EXHIBIT 10.31 LOAN AND SECURITY AGREEMENT DATED EFFECTIVE JANUARY 6, 2003
EX-10.31
3
ex10to10k05380_12312002.htm
EXHIBIT 10.31
LOAN AND SECURITY AGREEMENT
DATED EFFECTIVE JANUARY 6, 2003
AMONG
LASALLE BUSINESS CREDIT LLC
THE AGENT FOR LENDER,
STANDARD FEDERAL NATIONAL ASSOCIATION,
THE LENDER,
SL INDUSTRIES, INC. AND SL DELAWARE, INC, COLLECTIVELY,
BORROWERS
AND
CONDOR D.C. POWER SUPPLIES, INC., TEAL ELECTRONICS CORPORATION,
RFL ELECTRONICS, INC., SL MONTEVIDEO TECHNOLOGY, INC.,
SL SURFACE TECHNOLOGIES, INC., SL DELAWARE HOLDINGS, INC.,
SL AUBURN, INC., WABER POWER LTD., SLW HOLDINGS, INC.,
CONDOR HOLDINGS, INC. AND CEDAR CORPORATION, COLLECTIVELY,
GUARANTORS
TABLE OF CONTENTS
PAGE
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1. DEFINITIONS..............................................................2
2. LOANS...................................................................14
(a) Revolving Loans...................................................14
(b) Term Loan A.......................................................15
(c) Term Loan B.......................................................15
(d) Repayments........................................................15
(e) Notes.............................................................16
3. LETTERS OF CREDIT.......................................................16
(a) General Terms.....................................................16
(b) Requests for Letters of Credit....................................17
(c) Obligations Absolute..............................................17
(d) Expiration Dates of Letters of Credit.............................17
4. INTEREST, FEES AND CHARGES..............................................18
(a) Interest Rate For Revolving Loans.................................18
(b) Interest Rate for Term Loans......................................18
(c) Incentive Pricing.................................................18
(d) Default Interest..................................................19
(e) Calculation of Interest...........................................19
(f) Other LIBOR Provisions............................................19
(g) Fees And Charges..................................................20
(h) Maximum Interest..................................................22
5. COLLATERAL..............................................................22
(a) Grant of Security Interest to Agent...............................22
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(b) Mortgaged Property................................................23
(c) Guarantees........................................................23
(d) Stock.............................................................23
(e) Mexican Assets....................................................23
(f) Intercompany Notes................................................23
(g) Pledge of EME Sale Notes..........................................23
(h) Other Security....................................................24
(i) Possessory Collateral.............................................24
(j) Electronic Chattel Paper..........................................24
6. PRESERVATION OF COLLATERAL AND PERFECTION OF SECURITY INTERESTS THEREIN.24
7. POSSESSION OF COLLATERAL AND RELATED MATTERS............................25
8. COLLECTIONS.............................................................25
9. COLLATERAL, AVAILABILITY AND FINANCIAL REPORTS AND SCHEDULES............27
(a) Daily Reports.....................................................27
(b) Monthly Reports...................................................27
(c) Financial Statements..............................................27
(d) Annual Projections................................................28
(e) Public Reporting..................................................28
(f) Other Information.................................................28
10. TERMINATION.............................................................28
11. REPRESENTATIONS AND WARRANTIES..........................................29
(a) Financial Statements and Other Information........................29
(b) Locations.........................................................30
(c) Loans by Obligors.................................................30
(d) Accounts and Inventory............................................30
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(e) Liens.............................................................30
(f) Organization, Authority and No Conflict...........................30
(g) Litigation........................................................31
(h) Compliance with Laws and Maintenance of Permits...................31
(i) Affiliate Transactions............................................31
(j) Names and Trade Names.............................................31
(k) Equipment.........................................................31
(l) Enforceability....................................................31
(m) Solvency..........................................................32
(n) Indebtedness......................................................32
(o) Margin Security and Use of Proceeds...............................32
(p) Parent, Subsidiaries and Affiliates...............................32
(q) No Defaults.......................................................32
(r) Employee Matters..................................................32
(s) Intellectual Property.............................................32
(t) Environmental Matters.............................................33
(u) ERISA Matters.....................................................33
(v) Interrelatedness of Obligors......................................33
12. AFFIRMATIVE COVENANTS...................................................33
(a) Maintenance of Records............................................33
(b) Notices...........................................................34
(c) Compliance with Laws and Maintenance of Permits...................35
(d) Inspection and Audits.............................................35
(e) Insurance.........................................................35
(f) Collateral........................................................37
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(g) Use of Proceeds...................................................37
(h) Taxes.............................................................37
(i) Intellectual Property.............................................38
(j) Bank Accounts.....................................................38
(k) Maintenance of Management.........................................38
(l) Tracking of Borrowings............................................38
13. NEGATIVE COVENANTS......................................................38
(a) Guaranties........................................................39
(b) Indebtedness......................................................39
(c) Liens.............................................................39
(d) Mergers, Sales, Acquisitions, Subsidiaries and Other
Transactions Outside the Ordinary Course of Business..............39
(e) Dividends and Distributions.......................................40
(f) Investments; Loans................................................40
(g) Fundamental Changes, Line of Business.............................40
(h) Equipment.........................................................40
(i) Affiliate Transactions............................................40
(j) Settling of Accounts..............................................41
(k) Limitations on SL Delaware and Non-Operating Subsidiaries.........41
14. FINANCIAL COVENANTS.....................................................41
(a) Book Net Worth....................................................41
(b) Fixed Charge Coverage.............................................41
(c) Capital Expenditure Limitations...................................41
(d) Minimum EBITDA....................................................42
15. DEFAULT.................................................................42
(a) Payment...........................................................42
(b) Breach of this Agreement and the Other Agreements.................42
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(c) Breaches of Other Obligations.....................................42
(d) Breach of Representations and Warranties..........................42
(e) Loss of Collateral................................................42
(f) Levy, Seizure or Attachment.......................................43
(g) Bankruptcy or Similar Proceedings.................................43
(h) Appointment of Receiver...........................................43
(i) Judgment..........................................................43
(j) Dissolution of Obligor............................................43
(k) Default or Revocation of Guaranty.................................43
(l) Criminal Proceedings..............................................44
(m) Material Adverse Change...........................................44
16. REMEDIES UPON AN EVENT OF DEFAULT.......................................44
17. CONDITIONS PRECEDENT....................................................45
18. JOINT AND SEVERAL LIABILITY.............................................46
19. NON LIABILITY OF AGENT AND LENDER.......................................48
20. INDEMNIFICATION.........................................................48
21. NOTICE..................................................................48
22. CHOICE OF GOVERNING LAW; CONSTRUCTION; FORUM SELECTION..................48
23. MODIFICATION AND BENEFIT OF AGREEMENT...................................49
24. HEADINGS OF SUBDIVISIONS................................................49
25. POWER OF ATTORNEY.......................................................49
26. CONFIDENTIALITY.........................................................50
27. COUNTERPARTS............................................................50
28. ELECTRONIC SUBMISSIONS..................................................50
29. LASALLE BUSINESS CREDIT LLC, AS AGENT...................................50
30. BORROWING AGENCY........................................................51
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(a) Borrowing Agency Provisions.......................................51
(b) Subordination.....................................................51
31. WAIVER OF JURY TRIAL; OTHER WAIVERS.....................................51
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (as amended, modified or
supplemented from time to time, this "AGREEMENT") is made effective the 6th day
of January, 2003 by and among STANDARD FEDERAL NATIONAL ASSOCIATION, a national
banking association ("LENDER"), LASALLE BUSINESS CREDIT LLC, a Delaware limited
liability company ("AGENT"), with an address of ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, SL INDUSTRIES, INC., a New Jersey corporation
("INDUSTRIES"), having its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇-▇▇▇, ▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, SL DELAWARE, INC., a Delaware corporation ("SL
DELAWARE"), having its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, CONDOR D.C. POWER SUPPLIES, INC., a
California corporation ("CONDOR D.C."), having its principal place of business
at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, TEAL ELECTRONICS CORPORATION, a
California corporation ("TEAL"), having its principal place of business at
10350-10360 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, RFL ELECTRONICS, INC., a
Delaware corporation ("RFL"), having its principal place of business at ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, SL MONTEVIDEO TECHNOLOGY, INC., a Minnesota
corporation ("MONTEVIDEO"), having its principal place of business at ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, SL SURFACE TECHNOLOGIES, INC., a New Jersey
corporation ("SURFACE"), having its principal place of business at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, SL DELAWARE HOLDINGS, INC., a Delaware
corporation ("DELAWARE HOLDINGS"), having its principal place of business at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, SL AUBURN, INC.,
a New York corporation ("AUBURN"), having its principal place of business at ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, WABER POWER LTD., a
Connecticut corporation ("WABER"), with a principal place of business at ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, SLW HOLDINGS, INC., a New
Jersey corporation ("SLW"), having a principal place of business at ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, CONDOR HOLDINGS, INC., a
Delaware corporation ("CONDOR HOLDINGS"), having a principal place of business
at ▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and CEDAR CORPORATION, a Nevada
corporation ("CEDAR"), having a principal place of business at ▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇, ▇▇ ▇▇▇▇▇.
WITNESSETH:
WHEREAS, Borrowers may, from time to time, request Loans from
Lender, and the parties wish to provide for the terms and conditions upon which
such Loans or other financial accommodations, if made by Lender, shall be made.
WHEREAS, Lender has appointed Agent as its agent to manage the
rights and obligations of Lender pursuant to an Agency Services Agreement dated
as of May 7, 2001 by and between Agent and Lender.
NOW, THEREFORE, in consideration of any Loan (including any Loan by
renewal or extension) hereafter made to a Borrower by Lender, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by Borrowers, the parties agree as follows:
1. DEFINITIONS.
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"ACCOUNT", "ACCOUNT DEBTOR", "CHATTEL PAPER", "COMMERCIAL TORT
CLAIMS", "DEPOSIT ACCOUNTS", "DOCUMENTS", "ELECTRONIC CHATTEL PAPER",
"EQUIPMENT", "FINANCIAL ASSETS", "FIXTURES", "GENERAL INTANGIBLES", "GOODS",
"INSTRUMENTS", "INVENTORY", "INVESTMENT PROPERTY", "LETTER-OF-CREDIT RIGHT",
"PROCEEDS" and "TANGIBLE CHATTEL PAPER" shall have the respective meanings
assigned to such terms in the Pennsylvania Uniform Commercial Code, as the same
may be in effect from time to time.
"AFFILIATE" shall mean any Person (i) which directly or indirectly
through one or more intermediaries controls, is controlled by, or is under
common control with, an Obligor, (ii) which beneficially owns or holds ten
percent (10%) or more of the voting control or equity interests of an Obligor,
or (iii) ten percent (10%) or more of the voting control or equity interests of
which is beneficially owned or held by an Obligor.
"BOOK NET WORTH" shall mean, at any time, the amount by which all
assets of Covenant Obligors exceed all of Covenant Obligors' liabilities, as
would be shown on a balance sheet of Covenant Obligors prepared as of such date
in accordance with GAAP on a consolidated basis.
"BOONTON PROPERTY" shall mean that certain Mortgaged Property of RFL
located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇.
"BORROWING AGENT" means SL Industries, Inc. in its capacity as
borrowing agent.
"BORROWERS" shall mean, collectively, Industries and SL Delaware,
and "BORROWER" shall mean each of them.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or
(i) with respect to all matters, determinations, fundings and payments in
connection with LIBOR Rate Loans, any day on which banks in London, England or
Chicago, Illinois are required or permitted to close, and (ii) with respect to
all other matters, any day that banks in Chicago, Illinois are required or
permitted to close.
"CAPITAL EXPENDITURES" shall mean with respect to any period, the
aggregate of all expenditures (without duplication, whether paid in cash or
accrued as liabilities and including expenditures funded by capitalized lease
obligations) by Covenant Obligors during such period that are required by GAAP
to be included in or reflected by the property, plant and equipment or similar
fixed asset accounts (or intangible accounts subject to amortization) on the
balance sheet of Covenant Obligors.
"CAPITALIZED LEASES" means all leases of Covenant Obligors which, in
accordance with GAAP, should be capitalized on the books of a Covenant Obligor.
"COLLATERAL" shall mean all of the property of each Obligor
described in SECTION 5 hereof, together with all other real or personal property
of any Obligor or any other Person now or hereafter pledged to Agent or Lender
to secure, either directly or indirectly, repayment of any of the Liabilities.
"COVENANT OBLIGORS" means, collectively, Industries and Eligible
Guarantors, and "COVENANT OBLIGOR" shall mean each of them.
"DCX HOLDING" shall mean DCX-Chol Holding GmbH.
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"DCX/CHOL GUARANTY" shall mean that certain Guaranty by DCX-Chol
Enterprises, Inc. and Chol Enterprises, Inc. in favor of Vertrieb.
"DEFAULT" shall mean any event which with the giving of notice,
passage of time, or both, would constitute an Event of Default.
"DIVIDEND SUBSIDIARIES" shall mean, collectively, SLW, SL Delaware
and any Subsidiary of SL Delaware, and "DIVIDEND SUBSIDIARY" shall mean each of
them.
"DOMESTIC OBLIGOR" shall mean each Obligor which is organized in any
state within the United States of America.
"DOMESTIC SUBSIDIARY" shall mean each Subsidiary which is organized
in any state within the United States of America.
"EBITDA" shall mean, (a) with respect to Covenant Obligors' Fiscal
Year ending December 31, 2002, Covenant Obligors' Net Income for such period,
PLUS EBITDA Dividends received by any Covenant Obligor which are applied to
reduce the Revolving Loans (but shall not reduce the Maximum Revolving Loan
Limit), PLUS the aggregate amount deducted in determining such earnings in
respect of interest expense, income tax expense, depreciation and amortization
for such period, PLUS all amounts identified as "Special Charges" or
"Restructuring Costs" in Industries' June 30, 2002 10-Q up to a maximum amount
of Two Million One Hundred Thousand Dollars ($2,100,000.00) and all amounts up
to a maximum amount of Seven Hundred Fifty Thousand Dollars ($750,000.00)
written off by Surface for the year ending December 31, 2002 as a noncash
reduction of its goodwill and/or fixed assets, all as determined in accordance
with GAAP on a consolidated basis, (b) with respect to any other period of
Covenant Obligors, Covenant Obligors' Net Income for such period, PLUS EBITDA
Dividends received by any Covenant Obligor which are applied to the Revolving
Loans (but shall not reduce the Maximum Loan Limit), PLUS the aggregate amount
deducted in determining such earnings in respect of interest expense, income tax
expense, depreciation and amortization for such period, all as determined in
accordance with GAAP on a consolidated basis.
"EBITDA DIVIDEND" shall mean a cash dividend received by any
Covenant Obligor from any Dividend Subsidiary which dividend was a result of a
distribution of the earnings of a Dividend Subsidiary which earnings were a
result of operations of a Dividend Subsidiary or a Subsidiary of a Dividend
Subsidiary (and not sales of assets out of the ordinary course of business or
sales of stock).
"ELIGIBLE ACCOUNT" shall mean an Account owing to a Covenant Obligor
which is acceptable to Agent in its reasonable discretion for lending purposes.
Without limiting Agent's discretion, Agent shall, in general, consider an
Account to be an Eligible Account if it meets, and so long as it continues to
meet, the following requirements, any or all of which may be set or revised in
Agent's reasonable discretion:
(i) it is genuine and in all respects what it purports to be;
(ii) it is owned by such Covenant Obligor, such Covenant
Obligor has the right to subject it to a security interest in favor of Agent and
Lender or assign it to Agent and Lender and it is subject to a first priority
perfected security interest in favor of Agent and Lender and to no other claim,
lien, security interest or encumbrance whatsoever, other than Permitted Liens;
(iii) it arises from (A) the performance of services by such
Covenant Obligor in the ordinary course of such Covenant Obligor's business, and
such services have been fully performed and acknowledged and accepted by the
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Account Debtor thereunder; or (B) the sale or lease of Goods by such Covenant
Obligor in the ordinary course of such Covenant Obligor's business, and (x) such
Goods have been completed in accordance with the Account Debtor's specifications
(if any) and delivered to the Account Debtor, (y) such Account Debtor has not
refused to accept, returned or offered to return, any of the Goods which are the
subject of such Account, and (z) such Covenant Obligor has possession of, or
such Covenant Obligor has delivered to Agent (at Agent's request) shipping and
delivery receipts evidencing delivery of such Goods;
(iv) it is evidenced by an invoice rendered to the Account
Debtor thereunder, it does not remain unpaid more than sixty (60) days from the
due date or, in any event, ninety (90) days after the invoice date thereof;
provided, however, that if more than fifty percent (50%) (such percentage being
subject to adjustment in Agent's sole discretion) of the aggregate dollar amount
of invoices owing by a particular Account Debtor remain unpaid more than sixty
(60) days from the due date or ninety (90) days after the invoice date thereof,
then all Accounts owing by that Account Debtor shall be deemed ineligible;
(v) it is a valid, legally enforceable and unconditional
obligation of the Account Debtor thereunder, and is not subject to any setoff,
counterclaim, contra, credit, allowance or adjustment by such Account Debtor, or
to any claim by such Account Debtor denying liability thereunder in whole or in
part;
(vi) it does not arise out of a contract or order which fails
in any material respect to comply with the requirements of applicable law;
(vii) the Account Debtor thereunder is not a director, officer,
employee or agent of an Obligor, or a Subsidiary, Parent or Affiliate;
(viii) it is not an Account with respect to which the Account
Debtor is the United States of America or any state or local government, or any
department, agency or instrumentality thereof, unless such Covenant Obligor
assigns its right to payment of such Account to Agent pursuant to, and in full
compliance with, the Assignment of Claims Act of 1940, as amended, or any
comparable state or local law, as applicable;
(ix) it is not an Account with respect to which the Account
Debtor is located in a state which requires such Covenant Obligor, as a
precondition to commencing or maintaining an action in the courts of that state,
either to (A) receive a certificate of authority to do business and be in good
standing in such state; or (B) file a notice of business activities report or
similar report with such state's taxing authority, unless (x) such Covenant
Obligor has taken one of the actions described in clauses (A) or (B); (y) the
failure to take one of the actions described in either clause (A) or (B) may be
cured retroactively by such Covenant Obligor at its election; or (z) such
Covenant Obligor has proven, to Agent's satisfaction, that it is exempt from any
such requirements under any such state's laws;
(x) the Account Debtor is located within the United States of
America or, if the Account Debtor is not located within the United States, the
obligation of the Account Debtor to pay such Account is secured by a letter of
credit in form and content satisfactory to Agent in its sole discretion and
which letter of credit has been assigned to Agent and issued by a financial
institution acceptable to Agent;
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(xi) it is not an Account with respect to which the Account
Debtor's obligation to pay is subject to any repurchase obligation or return
right, as with sales made on a ▇▇▇▇-and-hold, guaranteed sale, sale on approval,
sale or return or consignment basis;
(xii) it is not an Account (A) with respect to which any
representation or warranty contained in this Agreement is untrue; or (B) which
violates any of the covenants of such Covenant Obligor contained in this
Agreement;
(xiii) it is not an Account which, when added to a particular
Account Debtor's other indebtedness to each of the Covenant Obligors, exceeds
fifteen percent (15%) (such percentage being subject to adjustment by Agent in
its sole discretion) of all of Covenant Obligors' Accounts (except that Accounts
excluded from Eligible Accounts solely by reason of this clause (xiii) shall be
Eligible Accounts to the extent of such percentage limit); and
(xiv) it is not an Account with respect to which the prospect
of payment or performance by the Account Debtor is or will be impaired, as
determined by Agent in its sole discretion.
"ELIGIBLE INVENTORY" shall mean the raw materials and finished goods
Inventory of a Covenant Obligor which is acceptable to Agent in its reasonable
discretion for lending purposes. Without limiting Agent's discretion, Agent
shall, in general, consider Inventory to be Eligible Inventory if it meets, and
so long as it continues to meet, the following requirements:
(i) it is owned by such Covenant Obligor, such Covenant Obligor
has the right to subject it to a security interest in favor of Agent and Lender
and it is subject to a first priority perfected security interest in favor of
Agent and Lender and to no other claim, lien, security interest or encumbrance
whatsoever, other than Permitted Liens;
(ii) it is located on one of the premises listed on EXHIBIT A
(or other locations of which Agent has been advised in writing pursuant to
SUBSECTION 12(b)(i) hereof) which location is within the United States of
America and, if any such location is a leased location, Agent has received a
Landlord Waiver Agreement satisfactory to Agent in its sole discretion;
(iii) if held for sale or lease or furnished under contracts of
service, it is (except as Agent may otherwise consent in writing) new and unused
and free from defects which would, in Agent's sole determination, affect its
market value;
(iv) it is not stored with a bailee, consignee, warehouseman,
processor or similar party unless Agent has given its prior written approval and
such Covenant Obligor has caused any such bailee, consignee, warehouseman,
processor or similar party to issue and deliver to Agent, in form and substance
acceptable to Agent, such Uniform Commercial Code financing statements,
warehouse receipts, waivers and other documents as Agent shall require,
provided, however, that acceptance by Agent of a waiver or such other documents
shall not constitute written approval by Agent;
(v) Agent has determined that it is not unacceptable due to
age, type, category or quantity;
(vi) it is not Inventory consisting of packaging or tooling and
is not slow-moving or obsolete Inventory;
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(vii) it is not Inventory (A) with respect to which any of the
representations and warranties contained in this Agreement are untrue; or (B)
which violates any of the covenants of such Covenant Obligor contained in this
Agreement; and
(viii) it is not Inventory which is unsatisfactory to Agent for
any reason in its sole discretion based on the exercise of Agent's reasonable
business judgment.
