EXHIBIT 10.25
LOAN AND SECURITY AGREEMENT
DATED AS OF OCTOBER 9, 1995
BETWEEN
DELAWARE ELECTRO INDUSTRIES, INC.
and
BANK OF AMERICA ILLINOIS
TABLE OF CONTENTS
PAGE
1. DEFINITIONS AND OTHER TERMS..........................................2
1.1 Definitions................................................2
1.2 Other Definitional Provisions.............................15
1.3 Interpretation of Agreement...............................15
1.4 Compliance with Financial Restrictions....................15
2. LOANS; OTHER MATTERS................................................16
2.1 Loans.....................................................16
2.1.1 Revolving Loans....................................16
2.1.2 Reduction of Revolving Credit Amount...............16
2.1.3 Maximum Outstanding Loans..........................16
2.1.4 Assumption.........................................17
2.2 Loan Account; Demand Deposit Account......................17
2.3 Interest and Fees.........................................17
2.3.1 Interest on Revolving Loans........................17
2.3.2 Nonuse Fee.........................................18
2.3.3 Method of Calculating Interest and Fees............18
2.3.4 Payment of Interest and Fees.......................18
2.4 Requests for Loans; Borrowing Base Certificates;
Other Information.........................................18
2.5 Notes.....................................................19
2.6 Overdraft Loans...........................................20
2.7 Over Advances.............................................20
2.8 All Loans One Obligation..................................21
2.9 Making of Payments; Application of Collections;
Charging of Accounts......................................21
2.10 Lender's Election Not to Enforce..........................23
2.11 Reaffirmation.............................................23
2.12 Setoff....................................................23
2.13 Refinancing Fee...........................................23
2.14 Closing Fee...............................................24
3. COLLATERAL..........................................................24
3.1 Grant of Security Interest................................24
3.2 Accounts Receivable.......................................25
3.3 Inventory.................................................29
3.4 Equipment.................................................30
3.5 Supplemental Documentation................................30
4. REPRESENTATIONS AND WARRANTIES......................................31
5. BORROWER COVENANTS......................................................31
6. DEFAULT.................................................................31
6.1 Event of Default...............................................31
PAGE
(a) Non-Payment................................................31
(b) Non-Payment of Other Indebtedness..........................31
(c) Acceleration of Other Indebtedness.........................32
(d) Other Obligations..........................................32
(e) Insolvency.................................................32
(f) Pension Plans..............................................33
(g) Non-Compliance With This Agreement.........................33
(h) Non-Compliance With Related
Agreements.................................................34
(i) Warranty...................................................34
(j) Litigation.................................................34
(k) Validity...................................................34
(l) Conduct of Business........................................34
(m) Material Adverse Change....................................34
(n) Other Loan Agreements......................................35
6.2 Effect of Event of Default; Remedies......................35
7. ADDITIONAL PROVISIONS REGARDING COLLATERAL AND LENDER'S
RIGHTS..............................................................36
7.1 Notice of Disposition of Collateral.......................36
7.2 Application of Proceeds of Collateral.....................36
7.3 Care of Collateral........................................36
7.4 Performance of Borrower's Obligations.....................36
7.5 Lender's Rights...........................................37
8. CONDITIONS PRECEDENT; DELIVERY OF DOCUMENTS AND OTHER
MATTERS.............................................................38
8.1 Conditions Precedent......................................38
8.1.1 Security Interest..................................38
8.1.2 Blocked Account; Lock Box..........................38
8.1.3 Effect of Law......................................38
8.1.4 Other Loan Agreements..............................38
8.1.5 Fees...............................................38
8.1.6 Documents..........................................38
(a) Resolutions..................................38
(b) Incumbency Certificates.................39
(c) Borrower's Certificate..................39
(d) Landlord's Consents.....................39
(e) Note....................................39
(f) Other Documents.........................39
8.2 Continuing Conditions Precedent to all Loans;
Certification.............................................39
(a) No Change in Condition..................39
(b) Default.................................40
(c) Insurance...............................40
(d) Warranties..............................40
(e) Accounting Methods......................40
PAGE
9. INDEMNITY................................................................40
9.1 Environmental and Safety and Health Indemnity..............40
9.2 General Indemnity..........................................41
9.3 Capital Adequacy...........................................41
9.4 Other Indemnities..........................................42
10. ADDITIONAL PROVISIONS................................................42
11. GENERAL.................................................................42
11.1 Borrower Waiver............................................42
11.2 Power of Attorney..........................................43
11.3 Expenses; Attorneys' Fees..................................44
11.4 Lender Fees and Charges....................................44
11.5 Lawful Interest............................................44
11.6 No Waiver by Lender; Amendments............................44
11.7 Termination of Credit......................................45
11.8 Notices....................................................45
11.9 Assignments and Participations; Information................46
11.10 Severability..................................................46
11.11 Successors....................................................46
11.12 Construction..................................................46
11.13 Consent to Jurisdiction.......................................47
11.14 Subsidiary Reference..........................................47
11.15 WAIVER OF JURY TRIAL..........................................47
11.16 Prior Actions.................................................47
LIST OF EXHIBITS
Exhibits:
Exhibit A Form of Borrowing Base Certificate (ss.2.5(c))
Exhibit B [Reserved]
Exhibit C Form of Revolving Note
Exhibit D [Reserved]
Exhibit E Form of Landlord's Consent
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (as from time to time amended, modified
or supplemented, this "Agreement") is made as of this 9th day of October, 1995
by and between BANK OF AMERICA ILLINOIS (formerly Continental Bank N.A.), an
Illinois banking corporation having its principal office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Lender"), and DELAWARE ELECTRO INDUSTRIES,
INC., a Delaware corporation ("Borrower").
RECITALS
1. On January 16, 1991, Azimuth Corporation, a Delaware corporation
("Parent"), and Lender entered into an Amended and Restated Loan and Security
Agreement (such Amended and Restated Loan and Security Agreement, as amended to
the date hereof, being herein referred to as the "Original Loan Agreement"; and
the other capitalized terms used herein shall have the meanings set forth in
Section 1.1) pursuant to which Lender made loans to Parent.
2. Parent and Lender are, on the date hereof, amending and
restating the Original Loan Agreement.
3. As security for the loans made by Lender to Parent, (a) Borrower and
other Subsidiaries of Parent, Contempo Design West, Inc., a Delaware corporation
("Contempo West"), and Contempo Design, Inc., an Illinois corporation
("Contempo"), have granted Lender a lien on, and a security interest in, all of
their respective assets and (b) Borrower, Contempo and Contempo West have
executed a guaranty whereby such companies jointly and severally guaranteed the
full and prompt payment and performance of all obligations of Parent to Lender
in connection with the Original Loan Agreement and all related documents.
4. In connection with the amendment and restatement of the Original Loan
Agreement, Borrower and other Subsidiaries of Parent are assuming a portion of
the "Liabilities" under and as defined in the Original Loan Agreement
representing "Revolving Loans" under and as defined in the Original Loan
Agreement, with the portion of such Liabilities assumed by Borrower to be
governed by the terms of this Agreement.
5. Lender has agreed to provide financial accommodations to Borrower in
addition to those assumed by Borrower as described in the immediately preceding
recital on the terms hereinafter set forth.
Accordingly, in consideration of the mutual agreements
contained herein, and subject to the terms and conditions hereof,
the parties hereto agree, as follows:
1. DEFINITIONS AND OTHER TERMS.
1.1 Definitions. In addition to terms defined elsewhere in this
Agreement or any Supplement, Schedule or Exhibit hereto, when used herein, the
following terms shall have the following meanings (such meanings shall be
equally applicable to the singular and plural forms of the terms used, as the
context requires):
"Account Debtor" shall mean any Person who is or who may become
obligated to Borrower under, with respect to, or on account of an Account
Receivable, Contract Right, General Intangible or
other Collateral or Third Party Collateral.
"Account Receivable" shall mean any account of Borrower and any
other right of Borrower to payment, whether or not evidenced by an instrument or
chattel paper and whether or not yet earned by performance (excluding any
Contract Right).
"Accounts Receivable Availability" shall have the meaning
ascribed to such term in Supplement A.
"Assignee Deposit Account" shall have the meaning ascribed to
such term in Section 3.2(d).
"Assumed Liabilities" shall have the meaning ascribed to such
term in Section 2.1.4.
"Attorneys' Fees" shall mean the reasonable value of the services
(and reasonable costs, charges and expenses related thereto) of the attorneys
(and all paralegals, secretaries, accountants and other staff employed by such
attorneys) employed by Lender (including, but not limited to, attorneys and
paralegals who are employees of Lender) from time to time (i) in connection with
the negotiation, preparation, execution, delivery, administration and
enforcement of this Agreement, any Related Agreement, any Supplemental
Documentation and all other documents or instruments provided for herein or in
any thereof or delivered or to be delivered hereunder or under any thereof or in
connection herewith or with any thereof, (ii) to prepare documentation related
to the Loans made and other Liabilities incurred hereunder, (iii) to prepare any
amendment to or waiver under this Agreement or any Related Agreement and any
documents or instruments related thereto, (iv) to represent Lender in any
litigation, contest, dispute, suit or proceeding or to commence, defend or
intervene in any litigation, contest, dispute, suit or proceeding or to file a
petition, complaint, answer, motion or other pleading, or to take any other
action in or with respect to, any litigation, contest,
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dispute, suit or proceeding (whether instituted by Lender, Borrower or any other
Person and whether in bankruptcy or otherwise) in any way or respect relating to
the Collateral, any Third Party Collateral, this Agreement or any Related
Agreement, or Borrower's or any other Obligor's or any Subsidiary's affairs, (v)
to protect, collect, lease, sell, take possession of, or liquidate any of the
Collateral or any Third Party Collateral, (vi) to attempt to enforce any
security interest in any of the Collateral or any Third Party Collateral or to
give any advice with respect to such enforcement and (vii) to enforce any of
Lender's rights to collect any of the Liabilities.
"Banking Day" shall mean any day other than a Saturday, Sunday or
legal holiday on which banks are authorized or required to be closed for the
conduct of commercial banking business in Chicago, Illinois.
"Borrower" -- see Preamble.
"Borrowing Base" shall have the meaning ascribed to such term in
Supplement A.
"Borrowing Base Certificate" shall mean a certificate in
substantially the form of Exhibit A.
"Capitalized Lease" shall mean any lease which is or should be
capitalized on the balance sheet of the lessee in accordance with GAAP.
"Closing Date" shall mean the date this Agreement becomes
effective pursuant to Section 8.
"Code" shall mean the Internal Revenue Code of 1986, as amended,
and any successor statute of similar import, together with the regulations
thereunder, in each case as in effect from time to time. References to sections
of the Code shall be construed to also refer to any successor sections.
"Collateral" shall have the meaning ascribed to such term
in Section 3.1.
"Contempo" -- see Recitals.
"Contempo Amsterdam" shall mean Contempo Design Europe B.V., a
Dutch corporation 90% owned by Contempo and 10% owned by an employee thereof.
"Contempo West" -- see Recitals.
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"Contract Right" shall mean any right of Borrower to payment
under a contract, which right is not yet earned by performance and not evidenced
by an instrument or chattel paper.
"Credit" shall mean the facility established under this Agreement
pursuant to which Lender will make Revolving Loans to Borrower.
"Default" shall mean any event or condition which, with the lapse
of time or giving of notice to Borrower or both, would constitute an Event of
Default.
"Default Rate" shall mean, with respect to a Loan, the rate of
interest which is applicable to such Loan after any amount thereof is not paid
when due, whether by acceleration or otherwise, as determined pursuant to
Supplement A.
"Demand Deposit Account" shall have the meaning ascribed to such
term in Section 2.2.
