1
EXHIBIT 10.44
LOAN AND SECURITY AGREEMENT
DATED AS OF DECEMBER 1, 1998
BETWEEN
GENERAL ELECTRIC CAPITAL CORPORATION
AS LENDER
AND
AMERICAN HEALTH PRODUCTS CORPORATION
AS BORROWER
2
INDEX OF EXHIBITS AND SCHEDULES
Schedule A - Definitions
Schedule B - Lender's and Borrower's Addresses for Notices
Schedule C - Letters of Credit
Schedule D - Cash Management System
Schedule E - Fees and Expenses
Schedule F - Schedule of Documents
Schedule G - Financial Covenants
Schedule H - Account Debtors
Disclosure Schedule (3.2) - Places of Business; Corporate Names
Disclosure Schedule (3.6) - Real Estate
Disclosure Schedule (3.7) - Stock; Affiliates
Disclosure Schedule (3.12) - ERISA
Disclosure Schedule (3.13) - Litigation
Disclosure Schedule (3.14) - Intellectual Property
Disclosure Schedule (3.16) - Environmental Matters
Disclosure Schedule (3.17) - Insurance
Disclosure Schedule (5(c)) - Indebtedness
Disclosure Schedule (5(h)) - Liens
Disclosure Schedule (6.1) - Actions to Perfect Liens
Exhibit A - Form of Notice of Revolving Credit Advance
Exhibit B - Other Reports and Information
Exhibit C - Form of Borrowing Base Certificate
Exhibit D - Form of Accounts Payable Analysis (Not used)
Exhibit E - Form of Accounts Receivable Rollforward Analysis (Not used)
Exhibit F - Form of Revolving Credit Note
Exhibit G - Form of Term Note (Not Used)
Exhibit H - Form of Secretarial Certificate
Exhibit I - Form of Power of Attorney
Exhibit J - Form of Certificate of Compliance
Exhibit K - Form of Lockbox Agreement
Exhibit L - Form of Landlord's Waiver and Consent
Exhibit M-1 - Form of Mortgage Waiver and Consent (Trust) (Not Used)
Exhibit M-2 - Form of Mortgage Waiver and Consent (Mortgage) (Not Used)
Exhibit N-1.A - Form of Guarantee (variant) (Not Used)
Exhibit N-2 - Form of Joint and Several Guarantee (Not Used)
Exhibit N-2.A - Form of Joint and Several Guarantee (variant) (Not Used)
Exhibit 0 - Form of Opinion of Counsel to Borrower
Exhibit P-1 - Form of Intercreditor Agreement (secured junior debt) (Not Used)
Exhibit P-2 - Form of Intercreditor Agreement (unsecured junior debt) (Not Used)
Exhibit Q - Form of Standard Payoff Letter
Exhibit R - Form of U.C.C. Schedule
Exhibit S - Form of Payment of Proceeds Letter
3
GE CAPITAL COMMERCIAL FINANCE
This LOAN AND SECURITY AGREEMENT is dated as of December 1, 1998, and agreed to
by and between American Health Products Corporation, a Texas C corporation
("Borrower") and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
("Lender").
RECITALS
A. The purpose of this Agreement is to provide to Borrower revolving credit
loans (including a subfacility for letters of credit) (collectively, the
"Loans") having the following general description:
--------------------------------------------------------------------------------
TRANSACTION SUMMARY AS OF THE DATE OF THIS AGREEMENT
REVOLVING CREDIT LOAN
Maximum Amount: $10,000,000
Term: 3 years
Revolving Credit Rate: Index Rate plus 2.75%
Letter of Credit Subfacility: $7,000,000
Borrowing Base: 85% of the value (as determined by Lender) of
Borrower's Eligible Accounts, plus the lesser of (i)
$6,000,000 or (ii) 60% of the value of Borrower's
Eligible Inventory consisting of market value of
eligible finished goods, valued on a first in, first
out basis (at the lower of cost or market).
FEES
Closing Fee: $12,500
Collateral Monitoring Fee: $0 per annum.
Unused Line Fee: .25% on unused facility below $5,000,000
Letter of Credit Fee: .50%. Additional 2% during default.
Prepayment Fee: .75% in year one; .50% in year two;
and .0% in year three on total
commitment.
THE LOANS DESCRIBED GENERALLY HERE ARE ESTABLISHED AND GOVERNED BY THE TERMS AND
CONDITIONS SET FORTH BELOW IN THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND
IF THERE IS ANY CONFLICT BETWEEN THIS GENERAL DESCRIPTION AND THE EXPRESS TERMS
AND CONDITIONS BELOW OR ELSEWHERE IN THE LOAN DOCUMENTS, SUCH OTHER EXPRESS
TERRNS AND CONDITIONS SHALL CONTROL.
--------------------------------------------------------------------------------
B. Borrower desires to obtain the Loans and other financial accommodations from
Lender and Lender is willing to provide the Loans and accommodations all in
accordance with the terms of this Agreement.
C. Capitalized terms used herein shall have the meanings assigned to them in
Schedule A and, for purposes of this Agreement and the other Loan Documents, the
rules of construction set forth in Schedule A shall govern. All Schedules,
Disclosure Schedules, Attachments, Addenda and Exhibits (collectively,
"Appendices") hereto, or expressly identified to this Agreement, are
incorporated herein by reference, and taken together with this Agreement,
constitute but a single agreement. These Recitals shall be construed as part of
this Agreement.
1
4
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Loans.
(a) Subject to the terms and conditions of this Agreement, from the
Closing Date and until the Commitment Termination Date
(i) Lender agrees (A) to make available advances (each, a
"Revolving Credit Advance") and (B) to incur Letter of Credit
Obligations, in an aggregate outstanding amount not to exceed the
Borrowing Availability, and
(ii) Borrower may at its request from time to time borrow, repay
and reborrow, and may cause Lender to incur Letter of Credit
Obligations, under this Section 1.1.
(b) Borrower shall request each Revolving Credit Advance by written
notice to Lender substantially in the form of Exhibit A (each a "Notice of
Revolving Credit Advance") given no later than 11:30 A.M. (Chicago time) on the
Business Day of the proposed Revolving Credit Advance. Lender shall be fully
protected under this Agreement in relying upon, and shall be entitled to rely
upon,
(i) any Notice of Revolving Credit Advance believed by Lender to
be genuine, and
(ii) the assumption that the Persons making electronic requests or
executing and delivering a Notice of Revolving Credit Advance were duly
authorized, unless the responsible individual acting thereon for Lender
shall have actual knowledge to the contrary.
(c) The Revolving Credit Loan shall be evidenced by, and be repayable
in accordance with the terms of, the Revolving Credit Note and this Agreement.
(d) Borrower agrees that Lender, in making any Revolving Credit Advance
or incurring any other Obligation hereunder, shall be entitled to rely upon the
most recent Borrowing Base Certificate delivered to Lender by Borrower and other
information available to Lender. Borrower further agrees that Lender shall be
under no obligation to make any further Revolving Credit Advance or incur any
other Obligation if Borrower shall have failed to deliver a Borrowing Base
Certificate to Lender by the time specified in Section 4.1 (b).
(e) Letters of Credit. Subject to the terms and conditions of this
Agreement, including Schedule C, Borrower shall have the right to request, and
Lender agrees to incur, the Letter of Credit Obligations for the account of
Borrower in accordance with Schedule C.
2
5
1.2 Term and Prepayment.
(a) The obligation of Lender to make Revolving Credit Advances and
extend other financial accommodations shall be in effect from the Closing Date
until the Commitment Termination Date. Upon the Commitment Termination Date
Borrower shall pay to Lender in full, in cash:
(i) all outstanding Revolving Credit Advances and all accrued but
unpaid interest thereon;
(ii) an amount sufficient to enable Lender to hold cash collateral
as specified in Schedule C; and
(iii) all other non-contingent Obligations due to or- incurred by
Lender. Upon payment of the amounts specified in the immediately
preceding sentence, Borrower's obligation to pay the Unused Line Fee
shall simultaneously terminate.
(b) If the Revolving Credit Loan shall at any time exceed the Borrowing
Availability, then Borrower shall immediately repay the Revolving Credit Loan in
the amount of such excess; any such excess balance outstanding shall
nevertheless constitute Obligations that are evidenced by the Revolving Credit
Note, secured by the Collateral and entitled to all of the benefits of the Loan
Documents.
(c) Each Borrower shall have the right, at any time upon 30 days prior
written notice to Lender to
(i) terminate voluntarily each Borrower's right to receive or
benefit from, and Lenders obligation to make and to incur, Revolving
Credit Advances and Letter of Credit Obligations and
(ii) prepay all of the Obligations. The effective date of
termination of the Revolving Credit Loan specified in such notice shall
be the Commitment Termination Date.
(d) If Borrower exercises its right of termination and prepayment, or
if Borrower's right to receive or benefit from, and Lenders obligation to make
Loans, are terminated for any reason prior to the Stated Expiry Date (including
as a result of the occurrence of a Default), Borrower shall pay to Lender the
applicable Prepayment Fee.
1.3 Use of Proceeds. Borrower shall use the proceeds of the Loans to
refinance on the Closing Date certain outstanding Indebtedness as provided in
Section 2.1(b) and for working capital and other general corporate purposes.
1.4 Single Loan. The Loans and all of the other Obligations of Borrower to
Lender shall constitute one general obligation of Borrower secured by all of the
Collateral.
3
6
1.5 Interest.
(a) Borrower shall pay interest to Lender on the aggregate outstanding
Revolving Credit Advances at a floating rate equal to the Index Rate plus two
and seventy five hundredths percent (2.75%) per annum (the "Revolving Credit
Rate").
