EXHIBIT 10.24
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SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
DATED AS OF OCTOBER 9, ▇▇▇▇
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TABLE OF CONTENTS
PAGE
1. DEFINITIONS AND OTHER TERMS.............................................. 2
1.1 Definitions......................................................... 2
1.2 Other Definitional Provisions....................................... 12
1.3 Interpretation of Agreement......................................... 13
1.4 Compliance with Financial Restrictions.............................. 13
2. LOANS; OTHER MATTERS..................................................... 13
2.1 Term Loan........................................................... 13
2.2 Loan Account; Demand Deposit Account................................ 13
2.3 Interest and Fees................................................... 14
2.3.1 Interest................................................... 14
2.3.2 Additional Fee............................................. 14
2.3.3 Method of Calculating Interest and Fees.................... 14
2.3.4 Payment of Interest and Fees................................14
2.4 Note ............................................................ 14
2.5 One Obligation...................................................... 14
2.6 Making of Payments; Application of Collections;
Charging of Accounts........................................ 15
2.7 Lender's Election Not to Enforce.................................... 16
2.8 Setoff ............................................................ 16
2.9 Refinancing Fee..................................................... 17
3. COLLATERAL............................................................... 17
3.1 Grant of Security Interest.......................................... 17
3.2 Accounts Receivable................................................. 18
3.3 Inventory........................................................... 22
3.4 Equipment........................................................... 23
3.5 Supplemental Documentation.......................................... 23
3.6 Other Security...................................................... 24
4. REPRESENTATIONS AND WARRANTIES........................................... 24
4.1 Organization........................................................ 24
4.2 Authorization....................................................... 25
4.3 No Conflicts........................................................ 25
4.4 Validity and Binding Effect......................................... 25
4.5 No Default.......................................................... 25
4.6 Financial Statements................................................ 26
4.7 Insurance........................................................... 26
4.8 Litigation; Contingent Liabilities.................................. 26
4.9 Liens ............................................................ 26
4.10 Subsidiaries....................................................... 27
4.11 Partnerships; Joint Ventures....................................... 27
4.12 Business and Collateral Locations.................................. 27
4.13 Real Property...................................................... 28
4.14 [Intentionally Left Blank.]........................................ 28
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4.15 Control of Collateral; Lease of Property.......................... 28
4.16 Patents, Trademarks, etc.......................................... 28
4.17 Solvency.......................................................... 28
4.18 Contracts; Labor Matters.......................................... 28
4.19 Pension and Welfare Plans......................................... 29
4.20 Regulation U...................................................... 30
4.21 Compliance........................................................ 30
4.22 Taxes ........................................................... 30
4.23 Investment Company Act Representation............................. 30
4.24 Public Utility Holding Company Act
Representation.................................................. 30
4.25 Environmental and Safety and Health Matters....................... 30
4.26 Related Agreements................................................ 31
5. BORROWER COVENANTS....................................................... 32
5.1 Financial Statements and Other Reports............................. 32
5.1.1 Financial Reports......................................... 32
(a) Annual Audit Report................................. 32
(b) Quarterly Financial Statement....................... 32
(c) Monthly Financial Statement......................... 32
(d) Officer's Certificate............................... 33
5.1.2 Other Reports............................................. 33
(a) SEC and Other Reports............................... 33
(b) Report of Change Relating to
Borrower, Subsidiaries, Partnerships
or Joint Ventures................................... 33
(c) Patents, etc........................................ 33
(d) Other Reports....................................... 33
5.2 Notices ........................................................... 33
(a) Default...................................................34
(b) Litigation................................................34
(c) Judgment..................................................34
(d) Pension Plans and Welfare Plans...........................34
(e) Business and Collateral Information.......................34
(f) Change of Name or Status..................................35
(g) Insurance Information.....................................35
(h) Environmental and Safety and Health
Matters...................................................35
(i) Material Adverse Change...................................35
(j) Default by Others.........................................35
(k) Moveable Collateral.......................................35
(l) Change in Management or Line(s) of
Business..................................................36
(m) Other Notices.............................................36
5.3 Existence...........................................................36
5.4 Nature of Business..................................................36
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5.5 Books, Records and Access..........................................36
5.6 Insurance..........................................................37
5.7 Insurance Survey...................................................38
5.8 Repair ...........................................................38
5.9 Taxes ...........................................................38
5.10 Compliance........................................................39
5.11 Pension Plans.....................................................39
5.12 Merger, Purchase and Sale.........................................39
5.13 Restricted Payments...............................................40
5.14 Borrower's and Subsidiaries' Stock................................41
5.15 Indebtedness......................................................41
5.16 Liens ...........................................................42
5.17 Guaranties........................................................42
5.18 Investments.......................................................42
5.19 Subsidiaries......................................................43
5.20 Leases ...........................................................43
5.21 Change in Accounts Receivable.....................................43
5.22 Future Environmental Assessments..................................43
5.23 [Intenionally Left Blank].........................................44
5.24 Unconditional Purchase Options....................................44
5.25 Use of Proceeds...................................................44
5.26 Transactions with Related Parties................................ 44
5.27 Modification of Subordinated Debt, etc............................45
5.28 Restrictive Agreements............................................45
5.29 Inconsistent Agreements...........................................45
5.30 Stock Appreciation Plan...........................................45
6. DEFAULT.................................................................. 46
6.1 Event of Default...................................................46
(a) Non-Payment.................................................46
(b) Non-Payment of Other Indebtedness...........................46
(c) Acceleration of Other Indebtedness..........................46
(d) Other Obligations...........................................46
(e) Insolvency..................................................47
(f) Pension Plans...............................................47
(g) Non-Compliance With This Agreement..........................48
(h) Non-Compliance With Related Agreements......................48
(i) Warranty....................................................48
(j) Litigation..................................................48
(k) Validity....................................................48
(l) Conduct of Business.........................................49
(m) Board Membership............................................49
(n) Material Adverse Change.....................................49
(o) Other Loan Agreements.......................................49
6.2 Effect of Event of Default; Remedies...............................49
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7. ADDITIONAL PROVISIONS REGARDING COLLATERAL AND LENDER'S
RIGHTS............................................................. 50
7.1 Notice of Disposition of Collateral.......................... 50
7.2 Application of Proceeds of Collateral........................ 50
7.3 Care of Collateral........................................... 51
7.4 Performance of Borrower's Obligations........................ 51
7.5 Lender's Rights.............................................. 51
8. CONDITIONS PRECEDENT; DELIVERY OF DOCUMENTS AND OTHER
MATTERS............................................................ 52
8.1 Conditions Precedent.................................. 52
8.1.1 Security Interest.............................. 52
8.1.2 Financial Statements........................... 52
8.1.3 Other Loan Agreements.......................... 52
8.1.4 Blocked Account; Lock Box...................... 52
8.1.5 Effect of Law.................................. 52
8.1.6 Exhibits; Schedules............................ 52
8.1.7 Fees........................................... 53
8.1.8 Documents...................................... 53
(a) Resolutions...................................... 53
(b) Incumbency Certificates.......................... 53
(c) Borrower's Certificate........................ 53
(d) Accountant's Letter........................... 53
(e) Bylaws........................................ 54
(f) Charter....................................... 54
(g) Registration; Good Standing................... 54
(h) Legal Opinion................................. 54
(i) Insurance..................................... 54
(j) Landlord's Consents........................... 54
(k) Note............................................. 54
(l) Guaranty......................................... 54
(m) Pledge Agreement................................. 54
(n) Other Documents............................... 55
8.2 Further Conditions Precedent; Certification........... 55
(a) No Change in Condition........................ 55
(b) Default....................................... 55
(c) Insurance..................................... 55
(d) Warranties.................................... 55
(e) Accounting Methods............................ 55
9. INDEMNITY............................................................... 56
9.1 Environmental and Safety and Health Indemnity......... 56
9.2 General Indemnity..................................... 56
9.3 Capital Adequacy...................................... 57
9.4 Other Indemnities..................................... 57
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10. ADDITIONAL PROVISIONS................................................... 57
11. GENERAL..................................................................58
11.1 Borrower Waiver................................................58
11.2 Power of Attorney..............................................58
11.3 Expenses; Attorneys' Fees......................................59
11.4 Lender Fees and Charges........................................60
11.5 Lawful Interest................................................60
11.6 No Waiver by Lender; Amendments................................60
11.7 Termination of Credit..........................................60
11.8 Notices........................................................61
11.9 Assignments and Participations; Information....................61
11.10 Severability..................................................62
11.11 Successors....................................................62
11.12 Construction..................................................62
11.13 Consent to Jurisdiction.......................................62
11.14 Subsidiary Reference..........................................62
11.15 WAIVER OF JURY TRIAL..........................................63
11.16 Prior Actions.................................................63
12. BORROWER GUARANTY....................................................63
12.1 Guaranty of Payment............................................63
12.2 Obligations Absolute, Unconditional, etc.......................63
12.3 Waiver of All Defenses.........................................65
12.4 Payment, etc., by Borrower.....................................67
12.5 Subrogation....................................................68
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LIST OF EXHIBITS AND SCHEDULES
Exhibits:
Exhibit A [Reserved]
Exhibit B [Reserved]
Exhibit C Form of Term Note
Exhibit D Form of Insurance Endorsement (ss.5.6)
Exhibit E Form of Pledge Agreement
Exhibit F [Reserved]
Exhibit G Form of Guaranty
Exhibit H Form of Landlord's Consent
Exhibit I Form of Borrower's Counsel Opinion (ss.8.1.8(h))
Schedules:
Schedule 4.1 Borrower Trade Names, State of Incorporation
& Qualification
Schedule 4.3 Schedule of Conflicts
Schedule 4.5 Schedule of Defaults
Schedule 4.7 Insurance Summary
Schedule 4.8 Schedule of Litigation & Contingent Liabilities
Schedule 4.9 Schedule of Liens
Schedule 4.10 Schedule of Subsidiaries
Schedule 4.11 Schedule of Partnerships & Joint Ventures
Schedule 4.12 Schedule of Business & Collateral Locations
Schedule 4.13 Schedule of Real Property Descriptions and
Owners
Schedule 4.15 Schedule of Leases
Schedule 4.16 Schedule of Patents, Trademarks & Copyrights
Schedule 4.18 Schedule of Labor Matters
Schedule 4.19 Schedule of Contingent Employee Benefit Plan
Liabilities
Schedule 4.21 Schedule of Noncompliance
Schedule 4.25 Schedule of Environmental Matters
Schedule 5.13 Schedule of Restricted Payments
Schedule 5.15 Schedule of Indebtedness
Schedule 5.18 Schedule of Investments
Schedule 5.28 Schedule of Restrictive Agreements
vi
SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (as from
time to time amended, modified or supplemented, this "Agreement") is made as of
the 9th day of October, 1995 by and between BANK OF AMERICA ILLINOIS (formerly
Continental Bank N.A.), an Illinois banking corporation, having its principal
office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Lender"), and
AZIMUTH CORPORATION, a Delaware corporation ("Borrower").
RECITALS
1. On January 16, 1991, Borrower and Lender entered into a Loan
Agreement (such Loan Agreement, as amended to the date hereof, being herein
referred to as the "Original Loan Agreement"; and the other capitalized terms
used herein shall have the meanings set forth in Section 1.1) pursuant to which
Lender has made revolving loans and a term loan to Borrower.
2. Borrower and Lender desire that the Original Loan Agreement be
amended and restated on the terms and conditions set forth herein to, among
other things, set forth the terms and conditions under which Lender hereafter
will extend Loans to Borrower; it being the intention of Borrower and Lender
that this Agreement and the execution and delivery of any substituted promissory
notes not effect a novation of the obligations of Borrower to Lender under the
Original Loan Agreement but merely a restatement and, where applicable, a
substitution of the terms governing and evidencing such obligations hereafter.
3. As security for the loans made or to be made by Lender to, or for
the account of, Borrower, (a) Borrower has caused Borrower's Subsidiaries,
Delaware Electro Industries, Inc., a Delaware corporation ("Delaware"), Contempo
Design, Inc., an Illinois corporation ("Contempo"), and Contempo Design West,
Inc., a Delaware corporation ("Contempo West"), to grant Lender a lien on, and a
security interest in, all of their respective assets, (b) Borrower has executed
and delivered a pledge of all or a majority of the issued and outstanding
capital stock of Delaware, Contempo and Contempo West, and (c) Delaware,
Contempo and Contempo West have executed a guaranty whereby such companies
jointly and severally guaranty the full and prompt payment and performance of
all obligations of Borrower to Lender in connection with the Original Loan
Agreement.
4. Concurrently with the consummation of the transactions
contemplated hereby, each of Delaware, Contempo and Contempo West will enter
into a Loan and Security Agreement and related
documentation with Lender whereby Delaware, Contempo and Contempo West shall
each assume a portion of the "Liabilities" under and as defined in the Original
Loan Agreement that are represented by "Revolving Loans" under and as defined in
the Original Loan Agreement. Borrower shall guarantee the payment and
performance of such assumed liabilities and all other obligations of Delaware,
Contempo and Contempo West to Lender (and each such entity shall guarantee the
payment and performance of all obligations of the other such entities to
Lender).
Accordingly, in consideration of the mutual agreements contained
herein, and subject to the terms and conditions hereof, the Original Loan
Agreement is hereby amended and restated in its entirety, and the parties hereto
agree, as follows:
1. DEFINITIONS AND OTHER TERMS.
1.1 Definitions. In addition to terms defined elsewhere in this
Agreement or any Supplement, Schedule or Exhibit hereto, when used herein, the
following terms shall have the following meanings (such meanings shall be
equally applicable to the singular and plural forms of the terms used, as the
context requires):
"Account Debtor" shall mean any Person who is or who may
become obligated to Borrower or any other Obligor, as applicable, under, with
respect to, or on account of an Account Receivable, Contract Right, General
Intangible or other Collateral or Third
Party Collateral.
"Account Receivable" shall mean any account of Borrower and
any other right of Borrower or any other Obligor, as applicable, to payment,
whether or not evidenced by an instrument or chattel paper and whether or not
yet earned by performance (excluding any Contract Right).
"Assignee Deposit Account" shall have the meaning ascribed to
such term in Section 3.2(d).
"Attorneys' Fees" shall mean the reasonable value of the
services (and reasonable costs, charges and expenses related thereto) of the
attorneys (and all paralegals, secretaries, accountants and other staff employed
by such attorneys) employed by Lender (including, but not limited to, attorneys
and paralegals who are employees of Lender) from time to time (i) in connection
with the negotiation, preparation, execution, delivery, administration and
enforcement of this Agreement, any Related Agreement, any Supplemental
Documentation and all other documents or instruments provided for herein or in
any thereof or delivered or to be delivered hereunder or under any thereof or in
connection herewith or with any thereof, (ii) to prepare documentation related
to the Loans made and other Liabilities incurred hereunder, (iii) to
2
prepare any amendment to or waiver under this Agreement or any Related Agreement
and any documents or instruments related thereto, (iv) to represent Lender in
any litigation, contest, dispute, suit or proceeding or to commence, defend or
intervene in any litigation, contest, dispute, suit or proceeding or to file a
petition, complaint, answer, motion or other pleading, or to take any other
action in or with respect to, any litigation, contest, dispute, suit or
proceeding (whether instituted by Lender, Borrower or any other Person and
whether in bankruptcy or otherwise) in any way or respect relating to the
Collateral, any Third Party Collateral, this Agreement or any Related Agreement,
or Borrower's or any other Obligor's or any Subsidiary's affairs, (v) to
protect, collect, lease, sell, take possession of, or liquidate any of the
Collateral or any Third Party Collateral, (vi) to attempt to enforce any
security interest in any of the Collateral or any Third Party Collateral or to
give any advice with respect to such enforcement and (vii) to enforce any of
Lender's rights to collect any of the Liabilities.
"Banking Day" shall mean any day other than a Saturday, Sunday
or legal holiday on which banks are authorized or required to be closed for the
conduct of commercial banking business in Chicago, Illinois.
"Borrower" -- see Preamble.
"Capitalized Lease" shall mean any lease which is or should be
capitalized on the balance sheet of the lessee in accordance with GAAP.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of the Code shall be construed to also refer to any successor
sections.
"Collateral" shall have the meaning ascribed to such term in
Section 3.1, and, where the context requires, shall include "Collateral" as such
term is defined in each Other Loan Agreement.
"Consolidated Net Worth" at any date shall mean the excess of
(a) the sum of capital stock, additional paid-in capital, retained earnings (or
minus accumulated deficit) of Borrower and its Subsidiaries, all as would be
shown on a consolidated balance sheet of Borrower and its Subsidiaries,
determined in accordance with GAAP, prepared at such date (including minority
interests reflected in such balance sheet) over (b) any item which shall not
have been classified in such consolidated balance sheet as a liability but which
is included within "Indebtedness" as defined herein.
3
"Consolidated Senior Debt-Equity Ratio" at any time shall mean
the ratio, expressed as a percentage, of (a) all Indebtedness of Borrower and
its Subsidiaries representing any borrowing or financing (excluding Subordinated
Debt and intercompany Indebtedness) to (b) the sum of (i) Consolidated Net Worth
plus (ii) Subordinated Debt.