"Eligible Account Receivable" shall mean an Account Receivable
owing to Borrower which meets the following requirements:
(1) it is genuine and in all respects what it purports
to be;
(2) it arises from either (a) the performance of services by
Borrower, which services have been fully performed and, if applicable,
acknowledged and/or accepted by the Account Debtor with respect thereto
or (b) the sale or lease of goods by Borrower; and if it arises from the
sale or lease of goods, (i) such goods comply with such Account Debtor's
specifications (if any) and have been shipped to, or delivered to and
accepted by, such Account Debtor and (ii) Borrower has possession of, or
if requested by Lender has delivered to Lender, shipping and delivery
receipts evidencing such shipment, delivery and acceptance;
(3) it (a) is evidenced by an invoice rendered to the Account
Debtor with respect thereto which (i) is dated not earlier than the date
of shipment or performance and (ii) has payment terms not unacceptable
to Lender (in good faith and in the exercise of its reasonable judgment)
and (b) meets the Eligible Account Receivable requirements set forth in
Supplement A;
(4) it is not subject to any assignment, claim or Lien, other
than (a) a Lien in favor of Lender, (b) Liens consented to by Lender in
writing and (c) Liens described in Section 5.16(a) of the Parent Loan
Agreement;
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(5) it is a valid, legally enforceable and unconditional
obligation of the Account Debtor with respect thereto, and is not
subject to a claim for setoff, counterclaim, credit or allowance (except
any credit or allowance which has been deducted in computing the net
amount of the applicable invoice as shown in the original schedule or
Borrowing Base Certificate furnished to Lender identifying or including
such Account Receivable) or adjustment by the Account Debtor with
respect thereto, or to any claim by such Account Debtor denying
liability thereunder in whole or in part, and such Account Debtor has
not refused to accept any of the goods or services which are the subject
of such Account Receivable or offered or attempted to return any of such
goods;
(6) there are no proceedings or actions which are then threatened
or pending against the Account Debtor with respect thereto or to which
such Account Debtor is a party which proceedings or actions would
reasonably be expected to result in any material adverse change in such
Account Debtor's financial condition or in its ability to pay any
Account Receivable in full when due;
(7) it does not arise out of a contract or order which, by its
terms, forbids, restricts or makes void or unenforceable the assignment
by Borrower to Lender of the Account Receivable arising with respect
thereto;
(8) the Account Debtor with respect thereto is not a Subsidiary
or Obligor, or a director, officer, employee or agent of Borrower,
Parent, Contempo, Contempo West, a
Subsidiary or Obligor;
(9) the Account Debtor with respect thereto is a resident or
citizen of, and is located within, the United States of America, unless
the sale of goods giving rise to the Account Receivable is on letter of
credit, banker's acceptance or other credit support terms reasonably
satisfactory to Lender;
(10) it is not an Account Receivable arising from a "sale on
approval," "sale or return" or "consignment," or subject to any other
repurchase or return agreement;
(11) it is not an Account Receivable with respect to which
possession and/or control of the goods sold giving rise thereto is held,
maintained or retained by Borrower or any Subsidiary, or other Obligor
(or by any agent or custodian of Borrower, any Subsidiary, or other
Obligor) for the account of or subject to further and/or future
direction from the Account Debtor thereof;
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(12) it is not an Account Receivable which in any way fails to
meet or violates any warranty, representation or covenant contained in
this Agreement or any Related Agreement relating directly or indirectly
to Borrower's Accounts Receivable;
(13) the Account Debtor thereunder is not located in the States
of Indiana, New Jersey or Minnesota; provided, however, that such
restriction shall not apply to an Account Receivable if at the time the
Account Receivable was created and at all times thereafter (a) Borrower
had filed and has maintained effective a current Notice of Business
Activities Report with the appropriate office or agency of the State of
Indiana, New Jersey or Minnesota, as applicable or (b) Borrower was and
has continued to be exempt from the filing of such Report and has
provided Lender with satisfactory evidence thereof;
(14) it arises in the ordinary course of business of
Borrower;
(15) if the Account Debtor is the United States of America or any
department, agency or instrumentality thereof, Borrower has assigned its
right to payment of such Account Receivable to Lender pursuant to the
Assignment of Claims Act of 1940, as amended;
(16) if Lender in good faith and in its reasonable judgment has
established a credit limit for an Account Debtor, the aggregate dollar
amount of Accounts Receivable due from such Account Debtor, including
such Account Receivable, does not exceed such credit limit (it being
understood that in establishing any such credit limit Lender may rely on
factors which, due to confidentiality restrictions or otherwise, are not
disclosed to Borrower); and
(17) if the Account Receivable is evidenced by chattel paper or
an instrument, (a) Lender shall have specifically agreed in writing to
include such Account Receivable as an Eligible Account Receivable, (b)
only payments then due and payable under such chattel paper or
instrument shall be included as an Eligible Account Receivable and (c)
the originals of such chattel paper or instruments have been endorsed
and/or assigned and delivered to Lender in a manner satisfactory to
Lender.
An Account Receivable which is at any time an Eligible Account
Receivable, but which subsequently fails to meet any of the foregoing
requirements, shall forthwith cease to be an Eligible Account
Receivable. Further, with respect to any Account Receivable, if Lender
at any time or times hereafter determines in good faith and in its
reasonable judgment that
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the prospect of payment or performance by the Account Debtor with
respect thereto is or will be impaired for any reason whatsoever,
notwithstanding anything to the contrary contained above, such Account
Receivable shall forthwith cease to be an Eligible Account Receivable.
Notwithstanding the foregoing, commencing with the opening of business
on the date that the Fuse World Acquisition (or the stock acquisition
described in clause (i) of the definition thereof) is consummated, and
thereafter until the earlier of 10 days after such acquisition or the
merger into Borrower of Fuse World or the dissolution of Fuse World, any
Account Receivable owing to Fuse World which meets the requirements of
clauses (1) through (17) above shall be an "Eligible Account Receivable"
hereunder (provided that for this purpose the term "Borrower" appearing
in such clauses shall be read "Fuse World").
"Eligible Inventory" shall mean Inventory which meets the
following requirements:
(1) it is owned by Borrower and is not subject to any prior
assignment, claim or Lien, other than (a) a Lien in favor of Lender, (b)
Liens consented to by Lender in writing and (c) Liens described in
Section 5.16(a) of the Parent Loan Agreement;
(2) if it is held for sale or lease or furnishing under contracts
of service, it is (except as Lender may otherwise consent in writing)
new and unused;
(3) except as Lender may otherwise consent, it is in the possession
and control of Borrower; provided, however, that if it is stored on
premises leased by Borrower (i) Lender is in possession of a Landlord's
Consent duly executed by the owner (or its duly authorized agent) of
such premises and (ii) Borrower is not in default under the lease with
respect to such premises pursuant to which the landlord can exercise any
remedies under such lease;
(4) it is not Inventory which is dedicated to, identifiable with,
or is otherwise specifically to be used in the manufacture of, goods
which are to be sold or leased to the United States of America or any
department, agency or instrumentality thereof, and in respect of which
Inventory Borrower shall have received any progress or other advance
payment which is or may be against any Account Receivable generated upon
the sale or lease of any such goods;
(5) it is not Inventory produced in violation of the
Fair Labor Standards Act and subject to the "hot goods"
provisions contained in Title 29 U.S.C. ss.215 or any successor
statute or section;
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(6) it is not "private label" Inventory, or Inventory bearing a
servicemark, trademark or name of any Person other than Borrower or with
respect to which the use by Borrower or the manufacture or sale thereof
by Borrower is subject to any licensing, patent, royalty, trademark,
tradename or copyright agreement with any other Person; provided,
however, that none of the foregoing shall apply to any Inventory
consisting of fuses and aircraft and other fasteners;
(7) it is not (i) packaging or shipping materials, (ii) goods used
in connection with maintenance or repair of the business, properties or
assets of Borrower or (iii) general supplies;
(8) it is not Inventory which in any way fails to meet or violates
any warranty, representation or covenant contained in this Agreement or
any Related Agreement relating directly or indirectly to the Inventory
of Borrower;
(9) Lender has determined in good faith and in its reasonable
judgment that it is not unacceptable due to age, type, category, quality
and/or quantity; and
(10) it satisfies the Eligible Inventory Requirements,
if any, set forth in Supplement A.
Inventory of Borrower which is at any time Eligible Inventory but which
subsequently fails to meet any of the foregoing requirements shall
forthwith cease to be Eligible Inventory. Notwithstanding the foregoing,
commencing with the opening of business on the date that the Fuse World
Acquisition (or the stock acquisition described in clause (i) of the
definition thereof) is consummated, and thereafter until the earlier of
10 days after such acquisition or the merger into Borrower of Fuse World
or the dissolution of Fuse World, any Inventory of Fuse World which
meets the requirements of clauses (1) through (10) above shall be
"Eligible Inventory" hereunder (provided that for this purpose the term
"Borrower" appearing in such clauses shall be read "Fuse World").
"Environmental Laws" shall mean the Clean Air Act of 1970, as
amended, 42 U.S.C. ss.7401 et seq., the Clean Water Act, as amended, 33 U.S.C.
ss.1251 et seq., the Resource Conservation and Recovery Act of 1976, as amended,
42 U.S.C. ss.6901 et seq., the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. ss.9601 et seq.,
any so-called "Superfund" or "Superlien" law, the Toxic Substances Control Act,
15 U.S.C. ss.2601 et seq., and any other federal, state or local statute, law,
ordinance, code, rule, regulation, order or decree or other written legal
requirement regulating, relating to, or imposing liability or standards of
conduct (including, but not
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limited to, permit requirements, emission or effluent restrictions and other
requirements relating to manufacturing, processing, generation, distribution,
use, treatment, storage, disposal, clean-up, transport or handling) concerning
any Hazardous Materials or any hazardous, toxic or dangerous waste, substance or
constituent, or any noise, odor, waste, radiation, pollutant or contaminant or
other substance, whether solid, liquid or gas, as now or at any time hereafter
in effect.
"Equipment" shall mean all equipment of every description,
including, without limitation, fixtures, furniture, vehicles and trade fixtures,
together with any and all accessions, parts and equipment attached thereto or
used in connection therewith, and any substitutions therefor and replacements
thereof.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor sections.
"ERISA Affiliate" shall mean any corporation, partnership, or
other trade or business (whether or not incorporated) that is, along with
Borrower, a member of a controlled group of corporations or a controlled group
of trades or businesses, as described in sections 414(b) and 414(c),
respectively, of the Code or section 4001 of ERISA, or a member of the same
affiliated service group within the meaning of section 414(m) of the Code.
"Event of Default" shall have the meaning ascribed to such term
in Section 6.1.
"Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System or any successor thereto.
"Fiscal Quarter" shall mean any quarter of a Fiscal Year.
"Fiscal Year" shall mean any period of 12 consecutive calendar
months ending on the last day of December.
"Fixtures" shall mean all fixtures of Borrower of every
description and all substitutions and replacements of any thereof.
"Fuse World" shall mean Fuse World, Inc., an Ohio
corporation.
"Fuse World Acquisition" shall mean (i) the acquisition by
Borrower of the outstanding capital stock of Fuse World substantially on the
terms set forth in the Fuse World Letter of Intent, and (ii) the subsequent
dissolution or merger of Fuse World
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with and into Borrower; provided, however, that if an acquisition merger is
agreed to by Fuse World, then "Fuse World Acquisition" shall mean the
acquisition by merger of Fuse World by Borrower substantially on the terms set
forth in the Fuse World Letter of Intent.
"Fuse World Letter of Intent" shall mean that certain letter
dated August 15, 1995 from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, President of Borrower,
addressed to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President of Fuse World, a copy of which has been
presented to the Lender.
"GAAP" shall mean generally accepted accounting principles as
applied in the preparation of the audited financial statements of Parent
referred to in Section 4.6 of the Parent Loan Agreement.
"General Intangibles" shall mean all of Borrower's intangible
personal property, including things in action, causes of action and all other
personal property of Borrower of every kind and nature (other than accounts,
inventory, equipment, chattel paper, documents, instruments and money),
including, without limitation, corporate or other business records, inventions,
designs, patents, patent applications, trademarks, trademark applications, trade
names, trade secrets, goodwill, copyrights, registrations, licenses, franchises,
customer lists, tax refund claims, claims against carriers and shippers,
guarantee claims, security interests, security deposits or other security held
by or granted to Borrower to secure any payment from an Account Debtor, and any
rights to indemnification.
"Guaranteed Obligations" means all obligations of Borrower under
the Amended and Restated Guaranty Agreement of Borrower, Contempo and Contempo
West dated as of the Closing Date.
"Hazardous Materials" shall mean any toxic substance, hazardous
substance, hazardous material, hazardous chemical or hazardous waste defined or
qualifying as such in (or for the purposes of) any Environmental Law, or any
pollutant or contaminant, and shall include, but not be limited to, petroleum,
including crude oil or any fraction thereof which is liquid at standard
conditions of temperature or pressure (60 degrees fahrenheit and 14.7 pounds per
square inch absolute), any radioactive material, including, but not limited to,
any source, special nuclear or by-product material as defined at 42 U.S.C.
ss.2011 et seq., as amended or hereafter amended, polychlorinated biphenyls and
asbestos in any form or condition.
"Indebtedness" of any Person shall mean, without duplication, (i)
any obligation of such Person for borrowed money, including, without limitation,
(a) any obligation of such Person evidenced by bonds, debentures, notes or other
similar debt
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instruments and (b) any obligation for borrowed money which is non-recourse to
the credit of such Person but which is secured by a Lien on any asset of such
Person, (ii) any obligation of such Person on account of deposits or advances,
(iii) any obligation of such Person for the deferred purchase price of any
property or services, except Trade Accounts Payable, (iv) any obligation of such
Person as lessee under a Capitalized Lease and (v) any Indebtedness of another
Person secured by a Lien on any asset of such first Person, whether or not such
Indebtedness is assumed by such first Person. For all purposes of this
Agreement, the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture in which such Person is a general partner or joint
venturer.
"Inventory" shall mean any and all goods of Borrower (including,
without limitation, goods in transit) wheresoever located, which are or may at
any time be leased to a lessee, held for sale or lease or furnished under any
contract of service by, or held as raw materials, work in process, or supplies
or materials used or consumed in the business of, Borrower or which are held for
use in connection with the manufacture, packing, shipping, advertising, selling
or finishing of such goods, and all goods the sale or other disposition of which
has given rise to an Account Receivable, Contract Right or General Intangible
and which are returned to and/or repossessed and/or stopped in transit by
Borrower or Lender or any agent or bailee of any of them, and all documents of
title or other documents representing the same.
"Inventory Availability" shall have the meaning ascribed to such
term in Supplement A.
"Landlord's Consent" shall mean a Landlord's Consent
substantially in the form of Exhibit E, with appropriate insertions, or such
other form as shall be acceptable to Lender, as it may be amended or modified
from time to time.
"Lender" -- see Preamble.
"Liabilities" shall mean all of the liabilities, obligations,
reimbursement obligations in connection with any letter of credit, and
indebtedness of Borrower, any Subsidiary or any other Obligor to Lender of any
kind or nature, however created, arising or evidenced, whether direct or
indirect, absolute or contingent, now or hereafter existing or due or to become
due, and including but not limited to (i) Borrower's obligations under any Note,
(ii) Borrower's obligations under this Agreement, (iii) interest, charges,
expenses, Attorneys' Fees and other sums chargeable to Borrower by Lender under
this Agreement or any Related Agreement, (iv) the obligations of Borrower, any
Subsidiary and any other Obligor under any Related Agreement, including
obligations of performance and (v) the Guaranteed Obligations.
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"Liabilities" shall also include any and all amendments, extensions, renewals,
refundings or refinancings of any of the foregoing.