(b) Interest shall be payable on the outstanding Revolving Credit
Advances
(i) in arrears for the preceding calendar month on the first day
of each calendar month,
(ii) on the Commitment Termination Date, and
(iii) if any interest accrues or remains payable after the
Commitment Termination Date, upon demand by Lender.
(c) All computations of interest, and all calculations of the Letter of
Credit Fee, shall be made by Lender on the basis of a three hundred and sixty
(360) day year, in each case for the actual number of days occurring in the
period for which such interest or fee is payable. Each determination by Lender
of an interest rate hereunder shall be conclusive and binding for all purposes,
absent manifest error.
(d) Effective upon the occurrence of any Event of Default and for so
long as any Event of Default shall be continuing, upon notice to the Borrower
(except that no notice shall be required upon the occurrence of any Event of
Default specified in Sections 7.1 (e), (f) or (g)) the Revolving Credit Rate and
the Letter of Credit Fee shall automatically be increased by two percentage
points (2%) per annum (such increased rate, the "Default Rate"), and all
outstanding Obligations, including unpaid interest and Letter of Credit Fees,
shall continue to accrue interest from the date of such Event of Default at the
Default Rate applicable to such Obligations.
(e) If any interest or other payment (including Unused Line Fees,
Left'er of Credit Fees and Collateral Monitoring Fees) to Lender under this
Agreement becomes due and payable on a day other than a Business Day, such
payment date shall be extended to the next succeeding Business Day and interest
thereon shall be payable at the then applicable rate during such extension.
(f) In no event will Lender charge interest at a rate that exceeds the
highest rate of interest permissible under any law that a court of competent
jurisdiction shall, in a final determination, deem applicable.
1.6 Cash Management System. On or prior to the Closing Date and until the
Termination Date, Borrower will establish and maintain the cash management
system described in Schedule D. All payments in respect of the Collateral shall
be made to or deposited in the blocked or lockbox accounts described in Schedule
D in accordance with the terms thereof.
4
7
1.7 Fees. As compensation for Lender's costs and efforts incurred and
expended in entering into this Agreement and in consideration of Lender's making
the Loans available to Borrower, Borrower agrees to pay to Lender the Fees set
forth in Schedule E.
1.8 Receipt of Payments. Borrower shall make each payment under this
Agreement (not otherwise made pursuant to Section 1.9) without setooff or
counterclaim not later than 11:30 A.M. (Chicago time) on the day when due in
lawful money of the United States of America in immediately available funds to
the Collection Account. For purposes of computing interest and Fees, all
payments shall be deemed received by Lender upon receipt of good funds in the
Collection Account so long as such funds are received not later than 11:30 A.M.
(Chicago time). For purposes of determining the Borrowing Availability, payments
shall be deemed received by Lender upon receipt of good funds in the Collection
Account.
1.9 Application and Allocation of Payments. Borrower irrevocably agrees
that Lender shall have the continuing and exclusive right to apply any and all
payments against the then due and payable Obligations in such order as Lender
may deem advisable. Lender is authorized to, and at its option may (without
prior notice or precondition and at any time or times), but shall not be
obligated to, make or cause to be made Revolving Credit Advances on behalf of
Borrower for:
(a) payment of all Fees, expenses, indemnities, charges, costs,
principal, interest, or other Obligations owing by Borrower under this Agreement
or any of the other Loan Documents,
(b) the payment, performance or satisfaction of any of Borrower's
obligations with respect to preservation of the Collateral or otherwise under
this Agreement, or
(c) any premium in whole or in part required in respect of any of the
policies of insurance required by this Agreement, even if the making of any such
Revolving Credit Advance causes the outstanding balance of the Revolving Credit
Loan to exceed the Borrowing Availability, and Borrower agrees to repay
immediately, in cash, any amount by which the Revolving Credit Loan exceeds the
Borrowing Availability.
1.10 Accounting. Lender is authorized to record on its books and records the
date and amount of each Loan and each payment of principal thereof and such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded. Lender shall provide Borrower on a monthly basis a
statement and accounting of such recordations but any failure on the part of the
Lender to keep any such recordation (or any errors therein) or to send a
statement thereof to Borrower shall not in any manner affect the obligation of
Borrower to repay (with applicable interest) the Loans made to Borrower under
this Agreement. Except to the extent that Borrower shall, within 30 days after
such statement and accounting is sent, notify Lender in writing of any objection
Borrower may have thereto (stating with particularity the basis for such
objection), such statement and accounting shall be deemed final, binding and
conclusive upon Borrower, absent manifest error.
1.11 Indemnity. Borrower agrees to indemnify and hold Lender and its
Affiliates, and their respective employees, attorneys and agents (each, an
"Indemnified Person"), harmless from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses of
5
8
any kind or nature whatsoever (including attorneys' fees and disbursements and
other costs of investigation or defense, including those incurred upon any
appeal) which may be instituted or asserted against or incurred by any such
Indemnified Person as the result of credit having been extended, suspended or
terminated under this Agreement and the other Loan Documents or with respect to
the execution, delivery, enforcement, performance and administration of, or in
any other way arising out of or relating to, this Agreement and the other Loan
Documents or any other documents or transactions contemplated by or referred to
herein or therein and any actions or failures to act with respect to any of the
foregoing, including any and all product liabilities, Environmental Liabilities
and legal costs and expenses arising out of or incurred in connection with
disputes between or among any parties to any of the Loan Documents
(collectively, "Indemnified Liabilities"), except to the extent that any such
Indemnified Liability is finally determined by a court of competent jurisdiction
to have resulted solely from such Indemnified Person's gross negligence or
willful misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO THE
BORROWER OR TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR
THIRD PARTY BENEFICIARY OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY
THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES
WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR
TERMINATED UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR AS A RESULT OF ANY
OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
1.12 Taxes. All payments to Lender under any Loan Document shall be made
free and clear of, and without deduction for, any Taxes. If Borrower shall be
required by law to deduct any Taxes from any payment to Lender under any Loan
Document, then the amount payable to Lender shall be increased so that, after
making all required deductions (including deductions applicable to additional
sums payable under this Section 1.12), Lender receives an amount equal to that
which it would have received had no such deductions been made and Borrower shall
pay the full amount deducted to the relevant taxing authority, and promptly
furnish to Lender tax receipts evidencing such payment. Borrower shall pay and
indemnify Lender for the full amount of Taxes (including any Taxes imposed by
any jurisdiction on amounts payable under this Section 1.12) paid by Lender and
any liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes were correctly or legally
asserted.
1.13 Borrowing Base: Reserves. The Borrowing Base shall be determined by
Lender (including the eligibility of Accounts and Inventory) based on the most
recent Borrowing Base Certificate delivered to Lender in accordance with Section
4.1 (b) and such other information available to Lender. Without limiting any
other rights and remedies of Lender hereunder or under the other Loan Documents,
the Revolving Credit Loan shall be subject to Lenders continuing right to
withhold from Borrowing Availability reserves, and to increase and decrease such
reserves from time to time, if and to the extent that in Lender's good faith
credit judgment such reserves are necessary, including to protect Lender's
interest in the Collateral or to protect Lender against possible non-payment of
Accounts for any reason by Account Debtors or possible diminution of the value
of any Inventory or possible non-payment of any of the Obligations or for any
taxes or customs duties or in respect of any state of facts which could
constitute a Default. Lender may, at its option, implement reserves by
designating as ineligible a sufficient amount of Accounts or Inventory which
would otherwise
6
9
be Eligible Accounts or Eligible Inventory, as the case may be, so as to reduce
the Borrowing Base by the amount of the intended reserves.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans. Lender shall not be obligated to make
any of the Loans, or to take, fulfill, or perform any other action hereunder,
until the following conditions have been satisfied in a manner satisfactory to
Lender in its sole discretion, or waived in writing by Lender:
(a) the Loan Documents to be delivered on or before the Closing Date
shall have been duly executed and delivered by the appropriate parties, all as
set forth in the Schedule of Documents (Schedule F);
(b) Lender shall have received evidence satisfactory to it that:
(i) all of the obligations of Borrower to Bank Burniputra Malaysia
Berhad under its financing documentation as in effect immediately prior
to the Closing Date will be performed and paid in full from the
proceeds of the initial Loans; and
(ii) all Liens upon any of the property of Borrower in favor of
Bank Burniputra Malaysia Berhad shall have been terminated immediately
upon such payment;
(c) Lender shall have received evidence satisfactory to R that Borrower
has obtained all consents and acknowledgments of all Persons and Governmental
Authorities whose consents or acknowledgments may be required prior to the
execution and delivery of this Agreement and the other Loan Documents (or
pursuant to the terms hereof or thereof) and the consummation of the
transactions contemplated hereby and thereby and that such consents or
acknowledgments remain in full force and effect;
(d) Lender shall have received evidence satisfactory to it that the
insurance policies provided for in Section 3.17 are in full force and effect,
together with appropriate evidence showing loss payable or additional insured
clauses or endorsements in favor of Lender as required under such Section;
(e) Lender shall have received an opinion of counsel to the Borrower
with respect to the Loan Documents in form and substance satisfactory to Lender;
and
(f) payment by Borrower of the Closing Fee and all other fees, costs,
and expenses payable by Borrower hereunder that have accrued as of the Closing
Date.
