13 Environmental Indemnity......................................................................54
13.14 Release......................................................................................54
13.15 Governing Law................................................................................54
13.16 Notices......................................................................................54
13.17 FORUM; VENUE; JURY TRIAL WAIVER..............................................................55
13.18 Other Costs, Fees and Expenses...............................................................55
13.19 Revival......................................................................................55
13.20 Acknowledgments..............................................................................56
13.21 Section Headings.............................................................................56
13.22 Counterparts.................................................................................56
13.23 Effectiveness................................................................................56
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement") is made as of the
____ day of April, 1999, by and between SIGMATRON INTERNATIONAL, INC., a
Delaware corporation (the "Borrower"), and LASALLE NATIONAL BANK, a national
banking association ("Bank").
WITNESSETH:
WHEREAS, Borrower desires to borrow funds and obtain other financial
accommodations from Bank; and
WHEREAS, pursuant to Borrower's request, Bank is willing to extend such
financial accommodations to Borrower under the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements set forth herein, Borrower agrees to borrow from Bank, and Bank
agrees to lend to Borrower, subject to and upon the following terms and
conditions:
1. DEFINITIONS AND TERMS
1.1 Certain Definitions. The following words, terms and/or phrases
shall have the meanings set forth thereafter and such meanings shall be
applicable to the singular and plural form thereof, giving effect to the
numerical difference.
"Accounts Receivable" means all of Borrower's now existing or
hereafter arising or acquired Accounts, accounts receivable and other
rights to payment, however created, including without limitation any
right to payment for goods sold or leased or for services rendered,
whether arising out of the sale of Inventory or otherwise and whether
or not it has been earned by performance, and any and all notes,
drafts, acceptances, chattel paper, General Intangibles and other
obligations arising out of or representing a right to payment, however
created, including without limitation a right to payment for goods sold
or leased or for services rendered.
"Adjusted LIBOR Rate" means a rate per annum determined pursuant
to the following formula:
Adjusted LIBOR Rate = LIBOR
-------------------------
100% - Reserve Percentage
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"Affiliate" means any Person (a) that directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is
under common control with any other Person or one or more Affiliates,
(b) that directly or beneficially owns or holds 20% or more of any
equity interest in any other Person or one or more Affiliates or (c)
20% or more of whose voting stock (or in the case of a person that is
not a corporation, 20% or more of any equity interest) is owned
directly or beneficially or held by any other Person or one or more
Affiliates. For purposes of this definition and this Agreement, the
term "control" shall mean, directly or indirectly, the power to direct
or cause the direction of the management or policies of a Person,
whether through ownership interest or otherwise, including without
limitation the power to elect or appoint, directly or indirectly, a
majority of the members of its governing board or body.
"Authorized Officer" means the President or one or more other
executive officers of Borrower.
"Base Rate" or "Prime Rate" means the rate of interest (expressed
as a percentage per annum) most recently announced or published
publicly from time to time by Bank as its base or prime rate of
interest, which is not necessarily the lowest or most favorable rate of
interest charged by Bank on commercial loans at any one time. The rate
of interest shall change automatically and immediately as and when the
Base Rate shall change, without notice to Borrower, and any notice to
which it may be entitled is hereby waived, and any such change in the
Bank's Base Rate shall not affect any of the terms and conditions of
this Agreement, all of which shall remain in full force and effect.
"Base Rate Loan" means a Loan bearing interest at the Base Rate.
"Borrower's Liabilities" means all obligations and liabilities of
Borrower in the aggregate to Bank (including, without limitation, all
debts, claims, reimbursement obligations and indebtedness) whether
primary, secondary, direct, contingent, fixed or otherwise, heretofore,
now and/or from time to time hereafter owing, due or payable, however
evidenced, created, incurred, acquired or owing and however arising,
whether under this Agreement, or the Other Agreements, or by oral
agreement or operation of law or otherwise.
"Borrowing" means the incurrence or continuance of one type of
Loan (either a Base Rate Loan or a LIBOR Loan) under the Revolving
Credit Commitment from Bank on a given date (or resulting from
conversions on a given date), having in the case of LIBOR Loans the
same Interest Period.
"Business Day" means (i) for all purposes other than as covered by
clause (ii) below, any day on which Bank is open for the transaction of
commercial banking business in Chicago, Illinois other than a Saturday
or Sunday and (ii) with respect to all notices and
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determinations in connection with, and payments of principal and
interest on, LIBOR Loans, any day which is a Business Day described in
clause (i) above and which is also a day for trading by and between
banks in United States dollar deposits in London, England.
"Capital Expenditures" means the cost of acquiring any fixed
assets, or any improvements, replacements, substitutions, accessions or
additions thereto or therefor, which have a useful life of more than
one (1) year, including without limitation, the cost of direct or
indirect acquisitions of such assets by way of purchase, capital lease
or otherwise.
"Change of Control" means __________________ shall cease to
beneficially own, directly or indirectly, at least _____________
percent (___%) of the Stock of Borrower, on a fully diluted basis.
[DISCUSS]
"Charges" means all national, federal, state, county, city,
municipal and/or other governmental (or any instrumentality, division,
agency, body or department thereof, including, without limitation, the
PBGC) taxes, levies, assessments, charges, liens, claims or
encumbrances upon and/or relating to Borrower's Liabilities, Borrower's
business, Borrower's ownership and/or use of the Collateral, income
and/or gross receipts.
"Closing Date" means April __, 1999.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" shall have the meaning assigned to such term in
Paragraph 7.1 hereof.
"Conversion Date" means the Business Day on which a Base Rate Loan
is converted to a LIBOR Loan.
"Debt" means all of a Person's liabilities, obligations and
indebtedness to any Person of any and every kind and nature, whether
primary, secondary, direct, indirect, absolute, contingent, fixed or
otherwise, heretofore, now and/or from time to time hereafter owing,
due or payable, however evidenced, created, incurred, acquired or owing
and however arising, whether under written or oral agreement, by
operation of law or otherwise. Without in any way limiting the
generality of the foregoing, Debt specifically includes (i)
indebtedness for borrowed money, (ii) obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) obligations to
pay the deferred purchase price of property or services, (iv)
obligations as lessee under leases which shall have been or should be,
in accordance with generally accepted accounting principles, recorded
as capital leases, (v) obligations under direct or indirect guaranties
in respect of, and obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred
to in clauses (i) through (iv) above,
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and (vi) liabilities in respect of unfunded vested benefits under Plans
and Multiemployer Plans covered by Title IV of ERISA.
"Default Rate" shall have the meaning assigned to such term in
Paragraph 4.1(c) hereof.
"Disclosure Schedule" means a schedule, in form and substance
satisfactory to Bank, which (i) has been certified as true and correct
by an Authorized Officer of Borrower, (ii) has been delivered to Bank
on or prior to the date hereof, (iii) describes, in reasonable detail,
all exceptions to the representations, warranties and covenants of
Borrower herein, and (iv) is clearly identified on its face as the
Disclosure Schedule for purposes hereof. Any reference herein to a
"Schedule" shall be deemed to refer to a part of the Disclosure
Schedule.
"Early Termination Date" means the date, pursuant to Paragraph
12.3, upon which, whether by notice or by right hereunder, Bank's
obligations to extend credit hereunder is terminated.
"EBITDA" means, with respect to any fiscal period of Borrower,
Borrower's (a) net income for such period, plus (b) the aggregate
amounts deducted in determining such net income in respect of (i)
Interest Expense, (ii) federal and state income taxes, (iii)
depreciation, (iv) amortization and (v) extraordinary losses minus (c)
extraordinary gains, each determined on a consolidated basis and in
accordance with GAAP consistently applied.
"Eligible Accounts Receivable" means an Account Receivable
arising in the ordinary course of Borrower's business from the sale of
goods or rendition of services which Bank, in its reasonable credit
judgment, deems to be an Eligible Account Receivable. Without limiting
the generality of the foregoing, no Account Receivable shall be an
Eligible Account Receivable if: (i) it arises out of a sale made by
Borrower to a Subsidiary or an Affiliate of such Borrower or to a
Person controlled by an Affiliate of Borrower; or (ii) it is unpaid for
more than ninety (90) days after the original due date shown on the
invoice; or (iii) it arises from service charges or similar charges or
is subject to a debit memo(s), to the extent of any such service
charges or similar charge or debit memo(s), or (iv) twenty-five percent
(25%) or more of the Accounts Receivable from the Obligor are not
deemed Eligible Accounts Receivable hereunder; or (v) the total unpaid
Accounts Receivable of the Obligor exceed twenty-five percent (25%) of
the net amount of all Accounts Receivable owing to Borrower, to the
extent of such excess; or (vi) any covenant, representation or warranty
contained in this Agreement with respect to such Account Receivable has
been breached; or (vii) the Obligor is also Borrower's creditor or
supplier, or the Obligor has disputed liability with respect to such
Account Receivable, or the Obligor has made any claim with respect to
any other Account Receivable due from such Obligor to Borrower, or the
Account Receivable otherwise is subject to any right of set-off by the
Obligor, all to the extent of such
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dispute, claim or asserted right of set-off; or (viii) the Obligor has
commenced a voluntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or made an assignment for the benefit
of creditors, or a decree or order for relief has been entered by a
court having jurisdiction in the premises in respect of the Obligor in
an involuntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or any other petition or other
application for relief under the federal bankruptcy laws has been filed
against the Obligor, or if the Obligor has failed, suspended business,
ceased to be solvent, or consented to or suffered a receiver, trustee,
liquidator or custodian to be appointed for it or for all or a
significant portion of its assets or affairs; or (ix) it arises from a
sale to an Obligor outside the United States, unless the sale is on
letter of credit, credit insurance, guaranty or acceptance terms, in
each case acceptable to Bank in its reasonable discretion; or (x) it
arises from a sale to the Obligor on a ▇▇▇▇-and-hold, guaranteed sale,
sale-or-return, sale-on-approval, consignment or any other repurchase
or return basis; or (xi) Bank believes, in its reasonable judgment,
that collection of such Account Receivable is insecure or that payment
thereof is doubtful or will be delayed by reason of the Obligor's
financial condition; or (xii) the Obligor is the United States of
America or any department, agency or instrumentality thereof, unless
Borrower assigns its right to payment of such Account Receivable to
Bank, in form and substance satisfactory to Bank, so as to comply with
the Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section
203 et seq.); or (xiii) the Obligor is located in the State of
Louisiana, the State of New Jersey or the State of Minnesota unless
Borrower has filed a notice of business activities report with the
appropriate officials in such state for the then current year; or (xiv)
the Account Receivable is subject to a Lien other than a Permitted
Lien; or (xv) the goods giving rise to such Account Receivable have not
been shipped or delivered to or have been rejected by the Obligor or
the services giving rise to such Account Receivable have not been
performed by Borrower and accepted by the Obligor or the Account
Receivable otherwise does not represent a final sale; or (xvi) the
Account Receivable is evidenced by chattel paper or an instrument of
any kind, or has been reduced to judgment; or (xvii) Borrower has made
any agreement with the Obligor for any deduction therefrom, except for
discounts or allowances which are made in the ordinary course of
business for returns, rebates, cash discounts, volume discounts,
performance discounts, co-op advertising discounts, price concession
discounts, service charges or credit discounts or allowances and which
discounts or allowances are reflected in the calculation of the face
value of each invoice related to such Account Receivable, to the extent
of such deduction; or (xviii) after the issuance of an invoice
evidencing an Account Receivable, Borrower has made an agreement with
the Obligor to extend the time of payment thereof except for extensions
in the normal course of business not exceeding ninety (90) days; or
(xix) the Account Receivable arises from a retail sale of goods to a
Person who is purchasing same primarily for personal, family or
household purposes.
"Eligible Inventory" means Inventory of Borrower (other than
packaging materials and supplies) which Bank, in the exercise of its
reasonable credit judgment, deems to be Eligible Inventory. Without
limiting the generality of the foregoing, no Inventory shall be
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Eligible Inventory unless, in Bank's opinion, it (i) is raw materials
or finished goods that is, in Bank's opinion, readily marketable in its
current form or is raw materials, (ii) is in good, new and saleable
condition, (iii) is not obsolete or unmerchantable, (iv) meets all
standards imposed by any governmental agency or authority, (v) is at
all times subject to Bank's duly perfected, first priority security
interest and no other Lien except a Permitted Lien, (vi) is situated at
a location in the United States, and (vii) in the case of Inventory
stored in a warehouse or other facility owned by a Person other than
Borrower, such Inventory is subject to a bailee agreement acceptable in
form and substance to Bank.
"Environmental Claim" means any notice of violation, claim,
demand, abatement order or other order or direction (conditional or
otherwise) by any governmental authority for any damage, including,
without limitation, personal injury (including sickness, disease or
death), tangible or intangible property damage, contribution,
indemnity, indirect or consequential damages, damage to the
environment, nuisance, pollution, release of any Hazardous Material to
the environment, contamination or other adverse effects on the
environment, or for fines, penalties or restrictions, resulting from or
based upon (i) the occurrence of a Release (whether sudden or
non-sudden or accidental or non-accidental) of, or exposure to, any
Hazardous Material, in, into or onto the environment at, in, by, from,
onto or related to any Facility, (ii) the generation, use, handling,
transportation, storage, treatment or disposal of Hazardous Materials
in connection with the operation of any Facility, or (iii) the
violation, or alleged violation, of any Environmental Laws or any
Governmental Authorizations relating to environmental matters in
connection with the Facilities.
"Environmental Laws" means all statutes, ordinances, orders,
rules, regulations, plans, policies, or decrees and the like relating
to (i) environmental matters, including, without limitation, those
relating to fines, injunctions, penalties, damages, contribution, cost
recovery compensation, losses or injuries resulting from the Release or
threatened Release of Hazardous Materials, (ii) the generation, use,
handling, transportation, storage, treatment or disposal of Hazardous
Materials or (iii) occupational safety and health, industrial hygiene,
land use or the protection of human, plant or animal health or welfare
related to Hazardous Materials, in any manner applicable to Borrower or
an Affiliate or any of their respective properties, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. ss.9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. ss.1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss.6901 et seq.), the Federal
Water Pollution Control Act (33 U.S.C. ss.1251 et seq.), the Clean Air
Act (42 U.S.C. ss.7401 et seq.), the Toxic Substances Control Act (15
U.S.C. ss.2601 et seq.), the Occupational Safety and Health Act (29
U.S.C. ss.651 et seq.) and the Emergency Planning and Community
Right-To-Know Act (42 U.S.C. ss.11001 et seq.), each as amended or
supplemented, and any analogous present or future local, state and
federal statutes and regulations promulgated pursuant thereto, each as
in effect as of the date of determination.
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"Equipment" shall have the meaning ascribed to it in the Uniform
Commercial Code, as then in effect in the State of Illinois.
"Equipment Loan" means and includes the Loan made under the
Equipment Loan Credit Commitment, unless the context in which such term
is used shall otherwise require.
"Equipment Loan Base Margin" means one-half of one percent (0.5%).
"Equipment Loan Credit Commitment" shall have the meaning assigned
to such term in Paragraph 2.2 hereof.
"Equipment Note" means that certain Equipment Note of even date
herewith in the original aggregate maximum principal amount of EIGHT
HUNDRED THOUSAND DOLLARS ($800,000), as the same may be amended,
modified or restated from time to time, together with any renewals
thereof or exchanges or substitutes therefor.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time and, unless the context
otherwise requires, the regulations promulgated thereunder and any
successor statute.
"ERISA Affiliate" means each trade or business (whether or not
incorporated) which together with Borrower or an Affiliate would be
deemed to be a "single employer" within the meaning of Section 4001(b)
of ERISA or, where applicable, would be treated as a "single employer"
under Section 412(c)(11) of the Code.
"ERISA Termination Event" means (i) a "Reportable Event" described
in Section 4043 of ERISA (other than a "Reportable Event" not subject
to the provision for 30-day notice to the PBGC under such regulations),
(ii) the withdrawal of Borrower or any Affiliate from a Plan during a
plan year in which it was a "substantial employer," as defined in
Section 4001(a) of ERISA, including a cessation of operations that is
treated as a withdrawal by a "substantial employer" under Section
4062(e) of ERISA, (iii) the filing of a notice of intent to terminate a
Plan or the treatment of a Plan amendment as a termination under
Section 4041 of ERISA, (iv) the institution of proceedings to terminate
a Plan by the PBGC, (v) any other event or condition which in the
reasonable judgment of Bank is likely to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to or any ERISA administer, any Plan, or (vi) the partial or
complete withdrawal of Borrower or any ERISA Affiliate from a
Multiemployer Plan.
"Event of Default" shall have the meaning assigned to such term in
Paragraph 12.1 hereof.
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"Excess Interest" shall have the meaning assigned to such term in
Paragraph 4.9 hereof.
"Facilities" or "Facility" means any and all real property
(including, without limitation, all buildings, or other improvements
located thereon) now, hereafter or heretofore, owned, leased, operated
or used by Borrower, its Subsidiaries or any of their respective
successors and assigns.
"Funded Debt" means, without duplication, (i) indebtedness for
borrowed money, including, but not limited to, all Loans incurred under
this Agreement, (ii) obligations evidenced by bonds, debentures, notes
or other similar instruments, (iii) the face amount of all letters of
credit issued for the account of Borrower and, without duplication, all
drafts drawn thereunder, (iv) obligations to pay the deferred purchase
price of property or services, (v) obligations as lessee under leases
which have been or should be, in accordance with GAAP, recorded as
capital leases, (vi) obligations under direct or indirect guaranties in
respect of, and obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of other of the kinds referred
to in clauses (i) through (v) above, (vii) all net obligations under
any interest rate swap agreements, any interest rate cap agreement, any
interest rate collar agreement or other similar agreement or
arrangement, and (viii) all obligations to pay a specified purchase
price for goods or services whether or not delivered or accepted (i.e.,
take-or-pay and similar obligations).