"Lien" shall mean any mortgage, pledge, hypothecation, judgment
lien or similar legal process, title retention lien, or other lien, encumbrance
or security interest, including, without limitation, the interest of a vendor
under any conditional sale or other title retention agreement and the interest
of a lessor under any Capitalized Lease.
"Loan" shall mean (i) the Revolving Loans made pursuant to
Section 2.1.1 and (ii) any other loan or advance made to Borrower by Lender
under or pursuant to this Agreement.
"Loan Account" shall have the meaning ascribed to such term in
Section 2.2.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined
in Section 4001(a) (3) of ERISA which is maintained for employees of Borrower,
any other Obligor or any ERISA Affiliate.
"Note" shall mean the Revolving Note and any other promissory
note of Borrower evidencing any loan or advance (including but not limited to
any Revolving Loans) made by Lender to Borrower pursuant to this Agreement.
"Obligor" shall mean Borrower and each other Person who is or
shall become primarily or secondarily liable on any of the Liabilities, or who
grants to Lender a Lien on any property of such Person as security for any of
the Liabilities.
"Occupational Safety and Health Law" shall mean the Occupational
Safety and Health Act of 1970, as amended, 29 U.S.C. ss.651 et seq., and any
other federal, state or local statute, law, ordinance, code, rule, regulation,
order or decree regulating, relating to or imposing liability or standards of
conduct concerning employee health and/or safety.
"Original Loan Agreement" - see Recitals.
"Original Security Agreement" means the Amended and Restated
Security Agreement dated as of January 16, 1991 among Borrower, Contempo,
Contempo West and Lender.
"Other Loan Agreements" means the Loan and Security Agreement
dated as of the date hereof between Lender and Contempo and the Loan and
Security Agreement dated as of the date hereof between Lender and Contempo West,
as the same may be amended, supplemented or otherwise modified from time to
time, and the Parent Loan Agreement.
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"Over Advance" shall have the meaning ascribed to such term in
Section 2.7.
"Overdraft Loan" shall have the meaning ascribed to such term in
Section 2.6.
"Parent" -- see Recitals.
"Parent Loan Agreement" means the Second Amended and Restated
Loan and Security Agreement between Lender and Parent dated as of the date
hereof, as the same may be amended, supplemented or otherwise modified from time
to time.
"Participant" shall mean any Person, now or at any time or times
hereafter, participating with Lender in the Loans made to Borrower pursuant to
this Agreement or any Related Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.
"Pension Plan" shall mean a "pension plan," as such term is
defined in Section 3(2) of ERISA, which is subject to the provisions of Title IV
of ERISA (other than a Multiemployer Plan) and to which Borrower, any other
Obligor or any ERISA Affiliate may have any liability, including any liability
by reason of being deemed to be a contributing sponsor under Section 4069 of
ERISA.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, entity, or government (whether national, federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Reference Rate" shall mean, at any time, the rate of interest
then most recently announced by Lender at Chicago, Illinois as its reference
rate (of which announcements Lender shall give notice promptly to Borrower).
Each change in the interest rate on any Loan shall take effect on the effective
date of the change in the Reference Rate.
"Refinancing Fee" shall have the meaning ascribed to such term in
Section 2.13.
"Related Agreement" shall mean any agreement, instrument or
document (including, without limitation, notes, guarantees, mortgages, deeds of
trust, chattel mortgages, pledges, powers of attorney, consents, assignments,
contracts, notices, security agreements, leases, financing statements,
subordination agreements, trust account agreements and all other written matter)
heretofore,
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now, or hereafter delivered to Lender with respect to or in connection with or
pursuant to this Agreement or any of the Liabilities, and executed by or on
behalf of Borrower, Parent, Contempo, Contempo West or any other Obligor.
"Related Party" shall mean any Person (other than a Subsidiary)
(i) which directly or indirectly through one or more intermediaries controls, or
is controlled by, or is under common control with, Borrower, (ii) which
beneficially owns or holds ten percent (10%) or more of the equity interest of
Borrower or (iii) ten percent (10%) or more of the equity interest of which is
beneficially owned or held by Borrower or a Subsidiary. The term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Revolving Credit Amount" shall have the meaning ascribed to such
term in Supplement A.
"Revolving Loan" shall have the meaning ascribed to such term in
Section 2.1.1.
"Revolving Loan Availability" shall mean the lesser of (a) the
Revolving Credit Amount and (b) the Borrowing Base.
"Revolving Note" shall have the meaning ascribed to such term in
Section 2.5.
"Subsidiary" shall mean any Person of which or in which Borrower
and its other Subsidiaries own directly or indirectly 50% or more of (i) the
combined voting power of all classes of stock having general voting power under
ordinary circumstances to elect a majority of the board of directors of such
Person, if it is a corporation, (ii) the capital interest or profits interest of
such Person, if it is a partnership, joint venture or similar entity or (iii)
the beneficial interest of such Person, if it is a trust, association or other
unincorporated organization.
"Supplemental Documentation" shall have the meaning ascribed to
such term in Section 3.5.
"Taxes" with respect to any Person shall mean taxes, assessments
or other governmental charges or levies imposed upon such Person, its income or
any of its properties, franchises or assets.
"Termination Date" shall mean August 31, 1996 or such later date
to which the Termination Date may be extended pursuant to Section 11.7.
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"Third Party Collateral" shall mean any property of any Person
other than Borrower which secures payment or performance of any Liabilities.
"Trade Accounts Payable" of any Person shall mean trade accounts
payable of such Person with a scheduled maturity of not greater than 90 days
incurred in the ordinary course of such Person's business.
"UCC" shall mean the Uniform Commercial Code as in effect in the
State of Illinois, and any successor statute, together with any regulations
thereunder, in each case as in effect from time to time. References to sections
of the UCC shall be construed to also refer to any successor sections.
1.2 Other Definitional Provisions. Unless otherwise defined or the
context otherwise requires, all financial and accounting terms used herein or in
any certificate or other document made or delivered pursuant hereto shall be
defined in accordance with GAAP. Unless otherwise defined therein, all terms
defined in this Agreement shall have the defined meanings when used in any Note
or in any certificate or other document made or delivered pursuant hereto. Terms
used in this Agreement which are defined in any Supplement or Exhibit hereto
shall, unless the context otherwise indicates, have the meanings given them in
such Supplement or Exhibit. Other terms used in this Agreement shall, unless the
context indicates otherwise, have the meanings provided for by the UCC to the
extent the same are used or defined therein.
1.3 Interpretation of Agreement. A Section, an Exhibit or a Schedule is,
unless otherwise stated, a reference to a section hereof, an exhibit hereto or a
schedule hereto, as the case may be. Section captions used in this Agreement are
for convenience only and shall not affect the construction of this Agreement.
The words "hereof," "herein," "hereto" and "hereunder" and words of similar
import when used in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Reference to "this Agreement" shall
include the provisions of Supplement A.
1.4 Compliance with Financial Restrictions. Compliance with each of the
financial ratios and restrictions contained herein shall, except as otherwise
provided herein, be determined in accordance with GAAP consistently followed.
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2. LOANS; OTHER MATTERS.
2.1 Loans.
2.1.1 Revolving Loans.
(a) Subject to the terms and conditions of this Agreement
and the Related Agreements, and in reliance upon the warranties
of Borrower set forth herein and in the Related Agreements,
Lender agrees to make such loans or advances (individually each a
"Revolving Loan" and collectively the "Revolving Loans") from
time to time before the Termination Date to Borrower as Borrower
may from time to time request, up to but not in excess (at any
one time outstanding) of the Revolving Loan Availability.
Revolving Loans made by Lender may be repaid and, subject to the
terms and conditions hereof, reborrowed to but not including the
Termination Date unless the Credit extended under this Agreement
is otherwise terminated as provided in this Agreement.
(b) In the event the aggregate outstanding principal
balance of the Revolving Loans exceeds the Revolving Loan
Availability, Borrower shall, unless Lender shall otherwise
consent, without notice or demand of any kind, immediately make
such repayments of the Revolving Loans or take such other actions
as shall be necessary to eliminate such excess.
(c) All Revolving Loans hereunder shall be paid by
Borrower on the Termination Date, unless payable sooner pursuant
to the provisions of this Agreement, but may, at Borrower's
election, be repaid in whole or in part at any time prior to such
date without premium or penalty.
2.1.2 Reduction of Revolving Credit Amount. Borrower may, at any
time, on at least three (3) Banking Days' prior written notice received
by Lender, permanently reduce the Revolving Credit Amount; provided,
however, that concurrently with any such reduction, Borrower shall pay
to Lender the amount, if any, as is necessary to reduce the outstanding
principal balance of all Revolving Loans to such reduced Revolving
Credit Amount.
2.1.3 Maximum Outstanding Loans. Notwithstanding any other
provision of this Agreement, the aggregate outstanding principal balance
of all Loans shall not exceed the Revolving Credit Amount; provided,
however, that the foregoing shall not limit the right of Lender to
advance Revolving Loans to Borrower pursuant to the provisions of
Section 5.5, 5.6 or 5.22 of the Parent Loan Agreement (as incorporated
herein by
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reference) or Section 3.2(c), 7.4, 11.3, 11.4 or any other provision of
this Agreement or any Related Agreement that permits Lender to advance
Loans to Borrower.
2.1.4 Assumption. Borrower and Lender agree that $2,145,942.00 of
the principal balance of the "Revolving Loans" under and as defined in
the Original Loan Agreement outstanding as of the date hereof shall
constitute Revolving Loans hereunder as of the Closing Date. To the
extent of such loans, Borrower hereby absolutely and unconditionally
assumes and affirms all of the "Liabilities" of Parent under and as
defined in the Original Loan Agreement (the "Assumed Liabilities").
Borrower hereby agrees to pay and perform the Assumed Liabilities with
the same effect and to the same extent (as modified hereby) as if
Borrower had been the original primary obligor thereof. To the extent of
the Assumed Liabilities, this Agreement shall be deemed to be a partial
amendment and restatement of the terms and provisions of the Original
Loan Agreement. Nothing contained in this Agreement shall be construed
to release, cancel, terminate, impair the priority of or otherwise
affect adversely all or any part of the Indebtedness of Parent assumed
by Borrower hereunder or the Lien of Lender granted in respect thereof.
Nothing herein shall deem the Indebtedness of Parent to have been paid,
extinguished or novated and the Assumed Liabilities shall remain
outstanding and unpaid on the Closing Date.
2.2 Loan Account; Demand Deposit Account. Lender shall establish or
cause to be established on its books in Borrower's name one or more accounts
(each a "Loan Account") to evidence Loans made to Borrower. Lender will credit
or cause to be credited to a commercial account ("Demand Deposit Account")
maintained by Borrower at Lender's ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
office the amount of any sums advanced as Loans hereunder. Any amounts advanced
as Loans hereunder which are credited to Borrower's Demand Deposit Account,
together with any other amounts advanced to Borrower as a Loan pursuant to this
Agreement, will be debited to the applicable Loan Account and result in an
increase in the principal balance outstanding in such Loan Account in the amount
thereof.
2.3 Interest and Fees.
2.3.1 Interest on Revolving Loans. The unpaid principal amount of
each Revolving Loan shall bear interest until maturity at the rates
applicable to Revolving Loans indicated in Supplement A. If any
Revolving Loan or portion thereof is not paid when due, whether by
acceleration or otherwise, the entire unpaid principal amount of the
Revolving Loans shall bear interest thereafter until such overdue amount
is paid in full at the Default Rate applicable to Revolving Loans
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indicated in Supplement A. Until maturity, interest on the Revolving
Loans shall be paid by Borrower on the date(s) indicated in Supplement
A, and at such maturity. After maturity, whether by acceleration or
otherwise, accrued interest shall be payable on demand.
2.3.2 Nonuse Fee. Borrower agrees to pay to Lender a fee equal to
one-half of one percent (0.5%) per annum on the product of (x) the daily
average amount by which $5,400,000 exceeds the sum of the outstanding
principal balance of the Revolving Loans hereunder plus the outstanding
principal amount of the "Revolving Loans" under the Other Loan
Agreements times (y) .40. Such fee shall be payable in arrears on the
last day of each Fiscal Quarter, and on the date the Credit terminates,
in each case for the period then ended.
2.3.3 Method of Calculating Interest and Fees. Interest on the
unpaid principal amount of each Loan shall accrue from and including the
date such Loan is made to, but not including, the date such Loan is
paid. Interest and any fees shall be calculated on the basis of a year
consisting of 360 days and paid for actual days elapsed. All
determinations by Lender of the rate of interest applicable to any Loan
shall be rebuttable presumptive evidence of the applicable interest rate
for such Loan.
2.3.4 Payment of Interest and Fees. Lender may provide for the
payment of any unpaid accrued interest and any fees by charging the
Demand Deposit Account or any other bank account maintained by Borrower
with Lender.
2.4 Requests for Loans; Borrowing Base Certificates; Other
Information.
(a) Loans shall be requested in writing or by telephone, except
for Overdraft Loans and Revolving Loans made pursuant to the provisions
of Section 5.5, 5.6 or 5.22 of the Parent Loan Agreement (as
incorporated herein by reference) or Section 3.2(c), 7.4, 11.3 or 11.4
or any other provision of this Agreement (other than Section 2.1.1) or
any Related Agreement that permits Lender to advance Revolving Loans to
Borrower.
(b) In the event that Borrower shall at any time, or from time to
time, (i) make a request for a Loan hereunder or (ii) be deemed to have
requested an Overdraft Loan, Borrower agrees to provide Lender with such
information, as soon as practicable after a request therefor, at such
frequency and in such format, as is reasonably required by Lender, such
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information to be current as of the time such information is
provided.