2.2 Further Conditions to the Loans. Lender shall not be obligated to fund
any Loan (including the initial Loans), if, as of the date thereof:
(a) any representation or warranty by Borrower contained herein or in
any of the other Loan Documents shall be untrue or incorrect as of such date,
except to the extent that any such
7
10
representation or warranty is expressly stated to relate to a specific earlier
date, in which case, such representation and warranty shall be true and correct
as of such earlier date; or
(b) any event or circumstance which has had or reasonably could be
expected to have a Material Adverse Effect shall have occurred since the Closing
Date; or
(c) any Default shall have occurred and be continuing or would result
after, giving effect to such Loan; or
(d) after giving effect to such Loan the Revolving Credit Loan would
exceed the Borrowing Availability; or
(e) any action, proceeding, investigation, regulation or legislation
shall have been instituted, threatened or proposed before any Governmental
Authority to enjoin, restrain or prohibit, or to obtain damages in respect of,
or which is related to or arises out of, this Agreement or any other Loan
Document or the consummation of any transaction contemplated hereby or thereby
and which, in Lender's sole judgment, would make it inadvisable to consummate
any transaction contemplated by this Agreement or any other Loan Document.
The request and acceptance by Borrower of the proceeds of any Loan shall be
deemed to constitute, as of the date of such request and the date of such
acceptance, (i) a representation and warranty by Borrower that the conditions in
this Section 2.2 have been satisfied and (ii) a reaffirmation by Borrower of the
granting and continuance of Lenders Liens pursuant to the Loan Documents.
3. REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE COVENANTS
To induce Lender to enter into this Agreement and to make the Loans, Borrower
represents and warrants to Lender (each of which representations and warranties
shall survive the execution and delivery of this Agreement), and promise to and
agree with Lender until the Termination Date as follows:
3.1 Corporate Existence: Compliance with Law. Borrower:
(a) is, as of the Closing Date, and will continue to be
(i) a corporation duly organized, validly existing and in good
standing under the laws of Texas,
(ii) duly qualified to do business and in good standing in each
other jurisdiction where its ownership or lease of property or the
conduct of its business requires such qualification, except where the
failure to be so qualified could not reasonably be expected to have a
Material Adverse Effect, and
8
11
(iii) in compliance with all Requirements of Law and Contractual.
Obligations, except to the extent failure to comply therewith could
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; and
(b) has and will continue to have
(i) the requisite corporate power and authority and the legal
right to execute, deliver and perform its obligations under the Loan
Documents, and to own, pledge, mortgage or otherwise encumber and
operate its properties, to lease the property it operates under lease,
and to conduct its business as now, heretofore or proposed to be
conducted, and
(ii) all licenses, permits, franchises, rights, powers, consents
or approvals from or by all Persons or Governmental Authorities having
jurisdiction over Borrower which are necessary or appropriate for the
conduct of its business.
3.2 Executive Offices: Corporate or Other Names: Conduct of Business. The
location of Borrowers chief executive office, corporate offices, warehouses,
other locations of Collateral and locations where records with respect to
Collateral are kept (including in each case the county of such locations) are as
set forth in Disclosure Schedule (3.2) and, except as set forth in such
Disclosure Schedule, such locations have not changed during the preceding twelve
months. As of the Closing Date, during the prior five years, except as set forth
in Disclosure Schedule (3.2), Borrower has not been known as or conducted
business in any other name (including tradenames). Borrower shall not shall
change its
(a) name,
(b) chief executive office,
(c) corporate offices,
(d) warehouses or other Collateral locations, or
(e) location of its records concerning the Collateral, or acquire,
lease or use any real estate after the Closing Date without Borrower, in each
instance, giving thirty (30) days prior written notice thereof to Lender and
taking all actions deemed necessary or appropriate by Lender to continuously
protect and perfect Lender's Liens upon the Collateral.
3.3 Corporate Power Authorization: Enforceable Obligations. The execution,
delivery and performance by Borrower of the Loan Documents to which it is a
party, and the creation of all Liens provided for herein and therein:
(a) are and will continue to be within such Borrower's power and
authority;
(b) have been and will continue to be duly authorized by all necessary
or proper action;
9
12
(c) are not and will not be in violation of any Requirement of Law or
Contractual Obligation of such Borrower
(d) do not and will not result in the creation or imposition of any
Lien (other than Permitted Encumbrances) upon any of the Collateral; and
(e) do not and will not require the consent or approval of any
Governmental Authority or any other Person, except those referred to in Section
2.1(c) (all of which will have been duly obtained, made or complied with on or
before the Closing Date and shall be in full force and effect on such date). As
of the Closing Date, each Loan Document shall have been duly executed and
delivered on behalf of Borrower thereto, and each such Loan Document upon such
execution and delivery shall be and will continue to be a legal, valid and
binding obligation of Borrower, enforceable against it in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency and
other similar laws affecting creditors' rights generally, and by general
principles of equity.
3.4 Financial Statements and Projections: Books and Records.
(a) The Financial Statements delivered by Borrower to Lender for its
most recently ended Fiscal Year and Fiscal Month, are true, correct and complete
and reflect fairly and accurately the financial condition of Borrower as of the
date of each such Financial Statement in accordance with GAAP. The Projections
most recently delivered by Borrower to Lender have been prepared in good faith,
with care and diligence and use assumptions that are reasonable under the
circumstances at the time such Projections were prepared and as of the date
delivered to Lender and all such assumptions are disclosed in the Projections.
(b) Borrower shall keep adequate Books and Records with respect to the
Collateral and its business activities in which proper entries, reflecting all
consolidated and consolidating financial transactions, and payments received on
any and all credits granted to, and all other dealings with, the Collateral,
will be made in accordance with GAAP and all Requirements of Law and on a basis
consistent with the Financial Statements.
3.5 Material Adverse Change. Between the date of Borrower's most recently
audited Financial Statements delivered to Lender and the Closing Date:
(a) Borrower has incurred no obligations, contingent or non-contingent
liabilities, or liabilities for Charges, long-term leases or unusual forward or
long-term commitments which are not reflected in the Projections delivered on
the Closing Date and which could, alone or in the aggregate, reasonably be
expected to have a Material Adverse Effect;
(b) there has been no material deviation from such Projections; and
(c) no events have occurred which alone or in the aggregate has had or
could reasonably be expected to have a Material Adverse Effect. No Requirement
of Law or Contractual Obligation of Borrower has or have had or could reasonably
be expected to have a Material Adverse Effect and
10
13
Borrower is not in default, and to such Borrowers knowledge no third party is in
default under or with respect to any of its Contractual Obligations, which alone
or in the aggregate has had or could reasonably be expected to have a Material
Adverse Effect.
3.6 Real Estate: Property. The real estate listed in Disclosure Schedule
(3.6) constitutes all of the real property owned, leased, or used by Borrower in
its business, and such Borrower will not execute any material agreement or
contract in respect of such real estate after the date of this Agreement without
giving Lender prompt written notice thereof. Borrower holds and will continue to
hold good and marketable fee simple title to all of its owned real estate, and
good and marketable title to all of its other properties and assets, and valid
and insurable leasehold interests in all of its leases (both as lessor and
lessee, sublessee or assignee), and none of the properties and assets of
Borrower are or will be subject to any Liens, except Permitted Encumbrances.
With respect to each of the premises identified in Disclosure Schedule (3.2) on
or prior the Closing Date a bailee, landlord or mortgagee agreement acceptable
to Lender has been obtained.
3.7 Ventures, Subsidiaries and Affiliates: Outstanding Stock and
Indebtedness. Except as set forth in Disclosure Schedule (3.7), as of the
Closing Date Borrower has no Subsidiaries, is not engaged in any joint venture
or partnership with any other Person, and is not an Affiliate of any other
Person. All of the issued and outstanding Stock of Borrower (including all
rights to purchase, options, warrants or similar rights or agreements pursuant
to which Borrower may be required to issue, sell, repurchase or redeem any of
its Stock) as of the Closing Date is owned by each of the Stockholders (and in
the amounts) set forth on Disclosure Schedule (3.7). All outstanding
Indebtedness of Borrower as of the Closing Date is described in Disclosure
Schedule (5(c)).
3.8 Government Regulation. Borrower is not subject to or regulated under
the Investment Company Act of 1940, the Public Utility Holding Company Act of
1935, the Federal Power Act or any other Federal or state statute, rule or
regulation that restricts or limits such Person's ability to incur Indebtedness,
pledge its assets, or to perform its obligations under the Loan Documents. The
making of the Loans, the application of the proceeds and repayment thereof, and
the consummation of the transactions contemplated by the Loan Documents do not
and will not violate any provision of any such statute or any rule, regulation
or order issued by the Securities and Exchange Commission.
3.9 Margin Regulations. Borrower is not engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin security" as
such terms are defined in Regulations U or G of the Federal Reserve Board as now
and from time to time hereafter in effect (such securities being referred to
herein as "Margin Stock"). Borrower owns no Margin Stock, and none of the
proceeds of the Loans or other extensions of credit under this Agreement will be
used, directly or indirectly, for the purpose of purchasing or carrying any
Margin Stock, for the purpose of reducing or retiring any Indebtedness which was
originally incurred to purchase or carry any Margin Stock or for any other
purpose which might cause any of the Loans or other extensions of credit under
this Agreement to be considered a "purpose credit" within the meaning of
Regulation G, T, U or X of the Federal Reserve Board. Borrower will not take or
permit to be taken any action which might cause any Loan Document to violate any
regulation of the Federal Reserve Board.