"GAAP" means United States generally accepted accounting
principles, as in effect from time to time.
"GAAP Net Worth" means net worth determined in accordance with
GAAP as set forth in the most recent financial statements of Borrower.
"General Intangibles" means all choses in action, causes of action
and all other intangible property of Borrower of every kind and nature
now owned or hereafter acquired by Borrower, including, without
limitation, corporate and other business records, deposit accounts,
inventions, designs, patents, patent and trademark registrations and
applications, trademarks, trade names, trade secrets, goodwill,
copyrights, registrations, licenses, franchises, deferred tax benefits,
tax refund claims, prepaid expenses, computer programs, covenants not
to compete, customer lists and mailing lists, contract rights,
indemnification rights, causes of action and any letters of credit,
guarantee claims, security interests or other security held by or
granted to Borrower.
"Governmental Authorization" means any permit, license,
authorization, plan, directive, consent order or consent decree of or
from any federal, state or local governmental authority, agency or
court having jurisdiction over Borrower or any Facility.
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"Guarantors" means each of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇.
"Guaranty" means that certain Joint and Several Guaranty of even
date herewith made by each of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇ in
favor of Bank, as the same may be amended, modified or supplemented
from time to time.
"Hazardous Materials" means (i) any chemical, material or
substance defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely
hazardous waste," "restricted hazardous waste," "infectious waste,"
"toxic substances" or any other formulations intended to define, list
or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity,
reproductive toxicity, "TCLP toxicity" or "EP toxicity" or words of
similar import under any applicable Environmental Laws or publications
promulgated pursuant thereto, (ii) any oil, petroleum or petroleum
derived substance, (iii) any drilling fluids, produced waters and other
wastes associated with the exploration, development or production of
crude oil, natural gas or geothermal resources, (iv) any flammable
substances or explosives, (v) any radioactive materials, (vi) asbestos
in any form (which is or could become friable), (vii) urea formaldehyde
foam insulation, (viii) electrical equipment which contains any oil or
dielectric fluid containing levels of polychlorinated biphenyls in
excess of fifty parts per million, (ix) pesticides or (x) any other
chemical, material or substance, exposure to which is prohibited,
limited or regulated by any governmental authority or which may or
could pose a hazard to the health and safety of the owners, occupants
or any Persons in the vicinity of the Facilities.
"Interest Expense" means, for any period, the sum of all interest
in respect of Funded Debt of Borrower accrued or capitalized during
such period (whether or not actually paid during such period),
determined in accordance with GAAP.
"Interest Coverage Ratio" means, for any period the ratio of (i)
EBITDA to (ii) Interest Expense, as determined in accordance with GAAP.
"Interest Period" means with respect to LIBOR Loans, the period
used for the computation of interest commencing on the date the
relevant LIBOR Loan is initiated, effected by conversion or continued,
as the case may be, and concluding on the date one (1) month, two (2)
months, three (3) months or six (6) months thereafter, at Borrower's
option, with any subsequent Interest Period commencing on the last day
of the immediately preceding Interest Period and concluding one (1)
month, two (2) months, three (3) months or six (6) months thereafter,
at Borrower's option; provided, however, that no Interest Period for
any LIBOR Loan made under the Revolving Credit Commitment may extend
beyond the Maturity Date.
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"Inventory" shall have the meaning ascribed to it in the Uniform
Commercial Code, as then in effect in the State of Illinois, and shall
include, without limitation, all goods held or being processed for sale
or lease including all materials, work-in-process, finished goods,
supplies and other goods customarily classified as Inventory.
"Invoice Price" means the invoice price of each piece of Equipment
to be purchased by Borrower, excluding all costs associated with
shipping, handling and installation.
"Letter of Credit" means a standby, commercial import or other
letter of credit at any time issued by Bank for the account of
Borrower.
"Letter of Credit Limit" means Two Million Dollars ($2,000,000).
"Letter of Credit Obligations" means, as at the time of
determination thereof, an amount in U.S. Dollars equal to all
liabilities, whether actual or contingent, of Borrower with respect to
all Letters of Credit, including the sum of (a) Reimbursement
Obligations and (b) the aggregate undrawn face amount of the
outstanding Letters of Credit.
"Leverage Coverage Ratio" means, as of any date, the ratio of (i)
total Liabilities to (ii) Tangible Net Worth, as determined in
accordance with GAAP.
"Liabilities" means, as of any date, the aggregate amount of all
liabilities of Borrower, as determined in accordance with GAAP.
"LIBOR" means, for each Interest Period, the rate of interest per
annum as determined by Bank (rounded upward, if necessary, to the
nearest whole multiple of one-sixteenth of one percent (1/16th of 1%)
or such other integral multiple thereof at which interest rates for
LIBOR-based loans are commonly quoted to major banks in the interbank
eurodollar market) at which deposits of United States Dollars in
immediately available and freely transferable funds would be offered at
11:00 a.m., Chicago time, three (3) Business Days prior to the
commencement of such Interest Period by the principal offshore funding
office of Bank to major banks in the interbank eurodollar market upon
request by such major banks for a period equal to such Interest Period
and in an amount equal to the principal amount of the LIBOR Loan to be
outstanding from Bank during such Interest Period. Each determination
of LIBOR made by Bank in accordance with this paragraph shall be
conclusive and binding on Borrower except in the case of manifest
error.
"LIBOR Loan" means all or a portion of a Revolving Loan bearing
interest at the Adjusted LIBOR Rate plus the LIBOR Margin.
"LIBOR Margin" shall mean 2.25%.
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"Lien" means, with respect to the Collateral, or any asset of
Borrower, any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, any
lease in the nature thereof and the filing of or agreement to give any
financing statement under the Uniform Commercial Code in effect in any
jurisdiction).
"Loan" or "Loans" means and includes all Revolving Loans and all
Letters of Credit issued under the Revolving Credit Commitment, in each
case including all LIBOR Loans and all Base Rate Loans thereunder, and
the Equipment Loan made under the Equipment Loan Credit Commitment,
unless the context in which such term is used shall otherwise require.
"Maturity Date" means (a) in the case of the Revolving Credit
Commitment April ___, 2001; and (b) in the case of the Equipment Loan
Credit Commitment April ___, 2004.
"Maximum Rate" shall have the meaning assigned to such term in
Paragraph 4.9 hereof.
"Multiemployer Plan" means a plan defined as such in Section
4001(a)(3) of ERISA to which contributions have been made by Borrower
or an ERISA Affiliate.
"Notes" means collectively, the Revolving Note and the Equipment
Note.
"Obligor" means any Person who is and/or may become obligated to
Borrower or any Subsidiary under or on account of Accounts Receivable.
"Other Agreements" means all agreements, instruments and
documents, including, without limitation, letters of credit,
guaranties, mortgages, deeds of trust, pledges, powers of attorney,
consents, assignments, contracts, notices, security agreements, leases,
financing statements and all other written matter heretofore, now
and/or from time to time hereafter executed by and/or on behalf of
Borrower and delivered to Bank including, without limitation, the
Notes, the Guaranty, the Subordination Agreements and the Patent,
Trademark and License Mortgage.
"Patent, Trademark and License Mortgage" means that certain
Patent, Trademark and License Mortgage of even date herewith made by
Borrower in favor of Bank, as amended, modified or restated from time
to time.
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
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"Permitted Investments" shall have the meaning assigned to such
term in Paragraph 11.3(f) hereof.
"Permitted Liens" shall have the meaning assigned to such term in
Paragraph 11.3(a) hereof.
"Person" means and includes an individual, a partnership, a joint
venture, a corporation (whether or not for profit), a trust, an
unincorporated organization, a government or any department or agency
thereof or any other entity or organization.
"Plan" means, at any time, any single-employer plan, as defined in
Section 4001(a) and subject to Title IV of ERISA, which is maintained,
or at any time during the five calendar years preceding the time in
question was maintained, for employees of Borrower or a Subsidiary.
"Pre-Tax Income" means the pre-tax income of Borrower as reflected
in Borrower's most recent financial statements, as determined in
accordance with GAAP.
"Reimbursement Obligations" means, at any time, the aggregate of
the obligations of Borrower to Bank in respect of all unreimbursed
payments or disbursements made by Bank under or in respect of the
Letters of Credit.
"Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dumping,
leaching, or migration of Hazardous Materials into the indoor or
outdoor environment (including, without limitation, the abandonment or
disposal of any barrels, containers or other closed receptacles
containing any Hazardous Materials), or into or out of any Facility.
"Reserve Percentage" means, for the purpose of computing the
Adjusted LIBOR Rate, the reserve requirement imposed by the Board of
Governors of the Federal Reserve System (or any successor) under
Regulation D on Eurocurrency liabilities (as such term is defined in
Regulation D) for the applicable Interest Period as of the first day of
such Interest Period, but subject to any amendments of such reserve
requirement by such Board or its successor, and taking into account any
transitional adjustments thereto becoming effective during such
Interest Period. For purposes of this definition, LIBOR Loans shall be
deemed to be Eurocurrency liabilities as defined in Regulation D
without benefit of or credit for prorations, exemptions or offsets
under Regulation D.
"Revolving Credit Commitment" shall have the meaning assigned to
such term in Paragraph 2.1 hereof.
"Revolving Loans" means and includes all Loans made under the
Revolving Credit Commitment, unless the context in which such term is
used shall otherwise require.
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"Revolving Loan Borrowing Base" means, as at any date of
determination thereof, an amount equal to the lesser of (i) the amount
then available under the Revolving Credit Commitment and (ii) an amount
equal to the sum of (A) eighty-five percent (85%) of the net amount of
Eligible Accounts Receivable outstanding at such date and (B) sixty
percent (60%) of Eligible Inventory at such date; provided, however,
that the aggregate amount of advances for Eligible Inventory under the
Revolving Credit Commitment shall not exceed $10,000,000 at any time.
"Revolving Note" means that certain Revolving Note of even date
herewith in the maximum aggregate principal amount of TWENTY-FIVE
MILLION DOLLARS ($25,000,000), as the same may be amended, modified or
restated from time to time, and together with any renewals thereof or
exchanges or substitutes therefor.
"Stock" means all shares, interests, participation or other
equivalents, however designated, of or in a corporation or limited
liability company, whether or not voting, including but not limited to
common stock, warrants, preferred stock, convertible debentures, and
all agreements, instruments and documents convertible, in whole or in
part, into any one or more or all of the foregoing.
"Subordinated Debt" means, as of any date, the amount of Funded
Debt which is subordinated in right of payment to the Loan on terms
satisfactory to Bank in each particular case.
["Subordination Agreements" means those certain Subordination
Agreements of even date herewith between Bank and each holder of
Subordinated Debt, as the same may be amended, modified or supplemented
from time to time.] [CONFIRM BASED ON UCC SEARCHES]
"Subsidiary" means any corporation of which a Person owns,
directly or indirectly through one or more intermediaries, more than
fifty percent (50%) of the voting stock at the time of determination.
"Tangible Net Worth" means, at any time, GAAP Net Worth plus
Subordinated Debt after subtracting therefrom the amount of any General
Intangibles, amounts due from Affiliates and the amount of other assets
classified as intangible by Bank in the exercise of its sole
discretion.
"Termination Date" means the earliest to occur of (i) the Maturity
Date or (ii) the Early Termination Date.
1.2 Certain UCC and Accounting Terms. Except as otherwise defined in
this Agreement or the Other Agreements, all words, terms and/or phrases used
herein and therein shall be defined
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by the applicable definition therefor (if any) in the Uniform Commercial Code as
then in effect in the State of Illinois. Notwithstanding the foregoing, any
accounting terms used in this Agreement which are not specifically defined
herein shall have the meanings customarily given to them in accordance with
GAAP. All financing computations hereunder shall be computed, unless otherwise
specifically provided herein, in accordance with GAAP as consistently applied.
20 LOANS: BANK'S COMMITMENTS AND BORROWING PROCEDURES
2.1 Revolving Credit Commitment. On the terms and subject to the
conditions set forth in this Agreement, Bank agrees to make revolving credit
available and Letters of Credit available to Borrower from time to time prior to
the Termination Date with respect to Revolving Loans in such aggregate amounts
as Borrower may from time to time request but in no event exceeding the maximum
principal amount available of Twenty-Five Million Dollars ($25,000,000) in the
aggregate (the "Revolving Credit Commitment"); provided, however, that in no
event shall the Revolving Credit Commitment at any one time exceed the Revolving
Loan Borrowing Base nor shall outstanding Letters of Credit issued under the
Revolving Credit Commitment at any time exceed the Letter of Credit Limit. The
Revolving Credit Commitment shall be available to Borrower by means of Revolving
Loans, it being understood that Revolving Loans and Letters of Credit may be
repaid and used again during the period from the date hereof to and including
the Termination Date with respect to Revolving Loans, at which time the
Revolving Credit Commitment shall expire. The Revolving Credit may be repaid at
any time without premium or penalty.
2.2 Equipment Loan Credit Commitment. On the terms and subject to the
conditions set forth in this Agreement, Bank agrees to make the Equipment Loan
to Borrower in the maximum principal amount of EIGHT HUNDRED THOUSAND DOLLARS
($800,000) (the "Equipment Loan Credit Commitment"); provided, however, that in
no event shall the Equipment Loan at any time exceed [eighty percent (80%) of
the Invoice Price] of the Equipment to be acquired by Borrower. Amounts borrowed
in respect of the Equipment Loan and repaid may not be reborrowed. [DISCUSS]
2.3 Letters of Credit.
(a) Subject to all of the terms and conditions of this Agreement,
including, but not limited to, the availability of funds pursuant to Paragraph
2.1 above with respect to the Revolving Credit Commitment, if requested to do so
by Borrower, Bank shall issue its or cause to be issued Letters of Credit for
the account of Borrower under the Revolving Credit Commitment; provided that the
aggregate face amount of all Letters of Credit outstanding at any time shall not
exceed the Letter of Credit Limit. No Letter of Credit may have an expiration
date that is later than the Maturity Date with respect to Revolving Loans. Any
amounts paid by Bank so designated by the Authorized Officer in connection with
any Letter of Credit (i) shall become part of Borrower's Liabilities, (ii) shall
be paid from the proceeds of a Revolving Loan requested pursuant to Paragraph
2.1 above, to the extent Bank is required to make a Revolving Loan pursuant to
the terms
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hereof, and (iii) otherwise, shall be payable as set forth in Paragraph 2.7
below. In no event shall Bank be required to issue or cause to be issued Letters
of Credit at any time there exists an Event of Default or an event which with
passage of time or giving of notice or both would mature into an Event of
Default.
2.4 Borrowing Procedures.
(a) Whenever Borrower desires to continue or incur Revolving
Loans hereunder, Borrower shall give Bank at its "Address for Notices" set forth
on the signature page hereof, prior to 11:00 A.M. (Chicago time), at least three
(3) Business Days' prior written notice (or telephonic notice promptly confirmed
in writing) of each Borrowing of LIBOR Loans and written notice (or telephonic
notice promptly confirmed in writing) on the day of each Borrowing of Base Rate
Loans under the Revolving Credit Commitment to be made hereunder. Each such
notice (each a "Notice of Borrowing") with respect to Revolving Loans and LIBOR
Loans shall be irrevocable and shall specify (i) the aggregate principal amount
of the Revolving Loans to be made pursuant to each Borrowing, (ii) the date of
Borrowing (which shall be a Business Day) and (iii) whether any respective
Borrowing shall consist of Base Rate Loans or LIBOR Loans and, if LIBOR Loans,
the Interest Period to be initially applicable thereto. In addition, each Notice
of Borrowing shall be accompanied by a Borrowing Base Certificate in the form
attached hereto as Exhibit A duly executed and completed by the Chief Financial
Officer of Borrower.
(b) Whenever Borrower desires to incur Equipment Loans (if
such Equipment Loan has not been funded on the Closing Date) hereunder, Borrower
shall give Bank at its "Address for Notices" set forth on the signature page
hereof, prior to 11:00 A.M. (Chicago time), at least three (3) Business Days'
prior written notice (or telephonic notice promptly confirmed in writing) of
each Borrowing of Equipment Loans under the Equipment Loan Credit Commitment to
be made hereunder. Each such notice of borrowing of Equipment Loans shall be
accompanied by a copy of the original invoice of each piece of Equipment to be
financed by Borrower, certified as true and correct by the President of
Borrower, and shall specify (i) the aggregate principal amount of the Equipment
Loan (which shall not exceed eighty percent (80%) of the Invoice Price); and
(ii) the date of the Borrowing. Prior to funding any Equipment Loan, Borrower
shall deliver to Bank an executed Equipment Note and a UCC-1 Financing Statement
evidencing Bank's first priority security interest in such Equipment, together
with such other documents, certificates and agreements as Bank may request.
(c) Without in any way limiting the obligation of Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, Bank
may prior to receipt of written confirmation act without liability upon the
basis of such telephonic notice, believed by Bank in good faith to be from an
Authorized Officer of Borrower. In each such case, Borrower hereby waives the
right to dispute Bank's record of the terms of such telephonic notice.