(c) Borrower further agrees to provide to Lender a current
Borrowing Base Certificate at the end of each week and at such other
times as Lender may reasonably request. On each Borrowing Base
Certificate, determinations as to eligibility and ineligibility of
collateral shall be made as of the same time. Such Borrowing Base
Certificate shall be executed and certified as accurate by such officers
or employees of Borrower as Borrower shall designate in writing to
Lender pursuant to duly adopted resolutions of the respective Board of
Directors of each such company authorizing such action. Prior to the
borrowing of any Loan used to fund the Fuse World Acquisition (or the
stock acquisition described in clause (i) of the definition thereof),
Borrower agrees to provide Lender a Borrowing Base Certificate with
respect to the Accounts Receivable and Inventory of Fuse World as of the
latest practicable date, executed by an officer or employee of Borrower
designated as aforesaid.
(d) Borrower shall provide Lender with documentation satisfactory
to Lender indicating the names of those employees of Borrower authorized
by Borrower to sign Borrowing Base Certificates on behalf of such
companies and Borrower shall provide Lender with documentation
satisfactory to Lender indicating the names of the employees of Borrower
authorized by Borrower to make telephonic requests for Loans, and/or to
authorize disbursement of the proceeds of Loans by wire transfer or
otherwise, and Lender shall be entitled to rely upon such documentation
until notified in writing by Borrower of any change(s) in the names of
the employees so authorized. Lender shall be entitled to act on the
instructions of anyone identifying himself as one of the persons
authorized to request Loans or disbursements of Loan proceeds by
telephone and Borrower shall be bound thereby in the same manner as if
the person were actually so authorized. Borrower agrees to indemnify and
hold Lender harmless from and against any and all claims, damages,
liabilities, losses, costs and expenses (including Attorneys' Fees)
which may arise or be created by the acceptance of instructions for
making or paying Loans by wire transfer or telephone, except for those
claims, damages, liabilities, losses, costs and expenses arising from
Lender's gross negligence or willful misconduct.
2.5 Notes. The Revolving Loans shall be evidenced by a promissory note
(herein, as it may from time to time be supplemented, extended or replaced,
called the "Revolving Note") substantially in the form set forth in Exhibit C,
with appropriate insertions, dated the date hereof, payable to the order of
Lender on the Termination Date. Borrower hereby irrevocably authorizes
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Lender to make (or cause to be made) appropriate notations on the grid attached
to the Revolving Note (or on a continuation of such grid attached to the
Revolving Note and made a part thereof), which notations, if made, shall
evidence, inter alia, the date and outstanding principal amount of all Revolving
Loans evidenced thereby. Any such notations on such grid (and on any
continuation thereof) indicating the outstanding principal amount of Revolving
Loans shall be rebuttable presumptive evidence of the principal amount thereof
owing and unpaid, but the failure to record any such amount on such grid (or on
such continuation) shall not limit or otherwise affect the obligations of
Borrower hereunder or under the Revolving Note to make payments of principal of
or interest on such Revolving Loans when due. Upon request by Borrower to Lender
(but not more than once in any 90-day period), Lender will furnish Borrower with
a photocopy of the grid attached to the Revolving Note.
2.6 Overdraft Loans. Lender, in its sole and absolute discretion, and
subject to the terms hereof, may make a Revolving Loan to Borrower in an amount
equal to the amount of any overdraft which may from time to time exist with
respect to the Demand Deposit Account or any other bank account which Borrower
may now or hereafter have with Lender. The existence of any such overdraft shall
be deemed to be a request by Borrower for such Loan. Borrower acknowledges that
Lender is under no duty or obligation to make any Loan to Borrower to cover any
overdraft. Borrower further agrees that an overdraft shall constitute a separate
Loan under this Agreement (an "Overdraft Loan"), which shall bear, from the date
on which the overdraft occurred until paid, interest in an amount equal to the
greater of (x) 130% of the highest rate of interest then charged for Loans
(other than Overdraft Loans) made hereunder and (y) $50.00 per day. If Lender,
in its sole and absolute discretion, decides not to make a Loan to cover part or
all of any overdraft, Lender may return any check(s) which created such
overdraft.
2.7 Over Advances. Lender, in its sole and absolute discretion, may make
Revolving Loans to Borrower in amounts which cause the outstanding principal
balance of the Revolving Loans to exceed the Revolving Loan Availability or
otherwise permit the outstanding principal balance of the Revolving Loans to at
any time exceed the Revolving Loan Availability, and no such event or occurrence
shall cause or constitute a waiver by Lender of its right to refuse to make any
further Revolving Loans at any time that an Over Advance exists or would result
therefrom. During any period in which the aggregate outstanding Revolving Loans
exceeds the Revolving Loan Availability (such excess Liabilities are herein
referred to as "Over Advances"), the amount of Over Advances shall bear interest
at a rate equal to 130% of the highest rate of interest then charged for
Revolving Loans made hereunder.
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2.8 All Loans One Obligation. The Revolving Loans and all other Loans
under this Agreement shall constitute one Loan, and all Indebtedness and other
Liabilities of Borrower to Lender under this Agreement and any of the Related
Agreements shall constitute one general obligation secured by Lender's Lien on
all of the Collateral and Third Party Collateral and by all other Liens
heretofore, now, or at any time or times hereafter granted by Borrower or any
other Obligor to Lender. Borrower agrees that all of the rights of Lender set
forth in this Agreement shall apply to any modification of or supplement to this
Agreement, any Supplements or Exhibits hereto, and the Related Agreements,
unless otherwise agreed in writing.
2.9 Making of Payments; Application of Collections; Charging
of Accounts.
(a) All payments hereunder shall be made without set-off or
counterclaim and shall be made to Lender in immediately available funds
(except as Lender may otherwise consent) prior to 12:30 p.m., Chicago
time, on the date due at its office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as may be designated by
Lender to Borrower in writing. Any payments received after such time
shall be deemed received on the next Banking Day. Whenever any payment
to be made hereunder or under any Note shall be stated to be due on a
date other than a Banking Day, such payment shall be due on the next
succeeding Banking Day, and such extension of time shall be included in
the calculation of interest and any fees.
(b) Borrower authorizes Lender to, and Lender will, subject to
the provisions of this paragraph (b), apply the whole or any part of any
amounts received by Lender (whether deposited in the Assignee Deposit
Account of Borrower or otherwise received by Lender) from the collection
of items of payment and proceeds of any Collateral or Third Party
Collateral (whether received upon any sale or other distribution of
Collateral or Third Party Collateral by Lender or otherwise), against
the principal of and/or interest on any Loans made hereunder and/or any
other Liabilities, whether or not then due, in such order of application
as Lender may determine, unless such payments or proceeds are, in
Lender's sole and absolute discretion, released to Borrower; provided,
however, so long as no Event of Default exists and is continuing, any
such amounts received by Lender shall be applied as follows: first, to
payment of amounts then due with respect to fees (including Attorneys'
Fees), charges and expenses for which Borrower or any other Obligor is
liable pursuant to this Agreement and the Related Agreements; second, to
payment of amounts then due with respect to interest on the Loans;
third, to payment of amounts then due with respect to
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principal of the Loans; fourth, to repayment of the Revolving Loans; and
fifth, to payment of the Guaranteed Obligations then due and owing; and
provided, further, that no checks, drafts or other instruments received
by Lender shall constitute final payment to Lender unless and until such
item of payment has actually been collected. All items or amounts which
are delivered to Lender by or on behalf of Borrower or any Obligor or
any Account Debtor on account of partial or full payment or otherwise as
proceeds of any of the Collateral or Third Party Collateral (including
any items or amounts which may have been deposited to the Assignee
Deposit Account) may from time to time in Lender's sole and absolute
discretion be released to Borrower or be applied by Lender towards
payment of the Liabilities, whether or not then due, in accordance with
the preceding sentence. Notwithstanding anything to the contrary herein,
(i) solely for purposes of determining the occurrence of an Event of
Default, all cash, checks, instruments and other items of payment shall
be deemed received upon actual receipt by Lender, unless the same is
subsequently dishonored for any reason whatsoever, (ii) for purposes of
determining whether, under Section 2.1, there is availability for Loans,
all cash, checks, instruments and other items of payment shall be
applied against the Liabilities on the first Banking Day after receipt
thereof by Lender and (iii) solely for purposes of interest calculation
hereunder, all cash, checks, instruments and other items of payment
shall be deemed to have been applied against the Liabilities on the
second Banking Day after receipt by Lender of available funds with
respect thereto.
(c) Borrower hereby authorizes Lender to, and Lender may, in its
sole and absolute discretion, charge to Borrower at any time when due
all or any portion of any of the Liabilities including but not limited
to any Attorneys' Fees and other costs and expenses of Lender for which
Borrower or any other Obligor is liable pursuant to the terms of this
Agreement or any Related Agreement, by charging Borrower's Demand
Deposit Account or any other bank account of Borrower with Lender;
provided, however, that the provisions of this Section 2.9(c) shall not
affect the obligation of Borrower or any other Obligor to pay when due
all amounts payable by such Person under this Agreement, any Note or any
Related Agreement, whether or not there are sufficient funds therefor in
the Demand Deposit Account or any such other bank account of Borrower.
So long as no Event of Default or Default exists, Lender shall use
reasonable efforts to give Borrower prompt notice of Liabilities paid by
charging such Demand Deposit Account or other account (but failure to
give such notice shall not impose any liability on Lender or relieve
Borrower of any of its obligations).
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2.10 Lender's Election Not to Enforce. Notwithstanding any term or
condition of this Agreement to the contrary, Lender, in its sole and absolute
discretion, at any time and from time to time, may suspend or refrain from
enforcing any or all of the restrictions imposed in this Section 2, but no such
suspension or failure to enforce shall impair any right or power of Lender under
this Agreement, including, without limitation, any right of Lender to refrain
from making a Loan if all conditions precedent to Lender's obligation to making
such Loan have not been satisfied.
2.11 Reaffirmation. Each Loan requested by Borrower pursuant to this
Agreement shall constitute an automatic certification by Borrower to Lender that
(i) all of the representations and warranties of Borrower, Parent and each other
Obligor in this Agreement and each of the Related Agreements are true and
correct on the date of such request to the same extent as if made on such date,
except for such changes as are specifically permitted hereunder (or under such
Related Agreement) and (ii) immediately before and after making the requested
Loan, no Event of Default or Default then exists or would result therefrom.
2.12 Setoff. In addition to and not in limitation of all other rights
and remedies (including other rights of offset or banker's lien) that Lender or
any other holder of any Note may have under applicable law, Lender or such other
holder shall, upon the occurrence of any Event of Default described in Section
6.1 and during the continuance thereof, or upon the occurrence of any Default
described in Section 6.1(e) and during the continuance thereof, have the right
to appropriate and apply to the payment of the Liabilities (whether or not then
due), in such order of application as Lender or such other holder may elect, any
and all balances, credits, deposits (general or special, time or demand,
provisional or final), accounts or moneys of Borrower then or thereafter with
Lender or such other holder. Lender shall use reasonable efforts to give
Borrower prompt notice of any appropriation and application pursuant to the
preceding sentence (but failure to give such notice shall not impose any
liability on Lender or relieve Borrower of any of its obligations).
2.13 Refinancing Fee. Borrower shall pay Lender a Refinancing Fee (as
hereinafter defined) from time to time if Borrower shall obtain any Indebtedness
or equity contributions (other than from any other Obligor or Contempo Amsterdam
except if such Indebtedness or equity contribution is funded with funds obtained
by such other Obligor or Contempo Amsterdam from a non- Obligor (other than
Lender)) after the date hereof and Borrower shall at any time cause the
Revolving Credit Amount to be permanently reduced with the proceeds of such
Indebtedness or equity contributions. As used in this Section, "Refinancing Fee"
shall mean an amount equal to the amount of the reduction in the
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Revolving Credit Amount caused with such proceeds, multiplied by .0125.
2.14 Closing Fee. Borrower agrees to pay Lender a closing
fee of $20,000 on the Closing Date. With Lender's consent, the
amount of such closing fee may be advanced to Borrower as a
Revolving Loan.
3. COLLATERAL.
3.1 Grant of Security Interest. As security for the payment of all Loans
now or hereafter made by Lender to Borrower hereunder or under any Note, as
security for the payment or other satisfaction of all other Liabilities,
Borrower hereby confirms the continued effectiveness of the grant of a security
interest contained in the Original Security Agreement and hereby further grants
to Lender a security interest in and to the following property of Borrower,
whether now owned or existing, or hereafter acquired or coming into existence,
wherever now or hereafter located (all such property is hereinafter referred to
collectively as the "Collateral"):
(a) Accounts Receivable;
(b) Equipment and Fixtures;
(c) Inventory;
(d) General Intangibles (including all rights of Borrower with
respect to all amounts now or hereafter from time to time loaned or
advanced by Borrower to any Subsidiary);
(e) Contract Rights and documents of title;
(f) All chattel paper and instruments evidencing, arising out of
or relating to any obligation to Borrower for goods sold or leased or
services rendered, or otherwise arising out of or relating to any
property described in clauses (a) through (e) above;
(g) Any and all balances, credits, deposits (general or special,
time or demand, provisional or final), accounts or monies of or in the
name of Borrower now or hereafter with Lender, any agent or bailee for
Lender, or any Participant, and any and all property of every kind or
description of or in the name of Borrower now or hereafter, for any
reason or purpose whatsoever, in the possession or control of, or in
transit to, or standing to Borrower's credit on the books of, Lender,
any agent or bailee for Lender, or any Participant;
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(h) All interest of Borrower in any goods the sale or lease of
which shall have given or shall give rise to, and in all guaranties and
other property securing the payment of or performance under, any
Accounts Receivable, General Intangibles, Contract Rights, or any
chattel paper or instru-
ments referred to in clause (f) above;
(i) Any and all other property of Borrower, of any kind or
description (including but not limited to real estate of Borrower),
including, without limitation, any property of Borrower subject to a
separate mortgage, pledge or security interest in favor of Lender or in
which Lender now or hereafter has or acquires a security interest
securing any Liabilities pursuant to an agreement or instrument other
than this Agreement;
(j) All replacements, substitutions, additions or
accessions to or for any of the foregoing;
(k) To the extent related to the property described in clauses
(a) through (j) above, all books, correspondence, credit files, records,
invoices and other papers and documents, including, without limitation,
to the extent so related, all tapes, cards, computer runs, computer
programs and other papers and documents in the possession or control of
Borrower or any computer bureau from time to time acting for Borrower,
and, to the extent so related, all rights in, to and under all policies
of insurance, including claims of rights to payments thereunder and
proceeds therefrom, including any credit insurance; and
(l) All products and proceeds (including but not limited to any
Accounts Receivable or other proceeds arising from the sale or other
disposition of any Collateral, any returns of any Equipment or Inventory
sold by Borrower, and the proceeds of any insurance covering any of the
Collateral) of any of the foregoing.