11
14
3.10 Taxes; Charges. Except as disclosed on Disclosure Schedule (3.10) all
tax returns, reports and statements required by any Governmental Authority to be
filed by Borrower have, as of the Closing Date, been filed and will, until the
Termination Date, be filed with the appropriate Governmental Authority and no
tax Lien has been filed against Borrower or its property. Proper and accurate
amounts have been and will be withheld by Borrower from its employees for all
periods in complete compliance with all Requirements of Law and 'such
withholdings have and will be timely paid to the appropriate Governmental
Authorities. Disclosure Schedule (3.10) sets forth as of the Closing Date those
taxable years for which Borrower's tax returns are currently being audited by
the IRS or any other applicable Governmental Authority and any assessments or
threatened assessments in connection with such audit, or otherwise currently
outstanding. Except as described on Disclosure Schedule (3.10), Borrower has not
executed or filed with the IRS or any other Governmental Authority any agreement
or other document extending, or having the effect of extending, the period for
assessment or collection of any Charges. Neither Borrower nor any of its
predecessors are liable for any Charges:
(a) under any agreement (including any tax sharing agreements) or
(b) to Borrowers knowledge, as a transferee. As of the Closing Date,
Borrower has not agreed or been requested to make any adjustment under IRC
Section 481(a), by reason of a change in accounting method or otherwise, which
could reasonably be expected to have a Material Adverse Effect.
3.11 Payment of Obligations. Borrower will pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all of its Charges and other obligations of whatever nature, except where
the amount or validity thereof is currently being contested in good faith by
appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of Borrower and none of the Collateral
is or could reasonably be expected to become subject to any Lien or forfeiture
or loss as a result of such contest.
3.12 ERISA.
(a) Disclosure Schedule (3.12) lists and separately identifies all
Title IV Plans, Multiemployer Plans, ESOPs and Retiree Welfare Plans. Copies of
all such listed Plans, together with a copy of the latest form 5500 for each
such Plan, have been delivered to Lender. Each Qualified Plan has been
determined by the IRS to quality under Section 401 of the IRC, and the trusts
created thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the IRC, and nothing has occurred which would cause
the loss of such qualification or taxoexempt status. Each Plan is in compliance
with the applicable provisions of ERISA and the IRC , including the filing of
reports required under the IRC or ERISA. Neither Borrower nor any ERISA
Affiliate has failed to make any contribution or pay any amount due as required
by either Section 412 of the IRC or Section 302 of ERISA or the terms of any
such Plan. Neither Borrower nor any ERISA Affiliate has engaged in a prohibited
transaction, as defined in Section 4975 of the IRC, in connection with any Plan,
which would subject Borrower to a material tax on prohibited transactions
imposed by Section 4975 of the IRC.
12
15
(b) Except as set forth in Disclosure Schedule (3.12):
(i) no Title IV Plan has any Unfunded Pension Liability;
(ii) no ERISA Event or event described in Section 4062(e) of ERISA
with respect to any Title IV Plan has occurred or is reasonably
expected to occur;
(iii) there are no pending, or to the knowledge of Borrower,
threatened claims (other than claims for benefits in the normal
course), sanctions, actions or lawsuits, asserted or instituted against
any Plan or any Person as fiduciary or sponsor of any Plan;
(iv) neither Borrower nor any ERISA Affiliate has incurred or
reasonably expects to incur any liability as a result of a complete or
partial withdrawal from a Multiemployer Plan;
(v) within the last five years no Title IV Plan with Unfunded
Pension Liabilities has been transferred outside of the "controlled
group" (within the meaning of Section 4001(a)(14) of ERISA) of Borrower
or any ERISA Affiliate; and
(vi) no liability under any Title IV Plan has been satisfied with
the purchase of a contract from an insurance company that is not rated
AAA by the Standard & Poor's Corporation or the equivalent by another
nationally recognized rating agency.
3.13 Litigation. No Litigation is pending or, to the knowledge of Borrower,
threatened by or against Borrower or its properties or revenues
(a) with respect to any of the Loan Documents or any of the
transactions contemplated hereby or thereby, or
(b) which could reasonably be expected to have a Material Adverse
Effect. Except as set forth on Disclosure Schedule (3.13), as of the Closing
Date there is no Litigation pending or threatened against Borrower which seeks
damages in excess of $50,000 or injunctive relief or alleges criminal misconduct
of Borrower. Borrower shall notify Lender promptly upon learning of the
existence or commencement of any Litigation commenced or to the knowledge of
Borrower threatened against any Borrower that: (x) may involve an amount in
excess of $50,000; (y) could reasonably be expected to have a Material Adverse
Effect whether or not determined adversely; or (z) regardless of amount
(i) is asserted or instituted, against any Plan, its fiduciaries
or its assets, or against any Borrower or any ERISA Affiliate in
connection with any Plan,
(ii) includes any demand for injunctive relief,
(iii) alleges criminal misconduct by Borrower, or
13
16
(iv) alleges the violation of any law regarding, or seeks remedies
in connection with, any Environmental Liabilities.
3.14 Intellectual Property. As of the Closing Date, all material
Intellectual Property owned or used by Borrower is listed, together with
application or registration numbers, where applicable, in Disclosure Schedule
(3.14). Each Borrower owns, or is licensed to use, all Intellectual Property
necessary to conduct its business as currently conducted except for such
Intellectual Property the failure of which to own or license could not
reasonably be expected to have a Material Adverse Effect.
3.15 Full Disclosure. No information contained in any Loan Document, the
Financial Statements or any written statement furnished by or on behalf of
Borrower under any Loan Document, or to induce Lender to execute the Loan
Documents, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made.
3.16 Hazardous Materials. Except as set forth on Disclosure Schedule (3.16),
as of the Closing Date,
(a) each real property location owned, leased or occupied by Borrower
(the "Real Property") is maintained free of contamination from any Hazardous
Material,
(b) Borrower is not subject to any Environmental Liabilities or, to
Borrower's knowledge, potential Environmental Liabilities, in excess of $50,000
in the aggregate,
(c) no notice has been received by Borrower identifying it as a
"potentially responsible party" or requesting information under CERCLA or
analogous state statutes, and to the knowledge of Borrower, there are no facts,
circumstances or conditions that may result in Borrower being identified as a
"potentially responsible party" under CERCLA or analogous state statutes; and
(d) Borrower has provided to Lender copies of all existing
environmental reports, reviews and audits and all written information pertaining
to actual or potential Environmental Liabilities, in each case relating to
Borrower. Borrower:
(i) shall comply in all material respects with all applicable
Environmental Laws and Environmental Permits;
(ii) shall notify Lender in writing within seven days if and when
it becomes aware of any Release, on, at, in, under, above, to, from or
about any of its Real Property; and
(iii) shall promptly forward to Lender a copy of any order,
notice, permit, application, or any communication or report received by
it in connection with any such Release.
14
17
3.17 Insurance. As of the Closing Date, Disclosure Schedule (3.17) lists all
insurance of any nature maintained for current occurrences by Borrower, as well
as a summary of the terms of such insurance. Borrower shall deliver to Lender
endorsements to all of its
(a) "All Risk" and business interruption insurance policies naming
Lender loss payee, and
(b) general liability and other liability policies naming Lender as an
additional insured. All policies of insurance on real and personal property will
contain an endorsement, in form and substance acceptable to Lender, showing loss
payable to Lender (Form 438 BFU or equivalent) and extra expense and business
interruption endorsements. Such endorsement, or an independent instrument
furnished to Lender, will provide that the insurance companies will give Lender
at least 30 days prior written notice before any such policy or policies of
insurance shall be altered or canceled and that no act or default of Borrower or
any other Person shall affect the right of Lender to recover under such policy
or policies of insurance in case of loss or damage. Borrower shall direct all
present and future insurers under its "All Risk" policies of insurance to pay
all proceeds payable thereunder directly to Lender. If any insurance proceeds
are paid by check, draft or other instrument payable to Borrower and Lender
jointly, Lender may endorse Borrower's name thereon and do such other things as
Lender may deem advisable to reduce the same to cash. Lendero reserves the right
at any time, upon review of Borrowers risk profile, to require additional forms
and limits of insurance to adequately protect Lender's interests in accordance
with Lender's normal practice for similarly situated borrowers. Borrower shall,
on each anniversary of the Closing Date and from time to time at Lenders
request, deliver to Lender a report by a reputable insurance broker,
satisfactory to Lender, with respect to such Person's insurance policies.
3.18 Deposit and Disbursement Accounts. Attachment I to Schedule D lists all
banks and other financial institutions at which Borrower maintains deposits
and/or other accounts, including the Disbursement Account, and such Attachment
correctly identifies the name, address and telephone number of each such
depository, the name in which the account is held, a description of the purpose
of the account, and the complete account number. Borrower shall not establish
any depository or other bank account of any kind with any financial institution
(other than the accounts set forth on Attachment 1 to Schedule D) without
Lender's prior written consent.
3.19 Accounts. As of the date of each Borrowing Base Certificate delivered
to Lender, each Account listed thereon as an Eligible Account shall be an
Eligible Account. Borrower has not made, and will not make, any agreement with
any Account Debtor for any extension of time for the payment of any Account, any
compromise or settlement for materially less than the full amount thereof, any
release of any Account Debtor from liability therefor, or any deduction
therefrom except a discount or allowance for prompt or early payment allowed by
Borrower in the ordinary course of its business consistent with historical
practice and as previously disclosed to Lender in writing. With respect to the
Accounts pledged as collateral pursuant to any Loan Document
(a) the amounts shown on all invoices, statements and reports which may
be delivered to the Lender with respect thereto are actually and absolutely
owing to Borrower as indicated thereon and are not in any way contingent;
15
18
(b) no payments have been or shall be made thereon except payments
immediately delivered to the applicable Bank Accounts or the Lender as required
hereunder; and
(c) to Borrower's knowledge all Account Debtors have the capacity to
contract. Borrower shall notify Lender promptly of any event or circumstance
which to Borrower's knowledge would cause Lender to consider any then existing
Account as no longer constituting an Eligible Account.