"ELIGIBLE GUARANTORS" shall mean, collectively, Condor D.C., Teal,
RFL, Montevideo and Surface, and "ELIGIBLE GUARANTOR" shall mean each of them.
"EME" shall mean Elektro Metall Export GmbH.
"EME GAIN" shall mean the gain, if any, recognized for financial
reporting purposes as a result of the EME sale.
" EME LOSS" shall mean the loss, if any, recognized for financial
reporting purposes as a result of the EME Sale.
"EME SALE NOTES" shall mean, collectively, the EME $1,000,000.00
Sale Note and the EME $3,000,000.00 Sale Note.
"EME $1,000,000.00 SALE NOTE" shall mean that certain promissory
note executed by DCX Holding in favor of Vertrieb in the original principal
amount of One Million Dollars ($1,000,000.00) dated January 3, 2003 delivered in
connection with the EME Sale.
"EME $3,000,000.00 SALE NOTE" shall mean that certain promissory
note executed by DCX Holding in favor of Vertrieb in the original principal
amount of Three Million Dollars ($3,000,000.00) dated January 3, 2003 delivered
in connection with the EME Sale.
"EME SALE" shall mean the sale of the capital stock of EME by
Vertrieb to DCX Holding pursuant to the EME Sale Agreement.
"EME SALE AGREEMENT" shall mean that certain Securities Purchase
Agreement dated January 3, 2003, by and between Industries, Vertrieb, DCX
Holding, Chol Enterprises, Inc., and DCX-Chol Enterprises, Inc.
"EME SALE PAYMENT" shall mean a dividend or distribution resulting
from the receipt by Vertrieb of a payment on the EME $3,000,000.00 Sale Note.
"ENVIRONMENTAL LAWS" shall mean all federal, state, district, local
and foreign laws, rules, regulations, ordinances, and consent decrees relating
to health, safety, hazardous substances, pollution and environmental matters, as
now or at any time hereafter in effect, applicable to an Obligor's business or
facilities owned or operated by an Obligor, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contamination, chemicals, or hazardous, toxic or dangerous substances, materials
or wastes into the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata) or otherwise
relating to the generation, manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials.
"ENVIRONMENTAL RESERVE" shall mean a reserve against the Revolving
Loan Limit established by Agent in respect of amounts for which any Covenant
Obligor may be required to establish cash security or pay other sums in
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accordance with applicable Environmental Laws, as determined by Agent in its
sole discretion.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, modified or restated from time to time.
"EVENT OF DEFAULT" shall have the meaning specified in SECTION 15
hereof. Any Event of Default of which any Borrower shall have notified Agent in
writing or Agent shall have notified Borrowers in writing shall be deemed
continuing unless waived in writing by Agent.
"EXCESS AVAILABILITY" shall mean, as of any date of determination by
Agent, an amount equal to (A) the Maximum Revolving Loan Limit, MINUS (B) the
sum of (i) all outstanding Revolving Loans, PLUS (ii) all Letter of Credit
Obligations, PLUS (iii) all sums due and owing by SL Delaware or any Covenant
Obligor to trade creditors which are outstanding beyond normal trade terms, plus
(iv) taxes to any taxing authority which are due but unpaid, PLUS (v) unpaid
transaction costs in connection with the Loans.
"EXCESS CASH FLOW AMOUNT" shall mean for each of Covenant Obligors'
Fiscal Years, fifty percent (50%) of the amount remaining after subtracting (i)
the sum of (A) Borrowers' scheduled principal payments and other principal
payments on the Term Loans for such Fiscal Year, PLUS (B) the amount by which
the Overadvance Amount has been permanently reduced pursuant to the scheduled
monthly reductions of the Overadvance Amount for such Fiscal Year, PLUS (C)
Unfinanced Capital Expenditures for such Fiscal Year, PLUS (D) payments of
Covenant Obligors with respect to Capitalized Leases for such Fiscal Year from
(ii) the sum of (A) Covenant Obligors' Net Income for such Fiscal Year, PLUS (B)
depreciation and amortization for such Fiscal Year.
"EXPENSE LIMIT" shall mean Thirty Thousand ($30,000.00) Dollars.
"FISCAL YEAR" shall mean each twelve (12) month accounting period of
each Obligor, which ends on December 31 of each year.
"FIXED CHARGES" shall mean for any period, without duplication,
scheduled payments of principal during the applicable period with respect to all
indebtedness of SL Delaware and each Covenant Obligor for borrowed money, PLUS
scheduled payments of principal during the applicable period with respect to all
Capitalized Leases, PLUS scheduled payments of interest during the applicable
period with respect to all indebtedness of SL Delaware and each Covenant Obligor
for borrowed money including Capitalized Leases, PLUS any required reductions of
the Overadvance Amount for such period, PLUS any payments made by SL Delaware or
any Covenant Obligor under any Hedging Agreements, PLUS any payments made by SL
Delaware or any Covenant Obligor on any other indebtedness of such entity
(specifically including any subordinated debt) during such period, all of the
foregoing determined on a consolidated basis.
"FIXED CHARGE COVERAGE RATIO" shall mean, with respect to any
period, the ratio of (i) the sum of (A) Covenant Obligors' EBITDA for such
period, MINUS (B) Unfinanced Capital Expenditures for such period, MINUS (C) any
cash dividends paid or accrued and cash withdrawals paid or accrued to
shareholders or other Affiliates for such period which were not calculated in
determining net income after taxes, to (ii) Fixed Charges for such period. The
inclusion of dividends and withdrawals in this definition shall not imply that
such dividends and withdrawals are permitted hereunder. These items are
specifically prohibited under SECTION 13(e) hereof.
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"GAAP" means generally accepted accounting principals consistently
applied and maintained.
"GE LOAN AGREEMENT" means that certain Second Amended and Restated
Credit Agreement dated December 13, 2001 by and among, Industries, SL Delaware,
GE and the GE Lenders.
"GE LENDERS" shall mean the lenders party to the GE Loan Agreement
including, without limitation, GE, Fleet Bank and PNC Bank, National
Association.
"GE" shall mean GE Capital CFE, Inc., successor to Mellon Bank, N.A.
"GUARANTEES" means those certain Continuing Unconditional Guaranty
agreements signed by each of the Guarantors in favor of Agent of even date
herewith.
"GUARANTORS" shall mean, collectively, Condor D.C., Teal, RFL,
Montevideo, Surface, Delaware Holdings, Auburn, Waber, SLW, Condor Holdings and
Cedar, and "GUARANTOR" shall mean each of them.
"HAZARDOUS MATERIALS" shall mean any hazardous, toxic or dangerous
substance, materials and wastes, including, without limitation, hydrocarbons
(including naturally occurring or man-made petroleum and hydrocarbons),
flammable explosives, asbestos, urea formaldehyde insulation, radioactive
materials, biological substances, polychlorinated biphenyls, pesticides,
herbicides and any other kind and/or type of pollutants or contaminants
(including, without limitation, materials which include hazardous constituents),
sewage, sludge, industrial slag, solvents and/or any other similar substances,
materials, or wastes and including any other substances, materials or wastes
that are or become regulated under any Environmental Law (including, without
limitation any that are or become classified as hazardous or toxic under any
Environmental Law).
"HEDGING AGREEMENTS" shall mean any interest rate protection
agreement, foreign currency exchange agreement, commodity purchase or option
agreement or other interest or exchange rate or commodity price hedging
agreements between any Borrower and Agent, Lender or any affiliate of Agent or
Lender.
"INDEMNIFIED PARTY" shall have the meaning specified in SECTION 20
hereof.
"INTEREST PERIOD" shall mean any continuous period of thirty (30),
sixty (60) or ninety (90) days as selected from time to time by Borrowing Agent
requesting such LIBOR Rate Loan by irrevocable notice (in writing, by telecopy,
telex, electronic mail, or cable) given to Agent not less than three (3)
Business Days prior to the first day of each respective Interest Period;
provided, that: (A) each such period occurring after such initial period shall
commence on the day on which the immediately preceding period expires; and (B)
the final Interest Period shall be such that its expiration occurs on or before
the end of the Term.
"INVENTORY SUBLIMIT" means the lesser of (a) Five Million Dollars
($5,000,000.00) and (b) one hundred percent (100%) of the orderly liquidation
value of Covenant Obligors' Inventory as shown on an appraisal satisfactory to
Lender performed by an appraiser satisfactory to Lender (such amount to be
subject to downward adjustment based on reductions in Covenant Obligors'
Inventory levels from that existing on the date of such appraisal).
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"INTERCOMPANY AGREEMENT" shall have the meaning given such term in
SECTION 12(l) hereof.
"INTERCOMPANY NOTES" shall have the meaning given such term in
SECTION 12(l) hereof.
"LANDLORD WAIVER AGREEMENT" shall mean an agreement in form and
content satisfactory to Agent in its sole discretion executed by a landlord of a
leased location of a Covenant Obligor pursuant to which, INTER ALIA, such
landlord waives any and all rights against any Collateral at such location and
permits Agent access to such location for the purpose of selling and taking
possession of any Collateral at such location.
"LASALLE BANK" shall mean LaSalle Bank National Association,
Chicago, Illinois.
"LETTER OF CREDIT" shall mean any Letter of Credit issued on behalf
of a Covenant Obligor in accordance with this Agreement.
"LETTER OF CREDIT OBLIGATIONS" shall mean, as of any date of
determination, the sum of (i) the aggregate undrawn face amount of all Letters
of Credit, and (ii) the aggregate unreimbursed amount of all drawn Letters of
Credit not already converted to Loans hereunder.
"LIABILITIES" shall mean any and all obligations, liabilities and
indebtedness of each Obligor to Agent, Lender or to any parent, affiliate or
subsidiary of Agent or Lender of any and every kind and nature, howsoever
created, arising or evidenced and howsoever owned, held or acquired, whether now
or hereafter existing, whether now due or to become due, whether primary,
secondary, direct, indirect, absolute, contingent or otherwise (including,
without limitation, obligations of performance), whether several, joint or joint
and several, and whether arising or existing under written or oral agreement or
by operation of law.
"LIBOR RATE" shall mean, with respect to any LIBOR Rate Loan for any
Interest Period, a rate per annum equal to (a) the offered rate for deposits in
United States dollars for a period equal to such Interest Period as it appears
on Telerate page 3750 as of 11:00 a.m. (London time) two (2) Business Days prior
to the first day of such Interest Period. "TELERATE PAGE 3750" means the display
designated as "Page 3750" on the Telerate Service (or such other page as may
replace page 3750 of that service or such other service as may be nominated by
the British Bankers' Association as the vendor for the purpose of displaying
British Bankers' Association interest settlement rates for United States dollar
deposits) divided by (b) a number equal to 1.0 minus the maximum reserve
percentages (expressed as a decimal fraction) including, without limitation,
basic supplemental, marginal and emergency reserves under any regulations of the
Board of Governors of the Federal Reserve System or other governmental authority
having jurisdiction with respect thereto, as now and from time to time in
effect, for Eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) which are required to be maintained
by Lender by the Board of Governors of the Federal Reserve System. The LIBOR
Rate shall be adjusted automatically on and as of the effective date of any
change in such reserve percentage.
"LIBOR RATE LOANS" shall mean the Loans bearing interest with
reference to the LIBOR Rate.
"LOANS" shall mean all loans and advances made by Agent or Lender to
or on behalf of any Borrower hereunder.
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"LOCK BOX" and "LOCK BOX ACCOUNT" shall have the meanings specified
in SUBSECTION 8(a) hereof.
"MANDATORY PREPAYMENT" shall mean prepayment of a Loan required by
the provisions of SECTION 2(d)(iv) or SECTION 13(d).
"MATERIAL ADVERSE CHANGE" shall mean a material adverse change in
the business, property, assets, prospects, operations or condition, financial or
otherwise, of a Person.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on
the business, property, assets, prospects, operations or condition, financial or
otherwise, of a Person.
"MAXIMUM LOAN AMOUNT" shall mean Twenty Million Dollars.
"MAXIMUM REVOLVING LOAN LIMIT" shall have the meaning specified in
SUBSECTION 2(a) hereof.
"MEXICAN SUBSIDIARY" shall mean each Subsidiary organized under the
laws of the country of Mexico.
"MORTGAGED PROPERTY" shall mean that certain real property and all
improvements thereon (i) owned by RFL and located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, (▇▇) owned by Surface and located at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, and
(iii) owned by Montevideo and located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, together with all rents, leases, agreement of sale and all other
rights appurtenant to each of the foregoing, and all proceeds of each of the
foregoing.
"NET INCOME" shall mean, with respect to any Covenant Obligor, net
income (or loss) of such Covenant Obligor after income and franchise taxes as
determined in accordance with GAAP, provided that there shall be specifically
excluded therefrom (i) gains from the sale of capital assets, (ii) net income of
any Person in which such Covenant Obligor has an owner's interest, unless
received by such Covenant Obligor in a cash distribution, (iii) any gains
arising from extraordinary items, as defined by GAAP, and (iv) the EME Loss.
"NON-OPERATING SUBSIDIARIES" shall mean, collectively, Cedar,
Auburn, Waber, Condor Holdings, Delaware Holdings and SLW, and "NON-OPERATING
SUBSIDIARY" shall mean each of them.
"OBLIGORS" shall mean, collectively, Borrowers, Guarantors and each
other Person who is or shall become primarily or secondarily liable for any of
the Liabilities, and "OBLIGOR" shall mean each of them.
"OTHER AGREEMENTS" shall mean all agreements, instruments and
documents, other than this Agreement, including, without limitation, guaranties,
mortgages, trust deeds, pledges, powers of attorney, consents, assignments,
contracts, notices, security agreements, leases, financing statements and all
other writings heretofore, now or from time to time hereafter executed by or on
behalf of an Obligor or any other Person and delivered to Agent, Lender or to
any parent, affiliate or subsidiary of Agent or Lender in connection with the
Liabilities or the transactions contemplated hereby, as each of the same may be
amended, modified or supplemented from time to time.
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"OVERADVANCE AMOUNT" shall mean, initially, One Million Five Hundred
Thousand Dollars ($1,500,000.00), which amount shall be permanently reduced (i)
on the first day of each calendar month commencing February 1, 2003 by an amount
equal to Sixty-Two Thousand Five Hundred Dollars ($62,500.00) and (ii)
coincident with Covenant Obligor's delivery to Agent of Covenant Obligors'
Fiscal Year end audited financial statements for each Fiscal Year of Covenant
Obligors commencing with Covenant Obligors' Fiscal Year ended December 31, 2003,
by an amount equal to the Excess Cash Flow Amount for such Fiscal Year. The
foregoing permanent reductions shall continue until the earlier of the date on
which (x) the Overadvance Amount is reduced to zero or (y) the Revolving Loans
are terminated on the terms and conditions set forth herein.
"PARENT" shall mean any Person now or at any time or times hereafter
owning or controlling (alone or with any other Person) at least a majority of
the issued and outstanding equity of an Obligor and, if an Obligor is a
partnership, the general partner of such Obligor.
"PBGC" shall have the meaning specified in SUBSECTION 12(b)(v)
hereof.
"PERMITTED DIVIDEND" shall mean a dividend or distribution (which if
a distribution for tax purposes is a return of capital) paid to Shareholders of
Industries in an amount which when combined with any other Permitted Dividend
and/or Permitted Industries Stock Purchase does not exceed Six Million
($6,000,000.00) Dollars provided:
(i) no Default or Event of Default has occurred and is
continuing;
(ii) Industries has, not more than 360 days prior to the date of
such dividend, either (A) sold one or more Subsidiaries for a net cash purchase
price in excess of the total cost of such dividend (including expenses), PLUS
the cost of compliance with (iii) and (iv) below, or (B) Industries has received
an EME Sale Payment in excess of the total cost of such dividend (including
expenses), PLUS the cost of compliance with (iii) below;
(iii) the Overadvance Amount has been permanently reduced to
zero (0) with the proceeds of the sale of the Subsidiary;
(iv) the Subordinated Debt has been repaid in full;
(v) to the extent any Collateral is owned by any Subsidiary
which has been sold any Loan supported by such Collateral will be repaid in
accordance with SECTION 13(d) below from the proceeds of such sale;
(vi) after payment of the dividend and payment of the sums
required by (iii) and (iv) above, there remains Excess Availability of not less
than Four Million ($4,000,000.00) Dollars; and
(xii) Industries gives Agent not less than seven (7) days
notice of such dividend and evidence of compliance with all of the above
requirements at the earliest practical time but in any event prior to payment of
such dividend.
"PERMITTED INDUSTRIES STOCK PURCHASES" shall mean purchases by
Industries of outstanding shares of its common stock which when combined with
any other Permitted Industries Stock Purchase and/or Permitted Dividends does
not exceed Six Million ($6,000,000.00) Dollars provided:
(i) no Default or Event of Default has occurred and is
continuing;
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(ii) Industries has, not more than 360 days prior to the date
of such stock purchase, sold one or more Subsidiaries for a net cash purchase
price in excess of the total cost of such stock purchase (including expenses),
PLUS the cost of compliance with (iii) and (iv) below, or Industries has
received an EME Sale Payment in excess of the total cost of such dividend
(including expenses), PLUS the cost of compliance with (iii) below;
(iii) the Overadvance Amount has been permanently reduced to
zero (0) with the proceeds of the sale of the subsidiary;
(iv) the Subordinated Debt was repaid in full;
(v) to the extent any Collateral is owned by any Subsidiary
which has been sold, any Loan supported by such Collateral will be repaid in
accordance with SECTION 13(d) below from the proceeds of such sale;
(vi) after payment of the purchase price of such stock and
payment of the sums required by (iii) and (iv) above, there remains Excess
Availability of not less than Four Million ($4,000,000.00) Dollars; and
(vii) Industries gives Agent not less than seven (7) days
notice of such purchase and evidence of compliance with all of the above
requirements at the earliest practical time but in any event prior to payment
for such stock purchase.
"PERMITTED LIENS" shall mean (i) statutory liens of landlords,
carriers, warehousemen, processors, mechanics, materialmen or suppliers incurred
in the ordinary course of business and securing amounts not yet due or declared
to be due by the claimant thereunder; (ii) liens or security interests in favor
of Agent or Lender; (iii) zoning restrictions and easements, licenses, covenants
and other restrictions affecting the use of real property that do not
individually or in the aggregate have a material adverse effect on an Obligor's
ability to use such real property for its intended purpose in connection with
such Obligor's business; (iv) liens in connection with purchase money
indebtedness and Capitalized Leases otherwise permitted pursuant to this
Agreement, provided, that such liens attach only to the assets the purchase of
which was financed by such purchase money indebtedness or which is the subject
of such Capitalized Leases; (v) liens set forth on SCHEDULE 1; and (vi) liens
specifically permitted by Agent in writing.
"PERMITTED PARENT GUARANTEES" shall mean a guaranty or guarantees by
Industries of the obligations of Obligors (which are not Non-Operating
Subsidiaries) for trade, debt and other contractual obligations, which are
otherwise permitted to be incurred by such Obligor pursuant to the terms hereof.
"PERSON" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, entity, party or foreign or
United States government (whether federal, state, county, city, municipal or
otherwise), including, without limitation, any instrumentality, division,
agency, body or department thereof.
"PLAN" shall have the meaning specified in SUBSECTION 12(b)(v)
hereof.
"PRIME RATE" shall mean LaSalle Bank's publicly announced prime rate
(which is not intended to be LaSalle Bank's lowest or most favorable rate in
effect at any time) in effect from time to time.
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"PRIME RATE LOANS" shall mean the Loans bearing interest with
reference to the Prime Rate.
"REVOLVING LOAN LIMIT" shall have the meaning specified in
SUBSECTION 2(a) hereof.
"REVOLVING LOANS" shall have the meaning specified in SUBSECTION
2(a) hereof.
"REVOLVING LOANS LIBOR RATE MARGIN" shall mean three percent (3%).
The Revolving Loans LIBOR Rate Margin may be reduced as provided in SECTION 4(c)
hereof for the time period specified therein.
"REVOLVING LOANS PRIME RATE MARGIN" shall mean one-half of one
percent (.5%). The Revolving Loans Prime Rate Margin may be reduced as provided
in SECTION 4(c) hereof for the time period specified therein.
"SPECIAL RESERVE" shall mean any reserves against availability as
provided for in that separate letter between Borrowers and Agent of even date
herewith.
"SUBSIDIARY" shall mean any corporation of which more than fifty
percent (50%) of the outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether at the time stock of any other class of such corporation shall have or
might have voting power by reason of the happening of any contingency) is at the
time, directly or indirectly, owned by an Obligor, or any partnership, joint
venture or limited liability company of which more than fifty percent (50%) of
the outstanding equity interests are at the time, directly or indirectly, owned
by an Obligor or any partnership of which an Obligor is a general partner.
"TAX" shall mean, in relation to any LIBOR Rate Loans and the
applicable LIBOR Rate, any tax, levy, impost, duty, deduction, withholding or
charges of whatever nature required to be paid by Agent or Lender and/or to be
withheld or deducted from any payment otherwise required hereby to be made by a
Borrower to Agent or Lender; provided, that the term "Tax" shall not include any
taxes imposed upon the net income of Agent or Lender.