3.2 Accounts Receivable.
(a) If requested by Lender, Borrower shall advise Lender promptly of any
Inventory returned by or repossessed from any Account Debtor, or otherwise
recovered, shall receive such Inventory in trust and, unless instructed to
deliver such Inventory to Lender, shall resell it for Lender. If requested by
Lender, Borrower shall notify Lender immediately of all disputes and claims by
any Account Debtor and settle or adjust them at no expense to Lender. If Lender
directs after the occurrence and during the continuance of an Event of Default
or a Default, no discount or credit allowance shall be granted thereafter by
Borrower to any Account Debtor. All Account Debtor payments and all net amounts
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received by Lender in settlement, adjustment or liquidation of any Account
Receivable may be applied by Lender to the Liabilities or credited to Borrower's
Demand Deposit Account (subject to collection) with Lender, as Lender may deem
appropriate, in either case in accordance with Section 2.9. If requested by
Lender, Borrower will make proper entries in its books and records disclosing
the assignment of Accounts Receivable to Lender.
(b) Borrower warrants that: (i) to the best of Borrower's knowledge all
of the Accounts Receivable are and will continue to be bona fide existing
obligations created by the sale of goods, the rendering of services, or the
furnishing of other good and sufficient consideration to Account Debtors in the
regular course of business and (ii) to the best of Borrower's knowledge all
shipping or delivery receipts and other documents furnished or to be furnished
to Lender in connection therewith are and will be genuine.
(c) Lender is hereby authorized and empowered (which authorization and
power, being coupled with an interest, shall be irrevocable until the later to
occur of termination of this Agreement and the final payment and performance in
full of all of the Liabilities) at any time in its sole and absolute discretion:
(1) To request, in Borrower's name or, after the occurrence and
during the continuance of an Event of Default or a Default, in Lender's
name or the name of a third party, confirmation from any Account Debtor
or party obligated under or with respect to any Collateral of the amount
shown by the Accounts Receivable or other Collateral to be payable, or
any other matter stated therein;
(2) To endorse in Borrower's name and to collect any chattel
paper, checks, notes, drafts, instruments or other items of payment
tendered to or received by Lender in payment of any Account Receivable
or other obligation owing to Borrower;
(3) To notify, in Borrower's name or, after the occurrence and
during the continuance of an Event of Default or a Default, in Lender's
name, and/or to require Borrower to notify, any Account Debtor or other
Person obligated under or in respect of any Collateral, of the fact of
Lender's Lien thereon and of the collateral assignment thereof to
Lender;
(4) To direct, in Borrower's name or, after the occurrence and
during the continuance of an Event of Default or a Default, in Lender's
name, and/or to require Borrower to direct, any Account Debtor or other
Person obligated under or in respect of any Collateral to make payment
directly to
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Lender of any amounts due or to become due thereunder or with
respect thereto; and
(5) After the occurrence and during the continuance of an Event
of Default, to demand, collect, surrender, release or exchange all or
any part of any Collateral or any amounts due thereunder or with respect
thereto, or compromise or extend or renew for any period (whether or not
longer than the initial period) any and all sums which are now or may
hereafter become due or owing upon or with respect to any of the
Collateral, or enforce, by suit or otherwise, payment or performance of
any of the Collateral either in Lender's own name or in the name of
Borrower.
Under no circumstances shall Lender be under any duty to act in regard to any of
the foregoing matters. The costs relating to any of the foregoing matters,
including Attorneys' Fees and reasonable out-of-pocket expenses, and the cost of
any Assignee Deposit Account or other bank account or accounts which may be
required hereunder, shall be borne solely by Borrower whether the same are
incurred by Lender or Borrower, and Lender may advance same to Borrower as a
Revolving Loan.
(d) Unless otherwise consented to by Lender, Borrower will, forthwith
upon receipt by Borrower of all checks, drafts, cash and other remittances in
payment or as proceeds of, or on account of, any of the Accounts Receivable or
other Collateral, deposit the same in a special bank account (the "Assignee
Deposit Account") with Lender or such other bank or financial institution as
Lender shall consent, over which Lender alone has power of withdrawal, and will,
to the extent required by Lender, designate with each such deposit the
particular Account Receivable or other item of Collateral upon which the
remittance was made. Borrower acknowledges that the maintenance of the Assignee
Deposit Account is solely for the convenience of Lender in facilitating its own
operations and Borrower does not and shall not have any right, title or interest
in the Assignee Deposit Account or in the amounts at any time appearing to the
credit thereof. Said proceeds shall be deposited in precisely the form received
except for Borrower's endorsement where necessary to permit collection of items,
which endorsement Borrower agrees to make. Pending such deposit, Borrower agrees
not to commingle any such checks, drafts, cash and other remittances with any of
its funds or property, but will hold them separate and apart therefrom and upon
an express trust for Lender until deposit thereof is made in the Assignee
Deposit Account. Upon the full and final liquidation of all Liabilities, Lender
will pay over to Borrower any excess amounts received by Lender as payment or
proceeds of Collateral, whether received by Lender as a deposit in the Assignee
Deposit Account or received by Lender as a direct payment on any of the sums due
hereunder.
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(e) Borrower appoints Lender, or any Person whom Lender may from time to
time designate, as Borrower's attorney and agent-in- fact with power: (i) after
the occurrence and during the continuance of an Event of Default, to notify the
post office authorities to change the address for delivery of Borrower's mail to
an address designated by Lender; (ii) after the event described in the foregoing
clause (i), to receive, open and dispose of all mail addressed to Borrower;
(iii) to send, in Borrower's name or, after the occurrence and during the
continuance of an Event of Default or a Default, in Lender's name or the name of
a third party, requests for verification of Accounts Receivable or other
Collateral to Account Debtors; (iv) to open an escrow account or Assignee
Deposit Account under Lender's sole control for the collection of Accounts
Receivable or other Collateral, if not required contemporaneously with the
execution hereof; and (v) to do all other things which Lender is permitted to do
under this Agreement or any Related Agreement or which are reasonably necessary
to carry out this Agreement and the Related Agreements. Neither Lender nor any
of its directors, officers, employees or agents will be liable for any acts of
commission or omission nor for any error in judgment or mistake of fact or law,
unless the same shall have resulted from gross negligence or willful misconduct.
The foregoing appointment and power, being coupled with an interest, shall be
irrevocable until all Liabilities under this Agreement are finally paid and
performed in full and this Agreement is terminated. Borrower expressly waives
presentment, demand, notice of dishonor and protest of all instruments and any
other notice to which it might otherwise be entitled.
(f) If any Account Receivable, Contract Right or General Intangible
arises out of a contract with the United States or any department, agency, or
instrumentality thereof, Borrower will, unless Lender shall otherwise agree,
immediately notify Lender in writing and execute any instruments and take any
steps required by Lender in order that all monies due and to become due under
such contract shall be assigned to Lender and notice thereof given to the
government under the Federal Assignment of Claims Act of 1940, as amended, or
other applicable laws or regulations; provided, however, that unless Lender
otherwise requests, until an Event of Default or a Default shall have occurred
and be continuing, Borrower need not take any of the steps contemplated in this
paragraph with respect to any contract with a value of less than $10,000.
(g) If any Account Receivable or Contract Right is evidenced by chattel
paper or promissory notes, trade acceptances, or other instruments for the
payment of money, Borrower will, unless Lender shall otherwise agree, deliver
the originals of same to Lender, appropriately endorsed to Lender's order and,
regardless of the form of such endorsement, Borrower hereby expressly waives
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presentment, demand, notice of dishonor, protest and notice of protest and all
other notices with respect thereto.
3.3 Inventory.
(a) Unless Lender shall otherwise agree, if Borrower sells Inventory for
cash, all full and partial payments therefor shall be immediately (and, in any
event, not later than the end of the day received) delivered by Borrower to
Lender in their original form for deposit in the Assignee Deposit Account or for
other application to reduction of the Liabilities, in either case in accordance
with Section 2.9. Pending such delivery, all such cash shall be held by Borrower
in trust for Lender.
(b) Lender shall not be liable or responsible in any way for the
safekeeping of any Inventory delivered to it, to any bailee appointed by or for
it, to any warehouseman, or under any other circumstances, except for Lender's
gross negligence or willful misconduct. Lender shall not be responsible for
collection of any proceeds or for losses in collected proceeds held by Borrower
in trust for Lender. Any and all risk of loss for any or all of the foregoing
shall be upon Borrower, except for such loss as shall result from Lender's gross
negligence or willful misconduct.
(c) If requested by Lender, Borrower shall, upon acquiring an interest
in any Inventory, deliver to Lender a description of such Inventory, together
with supplier's invoices, warranties, production, cost and other records as
Lender may request. If requested by Lender, Borrower shall deliver to Lender
schedules of the sale of any Inventory immediately upon its sale. Any material
change in the value or condition of any Inventory, and any errors discovered in
any schedule or description delivered to Lender, shall be reported to Lender
immediately. Borrower confirms that the warranties and representations in this
Agreement shall apply to each schedule. Borrower represents and warrants that,
as to each schedule and description of Inventory delivered to Lender:
(1) The descriptions, origins, sizes, qualities, quantities,
weights, and markings of all goods stated thereon, or on any attachment
thereto, are true and correct in all material respects;
(2) None of the goods are defective, of second quality, used, or
goods returned after shipment, except where described as such; and
(3) All Inventory not included on such schedule or description
has been previously scheduled or described.
(d) If requested by Lender, Borrower will notify Lender
immediately if Borrower obtains possession (by return, repossession
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or otherwise) of any Inventory which has been sold, and will inform Lender of
the identity of the returned or repossessed Inventory, the applicable Account
Debtor and the amount of the applicable Account Receivable.
3.4 Equipment.
(a) Borrower shall at all times keep, and cause each Subsidiary to keep,
its Equipment in good operating condition and repair, ordinary wear and tear
excepted, and neither Borrower nor any Subsidiary shall, without the prior
written consent of Lender, sell, lease, or otherwise dispose of any of its
Equipment, or any part thereof or interest therein; provided, however, that
without Lender's consent (but with notice to Lender) Borrower or any Subsidiary
may dispose of obsolete or unuseful Equipment in the ordinary course provided
all Equipment so disposed of by Parent and its Subsidiaries in any Fiscal Year
has an aggregate market value of $50,000 or less.
(b) In the event any Equipment is sold, transferred or otherwise
disposed of by Borrower or any Subsidiary, unless Lender shall agree otherwise,
Borrower or the applicable Subsidiary shall deliver all of the proceeds of any
such sale, transfer or disposition to Lender, which proceeds shall be deposited
in the Assignee Deposit Account or otherwise applied to the repayment of the
Liabilities, in either case in accordance with Section 2.9.
(c) Borrower will, upon request of Lender, submit to Lender a current
listing of all Equipment of Borrower and its Subsidiaries, which listing shall
indicate the type, model, serial number and location of such Equipment.
3.5 Supplemental Documentation. At Lender's request, Borrower shall
execute and/or deliver to Lender, at any time or times hereafter, such
agreements, documents, financing statements, warehouse receipts, bills of
lading, notices of assignment of Accounts Receivable, schedules of Accounts
Receivable assigned, and other written matter necessary or reasonably requested
by Lender to perfect and maintain perfected Lender's security interest in the
Collateral (all the above is hereinafter referred to as the "Supplemental
Documentation"), in form and substance acceptable to Lender, and pay all taxes,
fees and other reasonable costs and expenses associated with any recording or
filing of the Supplemental Documentation. Borrower hereby irrevocably makes,
constitutes and appoints Lender (and all Persons designated by Lender for that
purpose) as Borrower's true and lawful attorney (and agent-in-fact) (which
appointment and power, being coupled with an interest, shall be irrevocable
until the later to occur of termination of this Agreement and final payment and
performance in full of all of the Liabilities) to sign the name of Borrower on
any of the Supplemental Documentation and to deliver any of the
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Supplemental Documentation to such Persons as Lender, in its sole and absolute
discretion, may elect. Borrower agrees that a carbon, photographic, photostatic,
or other reproduction of this Agreement or of a financing statement is
sufficient as a financing statement.
4. REPRESENTATIONS AND WARRANTIES. To induce Lender to make Loans to Borrower
under this Agreement, Borrower hereby represents and warrants to Lender the
truth and accuracy of all matters contained in Section 4 of the Parent Loan
Agreement as from time to time in effect (or, if the Parent Loan Agreement has
been terminated, as in effect immediately prior to such termination), insofar as
the representations and warranties contained therein are applicable to Borrower,
each such representation and warranty (insofar as applicable as aforesaid) and
all other terms of the Parent Loan Agreement to which reference is made therein,
being incorporated herein by reference as though specifically set forth herein.