3.20 Inventory. As of the date of each Borrowing Base Certificate delivered
to Lender, all Inventory listed thereon as Eligible Inventory shall be Eligible
Inventory. Borrower shall promptly notify Lender of any event or circumstance
which, to Borrowers knowledge, would cause Lender to consider any then existing
Inventory as no longer constituting Eligible Inventory.
3.21 Conduct of Business: Maintenance of Existence. Borrower
(a) shall conduct its business substantially as now conducted or as
otherwise permitted. hereunder and preserve all of its rights, privileges and
franchises necessary and desirable in connection therewith, and
(b) shall at all times maintain, preserve and protect all of the
Collateral and such Borrower's other property, used or useful in the conduct of
its business and keep the same in good repair, working order and condition
(taking into consideration ordinary wear and tear) and from time to time make,
or cause to be made, all necessary or appropriate repairs, replacements and
improvements thereto consistent with industry practices.
3.22 Further Assurances. At any time and from time to time, upon the written
request of Lender and at the sole expense of Borrower, Borrower shall promptly
and duly execute and deliver any and all such further instruments and documents
and take such further action as Lender may reasonably deem desirable
(a) to obtain the full benefits of this Agreement and the other Loan
Documents,
(b) to protect, preserve and maintain Lender's rights in the
Collateral, or any of it, and under this Agreement, or
(c) to enable Lender to exercise all or any of the rights and powers
herein granted.
3.23 Year 2000 Covenants. If not previously delivered to Lender, on or prior
to January 31, 1999, Borrower shall complete and deliver to Lender a Year 2000
Assessment, and, if not previously delivered to Lender, on or prior to March 31,
1999, Borrower shall complete and deliver to Lender a Year 2000 Corrective Plan.
If not previously implemented as delivered to Lender, on or prior to May 31,
1999, Borrower shall implement Year 2000 Corrective Actions. On or before July
31, 1999, Borrower shall complete Year 2000 Corrective Actions and Year 2000
Implementation Testing. On or before September 30, 1999, Borrower shall
eliminate all Year 2000 Problems, except where the
16
19
failure to correct the same could not reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate.
4. FINANCIAL MATTERS; REPORTS
4.1 Reports and Notices. Borrower represents, agrees and promises that from
and after the Closing Date until the Termination Date, Borrower shall deliver to
Lender:
(a) within 20 days following the end of each Fiscal Month, an aged
trial balance by Account Debtor and an Inventory Perpetual or Physical (as
requested by Lender) and as soon as available but in no event later than 30 days
following the end of each Fiscal Month, a reconciliation of the aged trial
balance and the Inventory Perpetual or Physical (as the case may be) to the
Borrowers general ledger and from the general ledger to the Financial Statements
for such Fiscal Month accompanied by supporting detail and documentation as
Lender may request, in each case the Inventory reports to separately detail in
form satisfactory to Lender Inventory in Borrower's warehouse, Inventory in
transit backed by letters of credit, and Inventory in transit on open account
terms;
(b) as frequently as Lender may request and in any event no later than
20 days following the end of each Fiscal Month, a Borrowing Base Certificate in
the form of Exhibit C as of the last day of the previous Fiscal Month detailing
ineligible Accounts and Inventory for adjustment to the Borrowing Base,
certified as true and correct by the Chief Financial Officer of Borrower or such
other officer as is acceptable to Lender,
(c) (Intentionally Omitted)
(d) within 30 days following the end of each Fiscal Month, the
Financial Statements for such Fiscal Month, which shall provide comparisons to
budget. and actual results for the corresponding period during the prior Fiscal
Year, both on a monthly and year-to-date basis, and accompanied by a
certification in the form of Exhibit J by the Chief Executive Officer or Chief
Financial Officer of Borrower that such Financial Statements are complete and
correct, that there was no Default (or specifying those Defaults of which he or
she was aware), and showing in reasonable detail the calculations used in
determining compliance with the financial covenants hereunder;
(e) within 120 days following the close of each Fiscal Year, the
Financial Statements of Borrower and WRP Corporation for such Fiscal Year,
certified for WRP Corporation without qualification by an independent certified
accounting firm acceptable to Lender, and which for Borrower shall provide
comparisons to budget and actual results for the prior Fiscal Year, both on a
monthly and annual basis, and shall be accompanied by
(i) a statement in reasonable detail showing the calculations used
in determining compliance with the financial covenants hereunder,
17
20
(ii) a report from WRP Corporation's accountants to the effect
that in connection with their audit examination nothing has come to
their attention to cause them to believe that a Default has occurred or
specifying those Defaults of which they are aware, and
(iii) any management letter that may be issued;
(f) not less than 120 days after the close of each Fiscal Year, the
Projections, which will be prepared by Borrower in good faith, with care and
diligence, and using assumptions which are reasonable under the circumstances at
the time such Projections are delivered to Lender and disclosed therein when
delivered; and
(g) all the reports and other information set forth on Exhibit B in the
time frames set forth
4.2 Financial Covenants. Borrower shall not breach any of the financial
covenants set forth in Schedule G.
4.3 Other Reports and Information. Borrower shall advise Lender promptly,
in reasonable detail, of:
(a) any Lien, other than Permitted Encumbrances, attaching to or
asserted against any of the Collateral or any occurrence causing a material loss
or decline in value of any Collateral and the estimated (or actual, if
available) amount of such loss or decline;
(b) any material change in the composition of the Collateral; and
(c) the occurrence of any Default or other event which has had or could
reasonably be expected to have a Material Adverse Effect. Borrower shall, upon
request of Lender, furnish to Lender such other reports and information in
connection with the affairs, business, financial condition, operations,
prospects or management of Borrower or the Collateral as Lender may reasonably
request, all in reasonable detail.
5. NEGATIVE COVENANTS
Borrower covenants and agrees that, without Lender's prior written consent, from
the dosing Date until the Termination Date, Borrower shall not, directly or
indirectly, by operation of law or otherwise:
(a) merge with, consolidate with, acquire all or substantially all of
the assets or capital stock of, or otherwise combine with, any Person or form
any Subsidiary;
(b) except as otherwise permitted in this Section 5 below, make any
investment in, or make or accrue loans or advances of money to, any Person,
except that
(i) Borrower may hold investments comprised of notes payable, or
stock or other securities issued by Account Debtors to Borrower
pursuant to negotiated agreements with
18
21
respect to settlement of such Account Debtors' Accounts in the ordinary
course of business, so long as the aggregate amount of such Accounts so
settled by Borrower in any Fiscal Quarter does not exceed $100,000 and
such notes and securities are delivered to Lender as Collateral, and
(ii) loans and advances to WRP Corporation or PT WRP Buana
Multicorpora Indonesia not exceeding $2,000,000 in the aggregate for
any Fiscal Year, provided that (x) all such loans and advances are
evidenced by a promissory note from each obligor in form and substance
satisfactory to Lender and that has been delivered to Lender as
Collateral, and (y) if the aggregate of all such loans and advances
(after giving effect to such loan and advance) exceeds $250,000, at the
time of and after giving effect to each such loan and advance, the
Fixed Charge Coverage Ratio for the most recent Fiscal Quarter then
ended shall not be less than 1.3 to 1.0.;
(c) create, incur, assume or permit to exist any Indebtedness, except:
(i) the Obligations;
(ii) Indebtedness other than the Obligations in an aggregate
outstanding amount not exceeding $100,000;
(iii) deferred taxes; and
(iv) other Indebtedness set forth in Disclosure Schedule 5(c);
(d) enter into any lending, borrowing or other commercial transaction
with any of its employees, directors or Affiliates (including upstrearning and
downstrearning of cash and intercompany advances which are not otherwise
permitted hereunder) other than loans or advances to employees in the ordinary
course of business in an aggregate outstanding amount not exceeding $50,000;
provided that Borrower may make a bona fide ordinary course purchases of
inventory from Wembley Rubber Products or PT WRP Buana Multicorporo Indonesia on
terms no less favorable to Borrower than in third party transactions;
(e) make any changes in any of its business objectives, purposes, or
operations which could reasonably be expected to adversely affect repayment of
the Obligations or could reasonably be expected to have a Material AdVerse
Effect or engage in any business other than that presently engaged in or
proposed to be engaged in the Projections delivered to Lender on the Closing
Date;
(f) amend its charter or materially amend its byolaws or other
organizational documents;
(g) incur any Guaranteed Indebtedness except
(i) by endorsement of instruments or items of payment for deposit
to the general account of Borrower, and
19
22
(ii) for Guaranteed Indebtedness incurred for the benefit of
Borrower if the primary obligation is permitted by this Agreement;
(h) create or permit any Lien on any of its properties or assets,
except for Permitted Encumbrances;
(i) sell, transfer, issue, convey, assign or otherwise dispose of any
of its assets or properties, including its Accounts or any shares of its Stock
or engage in any saleoleaseback, synthetic lease or similar transaction
(provided, that the foregoing shall not prohibit the sale of Inventory or
obsolete or unnecessary Equipment in the ordinary course of its business);
(j) take any action or omit to take any action, which act or omission
would constitute a material default or an event of default pursuant to, or
material noncompliance with, any of its Contractual Obligations;
(k) cancel any debt owing to it, except for cancellation of debt not
constituting Accounts for reasonable consideration and in the ordinary course of
its business consistent with historical practice; or
(l) make or permit any Restricted Payment.