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2.5 Conditions for Issuance of Letters of Credit. In addition to being
subject to the satisfaction of the conditions contained in Paragraphs 2.6, 5.7
and 6.1 below, the obligation of Bank to issue any Letter of Credit is subject
to the satisfaction in full of the following conditions:
(a) the aggregate maximum amount then available for drawing under
Letters of Credit issued (and outstanding) by Bank, after giving effect to any
Letter of Credit requested hereunder, shall not exceed (i) any limit imposed by
law or regulation upon Bank or (ii) the Letter of Credit Limit;
(b) Borrower shall have delivered to Bank at such times and in
such manner as Bank may reasonably prescribe such documents and materials,
including, without limitation, an application therefor on Bank's standard form,
as may be required pursuant to the terms of the proposed Letter of Credit and
application therefor and the proposed Letter of Credit shall be reasonably
satisfactory to Bank as to form and content;
(c) as of the date of issuance, no order, judgment or decree of
any court, arbitrator or governmental authority shall purport by its terms to
enjoin or restrain Bank from issuing the Letter of Credit and no law, rule or
regulation applicable to Bank and no request or directive (whether or not having
the force of law) from any governmental authority with jurisdiction over Bank
shall prohibit or request that Bank refrain from the issuance of Letters of
Credit generally or the issuance of that Letter of Credit; and
(d) Bank will not be required to amend or renew a Letter of Credit
if Bank would have no obligation to issue the Letter of Credit in its amended or
renewed form.
2.6 Procedure for Issuance of Letters of Credit. (a) The Authorized
Officer shall give Bank three (3) Business Days' prior written notice of any
requested issuance of a Letter of Credit under this Agreement (except that, in
lieu of such written notice, the Authorized Officer may give Bank telephonic
notice of such request if confirmed in writing by delivery to Bank (i)
immediately of a telecopy of the written notice required hereunder which has
been signed by the Authorized Officer requesting the Letter of Credit containing
all information required to be contained in such written notice and (ii)
promptly (but in no event later than the requested time of issuance) of a copy
of the written notice required hereunder containing the original signature of
the Authorized Officer; such notice shall be irrevocable and shall specify the
stated amount of the Letter of Credit requested, the effective date (which day
shall be a Business Day) of issuance of such requested Letter of Credit, the
date on which such requested Letter of Credit is to expire (which date shall be
a Business Day and shall in no event be later than the Maturity Date applicable
to Revolving Loans), the purpose for which such Letter of Credit is to be
issued, and the applicable Person for whose benefit the requested Letter of
Credit is to be issued. At the time such request is made, the Authorized Officer
shall also provide Bank with a copy of the form of the Letter of Credit it is
requesting be issued. Such notice, to be effective, must be received by Bank not
later than 2:00 P.M. (Chicago time) or the time agreed upon by Bank and Borrower
on the last Business Day on which notice can be given under this
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Paragraph 2.6. Subject to the terms and conditions of this Paragraph 2.6, Bank
shall, on the requested date, issue a Letter of Credit on behalf of Borrower in
accordance with Bank's usual and customary business practices. Bank shall not
extend or amend any Letter of Credit unless the requirements of this Paragraph
2.6 are met as though a new Letter of Credit was being requested and issued.
2.7 Reimbursement Obligations for Letter of Credit.
(a) Borrower agrees to pay to Bank the amount of all
Reimbursement Obligations, interest and other amounts payable to Bank under or
in connection with any Letter of Credit issued on behalf of Borrower immediately
when due, irrespective of any claim, set-off, defense or other right which
Borrower may have at any time against Bank or any other Person, under all
circumstances, including without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this
Agreement or any of the Other Agreements;
(ii) the existence of any claim, setoff, defense or
other right which Borrower may have at any time against a beneficiary
named in a Letter of Credit or any transferee of any Letter of Credit
(or any Person for whom any such transferee may be acting), Bank
(except in instances relating to the gross negligence or wilful
misconduct of Bank), or any other Person, whether in connection with
this Agreement, any Letter of Credit, the transactions contemplated
herein or any unrelated transactions (including any underlying
transactions between Borrower and the beneficiary named in any Letter
of Credit);
(iii) any draft, certificate or any other document presented
under the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect (except in instances relating to the gross
negligence or wilful misconduct of Bank);
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of this Agreement or the
Other Agreements; or
(v) the occurrence of any Event of Default.
(b) Bank shall promptly notify Borrower of any draw under a
Letter of Credit. Borrower shall reimburse Bank for drawings under a Letter of
Credit issued by it no later than the Business Day after the payment by Bank.
Unless Borrower shall have made such payment to Bank on such date, Borrower
shall be deemed to have elected to fulfill its Reimbursement Obligation by
requesting a Revolving Loan (as a Base Rate Loan) in an amount equal to the
amount paid by Bank in respect of such drawing under the Letter of Credit. No
notice from the Authorized Officer shall be required and such Revolving Loan
shall be disbursed by Bank notwithstanding any failure to satisfy any conditions
for disbursement of a Revolving Loan set forth herein (including restatement
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of all representations and warranties) and, to the extent of the Revolving Loans
so disbursed, the Reimbursement Obligation of Borrower hereunder shall be deemed
satisfied. If any Reimbursement Obligation with respect to any Letter of Credit
is not paid by Borrower and there is no availability to make a Revolving Loan
under Paragraph 2.1, then an Event of Default shall be deemed to have occurred
hereunder by virtue of non-payment of Borrower's Liabilities and the
Reimbursement Obligation shall bear interest from the date of the relevant
drawing under the pertinent Letter of Credit at the Default Rate.
2.8 Nature of Obligations.
(a) As between Borrower and Bank, Borrower assumes all risks
of the acts and omissions of, or misuse of the Letters of Credit by, the
respective beneficiaries of the Letters of Credit; provided, that the foregoing
is not intended to affect any rights Borrower may have against any such
beneficiary. In furtherance and not in limitation of the foregoing, Bank shall
not be responsible for (i) the forms, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in connection
with the application for and issuance of any Letter of Credit, even if it should
in fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a Letter of Credit
or the rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason; (iii) failure of
the beneficiary of a Letter of Credit to comply fully with conditions required
in order to draw upon such Letter of Credit; (iv) errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise; (v) errors in interpretation of technical
terms; (vi) misapplication by the beneficiary of a Letter of Credit of the
proceeds of any drawing under such Letter of Credit; and (vii) any consequences
arising from causes beyond the control of Bank and to the extent not avoidable
by Bank by the observance of reasonable commercial standards prevailing in the
geographic area where Bank is located, except to the extent resulting from the
gross negligence or wilful misconduct of the Bank.
(b) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by Bank
under or in connection with the Letters of Credit or any related certificates
shall not put Bank under any resulting liability to Borrower or relieve Borrower
of any of its obligations hereunder to Bank except to the extent resulting from
the gross negligence or wilful misconduct of Bank.
2.9 Letter of Credit Collateral Account.
(a) Upon the occurrence of an Event of Default, Borrower hereby
agrees that it will, until the final expiration date of any Letter of Credit and
thereafter as long as any amount is payable to Bank in respect of any Letter of
Credit and whether or not this Agreement is then in effect, maintain a special
collateral account (the "Letter of Credit Collateral Account") at the Bank's
office at the address specified on the signature page hereof, in the name of
Borrower but under the sole dominion and control of Bank and in which Borrower
shall have no interest other than as set
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forth below. If this Agreement terminates for any reason and any Letters of
Credit remain outstanding beyond the Termination Date, Borrower shall
immediately do one or more of the following: (i) establish (if none existed) and
deposit in the Letter of Credit Collateral Account for the benefit, of Bank, an
amount of cash equal to one hundred percent (100%) of the sum of the aggregate
maximum amount remaining available to be drawn under the remaining outstanding
Letters of Credit (assuming compliance with all conditions for drawing
thereunder) (herein the "Collateral Amount"), (ii) deliver to Bank, cash
equivalents in a face amount, which when discounted at Bank's customary advance
rate for collateral of that type, is at least equal to the Collateral Amount,
plus such pledge agreements, financing statements, control agreements and other
documents requested by Bank in order to perfect a first and prior perfected
security interest in such cash equivalents in favor of Bank, or (iii) provide
Bank with a letter(s) of credit in an aggregate amount at least equal to the
Collateral Amount, such letter(s) of credit to be in form and substance, and
issued by banks, satisfactory to Bank. Bank will invest any funds on deposit
from time to time in the Letter of Credit Collateral Account in cash
equivalents, as directed by the Borrower from time to time.
(b) Upon any Event of Default hereunder, (i) the obligations of
Bank to issue Letters of Credit shall terminate in accordance with [Paragraph
12.3] [CONFIRM] below and (ii) Borrower will be and become thereby
unconditionally obligated, without the need for demand or the necessity of any
act or evidence, to deliver to Bank, for deposit into the Letter of Credit
Collateral Account, an amount (the "Collateral Shortfall Amount") of cash or
cash equivalents equal to the excess, if any, of
(A) one hundred percent (100%) of the sum of the aggregate
maximum amount remaining available to be drawn under the Letters of
Credit (assuming compliance with all conditions for drawing thereunder)
issued by Bank and outstanding as of such time, minus
(B) the amount on deposit in the Letter of Credit Collateral
Account at such time that is free and clear of all rights and claims of
third parties and that has not been applied by Bank against Borrower's
Liabilities.
(c) Upon the occurrence and during the continuance of an Event of
Default, Bank may at any time or from time to time after funds are deposited in
the Letter of Credit Collateral Account, apply such funds to the payment of the
Borrower's Liabilities as shall from time to time have become due and payable by
Borrower to Bank under this Agreement or the Other Agreements. Borrower nor any
Person claiming on behalf of or through Borrower shall have any right to
withdraw any of the funds held in the Letter of Credit Collateral Account. After
all of Borrower's Liabilities have been indefeasibly paid in full, any funds
remaining in the Letter of Credit Collateral Account shall be returned by Bank
to Borrower, or paid to whoever may be legally entitled thereto at such time.
Bank shall exercise reasonable care in the custody and preservation of any funds
held in the Letter of Collateral Account and shall be deemed to have exercised
such care if such funds are accorded treatment substantially equivalent to that
which Bank accords its own property, it being
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understood that Bank shall not have any responsibility for taking any necessary
steps to preserve rights against any Persons with respect to any such funds.
2.10 All Loans to Constitute One Obligation. The Loans shall constitute
one general obligation of Borrower, and shall be secured by the security
interest in and Lien upon all of the Collateral and by all other security
interests, Liens, claims and encumbrances heretofore, now or at any time or
times hereafter granted by Borrower to Bank.
2.11 Use of Proceeds. Notwithstanding anything contained herein to the
contrary, Loans made available by Bank to Borrower, (a) in respect of the
Revolving Credit Commitment, must be drawn upon and used for general working
capital purposes and other general corporate purposes only and (b) in respect of
the Equipment Loan Credit Commitment, must be used to support purchases of
Equipment. Prior to making any Loan, Bank has the right to require Borrower to
provide Bank with evidence, satisfactory to Bank, that such Loans will be used
in accordance with this Paragraph 2.11.
30 LOANS: NOTES EVIDENCING LOANS
3.1 Revolving Note. The Revolving Loans made by Bank under the
Revolving Credit Commitment shall be evidenced by the Revolving Note
substantially in the form set forth in Exhibit B, with appropriate insertions,
dated the date hereof (or such other date prior thereto as shall be satisfactory
to Bank), payable to the order of Bank. The unpaid principal amount of the
Revolving Loan shall bear interest and be due and payable as provided in this
Agreement and the Revolving Note. Payments to be made by Borrower under the
Revolving Note shall be made at the time, in the amounts and upon the terms set
forth herein and therein.
3.2 Equipment Note. The Equipment Loan made by Bank under the
Equipment Loan Credit Commitment shall be evidenced by the Equipment Note
substantially in the form set forth in Exhibit C, with appropriate insertions,
dated the date hereof (or on or before the date of disbursement), payable to the
order of Bank. The unpaid principal amount of the Equipment Note shall bear
interest and be due and payable as provided in this Agreement and the Equipment
Note. Payments to be made by Borrower under the Equipment Note shall be made at
the time, in the amounts and upon the terms set forth herein and therein.
3.3 Recordation. The type, date and amount of each Loan made by Bank,
the interest rate, and the date and amount of each repayment of principal
received by Bank shall be recorded by Bank in its records. The aggregate unpaid
principal amount so recorded shall be prima facie evidence of the principal
amount owing and unpaid on each Note absent manifest error. The failure to so
record any such amount or any error in so recording any such amount shall not
limit or otherwise affect the obligations of Borrower hereunder or under the
Notes to repay the principal amount of the Loans together with all interest
accrued thereon.
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3.4 Loan Evidence. Loans made by Bank to Borrower pursuant to this
Agreement may or may not (at Bank's sole and absolute discretion) be evidenced
after the date hereof by notes or other instruments issued or made by Borrower
to Bank. Where such loans are not so evidenced, such loans shall be evidenced
solely by entries upon the ledgers, books, records and/or computer records of
Bank maintained for that purpose, which entries shall be rebuttably presumptive
evidence of such loans in the absence of manifest error.
40 LOANS: AMOUNTS; INTEREST; CHANGE IN CIRCUMSTANCES, ETC.
4.1 Interest Rates; Applicable Borrowing Amounts; Default Rate.
(a) The unpaid principal amount of (i) each Revolving Loan that
is a Base Rate Loan shall bear interest from the date of such Loan until
maturity (whether by acceleration or otherwise) at a rate per annum which shall
at all times be the Base Rate in effect from time to time, and (ii) the
Equipment Loan shall bear interest from the date of such Loan until maturity
(whether by acceleration or otherwise) at a rate per annum which shall at all
times be the Base Rate in effect from time to time plus the Equipment Loan Base
Margin, in each case with such interest payable in accordance with Paragraph
4.1(d) below.
(b) Each LIBOR Loan shall be in a minimum amount of $500,000 or
such greater amount which is an integral multiple of $500,000 and shall bear
interest on the unpaid principal amount thereof from the date of such LIBOR Loan
until maturity (whether by acceleration or otherwise) at a rate per annum equal
to the sum of the LIBOR Margin plus the Adjusted LIBOR Rate, with such interest
payable in accordance with Paragraph 4.1(d) below. More than one LIBOR Loan may
be incurred on any Business Day; provided, that at no time shall there be
outstanding more than three (3) LIBOR Loans hereunder.
(c) If an Event of Default shall have occurred and be continuing
hereunder, all LIBOR Loans shall convert to Base Rate Loans and all Loans shall
bear interest from the date of such Event of Default, payable on demand, at a
rate per annum (the "Default Rate") equal to the sum of three percent (3%) plus
the interest rate then in effect.
(d) Interest on Loans shall accrue from and including the date of
any such Loan to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Revolving Loan that is a Base Rate Loan, monthly
in arrears on the last Business Day of each calendar month, (ii) in respect of
each LIBOR Loan, on the last day of each Interest Period applicable thereto and,
in the case of an Interest Period of more than three (3) months, on the last
Business Day of each calendar quarter, (iii) in respect of the Equipment Loan,
monthly in arrears on the last Business Day of each month commencing with the
last Business Day of April, 1999 and (iv) in respect of each Loan, on any
prepayment or conversion (on the amount prepaid or converted), at maturity
(whether by acceleration or otherwise) and, after such maturity, on demand. With
respect
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to the Equipment Loan, scheduled principal payments are to be made monthly as
set forth in the Equipment Note.
(e) Bank, upon determining the interest rate for any borrowing or
reborrowing of LIBOR Loans for any Interest Period, shall promptly notify
Borrower thereof.
4.2 Computation of Interest. Interest on each Loan and the calculation
of the Unused Portion Fee shall be computed for the actual number of days
elapsed on the basis of a 360-day year. The interest rate applicable to each
Revolving Loan that is a Base Rate Loan and each Equipment Loan shall change
simultaneously with each change in the Base Rate.
4.3 Conversion and Reborrowing of Loans; Interest Periods.
(a) LIBOR Loans shall mature and become due and payable on the
last day of the Interest Period applicable thereto. Following the end of an
Interest Period, provided that no Event of Default has occurred and is
continuing, Borrower shall have the right, subject to the terms and conditions
of this Agreement, to reborrow through a new LIBOR Loan in whole or in part,
subject to Paragraph 4.1(b) above, any LIBOR Loan from any current Interest
Period into a subsequent Interest Period, provided that Borrower shall give Bank
notice of the reborrowing of any such LIBOR Loan as provided in Paragraph 2.4(a)
hereof.
(b) In the event that Borrower fails to give notice pursuant to
Paragraph 2.4(a) hereof to specify the Interest Period applicable to such
reborrowing, such Loan shall be reborrowed as a Base Rate Loan.
4.4 Change of Law. Notwithstanding any other provisions of this
Agreement or the Notes, if at any time Bank shall determine in good faith that
any change in applicable law or regulation or in the interpretation thereof
makes it unlawful or impossible for Bank to continue to maintain any LIBOR Loan,
Bank shall promptly give notice thereof (together with an explanation of the
reasons therefor) to Borrower and Bank, and the obligation of Bank to effect by
conversion or continue such LIBOR Loan under this Agreement shall terminate
until it is no longer unlawful or impossible for Bank to effect by conversion or
maintain such LIBOR Loan. Upon the receipt of such notice, Borrower may elect to
either (i) pay or prepay, as the case may be, the outstanding principal amount
of any such LIBOR Loan, together with all interest accrued thereon and all other
amounts payable to Bank under this Agreement, or (ii) convert the principal
amount of such affected LIBOR Loan to a Base Rate Loan available hereunder,
subject to the terms and conditions of this Agreement.