5. BORROWER COVENANTS. From the date of this Agreement and thereafter until the
Credit is terminated and all Liabilities are finally paid in full, Borrower
agrees that, unless Lender shall otherwise consent in writing, it will perform,
comply with and be bound by all of the agreements, covenants and obligations set
forth in Section 5 of the Parent Loan Agreement as from time to time in effect
(or, if the Parent Loan Agreement has been terminated, as in effect immediately
prior to such termination) which are applicable to Borrower, each such
agreement, covenant and obligation and all other terms of the Parent Loan
Agreement to which reference is made therein being incorporated herein by
reference as though specifically set forth herein. Without limiting the
foregoing, to the extent that Sections 5.5, 5.6 and 5.22 of the Parent Loan
Agreement provide that Lender may advance loans to Parent in certain
circumstances, it is agreed that Lender may make advances to Borrower in such
circumstances if such circumstances exist with respect to Borrower, with such
advances to be Revolving Loans hereunder.
6. DEFAULT.
6.1 Event of Default. Each of the following shall constitute
an Event of Default under this Agreement:
(a) Non-Payment. Default in the payment, when due or
declared due, of any of the Liabilities.
(b) Non-Payment of Other Indebtedness. Default in the payment
when due, whether by acceleration or otherwise (subject to any
applicable grace period), of any Indebtedness of, or guaranteed by,
Borrower, any other Obligor or any Subsidiary (other than (i) any
Indebtedness under this Agreement and any Notes, (ii) any Indebtedness
of Parent or
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any Subsidiary of Parent to Borrower or to any other Subsidiary of
Parent, (iii) any Indebtedness of Borrower to Parent or any other
Subsidiary of Parent or (iv) Indebtedness under the Other Loan
Agreements); provided that the aggregate amount of Indebtedness so
affected shall equal or exceed $25,000.
(c) Acceleration of Other Indebtedness. Any event or condition
shall occur which results in the acceleration of the maturity of any
Indebtedness of, or guaranteed by, Borrower, any other Obligor or any
Subsidiary (other than (i) any Indebtedness of Parent or any Subsidiary
of Parent to Borrower or to any other Subsidiary of Parent, (ii) the
Indebtedness under this Agreement and any Notes, (iii) any Indebtedness
of Borrower to Parent or any other Subsidiary of Parent or (iv)
Indebtedness under the Other Loan Agreements) or enables the holder or
holders of such other Indebtedness or any trustee or agent for such
holders (any required notice of default having been given and any
applicable grace period having expired) to accelerate the maturity of
such other Indebtedness; provided that the aggregate amount of
Indebtedness with respect to which such event or condition shall have
occurred shall equal or exceed $25,000.
(d) Other Obligations. Default in the payment when due, whether
by acceleration or otherwise, or in the performance or observance
(subject to any applicable grace period or waiver of such default) of
(i) any obligation or agreement of Borrower, any other Obligor or any
Subsidiary to or with Lender (other than any obligation or agreement of
Borrower hereunder and under any Related Agreement); or (ii) any
material obligation or agreement of Borrower, any other Obligor or any
Subsidiary to or with any other Person (other than (x) any such material
obligation or agreement constituting or related to Indebtedness, (y)
Trade Accounts Payable and (z) any material obligation or agreement of
any Subsidiary to Borrower or to any other Subsidiary), except only to
the extent that the existence of any such default is being contested by
Borrower, such other Obligor or such Subsidiary, as the case may be, in
good faith and by appropriate proceedings and Borrower, such other
Obligor or such Subsidiary, as applicable, shall have set aside on its
books such reserves or other appropriate provisions therefor as may be
required by GAAP.
(e) Insolvency. Borrower, any other Obligor or any Subsidiary
becomes insolvent, or generally fails to pay, or admits in writing its
inability to pay, its debts as they mature, or applies for, consents to,
or acquiesces in the appointment of a trustee, receiver or other
custodian for Borrower, such other Obligor or such Subsidiary, or for a
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substantial part of the property of Borrower, such other Obligor or such
Subsidiary, or makes a general assignment for the benefit of creditors;
or, in the absence of such application, consent or acquiescence, a
trustee, receiver or other custodian is appointed for Borrower, any
other Obligor or any Subsidiary, or for a substantial part of the
property of Borrower, any other Obligor or any Subsidiary and is not
discharged or dismissed within 60 days; or any bankruptcy,
reorganization, debt arrangement or other proceeding under any
bankruptcy or insolvency law, or any dissolution or liquidation
proceeding, is instituted by or against Borrower, any other Obligor or
any Subsidiary and, solely in the case where such proceeding shall have
been instituted against Borrower, such Obligor or such Subsidiary, such
proceeding shall not have been dismissed within 60 days or an order for
relief shall have been entered; or any warrant of attachment or similar
legal process is issued against any substantial part of the property of
Borrower, any other Obligor or any Subsidiary.
(f) Pension Plans. The institution by Borrower or any ERISA
Affiliate of steps to terminate any Pension Plan if, in order to
effectuate such termination, Borrower or any ERISA Affiliate would be
required to make a contribution to such Pension Plan, or would incur a
liability or obligation to such Pension Plan, in excess of $50,000; the
institution by the PBGC of steps to terminate any Pension Plan and the
continuation of either such condition after notice thereof from Lender;
or a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under section 302(f) of ERISA.
(g) Non-Compliance With This Agreement. Default in the
performance of any of Borrower's agreements set forth in Section 2, 3.2,
3.3 or 3.4 hereof or Section 5.3, 5.5, 5.6 or 5.12 through 5.30 of the
Parent Loan Agreement (and not, in each case, constituting an Event of
Default under any of the other subsections of this Section 6.1), and
continuance of such default after written notice thereof to Borrower
from Lender; or default in the performance of any of Borrower's
agreements set forth in Section 6 of Supplement A or Section 5.2 of the
Parent Loan Agreement (and not, in each case, constituting an Event of
Default under any of the other subsections of this Section 6.1), and
continuance of such default for three (3) Banking Days after notice
thereof to Borrower from Lender; or default in the performance of any of
Borrower's other agreements herein set forth (and not constituting an
Event of Default under any of the other subsections of this Section
6.1), and continuance of such default for thirty (30) days after written
notice thereof to Borrower from Lender.
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(h) Non-Compliance With Related Agreements. Default in the
performance by Borrower, any other Obligor or any Subsidiary of any of
its agreements set forth in any Related Agreement (and not constituting
an Event of Default under any of the other subsections of this Section
6.1), and continuance of such default after notice from Lender and the
expiration of the grace period (if any) set forth therein.
(i) Warranty. Any warranty made by Borrower or any other Obligor
herein or in any Related Agreement is untrue or misleading in any
material respect when made or deemed made; any schedule, statement,
report, notice, certificate or other writing furnished by Borrower or
any other Obligor to Lender is untrue or misleading in any material
respect on the date as of which the facts set forth therein are stated
or certified; or any certification made or deemed made by Borrower or
any other Obligor to Lender is untrue or misleading in any material
respect on or as of the date made or deemed made.
(j) Litigation. There shall be entered against any one of
Borrower, any other Obligor or any Subsidiary one or more judgments or
decrees in excess of $50,000 in the aggregate at any one time
outstanding, excluding those judgments or decrees (i) that shall have
been outstanding less than 30 calendar days from the entry thereof or
(ii) for and to the extent which Borrower, such Subsidiary or such
Obligor, as applicable, is insured and with respect to which the insurer
has assumed responsibility in writing or for and to the extent which
Borrower, such Subsidiary or such Obligor, as applicable, is otherwise
indemnified if the terms of such indemnification are satisfactory to
Lender.
(k) Validity. If the validity or enforceability of this Agreement
or any Related Agreement shall be challenged by Borrower, any other
Obligor or any other Person acting through, or on behalf of, Borrower or
any other Obligor, or shall fail to remain in full force and effect.
(l) Conduct of Business. If Borrower, any other Obligor or any
Subsidiary is enjoined, restrained or in any way prevented by court
order, which has not been dissolved or stayed within five (5) business
days, from conducting all or any material part of its business affairs.
(m) Material Adverse Change. Lender shall have determined in good
faith that (i) a material adverse change has occurred in the business,
operations or financial condition of Borrower, any other Obligor or any
Subsidiary, (ii) Lender's interest in any material Collateral or Third
Party Collateral has been adversely affected or impaired, or the value
thereof to Lender has been diminished to a material
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extent or (iii) the prospect of payment or performance of any obligation
or agreement of Borrower or any other Obligor hereunder or under any
Related Agreement is materially impaired, and the condition giving rise
to such determination does not constitute an Event of Default under any
of the other subsections of this Section 6.1 and continues to exist
unremedied for a period of thirty (30) days after written notice of such
determination by Lender to Borrower.
(n) Other Loan Agreements. The existence of any other
"Event of Default" under and as defined in the Other Loan
Agreements.
6.2 Effect of Event of Default; Remedies.
(a) In the event that one or more Events of Default described in Section
6.1(e) shall occur, then Lender's commitment and the Credit extended under this
Agreement shall terminate and all Liabilities hereunder and under any Notes
shall be immediately due and payable without demand, notice or declaration of
any kind whatsoever.
(b) In the event an Event of Default other than one described in Section
6.1(e) shall occur, then Lender may declare its commitment terminated and/or all
Liabilities hereunder and under any Notes immediately due and payable without
demand or notice of any kind whatsoever, whereupon the Credit extended under
this Agreement shall terminate and all Liabilities hereunder and under any Notes
shall be immediately due and payable. Lender shall promptly advise Borrower of
any such declaration, but failure to do so shall not impair the effect of such
declaration.
(c) If any Event of Default exists and is continuing, Lender may
exercise any one or more or all of the following remedies, all of which are
cumulative and non-exclusive:
(1) Any remedy contained in this Agreement or in any of
the Related Agreements or any Supplemental Documentation;
(2) Any rights and remedies available to Lender under
the UCC and any other applicable law;
(3) To the extent permitted by applicable law, Lender may,
without notice, demand or legal process of any kind, take possession of
any or all of the Collateral and Third Party Collateral (in addition to
Collateral and Third Party Collateral which it may already have in its
possession), wherever it may be found, and for that purpose may pursue
the same wherever it may be found, and may enter into any premises where
any of the Collateral or Third Party Collateral may be or is supposed to
be, and search for, take possession of,
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remove, keep and store any of the Collateral or Third Party Collateral
until the same shall be sold or otherwise disposed of, and Lender shall
have the right to store the same in any of Borrower's premises without
cost to Lender;
(4) At Lender's request, Borrower will (and will cause its
Subsidiaries to), at Borrower's (or such Subsidiaries') expense,
assemble the Collateral and Third Party Collateral and make it available
to Lender at a place or places to be designated by Lender which is
reasonably convenient to Lender and Borrower; and
(5) Lender at its option, and pursuant to notification given to
Borrower (or any other applicable Obligor) as provided for below, may
sell any Collateral or Third Party Collateral actually or constructively
in its possession at public or private sale and apply the proceeds
thereof as provided below.
7. ADDITIONAL PROVISIONS REGARDING COLLATERAL AND LENDER'S
RIGHTS.
7.1 Notice of Disposition of Collateral. Any notification of intended
disposition of any of the Collateral required by law shall be deemed reasonably
and properly given if given at least ten (10) calendar days before such
disposition.
7.2 Application of Proceeds of Collateral. Any proceeds of any
disposition by Lender of any of the Collateral may be applied by Lender to the
payment of expenses in connection with the taking possession of, storing,
preparing for sale, and disposition of Collateral, including Attorneys' Fees and
legal expenses, and any balance of such proceeds may be applied by Lender toward
the payment of such of the Liabilities, and in such order of application, as
Lender may from time to time elect.
7.3 Care of Collateral. Lender shall be deemed to have exercised
reasonable care in the custody and preservation of any Collateral in its
possession if it takes such action for that purpose as Borrower requests in
writing, but failure of Lender to comply with such request shall not, of itself,
be deemed a failure to exercise reasonable care, and no failure of Lender to
preserve or protect any rights with respect to such Collateral against prior
parties, or to do any act with respect to the preservation of such Collateral
not so requested by Borrower, shall be deemed a failure to exercise reasonable
care in the custody or preservation of such Collateral.
7.4 Performance of Borrower's Obligations. Lender shall have
the right, but shall not be obligated, to discharge any claims
against or Liens, and any Taxes at any time levied or placed upon
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any or all Collateral, including, without limitation, those arising under
statute or in favor of landlords, taxing authorities, government, public and/or
private warehousemen, common and/or private carriers, processors, finishers,
draymen, coopers, dryers, mechanics, artisans, laborers, attorneys, courts, or
others. Lender may also pay for maintenance and preservation of Collateral.
Lender may, but is not obligated to, perform or fulfill any of Borrower's
responsibilities under this Agreement which Borrower has failed to perform or
fulfill. Lender may advance to Borrower as a Revolving Loan any payment made or
expense incurred by Lender under this Section 7.4.
7.5 Lender's Rights. None of the following shall affect the obligations
of Borrower to Lender under this Agreement or Lender's right with respect to the
remaining Collateral or any Third Party Collateral (any or all of which actions
may be taken by Lender at any time, whether before or after an Event of Default,
at its sole and absolute discretion and without notice to Borrower):
(a) acceptance or retention by Lender of other property or
interests in property as security for the Liabilities, or acceptance or
retention of any Obligor(s), in addition to Borrower, with respect to
any of the Liabilities;
(b) release of its security interest in, or the surrender or
release of, or the substitution or exchange of or for, all or any part
of the Collateral or any Third Party Collateral or any other property
securing any of the Liabilities (including but not limited to any
property of any Obligor other than Borrower), or any extension or
renewal for one or more periods (whether or not longer than the original
period), or release, compromise, alteration or exchange, of any
obligations of any guarantor or other Obligor with respect to any
Collateral, any Third Party Collateral or any such property;
(c) extension or renewal for one or more periods (whether or not
longer than the original period), or release, compromise, alteration or
exchange of any of the Liabilities, or release or compromise of any
obligation of any Obligor with respect to any of the Liabilities; or
(d) failure by Lender to resort to other security or pursue any
Person liable for any of the Liabilities before resorting to the
Collateral or Third Party Collateral.