"Consolidated Senior Interest Coverage Ratio" for any period
shall mean the ratio, expressed as a percentage, of (a) the sum of (i) the
consolidated pre-tax net income of Borrower and its Subsidiaries for such period
plus (ii) consolidated interest expense (including imputed interest expense) of
Borrower and its Subsidiaries during such period with respect to all
Indebtedness of Borrower and its Subsidiaries representing any borrowing or
financing (excluding intercompany Indebtedness) plus (iii) consolidated goodwill
amortization of Borrower and its Subsidiaries during such period plus (iv)
consolidated depreciation expense of Borrower and its Subsidiaries during such
period to (b) the amount calculated pursuant to clause (a)(ii) of this
definition (excluding interest expense with respect to Subordinated Debt).
"Consolidated Total Debt-Equity Ratio" at any time shall mean
the ratio, expressed as a percentage, of (a) all Indebtedness of Borrower and
its Subsidiaries representing any borrowing or financing (excluding intercompany
Indebtedness) to (b) Consolidated Net Worth.
"Consolidated Total Interest Coverage Ratio" for any period
shall mean the ratio, expressed as a percentage, of (a) the sum of (i)
consolidated pre-tax net income of Borrower and its Subsidiaries for such period
plus (ii) consolidated interest expense (including imputed interest expense) of
Borrower and its Subsidiaries during such period with respect to all
Indebtedness of Borrower and its Subsidiaries representing any borrowing or
financing (excluding intercompany Indebtedness) plus (iii) consolidated goodwill
amortization of Borrower and its Subsidiaries during such period plus (iv)
consolidated depreciation expense of Borrower and its Subsidiaries during such
period to (b) the amount calculated pursuant to clause (a)(ii) of this
definition.
"Contempo" -- see Recitals.
"Contempo Amsterdam" shall mean Contempo Design Europe B.V., a
Dutch corporation 90% owned by Contempo and 10% owned by an employee thereof.
"Contempo West" -- see Recitals.
"Contract Right" shall mean any right of Borrower to payment
under a contract, which right is not yet earned by performance and not evidenced
by an instrument or chattel paper.
4
"Credit" shall mean the facility established under this
Agreement pursuant to which Lender will make Loans to Borrower.
"Default" shall mean any event or condition which, with the
lapse of time or giving of notice to Borrower or both, would constitute an Event
of Default.
"Default Rate" shall mean, with respect to a Loan, the rate of
interest which is applicable to such Loan after any amount thereof is not paid
when due, whether by acceleration or otherwise, as determined pursuant to
Supplement A.
"Delaware" -- see Recitals.
"Demand Deposit Account" shall have the meaning ascribed to
such term in Section 2.2.
"Environmental Laws" shall mean the Clean Air Act of 1970, as
amended, 42 U.S.C. ss.7401 et seq., the Clean Water Act, as amended, 33 U.S.C.
ss.1251 et seq., the Resource Conservation and Recovery Act of 1976, as amended,
42 U.S.C. ss.6901 et seq., the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. ss.9601 et seq.,
any so-called "Superfund" or "Superlien" law, the Toxic Substances Control Act,
15 U.S.C. ss.2601 et seq., and any other federal, state or local statute, law,
ordinance, code, rule, regulation, order or decree or other written legal
requirement regulating, relating to, or imposing liability or standards of
conduct (including, but not limited to, permit requirements, emission or
effluent restrictions and other requirements relating to manufacturing,
processing, generation, distribution, use, treatment, storage, disposal,
clean-up, transport or handling) concerning any Hazardous Materials or any
hazardous, toxic or dangerous waste, substance or constituent, or any noise,
odor, waste, radiation, pollutant or contaminant or other substance, whether
solid, liquid or gas, as now or at any time hereafter in effect.
"Environmental Lien" shall mean a Lien in favor of any entity
for (1) any liability under any Environmental Law or (2) damages arising from or
costs incurred by such governmental entity in response to a spillage, disposal
or release into the environment of any Hazardous Material or any hazardous,
toxic or dangerous waste, substance or constituent, or any pollutant or
contaminant or other substance.
"Equipment" shall mean all equipment of every description,
including, without limitation, fixtures, furniture, vehicles and trade fixtures,
together with any and all accessions, parts and equipment attached thereto or
used in connection therewith, and any substitutions therefor and replacements
thereof.
5
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and any successor statute of similar import, together with
the regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed to also refer to any
successor sections.
"ERISA Affiliate" shall mean any corporation, partnership, or
other trade or business (whether or not incorporated) that is, along with
Borrower, a member of a controlled group of corporations or a controlled group
of trades or businesses, as described in sections 414(b) and 414(c),
respectively, of the Code or section 4001 of ERISA, or a member of the same
affiliated service group within the meaning of section 414(m) of the Code.
"Event of Default" shall have the meaning ascribed to such
term in Section 6.1.
"Federal Reserve Board" shall mean the Board of Governors of
the Federal Reserve System or any successor thereto.
"Fiscal Quarter" shall mean any quarter of a Fiscal Year.
"Fiscal Year" shall mean any period of 12 consecutive calendar
months ending on the last day of December.
"Fixtures" shall mean all fixtures of Borrower or any other
Obligor, as applicable, of every description and all substitutions and
replacements of any thereof.
"Fuse World" shall mean Fuse World, Inc., an Ohio
corporation.
"Fuse World Acquisition" shall mean (i) the acquisition by
Delaware of the outstanding capital stock of Fuse World substantially on the
terms set forth in the Fuse World Letter of Intent and (ii) the subsequent
dissolution or merger of Fuse World into Delaware; provided, however, that if an
acquisition merger is agreed to by Fuse World, then "Fuse World Acquisition"
shall mean the acquisition by merger of Fuse World by Delaware substantially on
the terms set forth in the Fuse World Letter of Intent.
"Fuse World Letter of Intent" shall mean that certain letter
dated August 15, 1995 from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, President of Delaware, to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President of Fuse World, a copy of which has been presented to
Lender.
"GAAP" shall mean generally accepted accounting principles as
applied in the preparation of the audited financial statements of Borrower
referred to in Section 4.6.
6
"General Intangibles" shall mean all of Borrower's intangible
personal property, including things in action, causes of action and all other
personal property of Borrower of every kind and nature (other than accounts,
inventory, equipment, chattel paper, documents, instruments and money),
including, without limitation, corporate or other business records, inventions,
designs, patents, patent applications, trademarks, trademark applications, trade
names, trade secrets, goodwill, copyrights, registrations, licenses, franchises,
customer lists, tax refund claims, claims against carriers and shippers,
guarantee claims, security interests, security deposits or other security held
by or granted to Borrower to secure any payment from an Account Debtor, and any
rights to indemnification.
"Guaranteed Obligations" shall have the meaning ascribed to
such term in Section 12.1.
"Guaranty" shall have the meaning ascribed to such term in
Section 3.6.
"Hazardous Materials" shall mean any toxic substance,
hazardous substance, hazardous material, hazardous chemical or hazardous waste
defined or qualifying as such in (or for the purposes of) any Environmental Law,
or any pollutant or contaminant, and shall include, but not be limited to,
petroleum, including crude oil or any fraction thereof which is liquid at
standard conditions of temperature or pressure (60 degrees fahrenheit and 14.7
pounds per square inch absolute), any radioactive material, including, but not
limited to, any source, special nuclear or by-product material as defined at 42
U.S.C. ss.2011 et seq., as amended or hereafter amended, polychlorinated
biphenyls and asbestos in any form or condition.
"Impermissible Qualification" shall mean, relative to the
opinion or certification of any public accounting firm as to any financial
statement of any Obligor, any qualification or exception to such opinion or
certification
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of
matters relevant to such financial statement; or
(c) which relates to the treatment or classification of any
item in such financial statement and which, as a condition to
its removal, would require an adjustment to such item the
effect of which would be to cause such Obligor to be in
default of any of its obligations under Section 3.1 of
Supplement A.
7
"Indebtedness" of any Person shall mean, without duplication,
(i) any obligation of such Person for borrowed money, including, without
limitation, (a) any obligation of such Person evidenced by bonds, debentures,
notes or other similar debt instruments and (b) any obligation for borrowed
money which is non-recourse to the credit of such Person but which is secured by
a Lien on any asset of such Person, (ii) any obligation of such Person on
account of deposits or advances, (iii) any obligation of such Person for the
deferred purchase price of any property or services, except Trade Accounts
Payable, (iv) any obligation of such Person as lessee under a Capitalized Lease
and (v) any Indebtedness of another Person secured by a Lien on any asset of
such first Person, whether or not such Indebtedness is assumed by such first
Person. For all purposes of this Agreement, the Indebtedness of any Person shall
include the Indebtedness of any partnership or joint venture in which such
Person is a general partner or joint venturer.
"Inventory" shall mean any and all goods (including, without
limitation, goods in transit) of Borrower or any other Obligor, as applicable,
wheresoever located, which are or may at any time be leased to a lessee, held
for sale or lease or furnished under any contract of service by, or held as raw
materials, work in process, or supplies or materials used or consumed in the
business of, Borrower, or which are held for use in connection with the
manufacture, packing, shipping, advertising, selling or finishing of such goods,
and all goods the sale or other disposition of which has given rise to an
Account Receivable, Contract Right or General Intangible and which are returned
to and/or repossessed and/or stopped in transit by Borrower or Lender or any
agent or bailee of any of them, and all documents of title or other documents
representing the same.
"Investment" of any Person shall mean any investment, made in
cash or by delivery of any kind of property or asset, in any other Person,
whether by acquisition of shares of stock or similar interest, Indebtedness or
other obligation or security, or by loan, advance or capital contribution, or
otherwise.
"Landlord's Consent" shall mean a Landlord's Consent
substantially in the form of Exhibit H, with appropriate insertions, or such
other form as shall be acceptable to Lender, as it may be amended or modified
from time to time.
"Lender" -- see Preamble.
"Liabilities" shall mean all of the liabilities, obligations,
reimbursement obligations in connection with any letter of credit, and
indebtedness of Borrower, Delaware, Contempo, Contempo West, any other
Subsidiary or any other Obligor to Lender of any kind or nature, however
created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter
8
existing or due or to become due, and including but not limited to (i)
Borrower's obligations under any Note, (ii) Borrower's obligations under this
Agreement, (iii) interest, charges, expenses, Attorneys' Fees and other sums
chargeable to Borrower by Lender under this Agreement or any Related Agreement,
(iv) the obligations of Borrower, Delaware, Contempo, Contempo West, any other
Subsidiary or any other Obligor under any Related Agreement, including
obligations of performance and (v) the Guaranteed Obligations. "Liabilities"
shall also include any and all amendments, extensions, renewals, refundings or
refinancings of any of the foregoing.
"Lien" shall mean any mortgage, pledge, hypothecation,
judgment lien or similar legal process, title retention lien, or other lien,
encumbrance or security interest, including, without limitation, the interest of
a vendor under any conditional sale or other title retention agreement and the
interest of a lessor under any Capitalized Lease.
"Loan" shall mean the Term Loan made pursuant to Section 2.1
and any other loan or advance made to Borrower by Lender under or pursuant to
this Agreement.
"Loan Account" shall have the meaning ascribed to such term in
Section 2.2.
"Margin Stock" shall have the meaning ascribed to such term in
Regulation U of the Federal Reserve Board or any regulation substituted
therefor, as in effect from time to time.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA which is maintained for employees of
Borrower, any other Obligor or any ERISA Affiliate.
"Note" shall mean the Term Note and any other promissory note
of Borrower evidencing any loan or advance made by Lender to Borrower pursuant
to this Agreement.
"Obligor" shall mean Borrower and each other Person who is or
shall become primarily or secondarily liable on any of the Liabilities, or who
grants to Lender a Lien on any property of such Person as security for any of
the Liabilities.
"Occupational Safety and Health Law" shall mean the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. ss.651 et
seq., and any other federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to or imposing liability or
standards of conduct concerning employee health and/or safety.
"Original Loan Agreement" - see Recitals.
9
"Other Loan Agreements" shall mean the Loan and Security
Agreement dated as of the date hereof between Lender and Contempo, the Loan and
Security Agreement dated as of the date hereof between Lender and Contempo West
and the Loan and Security Agreement dated as of the date hereof between Lender
and Delaware, in each case as the same may be amended, supplemented or otherwise
modified from time to time.
"Other Loan Documents" shall mean the "Related Agreements"
and the "Supplemental Documentation" as defined in each Other Loan
Agreement.
"Participant" shall mean any Person, now or at any time or
times hereafter, participating with Lender in the Loans made to Borrower
pursuant to this Agreement or any Related Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.
"Pension Plan" shall mean a "pension plan," as such term is
defined in Section 3(2) of ERISA, which is subject to the provisions of Title IV
of ERISA (other than a Multiemployer Plan) and to which Borrower, any other
Obligor or any ERISA Affiliate may have any liability, including any liability
by reason of being deemed to be a contributing sponsor under Section 4069 of
ERISA.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, entity, or government (whether national, federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Pledge Agreement" shall have the meaning ascribed to such
term in Section 3.6.
"Post-Retirement Welfare Plans" shall have the meaning
ascribed to such term in Section 4.19.
"Reference Rate" shall mean, at any time, the rate of interest
then most recently announced by Lender at Chicago, Illinois as its reference
rate (of which announcements Lender shall give notice promptly to Borrower).
Each change in the interest rate on any Loan shall take effect on the effective
date of the change in the Reference Rate.
"Refinancing Fee" shall have the meaning ascribed to such term
in Section 2.9.
10
"Related Agreement" shall mean any agreement, instrument or
document (including, without limitation, notes, guarantees, mortgages, deeds of
trust, chattel mortgages, pledges, powers of attorney, consents, assignments,
contracts, notices, security agreements, leases, financing statements,
subordination agreements, trust account agreements and all other written matter)
heretofore, now, or hereafter delivered to Lender with respect to or in
connection with or pursuant to this Agreement or any of the Liabilities, and
executed by or on behalf of Borrower, Delaware, Contempo, Contempo West or any
other Obligor.
"Related Party" shall mean any Person (other than a
Subsidiary) (i) which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, Borrower, (ii)
which beneficially owns or holds ten percent (10%) or more of the equity
interest of Borrower or (iii) ten percent (10%) or more of the equity interest
of which is beneficially owned or held by Borrower or a Subsidiary. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"Reportable Event" shall mean a "reportable event" as defined
in Section 4043(b) of ERISA and the regulations thereunder.
"Restatement Date" shall mean the date this Agreement becomes
effective pursuant to Section 8.
"Stock Appreciation Plan" shall have the meaning ascribed to
such term in Section 5.15.
"Subordinated Debt" shall mean (i) those certain 10%
Subordinated Promissory Notes due October 30, 1994 of Borrower in the aggregate
original principal amount of $1,525,000; (ii) that certain $300,000 subordinated
note of Borrower payable to the order of ▇▇▇▇▇▇ Management Incorporated, a
Delaware corporation; and (iii) that portion of any other liabilities,
obligations or Indebtedness of Borrower which contains terms reasonably
satisfactory to Lender and is subordinated, in a manner reasonably satisfactory
to Lender, as to right and time of payment of principal and interest thereon, to
all of the Liabilities.
"Subsidiary" shall mean any Person of which or in which
Borrower and its other Subsidiaries own directly or indirectly 50% or more of
(i) the combined voting power of all classes of stock having general voting
power under ordinary circumstances to elect a majority of the board of directors
of such Person, if it is a corporation, (ii) the capital interest or profits
interest of such Person, if it is a partnership, joint venture or similar entity
or
11
(iii) the beneficial interest of such Person, if it is a trust, association or
other unincorporated organization.
"Supplemental Documentation" shall have the meaning ascribed
to such term in Section 3.5.
"Taxes" with respect to any Person shall mean taxes,
assessments or other governmental charges or levies imposed upon such Person,
its income or any of its properties, franchises or assets.
"Term Loan" shall have the meaning ascribed to such term in
Section 2.1.
"Term Note" shall have the meaning ascribed to such term in
Section 2.4.
"Termination Date" shall mean August 31, 1996 or such later
date to which the Termination Date may be extended pursuant to Section 11.7.
"Third Party Collateral" shall mean any property of any Person
other than Borrower which secures payment or performance of any Liabilities and,
where the context requires, shall include "Third Party Collateral" under each
Other Loan Agreement.
"Trade Accounts Payable" of any Person shall mean trade
accounts payable of such Person with a scheduled maturity of not greater than 90
days incurred in the ordinary course of such Person's business.
"UCC" shall mean the Uniform Commercial Code as in effect in
the State of Illinois, and any successor statute, together with any regulations
thereunder, in each case as in effect from time to time. References to sections
of the UCC shall be construed to also refer to any successor sections.
1.2 Other Definitional Provisions. Unless otherwise defined or the
context otherwise requires, all financial and accounting terms used herein or in
any certificate or other document made or delivered pursuant hereto shall be
defined in accordance with GAAP. Unless otherwise defined therein, all terms
defined in this Agreement shall have the defined meanings when used in any Note
or in any certificate or other document made or delivered pursuant hereto. Terms
used in this Agreement which are defined in any Supplement or Exhibit hereto
shall, unless the context otherwise indicates, have the meanings given them in
such Supplement or Exhibit. Other terms used in this Agreement shall, unless the
context indicates otherwise, have the meanings provided for by the UCC to the
extent the same are used or defined therein.