4.5 Unavailability of Deposits or Inability to Ascertain the LIBOR
Rate or Adjusted LIBOR Rate. Notwithstanding any other provision of this
Agreement or the Notes to the contrary, if prior to the commencement of any
Interest Period Bank shall determine in good faith (i) that deposits in the
amount of any LIBOR Loan scheduled to be outstanding are not available to Bank
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in the relevant market or (ii) by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the LIBOR
rate or Adjusted LIBOR Rate, then Bank shall promptly give notice thereof to
Borrower, and the obligation of Bank to effect by conversion or continue any
such LIBOR Loan in such amount and for such Interest Period shall terminate
until deposits in such amount and for the Interest Period selected by Borrower
shall again be readily available in the relevant market and adequate and
reasonable means exist for ascertaining the LIBOR rate or Adjusted LIBOR Rate,
as the case may be. Upon the giving of such notice, Borrower may elect to either
(i) pay or prepay, as the case may be, the outstanding principal amount of any
such LIBOR Loan, together with all interest accrued thereon and all other
amounts payable to Bank in respect of Revolving Loans under this Agreement or
(ii) convert the principal amount of such affected LIBOR Loan to a Base Rate
Loan available hereunder, subject to all the terms and conditions of this
Agreement.
4.6 Yield Protection, Etc.
(a) Increased Costs. If (x) Regulation D of the Board of
Governors of the Federal Reserve System, or (y) the adoption of any applicable
law, treaty, rule, regulation or guideline, or any change therein, or any change
in the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Bank or its lending branch with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency,
(i) shall subject Bank, its lending branch or any Loan to
any tax, duty, change, stamp tax, fee, deduction, withholding or other
charge in respect of this Agreement, any Loan, the Notes or the
obligation of Bank to make or maintain any Loan, or shall change the
basis of taxation of payments to Bank of the principal of or interest
on any Loan or any other amounts due under this Agreement in respect of
any Loan or its obligation to make or maintain any Loan (except for
changes in the rate of tax on the overall net income of Bank imposed by
the federal, state or local jurisdiction in which Bank's principal
executive office or its lending branch is located);
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Board of
Governors of the Federal Reserve System), special deposit or similar
requirement against assets of, deposits with or for the account of, or
credit extended by, Bank; or
(iii) shall impose on Bank any penalty with respect to the
foregoing or any other condition affecting this Agreement, any Loan,
the Notes or the obligation of Bank to make or maintain any Loan;
and the result of any of the foregoing is to increase the cost to (or to impose
a cost on) Bank of making or maintaining any Loan, or to reduce the amount of
any sum received or receivable by Bank
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under this Agreement or under the Notes with respect thereto, then Bank shall
notify Borrower after it receives final notice of any of the foregoing and,
within forty-five (45) days after demand by Bank (which demand shall be
accompanied by a statement setting forth the basis of such demand), Borrower
shall pay directly to Bank, such additional amount or amounts as will compensate
Bank for such increased cost or such reduction.
(b) Capital Adequacy. If, after the date hereof, either (i) the
introduction of or any change in or change in the interpretation of any law or
regulation or (ii) compliance by Bank with any guideline or request from any
central bank or other governmental authority (whether or not having the force of
law) affects or would affect the amount of capital required or expected to be
maintained by Bank or any corporation controlling Bank and Bank determines that
the amount of such capital is increased solely by or solely based upon the
existence of Bank's commitment to lend hereunder and other commitments of this
type, then, upon demand by Bank, Borrower shall immediately pay to Bank, from
time to time as specified by Bank, additional amounts sufficient to compensate
Bank in the light of such circumstances, to the extent that Bank reasonably
determines such increase in capital to be allocable to the existence of Bank's
commitment to lend hereunder.
4.7 Funding Indemnity. In the event Bank shall incur any loss, cost or
expense (including, without limitation, any loss of profit and any loss, cost or
expense incurred by reason of the liquidation or re-employment of deposits or
other funds required by Bank to fund or maintain any LIBOR Loan or the relending
or reinvesting of such deposits or amounts paid or prepaid to Bank) as a result
of:
(a) any payment of a LIBOR Loan on a date other than the last day
of the then applicable Interest Period;
(b) any failure by Borrower to effect by conversion or continue
any LIBOR Loan on the date specified in the notice given pursuant to Paragraph
2.4(a) hereof;
(c) any failure by Borrower to make any payment of principal or
interest when due on any LIBOR Loan, whether at stated maturity, by acceleration
or otherwise; or
(d) the occurrence of any Event of Default;
then, upon the demand by Bank, Borrower shall pay to Bank such amount as will
reimburse Bank for such loss, cost or expense. If Bank makes such a claim for
compensation under this Paragraph 4.7, Bank shall provide to Borrower a
certificate setting forth the amount of such loss, cost or expense in reasonable
detail.
4.8 Discretion of Bank as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary other than Paragraph 4.7, Bank shall
be entitled to fund and maintain its funding of all or any part of the Loans in
any manner it sees fit.
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4.9 Interest Laws. Notwithstanding any provision to the contrary
contained in this Agreement or the Other Agreements, Borrower shall not be
required to pay, and Bank shall not be permitted to collect, any amount of
interest in excess of the maximum amount of interest permitted by law ("Excess
Interest"). If any Excess Interest is provided for or determined by a court of
competent jurisdiction to have been provided for in this Agreement or in any of
the Other Agreements, then in such event: (a) the provisions of this Paragraph
shall govern and control; (b) Borrower shall not be obligated to pay any Excess
Interest; (c) any Excess Interest that Bank may have received and/or disbursed
to Bank hereunder shall be, at Bank's option, (i) applied as a credit against
the outstanding principal balance of Borrower's Liabilities or accrued and
unpaid interest (not to exceed the maximum amount permitted by law), (ii)
refunded to the payor thereof, or (iii) any combination of the foregoing; (d)
the interest rate(s) provided for herein shall be automatically reduced to the
maximum lawful rate allowed from time to time under applicable law (the "Maximum
Rate"), and this Agreement and the Other Agreements shall be deemed to have been
and shall be reformed and modified to reflect such reduction; and (e) Borrower
shall not have any action against Bank for any damages arising out of the
payment or collection of any Excess Interest. Notwithstanding the foregoing, if
for any period of time interest on any Borrower's Liabilities is calculated at
the Maximum Rate rather than the applicable rate under this Agreement, and
thereafter such applicable rate becomes less than the Maximum Rate, the rate of
interest payable on such Borrower's Liabilities shall remain at the Maximum Rate
until Bank shall have received the amount of interest which Bank would have
received during such period on such Borrower's Liabilities had the rate of
interest not been limited to the Maximum Rate during such period.
50 LOANS: GENERAL TERMS
5.1 Payments to Bank; Defaulting Bank. That portion of Borrower's
Liabilities consisting of: (i) principal payable on account of the Loans made by
Bank to Borrower pursuant to this Agreement shall be payable by Borrower to
Bank: (A) as provided in the Revolving Note in respect of the Revolving Loans
and (B) as provided in the Equipment Note in respect of Equipment Loans; (ii)
costs, fees and expenses payable pursuant to this Agreement shall be payable by
Borrower to Bank on demand; (iii) interest payable pursuant to this Agreement
shall be payable by Borrower to Bank, as provided in Paragraph 4.1; and (iv) the
balance of Borrower's Liabilities, if any, shall be payable by Borrower to Bank
as and when provided in this Agreement or the Other Agreements.
5.2 Automatic Debit. In order to cause timely payment to be made to
Bank of all Borrower's Liabilities as and when due, Borrower hereby authorizes
and directs Bank to debit the amount of such Borrower's Liabilities to any
ordinary deposit account of Borrower (including, without limitation, by
increasing the principal balance due under the Revolving Loan).
5.3 Application of Payment. Subject to Paragraph 13.3 below and except
as otherwise specified herein, Borrower shall, at the time of making each
payment under this Agreement or any
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Note (whether by account debit or otherwise), specify to Bank the Loan or other
amounts payable by Borrower hereunder to which such payment is to be applied
(and in the event that it fails to so specify, or if an Event of Default has
occurred and is continuing, Bank may allocate such payment in such manner as it
may determine to be appropriate. All such payments shall be applied to the
amounts due hereunder in the inverse order of their maturities.
5.4 Conditions Precedent Events. Each Loan made by Bank to Borrower at
the request of Borrower issued for the account of Borrower pursuant to this
Agreement or the Other Agreements shall in any event be subject to the following
conditions precedent: (i) there shall not then exist an Event of Default (as
hereinafter defined) or any event or condition which with notice, lapse of time
and/or the making of such Loan would constitute an Event of Default; (ii) the
representations and warranties of Borrower contained in this Agreement shall be
true and correct as of the date of such Loan with the same effect as though made
on such date; (iii) all of the covenants and agreements of Borrower in this
Agreement, and all of the requirements of this Agreement with respect to such
Loan, shall have been complied with; and (iv) there shall not have occurred,
since the date of this Agreement, any material adverse change in the financial
condition, results of operations or business of Borrower. Each borrowing by
Borrower hereunder shall be deemed a representation and warranty by Borrower
that the foregoing conditions have been fulfilled as of the date of such
borrowing. Bank shall have received upon request a certificate signed by an
Authorized Officer of Borrower dated the date of such requested Loan certifying
satisfaction of the conditions specified in clauses (i)-(iv) of this Paragraph
5.4.
5.5 Offset. Borrower agrees that, in addition to (and without
limitation of) any right of set-off, bankers' lien or counterclaim Bank may
otherwise have, Bank shall be entitled, at its option, to offset balances held
by it for account of Borrower at any of its offices, in United States Dollars or
in any other currency, against any principal of or interest on any of Bank's
Loans, or any other amount payable to such Bank hereunder, which is not paid
when due (regardless of whether such balances are then due to Borrower), in
which case it shall promptly notify such Borrower thereof, provided that such
Bank's failure to give such notice shall not affect the validity thereof.
5.6 Discretionary Disbursements. Bank, in its sole and absolute
discretion, may immediately upon notice to Borrower, disburse any or all
proceeds of Loans made or available to Borrower pursuant to this Agreement
and/or the Other Agreements to pay any fees, costs, expenses or other amounts
required to be paid by Borrower hereunder and not so paid. All monies so
disbursed by Bank shall be a part of Borrower's Liabilities, payable by Borrower
on demand.
5.7 Credit Termination Date; Continuance of Obligations, Etc. This
Agreement, Bank's obligation to loan monies to Borrower, and Borrower's ability
to borrow monies from Bank shall be in effect until the Termination Date.
Notwithstanding the foregoing and until such date when Borrower's Liabilities
shall be paid in full, Borrower's obligations hereunder and under the Other
Agreements shall continue, interest shall continue to be paid in accordance with
the foregoing, Bank
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shall be entitled to retain its security interest in the Collateral and Bank
shall retain all of its rights and remedies under this Agreement.
5.8 Over-Advances. If, at any time and for any reason, the aggregate
amount of Borrower's Liabilities in respect of Revolving Loans outstanding
hereunder exceeds the Revolving Credit Commitment (an "Over-Advance"), then
Borrower shall immediately pay to Bank, the amount of such Over-Advance. If such
Over-Advance remains outstanding for more than two (2) Business Days, such
Over-Advance shall constitute an Event of Default and until such Over-Advance is
so repaid to Bank, the amount of such Over-Advance shall bear interest at the
applicable Default Rate.
5.9 Lock-Box and Blocked Account. [Upon the occurrence of an Event of
Default] [DISCUSS], Borrower shall establish a lock box and cash collateral
depository account (collectively, the "Blocked Account") in Borrower's name with
Bank to which all Obligors shall directly remit all payments on Accounts
Receivable and Collateral and in which Borrower will immediately deposit all
payments made for services rendered or other payments constituting proceeds of
Collateral in the identical form in which such payment was made, whether by cash
or check. All payments made to the Blocked Account shall be the sole and
exclusive property of Bank and no persons shall have a right to setoff against
the Blocked Account. Bank will apply, upon availability of such funds after the
date of receipt, if received in the Blocked Account and by Bank's commercial
note teller prior to 2:00 p.m., Chicago time, all payments received thereon,
including cash, solvent credits, collections of Accounts Receivable, proceeds of
Collateral and any other amounts; provided that (a) Bank shall charge back to
Borrower any payments that may be required to be returned to the entity making
such payment and Borrower shall continue to pay interest on the amount charged
back from the date that such payment was applied against Borrower's Liabilities;
and (b) Bank shall have the exclusive right to determine how, when and in what
amounts application of such payments and such credits shall be made on
Borrower's Liabilities, and such determination shall be conclusive upon
Borrower.
5.10 Unused Portion Fee. To compensate Bank for the cost of reserving
funds to be made available to Borrower under this Agreement, Borrower shall pay
to Bank, for the benefit of Bank, on the last day of each fiscal quarter an
unused revolving line fee (the "Unused Portion Fee") equal to the sum of the
daily amounts by which the maximum aggregate principal amount of the Revolving
Credit Commitment exceeds the actual principal amount of all Revolving Loans
made hereunder. The Unused Portion Fee is calculated for each applicable day of
such quarter in an amount equal to the excess of the maximum aggregate principal
amount of the Revolving Credit Commitment over the principal amount of all
outstanding advances under the Revolving Loans on such day, multiplied by
one-quarter of one percent (1/4%). All fees and charges imposed on Borrower
pursuant to this Agreement including, without limitation, the Unused Portion Fee
accrued through the date of termination, shall be nonrefundable to Borrower,
notwithstanding any prepayment and termination by Borrower of this Agreement.
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5.11 Fees.
(a Transaction Fees. On or prior to the Closing Date, Borrower
shall pay a fee of Fifteen Thousand Dollars ($15,000) (the "Transaction Fee") to
Bank.
(b Letter of Credit Fees. As additional consideration for
issuing, or causing to be issued, Letters of Credit for Borrower at the
Authorized Officer's request pursuant to Paragraph 2.3 hereof, Borrower agrees
to pay fees in respect to each "standby" Letter of Credit so issued by Bank.
Said fees shall be payable quarterly in advance, on the first Business Day of
each calendar quarter, on the average daily maximum amount available to be drawn
under outstanding Letters of Credit, at a rate per annum equal to (a) for
"standby" Letters of Credit, one percent (1.00%), calculated on the actual
number of days elapsed on the basis of a 360-day year, and (b) for "trade" or
other Letters of Credit, in accordance with Bank's published fee schedule then
in effect. During an Event of Default, the amount of fees in respect of Letters
of Credit shall be increased by three percent (3%). In the event a Letter of
Credit is renewed or extended, a fee calculated in the manner provided above
shall be payable for any such renewal or extended period. Further, Borrower
shall pay and/or reimburse Bank for all fees and charges paid by Bank on account
of any Letter of Credit, and Borrower shall pay to Bank its usual and customary
charges in respect to the issuance, or renewal, of Letters of Credit.
6. LOANS: CONDITIONS TO LENDING
6.1 Initial Loan Conditions Precedent. In addition to those
conditions set forth in Paragraph 5.4 above with respect to all Loans and
advances hereunder, prior to or contemporaneously with the making of the initial
advance of funds, Bank's obligation to make any Loan is subject to the
satisfaction of the following conditions precedent:
(a Fees and Expenses. Borrower shall have paid all fees owed
to Bank and reimbursed Bank for all expenses due and payable hereunder on or
before the date hereof including, but not limited to, the Transaction Fee and
counsel fees provided for in Paragraph 13.12 hereof.
(b Documents. Bank shall have received the following
documents, in form and substance satisfactory to Bank, and all of the
transactions contemplated by each such document shall have been consummated or
each condition contemplated by each such document shall have been satisfied:
(i Related Documents. Executed originals of this Agreement
as required by Bank and one original of the Revolving Note and the
Equipment Note each payable to Bank conforming to the requirements
hereof duly executed by Borrower. The applicable Form UCC-1 and UCC-2
financing statements, as applicable, related to the Collateral (as
herein defined) shall have been filed in all jurisdictions that Bank
deems necessary or advisable.
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(ii Legal Opinion. The legal opinion of counsel to Borrower
and each Guarantor.
(iii Officer's Certificate. A certificate executed by the
President of Borrower, stating that (A) no default or Event of Default
has occurred and is continuing, (B) no material adverse change in the
financial condition or operations of the business of Borrower has
occurred since April 30, 1998 and (C) each condition precedent to the
consummation of the Loans contemplated hereby has been met or
satisfied.
(iv Insurance Policies. Certificates from each insurance
carrier of Borrower evidencing that all insurance policies and coverage
required by Paragraph 11.2(g) below are in effect, together with a
lender's loss payable and additional insured endorsement.
(v Constituent Documents. A copy of the Certificate of
Incorporation for Borrower certified by the Secretary of State of
Delaware, and a copy of Borrower's Bylaws, certified by the Secretary
of Borrower, in each case together with all amendments.
(vi Good Standing Certificates. A Good Standing Certificate
for Borrower from the Secretary of State of Delaware and each state in
which Borrower is required to be qualified to transact business as a
foreign corporation.
(vii Resolutions. Certified copies of resolutions of the
Board of Directors of Borrower authorizing the execution and delivery
of and the consummation of the transactions contemplated by this
Agreement and the Other Agreements and all other documents or
instruments to be executed and delivered in conjunction herewith and
therewith by Borrower.
(viii Incumbency Certificates. A certificate of the Secretary
of Borrower certifying as to the names of the officer or officers of
Borrower authorized to sign this Agreement and the Other Agreements, in
each case together with a sample of the true signature of each such
individual.