6. SECURITY INTEREST
6.1 Grant of Security Interest.
(a) As collateral security for the prompt and complete payment and
performance of the Obligations, the Borrower hereby grants to the Lender a
security interest in and Lien upon all of its property and assets, whether real
or personal, tangible or intangible, and whether now owned or hereafter
acquired, or in which it now has or at any time in the future may acquire any
right, title, or interest, including all of the following property in which it
now has or at any time in the future may acquire any right, title or interest:
all Accounts; all bank and deposit accounts and all funds on deposit therein;
all cash and cash equivalents; all commodity contracts; all investments; all
Inventory and Equipment; all Goods; all Chattel Paper, Documents and
Instruments; all Books and Records; all General Intangibles (including all
Intellectual Property, Stock, contract rights, and choices in action); and to
the extent not otherwise included, all Proceeds and products of all and any of
the foregoing and all collateral security and guarantees given by any Person
with respect to any of the foregoing, but excluding in all events Hazardous
Waste (all of the foregoing, together with any other collateral pledged to the
Lender pursuant to any other Loan Document, collectively, the "Collateral").
(b) Borrower and Lender agree that this Agreement creates, and is
intended to create, valid and continuing Liens upon the Collateral in favor of
Lender. Borrower represents, warrants and promises to Lender that:
20
23
(i) Borrower is the sole owner of each item of the Collateral upon
which it purports to ▇▇▇▇▇ ▇ ▇▇▇▇ pursuant to the Loan Documents, and
has good and marketable title thereto free and clear of any and all
Liens or claims of others, other than Permitted Encumbrances;
(ii) the security interests granted pursuant to this Agreement,
upon completion of the filings and other actions listed on Disclosure
Schedule (6.1) (which, in the case of all filings and other documents
referred to in said Schedule, have been delivered to the Lender in duly
executed form) will constitute valid perfected security interests in
all of the Collateral in favor of the Lender as security for the prompt
and complete payment and performance of the Obligations, enforceable in
accordance with the terms hereof against any and all creditors of and
purchasers from Borrower (other than purchasers of Inventory in the
ordinary course of business) and such security interests are prior to
all other Liens on the Collateral in existence on the date hereof
except for Permitted Encumbrances which have priority by operation of
law; and
(iii) no effective security agreement, financing statement,
equivalent security or Lien instrument or continuation statement
covering all or any part of the Collateral is or will be on file or of
record in any public office, except those relating to Permitted
Encumbrances. Borrower promises to defend the right, title and interest
of Lender in and to the Collateral against the claims and demands of
all Persons whomsoever, and each shall take such actions, including (x)
the prompt delivery of all original Instruments, Chattel Paper and
certificated Stock owned by Borrower to Lender, (y) notification of
Lenders interest in Collateral at Lenders request, and (z) the
institution of litigation against third parties as shall be prudent in
order to protect and preserve Borrower's and Lenders respective and
several interests in the Collateral. Borrower shall ▇▇▇▇ its Books and
Records pertaining to the Collateral to evidence the Loan Documents and
the Liens granted under the Loan Documents. All Chattel Paper shall be
marked with the following legend: "This writing and the obligations
evidenced or secured hereby are subject to the security interest of
General Electric Capital Corporation."
6.2 Lenders Rights.
(a) Lender may,
(i) at any time in Lenders own name or in the name of Borrower,
communicate with Account Debtors, parties to Contracts, and obligors in
respect of Instruments, Chattel Paper or other Collateral to verify to
Lenders satisfaction, the existence, amount and terms of any such
Accounts, Contracts, Instruments or Chattel Paper or other Collateral,
and
(ii) at any time and without prior notice to Borrower, notify
Account Debtors, parties to Contracts, and obligors in respect of
Chattel Paper, Instruments, or other Collateral that the Collateral has
been assigned to Lender and that payments shall be made directly to
Lender. Upon the request of Lender, Borrower shall so notify such
Account Debtors, parties to Contracts, and obligors in respect of
Instruments, Chattel Paper or other Collateral.
21
24
Borrower hereby constitutes Lender or Lenders designee as Borrower's
attorney with power to endorse Borrowers name upon any notes,
acceptance drafts, money orders or other evidences of payment or
Collateral.
(b) It is expressly agreed by Borrower that, notwithstanding anything
herein to the contrary, Borrower shall remain liable under each Contract,
Instrument and License to observe and perform all the conditions and obligations
to be observed and performed by it thereunder, and Lender shall have no
obligation or liability whatsoever to any Person under any Contract, Instrument
or License (between Borrower and any Person other than Lender) by reason of or
arising out of the execution, delivery or performance of this Agreement, and
Lender shall not be required oro obligated in any manner
(i) to perform or fulfill any of the obligations of Borrower,
(ii) to make any payment or inquiry, or
(iii) to take any action of any kind to collect or enforce any
performance or the payment of any amounts which may have been assigned
to it or to which it may be entitled at any time or times under or
pursuant to any Contract, Instrument or License.
(c) Borrower shall, with respect to each owned, leased, or controlled
property or facility, during normal business hours and upon reasonable advance
notice (unless a Default shall have occurred and be continuing, in which event
no notice shall be required and Lender shall have access at any and all times):
(i) provide access to such facility or property to Lender and any
of its officers, employees and agents, as frequently as Lender
determines to be reasonably appropriate;
(ii) permit Lender and any of its officers, employees and agents
to inspect, audit and make extracts from all of Borrower's Books and
Records; and
(iii) permit Lender to inspect, review, evaluate and make physical
verifications and appraisals of the Inventory and other Collateral in
any manner and through any medium that Lender considers advisable, and
Borrower agrees to render to Lender, at Borrower's cost and expense,
such clerical and other assistance as may be reasonably requested with
regard thereto. Borrower shall make available to Lender and its
counsel, as quickly as practicable under the circumstances, originals
or copies of all Borrower's Books and Records and any other instruments
and documents which Lender may request. Borrower shall deliver any
document or instrument reasonably necessary for Lender, as it may from
time to time request, to obtain records from any service bureau or
other Person which maintains records for Borrower.
(d) After the occurrence and during the continuance of a Default,
Borrower, at its own expense, shall cause the certified public accountant then
engaged by Borrower to prepare and deliver to Lender at any time and from time
to time, promptly upon Lender's request, the following reports:
22
25
(i) a reconciliation of all Accounts;
(ii) an aging of all Accounts;
(iii) trial balances; and
(iv) test verifications of such Accounts as Lender may request.
Borrower, at its own expense, shall cause its certified independent
public accountants to deliver to Lender the results of any physical
verifications of all or any portion of the Inventory made or observed
by such accountants when and if such verification is conducted. Lender
shall be permitted to observe and consult with Borrower's accountants
in the performance of these tasks.
6.3 Lender's Appointment as Attorney-in-fact. On the Closing Date, Borrower
shall execute and deliver a Power of Attorney in the form attached as Exhibit 1.
The power of attorney granted pursuant to the Power of Attorney and all powers
granted under any Loan Document are powers coupled with an interest and shall be
irrevocable until the Termination Date. The powers conferred on Lender under the
Power of Attorney are solely to protect Lender's interests in the Collateral and
shall not impose any duty upon it to exercise any such powers. Lender agrees and
promises that
(a) it shall not exercise any power or authority granted under the
Power of Attorney unless an Event of Default has occurred and is continuing,
(b) Lender shall only exercise the powers granted under the Power of
Attorney in respect of Collateral, provided, except as otherwise required by
applicable law, Lender shall not have any duty as to any Collateral, and Lender
shall be accountable only for amounts that it actually receives as a result of
the exercise of such powers. NONE OF LENDER OR ITS OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE TO BORROWER FOR ANY
ACT OR FAILURE TO ACT PURSUANT TO THE POWERS GRANTED UNDER THE POWER OF ATTORNEY
OR OTHERWISE, EXCEPT FOR ITS OR THEIR OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.
Borrower also hereby authorizes Lender to file any financing or continuation
statement without the signature of Borrower to the extent permitted by
applicable law.
6.4 Grant of License to Use Intellectual Property Collateral. For the
purpose of enabling Lender to exercise its rights and remedies under the Loan
Documents, Borrower hereby grants to Lender'oan irrevocable, nonoexclusive
license (exercisable upon the occurrence and during the continuance of an Event
of Default without payment of royalty or other compensation to Borrower) to use,
transfer, license or sublicense any Intellectual Property now owned, licensed
to, or hereafter acquired by Borrower, and wherever the same may be located, and
including in such license access to all media in which any of the licensed items
may be recorded or stored and to all computer and automatic machinery software
and programs used for the compilation or printout thereof, and represents,
promises and agrees that any such license or sublicense is not and will not be
in conflict with the
23
26
contractual or commercial rights of any third Person; provided, that such
license will terminate on the Termination Date.
7. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
7.1 Events of Default. The occurrence of any one or more of the following
events (regardless of the reason therefor) shall constitute an "Event of
Default" hereunder which shall be deemed to be continuing until waived in
writing by Lender in accordance with Section 9.3:
(a) Borrower shall fail to make any payment in respect of any
Obligations when due and payable or declared due and payable; or
(b) Borrower shall fail or neglect to perform, keep or observe any of
the covenants, promises, agreements, requirements, conditions or other terms or
provisions contained in this Agreement or any of the other Loan Documents; or
(c) an event of default shall occur under any Contractual Obligation of
the Borrower (other than this Agreement and the other Loan Documents), and such
event of default
(i) involves the failure to make any payment (whether or not such
payment is blocked pursuant to the terms of an intercreditor agreement
or otherwise), whether of principal, interest or otherwise, and whether
due by scheduled maturity, required prepayment, acceleration, demand or
otherwise, in respect of any Indebtedness (other than the Obligations)
of Borrower in an aggregate amount exceeding the Minimum Actionable
Amount, or
(ii) causes (or permits any holder of such Indebtedness or a
trustee to cause) such Indebtedness, or a portion thereof, in an
aggregate amount exceeding the Minimum Actionable Amount to become due
prior to its stated maturity or prior to its regularly scheduled dates
of payment; or
(d) any representation or warranty in this Agreement or any other Loan
Document, or in any written statement pursuant hereto or thereto, or in any
report, financial statement or certificate made or delivered to Lender by
Borrower shall be untrue or incorrect as of the date when made; or
(e) there shall be commenced against the Borrower any Litigation
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in the
entry of an order for any such relief which remains unstayed or undismissed for
thirty (30) consecutive days; or Borrower shall have concealed, removed or
permitted to be concealed or removed, any part of its property with intent to
hinder, delay or defraud its creditors or any of them or made or suffered a
transfer of any of its property or the incurring of an obligation which may be
fraudulent under any bankruptcy, fraudulent transfer or other similar law; or
24
27
(f) a case or proceeding shall have been commenced involuntarily
against Borrower in a court having competent jurisdiction seeking a decree or
order:
(i) under the United States Bankruptcy Code or any other
applicable Federal, state or foreign bankruptcy or other similar law,
and seeking either (x) the appointment of a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) for
such Person or of any substantial part of its properties, or (y) the
reorganization or winding up or liquidation of the affairs of any such
Person, and such case or proceeding shall remain undismissed or
unstayed for sixty (60) consecutive days or such court shall enter a
decree or order granting the relief sought in such case or proceeding;
or
(ii) invalidating or denying any Person's right, power, or
competence to enter into or perform any of its obligations under any
Loan Document or invalidating or denying the validity or enforceability
of this Agreement or any other Loan Document or any action taken
hereunder or thereunder; or
(g) Borrower shall
(i) commence any case, proceeding or other action under any
existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, conservatorship or
relief of debtors, seeking to have an order for relief entered with
respect to it or seeking appointment of a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) for
it or any substantial part of its properties,
(ii) make a general assignment for the benefit of creditors,
(iii) consent to or take any action in furtherance of, or,
indicating its consent to, approval of, or acquiescence in, any of the
acts set forth in paragraphs (e) or (f) of this Section 7.1 or clauses
(i) and (ii) of this paragraph (g), or
(iv) shall admit in writing its inability to, or shall be
generally unable to, pay its debts as such debts become due; or
(h) a final judgment or judgments for the payment of money in excess of
the Minimum Actionable Amount in the aggregate shall be rendered against
Borrower, unless the same shall be
(i) fully covered by insurance and the issuer(s) of the applicable
policies shall have acknowledged full coverage in writing within
fifteen (15) days of judgment, or
(ii) vacated, stayed, bonded, paid or discharged within a period
of fifteen (15) days from the date of such judgment; or
(i) any other event shall have occurred which has had or could
reasonably be expected to have a Material Adverse Effect and Lender shall have
given Borrower notice thereof; or
25
28
(j) any material provision of any Loan Document shall for any reason
cease to be valid, binding and enforceable in accordance with its terms, or any
Lien granted, or intended by the Loan Documents to be granted, to Lender shall
cease to be a valid and perfected Lien having the first priority (or a lesser
priority if expressly permitted in the Loan Documents) in any of the Collateral;
or
(k) a Change of Control shall occur.
7.2 Remedies.
(a) If any Default shall have occurred and be continuing, then Lender
may terminate or suspend its obligation to make further Revolving Credit
Advances and to incur additional Letter of Credit Obligations. In addition, if
any Event of Default shall have occurred and be continuing, Lender may, without
notice, take any one or more of the following actions:
(i) declare all or any portion of the Obligations to be forthwith
due and payable, including contingent liabilities with respect to
Letter of Credit Obligations, whereupon such Obligations shall become
and be due and payable;
(ii) require that all Letter of Credit Obligations be fully cash
collateralized pursuant to Schedule C; or
(iii) exercise any rights and remedies provided to Lender under
the Loan Documents or at law or equity, including all remedies provided
under the Code; provided, that upon the occurrence of any Event of
Default specified in Sections 7.1 (e), (f) or (g), the Obligations
shall become immediately due and payable (and any obligation of Lender
to make further Loans, if not previously terminated, shall immediately
be terminated) and the Obligations shall automatically begin to accrue
interest at the Default Rate, in each case, without declaration, notice
or demand by Lender.
(b) Without limiting the generality of the foregoing, Borrower
expressly agrees that upon the occurrence of any Event of Default, Lender may
collect, receive, assemble, process, appropriate and realize upon the
Collateral, or any part thereof, and may forthwith sell, lease, assign, give an
option or options to purchase or otherwise dispose of and deliver said
Collateral (or contract to do so), or any part thereof, in one or more parcels
at public or private sale or sales, at any exchange at such prices as it may
deem best, for cash or on credit or for future delivery without assumption of
any credit risk. Lender shall have the right upon any such public sale or sales
and, to the extent permitted by law, upon any such private sale or sales, to
purchase for the benefit of Lender the whole or any part of said Collateral so
sold, free of any right or equity of redemption, which equity of redemption
Borrower hereby releases. Such sales may be adjourned, or continued from time to
time with or without notice. Lender shall have the right to conduct such sales
on Borrower's premises or elsewhere and shall have the right to use Borrowers
premises without rent or other charge for such sales or other action with
respect to the Collateral for such time or times as Lender deems necessary or
advisable.
26
29
(c) Borrower further agrees, upon the occurrence and during the
continuance of an Event of Default and at Lenders request, to assemble the
Collateral and make it available to Lender at places which Lender shall
reasonably select, whether at its premises or elsewhere. Until Lender is able to
effect a sale, lease, or other disposition of the Collateral, Lender shall have
the right to complete, assemble, use or operate the Collateral or any part
thereof, to the extent that Lender deems appropriate, for the purpose of
preserving such Collateral or its value or for any other purpose. Lender shall
have no obligation to Borrower to maintain or preserve the rights of Borrower as
against third parties with respect to any Collateral while such Collateral is in
the possession of Lender. Lender may, if it so elects, seek the appointment of a
receiver or keeper to take possession of any Collateral and to enforce any of
Lenders remedies with respect to such appointment without prior notice or
hearing. To the maximum extent permitted by applicable law, Borrower waives all
claims, damages, and demands against Lender, its Affiliates, agents, and the
officers and employees of any of them arising out of the repossession, retention
or sale of any Collateral except such as are determined in a final judgment by a
court of competent jurisdiction to have arisen solely out of the gross
negligence or willful misconduct of such Person. Borrower agrees that ten (10)
days prior notice by Lender to Borrower of the time and place of any public sale
or of the time after which a private sale may take place is reasonable
notification of such matters. Borrower shall remain liable for any deficiency if
the proceeds of any sale or disposition of the Collateral are insufficient to
pay all amounts to which Lender is entitled.
(d) Lender's rights and remedies under this Agreement shall be
cumulative and nonexclusive of any other rights and remedies which Lender may
have under any Loan Document or at law or in equity. Recourse to the Collateral
shall not be required. All provisions of this Agreement are intended to be
subject to all applicable mandatory provisions of law that may be controlling
and to be limited, to the extent necessary, so that they do not render this
Agreement invalid or unenforceable, in whole or in part.
7.3 Waivers by Borrower. Except as otherwise provided for in this Agreement
and to the fullest extent permitted by applicable law, Borrower waives:
(a) presentment, demand and protest, and notice of presentment,
dishonor, intent to accelerate, acceleration, protest, default, nonpayment,
maturity, release, compromise, settlement, extension or renewal of any or all
Loan Documents, the Notes or any other notes, commercial paper, Accounts,
Contracts, Documents, Instruments, Chattel Paper and guaranties at any time held
by Lender on which Borrower may in any way be liable, and hereby ratifies and
confirms whatever Lender may do in this regard;
(b) all rights to notice and a hearing prior to Lender's taking
possession or control of, or to Lender's replevy, attachment or levy upon, any
Collateral or any bond or security which might be required by any court prior to
allowing Lender to exercise any of its remedies; and
(c) the benefit of all valuation, appraisal and exemption laws.
Borrower acknowledges that it has been advised by counsel of its choices and
decisions with respect to this Agreement, the other Loan Documents and' the
transactions evidenced hereby and thereby.
27
30
7.4 Proceeds. The Proceeds of any sale, disposition or other realization
upon any Collateral shall be applied by Lender upon receipt, in the following
order of priorities: first, to reimburse or pay in full the actual expenses of
Lender incurred in connection with such sale, disposition or other realization,
including all other expenses, liabilities and advances incurred or made by
Lender in connection therewith; second, to the other Obligations in such order
as the Lender may deem advisable; third, to cash collateralize any outstanding.
Letter of Credit Obligations pursuant to Schedule C; and finally, after the
indefeasible payment and satisfaction in full in cash of all of the Obligations,
and after the payment by Lender of any other amount required by any provision of
law, including Section 9-504(l)(c) of the Code (but only after Lender has
received what Lender considers reasonable proof of a subordinate party's
security interest), the surplus, if any, to Borrower or its representatives or
to whomsoever may be lawfully entitled to receive the same, or as a court of
competent jurisdiction may direct.