12
1.3 Interpretation of Agreement. A Section, an Exhibit or a Schedule
is, unless otherwise stated, a reference to a section hereof, an exhibit hereto
or a schedule hereto, as the case may be. Section captions used in this
Agreement are for convenience only and shall not affect the construction of this
Agreement. The words "hereof," "herein," "hereto" and "hereunder" and words of
similar import when used in this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Reference to "this
Agreement" shall include the provisions of Supplement A.
1.4 Compliance with Financial Restrictions. Compliance with each of the
financial ratios and restrictions contained in Section 5 or Supplement A shall,
except as otherwise provided herein, be determined in accordance with GAAP
consistently followed.
2. LOANS; OTHER MATTERS.
2.1 Term Loan.
(a) On the Restatement Date, Borrower owed Lender the
principal amount of $5,468,200.02 under the "Term Loan" under
and as defined in the Original Loan Agreement. Borrower and
Lender agree that such outstanding principal balance
constitutes the "Term Loan" hereunder as of the date hereof.
(b) Unless otherwise required to be sooner paid
pursuant to any other provision of this Agreement, the
principal of the Term Loan shall be repaid on the Termination
Date.
(c) Borrower may, upon at least three (3) Banking
Days' prior notice to Lender, prepay the principal of the Term
Loan in whole or in part without any premium or penalty. Any
partial prepayment of principal shall be in a minimum amount
of the lesser of (i) the outstanding principal balance of the
Term Loan and (ii) $50,000 or an integral multiple thereof.
Any principal of the Term Loan which is repaid may not be
reborrowed.
2.2 Loan Account; Demand Deposit Account. Lender shall
establish or cause to be established on its books in Borrower's name one or more
accounts (each a "Loan Account") to evidence Loans made to Borrower. Lender will
credit or cause to be credited to a commercial account ("Demand Deposit
Account") maintained by Borrower at Lender's ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ office the amount of any sums advanced as Loans hereunder. Any amounts
advanced as Loans hereunder which are credited to Borrower's Demand Deposit
Account, together with any other amounts advanced to Borrower as a Loan pursuant
to this Agreement, will be debited to
13
the applicable Loan Account and result in an increase in the principal balance
outstanding in such Loan Account in the amount thereof.
2.3 Interest and Fees.
2.3.1 Interest. The unpaid principal amount of the Loans
hereunder shall bear interest until maturity at the rates indicated in
Supplement A. Until maturity, interest on the Loans shall be paid by
Borrower on the date(s) indicated in Supplement A, and at such
maturity. After maturity, whether by acceleration or otherwise, accrued
interest shall be payable on demand.
2.3.2 Additional Fee. Borrower agrees to pay to Lender the
fee of $300,000 specified in Section 2.3.3 of the Original Loan
Agreement on the Termination Date.
2.3.3 Method of Calculating Interest and Fees. Interest on the
unpaid principal amount of each Loan shall accrue from and including
the date such Loan is made to, but not including, the date such Loan is
paid. Interest and any fees shall be calculated on the basis of a year
consisting of 360 days and paid for actual days elapsed. All
determinations by Lender of the rate of interest applicable to any Loan
shall be rebuttable presumptive evidence of the applicable interest
rate for such Loan.
2.3.4 Payment of Interest and Fees. Lender may provide for the
payment of any unpaid non-capitalized accrued interest and any fees by
charging the Demand Deposit Account or any other bank account
maintained by Borrower with Lender.
2.4 Note. The Term Loan shall be evidenced by a promissory note
(herein, as it may from time to time be supplemented, amended or replaced,
called the "Term Note") substantially in the form set forth on Exhibit C, with
appropriate insertions, payable to the order of Lender on the Termination Date.
2.5 One Obligation. All Indebtedness and other Liabilities of Borrower
to Lender under this Agreement and any of the Related Agreements shall
constitute one general obligation secured by Lender's Lien on all of the
Collateral and Third Party Collateral and by all other Liens heretofore, now, or
at any time or times hereafter granted by Borrower or any other Obligor to
Lender. Borrower agrees that all of the rights of Lender set forth in this
Agreement shall apply to any modification of or supplement to this Agreement,
any Supplements or Exhibits hereto, and the Related Agreements, unless otherwise
agreed in writing.
14
2.6 Making of Payments; Application of Collections; Charging
of Accounts.
(a) All payments hereunder shall be made without set-off or
counterclaim and shall be made to Lender in immediately available funds
(except as Lender may otherwise consent) prior to 12:30 p.m., Chicago
time, on the date due at its office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as may be designated by
Lender to Borrower in writing. Any payments received after such time
shall be deemed received on the next Banking Day. Whenever any payment
to be made hereunder or under any Note shall be stated to be due on a
date other than a Banking Day, such payment shall be due on the next
succeeding Banking Day, and such extension of time shall be included in
the calculation of interest and any fees.
(b) Borrower authorizes Lender to, and Lender will, subject to
the provisions of this paragraph (b), apply the whole or any part of
any amounts received by Lender (whether deposited in the Assignee
Deposit Account of Borrower or otherwise received by Lender) from the
collection of items of payment and proceeds of any Collateral or Third
Party Collateral (whether received upon any sale or other distribution
of Collateral or Third Party Collateral by Lender or otherwise),
against the principal of and/or interest on any Loans made hereunder
and/or any other Liabilities, whether or not then due, in such order of
application as Lender may determine, unless such payments or proceeds
are, in Lender's sole and absolute discretion, released to Borrower;
provided, however, so long as no Event of Default exists and is
continuing, any such amounts received by Lender shall be applied as
follows: first, to payment of amounts then due with respect to fees
(including Attorneys' Fees), charges and expenses for which Borrower or
any other Obligor is liable pursuant to this Agreement and the Related
Agreements; second, to payment of amounts then due with respect to
interest on the Loans; third, to payment of amounts then due with
respect to principal of the Loans; fourth, to prepayment of the Term
Loan; and fifth, to the payment of the Guaranteed Obligations then due
and owing; and provided, further, that no checks, drafts or other
instruments received by Lender shall constitute final payment to Lender
unless and until such item of payment has actually been collected. All
items or amounts which are delivered to Lender by or on behalf of
Borrower or any Obligor or any Account Debtor on account of partial or
full payment or otherwise as proceeds of any of the Collateral or Third
Party Collateral (including any items or amounts which may have been
deposited to the Assignee Deposit Account) may from time to time in
Lender's sole and absolute discretion be released to Borrower or be
applied by Lender towards payment of the Liabilities, whether or not
then due, in accordance with the
15
preceding sentence. Notwithstanding anything to the contrary herein,
(i) solely for purposes of determining the occurrence of an Event of
Default, all cash, checks, instruments and other items of payment shall
be deemed received upon actual receipt by Lender, unless the same is
subsequently dishonored for any reason whatsoever and (ii) solely for
purposes of interest calculation hereunder, all cash, checks,
instruments and other items of payment shall be deemed to have been
applied against the Liabilities on the second Banking Day after receipt
by Lender of available funds with respect thereto.
(c) Borrower hereby authorizes Lender to, and Lender may, in
its sole and absolute discretion, charge to Borrower at any time when
due all or any portion of any of the Liabilities including but not
limited to any Attorneys' Fees and other costs and expenses of Lender
for which Borrower or any other Obligor is liable pursuant to the terms
of this Agreement or any Related Agreement, by charging Borrower's
Demand Deposit Account or any other bank account of Borrower with
Lender; provided, however, that the provisions of this Section 2.6(c)
shall not affect the obligation of Borrower or any other Obligor to pay
when due all amounts payable by such Person under this Agreement, any
Note or any Related Agreement, whether or not there are sufficient
funds therefor in the Demand Deposit Account or any such other bank
account of Borrower. So long as no Event of Default or Default exists,
Lender shall use reasonable efforts to give Borrower prompt notice of
Liabilities paid by charging such Demand Deposit Account or other
account (but failure to give such notice shall not impose any liability
on Lender or relieve Borrower of any of its obligations).
2.7 Lender's Election Not to Enforce. Notwithstanding any term or
condition of this Agreement to the contrary, Lender, in its sole and absolute
discretion, at any time and from time to time, may suspend or refrain from
enforcing any or all of the restrictions imposed in this Section 2, but no such
suspension or failure to enforce shall impair any right or power of Lender under
this Agreement, including, without limitation, any right of Lender to refrain
from making a Loan if all conditions precedent to Lender's obligation to making
such Loan have not been satisfied.
2.8 Setoff. In addition to and not in limitation of all other rights
and remedies (including other rights of offset or banker's lien) that Lender or
any other holder of any Note may have under applicable law, Lender or such other
holder shall, upon the occurrence of any Event of Default described in Section
6.1 and during the continuance thereof, or upon the occurrence of any Default
described in Section 6.1(e) and during the continuance thereof, have the right
to appropriate and apply to the payment of the Liabilities (whether or not then
due), in such order of
16
application as Lender or such other holder may elect, any and all balances,
credits, deposits (general or special, time or demand, provisional or final),
accounts or moneys of Borrower then or thereafter with Lender or such other
holder. Lender shall use reasonable efforts to give Borrower prompt notice of
any appropriation and application pursuant to the preceding sentence (but
failure to give such notice shall not impose any liability on Lender or relieve
Borrower of any of its obligations).
2.9 Refinancing Fee. Borrower shall pay Lender a Refinancing Fee (as
hereinafter defined) from time to time if Borrower shall obtain any Indebtedness
or equity contributions (other than from another Obligor or Contempo Amsterdam
except if such Indebtedness or equity contribution is funded with funds obtained
by such other Obligor or Contempo Amsterdam from a non-Obligor (other than
Lender)) after the date hereof and Borrower shall at any time repay all or any
portion of the Term Loan with the proceeds of such Indebtedness or equity
contributions. As used in this Section, "Refinancing Fee" shall mean an amount
equal to the product of the amount of the repayment of the Term Loan with such
proceeds multiplied by .0125.
3. COLLATERAL.
3.1 Grant of Security Interest. As security for the payment of all
Loans now or hereafter made by Lender to Borrower hereunder or under any Note,
and as security for the payment or other satisfaction of all other Liabilities,
Borrower hereby grants to Lender a security interest in and to the following
property of Borrower, whether now owned or existing, or hereafter acquired or
coming into existence, wherever now or hereafter located (all such property is
hereinafter referred to collectively as the "Collateral"):
(a) Accounts Receivable;
(b) Equipment and Fixtures;
(c) Inventory;
(d) General Intangibles (including all rights of Borrower
with respect to all amounts now or hereafter from time to time
loaned or advanced by Borrower to any Subsidiary);
(e) Contract Rights and documents of title;
(f) All chattel paper and instruments evidencing, arising out
of or relating to any obligation to Borrower for goods sold or leased
or services rendered, or otherwise arising out of or relating to any
property described in clauses (a) through (e) above;
17
(g) Any and all balances, credits, deposits (general or
special, time or demand, provisional or final), accounts or monies of
or in the name of Borrower now or hereafter with Lender, any agent or
bailee for Lender, or any Participant, and any and all property of
every kind or description of or in the name of Borrower now or
hereafter, for any reason or purpose whatsoever, in the possession or
control of, or in transit to, or standing to Borrower's credit on the
books of, Lender, any agent or bailee for Lender, or any Participant;
(h) All interest of Borrower in any goods the sale or lease of
which shall have given or shall give rise to, and in all guaranties and
other property securing the payment of or performance under, any
Accounts Receivable, General Intangibles, Contract Rights, or any
chattel paper or instru-
ments referred to in clause (f) above;
(i) Any and all other property of Borrower, of any kind or
description (including but not limited to real estate of Borrower),
including, without limitation, any property of Borrower subject to a
separate mortgage, pledge or security interest in favor of Lender or in
which Lender now or hereafter has or acquires a security interest
securing any Liabilities pursuant to an agreement or instrument other
than this Agreement;
(j) All replacements, substitutions, additions or
accessions to or for any of the foregoing;
(k) To the extent related to the property described in clauses
(a) through (j) above, all books, correspondence, credit files,
records, invoices and other papers and documents, including, without
limitation, to the extent so related, all tapes, cards, computer runs,
computer programs and other papers and documents in the possession or
control of Borrower or any computer bureau from time to time acting for
Borrower, and, to the extent so related, all rights in, to and under
all policies of insurance, including claims of rights to payments
thereunder and proceeds therefrom, including any credit insurance; and
(l) All products and proceeds (including but not limited to
any Accounts Receivable or other proceeds arising from the sale or
other disposition of any Collateral, any returns of any Equipment or
Inventory sold by Borrower, and the proceeds of any insurance covering
any of the Collateral) of any of the foregoing.
3.2 Accounts Receivable.
(a) If requested by Lender, Borrower shall advise Lender
promptly of any Inventory returned by or repossessed from any
18
Account Debtor, or otherwise recovered, shall receive such Inventory in trust
and, unless instructed to deliver such Inventory to Lender, shall resell it for
Lender. If requested by Lender, Borrower shall notify Lender immediately of all
disputes and claims by any Account Debtor and settle or adjust them at no
expense to Lender. If Lender directs after the occurrence and during the
continuance of an Event of Default or a Default, no discount or credit allowance
shall be granted thereafter by Borrower to any Account Debtor. All Account
Debtor payments and all net amounts received by Lender in settlement, adjustment
or liquidation of any Account Receivable may be applied by Lender to the
Liabilities or credited to Borrower's Demand Deposit Account (subject to
collection) with Lender, as Lender may deem appropriate, in either case in
accordance with Section 2.6. If requested by Lender, Borrower will make proper
entries in its books and records disclosing the assignment of Accounts
Receivable to Lender.
(b) Borrower warrants that: (i) to the best of Borrower's knowledge all
of the Accounts Receivable are and will continue to be bona fide existing
obligations created by the sale of goods, the rendering of services, or the
furnishing of other good and sufficient consideration to Account Debtors in the
regular course of business and (ii) to the best of Borrower's knowledge all
shipping or delivery receipts and other documents furnished or to be furnished
to Lender in connection therewith are and will be genuine.
(c) Lender is hereby authorized and empowered (which authorization and
power, being coupled with an interest, shall be irrevocable until the later to
occur of termination of this Agreement and the final payment and performance in
full of all of the Liabilities) at any time in its sole and absolute discretion:
(1) To request, in Borrower's name or, after the occurrence
and during the continuance of an Event of Default or a Default, in
Lender's name or the name of a third party, confirmation from any
Account Debtor or party obligated under or with respect to any
Collateral of the amount shown by the Accounts Receivable or other
Collateral to be payable, or any other matter stated therein;
(2) To endorse in Borrower's name and to collect any chattel
paper, checks, notes, drafts, instruments or other items of payment
tendered to or received by Lender in payment of any Account Receivable
or other obligation owing to Borrower;
(3) To notify, in Borrower's name or, after the occurrence and
during the continuance of an Event of Default or a Default, in Lender's
name, and/or to require Borrower to notify, any Account Debtor or other
Person obligated under or
19
in respect of any Collateral, of the fact of Lender's Lien
thereon and of the collateral assignment thereof to Lender;
(4) To direct, in Borrower's name or, after the occurrence and
during the continuance of an Event of Default or a Default, in Lender's
name, and/or to require Borrower to direct, any Account Debtor or other
Person obligated under or in respect of any Collateral to make payment
directly to Lender of any amounts due or to become due thereunder or
with respect thereto; and
(5) After the occurrence and during the continuance of an
Event of Default, to demand, collect, surrender, release or exchange
all or any part of any Collateral or any amounts due thereunder or with
respect thereto, or compromise or extend or renew for any period
(whether or not longer than the initial period) any and all sums which
are now or may hereafter become due or owing upon or with respect to
any of the Collateral, or enforce, by suit or otherwise, payment or
performance of any of the Collateral either in Lender's own name or in
the name of Borrower.
Under no circumstances shall Lender be under any duty to act in regard to any of
the foregoing matters. The costs relating to any of the foregoing matters,
including Attorneys' Fees and reasonable out-of-pocket expenses, and the cost of
any Assignee Deposit Account or other bank account or accounts which may be
required hereunder, shall be borne solely by Borrower whether the same are
incurred by Lender or Borrower, and Lender may advance same to Borrower as a
Loan.
(d) Unless otherwise consented to by Lender, Borrower will, forthwith
upon receipt by Borrower of all checks, drafts, cash and other remittances in
payment or as proceeds of, or on account of, any of the Accounts Receivable or
other Collateral, deposit the same in a special bank account (the "Assignee
Deposit Account") with Lender or such other bank or financial institution as
Lender shall consent, over which Lender alone has power of withdrawal, and will,
to the extent required by Lender, designate with each such deposit the
particular Account Receivable or other item of Collateral upon which the
remittance was made. Borrower acknowledges that the maintenance of the Assignee
Deposit Account is solely for the convenience of Lender in facilitating its own
operations and Borrower does not and shall not have any right, title or interest
in the Assignee Deposit Account or in the amounts at any time appearing to the
credit thereof. Said proceeds shall be deposited in precisely the form received
except for Borrower's endorsement where necessary to permit collection of items,
which endorsement Borrower agrees to make. Pending such deposit, Borrower agrees
not to commingle any such checks, drafts, cash and other remittances with any of
its funds or property, but will hold them separate and apart
20
therefrom and upon an express trust for Lender until deposit thereof is made in
the Assignee Deposit Account. Upon the full and final liquidation of all
Liabilities, Lender will pay over to Borrower any excess amounts received by
Lender as payment or proceeds of Collateral, whether received by Lender as a
deposit in the Assignee Deposit Account or received by Lender as a direct
payment on any of the sums due hereunder.