(ix Landlord's Lien Waiver. Landlord's lien waivers
executed by the landlord/lessor of each leased property of Borrower.
(x Bailee Agreements. A Bailee Agreement with each
warehouseman which owns any premises at which any Inventory may, from
time to time, be kept.
(xi Guaranty. The Guaranty executed by each Guarantor for
the benefit of Bank.
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(xii Subordination Agreements. Subordination Agreements with
such directors, officers, shareholders or creditors of Borrower as Bank
shall request.
(xiii Patent, Trademark and License Mortgage. The Patent,
Trademark and License Mortgage executed by Borrower in favor of Bank.
(xiv Payoff Letter. Payoff Letter and UCC-3 Termination
Statements from [HSBC Business Loans, Inc.] and such other lenders
deemed necessary by Bank acknowledging the payoff of certain
obligations to such lenders.
(xv Other Documents. Such other documents as Bank may
reasonably request.
(c Bank's Review. The Bank's review of and satisfaction with the
ownership, capital, corporate, organizational and legal structure of Borrower
and each Subsidiary.
7. COLLATERAL: GENERAL TERMS
7.1 Grant of Security Interest. To secure the prompt payment of
Borrower's Liabilities and the prompt, full and faithful performance by Borrower
of all of the provisions to be kept, observed or performed by Borrower, Borrower
hereby pledges, transfers, delivers, grants and assigns to Bank, and grants to
Bank a security interest in and to and a first lien on all of Borrower's
property of any kind or description, tangible or intangible, of whatever
description, whether now existing and/or owned and hereafter arising and/or
acquired, wherever located in the United States including, but not limited to,
the following: (a) accounts (including, without limitation, all of Borrower's
Accounts Receivable), chattel paper, contract rights, letters of credit,
instruments and documents (sometimes hereinafter individually and collectively
referred to as "Accounts"), and all goods whose sale, lease or other disposition
by Borrower has given rise to Accounts and have been returned to or repossessed
or stopped in transit by Borrower; (b) Inventory; (c) goods (other than
Inventory), machinery, Equipment, vehicles and fixtures (hereinafter
individually and collectively referred to as "Equipment"); (d) General
Intangibles; (e) monies, reserves, deposits, deposit accounts and interest or
dividends thereon, securities, cash, cash equivalents and other property now or
at any time or times hereafter in the possession or under the control of Bank or
its bailee; (f) liens, guarantees and other rights and privileges pertaining to
any of the foregoing; (g) all books, records and computer records in any way
relating to the foregoing; (h) all other assets of Borrower whether real,
personal, tangible or intangible or mixed, now existing or hereafter acquired,
created, built or otherwise coming into being; (i) all accessions,
substitutions, renewals, improvements and replacements of and additions to the
foregoing; and (j) all products and proceeds of the foregoing including, without
limitation, proceeds of insurance policies insuring the same (all of the
foregoing personal property and real property is hereinafter sometimes
individually and sometimes collectively referred to as "Collateral"). Borrower
shall make appropriate entries upon their financial statements and books and
records disclosing Bank's security interest in the Collateral.
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7.2 Perfection of Security Interests. Borrower shall execute and/or
deliver to Bank, at any time and from time to time hereafter at the request of
Bank, all agreements, instruments, financing statements, documents and other
written matter (sometimes hereinafter individually and collectively referred to
as "Supplemental Documentation") that Bank reasonably may request, in form and
substance acceptable to Bank, to perfect and maintain perfected the security
interest in the Collateral granted hereby and to consummate the transactions
contemplated in or by this Agreement and the Other Agreements. Borrower,
irrevocably, hereby makes, constitutes and appoints Bank (and all Persons
designated by Bank for that purpose) as Borrower's true and lawful attorney and
agent-in-fact to sign the name of such party on the Supplemental Documentation
and to deliver the Supplemental Documentation to such Persons as Bank may
reasonably elect. Borrower agrees that a carbon, photographic or photostatic
copy or other reproduction of this Agreement or of any financing statement shall
be sufficient as a financing statement.
7.3 Inspection of Collateral and Visitation Rights. Bank shall have
the right to inspect the Collateral and all related records (and the premises
upon which it is located), perform a field audit, visit and inspect the
properties and assets of Borrower and verify the amount and condition of or any
other matter relating to the Collateral. All costs, fees and expenses incurred
by Bank or for which Bank has become obligated, in connection with such
inspection and/or verification shall constitute part of Borrower's Liabilities,
payable by Borrower to Bank on demand.
7.4 First Lien and Locations of Collateral. Borrower warrants and
represents to and covenants with Bank that: (a) as of the Closing Date, Bank's
security interest in the Collateral is now and at all times hereafter shall be
perfected and have a first priority other than Permitted Liens; (b) the offices
and/or locations where Borrower keeps the Collateral consisting of personal
property and books and records concerning the Collateral are at the locations
specified on Schedule 7.4 and Borrower shall not remove such books and records
and/or the Collateral therefrom and shall not keep any of such books and records
and/or the Collateral at any other office or location without the prior written
consent of Bank; and (c) the addresses specified on Schedule 7.4 include and
designate Borrower's chief executive office, chief place of business and other
offices and places of business and are Borrower's sole offices and places of
business. Borrower, by written notice delivered to Bank at least thirty (30)
days prior thereto, shall advise Bank of Borrower's opening of any new office or
place of business or its closing of any existing office or place of business and
any new office or place of business shall be within the continental United
States of America. There are no liens on the Collateral other than the lien of
Bank pursuant hereto and Permitted Liens.
7.5 Constructive Trust. Borrower shall receive, as the sole and
exclusive property of Bank, and as trustee for Bank, all monies, checks, notes,
drafts and all other payment for and/or proceeds of Collateral which come into
the possession or under the control of Borrower (or any of its shareholders,
directors, officers, employees, representatives or those Persons acting for or
in concert with Borrower) and immediately upon receipt thereof, Borrower shall
remit the same (or cause the same to be remitted), in kind, to Bank.
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7.6 Application of Proceeds of Collateral. Upon the occurrence and
during the continuance of an Event of Default, Bank, at time or times in its
sole and absolute discretion, may take control of, in any manner, and may
endorse Borrower's name, as appropriate, to any of the items of payment or
proceeds described in Paragraph 7.5 above and, pursuant to the provisions of
this Agreement, Bank may, in its sole and absolute discretion, apply the same to
and on account of Borrower's Liabilities. For the purposes of this Paragraph,
Borrower, irrevocably, hereby makes, constitutes and appoints Bank (and all
persons designated by Bank for that purpose) as Borrower's true and lawful
attorney and agent-in-fact with power, without notice to Borrower, to take any
such actions.
7.7 Third Party Collateral Claims. Bank, in its sole and absolute
discretion, without waiving or releasing any Event of Default or obligation,
liability, or duty of Borrower under this Agreement or the Other Agreements, may
at any time or times hereafter, but shall be under no obligation to, pay,
acquire and/or accept an assignment of any security interest, lien, encumbrance,
or claim asserted by any Person against the Collateral. All sums paid by Bank,
in respect thereof and all costs, fees and expenses, including reasonable
attorney's fees, court costs, expenses and other charges relating thereto that
are incurred by Bank on account thereof shall be part of Borrower's Liabilities
payable by Borrower to Bank on demand.
7.8 Additional Collateral. Bank may, in its sole and absolute
discretion, retain as additional Collateral or release to Borrower, from time to
time, such portion of the monies, reserves and/or proceeds received by Bank with
respect to the Collateral as Bank may determine. All such monies, reserves,
proceeds and other property of Borrower in the possession of Bank at any time or
times hereafter are hereby pledged by Borrower to Bank as additional Collateral
hereunder and must be applied by Bank on account of Borrower's Liabilities.
7.9 No Custom or Waiver. No authorization given by Bank pursuant to
this Agreement or the Other Agreements to sell any specified portion of
Collateral or any items thereof, and no waiver by Bank in connection therewith
shall establish a custom or constitute a waiver of the limitation contained in
this Agreement against such sales, with respect to any portion of the Collateral
or any item thereof not covered by said authorization.
7.10 Special Collateral. Immediately upon receipt by Borrower of that
portion of Collateral evidenced or secured by an agreement, letter of credit,
instrument and/or document, including, without limitation, promissory note,
documents of title and warehouse receipts ("Special Collateral"), Borrower shall
▇▇▇▇ the same to show that such Special Collateral is subject to a security
interest in favor of Bank, and shall deliver the original thereof to Bank,
together with appropriate endorsements, the documents required to draw
thereunder (as may be relevant to letters of credit) and/or other specific
evidence of assignment (in form and substance satisfactory to Bank).
8. COLLATERAL: ACCOUNTS RECEIVABLE
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8.1 Account Representations and Warranties. Except as otherwise
disclosed by Borrower to Bank in writing, Borrower hereby warrants and
represents to Bank with respect to the Accounts Receivable that: (a) they are
genuine, in all respects what they purport to be and are not evidenced by a
judgment; (b) they represent undisputed, bona fide transactions completed in
accordance with the terms and provisions contained in the invoices and other
documents with respect thereto; (c) the amounts thereof are actually and
absolutely owing and are not contingent for any reason; (d) there are no
material setoffs, counterclaims or disputes existing or asserted with respect
thereto and Borrower has not made any agreement with any Obligor thereof for any
deduction therefrom except a regular discount allowed by Borrower in the
ordinary course of its business for prompt payment; (e) the services furnished
and/or goods sold giving rise thereto is not subject to any lien, claim,
encumbrance or security interest except that of Bank and Permitted Liens; and
(f) Borrower has no knowledge of any fact or circumstance which would impair the
validity or collectibility thereof.
8.2 Verification of Accounts Receivable. Prior to any Event of
Default any of Bank's officers, employees or representatives shall have the
right, in Bank's name or in the name of a nominee of Bank, to verify the
validity, amount or any other matter relating to any Accounts Receivable by mail
or telegraph. Following an Event of Default, Bank may verify the validity and
amount or any other matter relating to Accounts Receivable by any means. All
costs, fees and expenses relating thereto that are incurred by Bank (or for
which Bank becomes obligated) shall be part of Borrower's Liabilities payable by
Borrower to Bank on demand.
8.3 Account Restrictions. Unless Bank notifies Borrower in writing
that Bank suspends any one or more of the following requirements, Borrower
shall: (a) promptly upon Borrower's learning thereof, inform Bank in writing of
any material delay in Borrower's performance of any of its obligations to any
Obligor relating to Accounts Receivable in excess of $50,000 and of any
assertion of any claims, offsets or counterclaims by any Obligor relating to
Accounts Receivable in excess of $50,000 and of any allowances, credits and/or
other monies granted by Borrower to any Obligor which exceed $50,000 in value;
(b) not permit or agree to any material extension, compromise or settlement or
make any change or modification of any material kind or nature with respect to
any Accounts Receivable in excess of $50,000, including any of the terms
relating thereto; and (c) promptly upon Borrower's receipt or learning thereof,
furnish to and inform Bank of all material adverse information relating to the
financial condition of any Obligor on Accounts Receivable in excess of $50,000.
8.4 Enforcement of Right to Accounts Receivable. Bank shall have the
right, at any time or times in its sole and absolute discretion, without notice
thereof to Borrower: (a) to notify any or all Obligors that the Accounts
Receivable and Collateral have been assigned to Bank and that Bank has a
security interest therein; (b) to direct such Obligors to make all payments due
from them to Borrower upon the Accounts Receivable and Collateral directly to
Bank; (c) to enforce payment of and collect, by legal proceedings or otherwise,
the Accounts Receivable and Collateral in the name
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of Bank and Borrower; and (d) to take control, in any manner, of any item of
payment or proceeds referred to in Paragraph 7.5 above.
8.5 Appointment as Attorney-in-Fact. Upon an Event of Default,
Borrower, irrevocably, hereby designates, makes, constitutes and appoints Bank
(and all Persons designated by Bank), as Borrower's true and lawful attorney and
agent-in-fact, with power, without notice to Borrower and at such time or times
hereafter as Bank, in its sole and absolute discretion, may determine, in
Borrower's or Bank's name: (a) to demand payment of the Accounts Receivable and
Collateral; (b) to enforce payment of the Accounts Receivable and Collateral by
legal proceedings or otherwise; (c) to exercise all of Borrower's rights and
remedies with respect to the collection of the Accounts Receivable and
Collateral; (d) to settle, adjust, compromise, extend or renew the Accounts
Receivable and Collateral; (e) to settle, adjust or compromise any legal
proceedings brought to collect the Accounts Receivable and Collateral; (f) to
sell or assign the Accounts Receivable and Collateral upon such terms, for such
amounts, and at such time or times as Bank deems advisable; (g) to discharge and
release the Accounts Receivable and Collateral; (h) to take control, in any
manner, of any item of payment or proceeds referred to in Paragraph 7.5 above;
(i) to prepare, file and sign Borrower's name on any Notice of Lien, Assignment,
Satisfaction of Lien or similar document in connection with the Accounts
Receivable and Collateral; (j) to prepare, file and sign Borrower's name on any
Proof of Claim in Bankruptcy or similar document against any Obligor; (k) to do
all acts and things necessary, in Bank's sole discretion, to fulfill Borrower's
obligations under this Agreement; (l) to endorse the name of Borrower upon any
of the items of payment or proceeds referred to in Paragraph 7.5 above and to
deposit the same to the account of Bank to and on account of Borrower's
Liabilities; (m) to endorse the name of Borrower upon any chattel paper,
document, instrument, invoice, freight ▇▇▇▇, ▇▇▇▇ of lading or similar document
or agreement relating to the Accounts Receivable and Collateral; and (n) to sign
the name of Borrower to verifications of the Accounts Receivable and Collateral
and notices thereof to Obligors.
9. COLLATERAL: INVENTORY
9.1 Inventory Representations and Warranties. Borrower warrants and
represents to and covenants with Bank that: (a) Inventory shall be kept only at
the locations specified in Paragraph 7.4 hereof; (b) Borrower, at reasonable
intervals upon the reasonable request of Bank therefor, shall execute and
deliver to Bank designations of Inventory specifying the cost of Inventory and
such other matters and information relating to Inventory as Bank may reasonably
request; (c) Borrower does now keep and hereafter at all times shall keep
correct and accurate records itemizing and describing the kind, type, quality
and quantity of Inventory, the cost therefor and selling price thereof and the
daily withdrawals therefrom and additions thereto, all of which records shall be
available to any of Bank's officers, employees or Bank for inspection and
copying thereof; and (d) Inventory is not now and shall not at any time or times
hereafter be stored with a bailee, warehouseman or similar party without Bank's
prior written consent and, in such event, Borrower will concurrently therewith
cause any such bailee, warehouseman or similar party to issue and deliver to
Bank, in form and substance acceptable to Bank, warehouse receipts therefor in
Bank's name.
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9.2 Ordinary Course Sales. Until an Event of Default, Borrower may
sell Inventory in the ordinary course of business.
10. COLLATERAL: EQUIPMENT
10.1 Equipment Representations and Warranties. Borrower hereby
warrants and represents to Bank with respect to the Equipment that Borrower and
each Subsidiary have good, indefeasible and merchantable title, free and clear
of all Liens, claims and encumbrances, to and ownership of the Equipment used in
its business except for Liens of Bank granted hereunder and Permitted Liens, and
that Equipment shall be kept and/or maintained solely at the locations specified
on Schedule 7.4.
10.2 Maintenance. Borrower shall keep and maintain the Equipment in
good operating condition and repair and shall make all necessary replacements
thereof and renewals thereto so that the value and operating efficiency thereof
shall at all times be maintained and preserved, except where the failure to so
maintain and preserve would not have a material adverse effect on the business,
financial condition or operations of Borrower. Borrower shall not permit any
material item of Equipment to become a fixture to real estate or accession to
other personal property.
10.3 Evidence of Ownership. Borrower, upon reasonable request by Bank,
shall deliver to Bank any and all evidence of ownership of, including, without
limitation, certificates of title to and applications for title to, any
Equipment.
11. REPRESENTATIONS AND WARRANTIES; COVENANTS;
INDEMNIFICATION; CONTINUING OBLIGATION
11.1 Representations and Warranties of Borrower. Borrower hereby
represents and warrants to Bank as of the date hereof and, with respect to
subsections (a) through (d) and subsections (f) through (dd) below, the date of
disbursement of each Loan or advance hereunder, as follows:
(a Existence and Authority. Borrower and each Subsidiary are
corporations duly organized, validly existing and in good standing under the
laws of their respective jurisdictions of organization. Borrower and each
Subsidiary are duly qualified to do business and are in good standing under the
laws of each state in which the ownership of their properties and the nature and
extent of the activities transacted by them make such qualification necessary.
Borrower and each Subsidiary have all requisite power and authority to conduct
its activities as presently conducted, to own their properties and to perform
their obligations under this Agreement.
(b Authorization; No Conflict. The execution, delivery and
performance by Borrower of this Agreement and the Other Agreements to which it
is a party are within Borrower's corporate powers, have been duly authorized by
all necessary corporate action and do not contravene
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(i) Borrower's Certificate of Incorporation or By-laws; or (ii) any law or any
contractual restriction binding on or affecting Borrower or its properties, and
do not result in or require the creation of any Lien (except as may be created
under this Agreement or the Other Agreements) upon or with respect to any of its
properties.
(c No Approval. No authorization or approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required for the due execution, delivery and performance by Borrower of
this Agreement or any Other Agreement to which Borrower is a party.
(d Validity and Binding Nature. This Agreement is, and the
Other Agreements to which Borrower is a party when delivered hereunder will be,
legal, valid and binding obligations of Borrower, enforceable against Borrower
in accordance with their respective terms.