"TERM" shall have the meaning specified in SECTION 10 hereof.
"TERM LOAN A" shall have the meaning specified in SUBSECTION 2(b)
hereof.
"TERM LOAN B" shall have the meaning specified in SUBSECTION 2(c)
hereof.
"TERM LOANS" shall mean, collectively, Term Loan A and Term Loan B.
"TERM LOANS LIBOR RATE MARGIN" shall mean three and one-quarter
percent (3.25%). The Term Loans LIBOR Rate Margin may be reduced as provided in
SECTION 4(c) hereof for the time period specified therein.
"TERM LOANS PRIME RATE MARGIN" shall mean three-quarters of one
percent (.75%). The Term Loans Prime Rate ▇▇▇▇▇▇ may be reduced as provided in
SECTION 4(c) hereof for the time period specified therein.
"UNFINANCED CAPITAL EXPENDITURES" means Capital Expenditures of a
Covenant Obligor not financed via a Capitalized Lease or through purchase money
indebtedness permitted under the terms hereof.
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"VERTRIEB" shall mean SL Industries Vertrieb GmbH.
2. LOANS.
(a) REVOLVING LOANS.
Subject to the terms and conditions of this Agreement and the Other
Agreements, during the Term, Agent may, in its sole discretion, make revolving
loans and advances to Borrowing Agent (the "REVOLVING LOANS") on behalf of
Lender, or cause Lender to make such loans and advances in an amount up to the
sum of the following sublimits (the "REVOLVING LOAN LIMIT"):
(i) Up to eighty-five percent (85%) of the face amount (less
maximum discounts, credits and allowances which may be taken by or granted to
Account Debtors in connection therewith in the ordinary course of a Covenant
Obligor's business) of Covenant Obligors' Eligible Accounts; PLUS
(ii) Up to fifty-five percent (55%) of the lower of cost or
market value of Covenant Obligors' Eligible Inventory or the Inventory Sublimit,
whichever is less; PLUS
(iii) Up to fifty-five percent (55%) of the face amount of
commercial Letters of Credit issued or guaranteed by Agent or Lender, or an
Affiliate of Agent or Lender on behalf of any Covenant Obligor for the purpose
of purchasing Eligible Inventory; provided, that such commercial Letters of
Credit are in form and substance reasonably satisfactory to Agent; PLUS
(iv) the Overadvance Amount; MINUS
(v) such reserves as Agent elects, in its sole discretion to
establish from time to time, including, without limitation, the Environmental
Reserve and the Special Reserve;
provided, that the Revolving Loan Limit shall in no event exceed Sixteen Million
Eight Hundred Ten Thousand Dollars ($16,810,000.00) (as increased or decreased
as permitted herein, the "MAXIMUM REVOLVING LOAN LIMIT") except as such amount
may be increased or decreased by Agent or Lender, in its reasonable discretion.
All Revolving Loans shall be deemed to be advanced, first, under the Overadvance
Amount portion of the Revolving Loan Limit and, second, under the remainder of
the Revolving Loan Limit. Notwithstanding the foregoing, at any time during the
eighteen (18) month period following the date hereof, Borrowers may make a
one-time permanent reduction of the Maximum Revolving Loan Limit in an amount up
to Two Million Five Hundred Thousand Dollars ($2,500,000.00) without payment of
the Termination Fee set forth in SECTION 10 hereof.
The aggregate unpaid principal balance of the Revolving Loans shall
not at any time exceed the lesser of the (i) Revolving Loan Limit minus the
Letter of Credit Obligations and (ii) the Maximum Revolving Loan Limit minus the
Letter of Credit Obligations. If at any time the outstanding Revolving Loans
exceeds either the Revolving Loan Limit or the Maximum Revolving Loan Limit, in
each case minus the Letter of Credit Obligations, or any portion of the
Revolving Loans and Letter of Credit Obligations exceeds any applicable sublimit
within the Revolving Loan Limit, Borrowers shall immediately, and without the
necessity of demand by Agent, pay to Agent, for the benefit of Lender, or to
Lender such amount as may be necessary to eliminate such excess and Agent and
Lender shall apply such payment to the Revolving Loans in such order as Agent
may determine in its sole discretion.
-14-
Each Borrower hereby authorizes Agent and Lender, in each of their
sole discretion, to charge any of such Borrower's accounts or advance Revolving
Loans to make any payments of principal, interest, fees, costs or expenses
required to be made under this Agreement or the Other Agreements.
A request for a Revolving Loan shall be made or shall be deemed to
be made, each in the following manner: Borrowing Agent shall give Agent same day
notice, no later than 10:30 A.M. (Chicago, Illinois time) for such day, of its
request for a Revolving Loan as a Prime Rate Loan, and at least three (3)
Business Days prior notice of its request for a Revolving Loan as a LIBOR Rate
Loan, in which notice Borrowing Agent shall specify the amount of the proposed
borrowing and the proposed borrowing date; provided, however, that no such
request may be made at a time when there exists a Default or Event of Default.
In the event that a Borrower maintains a controlled disbursement account at
LaSalle Bank, each check presented for payment against such controlled
disbursement account and any other charge or request for payment against such
controlled disbursement account shall constitute a request for a Revolving Loan
as a Prime Rate Loan. As an accommodation to Borrowers, Agent may permit
telephone requests for Revolving Loans and electronic transmittal of
instructions, authorizations, agreements or reports to Agent by Borrowers or
Borrowing Agent. Unless Borrowing Agent specifically directs Agent in writing
not to accept or act upon telephonic or electronic communications from Borrowing
Agent or a Borrower, neither Agent nor Lender shall have any liability to any
Borrower for any loss or damage suffered by a Borrower as a result of Agent's
honoring of any requests, execution of any instructions, authorizations or
agreements or reliance on any reports communicated to it telephonically or
electronically and purporting to have been sent to Agent or Lender by a Borrower
or Borrowing Agent and neither Lender nor Agent shall have any duty to verify
the origin of any such communication or the authority of the Person sending it.
Each Borrower hereby irrevocably authorizes Agent and Lender to
disburse the proceeds of each Revolving Loan requested by Borrowing Agent, or
deemed to be requested by Borrowing Agent, as follows: the proceeds of each
Revolving Loan requested under SECTION 2(a) shall be disbursed by Agent or
Lender in lawful money of the United States of America in immediately available
funds, in the case of the initial borrowing, in accordance with the terms of the
written disbursement letter from Borrowing Agent, and in the case of each
subsequent borrowing, by wire transfer or Automated Clearing House (ACH)
transfer to such bank account as may be agreed upon by Borrowing Agent and Agent
from time to time, or elsewhere if pursuant to a written direction from such
Borrowing Agent.
(b) TERM LOAN A.
Subject to the terms and conditions of this Agreement and the Other
Agreements, on the date that the conditions to the initial Loans are satisfied,
Lender shall make a term loan to Borrowers in an amount equal to Two Million
Three Hundred Fifty Thousand and No/100 Dollars ($2,350,000.00) ("TERM LOAN A").
Amounts repaid with respect to the Term Loan A may not be reborrowed.
(c) TERM LOAN B.
Subject to the terms and conditions of this Agreement and the Other
Agreements, on the date that the conditions to the initial Loans are satisfied,
Lender shall make a term loan to Borrowers in an amount equal to Eight Hundred
Forty Thousand and No/100 Dollars ($840,000.00) ("TERM LOAN B"). Amounts repaid
with respect to Term Loan B may not be reborrowed.
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(d) REPAYMENTS.
(i) REPAYMENT OF REVOLVING LOANS. The Revolving Loans and all
other Liabilities (other than the Term Loans) shall be repaid on the last day of
the Term.
(ii) REPAYMENT OF TERM LOAN A. Term Loan A shall be repaid in
thirty-five (35) equal consecutive monthly installments of Thirty-Two Thousand
Six Hundred Thirty-Nine and NO/100 Dollars ($32,639.00) payable on the first day
of each month commencing February 1, 2003; provided, that any remaining
outstanding principal balance of Term Loan A and all accrued and unpaid interest
thereon shall be repaid at the end of the Term. If any such payment due date is
not a Business Day, then such payment may be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the amount of interest and fees due hereunder.
(iii) REPAYMENT OF TERM LOAN B. Term Loan B shall be repaid in
thirty-five (35) equal consecutive monthly installments of Fourteen Thousand and
NO/100 Dollars ($14,000.00) payable on the first day of each month commencing
February 1, 2003; provided, that any remaining outstanding principal balance of
Term Loan B and all accrued and unpaid interest thereon shall be repaid at the
end of the Term. If any such payment due date is not a Business Day, then such
payment may be made on the next succeeding Business Day and such extension of
time shall be included in the computation of the amount of interest and fees due
hereunder.
(iv) MANDATORY PREPAYMENTS OF THE TERM LOANS.
Upon receipt of the proceeds of the sale or other disposition
of any Equipment (other than obsolete equipment permitted to be sold pursuant to
SECTION 7 hereof) or real property of an Obligor which is subject to a lien or
mortgage in favor of Agent or Lender, or if any of the Equipment or real
property subject to such lien or mortgage is damaged, destroyed or taken by
condemnation in whole or in part, the proceeds thereof (other than insurance
proceeds payable to an Obligor pursuant to SECTION 12(e) hereof) shall be paid
by such Obligor to Agent as a mandatory prepayment of the Term Loans to be
applied against the outstanding principal balance of the Term Loans in such
order as Agent in its sole discretion determines.
(e) NOTES.
The Loans shall, in Agent's sole discretion, be evidenced by one or
more promissory notes in form and substance satisfactory to Agent. However, if
such Loans are not so evidenced, such Loans may be evidenced solely by entries
upon the books and records maintained by Agent.
3. LETTERS OF CREDIT.
(a) GENERAL TERMS.
Subject to the terms and conditions of this Agreement and the Other
Agreements, during the Term, Agent may, in its sole discretion, from time to
time cause to be issued (through Lender, LaSalle Bank or otherwise) and co-sign
for or otherwise guarantee, upon Borrowing Agent's request, commercial and/or
standby Letters of Credit for the account of Covenant Obligors; provided, that
the aggregate undrawn face amount of all such Letters of Credit shall at no time
exceed Three Million and No/100 Dollars ($3,000,000.00). Payments made by Agent
to any Person on account of any Letter of Credit shall constitute Loans
hereunder and each Borrower agrees that each payment made by the issuer of a
Letter of Credit in respect of a Letter of Credit issued on behalf of any
Covenant Obligor shall constitute a request by Borrowing Agent for a Loan to
reimburse such issuer. Borrowers shall remit to Agent a Letter of Credit fee
equal to two percent (2%) per annum on the aggregate undrawn face amount of all
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Letters of Credit outstanding, which fee shall be payable monthly in arrears on
the last Business Day of each month. Borrowers shall also pay on demand the
normal and customary administrative charges of the issuer of the Letter of
Credit for issuance, amendment, negotiation, renewal or extension of any Letter
of Credit.
(b) REQUESTS FOR LETTERS OF CREDIT.
Borrowing Agent shall make requests for Letters of Credit in writing
at least two (2) Business Days prior to the date such Letter of Credit is to be
issued. Each such request shall specify the date such Letter of Credit is to be
issued, the amount thereof, the name and address of the beneficiary thereof and
a description of the transaction to be supported thereby. Any such notice shall
be accompanied by the form of Letter of Credit requested and any application or
reimbursement agreement required by the issuer of such Letter of Credit. If any
term of such application or reimbursement agreement is inconsistent with this
Agreement, then the provisions of this Agreement shall control to the extent of
such inconsistency.
(c) OBLIGATIONS ABSOLUTE.
Each Covenant Obligor on whose account a Letter of Credit is issued
shall be obligated to reimburse the issuer of any Letter of Credit, or Agent if
Agent or Lender has reimbursed such issuer on a Covenant Obligor's behalf, for
any payments made in respect of any Letter of Credit, which obligation shall be
unconditional and irrevocable and shall be paid regardless of: (i) any lack of
validity or enforceability of any Letter of Credit, (ii) any amendment or waiver
of or consent or departure from all or any provisions of any Letter of Credit,
this Agreement or any Other Agreement, (iii) the existence of any claim, set
off, defense or other right which a Covenant Obligor or any other Person may
have against any beneficiary of any Letter of Credit, Agent, Lender or the
issuer of the Letter of Credit, (iv) any draft or other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid, or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect, (v) any payment under any Letter of Credit against presentation of a
draft or other document that does not comply with the terms of such Letter of
Credit, and (vi) any other act or omission to act or delay of any kind of the
issuer of such Letter of Credit, Agent, Lender or any other Person or any other
event or circumstance that might otherwise constitute a legal or equitable
discharge of a Covenant Obligor's obligations hereunder. It is understood and
agreed by each Covenant Obligor that the issuer of any Letter of Credit may
accept documents that appear on their face to be in order without further
investigation or inquiry, regardless of any notice or information to the
contrary.
(d) EXPIRATION DATES OF LETTERS OF CREDIT.
The expiration date of each Letter of Credit shall be no later than
the earlier of (i) one (1) year from the date of issuance for standby letters of
credit, (ii) ninety (90) days from the date of issuance with respect to
merchandise letters of credit and (iii) the last day of the Term.
Notwithstanding the foregoing, a standby Letter of Credit may provide for
automatic extensions of its expiration date for one or more one (1) year
periods, so long as the issuer thereof has the right to terminate such Letter of
Credit at the end of each one (1) year period and no extension period extends
past the last day of the Term. In the event that the Loans are terminated for
any reason or demand is made thereunder, Borrowers will deposit with Agent an
amount equal to 105% of the face amount of all letters of credit then
outstanding which have been issued hereunder, plus all fees related thereto or
to accrue thereunder. Such funds will be held by Agent as cash collateral to
secure Borrowers' obligations hereunder.
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4. INTEREST, FEES AND CHARGES.
(a) INTEREST RATE FOR REVOLVING LOANS.
Subject to the terms and conditions set forth below, each Revolving
Loan (other than Revolving Loans supported by the Overadvance Amount) shall bear
interest at the per annum rate of interest set forth in SUBSECTION (i) OR (ii)
below:
(i) the Prime Rate in effect from time to time, PLUS the
Revolving Loans Prime Rate Margin, payable on the first Business Day of each
month in arrears. Said rate of interest shall increase or decrease by an amount
equal to each increase or decrease in the Prime Rate effective on the effective
date of each such change in the Prime Rate.
(ii) the LIBOR Rate for the applicable Interest Period, PLUS
the Revolving Loans LIBOR Rate Margin, such rate to remain fixed for such
Interest Period. Interest shall be payable on the last Business Day of each
Interest Period.
Revolving Loans supported by the Overadvance Amount shall bear
interest at the per annum rate equal to the Prime Rate in effect from time to
time, PLUS two percent (2%). Said rate of interest shall increase or decrease by
an amount equal to each increase or decrease in the Prime Rate effective on the
effective date of each such change in the Prime Rate.
(b) INTEREST RATE FOR TERM LOANS.
Subject to the terms and conditions set forth below, principal
outstanding under each Term Loan shall bear interest at the per annum rate of
interest set forth in SUBSECTION (i) OR (ii) below:
(i) the Prime Rate in effect from time to time, plus the Term
Loans Prime Rate Margin, payable on the first Business Day of each month in
arrears. Said rate of interest shall increase or decrease by an amount equal to
each increase or decrease in the Prime Rate effective on the effective date of
each such change in the Prime Rate.
(ii) the LIBOR Rate for the applicable Interest Period, plus
the Term Loans LIBOR Rate Margin, such rate to remain fixed for such Interest
Period. Interest shall be payable on the last Business Day of each Interest
Period.
(c) INCENTIVE PRICING.
Provided that (i) no Default or Event of Default shall have occurred
and is continuing, (ii) Agent determines upon review of Covenant Obligors'
audited year-end financial statements for Fiscal Years ending 2002, 2003 or 2004
that Covenant Obligors have achieved a Fixed Charge Coverage Ratio for such
Fiscal Year of at least 2.0 to 1.0, and (iii) Covenant Obligors shall have had
Excess Availability of not less than Two Million Dollars ($2,000,000.00) on the
date of delivery of such financial statements and average Excess Availability of
not less than Two Million Dollars ($2,000,000.00) for the entire ninety (90) day
period immediately preceding delivery of such financial statements, each of the
Revolving Loans Prime Rate Margin, the Revolving Loans LIBOR Rate Margin, the
Term Loans Prime Rate Margin and the Term Loans LIBOR Rate Margin shall be
reduced by one-quarter of one percent (.25%) for a one (1) year period
commencing on the first day of the first month following Agent's timely receipt
of such financial statements. Notwithstanding the foregoing, if Covenant
Obligors do not deliver such financial statements in the time frame provided in
SECTION 9(b)(iii) hereof, (i) Agent shall have no obligation to reduce any
interest rate and (ii) any reduced interest rate then in effect (based on
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Agent's receipt of the preceding year's financial statements) shall immediately
terminate and each interest rate shall automatically increase to the applicable
rate specified in SECTION 4(a) AND 4(b) hereof.
(d) DEFAULT INTEREST. Upon the occurrence of an Event of Default,
the Loans shall bear interest at the rate of two percent (2.0%) per annum in
excess of the highest interest rate for Loans otherwise payable thereon, which
interest shall be payable on demand.
(e) CALCULATION OF INTEREST. All interest shall be calculated on
the basis of a 360 day year.
(f) OTHER LIBOR PROVISIONS.
(i) Subject to the provisions of this Agreement, Borrowing
Agent shall have the option (A) as of any date, to convert all or any part of
the Prime Rate Loans to, or request that new Loans be made as, LIBOR Rate Loans
of various Interest Periods, (B) as of the last day of any Interest Period, to
continue all or any portion of the relevant LIBOR Rate Loans as LIBOR Rate
Loans; (C) as of the last day of any Interest Period, to convert all or any
portion of the LIBOR Rate Loans to Prime Rate Loans; and (D) at any time, to
request new Loans as Prime Rate Loans; provided, that Loans may not be continued
as or converted to LIBOR Rate Loans, if the continuation or conversion thereof
would violate the provisions of SUBSECTIONS 4(f)(ii) or 4(f)(iii) of this
Agreement or if an Event of Default has occurred. If, with respect to any
particular Loan, for any reason Borrowing Agent fails to timely select an
Interest Rate or an Interest Period in accordance with the terms and conditions
of this Agreement, such loans shall continue as, or revert to, Prime Rate Loans.
(ii) Agent's determination of the LIBOR Rate as provided above
shall be conclusive, absent manifest error. Furthermore, if Agent or Lender
determines, in good faith (which determination shall be conclusive, absent
manifest error), prior to the commencement of any Interest Period that (A) U.S.
Dollar deposits of sufficient amount and maturity for funding the Loans are not
available to Agent or Lender in the London Interbank Eurodollar market in the
ordinary course of business, or (B) by reason of circumstances affecting the
London Interbank Eurodollar market, adequate and fair means do not exist for
ascertaining the rate of interest to be applicable to the Loans requested by
Borrowing Agent to be LIBOR Rate Loans or the Loans bearing interest at the
rates set forth in SUBSECTION 4(a)(ii) of this Agreement shall not represent the
effective pricing to Agent or Lender for U.S. Dollar deposits of a comparable
amount for the relevant period (such as for example, but not limited to,
official reserve requirements required by Regulation D to the extent not given
effect in determining the rate), Agent shall promptly notify Borrowing Agent and
(1) all existing LIBOR Rate Loans shall convert to Prime Rate Loans upon the end
of the applicable Interest Period, and (2) no additional LIBOR Rate Loans shall
be made until such circumstances are cured.
(iii) If, after the date hereof, the introduction of, or any
change in any applicable law, treaty, rule, regulation or guideline or in the
interpretation or administration thereof by any governmental authority or any
central bank or other fiscal, monetary or other authority having jurisdiction
over Agent or Lender or its lending offices (a "REGULATORY CHANGE"), shall, in
the opinion of counsel to Agent or Lender, make it unlawful for Agent or Lender
to make or maintain LIBOR Rate Loans, then Agent shall promptly notify the
Borrowing Agent and (A) the LIBOR Rate Loans shall immediately convert to Prime
Rate Loans on the last Business Day of the then existing Interest Period or on
such earlier date as required by law and (B) no additional LIBOR Rate Loans
shall be made until such circumstance is cured.
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(iv) If, for any reason, a LIBOR Rate Loan is paid prior to the
last Business Day of any Interest Period or if a LIBOR Rate Loan does not occur
on a date specified by Borrowing Agent in its request (other than as a result of
a default by Agent or Lender), each Borrower agrees to indemnify Agent and
Lender against any loss (including any loss on redeployment of the deposits or
other funds acquired by Agent or Lender to fund or maintain such LIBOR Rate
Loan), cost or expense incurred by Agent or Lender as a result of such
prepayment.
(v) If any Regulatory Change (whether or not having the force
of law) shall (A) impose, modify or deem applicable any assessment, reserve,
special deposit or similar requirement against assets held by, or deposits in or
for the account of or loans by, or any other acquisition of funds or
disbursements by, Agent or Lender; (B) subject Agent or Lender or the LIBOR Rate
Loans to any Tax or change the basis of taxation of payments to Agent or Lender
of principal or interest due from a Borrower to Agent or Lender hereunder (other
than a change in the taxation of the overall net income of Agent or Lender); or
(C) impose on Agent or Lender any other condition regarding the LIBOR Rate Loans
or Lender's or Agent's funding thereof, and Agent or Lender, as applicable,
shall determine (which determination shall be conclusive, absent any manifest
error) that the result of the foregoing is to increase the cost to Agent or
Lender of making or maintaining the LIBOR Rate Loans or to reduce the amount of
principal or interest received by Agent or Lender hereunder, then Borrowers
shall pay to Agent or Lender, on demand, such additional amounts as Agent or
Lender shall, from time to time, determine are sufficient to compensate for and
indemnify Agent and Lender from such increased cost or reduced amount.