(e) Borrower appoints Lender, or any Person whom Lender may from time
to time designate, as Borrower's attorney and agent-in- fact with power: (i)
after the occurrence and during the continuance of an Event of Default, to
notify the post office authorities to change the address for delivery of
Borrower's mail to an address designated by Lender; (ii) after the event
described in the foregoing clause (i), to receive, open and dispose of all mail
addressed to Borrower; (iii) to send, in Borrower's name or, after the
occurrence and during the continuance of an Event of Default or a Default, in
Lender's name or the name of a third party, requests for verification of
Accounts Receivable or other Collateral to Account Debtors; (iv) to open an
escrow account or Assignee Deposit Account under Lender's sole control for the
collection of Accounts Receivable or other Collateral, if not required
contemporaneously with the execution hereof; and (v) to do all other things
which Lender is permitted to do under this Agreement or any Related Agreement or
which are reasonably necessary to carry out this Agreement and the Related
Agreements. Neither Lender nor any of its directors, officers, employees or
agents will be liable for any acts of commission or omission nor for any error
in judgment or mistake of fact or law, unless the same shall have resulted from
gross negligence or willful misconduct. The foregoing appointment and power,
being coupled with an interest, shall be irrevocable until all Liabilities under
this Agreement are finally paid and performed in full and this Agreement is
terminated. Borrower expressly waives presentment, demand, notice of dishonor
and protest of all instruments and any other notice to which it might otherwise
be entitled.
(f) If any Account Receivable, Contract Right or General Intangible
arises out of a contract with the United States or any department, agency, or
instrumentality thereof, Borrower will, unless Lender shall otherwise agree,
immediately notify Lender in writing and execute any instruments and take any
steps required by Lender in order that all monies due and to become due under
such contract shall be assigned to Lender and notice thereof given to the
government under the Federal Assignment of Claims Act of 1940, as amended, or
other applicable laws or regulations; provided, however, that unless Lender
otherwise requests, until an Event of Default or a Default shall have occurred
and be continuing, Borrower need not take any of the steps contemplated in this
paragraph with respect to any contract with a value of less than $10,000.
21
(g) If any Account Receivable or Contract Right is evidenced by chattel
paper or promissory notes, trade acceptances, or other instruments for the
payment of money, Borrower will, unless Lender shall otherwise agree, deliver
the originals of same to Lender, appropriately endorsed to Lender's order and,
regardless of the form of such endorsement, Borrower hereby expressly waives
presentment, demand, notice of dishonor, protest and notice of protest and all
other notices with respect thereto.
3.3 Inventory.
(a) Unless Lender shall otherwise agree, if Borrower sells Inventory
for cash, all full and partial payments therefor shall be immediately (and, in
any event, not later than the end of the day received) delivered by Borrower to
Lender in their original form for deposit in the Assignee Deposit Account or for
other application to reduction of the Liabilities, in either case in accordance
with Section 2.6. Pending such delivery, all such cash shall be held by Borrower
in trust for Lender.
(b) Lender shall not be liable or responsible in any way for the
safekeeping of any Inventory delivered to it, to any bailee appointed by or for
it, to any warehouseman, or under any other circumstances, except for Lender's
gross negligence or willful misconduct. Lender shall not be responsible for
collection of any proceeds or for losses in collected proceeds held by Borrower
in trust for Lender. Any and all risk of loss for any or all of the foregoing
shall be upon Borrower, except for such loss as shall result from Lender's gross
negligence or willful misconduct.
(c) If requested by Lender, Borrower shall, upon acquiring an interest
in any Inventory, deliver to Lender a description of such Inventory, together
with supplier's invoices, warranties, production, cost and other records as
Lender may request. If requested by Lender, Borrower shall deliver to Lender
schedules of the sale of any Inventory immediately upon its sale. Any material
change in the value or condition of any Inventory, and any errors discovered in
any schedule or description delivered to Lender, shall be reported to Lender
immediately. Borrower confirms that the warranties and representations in this
Agreement shall apply to each schedule. Borrower represents and warrants that,
as to each schedule and description of Inventory delivered to Lender:
(1) The descriptions, origins, sizes, qualities, quantities,
weights, and markings of all goods stated thereon, or on any attachment
thereto, are true and correct in all material respects;
(2) None of the goods are defective, of second quality,
used, or goods returned after shipment, except where described
as such; and
22
(3) All Inventory not included on such schedule or
description has been previously scheduled or described.
(d) If requested by Lender, Borrower will notify Lender immediately if
Borrower obtains possession (by return, repossession or otherwise) of any
Inventory which has been sold, and will inform Lender of the identity of the
returned or repossessed Inventory, the applicable Account Debtor and the amount
of the applicable Account Receivable.
3.4 Equipment.
(a) Borrower shall at all times keep, and cause each Subsidiary to
keep, its Equipment in good operating condition and repair, ordinary wear and
tear excepted, and neither Borrower nor any Subsidiary shall, without the prior
written consent of Lender, sell, lease, or otherwise dispose of any of its
Equipment, or any part thereof or interest therein; provided, however, that
without Lender's consent (but with notice to Lender) Borrower or any Subsidiary
may dispose of obsolete or unuseful Equipment in the ordinary course provided
all Equipment so disposed of by Borrower and its Subsidiaries in any Fiscal Year
has an aggregate market value of $50,000 or less.
(b) In the event any Equipment is sold, transferred or otherwise
disposed of by Borrower or any Subsidiary, unless Lender shall agree otherwise,
Borrower or the applicable Subsidiary shall deliver all of the proceeds of any
such sale, transfer or disposition to Lender, which proceeds shall be deposited
in the Assignee Deposit Account or otherwise applied to the repayment of the
Liabilities, in either case in accordance with Section 2.6.
(c) Borrower will, upon request of Lender, submit to Lender a current
listing of all Equipment of Borrower and its Subsidiaries, which listing shall
indicate the type, model, serial number and location of such Equipment.
3.5 Supplemental Documentation. At Lender's request, Borrower shall
execute and/or deliver to Lender, at any time or times hereafter, such
agreements, documents, financing statements, warehouse receipts, bills of
lading, notices of assignment of Accounts Receivable, schedules of Accounts
Receivable assigned, and other written matter necessary or reasonably requested
by Lender to perfect and maintain perfected Lender's security interest in the
Collateral (all the above is hereinafter referred to as the "Supplemental
Documentation"), in form and substance acceptable to Lender, and pay all taxes,
fees and other reasonable costs and expenses associated with any recording or
filing of the Supplemental Documentation. Borrower hereby irrevocably makes,
constitutes and appoints Lender (and all Persons designated by Lender for that
purpose) as Borrower's true and lawful attorney (and agent-in-fact)
23
(which appointment and power, being coupled with an interest, shall be
irrevocable until the later to occur of termination of this Agreement and final
payment and performance in full of all of the Liabilities) to sign the name of
Borrower on any of the Supplemental Documentation and to deliver any of the
Supplemental Documentation to such Persons as Lender, in its sole and absolute
discretion, may elect. Borrower agrees that a carbon, photographic, photostatic,
or other reproduction of this Agreement or of a financing statement is
sufficient as a financing statement.
3.6 Other Security. Borrower shall cause Delaware, Contempo and
Contempo West to execute and deliver to Lender an amended and restated Guaranty
Agreement (the "Guaranty") in the form attached hereto as Exhibit G. Borrower
has caused Delaware, Contempo and Contempo West to execute and deliver to Lender
UCC-1 financing statements, suitable for filing centrally (and locally) in
certain jurisdictions, showing Lender as secured party and duly executed on
behalf of such Obligor, as debtor. Borrower shall execute and deliver to Lender
an amended and restated Pledge Agreement (the "Pledge Agreement") in the form
attached hereto as Exhibit E, and has delivered to Lender stock certificates
representing the number of outstanding shares of capital stock of each of
Delaware, Contempo and Contempo West set forth in Attachment 1 to the Pledge
Agreement, as collateral in pledge thereunder, along with undated stock powers
relating to the shares pledged under the Pledge Agreement executed by Borrower
in blank. Borrower shall deliver to Lender the intercompany notes pledged under
the Pledge Agreement on or prior to the Restatement Date. Borrower shall cause
all intercompany Indebtedness owing to Borrower or any Subsidiary by Borrower or
any other Subsidiary to be reflected by intercompany notes in form and substance
satisfactory to Lender, which notes shall be pledged to Lender under the Pledge
Agreement.
4. REPRESENTATIONS AND WARRANTIES. To induce Lender to make Loans
to Borrower under this Agreement, Borrower makes the following
representations and warranties, all of which shall survive the
execution of this Agreement:
4.1 Organization. Borrower and each of its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation. Borrower and each of its Subsidiaries
is in good standing and is duly qualified to do business in each jurisdiction
where, because of the nature of its business, such qualification is required and
where the failure to so qualify would have a material adverse effect on such
Person. Schedule 4.1 sets forth a complete and accurate list, as of the date of
this Agreement, of (a) the state or other jurisdiction of formation of Borrower,
(b) each state in which Borrower is qualified to do business and (c) all of
Borrower's trade names or doing business forms.
24
4.2 Authorization. Each of Borrower and any other Obligor a party
thereto is duly authorized to execute and deliver this Agreement, the Other Loan
Agreements, the Other Loan Documents, the Notes, and any Related Agreements or
Supplemental Documentation contemplated by this Agreement, and to perform its
obligations under this Agreement, the Other Loan Agreements, the Other Loan
Documents, the Notes and any such Related Agreements and Supplemental
Documentation. Borrower is and will continue to be duly authorized to borrow
monies hereunder. The execution, delivery and performance by each of Borrower
and any other Obligor a party thereto of this Agreement, the Other Loan
Agreements, the Other Loan Documents, the Notes, and any Related Agreements or
Supplemental Documentation contemplated by this Agreement, and the borrowings
hereunder and thereunder, do not and will not require any consent or approval of
any governmental agency or authority.
4.3 No Conflicts. Except as set forth on Schedule 4.3, the execution,
delivery and performance by Borrower and each other Obligor a party thereto of
this Agreement, the Other Loan Agreements, the Other Loan Documents, the Notes,
and any Related Agreements or Supplemental Documentation contemplated by this
Agreement do not and will not conflict with (i) any provision of law, (ii) the
charter or by-laws of Borrower or such Obligor, (iii) any agreement binding upon
Borrower or such Obligor or (iv) any court or administrative order or decree
applicable to Borrower or such Obligor, and do not and will not require, or
result in, the creation or imposition of any Lien on any asset of Borrower or
any of its Subsidiaries or such Obligor except as provided herein.
4.4 Validity and Binding Effect. This Agreement, the Other Loan
Agreements, the Other Loan Documents, the Notes, and any Related Agreements or
Supplemental Documentation contemplated by this Agreement, when duly executed
and delivered, will be legal, valid and binding obligations of Borrower and each
other Obligor a party thereto, enforceable against Borrower or such Obligor, as
applicable, in accordance with their respective terms, except as enforceability
may be limited by bankruptcy, insolvency or other similar laws of general
application affecting the enforcement of creditors' rights or by general
principles of equity limiting the availability of equitable remedies.
4.5 No Default. Except as set forth on Schedule 4.5, neither Borrower
nor any of its Subsidiaries is in default under any agreement or instrument to
which Borrower or such Subsidiary is a party or by which any of their respective
properties or assets is bound or affected, which default would reasonably be
expected to materially and adversely affect (i) Lender's Lien on or rights with
respect to any Collateral or Third Party Collateral or (ii) the financial
condition or operations of Borrower, any Subsidiary or Borrower and its
Subsidiaries taken as a whole. No Event of Default or Default has occurred and
is continuing.
25
4.6 Financial Statements. Borrower's consolidated and consolidating
financial statements as at December 31, 1994 and Borrower's unaudited
consolidated and consolidating financial statements as at March 31, 1995, copies
of which have been or concurrently with the effectiveness hereof will be
furnished to Lender, have been prepared in conformity with GAAP applied on a
basis consistent with that of the preceding fiscal year and period and present
fairly the financial condition of Borrower and its Subsidiaries as at such dates
and the results of their operations for the periods then ended, subject (in the
case of the interim financial statements) to year-end audit adjustments. Since
December 31, 1994, there has been no material adverse change in the financial
condition of Borrower, any Subsidiary or Borrower and its Subsidiaries taken as
a whole.
4.7 Insurance. Schedule 4.7 hereto is a complete and accurate summary
of the property and casualty insurance program carried by Borrower and its
Subsidiaries on the date hereof. Schedule 4.7 includes the insurer's(s')
name(s), policy number(s), expiration date(s), amount(s) of coverage, type(s) of
coverage, the annual premium(s), Best's policyholder's and financial size
ratings of the insurer(s), exclusions, deductibles and self-insured retention
and describes in detail any retrospective rating plan, fronting arrangement or
any other self-insurance or risk assumption agreed to by Borrower or any
Subsidiary or imposed upon Borrower or any Subsidiary by any such insurer. This
summary also includes any self-insurance program that is in effect.
4.8 Litigation; Contingent Liabilities.
(a) Except for those referred to in Schedule 4.8, no claims,
litigation, arbitration proceedings or governmental proceedings are
pending or, to the best of Borrower's knowledge, threatened against or
are affecting Borrower or any Subsidiary, the results of which would
reasonably be expected to materially and adversely affect (i) the
financial condition or operations of Borrower, any Subsidiary or
Borrower and its Subsidiaries taken as a whole or (ii) Lender's
interest in or Lien on any material Collateral or Third Party
Collateral.
(b) Other than any liability incident to the claims,
litigation or proceedings disclosed in Schedule 4.8 or Schedule 4.19,
or provided for or disclosed in the financial statements referred to in
Section 4.6, neither Borrower nor any of its Subsidiaries has any
contingent liabilities which are material to Borrower, any Subsidiary
or Borrower and its Subsidiaries taken as a whole.
4.9 Liens. None of the Collateral, the Third Party Collateral
or any other property, revenues or assets of Borrower or any
Subsidiary is subject to any Lien (including but not limited to
26
Liens pursuant to Capitalized Leases under which Borrower or any Subsidiary is a
lessee) except: (a) Liens permitted by Section 5.16; (b) Liens disclosed in the
financial statements referred to in Section 4.6; and (c) Liens listed on
Schedule 4.9.
4.10 Subsidiaries. Borrower has no Subsidiaries except for Delaware,
Contempo, Contempo Amsterdam and Contempo West. Schedule 4.10 sets forth, for
each Subsidiary, a complete and accurate statement of (a) Borrower's and each
Subsidiary's percentage ownership of each of their respective Subsidiaries, (b)
the state or other jurisdiction of formation or incorporation of each
Subsidiary, (c) each state in which each Subsidiary is qualified to do business
on the date of this Agreement and (d) all of each Subsidiary's trade names or
doing business forms on the date of this Agreement.
4.11 Partnerships; Joint Ventures. Neither Borrower nor any of its
Subsidiaries is a partner or joint venturer in any partnership or joint venture
other than the partnerships and joint ventures listed on Schedule 4.11. Schedule
4.11 sets forth, for each such partnership or joint venture, a complete and
accurate statement of (a) Borrower's and each Subsidiary's percentage ownership
of each such partnership or joint venture, (b) the state or other jurisdiction
of formation or incorporation, as appropriate, of each such partnership or joint
venture, (c) each state in which each such partnership or joint venture is
qualified to do business on the date of this Agreement and (d) all of each such
partnership's or joint venture's trade names or doing business forms on the date
of this Agreement.
4.12 Business and Collateral Locations.
(a) On the date hereof the offices where Borrower and each
Subsidiary keeps its books and records concerning its accounts
receivable and other Collateral, and Borrower's chief place of business
and chief executive office, are located at the addresses set forth on
Schedule 4.12. Schedule 4.12 contains a complete and accurate list, as
of the date of this Agreement, of (i) all of Borrower's places of
business other than that referred to in the first sentence of this
paragraph (a) and (ii) all locations and places of business of each
Subsidiary other than those referred to in the first sentence of this
paragraph (a). On the date hereof, the names of any landlords of any
such locations (including Borrower's place of business referred to in
the first sentence of this paragraph (a)) are identified in Schedule
4.12.
(b) Schedule 4.12 contains a complete and accurate list, as
of the date of this Agreement, of (i) the locations of all of
Borrower's Inventory, Equipment and Fixtures and the locations of all
Inventory, Equipment and Fixtures of any Subsidiary under each Other
Loan Agreement, (ii) the locations
27
of all Third Party Collateral (except any part thereof which prior to
the execution of this Agreement Borrower shall have advised Lender in
writing consists of Collateral or Third Party Collateral, as
applicable, normally used in more than one state) and (iii) if any of
Borrower's or any Subsidiary's Inventory or Equipment or other
Collateral or any Third Party Collateral, is not in the possession or
control of Borrower or such Subsidiary or the owner of such Third Party
Collateral, the name and mailing address of each bailee, processor,
▇▇▇▇- ▇▇▇▇▇▇▇▇ or other Person in possession or control thereof.