(e Financial Statements and Condition. The financial statements
and balance sheet (including the notes thereto) of Borrower as at April 30,
1998, and the related statements of income and equity and statements of cash
flows of Borrower for the fiscal year then ended, are complete and correct and
fairly present the financial condition of Borrower as at such date and the
results of the operations of Borrower for the period ended on such date, in
accordance with GAAP, and since the date of the last audited financial
statements of Borrower, there has been no material adverse change in Borrower's
financial condition, business, properties or operations. Except as set forth on
Schedule 11.1(e) hereto, Borrower has not on the date hereof, nor will have on
the date of any Loan or advance made by Bank hereunder, any material contingent
obligations, long-term leases or material forward or long-term commitments,
which are not reflected in the financial statements (and the related notes
thereto).
(f Litigation. There is no pending or, to the best knowledge
of Borrower, threatened action, suit, inquiry, investigation, or proceeding
affecting, directly or indirectly, Borrower or any Subsidiary before any court,
governmental agency or arbitrator, which, in any case, may (i) materially and
adversely affect the financial condition or operation of Borrower, (ii) which
seeks to restrain or would otherwise have a material adverse effect on the
transactions contemplated herein, or (iii) which would affect the validity or
enforceability of this Agreement or the Other Agreements.
(g Securities Transaction. No proceeds of any Loan or advance
made by Bank to Borrower hereunder will be used to acquire any security in any
transaction which is subject to Section 13 or 14 of the Securities Exchange Act
of 1934, as amended.
(h Regulation U. Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U issued by the Board of Governors of the Federal
Reserve System), and no proceeds of any Loan or advance made by Bank to Borrower
hereunder will be used to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying any margin stock.
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(i ERISA Termination Event and Funding. No ERISA Termination
Event has occurred nor is expected to occur with respect to any Plan and all
Plans, to the extent governed by ERISA, meet the minimum funding standards of
Section 302 of ERISA.
(j Withdrawal Liability and Reportable Events. No Borrower nor
any ERISA Affiliate has incurred, or expects to incur, any withdrawal liability
under Section 4201 of ERISA to any Multiemployer Plan. No Reportable Event (as
defined in ERISA) has occurred with respect to any Plan.
(k Taxes. Borrower and each Subsidiary have filed all tax
returns (Federal, state and local) required to be filed and paid all taxes shown
thereon to be due, including interest and penalties, other than such taxes that
Borrower or such Subsidiary is contesting in good faith by appropriate legal
proceedings and proper reserves therefor have been established on the books of
Borrower.
(l Liens. There are no Liens upon or with respect to any of the
properties of Borrower or any Subsidiary or Collateral or any right to receive
revenues of Borrower or any Subsidiary or Collateral other than (i) Liens
arising under this Agreement, and (ii) Permitted Liens.
(m Conflicts. Neither Borrower nor any Subsidiary is a party to
any indenture, loan or credit agreement or any lease or other agreement or
instrument (including corporate charters) which is likely to have a material
adverse effect on the ability of Borrower to perform its obligations under this
Agreement or the Other Agreements or which would restrict or otherwise limit the
incurring of the Funded Debt represented by this Agreement and the Other
Agreements.
(n Environmental Matters. Except as disclosed on Schedule
11.1(n),
(i the operations of Borrower and each Subsidiary
(including, without limitation, all operations and conditions at or in
the Facilities) comply in all material respects with all Environmental
Laws;
(ii Borrower and each Subsidiary have obtained or have
timely applied for all Governmental Authorizations under Environmental
Laws necessary to their respective operations, if any, and all such
Governmental Authorizations as have been obtained are in good standing,
and Borrower and each of its Subsidiaries are in compliance with all
terms and conditions of such Governmental Authorizations;
(iii neither Borrower nor any Subsidiary has received from
any Person (A) any notice or claim to the effect that it is or may be
liable to any Person as a result of the Release or threatened Release
of any Hazardous Materials or (B) any letter or request for information
under Section 104 of the Comprehensive Environmental Response,
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Compensation, and Liability Act (42 U.S.C. ss.9604) or comparable state
laws, and none of the operations of Borrower is the subject of any
federal or state investigation evaluating whether any remedial action
is needed to respond to a Release or threatened Release of any
Hazardous Materials at any Facility or at any other location;
(iv neither the operations of Borrower nor any Subsidiary
are subject to any investigation or judicial or administrative
proceeding alleging the violation of or liability under any
Environmental Laws;
(v neither Borrower nor its Subsidiaries nor any of their
Facilities or operations is subject to any outstanding written order or
agreement with any governmental authority or private party relating to
(a) any Environmental Laws or (b) any Environmental Claims;
(vi Neither Borrower nor any Subsidiary has any contingent
liability in connection with any Release or threatened Release of any
Hazardous Materials;
(vii neither Borrower, its Subsidiaries, nor any
predecessors thereof have filed any notice under any Environmental Law
indicating past or present treatment, storage, disposal or Release of
Hazardous Materials at any Facility except in accordance with
Environmental Laws, and the operations of Borrower and its Subsidiaries
do not involve the generation, transportation, treatment, storage or
disposal of hazardous waste, as defined under 40 C.F.R. Parts 260-270
or any state equivalent;
(viii no Hazardous Material exists on, under or about any
Facility in a manner that is likely to give rise to an Environmental
Claim and neither Borrower nor its Subsidiaries have filed any notice
or report of a Release of any Hazardous Materials that is reasonably
likely to give rise to an Environmental Claim;
(ix neither Borrower nor its Subsidiaries have disposed of
any Hazardous Materials in a manner that is likely to give rise to an
Environmental Claim;
(x no underground storage tanks or surface impoundments
are on or at any Facility; and
(xi no lien in favor of any Person for (a) any liability
under any Environmental Laws or (b) damages arising from or costs
incurred by such Person in response to a Release or threatened Release
has been filed or has been attached to any Facility.
(o Investment Company Act. Neither Borrower nor any Subsidiary
is an "investment company" or a company "controlled by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
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(p Compliance with Laws. Borrower and its Subsidiaries are in
compliance with all laws, orders, regulations and ordinances of all federal,
foreign, state and local governmental authorities binding upon or affecting the
business, operation or assets of Borrower and each Subsidiary including, without
limitation, zoning or other ordinances relating to permissive non-conforming
uses of property.
(q Other Agreements. Borrower makes each of the representations
and warranties of Borrower contained in the Other Agreements to which Borrower
is a party operative and applicable for the benefit of Bank as if the same were
set forth at length herein.
(r Millennium Compliance. Borrower and its Subsidiaries have
reviewed the areas within their business and operations which could be adversely
affected by, and have developed or are developing a program to address on a
timely basis, the "Year 2000 Problem" (that is, the risk that computer
applications used by Borrower and its Subsidiaries may be unable to recognize
and perform properly date-sensitive functions involving certain dates prior to
and any date on or after December 31, 1999), and have made related appropriate
inquiry of material suppliers, vendors and customers. Based on such review and
program, Borrower believes that the "Year 2000 Problem" will not have a material
adverse effect on Borrower. From time to time, at the request of the Bank,
Borrower and its Subsidiaries shall provide to the Bank such updated information
or documentation as is requested regarding the status of their efforts to
address the Year 2000 problem.
(s Subsidiaries. Except as disclosed on Schedule 11.1(s),
Borrower has no Subsidiaries.
(t Intellectual Property. Borrower owns, is licensed under, or
otherwise has the rights to, all patents, trademarks, trade names, copyrights,
technology, know-how and processes used in or necessary for the conduct of its
respective business as currently conducted that are material to the condition
(financial or other), business or operations of Borrower (collectively,
"Intellectual Property") and all such Intellectual Property is identified on
Schedule 11.1(t) and fully protected and/or duly and properly registered, filed
or issued in the appropriate office and jurisdictions for such registrations,
filing or issuances. Except as disclosed in Schedule 11.1(t), no material claim
has been asserted by any Person with respect to the use of any Intellectual
Property, or challenging or questioning the validity or effectiveness of any
Intellectual Property. Except as disclosed in Schedule 11.1(t), the use of such
Intellectual Property by Borrower does not infringe on the rights of any Person.
(u Labor. Except as disclosed on Schedule 11.1(u), none of the
employees of Borrower or any Subsidiary are subject to any collective bargaining
agreement, and there are no strikes, work stoppages, election or decertification
petitions or proceedings, unfair labor charges, equal employment opportunity
proceedings, wage payment or material unemployment compensation proceedings,
material workmen's compensation proceedings or other material labor or
employee-
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related controversies pending or threatened involving Borrower and any of its
employees, except for any of the foregoing which would not in the aggregate have
a material adverse effect on the financial condition, results of operations or
business of Borrower.
(v Solvency. Borrower has capital sufficient to carry on its
business and transactions and all businesses and transactions in which it is
about to engage and is solvent and able to pay its debts as they mature and
Borrower owns property the fair saleable value of which is greater than the
amount required to pay Borrower's Funded Debt. No transfer of property is being
made and no Funded Debt is being incurred in connection with the transactions
contemplated by this Agreement with the intent to hinder, delay or defraud
either present or future creditors of Borrower.
(w Title. Borrower and each Subsidiary have good, indefeasible
and merchantable title to and ownership of the Collateral, free and clear of all
Liens, claims, security interests and other encumbrances except for the Liens of
Bank granted hereunder and Permitted Liens.
(x Corporate Names. Except as disclosed on Schedule 11.1(x),
Borrower has no assumed corporate names and is not doing business under any
other corporate name.
(y Options. Except as set forth on Schedule 11.1(y) hereto, no
person, corporation, partnership, association or other entity has any option to
acquire ownership of the Collateral or any portion thereof, other than Inventory
of Borrower sold in the ordinary course of Borrower's business.
(z Credit Agreements. Schedule 11.1(z) hereto is a complete and
correct list, as of the date of this Agreement, of each credit agreement, loan
agreement, indenture, purchase agreement, guarantee or other arrangement
providing for or otherwise relating to any Funded Debt or any extension of
credit (or commitment for any extension of credit) to, or guarantee by,
Borrower, and the aggregate principal or face amount outstanding or which may
become outstanding under each such arrangement is correctly described in such
exhibit.
(aa Debt. As of the date of this Agreement, Borrower has no
Funded Debt except for the permitted Funded Debt set forth in Schedule 11.3(e)
hereof.
(bb Insurance. Schedule 11.1(bb) sets forth a complete and
accurate description of all policies of insurance that will be in effect as of
the Closing Date for Borrower. Borrower is adequately insured under such
policies, no notice of cancellation has been received with respect to such
policies, and Borrower is in compliance with all conditions contained in such
policies.
(cc Stock and Related Matters.
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(i The authorized capital stock of Borrower pursuant to
Borrower's Certificate of Incorporation and By-Laws, as of the Closing
Date is described on Schedule 11.1(cc). As of the Closing Date, no
other shares of Borrower's Stock are authorized, issued or outstanding.
As of the Closing Date, except as set forth on Exhibit 11.1(cc) hereto,
Borrower is not subject to any obligation, option, warrant, put or call
right (contingent or otherwise) to repurchase, issue, acquire or retire
any of its Stock. As of the Closing Date, all of the outstanding shares
of Stock of Borrower are validly issued, fully paid and non-assessable.
(ii Borrower has not violated any applicable federal or
state securities laws in connection with the offer, sale or issuance of
its Stock. As of the Closing Date, there are no agreements between any
parties with respect to the voting or transfer of Borrower's Stock.
(dd Accuracy of Information. All factual information heretofore
or contemporaneously furnished by or on behalf of Borrower and each Subsidiary
to Bank for purposes of or in connection with this Agreement or any transaction
contemplated hereby (excluding projections referred to below in this Paragraph
and factual information superseded or replaced prior to the date hereof) is, and
all other factual information (taken as a whole) hereafter furnished by or on
behalf of Borrower to Bank will be, true and accurate in every material respect
on the date as of which such information is dated or certified, and Borrower has
not omitted and will not omit any material fact necessary to prevent such
information from being false or misleading.
11.2 Affirmative Covenants. At all times prior to the Termination Date
and thereafter for so long as any amounts are due or owing to Bank hereunder,
Borrower hereby covenants and agrees that it will, unless Bank otherwise
consents in writing:
(a Existence, Etc. Do or cause to be done all things necessary
to preserve and maintain Borrower's and each Subsidiary's existence in good
standing.
(b Compliance with Laws, Etc. Comply with all applicable
present and future laws, rules, ordinances, regulations and orders including,
without limitation, laws, rules, ordinances, regulations and orders regarding
the operation and maintenance of Borrower's and each Subsidiary's business.
(c Payment of Taxes and Other Claims. Pay or discharge or cause
to be paid or discharged, before the same shall become delinquent, all material
Charges levied or imposed upon Borrower or any Subsidiary or upon the income,
profits or property of Borrower and each Subsidiary, provided, however, that
Borrower shall not be required to pay or discharge or cause to be paid or
discharged any such Charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings to the extent adequate
reserves have been established on the books of Borrower.
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(d Reporting Requirements. Maintain a system of accounting in
accordance with GAAP consistently applied with respect to all dealings or
transactions in relation to its business and activities, and Borrower shall
furnish to Bank:
(i as soon as possible and in any event within ten (10)
days after the occurrence of an Event of Default or any event which,
with the giving of notice, lapse of time, or both, would constitute an
Event of Default, the statement of an Authorized Officer setting forth
details of such Event of Default or event and the action which Borrower
has taken or proposes to take to cure the same;
(ii) as soon as available and in any event within seven (7)
days after the end of each week, (a) a duly completed and executed
Borrowing Base Certificate, and (b) a detailed final balance of all
then existing Accounts Receivable with a declaration of contra
liabilities, in each case in form and substance acceptable to Bank and
certified as accurate by the Chief Financial Officer of Borrower.
(iii) as soon as available and in any event within thirty
(30) days after the end of each month beginning with the month ending
March 31, 1999, an internally prepared consolidated and consolidating
balance sheet of Borrower as at the end of such month and the related
consolidated and consolidating statements of net earnings and
stockholders' equity and consolidated and consolidating statements of
cash flows of Borrower for such month and for the portion of the fiscal
year ended at the end of such month, setting forth in each case in
comparative form the figures for the corresponding month and the
corresponding portion of the previous fiscal year, all in reasonable
detail and certified (subject to normal year-end adjustments) as to
fairness of presentation, in accordance with GAAP, by the Chief
Financial Officer;
(iv) as soon as available, copies of the periodic Form 10-Q
quarterly report or comparable successor report filed by Borrower with
the Securities and Exchange Commission or any successor agency;
(v) as soon as available, copies of the Form 10-K Annual
Report or comparable successor report filed by Borrower with the
Securities and Exchange Commission or any successor agency; provided,
that if such report is not made available within ninety (90) days after
the close of each fiscal year of Borrower, Borrower shall immediately
deliver to Bank a balance sheet and the related consolidated and
consolidating statements of operations and stockholders' equity and
consolidated and consolidating statements of cash flows of Borrower and
its Subsidiaries on a consolidated and consolidating basis as of the
end of such fiscal year, fairly and accurately presenting the financial
condition of Borrower and its Subsidiaries on a consolidated basis as
at such date and the results of operations of Borrower and its
Subsidiaries for such fiscal year and setting forth in each case in
comparative form the corresponding figures for the corresponding
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period of the preceding fiscal year, all in reasonable detail, prepared
in accordance with GAAP consistently applied, and audited by an
accounting firm acceptable to Bank in its reasonable discretion (the
"Accountants");
(vi) concurrently with the delivery of the reports and/or
financial statements referred to in Sub-paragraphs (iv) and (v), a
compliance certificate duly completed and executed by both the Chairman
of the Board or President and the Chief Financial Officer of Borrower
in the form of Exhibit D hereto (a) stating that Borrower has observed
and performed all of its covenants and other agreements and satisfied
every condition, contained in this Agreement, the Notes and all Other
Agreements to which Borrower is a party to be observed, performed or
satisfied by it and that such officer has no knowledge of any Event of
Default except as specified in such certificate, (b) stating that, to
the best of such officer's knowledge, all such financial statements are
complete and correct in all respects and have been prepared in
accordance with GAAP consistently applied throughout the periods
reflected therein, subject to normal year-end adjustments, and (c)
showing calculations of compliance with the financial covenants set
forth in Paragraph 11.2(f) below;
(vii) promptly upon receipt and, in any event, within
fifteen (15) days after receipt thereof, copies of all auditors'
letters to management and management's response thereto pertaining to
the balance sheet and related financial statements of Borrower and its
Subsidiaries;
(viii) (A) as soon as possible and in any event (i) within
thirty (30) days after Borrower or any ERISA Affiliate knows or has
reason to know that any ERISA Termination Event described in clause (i)
of the definition of ERISA Termination Event with respect to any Plan
has occurred and (ii) within ten (10) days after Borrower or any ERISA
Affiliate knows or has reason to know that any other ERISA Termination
Event with respect to any Plan has occurred, a statement of the Chief
Financial Officer (or designee) of Borrower describing such ERISA
Termination Event and the action, if any, which Borrower, or any such
ERISA Affiliate, proposes to take with respect thereto;
(B) promptly and in any event within fifteen (15)
Business Days after receipt thereof by Borrower or any ERISA Affiliate
from the PBGC, copies of each notice received of the PBGC's intention
to terminate any Plan or to have a trustee appointed to administer any
Plan; and
(C) promptly and in any event within fifteen (15)
Business Days after receipt thereof by Borrower or any ERISA Affiliate
from a Multiemployer Plan sponsor, a copy of each notice received
concerning the imposition or amount of withdrawal liability which has
been assessed pursuant to Section 4202 of ERISA;
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(ix) within fifteen (15) Business Days after notice to
Borrower of the commencement thereof, notice, in writing, of any
action, suit, arbitration or other proceeding instituted, commenced or
threatened against Borrower or any Subsidiary with an amount in
controversy in excess of $50,000;
(x) at Bank's request, Borrower's federal, state and
local tax returns as soon as said returns are completed in the form
said returns will be filed with the Internal Revenue Service and any
state or local department of revenue or taxing authority;
(xi) promptly upon their becoming available, copies of (A)
all registration statements and regular periodic reports which Borrower
shall have filed with the Securities and Exchange Commission (or any
governmental agency substituted therefor) or any national securities
exchange and (B) all financial statements, reports and proxy statements
so mailed; and
(xii) such other information respecting the condition or
operations, financial or otherwise, of Borrower and its Subsidiaries as
Bank may from time to time reasonably request.