(vi) Agent and Lender shall receive payments of amounts of
principal of and interest with respect to the LIBOR Rate Loans free and clear
of, and without deduction for, any Taxes. If (A) Agent or Lender shall be
subject to any Tax in respect of any LIBOR Rate Loans or any part thereof or,
(B) Borrowers shall be required to withhold or deduct any Tax from any such
amount, the LIBOR Rate applicable to such LIBOR Rate Loans shall be adjusted by
Agent or Lender to reflect all additional costs incurred by Agent or Lender in
connection with the payment by Agent or Lender or the withholding by a Borrower
of such Tax and Borrowers shall provide Agent with a statement detailing the
amount of any such Tax actually paid by Borrowers. Determination by Agent or
Lender of the amount of such costs shall be conclusive, absent manifest error.
If after any such adjustment any part of any Tax paid by Agent or Lender is
subsequently recovered by Agent or Lender, Agent or Lender, as applicable, shall
reimburse Borrowers to the extent of the amount so recovered. A certificate of
an officer of Agent or Lender, as applicable, setting forth the amount of such
recovery and the basis therefor shall be conclusive, absent manifest error.
(vii) Each request for LIBOR Rate Loans shall be in an amount
not less than One Million and No/100 Dollars ($1,000,000.00) and in integral
multiples of One Hundred Thousand and No/100 Dollars ($100,000.00).
(viii) Unless otherwise specified by Borrowing Agent, all Loans
shall be Prime Rate Loans.
(ix) No more than five (5) Interest Periods may be in effect
with respect to outstanding LIBOR Rate Loans at any one time.
(g) FEES AND CHARGES.
(i) FACILITY FEE: Borrowers shall pay to Agent, for the benefit
of Lender, a facility fee equal to Two Hundred Eighty Thousand Dollars
($280,000.00). One Hundred Twenty-Five Thousand Dollars ($125,000.00) of such
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fee has already been paid by Borrower to Lender and the remaining One Hundred
Fifty-Five Thousand Dollars ($155,000.00) of such fee shall be payable by
Borrowers on the date hereof and is fully earned as of the date hereof.
(ii) UNUSED LINE FEE: Borrowers shall pay to Agent, for the
benefit of Lender, an unused line fee of one-quarter of one percent (.25%) of
the difference between the Maximum Revolving Loan Limit and the sum of (A) the
average daily balance of the Revolving Loans, plus (B) the Letter of Credit
Obligations for each year, which fee shall be fully earned by Lender and payable
monthly in arrears on the first Business Day of each month. Said fee shall be
calculated on the basis of a 360 day year.
(iii) COLLATERAL MANAGEMENT FEE. Borrowers shall pay to Agent,
for the benefit of Lender, a collateral management fee of Twenty-Four Thousand
Dollars ($24,000.00) per year, payable at closing and annually in advance on
January 1 of each year thereafter.
(iv) COSTS AND EXPENSES: Borrowers shall reimburse Agent and
Lender for all costs and expenses, including, without limitation, legal expenses
and reasonable attorneys' fees, incurred by Agent or Lender in connection with
the (i) documentation and consummation of this transaction and any other
transactions between Borrowers and Agent or Lender, including, without
limitation, Uniform Commercial Code and other public record searches and
filings, overnight courier or other express or messenger delivery, appraisal
costs, surveys, title insurance and environmental audit or review costs; (ii)
collection, protection or enforcement of any rights in or to the Collateral;
(iii) collection of any Liabilities; and (iv) administration and enforcement of
any of Agent's or Lender's rights under this Agreement or any Other Agreement.
Borrowers shall also pay all normal service charges with respect to all accounts
maintained by each Borrower with Lender or LaSalle Bank and any additional
services requested by a Borrower from Agent, Lender or LaSalle Bank. All such
costs, expenses and charges shall, if owed to LaSalle Bank, be reimbursed by
Lender and in such event or in the event such costs and expenses are owed to
Agent or Lender, shall constitute Liabilities hereunder, shall be payable by
Borrowers to Agent or Lender on demand, and, until paid, shall bear interest at
the highest rate then applicable to Loans hereunder.
(v) CAPITAL ADEQUACY CHARGE. If Agent or Lender shall have
determined that the adoption of any law, rule or regulation regarding capital
adequacy, or any change therein or in the interpretation or application thereof,
or compliance by Agent or Lender with any request or directive regarding capital
adequacy (whether or not having the force of law) from any central bank or
governmental authority enacted after the date hereof, does or shall have the
effect of reducing the rate of return on such party's capital as a consequence
of its obligations hereunder to a level below that which Agent or Lender could
have achieved but for such adoption, change or compliance (taking into
consideration Agent's and Lender's policies with respect to capital adequacy) by
a material amount, then from time to time, after submission by Agent to
Borrowing Agent of a written demand therefor ("CAPITAL ADEQUACY DEMAND")
together with the certificate described below, Borrowers shall pay to Agent, for
the benefit of Agent or Lender, as applicable, such additional amount or amounts
("CAPITAL ADEQUACY CHARGE") as will compensate Agent or Lender, as applicable,
for such reduction, such Capital Adequacy Demand to be made with reasonable
promptness following such determination. A certificate of Agent or Lender
claiming entitlement to payment as set forth above shall be conclusive in the
absence of manifest error. Such certificate shall set forth the nature of the
occurrence giving rise to such reduction, the amount of the Capital Adequacy
Charge to be paid to Agent or Lender, and the method by which such amount was
determined. In determining such amount, Agent or Lender may use any reasonable
averaging and attribution method, applied on a non-discriminatory basis.
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(vi) CONSENT FEE. In the event Borrowers have requested Agent's
consent to the purchase, redemption or retirement of any shares of Industries
(other than a Permitted Industries Stock Purchase) or the payment of dividend or
distribution to Shareholders of Industries (other than a Permitted Dividend)
which would have been a Permitted Industries Stock Purchase or a Permitted
Dividend, except that the total purchase price or dividend exceeded Six Million
Dollars ($6,000,000.00) and Agent agrees to consent to same (which consent Agent
may withhold for any or no reason) such consent shall not be conditioned upon
the payment of a fee. Provided, however, to the extent such consent is granted
and simultaneously with such consent, other modifications not related to the
amount of the purchase price or dividend (it being understood that changes to
financial covenants necessitated thereby are not deemed related to the purchase
price or dividend) of any nature are required to be made to the provisions
hereof, a fee may be charged.
(h) MAXIMUM INTEREST.
It is the intent of the parties that the rate of interest and other
charges to each Borrower under this Agreement and the Other Agreements shall be
lawful; therefore, if for any reason the interest or other charges payable under
this Agreement or the Other Agreement are found by a court of competent
jurisdiction, in a final determination, to exceed the limit which Agent or
Lender may lawfully charge such Borrower, then the obligation to pay interest
and other charges shall automatically be reduced to such limit and, if any
amount in excess of such limit shall have been paid, then such amount shall be
refunded to such Borrower.
5. COLLATERAL.
(a) GRANT OF SECURITY INTEREST TO AGENT.
As security for the payment of all Loans now or in the future made
by Agent or Lender to Borrowers hereunder and for the payment or other
satisfaction of all other Liabilities, and, with respect to Guarantors, as
security for all obligations of Guarantors under the Guarantees, each Obligor
hereby assigns to Agent, for its benefit and for the benefit of Lender, and
grants to Agent, for its benefit and for the benefit of Lender, a continuing
security interest in all of such Obligor's assets including, without limitation,
the following property of such Obligor, whether now or hereafter owned,
existing, acquired or arising and wherever now or hereafter located: (a) all
Accounts (whether or not Eligible Accounts) and all Goods whose sale, lease or
other disposition by such Obligor has given rise to Accounts and have been
returned to, or repossessed or stopped in transit by, such Obligor; (b) all
Chattel Paper, Instruments, Documents and General Intangibles (including,
without limitation, all patents, patent applications, trademarks, trademark
applications, trade names, trade secrets, goodwill, copyrights, copyright
applications, registrations, licenses, software, franchises, customer lists, tax
refund claims, claims against carriers and shippers, guarantee claims, contract
rights, payment intangibles, security interests, security deposits and rights to
indemnification); (c) all Inventory (whether or not Eligible Inventory); (d) all
Goods (other than Inventory), including, without limitation, Equipment, vehicles
and Fixtures; (e) all Financial Assets and Investment Property; (f) all Deposit
Accounts, bank accounts, deposits and cash (including, without limitation, any
of the foregoing maintained with Agent, Lender or LaSalle Bank); (g) all
Letter-of-Credit Rights; (h) Commercial Tort Claims listed on EXHIBIT C hereto,
(i) any other property of such Obligor now or hereafter in the possession,
custody or control of Agent or Lender or any agent or any parent, affiliate or
subsidiary of Agent or Lender or any participant with Agent or Lender in the
Loans, for any purpose (whether for safekeeping, deposit, collection, custody,
pledge, transmission or otherwise); and (j) all supporting obligations related
to, additions and accessions to, substitutions for, and replacements, products
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and Proceeds of the foregoing property, including, without limitation, proceeds
of all insurance policies insuring the foregoing property, and all of such
Obligor's books and records relating to any of the foregoing and to such
Obligor's business.
(b) MORTGAGED PROPERTY.
As additional security for all of the Liabilities, each of RFL,
Surface and Montevideo shall execute and deliver to Agent, for the benefit of
Agent and Lender, mortgage and security documentation, deed of trust
documentation and assignments of rents, leases and agreements of sale (and such
other documents required by Agent in connection therewith) granting to Agent,
for the benefit of Agent and Lender, a mortgage lien against, and an assignment
of and security interest in, all of their respective rights, title and interest
in the Mortgaged Property.
(c) GUARANTEES. As additional security for all of the
Liabilities, each Guarantor shall execute and deliver to Agent its respective
Guarantee pursuant to which it shall agree, INTER ALIA, to act as guarantor and
surety for all Liabilities.
(d) STOCK.
As additional security for all of the Liabilities, and, with respect
to Guarantors, as security for all obligations of Guarantors under the
Guarantees, each Obligor shall execute and deliver to Agent, for the benefit of
Agent and Lender, a pledge of and first priority security interest in the issued
and outstanding common stock of all Domestic Subsidiaries of such Obligor and
sixty-six percent (66%) of the issued and outstanding common stock, if such
Subsidiary is not a corporation, Sixty-Six Percent (66%) of the applicable
ownership interests of such Subsidiary of all direct and indirect foreign
Subsidiaries of such Obligor (Vertrieb), and in connection therewith such
Obligor shall cause to be delivered to Agent the original certificates therefor
and blank stock powers with respect thereto.
(e) MEXICAN ASSETS.
As additional security for all of the Liabilities, and, with respect
to Guarantors, as security for all obligations of Guarantors under the
Guarantees, each Domestic Obligor shall grant to Agent, for the benefit of Agent
and Lender, a lien upon, security interest in and charge against all assets of
each Domestic Obligor located in the country of Mexico. Within five (5) business
days of receipt of documents from Agent, each Domestic Obligor shall execute all
documents reasonably requested by Agent including, without limitation, documents
creating a trust in such assets, to insure that Agent and Lender have a first
priority perfected lien on all assets of each Domestic Obligor located in
Mexico. Lender agrees that no more than Twenty Thousand Dollars ($20,000.00) of
the legal costs incurred after the date hereof for local counsel to document
and/or record such lien shall be the obligation of Borrowers.
(f) INTERCOMPANY NOTES.
As additional security for all of the Liabilities, and, with respect
to Guarantors, as security for all obligations of Guarantors under the
Guarantees, Obligors shall grant to Agent, for the benefit of Agent and Lender,
a pledge of and security interest in all Intercompany Notes, if any.
(g) PLEDGE OF EME SALE NOTES.
As additional security for all of the Liabilities, and, with respect
to Guarantors, as security for all obligations of Guarantors under the
Guarantees, Borrowers shall cause their Affiliate, SL Industries Vertrieb GmbH,
to pledge and grant to Agent, for the benefit of Agent and Lender, a lien and
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security interest in the EME Sale Notes and the DCX/CHOL Guaranty. All payments
on the EME Sale Notes shall be paid directly to Agent and applied by Agent in
accordance with SECTION 12(m) hereof.
(h) OTHER SECURITY.
Agent or Lender, in its sole discretion, without waiving or
releasing any obligation, liability or duty of any Obligor under this Agreement
or the Other Agreements or any Event of Default, may at any time or times
hereafter, but shall not be obligated to, pay, acquire or accept an assignment
of any security interest, lien, encumbrance or claim asserted by any Person in,
upon or against the Collateral. All sums paid by Agent or Lender in respect
thereof and all costs, fees and expenses including, without limitation,
reasonable attorney fees, all court costs and all other charges relating thereto
incurred by Agent or Lender shall constitute Liabilities, payable by Borrowers
to Agent on demand and, until paid, shall bear interest at the highest rate then
applicable to Loans hereunder.
(i) POSSESSORY COLLATERAL.
Immediately upon an Obligor's receipt of any portion of the
Collateral evidenced by an agreement, Instrument or Document, including, without
limitation, any Tangible Chattel Paper and any Investment Property consisting of
certificated securities, such Obligor shall deliver the original thereof to
Agent together with an appropriate endorsement or other specific evidence of
assignment thereof to Agent (in form and substance acceptable to Agent). If an
endorsement or assignment of any such items shall not be made for any reason,
Agent is hereby irrevocably authorized, as each Obligor's attorney and
agent-in-fact, to endorse or assign the same on such Obligor's behalf.
(j) ELECTRONIC CHATTEL PAPER.
To the extent that an Obligor obtains or maintains any Electronic
Chattel Paper, such Obligor shall create, store and assign the record or records
comprising the Electronic Chattel Paper in such a manner that (i) a single
authoritative copy of the record or records exists which is unique, identifiable
and except as otherwise provided in clauses (iv), (v) and (vi) below,
unalterable, (ii) the authoritative copy identifies Agent as the assignee of the
record or records, (iii) the authoritative copy is communicated to and
maintained by the Agent or its designated custodian, (iv) copies or revisions
that add or change an identified assignee of the authoritative copy can only be
made with the participation of Agent, (v) each copy of the authoritative copy
and any copy of a copy is readily identifiable as a copy that is not the
authoritative copy and (vi) any revision of the authoritative copy is readily
identifiable as an authorized or unauthorized revision.
6. PRESERVATION OF COLLATERAL AND PERFECTION OF SECURITY INTERESTS
THEREIN.
Each Obligor shall, at Agent's request, at any time and from time to
time, authenticate, execute and deliver to Agent such financing statements,
documents and other agreements and instruments (and pay the cost of filing or
recording the same in all public offices deemed necessary or desirable by Agent)
and do such other acts and things or cause third parties to do such other acts
and things as Agent may deem necessary or desirable in its sole discretion in
order to establish and maintain a valid, attached and perfected security
interest in the Collateral in favor of Agent and Lender (free and clear of all
other liens, claims, encumbrances and rights of third parties whatsoever,
whether voluntarily or involuntarily created, except Permitted Liens) to secure
payment of the Liabilities, and in order to facilitate the collection of the
Collateral. Each Obligor irrevocably hereby makes, constitutes and appoints
Agent (and all Persons designated by Agent for that purpose) as such Obligor's
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true and lawful attorney and agent-in-fact to execute and file such financing
statements, documents and other agreements and instruments and do such other
acts and things as may be necessary to preserve and perfect Agent's and Lender's
security interest in the Collateral. Each Obligor further agrees that a carbon,
photographic, photostatic or other reproduction of this Agreement or of a
financing statement shall be sufficient as a financing statement, each Obligor
further ratifies and confirms the prior filing by Agent of any and all financing
statements which identify such Obligor as debtor, Agent as secured party and any
or all Collateral as collateral.
7. POSSESSION OF COLLATERAL AND RELATED MATTERS.
Until an Event of Default has occurred, each Covenant Obligor shall
have the right, except as otherwise provided in this Agreement, (a) in the
ordinary course of such Covenant Obligor's business, to (1) sell, lease or
furnish under contracts of service any of such Covenant Obligor's Inventory
normally held by such Covenant Obligor for any such purpose; provided, however,
that a sale in the ordinary course of business shall not include any transfer or
sale in satisfaction, partial or complete, of a debt owed by such Covenant
Obligor; and (2) use and consume any raw materials, work in process or other
materials normally held by such Covenant Obligor for such purpose and (b) sell
obsolete Equipment with a value equal to or less than One Hundred Thousand
Dollars ($100,000.00) in the aggregate for all Covenant Obligors during any
Fiscal Year, provided that the proceeds of such sale are used by the applicable
Covenant Obligor to purchase replacement Equipment within one hundred eighty
(180) days of receipt or are applied to sums due under Term Loan B. None of SL
Delaware or any Non-Operating Subsidiary shall sell, lease or furnish under
contracts of service any of such Guarantor's Inventory or otherwise generate
Accounts except as permitted under SECTION 13(i) hereof.
8. COLLECTIONS.
(a) Each Covenant Obligor shall direct all of its Account Debtors
to make all payments on the Accounts directly to a post office box (the "LOCK
BOX") designated by, and under the exclusive control of, Lender, for the benefit
of Agent and Lender, at LaSalle Bank. Each Covenant Obligor shall establish an
account (the "LOCK BOX ACCOUNT") in Agent's name with a financial institution
acceptable to Agent, into which all payments received in the Lock Box shall be
deposited, and into which such Covenant Obligor will immediately deposit all
payments received by such Covenant Obligor on Accounts in the identical form in
which such payments were received, whether by cash or check. If a Covenant
Obligor, any Affiliate or Subsidiary, any shareholder, officer, director,
employee or agent of a Covenant Obligor or any Affiliate or Subsidiary, or any
other Person acting for or in concert with a Covenant Obligor shall receive any
monies, checks, notes, drafts or other payments relating to or as Proceeds of
Accounts or other Collateral, such Covenant Obligor and each such Person shall
receive all such items in trust for, and as the sole and exclusive property of,
Agent and, immediately upon receipt thereof, shall remit the same (or cause the
same to be remitted) in kind to the Lock Box Account. The financial institution
with which the Lock Box Account is established shall acknowledge and agree, in a
manner satisfactory to Agent, that the amounts on deposit in such Lock Box and
Lock Box Account are the sole and exclusive property of Agent, that such
financial institution will follow the instructions of Agent with respect to
disposition of funds in the Lock Box and Lock Box Account without further
consent from Covenant Obligors, that such financial institution has no right to
setoff against the Lock Box or Lock Box Account or against any other account
maintained by such financial institution into which the contents of the Lock Box
or Lock Box Account are transferred, and that such financial institution shall
wire, or otherwise transfer in immediately available funds to Agent in a manner
satisfactory to Agent, funds deposited in the Lock Box Account on a daily basis
as such funds are collected. Each Covenant Obligor agrees that all payments made
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to such Lock Box Account or otherwise received by Agent, whether in respect of
the Accounts or as Proceeds of other Collateral or otherwise will be applied on
account of the Liabilities in accordance with the terms of this Agreement;
provided, that so long as no Event of Default has occurred, payments received by
Agent shall not be applied to the unmatured portion of the LIBOR Rate Loans, but
shall be held in a cash collateral account maintained by Agent, until the
earlier of (i) the last Business Day of the Interest Period applicable to such
LIBOR Rate Loan and (ii) the occurrence of an Event of Default; provided,
further, that so long as no Event of Default has occurred, the immediately
available funds in such cash collateral account may be disbursed, at Borrowing
Agent's discretion, to such Covenant Obligor so long as after giving effect to
such disbursement, Borrowers' availability under SUBSECTION 2(a) hereof at such
time, equals or exceeds the outstanding Revolving Loans at such time. Each
Covenant Obligor agrees to pay all fees, costs and expenses in connection with
opening and maintaining the Lock Box and Lock Box Account. All of such fees,
costs and expenses if not paid by a Covenant Obligor, may be paid by Agent or
Lender, and, in such event, all amounts paid by Agent or Lender shall constitute
Liabilities hereunder, shall be payable to Agent by Covenant Obligors upon
demand, and, until paid, shall bear interest at the highest rate then applicable
to Loans hereunder. All checks, drafts, instruments and other items of payment
or Proceeds of Collateral shall be endorsed by the applicable Covenant Obligor
to Agent, and, if that endorsement of any such item shall not be made for any
reason, Agent is hereby irrevocably authorized to endorse the same on such
Covenant Obligor's behalf. For the purpose of this section, each Covenant
Obligor irrevocably hereby makes, constitutes and appoints Agent (and all
Persons designated by Agent for that purpose) as such Covenant Obligor's true
and lawful attorney and agent-in-fact (i) to endorse such Covenant Obligor's
name upon said items of payment and/or Proceeds of Collateral and upon any
Chattel Paper, Document, Instrument, invoice or similar document or agreement
relating to any Account of such Covenant Obligor or Goods pertaining thereto;
(ii) to take control in any manner of any item of payment or Proceeds thereof
and (iii) to have access to any lock box or postal box into which any of such
Covenant Obligor's mail is deposited, and open and process all mail addressed to
such Covenant Obligor and deposited therein.