4.13 Real Property. Schedule 4.13 contains a complete and accurate
list, as of the date of this Agreement, of (a) the address and legal
descriptions of any real property owned by Borrower or any Subsidiary or on
which any Fixtures are located and (b) in the case of Fixtures located on
property not owned by Borrower or any Subsidiary, the name(s) and mailing
addresses of the record owners of such property.
4.14 [Intentionally Left Blank.]
4.15 Control of Collateral; Lease of Property. Except for Capitalized
Leases included on Schedule 5.15, Schedule 4.15 contains a complete and accurate
list of (a) all leases under which Borrower or a Subsidiary is the lessee
covering any machinery, equipment or real property used by Borrower or any
Subsidiary and (b) the name and mailing address of each lessor or owner of such
machinery, equipment or real property.
4.16 Patents, Trademarks, etc. Borrower and each of its Subsidiaries
possesses, or has sufficient rights in, adequate assets, licenses, patents,
patent applications, copyrights, trademarks, trademark applications, and
tradenames to continue to conduct its respective business as heretofore
conducted by it, and all such licenses, patents, patent applications, registered
copyrights, trademarks, trademark applications, and tradenames existing on the
date hereof and, in the case of patents, trademarks and registered copyrights,
the date of issuance thereof, are listed on Schedule 4.16.
4.17 Solvency. Borrower and each of its Subsidiaries now has capital
sufficient to carry on its respective business and transactions and all business
and transactions in which it is about to engage, and is now solvent and able to
pay its respective debts as they mature, and Borrower and each of its
Subsidiaries now owns property having a value, both at fair valuation and at
present fair salable value, greater than the amount required to pay Borrower's
or such Subsidiary's debts.
4.18 Contracts; Labor Matters. Except as disclosed on
Schedule 4.18: (a) neither Borrower nor any Subsidiary is a party
28
to any contract or agreement, or is subject to any charge, corporate
restriction, judgment, decree or order, which materially and adversely affects
its business, property, assets, operations or condition, financial or otherwise;
(b) no labor contract to which Borrower or any Subsidiary is a party or is
otherwise subject is scheduled to expire prior to the current Termination Date
or the "Termination Date" under any Other Loan Agreement; (c) neither Borrower
nor any Subsidiary has, within the two-year period preceding the date of this
Agreement, taken any action which would have constituted or resulted in a "plant
closing" or "mass layoff" within the meaning of the Federal Worker Adjustment
and Retraining Notification Act of 1988 or any similar applicable federal, state
or local law, and Borrower has no reasonable expectation that any such action is
or will be required at any time prior to the current Termination Date or the
"Termination Date" under any Other Loan Agreement; and (d) on the date of this
Agreement (i) neither Borrower nor any Subsidiary is a party to any material
labor dispute and (ii) there are no strikes or walkouts pending or, to the best
knowledge of Borrower, threatened relating to any labor contracts to which
Borrower or any Subsidiary is a party or is otherwise subject.
4.19 Pension and Welfare Plans. Each Pension Plan complies in all
material respects with all applicable statutes and governmental rules and
regulations; no Reportable Event has occurred and is continuing with respect to
any Pension Plan; neither Borrower nor any ERISA Affiliate has withdrawn from
any Multiemployer Plan in a "complete withdrawal" or a "partial withdrawal" as
defined in sections 4203 or 4205 of ERISA, respectively; no steps have been
instituted to terminate any Pension Plan; no contribution failure has occurred
with respect to any Pension Plan sufficient to give rise to a Lien under section
302(f) of ERISA; no condition exists or event or transaction has occurred in
connection with any Pension Plan or Multiemployer Plan which could result in the
incurrence by Borrower, any other Obligor or any ERISA Affiliate of any material
liability, fine or penalty; and neither Borrower nor any other Obligor nor any
ERISA Affiliate is a "contributing sponsor" as defined in section 4001(a) (13)
of ERISA of a "single-employer plan" as defined in section 4001 (a) (15) of
ERISA which has two or more contributing sponsors at least two of whom are not
under common control. Except as listed in Schedule 4.19, neither Borrower nor
any Subsidiary has any contingent liability with respect to any post-retirement
benefit under any "employee welfare benefit plans," as such term is defined in
section 3(1) of ERISA, other than liability for benefit coverage required by
applicable law, continuation coverage described in Part 6 of Title I of ERISA or
in section 4980B of the Code, severance pay, benefits the full cost of which is
borne by the former employee (or the former employee's beneficiary), or
disability, medical or life benefits provided due to injuries, sickness or
disease commencing prior to the termination of employment ("Post-Retirement
Welfare Plans").
29
4.20 Regulation U. Borrower is not engaged in the business of
purchasing or selling Margin Stock or extending credit to others for the purpose
of purchasing or carrying Margin Stock, and no part of the proceeds of any
borrowing hereunder will be used to purchase or carry any Margin Stock or for
any other purpose which would violate any of the margin regulations of the
Federal Reserve Board.
4.21 Compliance. Except as described on Schedule 4.21 or Schedule 4.25,
Borrower and its Subsidiaries are in material compliance with all statutes and
governmental rules and regulations applicable to them.
4.22 Taxes. Borrower and each of its Subsidiaries has filed all tax
returns which are required to have been filed and has paid, or made adequate
provisions for the payment of, all of its Taxes which are due and payable,
except such Taxes, if any, as are being contested in good faith and by
appropriate proceedings and as to which such reserves or other appropriate
provisions as may be required by GAAP have been maintained. The federal income
tax liability of Borrower and its domestic Subsidiaries has been audited by the
Internal Revenue Service and has been finally determined and satisfied (or the
statute of limitations as provided in Code section 6501 has expired) for all tax
years up to and including the tax year ended December 31, 1986. To the best of
Borrower's knowledge, there is no proposed assessment against Borrower or any of
its Subsidiaries for additional Taxes (or any basis for any such assessment)
which would reasonably be expected to be material to Borrower and its
Subsidiaries taken as a whole.
4.23 Investment Company Act Representation. None of Borrower or any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended. For purposes of this Section 4.23, the term "investment company"
does not include so-called "private investment companies" that are exempted from
the definition of "investment company" under section 3(c)(1) of such Act.
4.24 Public Utility Holding Company Act Representation. None of
Borrower or any Subsidiary is a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company" within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
4.25 Environmental and Safety and Health Matters. Except as disclosed
on Schedule 4.25, Borrower and each of its Subsidiaries and/or each property,
operation and facility that Borrower or any Subsidiary may own, lease, operate
or control: (i) complies in all respects with (A) all applicable Environmental
Laws and (B) all applicable Occupational Safety and Health Laws; (ii) is not
subject to any judicial or administrative proceeding alleging the violation
30
of any Environmental Law or Occupational Safety and Health Law; (iii) has not
received any notice or inquiry (A) that it may be in violation of any
Environmental Law or Occupational Safety and Health Law, (B) threatening the
commencement of any proceeding relating to allegedly unlawful, unsafe or
unhealthy conditions or (C) alleging that it is or may be responsible for any
response, cleanup, or corrective action, including but not limited to any
remedial investigation/feasibility studies, under any Environmental Law or
Occupational Safety and Health Law; (iv) to the best of Borrower's knowledge, is
not the subject of federal or state investigation evaluating whether any
investigation, remedial action or other response is needed to respond to (A) a
spillage, disposal or release or threatened release into the environment of any
Hazardous Material or other hazardous, toxic or dangerous waste, substance or
constituent, or other substance or (B) any allegedly unsafe or unhealthful
condition; (v) has not filed any notice under or relating to any Environmental
Law or Occupational Safety and Health Law (excluding, solely as to treatment,
storage and disposal, any routine periodic filings required under law,
including, without limitation the Emergency Planning and Community Right-to-Know
Act, 42 U.S.C. ss.11001 et seq.) indicating or reporting (A) any past or present
spillage, disposal or release into the environment of, or treatment, storage or
disposal of, any Hazardous Material or other hazardous, toxic or dangerous
waste, substance or constituent, or other substance or (B) any potentially
unsafe or unhealthful condition, and there exists no basis for such notice
irrespective of whether such notice was actually filed; and (vi) has no
contingent liability in connection with (A) any actual or potential spillage,
disposal or release into the environment of, or otherwise with respect to, any
Hazardous Material or other hazardous, toxic or dangerous waste, substance or
constituent, or other substance, whether on any premises owned or occupied by
Borrower or any Subsidiary or on any other premises or (B) any unsafe or
unhealthful condition. Except as disclosed on Schedule 4.25, there are no
underground storage tanks, whether or not in use, in or under any property or
facilities owned, operated or controlled by Borrower or any Subsidiary and there
are no Hazardous Materials on, in or under any property or facilities owned,
operated or controlled by Borrower or any Subsidiary, including but not limited
to such Hazardous Materials that may be contained in underground storage tanks,
but excepting such Hazardous Materials used in accordance with all applicable
laws and in the same manner as an ordinary consumer (e.g., gasoline in tanks of
motor vehicles, small amounts of cleaners, etc.).
4.26 Related Agreements. All representations and warranties of Borrower
and its Subsidiaries contained in any Related Agreements are true and correct as
if made on the date hereof and Borrower hereby adopts and affirms all such
representations and warranties which Borrower agrees shall be incorporated by
reference herein and made a part hereof.
31
5. BORROWER COVENANTS. From the date of this Agreement and thereafter until the
Credit is terminated and all Liabilities of Borrower hereunder and all
"Liabilities" of each Subsidiary under and as defined in each Other Loan
Agreement are finally paid in full, Borrower agrees that, unless Lender shall
otherwise consent in writing, it will:
5.1 Financial Statements and Other Reports. Furnish, or cause
to be furnished, to Lender in form reasonably satisfactory to
Lender:
5.1.1 Financial Reports:
(a) Annual Audit Report. Within one hundred twenty
(120) days after each Fiscal Year of Borrower, a copy of the
annual audit report of Borrower and its Subsidiaries prepared
on a consolidating and consolidated basis and in conformity
with GAAP and certified by KPMG Peat Marwick or such other
independent certified public accountant who shall be
reasonably satisfactory to Lender, together with a certificate
from such accountant (i) acknowledging to Lender such
accountant's understanding that Lender and any Participant is
relying on such annual audit report, (ii) containing a
computation of, and showing compliance with, each of the
financial ratios and restrictions contained in this Section 5
or in Supplement A, and (iii) to the effect that, in making
the examination necessary for the signing of such annual audit
report, such accountant has not become aware of any Event of
Default or Default that has occurred and is continuing, or, if
such accountant has become aware of any such event, describing
it and the steps, if any, being taken to cure it;
(b) Quarterly Financial Statement. Within forty-five
(45) days after each Fiscal Quarter of Borrower, a copy of the
unaudited financial statement of Borrower and its Subsidiaries
prepared in the same manner as the audit report referred to in
the preceding clause (a), signed by Borrower's chief financial
officer and consisting of at least a balance sheet as at the
close of such Fiscal Quarter and statements of earnings and
cash flows for such Fiscal Quarter and for the period from the
beginning of such Fiscal Year to the close of such Fiscal
Quarter;
(c) Monthly Financial Statement. Within forty-five
(45) days after the end of each month of each Fiscal Year of
Borrower, a copy of the unaudited financial statement of
Borrower and its Subsidiaries prepared in the same manner as
the audit report referred to in the preceding clause (a),
signed by Borrower's chief financial officer and consisting of
at least a balance sheet as at the close
32
of such month and statements of earnings and cash flows for
such month and for the period from the beginning of such
Fiscal Year to the close of such month; and
(d) Officer's Certificate. Together with the
financial statements furnished by Borrower under the preceding
clauses (a), (b) and (c), a certificate of Borrower signed by
Borrower's chief financial officer, dated the date of such
annual audit report or such quarterly or monthly financial
statement, as the case may be, containing a statement that no
Event of Default or Default has occurred and is continuing,
or, if there is any such event, describing it and the steps,
if any, being taken to cure it, and containing a computation
of, and showing compliance with, each of the financial ratios
and restrictions contained in this Section 5 or in Supplement
A.
5.1.2 Other Reports:
(a) SEC and Other Reports. Copies of each filing and
report made by Borrower or any Subsidiary with or to any
securities exchange or the Securities and Exchange Commission
and of each communication from Borrower or any Subsidiary to
shareholders generally, promptly upon the filing or making
thereof;
(b) Report of Change Relating to Borrower,
Subsidiaries, Partnerships or Joint Ventures. Promptly
from time to time, a written report of any change in the
information set forth in Schedule 4.1, Schedule 4.10 or
Schedule 4.11 concerning Borrower, any Subsidiary, or any
partnership or joint venture;
(c) Patents, etc. Promptly from time to time, a
written report of any change to the list of patents,
trademarks, copyrights and other information set forth in
Schedule 4.16; and
(d) Other Reports. As soon as practicable from time
to time, such other reports or information reasonably
requested by Lender.
5.2 Notices. Notify Lender in writing of any of the following
immediately upon learning of the occurrence thereof (or, in the case of clauses
(e) and (f) of this Section 5.2, at least 30 days prior to the occurrence
thereof to the extent applicable to Borrower, any Subsidiary or any other
Obligor), describing the same and, if applicable, the steps being taken by the
Person(s) affected with respect thereto:
33
(a) Default. The occurrence of (i) an Event of Default or a
Default and (ii) to the extent not included in clause (i) of this
Section 5.2(a), the default by Borrower, Delaware, Contempo, Contempo
West, any other Obligor or any Subsidiary under any Other Loan
Agreement or any material note, indenture, loan agreement, mortgage,
lease, deed or other material similar agreement to which Borrower,
Delaware, Contempo, Contempo West, any other Obligor or any Subsidiary,
as appropriate, is a party or by which it is bound;
(b) Litigation. The institution of any litigation, arbitration
proceeding or governmental proceeding affecting Borrower, Delaware,
Contempo, Contempo West, any other Obligor, any Subsidiary, any
Collateral or any Third Party Collateral, whether or not considered to
be covered by insurance, if the amount in controversy exceeds $10,000;
(c) Judgment. The entry of any judgment or decree
against Borrower, Delaware, Contempo, Contempo West, any other
Obligor or any Subsidiary, if the amount of such judgment
exceeds $25,000;
(d) Pension Plans and Welfare Plans. The occurrence of a
Reportable Event with respect to any Pension Plan; the filing of a
notice of intent to terminate a Pension Plan by Borrower, any ERISA
Affiliate, or any other Obligor; the institution of proceedings to
terminate a Pension Plan by the PBGC or any other Person; the
withdrawal in a "complete withdrawal" or a "partial withdrawal" as
defined in sections 4203 and 4205, respectively, of ERISA by Borrower,
any ERISA Affiliate or any other Obligor from any Multiemployer Plan;
the failure of Borrower, any other Obligor or any ERISA Affiliate to
make a required contribution to any Pension Plan, including but not
limited to any failure to pay an amount sufficient to give rise to a
Lien under section 302(f) of ERISA; the taking of any action with
respect to a Pension Plan which could result in the requirement that
Borrower, any other Obligor or any ERISA Affiliate furnish a bond or
other security to the PBGC or such Pension Plan other than the bond
required by section 412 of ERISA; the occurrence of any other event
with respect to any Pension Plan which could result in the incurrence
by Borrower, any other Obligor or any ERISA Affiliate of any material
liability, fine or penalty; or the incurrence of any material increase
in the contingent liability of Borrower, any other Obligor or any
Subsidiary with respect to any Post-Retirement Welfare Plans;
(e) Business and Collateral Information. Any change or
proposed change in any of the information set forth on Schedule
4.12, 4.13 or 4.15, including but not limited to (i) any change
in the location of any of Borrower's Inventory or Equipment or
34
any other Collateral or Third Party Collateral, (ii) the identity of
any new bailee, processor, warehouseman or other Person in possession
or control of any of Borrower's Inventory or Equipment or any other
Collateral or Third Party Collateral, (iii) any change in the name or
address of the lessor or owner of any real property or equipment leased
to Borrower, any Subsidiary or any other Obligor, (iv) any proposed
change in the location of Borrower's or any Subsidiary's chief
executive office or chief place of business, (v) any proposed opening,
closing or other change in the list of offices and other places of
business of Borrower or any Subsidiary and (vi) any opening, closing or
other change in the offices and other places of business of any other
Obligor;
(f) Change of Name or Status. Any change in the name or
address of Borrower, any Subsidiary or any other Obligor, as
well as any change in the list of tradenames set forth in
Schedule 4.1;
(g) Insurance Information. Any material change in the
information set forth in Schedule 4.7;
(h) Environmental and Safety and Health Matters. The
occurrence of any event, or the acquisition of any information
which, if it had occurred or was true on or before the
Restatement Date, would have been required to have been
disclosed and included on Schedule 4.25, including but not
limited to (i) existence of any Environmental Lien and (ii)
receipt of any notice from any federal, state or local
government or agency with respect to any actual or alleged
violation of any Environmental Law or any Occupational Safety
and Health Law;
(i) Material Adverse Change. The occurrence of a
material adverse change in the business, operations or
financial condition of Borrower, any other Obligor or any
Subsidiary;
(j) Default by Others. Any material default by any Account
Debtor or other Person obligated to Borrower, any other Obligor, or any
Subsidiary under any contract, chattel paper, note or other evidence of
amounts payable or due or to become due to Borrower, such Obligor or
such Subsidiary if the amount payable under such contract, chattel
paper, note or other evidence of amounts payable or due or to become
due is material;
(k) Moveable Collateral. If any of the Collateral or
Third Party Collateral shall consist of goods of a type
normally used in more than one state, whether or not actually
so used, any use of any such goods in any state other than a
35
state in which Borrower shall have previously advised Lender such goods
will be used. Borrower agrees that such goods will not, unless Lender
shall otherwise consent in writing, be used outside the continental
United States or in Louisiana;
(l) Change in Management or Line(s) of Business. Any
substantial change in the senior management of Borrower or any
Subsidiary, or any change in Borrower's or any Subsidiary's
line(s) of business; and
(m) Other Notices. Any notices required to be provided
pursuant to any Related Agreement or the other provisions of this
Agreement, and notice of the occurrence of such other events as Lender
may reasonably specify from time to time.