(e) Environmental Disclosure and Inspection.
(i) Exercise due diligence in order to comply with
all Environmental Laws and promptly take any and all necessary remedial
action in connection with the presence, storage, use, disposal,
transportation, Release or threatened Release of any Hazardous
Materials on, under or about any Facility in order to comply with all
applicable Environmental Laws and Governmental Authorizations.
(ii) Permit Bank, from time to time and in its sole
and absolute discretion, to retain, at Bank's expense (or, after the
assertion of an Environmental Claim, at Borrower's expense), an
independent professional consultant to review any report relating to
Hazardous Materials prepared by or for Borrower and each Subsidiary and
at reasonable times and subject to reasonable conditions to conduct its
own investigation of any Facility currently owned, leased, operated or
used by Borrower and each Subsidiary and Borrower agrees to use its
best efforts to obtain permission for Bank's professional consultant to
conduct its own investigation of any Facility previously owned, leased,
operated or used by Borrower and each Subsidiary. Borrower hereby
grants to Bank, its representatives, employees, consultants, and
contractors the right to enter into or on to, at reasonable times, the
Facilities currently owned, leased, operated or used by Borrower or any
Subsidiary to perform such tests on such property as are reasonably
necessary to conduct such a review and/or investigation.
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(iii) Promptly advise Bank in writing and in reasonable
detail of (i) any Release of any Hazardous Materials required to be
reported to any federal, state or local governmental or regulatory
agency under any applicable Environmental Laws, (ii) any and all
written communications with respect to Environmental Claims or any
Release of Hazardous Material required to be reported to any federal,
state or local governmental or regulatory agency, (iii) any remedial
action taken by Borrower or any other Person in response to (A) any
Hazardous Material on, under or about any Facility, the existence of
which is reasonably likely to give rise to an Environmental Claim, or
(B) any Environmental Claim that could have a material adverse effect
on Borrower, (iv) Borrower's or any Subsidiary's discovery of any
occurrence or condition on any real property adjoining or in the
vicinity of any Facility that could cause such Facility or any part
thereof to be subject to any restrictions on the ownership, occupancy,
transferability or use there of under any Environmental Laws, and (v)
any request for information from any governmental agency indicating
that such agency has initiated an investigation as to whether Borrower
or any Subsidiary may be potentially responsible for a Release or
threatened Release of Hazardous Materials.
(iv) Promptly notify Bank of (i) any acquisition of stock,
assets, or property by Borrower or any Subsidiary that reasonably could
be expected to expose Borrower or any Subsidiary to, or result in,
Environmental Claims that could have a material adverse effect or that
could be expected to have a material adverse effect on any Governmental
Authorization then held by Borrower or any Subsidiary, and (ii) any
proposed action outside of the normal course of business to be taken by
Borrower or any Affiliate to commence industrial or other operations
that could subject Borrower or any Subsidiary to additional laws, rules
or regulation, including, without limitation, laws, rules and
regulations requiring additional environmental permits or licenses.
(f) Financial Covenants. Maintain the following financial
covenants:
(i) Maintain Pre-Tax Income, at all times, calculated
on a rolling four-quarter basis, of not less than the following amounts
for the following periods:
PERIOD AMOUNT
------ ------
For the twelve (12) months ended April 30, 1999 $1,200,000
For the twelve (12) months ended April 30, 2000 and at
all times thereafter $1,300,000
(ii) Maintain an Interest Coverage Ratio, at all times, of
not less than (a) 2.25:1.0 for the period from the Closing Date through
April 29, 2000, and (b) 3.0:1.0 at all times thereafter.
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50
(iii) Maintain Tangible Net Worth, at all times, of at
least (a) $9,600,000 for the period from the Closing Date through the
date at which Borrower delivers to Bank its audited financial
statements for the fiscal year ended April 30, 1999 and each
corresponding fiscal year thereafter, at which time Borrower's Tangible
Net Worth shall be increased to $9,600,000 plus eighty (80%) of the
aggregate amount of Borrower's annual net income for such fiscal year
and all fiscal years thereafter.
(iv) Maintain a Leverage Ratio, at all times, of not more
than 6.00:1.0.
(v) Borrower will not permit the aggregate amount of
Capital Expenditures to exceed $5,000,000 in any fiscal year.
(g) Insurance.
(i) At its sole cost and expense, keep and maintain
business interruption insurance and public liability and property
damage insurance relating to its business and properties and their
ownership and use of the Collateral. All such policies of insurance
shall be in form and with insurers recognized as adequate by prudent
business persons and all such policies shall be in amounts no less than
such policies set forth on Schedule 11.1(bb) or as otherwise may be
reasonably satisfactory to Bank. Borrower shall deliver to Bank the
original (or certified) copy of each policy of insurance, or a
certificate of insurance, and evidence of payment of all premiums for
each such policy on or prior to the date of this Agreement. Such
policies shall: (A) contain a lender's loss payable clause naming Bank
as lender's loss payee and additional insured as its interest may
appear; (B) be accompanied by a lender's loss payable clause
endorsement, executed by the applicable insurer, in form and substance
acceptable to Bank; and (C) provide that the insurance companies will
give Bank at least thirty (30) days written notice before any such
policy or policies of insurance shall be altered or canceled.
(ii) In the event Borrower at any time or times hereafter
shall fail to obtain or maintain any of the policies of insurance
required above or to pay any premium in whole or in part relating
thereto (the "Insurance Coverage"), then Bank after giving five (5)
days' prior notice to Borrower, without waiving or releasing any
obligation or Event of Default by Borrower hereunder, may at any time
or times thereafter (but shall be under no obligation to) obtain and
maintain such policies of insurance and pay such premium and take any
other action with respect thereto which Bank deems advisable. All sums
so disbursed by Bank, including reasonable attorneys fees, court costs,
expenses and other charges relating thereto, shall be part of
Borrower's Liabilities, payable by Borrower to Bank on demand. Borrower
authorizes Bank, in Bank's sole discretion, to cause such sums to be
paid by making an advance in the amount thereof to Borrower under the
Revolving Credit Commitment and paying the proceeds thereof to Bank. In
the event Borrower, at any time, fails to provide Bank with evidence of
the Insurance Coverage as required by this
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Agreement, Bank may purchase the Insurance Coverage at Borrower's
expense to protect Bank's interests in the Collateral. Such insurance
may, but need not, protect Borrower's interests, and Bank shall be
under no obligation to so protect Borrower's interests. The Insurance
Coverage that Bank purchases on behalf of Borrower may not pay any
claim that Borrower make or any claim that is made against Borrower in
connection with the Collateral. Borrower may later cancel any Insurance
Coverage purchased by Bank, but only after providing Bank with evidence
that Insurance Coverage has been obtained as provided for in this
Agreement. In the event Bank purchases all or any portion of the
Insurance Coverage for the Collateral or as otherwise required
hereunder, Borrower will be responsible for all costs and expenses of
such Insurance Coverage, including, but not limited to, interest and
any other charges imposed by Bank in connection with the purchase of
the Insurance Coverage, until the effective date of the cancellation or
expiration of the Insurance Coverage. The costs and expenses of any
Insurance Coverage purchased by Bank shall be added to Borrower's
Obligations. Borrower acknowledges that the cost of the Insurance
Coverage purchased by Bank pursuant hereto may be more than the cost of
insurance Borrower may be able to obtain on its own. Prior to an Event
of Default, Borrower shall deliver to Bank, in kind, all instruments
representing proceeds of insurance received by Borrower in excess of
$75,000 in the aggregate at any time. Following an Event of Default,
Borrower shall deliver to Bank, in kind, all instruments representing
proceeds of insurance received by Borrower. Bank may apply any
insurance proceeds received at any time to the cost of repairs to or
replacement of any portion of the Collateral and/or, at Bank's option,
to payment of or as security for any of the Obligations, whether or not
due, in any order or manner as Bank determines.
(h) Leases. Maintain and comply with all leases covering the
Collateral used by Borrower, including, without limitation, the leases related
to any leased property, in accordance with their terms so as to prevent any
default thereunder which may result in the exercise or enforcement of any
landlord's or other lien against Borrower.
(i) Union Contracts. Provide Bank with copies of all executed
collective bargaining agreements or other union contracts, if any, in effect as
of the date hereof and all additions, modifications or amendments thereto and
shall provide Bank with evidence of the renewal of any such agreements or
contracts prior to their expiration.
11.3 Negative Covenants. Prior to the later to occur of the
Termination Date and thereafter for so long as any amount is due or owing to
Bank hereunder, unless Bank shall otherwise consent in writing, Borrower shall
not:
(a) Liens, Etc. Create or suffer to exist, any Lien, other
charge or encumbrance, or any other type of preferential arrangement, upon or
with respect to any of its Collateral and properties, whether now owned or
hereafter acquired, or assign any right to receive income, in each
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case to secure or provide for the payment of any Debt of any Person, except for
the permitted Liens set forth on Schedule 11.3(a) ("Permitted Liens").
(b) Maintain Existence, Merger, Etc. (i) Dissolve or liquidate
or amend or modify its Certificate of Incorporation; or (ii) convey, transfer,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions) any Collateral or assets (whether now owned or hereafter acquired)
to any Person, (other than sales of Inventory in the ordinary course of
business); or (iii) together with one or more Affiliates convey, transfer, lease
or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of the assets of Borrower and such
Affiliates (whether now owned or hereafter acquired) to any Person; or (iv)
purchase, lease or otherwise acquire all or substantially all of the assets or
properties of, or acquire any capital stock, equity interests, debt or other
securities of any Person, or enter into any joint venture or become a partner in
any partnership; or (v) engage in any transaction out of the ordinary course of
business; or (vi) merge or consolidate with any Person.
(c) Sale and Lease-Back. Enter into any arrangement with any
Person or to which such Person is a party providing for the leasing by Borrower
or any Affiliate of any principal asset which has been or is to be sold or
transferred by Borrower or such Affiliate to such Person or to any other Person
to whom funds have been or are to be advanced by such Person on the security of
such property or rental obligations of Borrower or such Affiliate, other than
sales or transfers between Borrower and any Affiliate or a lease for a temporary
period not to exceed twelve (12) months.
(d) Change in Control. Permit any Change in Control to occur.
(e) Funded Debt. Incur, create, assume, become or be liable
in any manner with respect to or permit to exist, any Funded Debt, except for
the permitted Funded Debt set forth on Schedule 11.3(e).
(f) Investments or Loans. Make or permit to exist investments
or loans in or to any other Person, except for (i) salaries and reasonable
advances of money to its employees in payment of reasonable expenses incurred by
such employees in the ordinary course of business or (ii) investments in
certificates of deposits of a banking institution having a net worth in excess
of $100,000,000 or in securities of the United States of America or commercial
paper with a P1 rating (or equivalent rating from a nationally recognized rating
agency) (all of the foregoing maturing within one year) ("Permitted
Investments").
(g) Guaranties. Guaranty, endorse or otherwise in any way
directly, indirectly or contingently become liable for the obligations or
liabilities of any other Person, except endorsements of negotiable instruments
for collection in the ordinary course of business.
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(h) Stock and Dividends. Redeem, retire, purchase or otherwise
acquire, directly or indirectly, any Stock of Borrower or any Stock of any
Subsidiary or other evidence of ownership interest, or declare or pay dividends
or distributions upon any Stock of Borrower or make any distribution of
Borrower's or any Subsidiary's property or assets.
(i) Transactions with Affiliates or Insiders. Enter into, or be
a party to, any transaction with any Affiliate, stockholder or member of
Borrower, except in the ordinary course of and pursuant to the reasonable
requirements of Borrower's business and upon fair and reasonable terms which are
fully disclosed to Bank and are no less favorable to Borrower than would obtain
in a comparable arm's length transaction with a Person not an Affiliate,
stockholder or member of Borrower, as applicable.
(j) Capital Structure and Line of Business. Make any change in
its capital structure or engage in any line of business materially different
from that previously engaged in by Borrower or any Subsidiary.
(k) Prepayment or Modification of Debt. Make any prepayments of
Funded Debt (except as permitted or required hereunder) or enter into or modify
any agreement pursuant to which the terms of payment of any Funded Debt are
amended or modified.
(l) Subordinated Debt. Make any payments whatsoever on or with
respect to Subordinated Debt; provided, however, that Borrower may make
regularly scheduled payments of principal and interest provided, no Event of
Default exits hereunder and such payment is not otherwise restricted by the
applicable Subordination Agreement.
(m) Inter-Company Transfers. Make any loans, transfers or
advances of funds to, or borrow any funds from, any Affiliate of Borrower,
except for loans and advances to SMT Unlimited L.P., an Illinois limited
partnership, not to exceed $500,000 in the aggregate at any time.
11.4 Maintenance of Accounts. Borrower agrees to maintain its primary
operational accounts with Bank and shall maintain an average balance of
collected, available funds in a non-interest bearing demand deposit account with
Bank (the "Operating Account") in an amount at least equal to that amount
required to compensate Bank for its services in maintaining such account.
Borrower acknowledges that Bank will charge Borrower standard service charges in
effect from time to time for various services performed by Bank in connection
with any aspect of the relationship between Borrower and Bank, and Borrower
hereby agrees that if such service charges exceed the credit to Borrower arising
from earnings attributable to funds on deposit with Bank in the applicable
Operating Account, such service charge deficiency shall be deducted by Bank from
Borrower's Operating Account, monthly, in arrears, within ten (10) days
following the end of each month. Bank may cause interest and other amounts
payable on the obligations of Borrower to Bank hereunder to be paid by making a
direct charge to the applicable Operating Account in accordance with the terms
hereof.
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12. DEFAULT
12.1 Events of Default. The occurrence of any one of the following
events shall constitute a default ("Event of Default") by Borrower under this
Agreement: (a) if Borrower or any Subsidiary fails or neglects to perform, keep
or observe any covenant or agreement contained in this Agreement or in the Other
Agreements which is required to be performed, kept or observed by Borrower or
such Subsidiary; (b) if any representation or warranty made by Borrower or any
Subsidiary herein or in any Other Agreement is breached or is false or
misleading in any material respect, or any exhibit, schedule, certificate,
financial statement, report, notice or other writing furnished by Borrower or
any of its Subsidiaries, partners, shareholders, directors, officers, employees,
managers, members or representatives to Bank is false or misleading in any
material respect on the date as of which the facts therein set forth are stated
or certified; (c) if Borrower fails to pay Borrower's Liabilities when due and
payable or declared due and payable; (d) if any of the Collateral is attached,
seized, subjected to a writ or distress warrant or is levied upon, or comes
within the possession of any receiver, trustee, custodian or assignee for the
benefit of creditors and the same is not terminated or dismissed within twenty
(20) days thereafter; (e) if a petition under any section or chapter of the
Bankruptcy Reform Act of 1978, as amended, or any similar law or regulation
shall be filed by Borrower or any Subsidiary or if Borrower or any Subsidiary
shall make an assignment for the benefit of its creditors or if any case or
proceeding is filed by Borrower or any Subsidiary for its dissolution or
liquidation; (f) if Borrower or any Subsidiary is enjoined, restrained or in any
way prevented by court order from conducting all or any material part of its
business affairs or if a petition under any section or chapter of the Bankruptcy
Reform Act of 1978, as amended, or any similar law or regulation is filed
against Borrower or any Subsidiary or if any case or proceeding is filed against
Borrower for its dissolution or liquidation and such injunction, restraint or
petition is not dismissed or stayed within forty-five (45) days after the entry
or filing thereof; (g) if an application is made by Borrower or any Subsidiary
for the appointment of a receiver, trustee or custodian for any of Borrower's or
any Subsidiary's assets; (h) if an application is made by any Person other than
Borrower or any Subsidiary for the appointment of a receiver, trustee or
custodian for the Collateral of Borrower or any Subsidiary and the same is not
dismissed within thirty (30) days after the application therefor; (i) if a
notice of lien, levy, or assessment is filed of record with respect to all or
any of the Collateral by the United States or any department, agency or
instrumentality thereof or by any state, county, municipal or other governmental
agency, including without limitation the PBGC, or if any taxes or debts owing at
any time or times thereafter to any one of them becomes a lien or encumbrance
upon any of the Collateral and the same is not released within thirty (30) days
after the same becomes a lien or encumbrance; (j) if Borrower or any Subsidiary
becomes insolvent or is unable generally to pay its debts as they become due;
(k) if Borrower or any Subsidiary is in default in the payment of Funded Debt in
an amount in excess of $50,000; (l) the appointment of a conservator for all or
any portion of the Collateral; (m) the occurrence of a material breach, default
or event of default under any agreement, instrument and/or document executed and
delivered by any Person to Bank pursuant to which such Person has guaranteed to
Bank the payment or collection of Borrower's Liabilities and/or has granted to
Bank
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a security interest or lien in and to some or all of such Person's real and/or
personal property to secure the payment of Borrower's Liabilities; (n) the
occurrence of a material breach, a default or an event of default by Borrower or
any Subsidiary under any of the Other Agreements; or (o) any guaranty of
Borrower's Liabilities shall be terminated, curtailed or restricted in scope
without Bank's consent.