(b) Agent may, after the occurrence and during the continuance,
of an Event of Default, whether before or after notification to any Account
Debtor and whether before or after the maturity of any of the Liabilities, (i)
enforce collection of any of Obligors' Accounts or other amounts owed to an
Obligor by suit or otherwise; (ii) exercise all of such Obligor's rights and
remedies with respect to proceedings brought to collect any Accounts or other
amounts owed to such Obligor; (iii) surrender, release or exchange all or any
part of any Accounts or other amounts owed to such Obligor, or compromise or
extend or renew for any period (whether or not longer than the original period)
any indebtedness thereunder; (iv) sell or assign any Account of such Obligor or
other amount owed to such Obligor upon such terms, for such amount and at such
time or times as Agent deems advisable; (v) prepare, file and sign such
Obligor's name on any proof of claim in bankruptcy or other similar document
against any Account Debtor or other Person obligated to such Obligor; and (vi)
do all other acts and things which are necessary, in Agent's sole discretion, to
fulfill such Obligor's obligations under this Agreement and the Other Agreements
and to allow Agent to collect the Accounts or other amounts owed to such
Obligor. In addition to any other provision hereof, Agent may at any time,
whether before or after the occurrence of an Event of Default, at Obligors'
expense, notify any parties obligated on any of the Accounts to make payment
directly to Agent of any amounts due or to become due thereunder; provided, that
prior to the occurrence of a Default, Agent shall only make such notice if it
believes notice to be reasonably necessary to maintain any of its rights
hereunder.
(c) For purposes of calculating interest and fees, Agent shall,
within one (1) Business Day after receipt by Agent at its office in Chicago,
Illinois of (i) checks and (ii) cash or other immediately available funds from
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collections of items of payment and Proceeds of any Collateral, apply the whole
or any part of such collections or Proceeds against the Liabilities in such
order as Agent shall determine in its sole discretion. For purposes of
determining the amount of Loans available for borrowing purposes, checks and
cash or other immediately available funds from collections of items of payment
and Proceeds of any Collateral shall be applied in whole or in part against the
Liabilities, in such order as Agent shall determine in its sole discretion, on
the day of receipt, subject to actual collection. Borrowers shall pay to Agent
on the first Business Day of each month a fee in an amount equal to one (1) days
interest on such items of payment at the applicable rate set forth for Revolving
Loans which are Prime Rate Loans.
(d) On a monthly basis, Agent shall deliver to Borrowing Agent an
account statement showing all Loans, charges and payments, which shall be deemed
final, binding and conclusive upon Borrowers unless Borrowing Agent notifies
Agent in writing, specifying any error therein, within thirty (30) days of the
date such account statement is sent to Borrowing Agent and any such notice shall
only constitute an objection to the items specifically identified.
9. COLLATERAL, AVAILABILITY AND FINANCIAL REPORTS AND SCHEDULES.
(a) DAILY REPORTS.
Borrowing Agent shall deliver to Agent an executed daily loan report
and borrowing base certificate in Agent's then current form on each day on which
Borrowing Agent requests a Revolving Loan, and in any event at least once each
week, which shall be accompanied by copies of Covenant Obligors' sales journal,
cash receipts journal and credit memo journal for the relevant period. Such
report shall reflect the activity of Covenant Obligors with respect to Accounts
for the immediately preceding week, and shall be in a form and with such
specificity as is satisfactory to Agent and shall contain such additional
information concerning Accounts and Inventory as may be requested by Agent
including, without limitation, but only if specifically requested by Agent,
copies of all invoices prepared in connection with such Accounts.
(b) MONTHLY REPORTS.
Borrowing Agent shall deliver to Agent, in addition to any other
reports, as soon as practicable and in any event within fifteen (15) days after
the end of each month: (i) a detailed trial balance of each Covenant Obligor's
Accounts aged per invoice date, in form and substance satisfactory to Agent
including, without limitation, the names and addresses of all Account Debtors of
each Covenant Obligor, (ii) a summary and detail of accounts payable (such
Accounts and accounts payable divided into such time intervals as Agent may
require in its sole discretion), including a listing of any held checks; and
(iii) the general ledger inventory account balance, a perpetual inventory report
and Agent's standard form of Inventory report then in effect or the form most
recently requested from Covenant Obligors by Agent, for each Covenant Obligor by
each category of Inventory, together with a description of the monthly change in
each category of Inventory.
(c) FINANCIAL STATEMENTS.
Borrowing Agent shall deliver to Agent the following financial
information, all of which shall be prepared in accordance with GAAP and shall be
accompanied by a compliance certificate in the form of EXHIBIT B hereto, which
compliance certificate shall include a calculation of all financial covenants
contained in this Agreement: (i) no later than thirty (30) days after each
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calendar month, copies of internally prepared financial statements, including,
without limitation, balance sheets and statements of income, retained earnings
and cash flow of Borrowers and all Subsidiaries on a consolidated and
consolidating basis, certified by the Chief Financial Officer of each Borrower
to be true, accurate and complete; (ii) no later than fifty-five (55) days after
the end of each quarter of Borrowers' Fiscal Year, copies of review-basis
financial statements including, without limitation, balance sheets, statements
of income, retained earnings, cash flows and reconciliation of surplus of
Borrowers and all Subsidiaries on a consolidated and consolidating basis,
reviewed by independent certified public accountants selected by Borrowers and
reasonably satisfactory to Agent which financial statements shall be accompanied
by Industries' quarterly report on Form 10-Q for such quarter, as applicable;
and (iii) no later than one-hundred five (105) days after the end of each of
Borrowers' Fiscal Years, audited annual financial statements of Borrowers and
all Subsidiaries on a consolidated and consolidating basis with an unqualified
opinion by independent certified public accountants selected by Borrowers and
reasonably satisfactory to Agent, which financial statements shall be
accompanied by (A) copies of any management letters sent to a Borrower by such
accountants; and (B) Industries' annual report on Form 10-K for such year, as
applicable. Agent acknowledges that Borrowers' current selection of ▇▇▇▇▇
▇▇▇▇▇▇▇▇, LLP as independent certified public accountants to the Borrower is
satisfactory to Agent.
(d) ANNUAL PROJECTIONS.
As soon as practicable and in any event within fifteen (15) days
prior to the beginning of each Fiscal Year, Borrowing Agent shall deliver to
Agent projected balance sheets, statements of income and cash flow for Borrowers
and all Subsidiaries on a consolidated and consolidating basis, for each of the
twelve (12) months during such Fiscal Year, which shall include the assumptions
used therein, together with appropriate supporting details as requested by
Agent.
(e) PUBLIC REPORTING.
Promptly upon the filing thereof, each Obligor shall deliver to
Agent copies of all registration statements and annual, quarterly, monthly or
other regular reports which such Obligor or any of its Subsidiaries files with
the Securities and Exchange Commission, as well as promptly providing to Agent
copies of any reports and proxy statements delivered to its shareholders.
(f) OTHER INFORMATION.
Promptly following request therefor by Agent, such other business or
financial data, reports, appraisals and projections as Agent may reasonably
request.
10. TERMINATION.
THIS AGREEMENT SHALL BE IN EFFECT FROM THE DATE HEREOF UNTIL JANUARY
5, 2006 (THE "TERM") UNLESS (A) AGENT MAKES DEMAND FOR REPAYMENT PRIOR TO THE
END OF THE TERM PURSUANT TO THE TERMS HEREOF; (B) THE DUE DATE OF THE
LIABILITIES IS ACCELERATED PURSUANT TO SECTION 16 HEREOF; OR (C) A BORROWER
ELECTS TO TERMINATE THIS AGREEMENT BY (i) GIVING AGENT WRITTEN NOTICE OF SUCH
ELECTION AT LEAST NINETY (90) DAYS (EXCEPT AS PROVIDED BELOW) PRIOR TO THE DATE
ON WHICH BORROWER DESIRES TO TERMINATE THIS AGREEMENT AND (ii) PAYING ALL OF THE
LIABILITIES IN FULL ON THE DATE FOR TERMINATION INDICATED IN SUCH NOTICE. If one
or more of the events specified in clauses (A), (B) and (C) occurs or this
Agreement otherwise expires, then (i) Lender shall not make any additional Loans
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on or after the date identified as the date on which the Liabilities are to be
repaid; and (ii) this Agreement shall terminate on the date thereafter that the
Liabilities are paid in full. At such time as Borrowers have repaid all of the
Liabilities and this Agreement has terminated, each Borrower shall deliver to
Agent a release, in form and substance satisfactory to Agent, of all obligations
and liabilities of Agent and Lender and their respective officers, directors,
employees, agents, parents, subsidiaries and affiliates to such Borrower, and if
such Borrower is obtaining new financing from another lender, such Borrower
shall deliver such lender's indemnification of Agent and Lender, in form and
substance satisfactory to Agent, for checks which Agent or Lender has credited
to such Borrower's account, but which subsequently are dishonored for any reason
or for automatic clearinghouse or wire transfers not yet posted to such
Borrower's account. In the event of termination of any of the Loans at any time
by Borrowers for any reason (other than by reason of a Mandatory Prepayment) or
by Agent or Lender by reason of the occurrence of an Event of Default, in
addition to all other fees, Borrowers shall jointly and severally pay to Agent,
for the benefit of Lender, a termination fee (the "TERMINATION FEE") in an
amount equal to (a) 2% of the Maximum Loan Amount if such termination occurs
prior to the first anniversary of the date hereof, (b) 1.5% of the Maximum Loan
Amount if such termination occurs on or after the first anniversary of the date
hereof but prior to the second anniversary of the date hereof and (c) 1% of the
Maximum Loan Amount if such termination occurs on or after the second
anniversary of the date hereof. Borrowers will not be permitted to prepay or
otherwise terminate any of the Loans without first giving Lender at least ninety
(90) days prior written notice thereof. Notwithstanding the foregoing to the
contrary, if prior to the first year anniversary of the date hereof, (x)
Borrowers have requested Agent's consent to the purchase, redemption or
retirement of any shares of Industries (other than a Permitted Industries Stock
Purchase) or the payment of a dividend or distribution to shareholders of
Industries (other than a Permitted Dividend) which would have been a Permitted
Industries Stock Purchase or Permitted Dividend except that the total cost of
the purchase or dividend exceeds Six Million Dollars ($6,000,000.00), and Agent
refused such consent solely because the purchase price, dividend or distribution
exceeded Six Million Dollars ($6,000,000.00) and the Loans are terminated by
Borrowers during such one-year period, the fee payable on account of such
termination shall be one percent (1%) of the Maximum Loan Amount and such
termination may be on forty-five (45) days notice to Agent, and (y) if Borrowers
request permission pursuant to SUBSECTION 12(e)(ii) to use insurance proceeds
and such permission is denied solely because the loss occurred in the last
ninety (90) days of the Term, the notice period for termination shall be thirty
(30) days.
11. REPRESENTATIONS AND WARRANTIES.
Each Obligor hereby represents and warrants to Agent and Lender,
which representations and warranties (whether appearing in this SECTION 11 or
elsewhere) shall be true at the time of Obligors' execution hereof and the
closing of the transactions described herein or related hereto, shall remain
true until the repayment in full and satisfaction of all the Liabilities and
termination of this Agreement, and shall be remade by each Obligor at the time
each Loan is made pursuant to this Agreement.
(a) FINANCIAL STATEMENTS AND OTHER INFORMATION.
The financial statements and other information delivered or to be
delivered by Obligors to Agent or Lender at or prior to the date of this
Agreement accurately reflect the financial condition of Obligors in all material
respects, and there has been no Material Adverse Change since the date of the
financial statements delivered to Agent most recently prior to the date of this
Agreement. All written information now or heretofore furnished by each Obligor
to Agent or Lender is true and correct in all material respects as of the date
with respect to which such information was furnished and with respect to
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projections such projections were based on reasonable assumptions relying on
information available at the time such projections were made.
(b) LOCATIONS.
The office where each Obligor keeps its books, records and accounts
(or copies thereof) concerning the Collateral, each Obligor's principal place of
business and all of each Obligor's other places of business, locations of
Collateral and post office boxes and locations of bank accounts are as set forth
in EXHIBIT A and at other locations within the continental United States of
which Agent has been advised by an Obligor in accordance with SUBSECTION
12(b)(i). The Collateral, including, without limitation, the Equipment (except
any part thereof which an Obligor shall have advised Agent in writing consists
of Collateral normally used in more than one state) is kept, or, in the case of
vehicles, based, only at the addresses set forth on EXHIBIT A, and at other
locations within the continental United States of which Agent has been advised
by an Obligor in writing in accordance with SUBSECTION 12(b)(i) hereof.
(c) LOANS BY OBLIGORS.
Other than intercompany loans described on SCHEDULE 11(c), or
permitted pursuant to section 13(f) no Obligor has made any loans or advances to
any Affiliate or other Person except for advances authorized hereunder to
employees, officers and directors of such Obligor for travel and other expenses
arising in the ordinary course of such Obligor's business and advances made to
Mexican Subsidiaries to fund operating expenses.
(d) ACCOUNTS AND INVENTORY.
Each Account or item of Inventory which Borrowing Agent shall,
expressly or by implication, request Agent to classify as an Eligible Account or
as Eligible Inventory, respectively, shall, as of the time when such request is
made, conform in all respects to the requirements of such classification as set
forth in the respective definitions of "Eligible Account" and "Eligible
Inventory" as set forth herein and as otherwise established by Agent from time
to time.
(e) LIENS.
Each Obligor is the lawful owner of all Collateral now purportedly
owned or hereafter purportedly acquired by such Obligor, free from all liens,
claims, security interests and encumbrances whatsoever, whether voluntarily or
involuntarily created and whether or not perfected, other than the Permitted
Liens.
(f) ORGANIZATION, AUTHORITY AND NO CONFLICT.
Each Obligor is a corporation duly organized, validly existing and
in good standing in its respective state of incorporation identified on SCHEDULE
11(f) hereto, its respective state organizational identification number is
identified on SCHEDULE 11(f) hereto, and each Obligor is duly qualified and in
good standing in all states, provinces, countries and other applicable locales
where the nature and extent of the business transacted by it or the ownership of
its assets makes such qualification necessary, except where such failure would
not have a Material Adverse Effect on such Obligor. Each Obligor has the right
and power and is duly authorized and empowered to enter into, execute and
deliver this Agreement and the Other Agreements and perform its obligations
hereunder and thereunder. Each Obligor's execution, delivery and performance of
this Agreement and the Other Agreements does not conflict with the provisions of
the organizational documents of such Obligor, any statute, regulation, ordinance
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or rule of law, or any agreement, contract or other document which may now or
hereafter be binding on such Obligor and each Obligor's execution, delivery and
performance of this Agreement and the Other Agreements shall not result in the
imposition of any lien or other encumbrance upon any of such Obligor's property
under any existing indenture, mortgage, deed of trust, loan or credit agreement
or other agreement or instrument by which such Obligor or any of its property
may be bound or affected.
(g) LITIGATION.
Except as disclosed to Agent on SCHEDULE 11(g) hereto, there are no
actions or proceedings which are pending or, to any Obligor's knowledge,
threatened against an Obligor which might have a Material Adverse Effect on such
Obligor, and each Obligor shall, promptly upon becoming aware of any such
pending or threatened action or proceeding, give written notice thereof to
Agent. No Obligor has any Commercial Tort Claims pending other than those set
forth on EXHIBIT C hereto as EXHIBIT C may be amended from time to time.
(h) COMPLIANCE WITH LAWS AND MAINTENANCE OF PERMITS.
Each Obligor has obtained all governmental consents, franchises,
certificates, licenses, authorizations, approvals and permits, the lack of which
would have a Material Adverse Effect on such Obligor. Each Obligor is in
compliance with all applicable federal, state, local and foreign statutes,
orders, regulations, rules and ordinances (including, to each Obligor's
knowledge, Environmental Laws and statutes, orders, regulations, rules and
ordinances relating to taxes, employer and employee contributions and similar
items, securities, ERISA or employee health and safety) the failure to comply
with which would have a Material Adverse Effect on such Obligor.
(i) AFFILIATE TRANSACTIONS.
Except as set forth on SCHEDULE 11(i) hereto or as permitted
pursuant to SUBSECTION 11(c) hereof, no Obligor is conducting, permitting or
suffering to be conducted, transactions with any Affiliate other than
transactions with Affiliates for the purchase or sale of Inventory or services
in the ordinary course of business pursuant to terms that are no less favorable
to such Obligor than the terms upon which such transactions would have been made
had they been made to or with a Person that is not an Affiliate.
(j) NAMES AND TRADE NAMES.
Each Obligor's name has, for the past five (5) years, been as set
forth on the first page of this Agreement and no Obligor uses trade names,
assumed names, fictitious names or division names in the operation of its
business, except as set forth on SCHEDULE 11(j) hereto.
(k) EQUIPMENT.
Each Obligor has good and indefeasible and merchantable title to and
ownership of all Equipment. No Equipment is (1) a Fixture to real estate unless
such real estate is owned by such Obligor and is subject to a mortgage in favor
of Agent, or if such real estate is leased, is subject to a landlord's agreement
in favor of Agent on terms acceptable to Agent, or (2) an accession to other
personal property unless such personal property is subject to a first priority
lien in favor of Agent.
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(l) ENFORCEABILITY.
This Agreement and the Other Agreements to which an Obligor is a
party are the legal, valid and binding obligations of such Obligor and are
enforceable against such Obligor in accordance with their respective terms,
except as enforceability may be limited by the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar proceeding
affecting creditor's rights generally.
(m) SOLVENCY.
Each Obligor is, after giving effect to the transactions
contemplated hereby, solvent, able to pay its debts as they become due, has
capital sufficient to carry on its business, now owns property having a value
both at fair valuation and at present fair saleable value greater than the
amount required to pay its debts, and will not be rendered insolvent by the
execution and delivery of this Agreement or any of the Other Agreements or by
completion of the transactions contemplated hereunder or thereunder.
(n) INDEBTEDNESS.
Except as set forth on SCHEDULE 11(n) hereto, no Obligor is
obligated (directly or indirectly), for any loans or other indebtedness for
borrowed money other than the Loans.
(o) MARGIN SECURITY AND USE OF PROCEEDS.
No Obligor owns any margin securities, and none of the proceeds of
the Loans hereunder shall be used for the purpose of purchasing or carrying any
margin securities or for the purpose of reducing or retiring any indebtedness
which was originally incurred to purchase any margin securities or for any other
purpose not permitted by Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
(p) PARENT, SUBSIDIARIES AND AFFILIATES.
Except as set forth on SCHEDULE 11(p) hereto, no Obligor has any
Parents, Subsidiaries or other Affiliates or divisions, nor is any Obligor
engaged in any joint venture or partnership with any other Person.
(q) NO DEFAULTS.
No Obligor is in default under any material contract, lease or
commitment to which it is a party or by which it is bound, nor does any Obligor
know of any dispute regarding any contract, lease or commitment which might have
a Material Adverse Effect on such Obligor.
(r) EMPLOYEE MATTERS.
There are no controversies pending or threatened between an Obligor
and any of its employees, agents or independent contractors other than employee
grievances arising in the ordinary course of business which would not, in the
aggregate, have a Material Adverse Effect on such Obligor, and each Obligor is
in compliance with all federal and state laws respecting employment and
employment terms, conditions and practices except for such non-compliance which
would not have a Material Adverse Effect on such Obligor.
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(s) INTELLECTUAL PROPERTY.
Each Obligor possesses adequate licenses, patents, patent
applications, copyrights, service marks, trademarks, trademark applications,
trade styles and trade names to continue to conduct its business as heretofore
conducted by it.
(t) ENVIRONMENTAL MATTERS.
Except as disclosed on SCHEDULE 11(t) hereto, to each Obligor's
knowledge, no Obligor has generated, used, stored, treated, transported,
manufactured, handled, produced or disposed of any Hazardous Materials, on or
off its premises (whether or not owned by it) in any manner which at any time
violates any Environmental Law or any license, permit, certificate, approval or
similar authorization thereunder and the operations of each Obligor comply with
all Environmental Laws and all licenses, permits, certificates, approvals and
similar authorizations thereunder. Except as disclosed on SCHEDULE 11(t) hereto,
to each Obligor's knowledge, there has been no investigation, proceeding,
complaint, order, directive, claim, citation or notice by any governmental
authority or any other Person, nor is any pending or to the best of each
Obligor's knowledge threatened with respect to any non-compliance with or
violation of the requirements of any Environmental Law by an Obligor or the
release, spill or discharge, threatened or actual, of any Hazardous Materials or
the generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or any other environmental,
health or safety matter, which affects an Obligor or its business, operations or
assets or any properties at which an Obligor has transported, stored or disposed
of any Hazardous Materials. Except as disclosed on SCHEDULE 11(t) hereto, to
each Obligor's knowledge, no Obligor has any material liability (contingent or
otherwise) in connection with a release, spill or discharge, threatened or
actual, of any Hazardous Materials or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials.
(u) ERISA MATTERS.
Each Obligor has paid and discharged all obligations and liabilities
arising under ERISA of a character which, if unpaid or unperformed, might result
in the imposition of a lien against any of its properties or assets.
(v) INTERRELATEDNESS OF OBLIGORS.