5.3 Existence. Maintain and preserve, and cause each Subsidiary to
maintain and preserve, its respective existence as a corporation or other form
of business organization, as the case may be, and all rights, privileges,
licenses, patents, patent rights, copyrights, trademarks, trade names,
franchises and other authority to the extent material and necessary for the
conduct of its respective business in the ordinary course as conducted from time
to time.
5.4 Nature of Business. Engage, and cause each Subsidiary to engage
engage, in substantially the same fields of business as it is engaged in on the
date hereof.
5.5 Books, Records and Access. Maintain, and cause each Subsidiary to
maintain, complete and accurate books and records (including but not limited to
records relating to Accounts Receivable, Inventory, Equipment and other
Collateral), in which full and correct entries in conformity with GAAP shall be
made of all dealings and transactions in relation to its respective business and
activities; cause its books and records as at the end of any calendar month to
be posted and closed not more than fifteen (15) days after the last business day
of such month; and permit, and cause each Subsidiary to permit, access by Lender
and its agents or employees upon not less than one day's prior telephonic
notice, such access to be given during normal business hours (except after an
Event of Default or a Default shall have occurred and be continuing, in which
case no notice shall be required and no limitation on the business hours of the
investigation shall apply) to the books and records of Borrower and such
Subsidiary at Borrower's or such Subsidiary's place or places of business at
intervals to be determined by Lender and without hindrance or delay, and on like
notice permit and cause each Subsidiary to permit Lender or its agents and
employees to inspect Borrower's and/or such Subsidiary's inventory and
Equipment, to perform appraisals of Borrower's and/or such Subsidiary's
equipment, and to inspect, audit, check and make copies and/or extracts from the
books, records, computer data and
36
records, computer programs, journals, orders, receipts, correspondence and other
data relating to Inventory, Accounts Receivable, Contract Rights, General
Intangibles, Equipment and any other Collateral or Third Party Collateral, or
relating to any other transactions between the parties hereto. Any and all such
inspections and/or audits shall be at Borrower's expense, and Lender may advance
the same to Borrower as a Loan. Notwithstanding the foregoing, as long as no
Event of Default or Default has occurred and is continuing, Borrower shall not
be required to reimburse Lender for appraisals of Equipment of Borrower and its
Subsidiaries more frequently than once each Fiscal Year.
5.6 Insurance. Maintain, and cause each Subsidiary to maintain,
insurance to such extent and against such hazards and liabilities as is commonly
maintained by companies similarly situated or as Lender may reasonably request
from time to time. Keep the Collateral properly housed and insured for its full
insurable value 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 business similar to that of
Borrower, with such companies, in such amounts and under policies in such form
as shall be reasonably satisfactory to Lender. Certificates of such policies of
insurance have been delivered to Lender prior to the date hereof together with
evidence of payment of all premiums therefor. Borrower shall cause each issuer
of an insurance policy to provide Lender, prior to the Restatement Date, with an
endorsement or an independent instrument (i) substantially in the form of
Exhibit D or such other form and containing such other terms as shall be
acceptable to Lender and (ii) showing loss payable to Lender and, if required by
Lender, naming Lender as an additional insured. Borrower hereby directs all
insurers under such policies of insurance to pay all proceeds payable thereunder
directly to Lender. Borrower appoints Lender and any Person whom Lender may from
time to time designate (and all officers, employees or agents designated by
Lender or such Person) as Borrower's true and lawful attorney and agent-in-fact
with power to make, settle and adjust claims under such policies of insurance,
endorse the name of Borrower on any check, draft, instrument or other item of
payment for the proceeds of such policies of insurance and make all
determinations and decisions with respect to such policies of insurance. The
foregoing appointment and power, being coupled with an interest, shall be
irrevocable until all Liabilities are paid and performed in full and this
Agreement is terminated. In the event Borrower or any Subsidiary at any time or
times hereafter shall fail to obtain or maintain any of the policies of
insurance required herein or to pay any premium in whole or in part relating
thereto, then Lender, without waiving or releasing any obligation or default
hereunder, may at any time or times thereafter (but shall be under no obligation
to do so) obtain and maintain such policies of insurance and pay such premiums
and take any other action with respect thereto which Lender reasonably deems
advisable. All sums
37
so disbursed by Lender, including Attorneys' Fees, court costs, expenses and
other charges relating thereto, shall be payable on demand by Borrower to
Lender, and Lender may, in its sole and absolute discretion, advance such sums
to Borrower as a Loan.
5.7 Insurance Survey. Provide to Lender at least annually within 120
days of the end of Borrower's Fiscal Year, a certificate of Borrower signed by
its president or a vice president of Borrower that attests to and summarizes the
property and casualty insurance program carried by Borrower and its
Subsidiaries. This summary shall include the insurer's(s') name(s), policy
number(s), expiration date(s), amount(s) of coverage, type(s) of coverage, the
annual premium(s), Best's policyholder's and financial size ratings of the
insurer(s), exclusions, deductibles and self-insured retention and shall
describe in detail any retrospective rating plan, fronting arrangement or any
other self-insurance or risk assumption agreed to by Borrower or any Subsidiary
or imposed upon Borrower or any Subsidiary by any such insurer, as well as any
self-insurance program that is in effect. Borrower shall notify Lender in
writing (1) at least 20 days prior to any cancellation or material change of any
such insurance by Borrower or any Subsidiary, and (2) within 5 business days
after receipt of any notice (whether formal or informal) of any cancellation or
change in any of its insurance by any of its insurers or any material change in
the cost thereof or which reduces the policyholder's or financial size ratings
of the insurance carriers of Borrower or any of its Subsidiaries, as established
by Best's Insurance Reports. Annually, Lender shall have the right to request
Borrower to have a risk management survey completed by a recognized independent
risk management consultant acceptable to it and Lender which will identify,
quantify and assess any catastrophic uninsured, underinsured or self-insured
exposures faced by Borrower and its Subsidiaries. The cost of such survey shall
be borne solely by Borrower. A copy of the results of each such survey shall be
promptly delivered by Borrower to Lender.
5.8 Repair. Maintain, preserve and keep, and cause each Subsidiary to
maintain, preserve and keep, its respective properties in operating condition
and repair, ordinary wear and tear excepted, and from time to time make, and
cause each Subsidiary to make, all necessary repairs, renewals, replacements,
additions, betterments and improvements thereto so that at all times the
efficiency thereof shall be fully preserved and maintained.
5.9 Taxes. Pay, and cause each Subsidiary to pay, when due, all of its
Taxes, unless and only to the extent that Borrower or such Subsidiary is
contesting such Taxes in good faith and by appropriate proceedings and Borrower
or such Subsidiary has set aside on its books such reserves or other appropriate
provisions therefor as may be required by GAAP.
38
5.10 Compliance. Comply in all material respects, and cause each
Subsidiary to comply in all material respects, with all statutes and
governmental rules and regulations applicable to it.
5.11 Pension Plans. Not permit, and not permit any Subsidiary to
permit, any condition to exist in connection with any Pension Plan which would
reasonably constitute grounds for the PBGC to institute proceedings to have such
Pension Plan terminated or a trustee appointed to administer such Pension Plan;
not fail, and not permit any Subsidiary to fail, to make a required contribution
to any Pension Plan if such failure is sufficient to give rise to a Lien under
section 302(f) of ERISA; and not engage in, or permit to exist or occur, or
permit any of its Subsidiaries to engage in, or permit to exist or occur, any
other condition, event or transaction with respect to any Pension Plan which
could result in the incurrence by Borrower or any of its Subsidiaries of any
material liability, fine or penalty.
5.12 Merger, Purchase and Sale. Not, and not permit any Subsidiary to:
(a) be a party to any merger, liquidation or consolidation; (b) except in the
normal course of its business and except as permitted by the proviso to Section
3.4(a), sell, transfer, convey, lease or otherwise dispose of any of its assets;
(c) sell or assign, with or without recourse, any Accounts Receivable, Contract
Rights, notes receivable or chattel paper, except as provided in this Agreement;
or (d) purchase or otherwise acquire all or substantially all the assets of any
Person; provided, however, that the Fuse World Acquisition shall be permitted if
the Lender has received five Business Days' prior written notice of such
acquisition and if, prior to such acquisition or contemporaneously with such
acquisition, the following conditions precedent shall have been satisfied
(i) if, after the Fuse World Acquisition, Fuse World shall
continue to exist as a separate legal entity, (x) Delaware shall pledge
to the Lender all of the outstanding shares of capital stock of Fuse
World pursuant to an amendment to the Pledge Agreement in form and
substance satisfactory to the Lender and shall deliver to Lender share
certificates representing all of the outstanding shares of capital
stock of Fuse World along with undated stock powers duly executed in
blank, (y) Fuse World shall become a party to the Guaranty pursuant to
an amendment to the Guaranty in form and substance satisfactory to the
Lender and (z) Fuse World shall grant to the Lender a security interest
in all of its personal property pursuant to a security agreement in
substantially the form of the Original Security Agreement,
(ii) Delaware shall have delivered to the Lender
acknowledgment copies of properly filed Uniform Commercial Code
financing statements (Form UCC-1) or such other evidence of
39
filing as may be acceptable to the Lender, naming Delaware (and, if
after the Fuse World Acquisition Fuse World continues to exist, Fuse
World) as the debtor and the Lender as the secured party, filed in all
jurisdictions as may be necessary or desirable to perfect the security
interest of the Lender in the collateral of Delaware (and, if after the
Fuse World Acquisition Fuse World continues to exist, Fuse World),
(iii) Delaware shall have delivered to the Lender executed
copies of proper Uniform Commercial Code Form UCC-3 termination
statements, if any, necessary to release all Liens and other rights of
any Person other than the Lender in any collateral being granted to the
Lender pursuant to the Delaware Loan Agreement or, if applicable,
clause (i)(z) above, and
(iv) Delaware shall have delivered to the Lender certified
copies of Uniform Commercial Code Requests for Information or Copies
(Form UCC-11), or a similar search report certified by a party
acceptable to the Lender, dated a date satisfactory to the Lender,
listing all effective financing statements which name either Delaware
or Fuse World, under their present names and any previous names, as the
debtor and which are filed in the jurisdictions in which filings were
made pursuant to clause (ii) above, together with copies of such
financing statements.
5.13 Restricted Payments.
(a) Borrower will not declare, pay, or make any dividend or
distribution (in cash, property, or obligations) on any shares of any
class of capital stock (now or hereafter outstanding) of Borrower or on
any warrants, options, or other rights with respect to any shares of
any class of capital stock (now or hereafter outstanding) of Borrower
(other than dividends or distributions payable in its stock, or
warrants to purchase its stock, or splitups or reclassifications of its
stock into additional or other shares of its stock) or apply, or permit
any Subsidiary to apply, any of its funds, property, or assets to the
purchase, redemption, sinking fund, or other retirement of any shares
of any class of capital stock (now or hereafter outstanding) of
Borrower;
(b) Borrower will not permit any Subsidiary to declare, pay,
or make any dividend or distribution (in cash, property, or
obligations) on any shares of any class of capital stock (now or
hereafter outstanding) of such Subsidiary or on any warrants, options,
or other rights with respect to any shares of any class of capital
stock (now or hereafter outstanding) of such Subsidiary or apply any of
its funds, property, or assets to the purchase, redemption, sinking
fund, or other retirement of any shares of any class of capital stock
(now or hereafter
40
outstanding) of such Subsidiary other than (x) dividends paid to
Borrower to reimburse Borrower for Borrower's overhead and
administrative expenses and (y) dividends of Contempo Amsterdam paid to
Contempo;
(c) Borrower will not, and will not permit any Subsidiary to,
pay or prepay any principal of, or make any payment of interest on, or
redeem, purchase, or defease, any Subordinated Debt (except (x) solely
to the extent of and with the net cash proceeds of an offering of
equity securities by Borrower and (y) intercompany Indebtedness held by
Borrower or another Obligor); and
(d) Borrower will not, and will not permit any Subsidiary
to, make any deposit for any of the foregoing purposes;
provided, however, that
(e) Borrower may, subject to the subordination provisions
applicable to any of its Subordinated Debt and provided that no Event
of Default or Default has occurred and is continuing or would exist
after giving effect to any such payment, make payments of interest
accrued thereon when due; and
(f) Borrower may make the payments described in Schedule
5.13.
5.14 Borrower's and Subsidiaries' Stock. Not permit any Subsidiary to
purchase or otherwise acquire any shares of the stock of Borrower, and not take
any action, or permit any Subsidiary to take any action, which will result in a
decrease in Borrower's or any Subsidiary's ownership interest in any Subsidiary.
5.15 Indebtedness. Not, and not permit any Subsidiary to, incur or
permit to exist any Indebtedness (including but not limited to Indebtedness as
lessee under Capitalized Leases), except: (a) Indebtedness under this Agreement;
(b) Subordinated Debt; (c) Indebtedness owing by Borrower or another Obligor to
Borrower or another Obligor which is evidenced by a note pledged to Lender under
the Pledge Agreement; (d) other Indebtedness outstanding on the date hereof and
listed on Schedule 5.15; (e) Indebtedness hereafter incurred in connection with
Liens permitted under Section 5.16(d); (f) Indebtedness issued in connection
with that certain Stock Appreciation Plan adopted by Borrower's Board of
Directors on October 30, 1988 (the "Stock Appreciation Plan") which is not due
and payable until Borrower shall offer to redeem its Series A Preferred Stock
(which offer shall not violate Section 5.13); (g) Indebtedness of Contempo
Amsterdam to Contempo or another Obligor which is evidenced by a note pledged to
Lender in an amount not to exceed $350,000 at any one time outstanding; (h) from
and after the time of the Fuse World Acquisition (or the stock acquisition
41
described in clause (i) of the definition thereof), Indebtedness of Delaware
described in the "Shareholder Note" section of the Fuse World Letter of Intent,
provided that such Indebtedness is subordinated, in a manner satisfactory to
Lender, as to right of payment of principal and interest thereon, to all
Liabilities of Delaware; and (i) other Indebtedness approved in writing by
Lender.
5.16 Liens. Not, and not permit any Subsidiary to, create or permit to
exist any Lien with respect to any property, revenue or assets, whether now
owned or hereafter acquired, except: (a) Liens for current Taxes not delinquent
or Taxes being contested in good faith and by appropriate proceedings and as to
which such reserves or other appropriate provisions as may be required by GAAP
are being maintained; (b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, and other like statutory Liens arising in the ordinary course of
business securing obligations which are not overdue or which are being contested
in good faith and by appropriate proceedings and as to which such reserves or
other appropriate provisions as may be required by GAAP are being maintained;
(c) pledges or deposits in connection with workers' compensation, unemployment
insurance and other social security legislation; (d) Liens in connection with
the acquisition of property after the date hereof by way of purchase money
mortgage, conditional sale or other title retention agreement, Capitalized Lease
or other deferred payment contract, and attaching only to the property being
acquired, if (i) the Indebtedness secured thereby does not exceed 80% of the
fair market value of such property at the time of the acquisition thereof and
(ii) the aggregate outstanding amount of such Indebtedness of Borrower and its
Subsidiaries does not exceed $100,000; (e) Liens in favor of Lender; (f) Liens
referred to in clauses (b) and (c) of Section 4.9; (g) Liens granted prior to
December 31, 1987 to secure Indebtedness which is permitted by clause (c) of
Section 5.15; and (h) Liens consented to in writing by Lender.
5.17 Guaranties. Not, and not permit any Subsidiary to, become or be a
guarantor or surety of, or otherwise become or be responsible in any manner
(whether by agreement to purchase any obligations, stock, assets, goods or
services, or to supply or advance any funds, assets, goods or services, or
otherwise) with respect to, any undertaking of any other Person, except for (i)
the endorsement, in the ordinary course of collection, of instruments payable to
it or its order, (ii) the guaranty of Borrower contained in Section 12, (iii)
the Related Agreements and (iv) guaranties by Borrower of the obligations of
Delaware, Contempo and Contempo West under real estate leases.