12.2 Cumulative Remedies. All of Bank's rights and remedies under
this Agreement and the Other Agreements are cumulative and non-exclusive.
12.3 Acceleration and Termination of Loans. Upon the occurrence and
during the continuance of an Event of Default, (a) upon notice by Bank to
Borrower, Borrower's Liabilities shall be immediately due and payable, unless
there shall have occurred an Event of Default under subparagraphs 12.1(d), (e),
(f), (g), (h), (i), (j), or (l), in which case Borrower's Liabilities shall
automatically become due and payable without notice or demand, and (b) without
notice by Bank to or demand by Bank of Borrower, Bank shall have no further
obligation to and may then forthwith cease advancing monies and extending credit
to or for the benefit of Borrower under this Agreement and the Other Agreements.
12.4 Rights of Secured Creditor. Upon an Event of Default, Bank, in
its sole and absolute discretion, may: (a) exercise any one or more of the
rights and remedies accruing to a secured party under the Uniform Commercial
Code of the relevant state or states and any other applicable law upon default
by a debtor; (b) enter, with or without process of law and without breach of the
peace, any premises where the Collateral or the books and records of Borrower
related thereto is or may be located, and without charge or liability to Bank
therefor seize and remove the Collateral (and copies of Borrower's books and
records in any way relating to the Collateral) from said premises and/or remain
upon said premises and use the same (together with said books and records) for
the purpose of collecting, preparing and disposing of the Collateral, and
Borrower hereby grants Bank a security interest in said books and records for
the purpose above stated; and (c) sell or otherwise dispose of the Collateral at
public or private sale for cash or credit, provided, however, that Borrower
shall be credited with the net proceeds of such sale only when such proceeds are
actually received by Bank pursuant to Paragraph 13.1 hereof.
12.5 Assembly of Collateral; Injunctive Relief. Upon an Event of
Default, Borrower, immediately upon demand by Bank, shall assemble the
Collateral and make it available to Bank at a place or places to be designated
by Bank which is reasonably convenient to Bank and Borrower. Borrower recognizes
that in the event Borrower fails to perform, observe or discharge any of its
obligations or liabilities under this Agreement or the Other Agreements, no
remedy of law will provide adequate relief to Bank, and agree that Bank shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving actual damages or the posting of bond, surety or other
security.
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12.6 Notice of Collateral Disposition. Any notice required to be given
by Bank of a sale, lease or other disposition of the Collateral or any other
intended action by Bank, deposited in the United States mail, postage prepaid
and duly addressed to Borrower at its principal place of business specified on
the signature page to this Agreement not less than ten (10) days prior to such
proposed action, shall constitute commercially reasonable and fair notice to
Borrower thereof.
12.7 Matters Regarding Sale of Collateral. Upon an Event of Default,
Borrower and each Subsidiary agree that Bank may, if Bank deems it reasonable,
postpone or adjourn any such sale of the Collateral from time to time by an
announcement at the time and place of sale or by announcement at the time and
place of such postponed or adjourned sale, without being required to give a new
notice of sale. Borrower and each Subsidiary agree that Bank has no obligation
to preserve rights against prior parties to the Collateral. Further, Borrower
and each Subsidiary waive and release any cause of action and claim against Bank
as a result of Bank's possession, collection or sale of the Collateral, any
liability or penalty for failure of Bank to comply with any requirement imposed
on Bank relating to notice of sale, holding of sale, or reporting of sale of the
Collateral, and any right of redemption from such sale; provided, however,
nothing in this Paragraph shall be deemed a waiver of any cause of action or
claim against Bank as a result of Bank's failure to dispose of the Collateral in
a commercially reasonable manner.
12.8 Replevin. In the event Bank seeks possession of the Collateral
through replevin or other court process, Borrower and each Subsidiary hereby
irrevocably waive: (a) any bond, surety or security required as an incident to
such possession, and (b) any demand for possession of the Collateral prior to
commencement of any suit or action to recover possession thereof.
12.9 Application of Proceeds. Except as otherwise herein expressly
provided, the proceeds of any collection, sale or other realization of all or
any part of the Collateral pursuant hereto, and any other cash of Borrower at
the time held by Bank hereunder, shall be applied by Bank:
First, to the payment of the costs and expenses of such
collection, sale or other realization, including out-of-pocket costs
and expenses of Bank and the fees (including reasonable attorneys'
fees) and expenses of its representatives and counsel, and all expenses
incurred and advances made by Bank in connection therewith;
Next, to the payment in full of Borrower's Liabilities; and
Finally, to the payment to Borrower, or its successors or
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining.
As used in this Paragraph, "proceeds" of Collateral shall mean cash,
securities and other property realized in respect of, and distributions in kind
of, Collateral, including any amount
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received under any reorganization, liquidation or adjustment of debt of Borrower
or any issuer of or obligor on any of the Collateral.
13. GENERAL
13.1 Payment Application Date. Any check, draft, or similar item of
payment by or for the account of Borrower delivered to Bank on account of
Borrower's Liabilities shall be applied by Bank on account of Borrower's
Liabilities on the date final settlement thereof is reflected by irrevocable
credit to Bank.
13.2 Statement of Account. Each statement of account by Bank delivered
to Borrower relating to Borrower's Liabilities shall be presumed correct and
accurate, absent manifest error, and shall constitute an account stated between
Borrower and Bank unless, within ninety (90) days after Borrower's receipt of
said statement, Borrower delivers to Bank, by registered or certified mail
addressed to Bank at its Address for Notices specified on the signature pages
hereto, written objection thereto specifying the error or errors, if any,
contained in any such statement.
13.3 Manner of Application; Waiver of Setoff Prohibition. During the
existence of an Event of Default, Borrower waives the right to direct the
application of any and all payments at any time or times hereafter received by
Bank on account of Borrower's Liabilities and Borrower agrees that Bank shall
have the right, in its absolute and sole discretion, to apply and re-apply any
and all such payments in such manner as Bank may deem advisable, notwithstanding
any entry by Bank upon any of its books and records. Borrower further waives any
right under or benefit of any law that would restrict or limit the right or
ability of Bank to obtain payment of Borrower's Liabilities, including any law
that would restrict or limit Bank in the exercise of its right to appropriate
any indebtedness owing from Bank to Borrower and any deposits or other property
of Borrower in the possession or control of Bank and apply the same toward or
setoff the same against the payment of Borrower's Liabilities.
13.4 Survival of Representations and Warranties. Borrower covenants,
warrants and represents to Bank that all representations and warranties of
Borrower contained in this Agreement and the Other Agreements shall be true at
the time of Borrower's execution of this Agreement and the Other Agreements and
shall survive the execution, delivery and acceptance thereof by the parties
thereto and the closing of the transactions described therein or related
thereto.
13.5 Integration; Amendment; Assignment.
(a) This Agreement and the Other Agreements constitute the
entire agreement and understanding between the parties relating to the subject
matter hereof and supersede all prior agreements, whether oral or written. This
Agreement and the Other Agreements may not be modified, altered or amended
except by an agreement in writing signed by Borrower and Bank, and no provision
of this Agreement may be waived except with the written consent of Bank.
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(b) Borrower may not sell, assign or transfer this Agreement,
or the Other Agreements or any portion thereof, including without limitation
Borrower's rights, titles, interests, remedies, powers and/or duties hereunder
or thereunder without the prior written consent of Bank.
(c) Bank may assign or sell or agree to sell to one or more
other Persons a participation or assignment of all or any part of any Loan held
by it or Loans made or to be made by it.
13.6 No Waiver. Bank's failure at any time or times hereafter to
require strict performance by Borrower of any provision of this Agreement shall
not waive, affect or diminish any right of Bank thereafter to demand strict
compliance and performance therewith. Any suspension or waiver by Bank of an
Event of Default under this Agreement or the Other Agreements shall not suspend,
waive or affect any other Event of Default under this Agreement or the Other
Agreements, whether the same is prior or subsequent thereto and whether of the
same or of a different type. None of the undertakings, agreements, warranties,
covenants or representations of Borrower contained in this Agreement or the
Other Agreements and no Event of Default under this Agreement or the Other
Agreements shall be deemed to have been suspended or waived by Bank unless such
suspension or waiver is by an instrument in writing by Bank specifying such
suspension or waiver.
13.7 Severability. If any provision of this Agreement or the Other
Agreements or the application thereof to any Person or circumstance is held
invalid or unenforceable, the remainder of this Agreement and the Other
Agreements and the application of such provision to other Persons or
circumstances will not be affected thereby and the provisions of this Agreement
and the Other Agreements shall be severable in any such instance.
13.8 Successors and Assigns. This Agreement and the Other Agreements
shall be binding upon and inure to the benefit of the respective successors and
assigns of Borrower and Bank. This provision, however, shall not be deemed to
modify Paragraph 13.5 hereof.
13.9 Conflict with Other Agreements. The provisions of the Other
Agreements are incorporated in this Agreement by this reference thereto. Except
as otherwise provided in the Other Agreements by specific reference to the
applicable provision of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision in the Other
Agreements, the provision contained in this Agreement shall govern and control.
13.10 No Impairment by Termination. Except to the extent provided to
the contrary in this Agreement and in the Other Agreements, no termination or
cancellation (regardless of cause or procedure) of this Agreement or the Other
Agreements shall in any way affect or impair the powers, obligations, duties,
rights and liabilities of Borrower or Bank in any way or respect relating to (a)
any transaction or event occurring prior to such termination or cancellation,
(b) the Collateral and/or (c) any of the undertakings, agreements, covenants,
warranties and representations of
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Borrower contained in this Agreement or the Other Agreements. All such
undertakings, agreements, covenants, warranties and representations shall
survive such termination or cancellation.
13.11 Waivers. Except as otherwise specifically provided in this
Agreement, Borrower waives any and all notice or demand which Borrower might be
entitled to receive with respect to this Agreement or the Other Agreements by
virtue of any applicable statute or law and waives presentment, demand and
protest and notice of presentment, protest, default, dishonor, non-payment,
maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, contract rights, documents, instruments, chattel
paper and guaranties at any time held by Bank on which Borrower may in any way
be liable and hereby ratify and confirm whatever Bank may do in this regard.
13.12 Costs, Fees and Expenses Related to Agreement and Other
Agreements. In accordance with this Agreement on or prior to the date hereof and
thereafter upon demand by Bank therefor, Borrower shall pay or reimburse Bank
for all costs, fees and expenses incurred by Bank, or for which Bank becomes
obligated, in connection with the negotiation, preparation and consummation of
this Agreement and the Other Agreements, including but not limited to,
reasonable attorneys' fees, costs and expenses, search fees and all taxes
payable in connection with this Agreement or the Other Agreements. That portion
of Borrower's Liabilities consisting of costs, expenses or advances to be
reimbursed by Borrower to Bank pursuant to this Agreement or the Other
Agreements which are not paid on or prior to the date hereof shall be payable by
Borrower to Bank on demand.
13.13 Environmental Indemnity. Borrower agrees to indemnify and save
Bank, its officers, directors, employees and representatives, harmless of, from
and against any liability, loss, damage or expense (including reasonable
attorneys' fees) to which Bank or any of such persons may become subject,
arising from or based upon (a) any violation, or claim of violation, by Borrower
of any laws, regulations or ordinances relating to Hazardous Materials, or (b)
any Hazardous Materials located or disposed of on or released or transported
from any property owned, leased or operated by Borrower, or any claim of any of
the foregoing.
13.14 Release. Borrower releases Bank from any and all causes of
action, claims or rights which Borrower may now or hereafter have for, or which
may arise from, any loss or damage caused by or resulting from: (a) any failure
of Bank to protect, enforce or collect in whole or in part any of the
Collateral; (b) Bank's notification to any Obligor of Bank's security interest
in the Accounts and the Collateral; (c) Bank's directing any Obligor to pay any
sums owing to Borrower directly to Bank in accordance with the terms thereof;
and (d) any other act or omission to act on the part of Bank, its officers,
representatives or employees, except in each instance for willful misconduct and
gross negligence.
13.15 Governing Law. This Agreement and the Other Agreements shall be
governed and controlled by the laws of the State of Illinois (without regard to
conflicts of laws) as to interpretation,
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enforcement, validity, construction, effect, choice of law, and in all other
respects including, but not limited to, the legality of the interest rate and
other charges.
13.16 Notices. All notices, consents, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly given to
any party or parties (a) upon delivery to the address of the party or parties as
specified in the "Address for Notices" below such party or parties' name on the
signature pages hereof if delivered in person or by courier or if sent by
certified or registered mail (return receipt requested), or (b) upon
confirmation of transmission if transmitted by telecopy or other means of
facsimile transmission, in any case to the party or parties at the telecopy
numbers specified on the same, or to such other address or telecopy number as
any party may hereafter designate by written notice in the aforesaid manner.
13.17 FORUM; VENUE; JURY TRIAL WAIVER. TO INDUCE BANK TO ACCEPT THIS
AGREEMENT AND THE OTHER AGREEMENTS, BORROWER AND BANK IRREVOCABLY AGREE THAT,
SUBJECT TO BANK'S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY
WAY, MANNER, OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT OR
THE OTHER AGREEMENTS SHALL BE LITIGATED ONLY IN COURTS HAVING SITUS WITHIN
CHICAGO, ILLINOIS. BORROWER AND BANK HEREBY CONSENT AND SUBMIT TO THE
JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL COURT LOCATED WITHIN SAID CITY AND
STATE. BORROWER AND BANK HEREBY WAIVE ANY RIGHT IT MAY HAVE TO TRANSFER OR
CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST SUCH PARTY IN CONNECTION WITH
THIS AGREEMENT IN ACCORDANCE WITH THIS PARAGRAPH. BORROWER AND BANK HEREBY
IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION IN WHICH
BORROWER OR BANK IS A PARTY IN CONNECTION WITH THIS AGREEMENT.
13.18 Other Costs, Fees and Expenses. If at any time or times
hereafter Bank: (a) employs counsel for advice or other representation (i) with
respect to this Agreement or the Other Agreements, (ii) to represent Bank in any
litigation, contest, dispute, suit or proceeding or to commence, defend, or
intervene or to take any other action in or with respect to any litigation,
contest, dispute, suit, or proceeding (whether instituted by Bank, Borrower, or
any other Person) in any way or respect relating to this Agreement, the Other
Agreements or Borrower's affairs, or (iii) to enforce any rights of Bank against
Borrower or any other person that may be obligated to Bank by virtue of this
Agreement or the Other Agreements; (b) takes any action to protect, collect,
sell, liquidate, or otherwise dispose of any of the Collateral; and/or (c)
attempts to or enforces any of Bank's rights or remedies under the Agreement or
the Other Agreements, the reasonable costs and expenses incurred by Bank in any
manner or way with respect to the foregoing, shall be part of Borrower's
Liabilities, payable by Borrower to Bank on demand. Without limiting the
generality of the foregoing, such expenses, costs, charges and fees include: (i)
attorneys' fees, costs and expenses; (ii) accountants' fees, costs and expenses;
(iii) court costs and expenses; (iv) court reporter fees, costs and expenses;
(v) long distance telephone charges; (vi) telegram charges; (vii) expenses
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for travel, lodging and food; and (viii) costs and expenses incurred with
respect to exercise or enforcement of Bank's rights in or against Accounts
Receivable and/or any Obligor, including expenses incurred in fulfilling, in
whole or in part, any order of any Obligor from which an Account Receivable has
arisen or will arise.
13.19 Revival. To the extent that Bank receives any payment on account
of Borrower's Liabilities, or any proceeds of Collateral are applied on account
of Borrower's Liabilities and any such payment(s) and/or proceeds or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside, subordinated and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy act, state or federal law, common law or
equitable cause, then, to the extent of such payment(s) and/or proceeds
received, Borrower's Liabilities or part thereof intended to be satisfied shall
be revived and continue in full force and effect, as if such payment(s) and/or
proceeds had not been received by Bank and applied on account of Borrower's
Liabilities.
13.20 Acknowledgments. Borrower acknowledges that (i) it has been
advised by counsel of its choice with respect to this Agreement and the
transactions contemplated hereby, (ii) each of the waivers set forth herein was
knowingly and voluntarily made; and (iii) the obligations of Bank hereunder,
including the obligation to advance and lend funds to Borrower in accordance
herewith, shall be strictly construed and shall be expressly subject to
Borrower's compliance in all respects with the terms and conditions herein set
forth.
13.21 Section Headings. Section headings used in this Agreement are
for convenience only and shall not effect the construction or interpretation of
this Agreement.
13.22 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same instrument.
13.23 Effectiveness. This Agreement shall become effective upon the
execution and deliver to Bank of counterparts of this Agreement by Borrower and
Bank.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year specified at the beginning hereof.
SIGMATRON INTERNATIONAL, INC.
By:
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Its:
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Address for Notices to Borrower:
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▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.:
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Telephone No.:
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Attention:
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LASALLE NATIONAL BANK
By:
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Its:
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Address for Notices:
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President
With a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Vedder, Price, ▇▇▇▇▇▇▇ & Kammholz
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Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
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