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8. CONDITIONS PRECEDENT; DELIVERY OF DOCUMENTS AND OTHER MATTERS.
8.1 Conditions Precedent. The effectiveness of this Agreement (and the
obligation of Lender to make any Loan hereunder on the date of this Agreement)
is subject to satisfaction of the following conditions precedent (in addition to
those provided in Section 8.2):
8.1.1 Security Interest. The security interest in the Collateral
granted under this Agreement and the Related Agreements, and in any
Third Party Collateral and all other Liens granted to Lender to secure
the Liabilities, shall be a senior, perfected Lien except as otherwise
agreed by Lender, and all financing statements and other documents
relating to Collateral and Third Party Collateral shall have been filed
or recorded, as appropriate.
8.1.2 Blocked Account; Lock Box. Borrower and its Subsidiaries
shall have entered into blocked account and/or lock box agreements with
Lender for the collection and remittance to Lender of cash proceeds of
Collateral and Third Party Collateral.
8.1.3 Effect of Law. No law or regulation affecting Lender's
entering into this Agreement shall impose upon Lender any material
obligation, fee, liability, loss, cost, expense or damage.
8.1.4 Other Loan Agreements. The Other Loan Agreements
shall have become effective in accordance with their terms.
8.1.5 Fees. Lender shall have received the closing fee referred
to in Section 2.14 and any other fees then due and payable by Borrower
or any other Person hereunder or in connection herewith.
8.1.6 Documents. Lender shall have received all of the following,
each duly executed where appropriate and dated as of the Closing Date
(or such other date as shall be satisfactory to Lender), in form and
substance satisfactory to Lender:
(a) Resolutions. A copy, duly certified by the secretary or an
assistant secretary of Borrower and each Subsidiary party to a Related
Agreement, of: (1) resolutions of the Board of Directors of Borrower and
each such Subsidiary authorizing (A) the borrowings by Borrower
hereunder, (B) the execution, delivery and performance by Borrower and
each such Subsidiary of this Agreement and each other Related Agreement
to which Borrower and each such Subsidiary is a party or by which it is
bound and (C) certain officers or employees (i) of
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Borrower to request borrowings by telephone and (ii) of Borrower to
execute Borrowing Base Certificates; (2) all documents evidencing any
other necessary corporate action with respect to this Agreement and the
Related Agreements; and (3) all approvals or consents, if any, with
respect to this Agreement and the Related Agreements;
(b) Incumbency Certificates. A certificate of the secretary of
Borrower and each Subsidiary party to a Related Agreement certifying the
names of the officers of Borrower and each such Subsidiary authorized to
sign this Agreement and each other Related Agreement to which Borrower
and each such Subsidiary is a party or by which any of them is bound,
and all other documents and certificates to be delivered by any of them
hereunder, together with samples of the true signatures of such
officers;
(c) Borrower's Certificate. The certificate of the President or
Chief Executive Officer of Borrower certifying to the fulfillment of all
conditions precedent to closing and funding the secured financing
transaction contemplated by this Agreement and to the truth and
accuracy, as of such date, of the representations and warranties of
Borrower and each Subsidiary party to a Related Agreement contained in
this Agreement and each other Related Agreement to which Borrower or
such Subsidiary is a party or by which it is bound;
(d) Landlord's Consents. A Landlord's Consent, duly executed by
the owner of each leased premises identified on Schedule 4.12, 4.13 or
4.15 to the Parent Loan Agreement where Collateral or Third Party
Collateral is located other than ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇;
(e) Note. The Revolving Note in the form of Exhibit C;
and
(f) Other Documents. Such other documents as Lender shall
determine to be necessary or desirable, including but not limited to
documents described in paragraphs (a) and (b) of this Section 8.1.6 with
respect to any Obligor other than Borrower and its Subsidiaries.
8.2 Continuing Conditions Precedent to all Loans; Certification. The
obligation of Lender to make any Loan hereunder is subject to satisfaction of
the following conditions precedent in addition to those provided in Section 8.1:
(a) No Change in Condition. No change in the condition
or operations, financial or otherwise, of Borrower, any
Subsidiary or any other Obligor shall have occurred which
change, in the reasonable credit judgment of Lender, would
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reasonably be expected to have a material adverse effect on Borrower,
such Subsidiary or such other Obligor, or on any Collateral or Third
Party Collateral (which Collateral or Third Party Collateral Lender
deems in its sole discretion to be material);
(b) Default. Before and after giving effect to such
Loan, no Event of Default or Default shall have occurred and
be continuing;
(c) Insurance. There shall have been no material change, or
notice of prospective material change (whether such notice is formal or
informal), in the nature, extent, scope or cost of the insurance
policies of Borrower or any Subsidiary listed on Schedule 4.7 to the
Parent Loan Agreement which change would have a material adverse effect
on the financial condition of Borrower, any Subsidiary or Borrower and
its Subsidiaries taken as a whole, or would significantly adversely
affect Borrower's ability to perform its obligations under this
Agreement, the Notes or any Related Agreement to which it is a party or
by which it is bound;
(d) Warranties. Before and after giving effect to such Loan, the
warranties in Section 4 shall be true and correct as though made on the
date of such Loan, except for such changes as are specifically permitted
hereunder; and
(e) Accounting Methods. Borrower shall not have made
any material (as reasonably determined by Lender) change in
its accounting methods or principles except as required by
GAAP.
Each request for a Loan hereunder made or deemed to have been made by
Borrower shall be deemed to be a certificate of Borrower as to the matters set
out in the foregoing provisions of this Section 8.2.
9. INDEMNITY.
9.1 Environmental and Safety and Health Indemnity. Borrower hereby
indemnifies Lender and agrees to hold Lender harmless from and against any and
all losses, liabilities, damages, injuries, costs, expenses and claims of any
and every kind whatsoever (including, without limitation, court costs and
Attorneys' Fees) which at any time or from time to time may be paid, incurred or
suffered by, or asserted against, Lender for, with respect to, or as a direct or
indirect result of the violation by Parent or any of its Subsidiaries of any
Environmental Law or Occupational Safety and Health Law, or with respect to, or
as a direct or indirect result of, (i) the presence on or under, or the escape,
seepage, leakage, spillage, disposal, discharge, emission or release from,
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properties utilized by Parent and/or any Subsidiary of Parent into or upon any
land, the atmosphere, or any watercourse, body of water, groundwater or wetland,
of any Hazardous Material or other hazardous, toxic or dangerous waste,
substance or constituent, or other substance (including, without limitation, any
losses, liabilities, damages, injuries, costs, expenses or claims asserted or
arising under any Environmental Law) or (ii) the existence of any unsafe or
unhealthful condition on or at any premises utilized by Parent and/or any
Subsidiary of Parent in the conduct of its business. The provisions and
undertakings of indemnification set out in this Section 9.1 shall survive
satisfaction and payment of the Liabilities and termination of this Agreement.
9.2 General Indemnity. In addition to the payment of expenses pursuant
to Section 11.3, whether or not the transactions contemplated hereby shall be
consummated, Borrower agrees to indemnify, pay and hold Lender and any holder of
any Note, and the officers, directors, employees, agents, and affiliates of
Lender and such holders (collectively, the "Indemnitees"), harmless from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for any of such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not any of such Indemnitees shall be designated a party thereto) that
may be imposed on, incurred by, or asserted against any Indemnitee, in any
manner relating to or arising out of this Agreement, any Related Agreement or
any other agreements executed and delivered by Borrower or any other Obligor in
connection herewith, the statements contained in any commitment letter delivered
by Lender, Lender's agreement to make the Loans hereunder, or the use or
intended use of the proceeds of any of the Loans hereunder (the "indemnified
liabilities"); provided that Borrower shall have no obligation to an Indemnitee
hereunder with respect to indemnified liabilities arising from the gross
negligence or willful misconduct of such Indemnitee. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it violates any law or public policy,
Borrower shall contribute the maximum portion that it is permitted to pay under
applicable law to the payment and satisfaction of all indemnified liabilities
incurred by the Indemnitees or any of them. The provisions and undertakings of
indemnification set out in this Section 9.2 shall survive satisfaction and
payment of the Liabilities and termination of this Agreement.
9.3 Capital Adequacy. If Lender shall reasonably determine
that the application or adoption of any law, rule, regulation,
directive, interpretation, treaty or guideline regarding capital
adequacy, or any change therein or in the interpretation or
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administration thereof, whether or not having the force or law (including,
without limitation, application of changes to Regulation H and Regulation Y of
the Federal Reserve Board issued by the Federal Reserve Board on January 19,
1989 and regulations of the Comptroller of the Currency, Department of the
Treasury, 12 CFR Part 3, Appendix A, issued by the Comptroller of the Currency
on January 27, 1989) increases the amount of capital required or expected to be
maintained by Lender or any Person controlling Lender, and such increase is
based upon the existence of Lender's obligations hereunder and other commitments
of this type, then from time to time, within ten (10) days after demand from
Lender, Borrower shall pay to Lender such amount or amounts as will compensate
Lender or such controlling Person, as the case may be, for such increased
capital requirement. The determination of any amount to be paid by Borrower
under this Section 9.3 shall take into consideration the policies of Lender or
any Person controlling Lender with respect to capital adequacy and shall be
based upon any reasonable averaging, attribution and allocation methods. A
certificate of Lender setting forth the amount or amounts as shall be necessary
to compensate Lender as specified in this Section 9.3 shall be delivered to
Borrower and shall be conclusive in the absence of manifest error. The
provisions and undertakings of indemnification set out in this Section 9.3 shall
survive satisfaction and payment of the Liabilities and termination of this
Agreement.
9.4 Other Indemnities. Notwithstanding anything to the contrary
elsewhere in this Agreement, all other indemnities of Borrower in favor of
Lender contained in this Agreement shall survive satisfaction and payment of the
Liabilities and termination of this Agreement.
10. ADDITIONAL PROVISIONS. Additional provisions are set forth in
Supplement A.
11. GENERAL.
11.1 Borrower Waiver. Except as otherwise provided for in this
Agreement, Borrower waives (i) presentment, demand and protest and notice of
presentment, protest, default, non-payment, maturity, release, compromise,
settlement, one or more extensions or renewals of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by Lender on which Borrower may in any way be liable and,
assuming Lender has acted in a commercially reasonable manner, hereby ratifies
and confirms whatever Lender may do in this regard; (ii) all rights to notice
and a hearing prior to Lender's taking possession or control of, or Lender's
relevy, attachment or levy on or of, the Collateral or any bond or security
which might be required by any court prior to allowing Lender to exercise any of
Lender's remedies; and (iii) the benefit of all valuation,
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appraisement and exemption laws. Borrower acknowledges that it has been advised
by counsel of its choice with respect to this Agreement and the transactions
evidenced by this Agreement.
11.2 Power of Attorney. Borrower appoints Lender, or any Person whom
Lender may from time to time designate, as Borrower's attorney and agent-in-fact
with power (which appointment and power, being coupled with an interest, shall
be irrevocable until all Liabilities are finally paid and performed in full and
this Agreement is terminated), without notice to Borrower, to:
(a) At such time or times hereafter as Lender or said agent, in
its sole and absolute discretion, may determine in Borrower's or
Lender's name (i) endorse Borrower's name on any checks, notes, drafts
or any other items of payment relating to and/or proceeds of the
Collateral which come into the possession of Lender or under Lender's
control and apply such payment or proceeds to the Liabilities in
accordance with the terms hereof; (ii) endorse Borrower's name on any
chattel paper, document, instrument, invoice, freight ▇▇▇▇, ▇▇▇▇ of
lading or similar document or agreement in Lender's possession relating
to Accounts Receivable, Inventory or any other Collateral; (iii) use the
information recorded on or contained in any data processing equipment
and computer hardware and software to which Borrower has access relating
to Accounts Receivable, Inventory and/or other Collateral; (iv) use
Borrower's stationery and sign the name of Borrower to verification of
Accounts Receivable and notices thereof to Account Debtors; and (v) if
not done by Borrower, do all acts and things determined by Lender to be
necessary, to fulfill Borrower's obligations under this Agreement; and
(b) At such time or times after the occurrence and during the
continuance of an Event of Default, as Lender or said agent, in its sole
and absolute discretion, may determine, in Borrower's or Lender's name:
(i) demand payment of the Accounts Receivable; (ii) enforce payment of
the Accounts Receivable, by legal proceedings or otherwise; (iii)
exercise all of Borrower's rights and remedies with respect to the
collection of the Accounts Receivable and other Collateral; (iv) settle,
adjust, compromise, extend or renew the Accounts Receivable; (v) settle,
adjust or compromise any legal proceedings brought to collect the
Accounts Receivable; (vi) if permitted by applicable law, sell or assign
the Accounts Receivable and/or other Collateral upon such terms for such
amounts and at such time or times as Lender may deem advisable; (vii)
discharge and release the Accounts Receivable and/or other Collateral;
(viii) prepare, file and sign Borrower's name on any proof of claim in
bankruptcy or similar document against any Account Debtor; (ix) prepare,
file and sign Borrower's name on any notice of lien, assignment or
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satisfaction of lien or similar document in connection with the Accounts
Receivable and/or other Collateral; and (x) do all acts and things
necessary, in Lender's sole and absolute discretion, to obtain repayment
of the Liabilities and to fulfill Borrower's other obligations under
this Agreement.