The business operations of each Obligor complement one another, and
such entities have a common business purpose, with intercompany bookkeeping and
accounting adjustments used to separate their respective properties,
liabilities, and transactions. To permit their uninterrupted and continuous
operations, such entities now require and will from time to time hereafter
require funds and credit accommodations for general business purposes. The
Revolving Loans and other credit facilities extended hereunder will directly or
indirectly benefit each Obligor hereunder, severally and jointly, regardless of
which Obligor requests or receives part or all of the proceeds of such advances.
12. AFFIRMATIVE COVENANTS.
Until payment and satisfaction in full of all Liabilities and
termination of this Agreement, unless Obligors obtain Agent's prior written
consent waiving or modifying any of Obligors' covenants hereunder in any
specific instance, each Obligor covenants and agrees as follows:
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(a) MAINTENANCE OF RECORDS.
Each Obligor shall at all times keep accurate and complete books,
records and accounts with respect to all of such Obligor's business activities,
in accordance with sound accounting practices and GAAP, and shall keep such
books, records and accounts, and any copies thereof, only at the addresses
indicated for such purpose on EXHIBIT A.
(b) NOTICES.
Each Obligor shall:
(i) LOCATIONS. Promptly (but in no event less than ten (10)
days prior to the occurrence thereof) notify Agent of the proposed opening of
any new place of business or new location of Collateral, the closing of any
existing place of business or location of Collateral, any change in the location
of such Obligor's books, records and accounts (or copies thereof), the opening
or closing of any post office box, the opening or closing of any bank account
or, if any of the Collateral consists of Goods of a type normally used in more
than one state, the use of any such Goods in any state other than a state in
which such Obligor has previously advised Agent that such Goods will be used.
Obligors shall also provide to Agent all financing statements, landlord waivers
or other documents as Agent may require with regard to any new location.
(ii) ELIGIBLE ACCOUNTS AND INVENTORY. Promptly upon becoming
aware thereof, notify Agent if any Account or Inventory identified by such
Borrower (or by Borrowing Agent) to Agent as an Eligible Account or Eligible
Inventory becomes ineligible for any reason.
(iii) LITIGATION AND PROCEEDINGS. Promptly upon becoming aware
thereof, notify Agent of any actions or proceedings which are pending or
threatened against such Obligor and of any Commercial Tort Claims of such
Obligor which may arise, which notice shall constitute such Obligor's
authorization to amend EXHIBIT C to add such Commercial Tort Claim.
(iv) NAMES AND TRADE NAMES. Notify Agent within ten (10) days
of the use of any trade name, assumed name, fictitious name or division name not
previously disclosed to Agent in writing. No Obligor shall change its name
without Agent's prior written consent.
(v) ERISA MATTERS. Promptly notify Agent of (x) the occurrence
of any "reportable event" (as defined in ERISA) which might result in the
termination by the Pension Benefit Guaranty Corporation (the "PBGC") of any
employee benefit plan ("PLAN") covering any officers or employees of such
Obligor, any benefits of which are, or are required to be, guaranteed by the
PBGC, (y) receipt of any notice from the PBGC of its intention to seek
termination of any Plan or appointment of a trustee therefor or (z) its
intention to terminate or withdraw from any Plan.
(vi) ENVIRONMENTAL MATTERS. Immediately notify Agent upon
becoming aware of any investigation, proceeding, complaint, order, directive,
claim, citation or notice with respect to any non-compliance with or violation
of the requirements of any Environmental Law by such Obligor or the generation,
use, storage, treatment, transportation, manufacture handling, production or
disposal of any Hazardous Materials or any other environmental, health or safety
matter which affects such Obligor or its business operations or assets or any
properties at which such Obligor has transported, stored or disposed of any
Hazardous Materials.
(vii) DEFAULT; MATERIAL ADVERSE CHANGE. Promptly advise Agent
of any material adverse change in the business, property, assets, prospects,
operations or condition, financial or otherwise, of such Obligor, and the
occurrence of any Default or Event of Default hereunder.
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All of the foregoing notices shall be provided by Obligors to Agent in writing.
(c) COMPLIANCE WITH LAWS AND MAINTENANCE OF PERMITS.
Each Obligor shall maintain all governmental consents, franchises,
certificates, licenses, authorizations, approvals and permits, the lack of which
might have a Material Adverse Effect on such Obligor and each Obligor shall
remain in compliance with all applicable federal, state, local and foreign
statutes, orders, regulations, rules and ordinances (including, without
limitation, Environmental Laws and statutes, orders, regulations, rules and
ordinances relating to taxes, employer and employee contributions and similar
items, securities, ERISA or employee health and safety) the failure with which
to comply might have a Material Adverse Effect on such Obligor. Following any
determination by Agent that there is non-compliance, or any condition which
requires any action by or on behalf of an Obligor in order to avoid
non-compliance, with any Environmental Law, Agent may, at such Obligor's
expense, cause an independent environmental engineer acceptable to Agent to
conduct such tests of the relevant site(s) as are appropriate and prepare and
deliver a report setting forth the results of such tests, a proposed plan for
remediation and an estimate of the costs thereof.
(d) INSPECTION AND AUDITS.
Each Obligor shall permit Agent, or any Persons designated by it, to
call at such Obligor's places of business at any reasonable time during normal
business hours (provided that after the occurrence, and during the continuance,
of an Event of Default, such inspections may take place at any time), and,
without hindrance or delay, to inspect the Collateral and to inspect, audit,
check and make extracts from such Obligor's books, records, journals, orders,
receipts and any correspondence and other data relating to such Obligor's
business, the Collateral or any transactions between the parties hereto, and
shall have the right to make such verification concerning such Obligor's
business as Agent may consider reasonable under the circumstances. Each Obligor
shall furnish to Agent such information relevant to Agent's or Lender's rights
under this Agreement and the Other Agreements as Agent shall at any time and
from time to time request. Agent, through its officers, employees or agents
shall have the right, at any time and from time to time, in Agent's name, to
verify the validity, amount or any other matter relating to any of such
Obligor's Accounts, by mail, telephone, telecopy, electronic mail, or otherwise.
Each Obligor authorizes Agent and Lender to discuss the affairs, finances and
business of such Obligor with any officers, employees or directors of such
Obligor or with its Parent or the officers, employees or directors of its
Parent, and to discuss the financial condition of such Obligor with such
Obligor's independent public accountants. Any such discussions shall be without
liability to Agent or to Obligors' independent public accountants. Borrowers
shall pay to Agent all customary fees (currently $750 per person per day) and
all costs and out-of-pocket expenses incurred by Agent or Lender in the exercise
of its rights hereunder, and all of such fees, costs and expenses shall
constitute Liabilities hereunder, shall be payable on demand and, until paid,
shall bear interest at the highest rate then applicable to Loans hereunder.
(e) INSURANCE.
Each Obligor shall:
(i) Keep the Collateral properly housed and insured for the
full insurable value thereof against loss or damage by fire, theft, explosion,
sprinklers, collision (in the case of motor vehicles) and such other risks as
are customarily insured against by Persons engaged in businesses similar to that
of such Obligor, with such companies, in such amounts, with such deductibles,
and under policies in such form, as shall be satisfactory to Agent. Original (or
certified) copies of such policies of insurance have been or shall be, within
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ninety (90) days of the date hereof, delivered to Agent, together with evidence
of payment of all premiums therefor, and shall contain an endorsement, in form
and substance acceptable to Agent, showing loss under such insurance policies
payable to Agent, for the benefit of Agent and Lender. Such endorsement, or an
independent instrument furnished to Agent, shall provide that the insurance
company shall give Agent at least thirty (30) days written notice before any
such policy of insurance is altered or canceled and that no act, whether willful
or negligent, or default of such Obligor or any other Person shall affect the
right of Agent to recover under such policy of insurance in case of loss or
damage. In addition, each Obligor shall cause to be executed and delivered to
Agent an assignment of proceeds of its business interruption insurance policies.
Each Obligor hereby directs all insurers under all policies of insurance to pay
all proceeds payable thereunder directly to Agent. Each Obligor irrevocably
makes, constitutes and appoints Agent (and all officers, employees or agents
designated by Agent) as such Obligor's true and lawful attorney (and
agent-in-fact) for the purpose of making, settling and adjusting claims under
such policies of insurance, endorsing the name of such Obligor on any check,
draft, instrument or other item of payment for the proceeds of such policies of
insurance.
(ii) Maintain, at its expense, such public liability and third
party property damage insurance as is customary for Persons engaged in
businesses similar to that of such Obligor with such companies and in such
amounts, with such deductibles and under policies in such form as shall be
satisfactory to Agent and original (or certified) copies of such policies have
been or shall be, within ninety (90) days after the date hereof, delivered to
Agent, together with evidence of payment of all premiums therefor; each such
policy shall contain an endorsement showing Agent and Lender as additional
insured thereunder and providing that the insurance company shall give Agent at
least thirty (30) days written notice before any such policy shall be altered or
canceled.
Notwithstanding the foregoing, in the event that an Obligor suffers
a casualty loss and desires to use the proceeds of its casualty loss insurance
to repair or replace damaged Mortgaged Property, Equipment or Inventory which
was Collateral hereunder, Agent will permit such Obligor to utilize the proceeds
of such insurance solely to rebuild the Mortgaged Property, purchase such
replacement Equipment and Inventory or to repair such Equipment, provided that:
(i) such casualty loss does not exceed One Million Dollars ($1,000,000.00) when
aggregated with other casualty losses of all Obligors during such Fiscal Year;
(ii) such Obligor confirms to Agent in writing that it intends to continue its
business operations and has business interruption insurance in effect providing
for the payment of proceeds in amounts acceptable to Agent, (iii) such Obligor
submits to Agent its business plan for operations after such casualty loss,
which plan must be in form and content satisfactory to Agent, (iv) Agent will
hold such insurance proceeds and will disburse such proceeds upon receipt by
Agent of evidence satisfactory to Agent that such proceeds will be used to
rebuild the Mortgaged Property or purchase or repair Equipment and Inventory as
required above, (v) disbursement of proceeds will be in compliance with such
procedures as Agent may require, e.g. checks payable to the equipment vendor or
inventory supplier, or to reimburse Borrowers for costs previously expended for
such purpose, (vi) no Default or Event of Default has occurred and is
continuing, and (vii) such loss does not occur within ninety (90) days of the
expiration of the Term.
If an Obligor at any time or times hereafter shall fail to obtain or
maintain any of the policies of insurance required above or to pay any premium
relating thereto, then Agent or Lender, without waiving or releasing any
obligation or default by Obligors hereunder, may (but shall be under no
obligation to) obtain and maintain such policies of insurance and pay such
premiums and take such other actions with respect thereto as Agent deems
advisable. Such insurance, if obtained by Agent, may, but need not, protect such
Obligor's interests or pay any claim made by or against such Obligor with
respect to the Collateral. Such insurance may be more expensive than the cost of
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insurance such Obligor may be able to obtain on its own and may be cancelled
only upon such Obligor providing evidence that it has obtained the insurance as
required above. All sums disbursed by Agent or Lender in connection with any
such actions, including, without limitation, court costs, expenses, other
charges relating thereto and reasonable attorneys' fees, shall constitute Loans
hereunder, shall be payable on demand by Borrowers to Agent and, until paid,
shall bear interest at the highest rate then applicable to Loans hereunder.
(f) COLLATERAL.
Each Obligor shall keep the Collateral in good condition, repair and
order and shall make all necessary repairs to the Equipment and replacements
thereof so that the operating efficiency and the value thereof shall at all
times be preserved and maintained. Each Obligor shall permit Agent to examine
any of the Collateral at any time and wherever the Collateral may be located
and, each Obligor shall, immediately upon request therefor by Agent, deliver to
Agent any and all evidence of ownership of any of the Equipment including,
without limitation, certificates of title and applications of title. Each
Obligor shall, at the request of Agent, indicate on its records concerning the
Collateral a notation, in form satisfactory to Agent, of the security interest
of Agent hereunder.
(g) USE OF PROCEEDS.
Nine Million Five Hundred Thousand Dollars ($9,500,000.00) of the
initial advance of the Loans shall be used to repay sums received by SL Delaware
from the GE Lenders pursuant to SECTION 2.01 of the GE Loan Agreement, and the
remainder of the initial advance shall be used to repay outstanding obligations
of Borrowers to the GE Lenders under the GE Loan Agreement. The Revolving Loans
may also be used to provide working capital for the Eligible Guarantors and to
fund expenses of Industries, SL Delaware and the Non-Operating Subsidiary as
permitted by SECTION 13(i) hereof provided that such expenses of each of
Industries, Delaware and each Non-Operating Subsidiary do not exceed the Expense
Limit in any Fiscal Year. All monies and other property obtained by a Borrower
or an Eligible Guarantor from Agent or Lender pursuant to this Agreement shall
be used solely for business purposes of such entity. SL Delaware shall not
receive any Loan proceeds after the initial advance.
(h) TAXES.
Each Obligor shall file all required tax returns and pay all of its
taxes when due, including, without limitation, taxes imposed by federal, state
or municipal agencies, and shall cause any liens for taxes to be promptly
released; provided, that such Obligor shall have the right to contest the
payment of such taxes in good faith by appropriate proceedings so long as (i)
the amount so contested is shown on such Obligor's financial statements; (ii)
the contesting of any such payment does not give rise to a lien for taxes; (iii)
such Obligor either keeps on deposit with Agent (such deposit to be held without
interest) an amount of money which, in the sole judgment of Agent, is sufficient
to pay such taxes and any interest or penalties that may accrue thereon or Agent
creates a reserve against availability under the Revolving Loans in such amount
(if sufficient availability exists, Agent shall establish a reserve in lieu of
requiring a cash deposit); and (iv) if such Obligor fails to prosecute such
contest with reasonable diligence, Agent may apply the money so deposited in
payment of such taxes. If an Obligor fails to pay any such taxes and in the
absence of any such contest by such Obligor, Agent or Lender may (but shall be
under no obligation to) advance and pay any sums required to pay any such taxes
and/or to secure the release of any lien therefor, and any sums so advanced by
Agent or Lender shall constitute Loans hereunder, shall be payable by Obligors
to Agent on demand, and, until paid, shall bear interest at the highest rate
then applicable to Loans hereunder.
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(i) INTELLECTUAL PROPERTY.
Each Obligor shall maintain adequate licenses, patents, patent
applications, copyrights, service marks, trademarks, trademark applications,
tradestyles and trade names to continue its business as heretofore conducted by
it or as hereafter conducted by it.
(j) BANK ACCOUNTS.
Each Obligor shall maintain LaSalle Bank as its principal bank of
account and disbursement and shall maintain its general checking/controlled
disbursement account with LaSalle Bank. Normal charges shall be assessed
thereon. Although no compensating balance is required, each Obligor must keep
monthly balances in order to merit earnings credits which will cover LaSalle
Bank's service charge for demand deposit account activities. Obligors may
maintain payroll accounts at banks other than LaSalle Bank.
(k) MAINTENANCE OF MANAGEMENT.
Industries shall cause its business to be continuously managed by
its present senior management team or other Persons reasonably satisfactory to
Lender.
(l) TRACKING OF BORROWINGS.
Industries shall have at all times reflected on its books and
records, the amount of Loan proceeds received by each Eligible Guarantor and the
amount of payments on the Loans funded by each Eligible Guarantor, so that such
records reflect the net amount of the Loan proceeds outstanding to each Eligible
Guarantor. Covenant Obligors shall enter into an Intercompany Debt Allocation
Agreement pursuant to which each Covenant Obligor indemnifies the other for the
net amount of Loan proceeds outstanding to each Covenant Obligor (the
"INTERCOMPANY AGREEMENT"). Covenant Obligors, at their option, may execute
intercompany notes to reflect the net amount of the Loans owed by any Covenant
Obligor at any time (collectively, the "INTERCOMPANY NOTES"). Contemporaneous
with the delivery of the statements required by SECTION 9 hereof, Borrowing
Agent shall provide Agent with a statement showing the flow and repayment of
loan proceeds through the date which is five (5) days prior to the date for
delivery of such statements.
(m) EME SALE PAYMENTS.
If at any time either Borrower receives (i) an EME Sale Payment or
(ii) a dividend or distribution resulting from the receipt by Vertrieb of a
payment on the EME $1,000,000.00 Sale Note, the full amount of such dividend
shall be immediately paid to Agent to be applied, first, to reduce the
Overadvance Amount until the Overadvance Amount is reduced to zero, and, second,
to repay the Revolving Loans.
(n) If the EME Sale Payment has not been paid by May 1, 2003,
Borrowers will cause SL Holdings GMBH Co., KG to pledge to agent for the benefit
of Lenders, as security for the Liabilities, and, with respect to Guarantors, as
security for all obligations of Guarantors under the Guarantees, all ownership
interests of Vertrieb in accordance with German law (including without
limitation all notarial requirements or requirements for payment of fees)
pursuant to documentation in form and content satisfactory to Agent.
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13. NEGATIVE COVENANTS.
Until payment and satisfaction in full of all Liabilities and
termination of this Agreement, unless Obligors obtain Agent's prior written
consent waiving or modifying any of Obligors' covenants hereunder in any
specific instance, each Obligor agrees as follows:
(a) GUARANTIES.
Other than guarantees in favor of Agent and Permitted Parent
Guarantees, no Obligor shall assume, guarantee or endorse, or otherwise become
liable in connection with, the obligations of any Person, except by endorsement
of instruments for deposit or collection or similar transactions in the ordinary
course of business.
(b) INDEBTEDNESS.
No Obligor shall create, incur, assume or become obligated (directly
or indirectly), for any loans or other indebtedness for borrowed money other
than the Loans, except that Obligors may (i) maintain its present indebtedness
listed on SCHEDULE 11(n) hereto; (ii) incur unsecured indebtedness to trade
creditors in the ordinary course of business; and (iii) incur future purchase
money indebtedness and obligations with respect to Capitalized Leases in an
aggregate amount outstanding for all Obligors not to exceed Five Hundred
Thousand Dollars ($500,000.00) outstanding at any time.
(c) LIENS.
No Obligor shall grant or permit to exist (voluntarily or
involuntarily) any lien, claim, security interest or other encumbrance
whatsoever on any of its assets, other than Permitted Liens.
(d) MERGERS, SALES, ACQUISITIONS, SUBSIDIARIES AND OTHER
TRANSACTIONS OUTSIDE THE ORDINARY COURSE OF BUSINESS.
No Obligor shall (i) enter into any merger or consolidation; (ii)
change its state of organization or enter into any transaction which has the
effect of changing its state of organization (iii) sell, lease or otherwise
dispose of any of its assets other than the sale of inventory in the ordinary
course of business and the sale of obsolete equipment as permitted by SECTION 7
hereof; (iv) purchase the stock, other equity interests or all or a material
portion of the assets of any Person or division of such Person; or (v) enter
into any other transaction outside the ordinary course of such Borrower's
business, including, without limitation, any purchase, redemption or retirement
of any shares (other than a Permitted Industries Stock Purchase) of any class of
its stock or any other equity interest, and any issuance of any shares of, or
warrants or other rights to receive or purchase any shares of, any class of its
stock or any other equity interest. No Obligor shall form any Subsidiaries or
enter into any joint ventures or partnerships with any other Person. If at any
time, Agent consents to the formation of a Subsidiary, such Subsidiary shall
become a Borrower or Guarantor hereunder (as determined by Agent in its sole
discretion) and shall be subject to all terms and conditions hereof and shall
execute all documentation required by Agent to effectuate the same. Agent agrees
that it shall not unreasonably withhold its consent to the sale by an Obligor of
a Subsidiary or division of such Obligor provided that (i) no Default or Event
of Default has occurred and is continuing or would be caused by such sale; (ii)
such sale is on terms and conditions reasonably satisfactory to Agent; and (iii)
Obligors deliver evidence reasonably satisfactory to Agent that Obligors will
remain in compliance with the terms and conditions of the Loan Documents after
such sale. All proceeds of any such sale shall be immediately paid over to Agent
and applied by Agent (i) first, to pay any Loan supported by Collateral being
sold (which with respect to Term Loan A supported solely by the Boonton Property
shall be $2,350,000.00 less any amount by which the principal amount of Term
Loan A has been reduced and with respect to Term Loan B supported solely by
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equipment shall be 80% of the value thereof based on the appraisal dated August
19, 2002 prepared by Dovebid Valuation Services, Inc.), (ii) second, to
permanently reduce the Overadvance Amount, (iii) third, to pay any other sums
due Agent or Lender by any Obligor hereunder or under the Other Agreements, (iv)
fourth, to repay outstanding Revolving Loans (but shall not reduce the Maximum
Revolving Loan Limit unless specified by Borrowers), and (v) fifth, to be
deposited into Borrowers' operating account to be used as otherwise provided
hereunder. Upon receipt of the sums required by SUBPART (i) of the preceding
sentence, Agent shall release its liens on Collateral being sold in such sale.
(e) DIVIDENDS AND DISTRIBUTIONS.
No Obligor shall declare or pay any dividend or other distribution
(other than a Permitted Dividend) (whether in cash or in kind) on any class of
its stock (if such Obligor is a corporation) or on account of any equity
interest in such Obligor (if such Obligor is a partnership, limited liability
company or other type of entity); provided however, a Subsidiary may pay
dividends or other distributions to a Borrower.
(f) INVESTMENTS; LOANS.