5.18 Investments. Not, and not permit any Subsidiary to, make
or permit to exist any Investment in any Person, except for: (a)
advances to employees of Borrower or any of its Subsidiaries for
travel or other ordinary business expenses provided that the
42
aggregate amount outstanding at any one time shall not exceed $15,000 for any
single employee and $50,000 in the aggregate for all employees; (b) advances to
subcontractors and suppliers in maximum aggregate amounts reasonably acceptable
to Lender but in any event not exceeding an aggregate outstanding amount of
$35,000; (c) extensions of credit in the nature of Accounts Receivable or notes
receivable arising from the sale of goods and services in the ordinary course of
business; (d) shares of stock, obligations or other securities received in
settlement of claims arising in the ordinary course of business; (e) Investments
(other than Investments in the nature of loans or advances) outstanding on the
date hereof in Subsidiaries by Borrower and other Subsidiaries; (f) Investments
in the nature of loans and advances constituting Indebtedness of Subsidiaries to
Borrower and to other Subsidiaries outstanding on the date hereof and listed on
Schedule 5.18 and Investments representing Indebtedness permitted under Section
5.15(c) and (g); (g) other Investments outstanding on the date hereof and listed
on Schedule 5.18; (h) the Investment by Delaware in Fuse World represented by
the Fuse World Acquisition; and (i) other Investments consented to by Lender in
writing.
5.19 Subsidiaries. Not, and not permit any Subsidiary to, acquire any
stock or similar interest in any Person, and not create, establish or acquire
any Subsidiaries other than those existing on the date of this Agreement and
except that Delaware may purchase the outstanding capital stock of Fuse World in
the Fuse World Acquisition provided that within 10 days' thereof Fuse World
shall be dissolved or merged into Delaware.
5.20 Leases. Not enter into or permit to exist, or permit any
Subsidiary to enter into or permit to exist, any arrangements for the leasing by
Borrower or such Subsidiary, as lessee under a lease which is not a Capitalized
Lease, of any real or personal property (or any interest therein) other than
under leases in existence on the date hereof and listed on Schedule 4.15 (and
renewals, replacements and extensions thereof entered into on commercially
reasonable terms); provided, however, that Borrower and its Subsidiaries may
enter into additional leases of personal or real property after the date hereof
which, in the aggregate for all such leases, do not require rental payments for
any Fiscal Year in excess of $50,000.
5.21 Change in Accounts Receivable. After the occurrence of an Event of
Default or a Default, permit or agree to any extension, compromise or settlement
or make any change or modification of any kind or nature with respect to any
Account Receivable, including any of the terms relating thereto.
5.22 Future Environmental Assessments. Borrower shall provide
such information and certifications which Lender may reasonably
request from time to time pertaining to the environmental aspects of
43
Borrower and its Subsidiaries and any property owned, operated or controlled by
Borrower or any Subsidiary. To investigate environmental aspects of Borrower and
its Subsidiaries and their properties, facilities and operations, Lender or its
agents shall have the right upon prior notice to Borrower and at any reasonable
time to enter upon the property of Borrower or any Subsidiary, take samples,
review the books, records or other documents of Borrower and its Subsidiaries,
interview officers and employees of Borrower or its Subsidiaries, and conduct
such other activities as Lender, in its sole discretion, deems appropriate;
provided, however, that (i) Lender's activities shall not unreasonably interfere
with Borrower's operations, and (ii) Lender shall provide Borrower with a copy
of any written findings or results of such assessment. Borrower shall, and shall
cause its Subsidiaries to, cooperate fully in the conduct of any such
assessment. If Lender decides to cause such an assessment to be conducted
because of (a) Lender's considering taking possession of or title to the
property after the occurrence of an Event of Default or (b) a material change in
the use of the property which, in Lender's opinion, increases the risk of
non-compliance with Environmental Laws or increases the risk of cost or
liabilities thereunder, then Borrower shall pay upon demand all costs and
expenses (including Attorneys' Fees) connected with such assessment. Lender may,
in its discretion, provide for the payment of any amount due from Borrower under
this Section 5.22 by making Borrower a Loan. Nothing in this Section 5.22, and
no actions taken by Lender pursuant thereto, shall give, or be construed as
controlling or giving, to Lender the right or obligation to direct or control
the conduct or action or inaction of Borrower or any Subsidiary with respect to
any environmental matters, including but not limited to those pertaining to
compliance with any Environmental Laws.
5.23 [Intentionally Left Blank.]
5.24 Unconditional Purchase Options. Not enter into or be a party to,
or permit any Subsidiary to enter into or be a party to any contract for the
purchase of materials, supplies or other property or services, if such contract
requires that payment be made by it regardless of whether or not delivery is
ever made of such materials, supplies or other property or services.
5.25 Use of Proceeds. Not use or permit any proceeds of the Loans to be
used, either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of "purchasing or carrying" any Margin Stock, and
furnish to Lender upon request, a statement in conformity with the requirements
of Federal Reserve Form U-1 referred to in Regulation U of the Federal Reserve
Board.
5.26 Transactions with Related Parties. Not, and not permit
any Subsidiary to, enter into or be a party to any transaction or
arrangement, including, without limitation, the purchase, sale,
44
lease or exchange of property or the rendering of any service, with any Related
Party, except (x) in the ordinary course of and pursuant to the reasonable
requirements of Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to Borrower or such Subsidiary than would
obtain in a comparable arm's- length transaction with a Person not a Related
Party and (y) transactions permitted by Section 5.15(c) and (g) and 5.18(e) and
(f).
5.27 Modification of Subordinated Debt, etc. From and after the date of
issuance of any Indebtedness qualifying as Subordinated Debt (including, without
limitation, the Subordinated Debt referenced in clauses (i) and (ii) of the
definition of Subordinated Debt), not, and not permit any Subsidiary to, consent
to any amendment, supplement, or other modification of any of the terms
(including acceleration, covenant, default, subordination, sinking fund,
repayment, interest rate, or redemption provisions contained in, or applicable
to, any instrument evidencing or applicable to any Subordinated Debt) contained
in or applicable to any instrument evidencing or applicable to any Subordinated
Debt held by a non- Obligor, other than any amendment, supplement, or other
modification which extends the date or reduces the amount of any required
repayment or redemption.
5.28 Restrictive Agreements. Not, and not permit any Subsidiary to,
enter into any agreement or arrangement which contains a restriction on the
ability of such Subsidiary to make any payment to Borrower by way of dividends,
advances, repayments of advances, reimbursements of management and other
intercompany charges, expenses, and accruals, or other returns on investments or
any other agreement or arrangement which restricts the ability of such
Subsidiary to make any payment to Borrower, except as disclosed in Schedule
5.28.
5.29 Inconsistent Agreements. Not, and not permit any Subsidiary to,
enter into any agreement containing any provision which would be violated or
breached by the making of any Loan or by the performance by Borrower of its
obligations hereunder or under any Related Agreement or the performance by any
other Obligor of its obligations under any Related Agreement.
5.30 Stock Appreciation Plan. Borrower shall not (i) amend any
currently existing award notices issued pursuant to the Stock Appreciation Plan
or (ii) issue any award notices after the date hereof pursuant to the Stock
Appreciation Plan or any similar plan or arrangement providing for cash payments
to be made to any Person prior to the scheduled date for payment in full of all
Liabilities.
45
6. DEFAULT.
6.1 Event of Default. Each of the following shall constitute
an Event of Default under this Agreement:
(a) Non-Payment. Default in the payment, when due or
declared due, of any of the Liabilities.
(b) Non-Payment of Other Indebtedness. Default in the payment
when due, whether by acceleration or otherwise (subject to any
applicable grace period), of any Indebtedness of, or guaranteed by,
Borrower, any other Obligor or any Subsidiary (other than (i) any
Indebtedness under this Agreement and any Notes, (ii) any Indebtedness
of Borrower or any Subsidiary to Borrower or to any other Subsidiary or
(iii) Indebtedness under the Other Loan Agreements); provided that (x)
the aggregate amount of Indebtedness so affected shall equal or exceed
$25,000 and (y) failure to make any payment on any Subordinated Debt
described in clause (i) of the definition of Subordinated Debt shall
not be an Event of Default, so long as the holders of such Subordinated
Debt are prohibited under the terms of such Subordinated Debt from
taking any action, and refrain from instituting any litigation, to
collect.
(c) Acceleration of Other Indebtedness. Any event or condition
shall occur which results in the acceleration of the maturity of any
Indebtedness of, or guaranteed by, Borrower, any other Obligor or any
Subsidiary (other than (i) any Indebtedness of Borrower or any
Subsidiary to Borrower or to any other Subsidiary, (ii) the
Indebtedness under this Agreement and any Notes or (iii) Indebtedness
under the Other Loan Agreements) or enables the holder or holders of
such other Indebtedness or any trustee or agent for such holders (any
required notice of default having been given and any applicable grace
period having expired) to accelerate the maturity of such other
Indebtedness; provided that (x) the aggregate amount of Indebtedness
with respect to which such event or condition shall have occurred shall
equal or exceed $25,000 and (y) any event or condition which shall have
occurred which shall result in the acceleration of any Subordinated
Debt described in clause (i) of the definition of Subordinated Debt
shall not be an Event of Default, so long as the holders of such
Subordinated Debt are prohibited under the terms of such Subordinated
Debt from taking any action, and refrain from instituting any
litigation, to collect.
(d) Other Obligations. Default in the payment when due,
whether by acceleration or otherwise, or in the performance or
observance (subject to any applicable grace period or waiver of
such default) of (i) any obligation or agreement of Borrower,
any other Obligor or any Subsidiary to or with Lender (other
46
than any obligation or agreement of Borrower hereunder and under any
Related Agreement); or (ii) any material obligation or agreement of
Borrower, any other Obligor or any Subsidiary to or with any other
Person (other than (x) any such material obligation or agreement
constituting or related to Indebtedness, (y) Trade Accounts Payable and
(z) any material obligation or agreement of any Subsidiary to Borrower
or to any other Subsidiary), except only to the extent that the
existence of any such default is being contested by Borrower, such
other Obligor or such Subsidiary, as the case may be, in good faith and
by appropriate proceedings and Borrower, such other Obligor or such
Subsidiary, as applicable, shall have set aside on its books such
reserves or other appropriate provisions therefor as may be required by
GAAP.
(e) Insolvency. Borrower, any other Obligor or any Subsidiary
becomes insolvent, or generally fails to pay, or admits in writing its
inability to pay, its debts as they mature, or applies for, consents
to, or acquiesces in the appointment of a trustee, receiver or other
custodian for Borrower, such other Obligor or such Subsidiary, or for a
substantial part of the property of Borrower, such other Obligor or
such Subsidiary, or makes a general assignment for the benefit of
creditors; or, in the absence of such application, consent or
acquiescence, a trustee, receiver or other custodian is appointed for
Borrower, any other Obligor or any Subsidiary, or for a substantial
part of the property of Borrower, any other Obligor or any Subsidiary
and is not discharged or dismissed within 60 days; or any bankruptcy,
reorganization, debt arrangement or other proceeding under any
bankruptcy or insolvency law, or any dissolution or liquidation
proceeding, is instituted by or against Borrower, any other Obligor or
any Subsidiary and, solely in the case where such proceeding shall have
been instituted against Borrower, such Obligor or such Subsidiary, such
proceeding shall not have been dismissed within 60 days or an order for
relief shall have been entered; or any warrant of attachment or similar
legal process is issued against any substantial part of the property of
Borrower, any other Obligor or any Subsidiary.
(f) Pension Plans. The institution by Borrower or any ERISA
Affiliate of steps to terminate any Pension Plan if, in order to
effectuate such termination, Borrower or any ERISA Affiliate would be
required to make a contribution to such Pension Plan, or would incur a
liability or obligation to such Pension Plan, in excess of $50,000; the
institution by the PBGC of steps to terminate any Pension Plan and the
continuation of either such condition after notice thereof from Lender;
or a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under section 302(f) of ERISA.
47
(g) Non-Compliance With This Agreement. Default in the
performance of any of Borrower's agreements set forth in Section 2,
3.2, 3.3, 3.4, 5.3, 5.5, 5.6 or 5.12 through 5.30 (and not constituting
an Event of Default under any of the other subsections of this Section
6.1), and continuance of such default after written notice thereof to
Borrower from Lender; or default in the performance of any of
Borrower's agreements set forth in Section 5.2 (and not constituting an
Event of Default under any of the other subsections of this Section
6.1), and continuance of such default for three (3) Banking Days after
notice thereof to Borrower from Lender; or default in the performance
of any of Borrower's other agreements herein set forth (and not
constituting an Event of Default under any of the other subsections of
this Section 6.1), and continuance of such default for thirty (30) days
after written notice thereof to Borrower from Lender.
(h) Non-Compliance With Related Agreements. Default in the
performance by Borrower, any other Obligor or any Subsidiary of any of
its agreements set forth in any Related Agreement (and not constituting
an Event of Default under any of the other subsections of this Section
6.1), and continuance of such default after notice from Lender and the
expiration of the grace period (if any) set forth therein.
(i) Warranty. Any warranty made by Borrower or any other
Obligor herein or in any Related Agreement is untrue or misleading in
any material respect when made or deemed made; any schedule, statement,
report, notice, certificate or other writing furnished by Borrower or
any other Obligor to Lender is untrue or misleading in any material
respect on the date as of which the facts set forth therein are stated
or certified; or any certification made or deemed made by Borrower or
any other Obligor to Lender is untrue or misleading in any material
respect on or as of the date made or deemed made.
(j) Litigation. There shall be entered against any one of
Borrower, any other Obligor or any Subsidiary one or more judgments or
decrees in excess of $50,000 in the aggregate at any one time
outstanding, excluding those judgments or decrees (i) that shall have
been outstanding less than 30 calendar days from the entry thereof or
(ii) for and to the extent which Borrower, such Subsidiary or such
Obligor, as applicable, is insured and with respect to which the
insurer has assumed responsibility in writing or for and to the extent
which Borrower, such Subsidiary or such Obligor, as applicable, is
otherwise indemnified if the terms of such indemnification are
satisfactory to Lender.
(k) Validity. If the validity or enforceability of this
Agreement or any Related Agreement shall be challenged by
48
Borrower, any other Obligor or any other Person acting through, or on
behalf of, Borrower or any other Obligor, or shall fail to remain in
full force and effect.
(l) Conduct of Business. If Borrower, any other Obligor or any
Subsidiary is enjoined, restrained or in any way prevented by court
order, which has not been dissolved or stayed within five (5) business
days, from conducting all or any material part of its business affairs.
(m) Board Membership. If (x) ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or (y)
▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ shall for any reason other
than the death, disability or permanent incapacity of any such
individual cease to be members of the board of directors of
Borrower.
(n) Material Adverse Change. Lender shall have determined in
good faith that (i) a material adverse change has occurred in the
business, operations or financial condition of Borrower, any other
Obligor or any Subsidiary, (ii) Lender's interest in any material
Collateral or Third Party Collateral has been adversely affected or
impaired, or the value thereof to Lender has been diminished to a
material extent or (iii) the prospect of payment or performance of any
obligation or agreement of Borrower or any other Obligor hereunder or
under any Related Agreement is materially impaired, and the condition
giving rise to such determination does not constitute an Event of
Default under any of the other subsections of this Section 6.1 and
continues to exist unremedied for a period of thirty (30) days after
written notice of such determination by Lender to Borrower.
(o) Other Loan Agreements. The existence of any other
"Event of Default" under and as defined in the Other Loan
Agreements.
6.2 Effect of Event of Default; Remedies.
(a) In the event that one or more Events of Default described in
Section 6.1(e) shall occur, then Lender's commitment and the Credit extended
under this Agreement shall terminate and all Liabilities hereunder and under any
Notes shall be immediately due and payable without demand, notice or declaration
of any kind whatsoever.
(b) In the event an Event of Default other than one described in
Section 6.1(e) shall occur, then Lender may declare its commitment terminated
and/or all Liabilities hereunder and under any Notes immediately due and payable
without demand or notice of any kind whatsoever, whereupon the Credit extended
under this Agreement shall terminate and all Liabilities hereunder and under any
Notes
49
shall be immediately due and payable. Lender shall promptly advise Borrower of
any such declaration, but failure to do so shall not impair the effect of such
declaration.
(c) If any Event of Default exists and is continuing, Lender
may exercise any one or more or all of the following remedies, all
of which are cumulative and non-exclusive:
(1) Any remedy contained in this Agreement or in any of
the Related Agreements or any Supplemental Documentation;
(2) Any rights and remedies available to Lender under the
UCC and any other applicable law;
(3) To the extent permitted by applicable law, Lender may,
without notice, demand or legal process of any kind, take possession of
any or all of the Collateral and Third Party Collateral (in addition to
Collateral and Third Party Collateral which it may already have in its
possession), wherever it may be found, and for that purpose may pursue
the same wherever it may be found, and may enter into any premises
where any of the Collateral or Third Party Collateral may be or is
supposed to be, and search for, take possession of, remove, keep and
store any of the Collateral or Third Party Collateral until the same
shall be sold or otherwise disposed of, and Lender shall have the right
to store the same in any of Borrower's premises without cost to Lender;
(4) At Lender's request, Borrower will (and will cause its
Subsidiaries to), at Borrower's (or such Subsidiaries') expense,
assemble the Collateral and Third Party Collateral and make it
available to Lender at a place or places to be designated by Lender
which is reasonably convenient to Lender and Borrower; and
(5) Lender at its option, and pursuant to notification given
to Borrower (or any other applicable Obligor) as provided for below,
may sell any Collateral or Third Party Collateral actually or
constructively in its possession at public or private sale and apply
the proceeds thereof as provided below.