11.3 Expenses; Attorneys' Fees. Borrower agrees, whether or not any Loan
is made hereunder, to pay upon demand all Attorneys' Fees and all other
reasonable expenses incurred by Lender in connection with (i) [intentionally
left blank], (ii) the preparation of any and all amendments to this Agreement or
any of the Related Agreements and all other instruments or documents provided
for therein or delivered or to be delivered thereunder or in connection
therewith, (iii) the collection or enforcement of Borrower's or any other
Obligor's obligations hereunder or under any Related Agreement, and (iv) the
collection or enforcement of any of Lender's rights in or to any Collateral or
Third Party Collateral. Lender may advance all such amounts to Borrower as a
Revolving Loan. Borrower also agrees, (v) to indemnify and hold Lender harmless
from any loss or expense which may arise or be created by the acceptance of
telephonic or other instructions for making Loans except for losses and expenses
arising from Lender's gross negligence or willful misconduct, and (vi) to pay,
and save Lender harmless from all liability for, any stamp or other taxes which
may be payable with respect to the execution or delivery of this Agreement, or
any Related Agreement or Supplemental Documentation, or the issuance of any Note
or of any other instruments or documents provided for herein or to be delivered
hereunder or in connection herewith. Borrower's foregoing obligations shall
survive any termination of this Agreement.
11.4 Lender Fees and Charges. Borrower agrees to pay Lender on demand
the customary fees and charges of Lender for maintenance of accounts with Lender
or for providing other services to Borrower. Lender may, in its sole and
absolute discretion, provide for such payment by advancing the amount thereof to
Borrower as a Revolving Loan.
11.5 Lawful Interest. In no contingency or event whatsoever shall the
interest rate charged pursuant to the terms of this Agreement exceed the highest
rate permissible under any law which a court of competent jurisdiction shall, in
a final determination, deem applicable hereto. In the event that such a court
determines that Lender has received interest hereunder in excess of the highest
applicable rate, Lender shall promptly refund such excess interest to Borrower.
11.6 No Waiver by Lender; Amendments. No failure or delay on
the part of Lender in the exercise of any power or right, and no
course of dealing between Borrower and Lender shall operate as a
waiver of such power or right, nor shall any single or partial
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exercise of any power or right preclude other or further exercise thereof or the
exercise of any other power or right. The remedies provided for herein are
cumulative and not exclusive of any remedies which may be available to Lender at
law or in equity. No notice to or demand on Borrower not required hereunder
shall in any event entitle Borrower to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the right of Lender to
any other or further action in any circumstances without notice or demand. No
amendment, modification or waiver of, or consent with respect to, any provision
of this Agreement or any Related Agreement shall in any event be effective
unless the same shall be in writing and signed and delivered by Lender and
Borrower. Any waiver of any provision of this Agreement, and any consent to any
departure by Borrower from the terms of any provision of this Agreement, shall
be effective only in the specific instance and for the specific purpose for
which given.
11.7 Termination of Credit.
(a) Unless the Termination Date is extended pursuant to clause
(b) of this Section 11.7, the Credit shall terminate on the
then-scheduled Termination Date. Borrower may terminate the Credit at
any time prior to the Termination Date upon notice to Lender and payment
in full of the outstanding principal balance of the Loans and all other
Liabilities. All of Lender's rights and remedies, the liens and security
interests of Lender in the Collateral and the Third Party Collateral and
all of Borrower's duties and obligations under this Agreement shall
survive termination of the Credit extended to Borrower hereunder until
all of the Liabilities have been finally paid and performed in full. The
termination or cancellation of the Credit shall not affect or impair the
liabilities and obligations of Borrower or any one or more of the
Obligors to Lender or Lender's rights with respect to any Loans and
advances made and other Liabilities incurred prior to such termination
or with respect to the Collateral or any Third Party Collateral.
(b) Borrower may, not more than 90 days nor less than 75 days
prior to any scheduled Termination Date, request that Lender extend the
Credit for an additional one-year period to the next anniversary of such
date. Unless Lender, in the exercise of its sole and complete
discretion, notifies Borrower of its willingness to extend the Credit
for such additional one-year period, the Credit shall terminate on the
then scheduled Termination Date (and all Loans and other Liabilities
shall be thereupon due and payable).
11.8 Notices. Except as otherwise expressly provided herein,
any notice hereunder to Borrower or Lender shall be in writing
(including telegraphic, telex, or facsimile communication) and
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shall be given to Borrower or Lender at its address, telex number or facsimile
number set forth on the signature pages hereof or at such other address, telex
number or facsimile number as Borrower or Lender may, by written notice,
designate as its address, telex number or facsimile number for purposes of
notices hereunder. All such notices shall be deemed to be given when transmitted
by telex and the appropriate answerback is received, transmitted by facsimile,
delivered to the telegraph office, delivered by courier, personally delivered
or, in the case of notice by mail, three (3) Banking Days following deposit in
the United States mails, properly addressed as herein provided, with proper
postage prepaid; provided, however, that notice to Lender of Borrower's intent
to terminate the Credit shall not be effective until actually received by
Lender.
11.9 Assignments and Participations; Information. Borrower hereby
consents to Lender's grant of participations in or sale, assignment, transfer or
other disposition, at any time and from time to time hereafter, of this
Agreement or any Related Agreement, or of any portion of any thereof, including
without limitation Lender's rights, titles, interests, remedies, powers and/or
duties. Lender may furnish any information concerning Borrower in the possession
of Lender from time to time to assignees of the rights and/or obligations of
Lender hereunder and to Participants in any Loan (including prospective
assignees and Participants) and may furnish information in response to credit
inquiries consistent with general banking practice. Lender shall promptly notify
Borrower of Lender's grant of any participation in or sale, assignment, transfer
or other disposition of this Agreement or any Related Agreement, or of any
portion of any thereof. Borrower shall use its reasonable efforts to assist
Lender in its efforts to sell assignments and participations.
11.10 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
11.11 Successors. This Agreement shall be binding upon Borrower and
Lender and their respective successors and assigns, and shall inure to the
benefit of Borrower and Lender and the successors and assigns of Lender.
Borrower shall not assign its rights or duties hereunder without the consent of
Lender.
11.12 Construction. Borrower acknowledges that this Agreement shall not
be binding upon Lender until and unless accepted by Lender in writing. If so
accepted by Lender, this Agreement and the Related Agreements and Supplemental
Documentation shall, unless otherwise expressly provided therein, be deemed to
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have been negotiated and entered into in, and shall be governed and controlled
by the laws of, the State of Illinois as to interpretation, enforcement,
validity, construction, effect, choice of law, and in all other respects,
including, but not limited to, the legality of the interest rate and other
charges, but excluding perfection of security interests and liens which shall be
governed and controlled by the laws of the relevant jurisdiction.
11.13 Consent to Jurisdiction. To induce Lender to accept this
Agreement, Borrower irrevocably agrees that, subject to Lender's sole and
absolute election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT,
ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT, THE RELATED AGREEMENTS, THE
SUPPLEMENTAL DOCUMENTATION OR THE COLLATERAL SHALL BE LITIGATED IN COURTS HAVING
SITUS WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS. BORROWER HEREBY CONSENTS
AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED
WITHIN SAID CITY AND STATE AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
UPON BORROWER, AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL DIRECTED TO BORROWER AT THE ADDRESS STATED ON THE SIGNATURE PAGE
HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT
THEREOF.
11.14 Subsidiary Reference. Any reference herein to a Subsidiary or
Subsidiaries of Borrower, and any financial definition, ratio, restriction or
other provision of this Agreement which is stated to be applicable to "Borrower
and its Subsidiaries" or which is to be determined on a "consolidated" or
"consolidating" basis, shall apply only to the extent Borrower has any
Subsidiaries and, where applicable, to the extent any such Subsidiaries are
consolidated with Borrower for financial reporting purposes.
11.15 WAIVER OF JURY TRIAL. BORROWER AND LENDER EACH WAIVES ANY RIGHT TO
A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (i)
UNDER THIS AGREEMENT OR ANY RELATED AGREEMENT OR UNDER ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR (ii) ARISING FROM ANY BANKING RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
Initials of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, President of Borrower:
_______________.
11.16 Prior Actions. Borrower hereby waives, releases and forever
discharges Lender, its officers, employees and agents, from any and all rights,
claims, demands or causes or action against Lender, in law or in equity, arising
out of Lender's past actions or omissions with respect to the Original Loan
Agreement, any other agreements or documents, or any lien or collateral securing
any Liabilities under and as defined in the Original Loan Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
DELAWARE ELECTRO INDUSTRIES, INC.
By:__________________________________
Title: ______________________________
Address: c/o Azimuth Corporation
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Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
BANK OF AMERICA ILLINOIS
By: _________________________________
Title: ______________________________
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Facsimile number: 312/828-3889
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SUPPLEMENT A
to
LOAN AND SECURITY AGREEMENT
Dated as of October 9, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ("Lender") and DELAWARE ELECTRO INDUSTRIES,
INC. ("Borrower")
1. Loan Agreement Reference. This Supplement A, as it may be amended or modified
from time to time, is a part of the Loan and Security Agreement dated as of
October 9, 1995 between Borrower and Lender (together with all amendments,
modifications and supplements thereto, the "Loan Agreement"). Terms used herein
which are defined in the Loan Agreement shall have the meaning ascribed to them
therein unless the context requires otherwise.
2. Revolving Credit Amount; Borrowing Base.
2.1 Revolving Credit Amount. The maximum amount of Revolving Loans which
Lender will make available to Borrower (such amount is herein called the
"Revolving Credit Amount") is (i) FIVE MILLION FOUR HUNDRED THOUSAND DOLLARS
($5,400,000) (unless such amount is increased by Lender in its sole discretion)
less (ii) the principal amount of "Revolving Loans" (under and as defined in
each Other Loan Agreement) outstanding under each Other Loan Agreement.
2.2 Borrowing Base. The term "Borrowing Base", as used
herein, shall mean:
(i) an amount (the "Accounts Receivable Availability") equal to
85% of the net amount (after deduction of such reserves and
allowances as Lender deems proper and necessary in good faith and
in the exercise of its reasonable judgment) of the Eligible
Accounts Receivable of Borrower; plus
(ii) an amount (the "Inventory Availability") equal to the lesser
of (A) the sum of (x) 40% of the net value (as determined by
Lender and after deduction of such reserves and allowances as
Lender deems proper and necessary in good faith and in the
exercise of its reasonable judgment) of the Eligible Inventory of
Borrower consisting of fuses plus (y) 25% of the net value (as
determined by Lender and after deduction of such reserves and
allowances as Lender deems proper and necessary in good faith and
in the exercise of its reasonable judgment) of the Eligible
Inventory of Borrower consisting of fasteners or (B) $2,500,000
(such dollar amount, as adjusted from time to time, is
hereinafter called the "Inventory Availability Sublimit"); plus
(iii) an amount (the "Additional Availability") equal to (A)(1)
from the Closing Date to the one year anniversary thereof,
$300,000 and (2) thereafter, zero less (B) the principal amount
of "Revolving Loans" under and as defined in the Other Loan
Agreements then outstanding under the Other Loan Agreements in
excess of the "Accounts Receivable Availability" under and as
defined in each Other Loan Agreement.
2.3 Availability Adjustments.
None.
2.4 Lender's Rights. Borrower agrees that nothing contained in this
Supplement A (i) shall be construed as Lender's agreement to resort or look to a
particular type or item of Collateral as security for any specific Loan or
advance or in any way limit Lender's right to resort to any or all of the
Collateral as security for any of the Liabilities, (ii) shall be deemed to limit
or reduce any lien on or any security interest in or upon any portion of the
Collateral or other security for the Liabilities or (iii) shall supersede
Section 2.8 of the Loan Agreement.
3. Interest.
3.1
(a) Interest to Maturity. The outstanding principal balance of
the Revolving Loans (other than Overdraft Loans and Over
Advances) shall bear interest to maturity at the Reference Rate
in effect from time to time plus one and one-half percent (1.5%)
per annum.
(b) Default Rate. If any amount of the Revolving Loans is
not paid when due, whether by acceleration or otherwise, the
outstanding principal balance of the Revolving Loans (other than
Overdraft Loans and Over Advances) shall bear interest until paid
at a rate per annum equal to the greater of the (a) the Reference
Rate from time to time in effect plus two and one-half percent
(2.5%) or (b) two and one-half percent (2.5%) above the Reference
Rate in effect at the time such amount became due.
3.2 Overdraft Loans; Over Advances. Overdraft Loans and Over Advances
shall bear interest at the rate(s) determined pursuant to Section 2.6 or Section
2.7 of the Loan Agreement, as applicable.
3.3 Computation. Interest shall be calculated on the basis
of a year consisting of 360 days and paid for actual days elapsed.
Changes in any interest rate provided for herein which are due to
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changes in the Reference Rate shall take effect on the date of the change in the
Reference Rate.
3.4 Payment. Until maturity, interest on the Loans shall be payable
monthly in arrears on the last day of each calendar month at maturity. After
maturity, whether by acceleration or otherwise, accrued interest shall be
payable on demand.
4. Eligible Account Receivable Data. Each Account Receivable of Borrower must be
due and payable within 90 days of the date of the invoice evidencing such
Account Receivable and must not be unpaid on the date that is 91 days after the
date of such invoice. If invoices representing 25% or more of the unpaid net
amount of all Accounts Receivable of Borrower from any one Account Debtor are
unpaid more than 90 days after the date of such invoices, then all Accounts
Receivable relating to such Account Debtor shall cease to be Eligible Accounts
Receivable.
5. Eligible Inventory Requirements.
None.
6. Information. Borrower agrees that, until the Credit is
terminated, it shall furnish to Lender in form reasonably
satisfactory to Lender the following:
(a) Within fifteen (15) days after the end of each month, an aging of
all Accounts Receivable of Borrower and an aging of all accounts payable
of Borrower; and
(b) Within fifteen (15) days after the end of each month, an Inventory
certification report as of the end of the month for all Inventory
locations.
Borrower's Initials: ______________
Lender's Initials: ______________
Date: October 9, 1995
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