No Obligor shall (i) purchase or otherwise acquire, or contract to
purchase or otherwise acquire, the obligations or stock of any Person, or
otherwise invest in any Person, other than direct obligations of the United
States or (ii) lend or otherwise advance funds to any Person except for advances
made to employees, officers and directors for travel and other expenses arising
in the ordinary course of business.
(g) FUNDAMENTAL CHANGES, LINE OF BUSINESS.
No Obligor shall amend its organizational documents or change its
Fiscal Year or enter into a new line of business materially different from such
Obligor's current business.
(h) EQUIPMENT.
No Obligor shall (i) permit any Equipment to become a Fixture to
real property unless such real property is owned by such Obligor and is subject
to a mortgage in favor of Agent, or if such real property is leased, is subject
to a landlord's agreement in favor of Agent on terms acceptable to Agent, or
(ii) permit any Equipment to become an accession to any other personal property
unless such personal property is subject to a first priority lien in favor of
Agent.
(i) AFFILIATE TRANSACTIONS.
Except as set forth on SCHEDULE 13(i) hereto or as permitted
pursuant to SUBSECTION 11(c) or 13(f) hereof, no Obligor shall conduct, permit
or suffer to be conducted, transactions with Affiliates other than transactions
for the purchase or sale of Inventory or services in the ordinary course of
business pursuant to terms that are no less favorable to such Obligor than the
terms upon which such transactions would have been made had they been made to or
with a Person that is not an Affiliate. No Guarantor (other than Eligible
Guarantors) shall sell, lease or furnish under contracts of service any of such
Guarantor's Inventory; provided however, Guarantors may process Inventory for
Eligible Guarantors and receive fees in connection with the same. No Borrower or
Eligible Guarantor shall pay or transfer any Revolving Loans or other Loan
proceeds received by such Borrower or Eligible Guarantor to any other Obligor or
Subsidiary other than (i) transfers of Loan proceeds from Industries to Eligible
Guarantors, (ii) transfers of Loan proceeds from Industries to SL Delaware, any
of the Non-Operating Subsidiaries or the Mexican Subsidiaries to fund ordinary
course operations of such entities up to the Expense Limit, and (iii) payments
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in the nature of expense reimbursement in connection with an Obligor or other
Subsidiary processing Inventory for an Eligible Guarantor. Borrowing Agent shall
advise Agent in writing of any such payments or transfers of Loan proceeds to
any Obligor (other than an Eligible Guarantor) or other Subsidiary with the
reports provided to Agent pursuant to SECTION 9(a) hereof. Notwithstanding the
foregoing, no Obligor may pay or transfer Loan proceeds to any Subsidiary which
is not a Domestic Subsidiary or a Mexican Subsidiary.
(j) SETTLING OF ACCOUNTS.
No Obligor shall settle or adjust any Account identified by such
Obligor or Borrowing Agent as an Eligible Account or with respect to which the
Account Debtor is an Affiliate without the consent of Agent if such settlement
or adjustment would cause the Revolving Loans to exceed the Revolving Loan
Limit, provided that, following the occurrence of an Event of Default, such
Obligor shall not settle or adjust any Account without the consent of Agent.
(k) LIMITATIONS ON SL DELAWARE AND NON-OPERATING SUBSIDIARIES.
None of SL Delaware and each Non-Operating Subsidiary, shall (i)
operate in any manner, (ii) own or hold any assets other than the assets
described on SCHEDULE 13(k) hereto, or (iii) receive any Loan proceeds or other
sums from any Obligor other than as permitted by SECTION 13(i) above.
14. FINANCIAL COVENANTS.
Covenant Obligors shall maintain and keep in full force and effect
each of the financial covenants set forth below:
(a) BOOK NET WORTH.
Covenant Obligors shall maintain at all times Book Net Worth of not
less than (i) Twenty-One Million Dollars ($21,000,000.00) at all times from the
date hereof through December 30, 2002, (ii) Twenty-One Million Four Hundred
Thirty-Five Thousand Dollars ($21,435,000.00) plus the EME Gain at all times
from December 31, 2002 through December 30, 2003, (iii) Twenty-Four Million Nine
Hundred Twenty-Five Thousand Dollars ($24,925,000.00) plus the EME Gain at all
times from December 31, 2003 through December 30, 2004 and (iv) Twenty-Eight
Million Four Hundred Fifteen Thousand Dollars ($28,415,000.00) plus the EME Gain
at all times from December 31, 2004 through expiration of the Term.
(b) FIXED CHARGE COVERAGE.
Covenant Obligors shall maintain a Fixed Charge Coverage Ratio of
not less than 2.0 to 1.0 as of (i) Covenant Obligors' fiscal quarter ending
December 31, 2002, (ii) Covenant Obligors' fiscal quarter ending ▇▇▇▇▇ ▇▇, ▇▇▇▇,
(▇▇) as of the six (6) month period ending June 30, 2003, (iv) as of the nine
(9) month period ending September 30, 2003, (v) as of Covenant Obligors' Fiscal
Year ending December 31, 2003 and as of the end of each fiscal quarter of
Covenant Obligors' ending thereafter, measured on a rolling four-quarter basis.
(c) CAPITAL EXPENDITURE LIMITATIONS.
Commencing with Covenant Obligors' Fiscal Year commencing January 1,
2003, Covenant Obligors shall not make any Capital Expenditures if, after giving
effect to such Capital Expenditure, the aggregate cost of all such fixed assets
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purchased or otherwise acquired would exceed Four Million Dollars
($4,000,000.00) during any Fiscal Year; provided however, if during any Fiscal
Year, Covenant Obligors do not expend Four Million Dollars ($4,000,000.00), an
amount equal to the lesser of (i) the remainder of (A) Four Million Dollars
($4,000,000.00), MINUS (B) the actual amount of Capital Expenditures for such
Fiscal Year, and (ii) Five Hundred Thousand Dollars ($500,000.00) may be carried
forward to the next Fiscal Year.
(d) MINIMUM EBITDA.
Each Eligible Guarantor shall maintain as of the end of each Fiscal
Year EBITDA showing a loss of not more than One Million Dollars ($1,000,000.00).
15. DEFAULT.
The occurrence of any one or more of the following events shall
constitute an "EVENT OF DEFAULT" by Obligors hereunder:
(a) PAYMENT.
The failure of any Obligor to pay when due, declared due, or
demanded by Agent, any of the Liabilities.
(b) BREACH OF THIS AGREEMENT AND THE OTHER AGREEMENTS.
The failure of any Obligor to perform, keep or observe any of the
covenants, conditions, promises, agreements or obligations of such Obligor under
this Agreement or any of the Other Agreements not otherwise specifically
constituting an Event of Default under this SECTION 15, and such failure
continues unremedied for a period of fifteen (15) days, provided that, in the
event such failure is (i) incapable of remedy, (ii) consists of a default of any
of the reporting requirements in SECTION 9 hereof, financial covenants in
SECTION 14, or any of the covenants or conditions contained in the following
sections: SECTIONS 12(d), 12(e), 12(f), 12(g), 12(h), 12(i), 12(j), 12(k),
13(a), 13(b), 13(c), 13(d), 13(e), 13(g), 13(i) and 13(j), or (iii) was
willfully caused or permitted by any Obligor, Obligors shall not be entitled to
any grace hereunder.
(c) BREACHES OF OTHER OBLIGATIONS.
The failure of any Obligor to perform, keep or observe any of the
covenants, conditions, promises, agreements or obligations of such Obligor under
any other agreement with any Person, if such failure might have a Material
Adverse Effect on such Obligor.
(d) BREACH OF REPRESENTATIONS AND WARRANTIES.
The making or furnishing by any Obligor to Agent or Lender of any
representation, warranty, certificate, schedule, report or other communication
within or in connection with this Agreement or the Other Agreements or in
connection with any other agreement between such Obligor and Agent, which is
untrue or misleading in any material respect.
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(e) LOSS OF COLLATERAL.
The uninsured loss, theft, damage or destruction of Collateral with
an aggregate value in excess of One Hundred Thousand Dollars ($100,000.00) or
(except as permitted hereby) sale, lease or furnishing under a contract of
service of, any of the Collateral.
(f) LEVY, SEIZURE OR ATTACHMENT.
The making or any attempt by any Person to make any levy, seizure or
attachment upon any of the Collateral.
(g) BANKRUPTCY OR SIMILAR PROCEEDINGS.
The commencement of any proceedings in bankruptcy by or against any
Obligor or for the liquidation or reorganization of any Obligor, or alleging
that such Obligor is insolvent or unable to pay its debts as they mature, or for
the readjustment or arrangement of any Obligor's debts, whether under the United
States Bankruptcy Code or under any other law, whether state or federal, now or
hereafter existing, for the relief of debtors, or the commencement of any
analogous statutory or non-statutory proceedings involving any Obligor;
provided, however, that if such commencement of proceedings against such Obligor
is involuntary, such action shall not constitute an Event of Default unless such
proceedings are not dismissed within thirty (30) days after the commencement of
such proceedings, though Agent shall have no obligation to make Loans or issue
Letters of Credit to any Borrower during such thirty (30) day period or, if
earlier, until such proceedings are dismissed.
(h) APPOINTMENT OF RECEIVER.
The appointment of a receiver or trustee for any Obligor, for any of
the Collateral or for any substantial part of any Obligor's assets or the
institution of any proceedings for the dissolution, or the full or partial
liquidation, or the merger or consolidation, of any Obligor which is a
corporation, limited liability company or a partnership; provided, however, that
if such appointment or commencement of proceedings against such Obligor is
involuntary, such action shall not constitute an Event of Default unless such
appointment is not revoked or such proceedings are not dismissed within thirty
(30) days after the commencement of such proceedings, though Agent shall have no
obligation to make Loans or issue Letters of Credit to any Borrower during such
thirty (30) day period or, if earlier, until such appointment is revoked or such
proceedings are dismissed.
(i) JUDGMENT.
The entry of any judgment or order against any Obligor in excess of
Two Hundred Fifty Thousand Dollars ($250,000.00), individually, or Five Hundred
Thousand Dollars ($500,000.00), in the aggregate, for all Obligors which remains
unsatisfied or undischarged and in effect for thirty (30) days after such entry
without a stay of enforcement or execution.
(j) DISSOLUTION OF OBLIGOR.
The dissolution of any Obligor.
(k) DEFAULT OR REVOCATION OF GUARANTY.
The occurrence of an event of default under, or the revocation or
termination of, any agreement, instrument or document executed and delivered by
any Person to Agent or Lender pursuant to which such Person has guaranteed to
Agent or Lender the payment of all or any of the Liabilities (including, without
limitation, the Guarantees) or has granted Agent or Lender a security interest
in or lien upon some or all of such Person's real and/or personal property to
secure the payment of all or any of the Liabilities.
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(l) CRIMINAL PROCEEDINGS.
The institution in any court of a criminal proceeding against any
Obligor or the indictment of any Obligor for any crime.
(m) MATERIAL ADVERSE CHANGE.
Any Material Adverse Change with respect to Obligors taken as a
whole, as determined by Agent in its reasonable judgment or the occurrence of
any event which, in Agent's reasonable judgment, could have a Material Adverse
Effect on Obligors taken as a whole including, without limitation, a change in
the status of or enforcement with respect to any of the environmental conditions
described on SCHEDULE 11(t) hereto or the litigation described on SCHEDULE 11(g)
hereto.
16. REMEDIES UPON AN EVENT OF DEFAULT.
(a) Upon the occurrence of an Event of Default described in
SUBSECTION 15(g) or 15(h) hereof, all of the Liabilities shall immediately and
automatically become due and payable, without notice of any kind. Upon the
occurrence of any other Event of Default, all Liabilities may, at the option of
Agent, and without demand, notice or legal process of any kind, be declared, and
immediately shall become, due and payable.
(b) Upon the occurrence of an Event of Default, Agent and Lender
may exercise from time to time any rights and remedies available to them under
the Uniform Commercial Code and any other applicable law in addition to, and not
in lieu of, any rights and remedies expressly granted in this Agreement or in
any of the Other Agreements and all of Agent's and Lender's rights and remedies
shall be cumulative and non-exclusive to the extent permitted by law. In
particular, but not by way of limitation of the foregoing, Agent may, without
notice, demand or legal process of any kind, take possession of any or all of
the Collateral (in addition to Collateral of which it already has possession),
wherever it may be found, and for that purpose may pursue the same wherever it
may be found, and may enter onto any of Obligors' premises where any of the
Collateral may be, and search for, take possession of, remove, keep and store
any of the Collateral until the same shall be sold or otherwise disposed of, and
Agent shall have the right to store the same at any of Obligors' premises
without cost to Agent or Lender. At Agent's request, each Obligor shall, at
Borrowers' expense, assemble the Collateral and make it available to Agent at
one or more places to be designated by Agent and reasonably convenient to Agent
and such Obligor. Each Obligor recognizes that if an Obligor fails to perform,
observe or discharge any of its Liabilities under this Agreement or the Other
Agreements, no remedy at law will provide adequate relief to Agent or Lender,
and agrees that Agent and Lender shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages. Any notification of intended disposition of any of the Collateral
required by law will be deemed to be a reasonable authenticated notification of
disposition if given at least ten (10) days prior to such disposition and such
notice shall (i) describe Agent, Lender and the applicable Obligor(s), (ii)
describe the Collateral that is the subject of the intended disposition, (iii)
state the method of the intended disposition, (iv) state that the applicable
Obligor(s) is entitled to an accounting of the Liabilities and state the charge,
if any, for an accounting and (v) state the time and place of any public
disposition or the time after which any private sale is to be made. Agent and
Lender may disclaim any warranties that might arise in connection with the sale,
lease or other disposition of the Collateral and have no obligation to provide
any warranties at such time. Any Proceeds of any disposition by Agent or Lender
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of any of the Collateral may be applied by Agent to the payment of expenses in
connection with the Collateral, including, without limitation, legal expenses
and reasonable attorneys' fees, and any balance of such Proceeds may be applied
by Agent or Lender toward the payment of such of the Liabilities, and in such
order of application, as Agent may from time to time elect.
17. CONDITIONS PRECEDENT.
The obligation of Lender to fund the Term Loans, to fund the initial
Revolving Loan, and to issue or cause to be issued the initial Letter of Credit,
if any, is subject to the satisfaction or waiver on or before the date hereof of
the following conditions precedent:
(a) Agent shall have received each of the agreements, opinions,
reports, approvals, consents, certificates and other documents set forth on the
closing document list attached hereto as SCHEDULE 17(a) (the "CLOSING DOCUMENT
LIST") in each case in form and substance satisfactory to Agent;
(b) Since the date of Agent's receipt of the most recent
financial statements of each Obligor, no event shall have occurred which has had
or could reasonably be expected to have a Material Adverse Effect on any
Obligor, as determined by Agent in its sole discretion;
(c) Agent shall have received payment in full of all fees and
expenses payable to it by Borrowers or any other Person in connection herewith,
on or before disbursement of the initial Loans hereunder;
(d) Agent shall have determined that immediately after giving
effect to (A) the making of the initial Loans, including without limitation the
Term Loans and the Revolving Loans, if any, requested to be made on the date
hereof, (B) the issuance of the initial Letter of Credit, if any, requested to
be made on such date, (C) the payment of all fees due upon such date and (D) the
payment or reimbursement by Borrowers of Agent for all closing costs and
expenses incurred in connection with the transactions contemplated hereby,
Covenant Obligors have Excess Availability of not less than Two Million Five
Hundred Thousand and 00/100 Dollars ($2,500,000.00);
(e) Obligors shall have delivered to Agent evidence that the
insurance required by SECTION 12(e) hereof is in place and is in full force and
effect;
(f) Agent shall have received landlord waiver agreements,
warehouseman's waiver agreements and processor letters for each leased location,
warehouse and/or processor location of each Obligor, each of which shall be in
form and content satisfactory to Agent;
(g) Agent shall have received a title insurance commitment for
the Boonton Property from a title insurance company acceptable to Agent (the
"TITLE COMPANY") insuring Agent's first priority mortgage lien on the Boonton
Property and otherwise in form and content satisfactory to Agent;
(h) Agent shall have received environmental reports for the
Boonton Property in form and content satisfactory to Agent in its sole
discretion;
(i) Agent shall have received and reviewed to its satisfaction
all documentation regarding the environmental issues described on SCHEDULE 11(f)
hereto, and Agent shall be satisfied, in its sole discretion, that reserves
established by Borrowers or Eligible Guarantors, as applicable, for such
environmental issues are sufficient;
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(j) Agent shall have received and reviewed to its satisfaction
all documentation regarding the ▇▇▇▇▇ ▇▇▇▇▇ litigation described on SCHEDULE
11(g) hereto, and Agent shall be satisfied, in its sole discretion, that
reserves established by Montevideo for such issues are sufficient;
(k) Agent shall have received and reviewed to its satisfaction a
current survey of the Boonton Property prepared by a licensed surveyor or
registered engineer, which survey is certified to and acceptable to Lender and
the Title Company;
(l) Agent shall have received and reviewed to its satisfaction
reference checks on Borrowers, Eligible Guarantors, all key officers and
managers of Borrowers and all key officers and managers of Eligible Guarantors;
(m) Agent shall have received and reviewed to its satisfaction
all documents evidencing indebtedness of Borrowers or the Eligible Guarantors
(other than the Loans);
(n) Agent shall have received an opinion of Obligors' counsel in
form and content satisfactory to Agent;
(o) Agent shall have received satisfactory evidence that
Industries has received a cash dividend resulting from the EME Sale of at least
Four Million Dollars ($4,000,000.00).
(p) Agent shall have received and reviewed to its satisfaction
the EME Sale Agreement and all other documents, instruments, agreements,
opinions and certificates executed or delivered in connection with the EME Sale.
(q) No material default exists under any obligations of any
Obligor to any third party or in any Obligor's compliance with any applicable
legal requirements; and
(r) The Obligors shall have executed and delivered to Agent and
Lender all such other documents, instruments and agreements which Agent or
Lender determines are reasonably necessary to consummate the transactions
contemplated hereby.
18. JOINT AND SEVERAL LIABILITY.
(a) Notwithstanding anything to the contrary contained herein,
all Liabilities of each Obligor hereunder shall be joint and several obligations
of Obligors.
(b) Notwithstanding any provisions of this Agreement to the
contrary, it is intended that the joint and several nature of the Liabilities of
Obligors and the liens and security interests granted by Obligors to secure the
Liabilities, not constitute a Fraudulent Conveyance (as defined below).
Consequently, Agent, Lender and Obligors agree that if the Liabilities of an
Obligor, or any liens or security interests granted by such Obligor securing the
Liabilities would, but for the application of this sentence, constitute a
Fraudulent Conveyance, the Liabilities of such Borrower and the liens and
security interests securing such Liabilities shall be valid and enforceable only
to the maximum extent that would not cause such Liabilities or such lien or
security interest to constitute a Fraudulent Conveyance, and the Liabilities of
such Obligor and this Agreement shall automatically be deemed to have been
amended accordingly. For purposes hereof, "FRAUDULENT CONVEYANCE" means a
fraudulent conveyance under Section 548 of Chapter 11 of Title II of the United
States Code (11 U.S.C. ss. 101, et seq.), as amended (the "BANKRUPTCY CODE") or
a fraudulent conveyance or fraudulent transfer under the applicable provisions
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of any fraudulent conveyance or fraudulent transfer law or similar law of any
state, nation or other governmental unit, as in effect from time to time.
(c) Each Obligor assumes responsibility for keeping itself
informed of the financial condition of each other Obligor, and any and all
endorsers and/or guarantors of any instrument or document evidencing all or any
part of such other Obligor's Liabilities and of all other circumstances bearing
upon the risk of nonpayment by such other Obligors of their Liabilities and each
Obligor agrees that neither Agent nor Lender shall have any duty to advise such
Obligor of information known to Agent or Lender regarding such condition or any
such circumstances or to undertake any investigation not a part of its regular
business routine. If Agent or Lender, in its sole discretion, undertakes at any
time or from time to time to provide any such information to an Obligor, neither
Agent nor Lender shall be under any obligation to update any such information or
to provide any such information to such Obligor on any subsequent occasion.
(d) Agent is hereby authorized, without notice or demand and
without affecting the liability of any Obligor hereunder, to, at any time and
from time to time, (i) renew, extend, accelerate or otherwise change the time
for payment of, or other terms relating to an Obligor's Liabilities or otherwise
modify, amend or change the terms of any promissory note or other agreement,
document or instrument now or hereafter executed by an Obligor and delivered to
Agent or Lender; (ii) accept partial payments on an Obligor's Liabilities; (iii)
take and hold security or collateral for the payment of an Obligor's Liabilities
hereunder or for the payment of any guaranties of an Obligor's Liabilities or
other liabilities of an Obligor and exchange, enforce, waive and release any
such security or collateral; (iv) apply such security or collateral and direct
the order or manner of sale thereof as Agent, in its sole discretion, may
determine; and (v) settle, release, compromise, collect or otherwise liquidate
an Obligor's Liabilities and any security or collateral therefor in any manner,
without affecting or impairing the obligations of the other Obligors. Agent
shall have the exclusive right to determine the time and manner of application
of any payments or credits, whether received from an Obligor or any other
source, and such determination shall be binding on such Obligor. All such
payments and credits may be applied, reversed and reapplied, in whole or in
part, to any of an Obligor's Liabilities as Agent shall determine in its sole
discretion without affecting the validity or enforceability of the Liabilities
of the other Obligors.