8. SUCCESSORS AND ASSIGNS
Each Loan Document shall be binding on and shall inure to the benefit of
Borrower, Lender, and their respective successors and assigns, except as
otherwise provided herein or therein. Borrower may not assign, transfer,
hypothecate, delegate or otherwise convey its rights, benefits, obligations or
duties under any Loan Document without the prior express written consent of
Lender. Any such purported assignment, transfer, hypothecation, delegation or
other conveyance by Borrower without the prior express written consent of Lender
shall be void. The terms and provisions of this Agreement and the other Loan
Documents are for the purpose of defining the relative rights and obligations of
Borrower and Lender with respect to the transactions contemplated hereby and
thereby, and there shall be no third party beneficiaries of any of the terms and
provisions of any of the Loan Documents. Lender reserves the right at any time
to create and sell participations in the Loans and the Loan Documents and to
sell, transfer or assign any or all of its rights in the Loans and under the
Loan Documents.
9. MISCELLANEOUS
9.1 Complete Agreement: Modification of Agreement. This Agreement and the
other Loan Documents constitute the complete agreement between the parties with
respect to the subject matter hereof and thereof, supersede all prior
agreements, commitments, understandings or inducements (oral or written,
expressed or implied), and no Loan Document may be modified, altered or amended
except by a written agreement signed by Lender and Borrower. Borrower shall have
all duties and obligations under this Agreement and such other Loan Documents
from the date of its execution and delivery, regardless of whether the initial
Loan has been funded at that time.
9.2 Expenses. Borrower agrees to pay or reimburse Lender for all costs and
expenses incurred in connection with:
(a) the preparation, negotiation, execution, delivery, performance and
enforcement of the Loan Documents and the preservation of any rights thereunder;
28
31
(b) collection (including the reasonable fees and expenses of all
special counsel, advisors, consultants (including environmental and management
consultants) and auditors retained in connection therewith), including
deficiency collections;
(c) the forwarding to Borrower or any other Person on behalf of
Borrower by Lender of the proceeds of any Loan (including a wire transfer fee of
$15 per wire transfer);
(d) any amendment, extension, modification or waiver of, or consent
with respect to any Loan Document or advice in connection with the
administration of the Loans of the rights thereunder;
(e) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by or between any combination of Lender, Borrower or any
other Person or Persons), and an appeal or review thereof, in any way relating
to the Collateral, any Loan Document, or any action taken or any other
agreements to be executed or delivered in connection therewith, whether as a
party, witness or otherwise; and
(f) any effort
(i) to monitor the Loans,
(ii) to evaluate, observe or assess Borrower or its affairs, and
(iii) to verify, protect, evaluate, assess, appraise, collect,
sell, liquidate or otherwise dispose of the Collateral including the
following with respect to all of the foregoing provisions of this
Section 9.2: the fees, costs and expenses of attorneys, accountants,
environmental advisors, appraisers, investment bankers, management and
other consultants, and paralegals; court costs and expenses;
photocopying and duplicating expenses; court reporter fees, costs and
expenses; long distance telephone charges; air express charges;
telegram charges; secretarial overtime charges; and expenses for
travel, lodging and food paid or incurred in connection therewith.
9.3 No Waiver. Neither Lender's failure, at any time or times, to require
strict performance by Borrower of any provision of any Loan Document, nor
Lenders failure to exercise, nor any delay in exercising, any right, power or
privilege hereunder,
(a) shall waive, affect or diminish any right of Lender thereafter to
demand strict compliance and performance therewith, or
(b) shall operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other or future
exercise thereof or the exercise of any other right, power or privilege. Any
suspension or waiver of a Default or other provision under the Loan Documents
shall not suspend, waive or affect any other Default under any Loan Document,
whether the same is prior or subsequent thereto and whether of the same or of a
different type, and shall not be construed as a bar to any right or remedy which
Lender would otherwise have had on any future
29
32
occasion. None of the undertakings, indemnities, agreements, warranties,
covenants and representations of Borrower to Lender contained in any Loan
Document and no Default by Borrower under any Loan Document shall be deemed to
have been suspended or waived by Lender, unless such waiver or suspension is by
an instrument in writing signed by an officer or other authorized employee of
Lender and directed to Borrower specifying such suspension or waiver (and then
such waiver shall be effective only to the extent therein expressly set forth),
and Lender shall not, by any act (other than execution of a formal written
waiver), delay, omission or otherwise, be deemed to have waived any of its
rights or remedies hereunder.
9.4 Severability. Wherever possible, each provision of the Loan Documents
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of any Loan Document shall be prohibited by
or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of such Loan Document. Except as
otherwise expressly provided for in the Loan Documents, no termination or
cancellation (regardless of cause or procedure) of any financing arrangement
under the Loan Documents shall in any way affect or impair the Obligations,
duties, covenants, representations and warranties, indemnities, and liabilities
of Borrower or the rights of Lender relating to any unpaid Obligation, (due or
not due, liquidated, contingent or unliquidated), or any transaction or event
occurring prior to such termination, or any transaction or event, the
performance of which is not required until after the Commitment Termination
Date, all of which shall not terminate or expire, but rather shall survive such
termination or cancellation and shall continue in full force and effect until
the Termination Date; provided, that all indemnity obligations of Borrower under
the Loan Documents shall survive the Termination Date.
9.5 Conflict of Terms. Except as otherwise provided in any Loan Document by
specific reference to the applicable provisions of this Agreement, if any
provision contained in this Agreement is in conflict with, or inconsistent with,
any provision in any other Loan Document, the provision contained in this
Agreement shall govern and control.
9.6 Authorized Signature. Until Lender shall be notified in writing by
Borrower to the contrary, the signature upon any document or instrument
delivered pursuant hereto and believed by Lender or any of Lenders officers,
agents, or employees to be that of an officer of Borrower listed in the
Secretarial Certificate in the form of Exhibit H shall bind Borrower and be
deemed to be the act of Borrower affixed pursuant to and in accordance with
resolutions duly adopted by Borrowers Board of Directors, and Lender shall be
entitled to assume the authority of each signature and authority of the person
whose signature it is or appears to be unless the person acting in reliance of
such signature shall have actual knowledge of the fact that such signature is
false or the person whose signature oor purported signature is presented is
without authority.
9.7 Notices. Except as otherwise provided herein, whenever any notice,
demand, request, consent, approval, declaration or other communication shall or
may be given to or served upon any party by any other party, or whenever any
party desires to give or serve upon any other party any communication with
respect to this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be deemed to
have been validly served, given or delivered
30
33
(a) upon the earlier of actual receipt and three (3) days after deposit
in the United States Mail, registered or certified mail, return receipt
requested, with proper postage prepaid,
(b) upon transmission, when sent by telecopy or other similar facsimile
transmission (with such telecopy or facsimile promptly confirmed by delivery of
a copy by personal delivery or United States Mail as otherwise provided in this
Section 9.7),
(c) one (1) Business Day after deposit with a reputable overnight
courier with all charges prepaid or (d) when hand-delivered, all of which shall
be addressed to the party to be notified and sent to the address or facsimile
number indicated in Schedule B or to such other address (or facsimile number) as
may be substituted by notice given as herein provided. The giving of any notice
required hereunder may be waived in writing by the party entitled to receive
such notice. Failure or delay in delivering copies of any notice, demand,
request, consent, approval, declaration or other communication to any Person
(other than Borrower or Lender) designated in Schedule B to receive copies shall
in no way adversely affect the effectiveness of such notice, demand, request,
consent, approval, declaration or other communication.
9.8 Section Titles. The Section titles and Table of Contents contained in
any Loan Document are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreement between the parties hereto.
9.9 Counterparts. Any Loan Document may be executed in any number of
separate counterparts by any one or more of the parties thereto, and all of said
counterparts taken together shall constitute one and the same instrument.
9.10 Time of the Essence. Time is of the essence for performance of the
Obligations under the Loan Documents.
9.11 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE
LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS ARISING UNDER THE LOAN
DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICTS OF
LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
9.12 SUBMISSION TO JURISDICTION: WAIVER OF JURY TRIAL.
(a) BORROWER HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL
COURTS LOCATED IN ILLINOIS SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDER PERTAINING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR
RELATED TO THIS
31
34
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT LENDER AND BORROWER
ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE OF ILLINOIS; AND FURTHER PROVIDED, THAT NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LENDER FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS,
TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LENDER. BORROWER EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH IT
MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT
AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF
SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN SCHEDULE B OF THIS
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF
BORROWER'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S.
MAILS, PROPER POSTAGE PREPAID.
(b) BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR
OTHERWISE BETWEEN LENDER AND BORROWER ARISING OUT OF, CONNECTED WITH, RELATED OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THE
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
9.13 Press Releases. Borrower agrees that neither it nor its Affiliates will
in the future issue any press release or other public disclosure using the name
of GE Capital or its affiliates or referring to this Agreement or the other Loan
Documents without at least two (2) Business Days' prior notice to GE Capital and
without the prior written consent of GE Capital unless (and only to the extent
that) Borrower or Affiliate is required to do so under law and then, in any
event, Borrower or Affiliate will consult with GE Capital before issuing such
press release or other public disclosure. Borrower consents to the publication
by Lender of a tombstone or similar advertising material relating to the
financing transactions contemplated by this Agreement.
9.14 Reinstatement. This Agreement shall continue to be effective, or be
reinstated, as the case may be, if at any time payment of all or any part of the
Obligations is rescinded or must otherwise
32
35
be returned or restored by the Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower, or otherwise, all as
though such payments had not been made.
IN WITNESS WHEREOF, this Loan and Security Agreement has been duly
executed as of the date first written above.
AMERICAN HEALTH PRODUCTS
CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Duly Authorized Signatory
33