(e) Each Obligor hereby agrees that, except as hereinafter
provided, its obligations hereunder shall be unconditional, irrespective of (i)
the absence of any attempt to collect an Obligor's Liabilities from any Obligor
or other action to enforce the same; (ii) the waiver or consent by Agent or
Lender with respect to any provision of any instrument evidencing an Obligor's
Liabilities, or any part thereof, or any other agreement heretofore, now or
hereafter executed by an Obligor and delivered to Agent or Lender; (iii) failure
by Agent or Lender to take any steps to perfect and maintain its security
interest in, or to preserve its rights to, any security or collateral for an
Obligor's Liabilities; (iv) the institution of any proceeding under the
Bankruptcy Code, or any similar proceeding, by or against an Obligor's or
Agent's or Lender's election in any such proceeding of the application of
Section 1111(b)(2) of the Bankruptcy Code; (v) any borrowing or grant of a
security interest by any Obligor as debtor-in-possession, under Section 364 of
the Bankruptcy Code; (vi) the disallowance, under Section 502 of the Bankruptcy
Code, of all or any portion of Agent's or Lender's claim(s) for repayment of any
of Obligors' Liabilities; or (vii) any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor.
(f) Any right of subrogation or other right to payment which an
Obligor may have against another Obligor with regard to payments made by or for
the account of an Obligor including, without limitation, a payment made by an
Obligor on behalf obligations pursuant to the Intercompany Agreement or the
Intercompany Notes, if any, shall not be exercised against an Obligor or any
property of an Obligor until the Liabilities have been repaid in full and this
Agreement is terminated.
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19. NON LIABILITY OF AGENT AND LENDER.
The relationships between Borrowers, Agent and Lender shall be
solely that of borrower and lender. Neither Agent nor Lender have any fiduciary
responsibilities to any Obligor. Neither Agent nor Lender undertakes any
responsibility to any Obligor to review or inform any Obligor of any matter in
connection with any phase of any Obligor's business or operations.
20. INDEMNIFICATION.
Each Obligor agrees to defend (with counsel satisfactory to Agent),
protect, indemnify and hold harmless Agent and Lender, each affiliate or
subsidiary of Agent and Lender, and each of their respective officers,
directors, employees, attorneys and agents (each an "INDEMNIFIED PARTY") from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature (including, without limitation, the disbursements and the reasonable
fees of counsel for each Indemnified Party in connection with any investigative,
administrative or judicial proceeding, whether or not the Indemnified Party
shall be designated a party thereto), which may be imposed on, incurred by, or
asserted against, any Indemnified Party (whether direct, indirect or
consequential and whether based on any federal, state or local laws or
regulations, including, without limitation, securities laws and regulations,
Environmental Laws and commercial laws and regulations, under common law or in
equity, or based on contract or otherwise) in any manner relating to or arising
out of this Agreement or any Other Agreement, or any act, event or transaction
related or attendant thereto, the making or issuance and the management of the
Loans or any Letters of Credit or the use or intended use of the proceeds of the
Loans or any Letters of Credit; provided, however, that no Obligor shall have
any obligation hereunder to any Indemnified Party with respect to matters caused
by or resulting from the willful misconduct or gross negligence of such
Indemnified Party. To the extent that the undertaking to indemnify set forth in
the preceding sentence may be unenforceable because it is violative of any law
or public policy, each Obligor shall satisfy such undertaking to the maximum
extent permitted by applicable law. Any liability, obligation, loss, damage,
penalty, cost or expense covered by this indemnity shall be paid to each
Indemnified Party on demand, and, failing prompt payment, shall, together with
interest thereon at the highest rate then applicable to Loans hereunder from the
date incurred by each Indemnified Party until paid by Obligors, be added to the
Liabilities of Borrowers and be secured by the Collateral. The provisions of
this SECTION 20 shall survive the satisfaction and payment of the other
Liabilities and the termination of this Agreement.
21. NOTICE.
(s) All written notices and other written communications with
respect to this Agreement and the Other Agreements shall be sent by ordinary,
certified or overnight mail, by telecopy or delivered in person, and in the case
of Agent shall be sent to it at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Vice President, facsimile
number: (▇▇▇) ▇▇▇-▇▇▇▇, and in the case of Obligors shall be sent to them at
their respective principal places of business set forth in the introductory
paragraph hereof or as otherwise directed by Obligors in writing. All notices
shall be deemed received upon actual receipt thereof or refusal of delivery.
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22. CHOICE OF GOVERNING LAW; CONSTRUCTION; FORUM SELECTION.
This Agreement and the Other Agreements are submitted by Borrowers
to Agent for Agent's acceptance or rejection at Agent's principal place of
business as an offer by Borrowers to borrow monies from Lender now and from time
to time hereafter, and shall not be binding upon Agent or Lender or become
effective until accepted by Agent or Lender, in writing, at said place of
business. If so accepted by Agent and Lender, this Agreement and the Other
Agreements shall be deemed to have been made at said place of business. THIS
AGREEMENT AND THE OTHER AGREEMENTS SHALL BE GOVERNED AND CONTROLLED BY THE
INTERNAL LAWS OF THE COMMONWEALTH OF PENNSYLVANIA AS TO INTERPRETATION,
ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT, AND IN ALL OTHER RESPECTS,
INCLUDING, WITHOUT LIMITATION, THE LEGALITY OF THE INTEREST RATE AND OTHER
CHARGES. If any provision of this Agreement shall be held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or remaining provisions of this Agreement.
To induce Agent and Lender to accept this Agreement, each Obligor
irrevocably agrees that, subject to Agent'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 OTHER AGREEMENTS OR THE COLLATERAL SHALL BE
LITIGATED IN COURTS HAVING SITES WITHIN THE CITY OF PHILADELPHIA, COMMONWEALTH
OF PENNSYLVANIA. EACH OBLIGOR HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF
ANY LOCAL, STATE OR FEDERAL COURTS LOCATED WITHIN SAID CITY AND STATE. EACH
OBLIGOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT
ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON SUCH OBLIGOR BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO SUCH BORROWER, AT THE
ADDRESS SET FORTH FOR NOTICE IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE
COMPLETE FIVE (5) DAYS AFTER THE SAME HAS BEEN POSTED. EACH OBLIGOR HEREBY
WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION
BROUGHT AGAINST SUCH OBLIGOR BY AGENT OR LENDER IN ACCORDANCE WITH THIS SECTION.
23. MODIFICATION AND BENEFIT OF AGREEMENT.
This Agreement and the Other Agreements may not be modified, altered
or amended except by an agreement in writing signed by each Obligor or such
other Person who is a party to such Other Agreement and Agent. No Obligor may
sell, assign or transfer this Agreement, or the Other Agreements or any portion
thereof, including, without limitation, such Obligor's rights, titles, interest,
remedies, powers or duties hereunder and thereunder. Each Obligor hereby
consents to Lender's sale, assignment, transfer or other disposition, at any
time and from time to time hereafter, of this Agreement, or the Other
Agreements, or of any portion thereof, or participations therein, including,
without limitation, Lender's rights, titles, interest, remedies, powers and/or
duties and agrees that it shall execute and deliver such documents as Agent and
Lender may request in connection with any such sale, assignment, transfer or
other disposition.
24. HEADINGS OF SUBDIVISIONS.
The headings of subdivisions in this Agreement are for convenience
of reference only, and shall not govern the interpretation of any of the
provisions of this Agreement.
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25. POWER OF ATTORNEY.
Each Obligor acknowledges and agrees that its appointment of Agent
as its attorney and agent-in-fact for the purposes specified in this Agreement
is an appointment coupled with an interest and shall be irrevocable until all of
the Liabilities are satisfied and paid in full and this Agreement is terminated.
26. CONFIDENTIALITY.
Obligors, Agent and Lender hereby agree and acknowledge that any and
all information relating to an Obligor which is (i) furnished by such Obligor to
Agent or Lender (or to any affiliate of Agent or Lender); and (ii) non-public,
confidential or proprietary in nature, shall be kept confidential by Agent or
Lender or such affiliate in accordance with applicable law; provided, HOWEVER,
that such information and other credit information relating to such Obligor may
be distributed by Agent, Lender or such affiliate to Agent's, Lender's or such
affiliate's directors, officers, employees, attorneys, affiliates, assignees,
participants, auditors, agents and regulators, and upon the order of a court or
other governmental agency having jurisdiction over Agent, Lender or such
affiliate, to any other party. Each Obligor, Agent and Lender further agree that
this provision shall survive the termination of this Agreement. Notwithstanding
the foregoing, each Obligor hereby consents to Agent and/or Lender publishing a
tombstone or similar advertising material relating to the financing transaction
contemplated by this Agreement.
27. COUNTERPARTS.
This Agreement, any of the Other Agreements and any amendments,
waivers, consents or supplements may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which, when so
executed and delivered, shall be deemed an original, but all of which
counterparts together shall constitute but one agreement.
28. ELECTRONIC SUBMISSIONS.
Upon not less than thirty (30) days' prior written notice (the
"APPROVED ELECTRONIC FORM NOTICE"), Agent may permit or require that any of the
documents, certificates, forms, deliveries or other communications, authorized,
required or contemplated by this Agreement or the Other Agreements, be submitted
to Agent in "APPROVED ELECTRONIC FORM" (as hereafter defined), subject to any
reasonable terms, conditions and requirements in the applicable Approved
Electronic Forms Notice. For purposes hereof "ELECTRONIC FORM" means e-mail,
e-mail attachments, data submitted on web-based forms or any other communication
method that delivers machine readable data or information to Agent, and
"APPROVED ELECTRONIC FORM" means an Electronic Form that has been approved in
writing by Agent (which approval has not been revoked or modified by Agent) and
sent to Obligor in an Approved Electronic Form Notice. Except as otherwise
specifically provided in the applicable Approved Electronic Form Notice, any
submissions made in an applicable Approved Electronic Form shall have the same
force and effect that the same submissions would have had if they had been
submitted in any other applicable form authorized, required or contemplated by
this Agreement or the Other Agreements.
29. LASALLE BUSINESS CREDIT LLC, AS AGENT.
Lender has appointed Agent as its agent to act on its behalf under
the credit facility pursuant to the terms of an Agency Services Agreement
between Agent and Lender dated May 7, 2001. If at any time Lender or Agent
elects to terminate the agency relationship, Agent or Lender shall give thirty
(30) days prior written notice of such event to Borrowers. Thereafter, all
rights and obligations of Agent contained in this Agreement shall revert to
Lender or another Agent, if Lender appoints a new agent.
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30. BORROWING AGENCY.
(a) BORROWING AGENCY PROVISIONS.
(i) Each Borrower hereby irrevocably designates Borrowing Agent
to be its attorney and agent and in such capacity to borrow, sign and endorse
notes, and execute and deliver all instruments, documents, writings and further
assurances now or hereafter required hereunder, on behalf of such Borrower or
Borrowers, and hereby authorizes Agent and Lender to pay over or credit all
proceeds of the Loans hereunder in accordance with the request of Borrowing
Agent.
(ii) The handling of this credit facility as a co-borrowing
facility with a Borrowing Agent in the manner set forth in this Agreement is
solely as an accommodation to Borrowers and at their request. Neither Agent nor
Lender shall incur liability to Borrowers as a result thereof. To induce Agent
and Lender to do so and in consideration thereof, each Borrower hereby
indemnifies Agent and Lender and holds Agent and Lender harmless from and
against any and all liabilities, expenses, losses, damages and claims of damage
or injury asserted against Agent or Lender by any Person arising from or
incurred by reason of the handling of the financing arrangements of Borrowers as
provided herein, reliance by Agent or Lender on any request or instruction from
Borrowing Agent or any Borrower or any other action taken by Agent or Lender
with respect to this SECTION 30(a) except due to willful misconduct or gross
(not mere) negligence by the indemnified party.
(iii) All Borrowers' Liabilities shall be joint and several,
and each Borrower shall make payment upon the maturity of the Liabilities by
acceleration or otherwise, and such obligation and liability on the part of each
Borrower shall in no way be affected by any extensions, renewals and forbearance
granted by Agent or Lender to any Borrower, failure of Agent or Lender to give
any Borrower notice of borrowing or any other notice, any failure of Agent or
Lender to pursue or preserve its rights against any Borrower, the release by
Agent or Lender of any Collateral now or thereafter acquired from any Borrower,
and such agreement by each Borrower to pay upon any notice issued pursuant
thereto is unconditional and unaffected by prior recourse by Agent or Lender to
the other Borrowers or any Collateral for such Borrower's Liabilities or the
lack thereof.
(b) SUBORDINATION. Each Obligor expressly subordinates to Agent
and Lender any and all rights of subrogation, reimbursement, indemnity,
exoneration, contribution of any other claim which such Obligor may now or
hereafter have against the other Obligors or other Person directly or
contingently liable for the Liabilities hereunder, or against or with respect to
the other Obligors' property (including, without limitation, any property which
is Collateral for the Liabilities), arising from the existence or performance of
this Agreement, until termination of this Agreement and repayment in full of the
Liabilities.
31. WAIVER OF JURY TRIAL; OTHER WAIVERS.
(a) OBLIGORS, AGENT AND LENDER EACH HEREBY WAIVES ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY
TO THIS AGREEMENT, ANY OF THE OTHER AGREEMENTS, THE LIABILITIES, THE COLLATERAL,
ANY ALLEGED TORTIOUS CONDUCT BY AN OBLIGOR, AGENT OR LENDER OR WHICH, IN ANY
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WAY, DIRECTLY OR INDIRECTLY, ARISES OUT OF OR RELATES TO THE RELATIONSHIP
BETWEEN AN OBLIGOR AND AGENT OR AN OBLIGOR AND LENDER. IN NO EVENT SHALL AGENT
OR LENDER BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES.
(b) Each Obligor hereby waives demand, presentment, protest and
notice of nonpayment, and further waives the benefit of all valuation, appraisal
and exemption laws.
(c) Each Obligor hereby waives the benefit of any law that would
otherwise restrict or limit Agent or Lender or any affiliate of Agent or Lender
in the exercise of its right, which is hereby acknowledged and agreed to, to
set-off against the Liabilities, without notice at any time hereafter, any
indebtedness, matured or unmatured, owing by Agent or Lender or such affiliate
of Agent or Lender to such Obligor, including, without limitation any deposit
account at Agent or Lender or such affiliate.
(d) EACH OBLIGOR HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING
OF ANY KIND PRIOR TO THE EXERCISE BY AGENT OR LENDER OF ITS RIGHTS TO REPOSSESS
THE COLLATERAL OF SUCH OBLIGOR WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR
LEVY UPON SUCH COLLATERAL.
(e) Agent's and/or Lender's failure, at any time or times
hereafter, to require strict performance by an Obligor of any provision of this
Agreement or any of the Other Agreements shall not waive, affect or diminish any
right of Agent or Lender thereafter to demand strict compliance and performance
therewith. Any suspension or waiver by Agent or Lender of an Event of Default
under this Agreement or any default under any of the Other Agreements shall not
suspend, waive or affect any other Event of Default under this Agreement or any
other default under any of the Other Agreements, whether the same is prior or
subsequent thereto and whether of the same or of a different kind or character.
No delay on the part of Agent or Lender in the exercise of any right or remedy
under this Agreement or any Other Agreement shall preclude other or further
exercise thereof or the exercise of any right or remedy. None of the
undertakings, agreements, warranties, covenants and representations of Obligors
contained in this Agreement or any of the Other Agreements and no Event of
Default under this Agreement or default under any of the Other Agreements shall
be deemed to have been suspended or waived by Agent or Lender unless such
suspension or waiver is in writing, signed by a duly authorized officer of Agent
and Lender and directed to Obligors specifying such suspension or waiver.
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IN WITNESS WHEREOF, intending to be legally bound hereby, the
parties hereto have duly executed this Agreement as of the date first written
above.
BORROWERS:
SL INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, Vice President
SL DELAWARE, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, Vice President
GUARANTORS:
CONDOR D.C. POWER SUPPLIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, Secretary
TEAL ELECTRONICS CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, Secretary
RFL ELECTRONICS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, Secretary
SL MONTEVIDEO TECHNOLOGY, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, Secretary
SL SURFACE TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, Secretary
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SL AUBURN, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, Secretary
WABER POWER, LTD.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, Secretary
CONDOR HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, President
CEDAR CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, Secretary
SLW HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, Secretary
SL DELAWARE HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, Vice President
AGENT:
LASALLE BUSINESS CREDIT LLC, AS AGENT
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Vice President
LENDER:
STANDARD FEDERAL NATIONAL ASSOCIATION,
AS LENDER
By: /s/
------------------------------------
Group Sr. , Vice President
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Exhibit A - Business and Collateral Locations
Exhibit B - Compliance Certificate
Exhibit C - Commercial Tort Claims
Schedule 1 - Permitted Liens
Schedule 11(c) Loans by Obligors
Schedule 11(f) - Borrowers' States Of Incorporation And Organizational Ids
Schedule 11(g) - Litigation
Schedule 11(i) - Affiliate Transactions
Schedule 11(j) - Names & Trade Names
Schedule 11(n) - Indebtedness
Schedule 11(p) - Parent, Subsidiaries And Affiliates
Schedule 11(t) - Existing Environmental Issues
Schedule 13(k) - Assets of SL Delaware and Non-Operating Subsidiaries
Schedule 17(a) - Closing Document List
EXHIBIT A - BUSINESS AND COLLATERAL LOCATIONS
Attached to and made a part of that certain Loan and Security
Agreement of even date herewith among STANDARD FEDERAL NATIONAL ASSOCIATION,
LASALLE BUSINESS CREDIT LLC, SL INDUSTRIES, INC., SL DELAWARE, INC., SL DELAWARE
HOLDINGS, INC., CONDOR D.C. POWER SUPPLIES, INC., TEAL ELECTRONICS CORPORATION,
RFL ELECTRONICS, INC., SL MONTEVIDEO TECHNOLOGY, INC., SL SURFACE TECHNOLOGIES,
INC., SL AUBURN, INC., WABER POWER LTD., SLW HOLDINGS, INC., CONDOR HOLDINGS,
INC. AND CEDAR CORPORATION. Borrowers and Guarantors are referred to herein,
collectively, as "OBLIGORS" and each as an "OBLIGOR").
A. Each Obligor's business locations (please indicate which location is
the principal place of business and at which locations originals and
all copies of each Obligor's books, records and accounts are kept).
B. Other locations of Collateral (including, without limitation,
warehouse locations, processing locations, consignment locations)
and all post office boxes of each Obligor. Please indicate the
relationship of such location to each Obligor (i.e., public
warehouse, processor, etc.).
C. Bank Accounts of each Obligor (other than those at LaSalle Bank
National Association):
Obligor Bank (with address) Account Number Type of Account
------- ------------------- -------------- ---------------
EXHIBIT B - COMPLIANCE CERTIFICATE
Attached to and made a part of that certain Loan and Security
Agreement of even date herewith among STANDARD FEDERAL NATIONAL ASSOCIATION,
LASALLE BUSINESS CREDIT LLC, SL INDUSTRIES, INC., SL DELAWARE, INC., SL DELAWARE
HOLDINGS, INC., CONDOR D.C. POWER SUPPLIES, INC., TEAL ELECTRONICS CORPORATION,
RFL ELECTRONICS, INC., SL MONTEVIDEO TECHNOLOGY, INC., SL SURFACE TECHNOLOGIES,
INC., SL AUBURN, INC., WABER POWER LTD., SLW HOLDINGS, INC., CONDOR HOLDINGS,
INC. AND CEDAR CORPORATION. Borrowers and Guarantors are referred to herein,
collectively, as "OBLIGORS" and each as an "OBLIGOR").
This Certificate is submitted pursuant to SECTION 9 of the
Agreement.
The undersigned hereby certifies to Agent and Lender that as of the
date of this Certificate:
Manually Numbered
1. The undersigned is the _____________________ of __________.
2. There exists no Event of Default or Default, as those terms are
defined in the Agreement, or, if such an event of circumstance exists, a writing
attached hereto specifies the nature thereof, the period of existence thereof
and the action that Obligors have taken or proposes to take with respect
thereto.
3. No material adverse change in the condition, financial or
otherwise, business, property, or results of operations of Obligors has occurred
since [DATE OF LAST COMPLIANCE CERTIFICATE/LAST FINANCIAL STATEMENTS DELIVERED
PRIOR TO CLOSING], or, if such a change has occurred, a writing attached hereto
specifies the nature thereof and the action that Obligors have taken or proposes
to take with respect thereto.
4. Obligors are in compliance in all material respects with the
representations, warranties and covenants in the Agreement, or, if Obligors are
not in compliance with any representations, warranties or covenants in the
Agreement, a writing attached hereto specifies the nature thereof, the period of
existence thereof and the action that Obligors have taken or proposes to take
with respect thereto.
5. The financial statements of each Obligor being concurrently
delivered herewith have been prepared in accordance with generally accepted
accounting principles consistently applied and there have been no material
changes in accounting policies or financial reporting practices of any Obligor
since [DATE OF THE LAST COMPLIANCE CERTIFICATE/DATE OF LAST FINANCIAL STATEMENTS
DELIVERED PRIOR TO CLOSING] or, if any such change has occurred, such changes
are set forth in a writing attached hereto.
6. Attached hereto is a true and correct calculation of the
financial covenants contained in the Agreement.
-----------------------------------------
By:______________________________________
Title:___________________________________
-----------------------------------------
By:______________________________________
Title:___________________________________
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