7. ADDITIONAL PROVISIONS REGARDING COLLATERAL AND LENDER'S RIGHTS.
7.1 Notice of Disposition of Collateral. Any notification of intended
disposition of any of the Collateral required by law shall be deemed reasonably
and properly given if given at least ten (10) calendar days before such
disposition.
7.2 Application of Proceeds of Collateral. Any proceeds of
any disposition by Lender of any of the Collateral may be applied by
Lender to the payment of expenses in connection with the taking
50
possession of, storing, preparing for sale, and disposition of Collateral,
including Attorneys' Fees and legal expenses, and any balance of such proceeds
may be applied by Lender toward the payment of such of the Liabilities, and in
such order of application, as Lender may from time to time elect.
7.3 Care of Collateral. Lender shall be deemed to have exercised
reasonable care in the custody and preservation of any Collateral in its
possession if it takes such action for that purpose as Borrower requests in
writing, but failure of Lender to comply with such request shall not, of itself,
be deemed a failure to exercise reasonable care, and no failure of Lender to
preserve or protect any rights with respect to such Collateral against prior
parties, or to do any act with respect to the preservation of such Collateral
not so requested by Borrower, shall be deemed a failure to exercise reasonable
care in the custody or preservation of such Collateral.
7.4 Performance of Borrower's Obligations. Lender shall have the right,
but shall not be obligated, to discharge any claims against or Liens, and any
Taxes at any time levied or placed upon any or all Collateral, including,
without limitation, those arising under statute or in favor of landlords, taxing
authorities, government, public and/or private warehousemen, common and/or
private carriers, processors, finishers, draymen, coopers, dryers, mechanics,
artisans, laborers, attorneys, courts, or others. Lender may also pay for
maintenance and preservation of Collateral. Lender may, but is not obligated to,
perform or fulfill any of Borrower's responsibilities under this Agreement which
Borrower has failed to perform or fulfill. Lender may advance to Borrower as a
Loan any payment made or expense incurred by Lender under this Section 7.4.
7.5 Lender's Rights. None of the following shall affect the obligations
of Borrower to Lender under this Agreement or Lender's right with respect to the
remaining Collateral or any Third Party Collateral (any or all of which actions
may be taken by Lender at any time, whether before or after an Event of Default,
at its sole and absolute discretion and without notice to Borrower):
(a) acceptance or retention by Lender of other property or
interests in property as security for the Liabilities, or acceptance or
retention of any Obligor(s), in addition to Borrower, with respect to
any of the Liabilities;
(b) release of its security interest in, or the surrender or
release of, or the substitution or exchange of or for, all or any part
of the Collateral or any Third Party Collateral or any other property
securing any of the Liabilities (including but not limited to any
property of any Obligor other than Borrower), or any extension or
renewal for one or more periods (whether or not longer than the
original period), or release,
51
compromise, alteration or exchange, of any obligations of any guarantor
or other Obligor with respect to any Collateral, any Third Party
Collateral or any such property;
(c) extension or renewal for one or more periods (whether or
not longer than the original period), or release, compromise,
alteration or exchange of any of the Liabilities, or release or
compromise of any obligation of any Obligor with respect to any of the
Liabilities; or
(d) failure by Lender to resort to other security or pursue
any Person liable for any of the Liabilities before resorting to the
Collateral or Third Party Collateral.
8. CONDITIONS PRECEDENT; DELIVERY OF DOCUMENTS AND OTHER MATTERS.
8.1 Conditions Precedent. The effectiveness of this Agreement
is subject to satisfaction of the following conditions precedent (in
addition to those provided in Section 8.2):
8.1.1 Security Interest. The security interest in the
Collateral granted under this Agreement and the Related Agreements, and
in any Third Party Collateral and all other Liens granted to Lender to
secure the Liabilities, shall be a senior, perfected Lien except as
otherwise agreed by Lender, and all financing statements and other
documents relating to Collateral and Third Party Collateral shall have
been filed or recorded, as appropriate.
8.1.2 Financial Statements. Borrower shall deliver to Lender
Borrower's audited consolidated and consolidating financial statements
as at December 31, 1994, prepared in conformity with GAAP applied on a
basis consistent with that of the preceding Fiscal Year.
8.1.3 Other Loan Agreements. The Other Loan Agreements
shall have become effective in accordance with their terms.
8.1.4 Blocked Account; Lock Box. Borrower and its Subsidiaries
shall have entered into blocked account and/or lock box agreements with
Lender for the collection and remittance to Lender of cash proceeds of
Collateral and Third Party Collateral.
8.1.5 Effect of Law. No law or regulation affecting Lender's
entering into this Agreement shall impose upon Lender any material
obligation, fee, liability, loss, cost, expense or damage.
8.1.6 Exhibits; Schedules. All Exhibits and Schedules to
this Agreement shall have been completed and submitted to
52
Lender, shall be in form and substance reasonably satisfactory to
Lender and shall contain no facts or information which Lender, in its
reasonable judgment, determines to be unacceptable.
8.1.7 Fees. Lender shall have received all fees then due and
payable by Borrower or any other Person hereunder or in connection
herewith.
8.1.8 Documents. Lender shall have received all of the
following, each duly executed where appropriate and dated as of the
Restatement Date (or such other date as shall be satisfactory to
Lender), in form and substance satisfactory to Lender:
(a) Resolutions. A copy, duly certified by the secretary or an
assistant secretary of Borrower and each Subsidiary party to a Related
Agreement, of: (1) resolutions of the Board of Directors of Borrower
and each such Subsidiary authorizing (A) the borrowings by Borrower
hereunder and (B) the execution, delivery and performance by Borrower
and each such Subsidiary of this Agreement and each other Related
Agreement to which Borrower and each such Subsidiary is a party or by
which it is bound; (2) all documents evidencing any other necessary
corporate action with respect to this Agreement and the Related
Agreements; and (3) all approvals or consents, if any, with respect to
this Agreement and the Related Agreements;
(b) Incumbency Certificates. A certificate of the secretary of
Borrower and each Subsidiary party to a Related Agreement certifying
the names of the officers of Borrower and each such Subsidiary
authorized to sign this Agreement and each other Related Agreement to
which Borrower and each such Subsidiary is a party or by which any of
them is bound, and all other documents and certificates to be delivered
by any of them hereunder, together with samples of the true signatures
of such officers;
(c) Borrower's Certificate. The certificate of the President
or Chief Executive Officer of Borrower certifying to the fulfillment of
all conditions precedent to closing and funding the secured financing
transaction contemplated by this Agreement and to the truth and
accuracy, as of such date, of the representations and warranties of
Borrower and each Subsidiary party to a Related Agreement contained in
this Agreement and each other Related Agreement to which Borrower or
such Subsidiary is a party or by which it is bound;
(d) Accountant's Letter. With respect to the financial
statements referred to in Section 4.6, a "reliance letter" from
53
the accountants who prepared such statements in form and
content acceptable to Lender;
(e) Bylaws. A copy, duly certified by the secretary or
an assistant secretary of Borrower and each Subsidiary party to
a Related Agreement, of the Bylaws of Borrower and each such
Subsidiary;
(f) Charter. A copy, duly certified by the Secretary of
State of the state of organization of each such Person, of the
Certificate of Incorporation of Borrower and each Subsidiary
party to a Related Agreement;
(g) Registration; Good Standing. A copy, duly certified by the
applicable Secretary of State, of a certificate of good standing issued
by the Secretary of the State of the state of organization of Borrower
and each Subsidiary party to a Related Agreement and each other state
where Borrower and each such Subsidiary is qualified to do business or
where, because of the nature of its business or properties,
qualification to do business is required;
(h) Legal Opinion. A legal opinion from counsel for
Borrower and each Subsidiary party to a Related Agreement
substantially in the form of Exhibit I;
(i) Insurance. Evidence satisfactory to Lender of the
existence of insurance on the Collateral, Third Party Collateral and
business of Borrower and each Subsidiary in amounts and with insurers
acceptable to Lender, together with evidence establishing that Lender
is named as a loss payee and/or additional insured, as applicable, on
all related insurance policies;
(j) Landlord's Consents. A Landlord's Consent, duly
executed by the owner of each leased premises identified on
Schedule 4.12, 4.13 or 4.15 where Collateral or Third Party
Collateral is located other than ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇;
(k) Note. The Term Note in the form of Exhibit C;
(l) Guaranty. A Guaranty, duly executed by Delaware,
Contempo and Contempo West;
(m) Pledge Agreement. A Pledge Agreement, duly executed
by Borrower, together with all intercompany notes pledged
thereunder, duly endorsed in blank or accompanied by duly
endorsed blank bond powers or allonges; and
54
(n) Other Documents. Such other documents as Lender shall
determine to be necessary or desirable, including but not limited to
documents described in paragraphs (a), (b), (e), (f), (g), (h) and (i)
of this Section 8.1.8 with respect to any Obligor other than Borrower
and its Subsidiaries.
8.2 Further Conditions Precedent; Certification. The
effectiveness of this Agreement is subject to satisfaction of the
following conditions precedent in addition to those provided in
Section 8.1:
(a) No Change in Condition. No change in the condition or
operations, financial or otherwise, of Borrower, any Subsidiary or any
other Obligor shall have occurred which change, in the reasonable
credit judgment of Lender, would reasonably be expected to have a
material adverse effect on Borrower, such Subsidiary or such other
Obligor, or on any Collateral or Third Party Collateral (which
Collateral or Third Party Collateral Lender deems in its sole
discretion to be material);
(b) Default. Before and after the effectiveness hereof,
no Event of Default or Default shall have occurred and be
continuing;
(c) Insurance. There shall have been no material change, or
notice of prospective material change (whether such notice is formal or
informal), in the nature, extent, scope or cost of the insurance
policies of Borrower or any Subsidiary listed on Schedule 4.7 which
change would have a material adverse effect on the financial condition
of Borrower, any Subsidiary or Borrower and its Subsidiaries taken as a
whole, or would significantly adversely affect Borrower's ability to
perform its obligations under this Agreement, the Notes, or any Related
Agreement to which it is a party or by which it is bound;
(d) Warranties. Before and after the effectiveness
hereof, the warranties in Section 4 shall be true and correct
as though made on the Restatement Date, except for such changes
as are specifically permitted hereunder; and
(e) Accounting Methods. Borrower shall not have made any
material (as reasonably determined by Lender) change in its
accounting methods or principles except as required by GAAP.
Each request for a Loan hereunder made or deemed to have been made by
Borrower shall be deemed to be a certificate of Borrower as to the matters set
out in the foregoing provisions of this Section 8.2.
55
9. INDEMNITY.
9.1 Environmental and Safety and Health Indemnity. Borrower hereby
indemnifies Lender and agrees to hold Lender harmless from and against any and
all losses, liabilities, damages, injuries, costs, expenses and claims of any
and every kind whatsoever (including, without limitation, court costs and
Attorneys' Fees) which at any time or from time to time may be paid, incurred or
suffered by, or asserted against, Lender for, with respect to, or as a direct or
indirect result of the violation by Borrower or any of its Subsidiaries of any
Environmental Law or Occupational Safety and Health Law, or with respect to, or
as a direct or indirect result of, (i) the presence on or under, or the escape,
seepage, leakage, spillage, disposal, discharge, emission or release from,
properties utilized by Borrower and/or any Subsidiary into or upon any land, the
atmosphere, or any watercourse, body of water, groundwater or wetland, of any
Hazardous Material or other hazardous, toxic or dangerous waste, substance or
constituent, or other substance (including, without limitation, any losses,
liabilities, damages, injuries, costs, expenses or claims asserted or arising
under any Environmental Law) or (ii) the existence of any unsafe or unhealthful
condition on or at any premises utilized by Borrower and/or any Subsidiary in
the conduct of its business. The provisions and undertakings of indemnification
set out in this Section 9.1 shall survive satisfaction and payment of the
Liabilities and termination of this Agreement.
9.2 General Indemnity. In addition to the payment of expenses pursuant
to Section 11.3, whether or not the transactions contemplated hereby shall be
consummated, Borrower agrees to indemnify, pay and hold Lender and any holder of
any Note, and the officers, directors, employees, agents, and affiliates of
Lender and such holders (collectively, the "Indemnitees"), harmless from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for any of such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not any of such Indemnitees shall be designated a party thereto) that
may be imposed on, incurred by, or asserted against any Indemnitee, in any
manner relating to or arising out of this Agreement, any Related Agreement or
any other agreements executed and delivered by Borrower or any other Obligor in
connection herewith, the statements contained in any commitment letter delivered
by Lender, Lender's agreement to make the Loans hereunder, or the use or
intended use of the proceeds of any of the Loans hereunder (the "indemnified
liabilities"); provided that Borrower shall have no obligation to an Indemnitee
hereunder with respect to indemnified liabilities arising from the gross
negligence or willful misconduct of such Indemnitee. To the extent that the
undertaking
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to indemnify, pay and hold harmless set forth in the preceding sentence may be
unenforceable because it violates any law or public policy, Borrower shall
contribute the maximum portion that it is permitted to pay under applicable law
to the payment and satisfaction of all indemnified liabilities incurred by the
Indemnitees or any of them. The provisions and undertakings of indemnification
set out in this Section 9.2 shall survive satisfaction and payment of the
Liabilities and termination of this Agreement.
9.3 Capital Adequacy. If Lender shall reasonably determine that the
application or adoption of any law, rule, regulation, directive, interpretation,
treaty or guideline regarding capital adequacy, or any change therein or in the
interpretation or administration thereof, whether or not having the force or law
(including, without limitation, application of changes to Regulation H and
Regulation Y of the Federal Reserve Board issued by the Federal Reserve Board on
January 19, 1989 and regulations of the Comptroller of the Currency, Department
of the Treasury, 12 CFR Part 3, Appendix A, issued by the Comptroller of the
Currency on January 27, 1989) increases the amount of capital required or
expected to be maintained by Lender or any Person controlling Lender, and such
increase is based upon the existence of Lender's obligations hereunder and other
commitments of this type, then from time to time, within ten (10) days after
demand from Lender, Borrower shall pay to Lender such amount or amounts as will
compensate Lender or such controlling Person, as the case may be, for such
increased capital requirement. The determination of any amount to be paid by
Borrower under this Section 9.3 shall take into consideration the policies of
Lender or any Person controlling Lender with respect to capital adequacy and
shall be based upon any reasonable averaging, attribution and allocation
methods. A certificate of Lender setting forth the amount or amounts as shall be
necessary to compensate Lender as specified in this Section 9.3 shall be
delivered to Borrower and shall be conclusive in the absence of manifest error.
The provisions and undertakings of indemnification set out in this Section 9.3
shall survive satisfaction and payment of the Liabilities and termination of
this Agreement.
9.4 Other Indemnities. Notwithstanding anything to the contrary
elsewhere in this Agreement, all other indemnities of Borrower in favor of
Lender contained in this Agreement shall survive satisfaction and payment of the
Liabilities and termination of this Agreement.
10. ADDITIONAL PROVISIONS. Additional provisions are set forth in
Supplement A.
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11. GENERAL.
11.1 Borrower Waiver. Except as otherwise provided for in this
Agreement, Borrower waives (i) presentment, demand and protest and notice of
presentment, protest, default, non-payment, maturity, release, compromise,
settlement, one or more extensions or renewals of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by Lender on which Borrower may in any way be liable and,
assuming Lender has acted in a commercially reasonable manner, hereby ratifies
and confirms whatever Lender may do in this regard; (ii) all rights to notice
and a hearing prior to Lender's taking possession or control of, or Lender's
relevy, attachment or levy on or of, the Collateral or any bond or security
which might be required by any court prior to allowing Lender to exercise any of
Lender's remedies; and (iii) the benefit of all valuation, appraisement and
exemption laws. Borrower acknowledges that it has been advised by counsel of its
choice with respect to this Agreement and the transactions evidenced by this
Agreement.
11.2 Power of Attorney. Borrower appoints Lender, or any Person whom
Lender may from time to time designate, as Borrower's attorney and agent-in-fact
with power (which appointment and power, being coupled with an interest, shall
be irrevocable until all Liabilities are finally paid and performed in full and
this Agreement is terminated), without notice to Borrower, to:
(a) At such time or times hereafter as Lender or said agent,
in its sole and absolute discretion, may determine in Borrower's or
Lender's name (i) endorse Borrower's name on any checks, notes, drafts
or any other items of payment relating to and/or proceeds of the
Collateral which come into the possession of Lender or under Lender's
control and apply such payment or proceeds to the Liabilities in
accordance with the terms hereof; (ii) endorse Borrower's name on any
chattel paper, document, instrument, invoice, freight ▇▇▇▇, ▇▇▇▇ of
lading or similar document or agreement in Lender's possession relating
to Accounts Receivable, Inventory or any other Collateral; (iii) use
the information recorded on or contained in any data processing
equipment and computer hardware and software to which Borrower has
access relating to Accounts Receivable, Inventory and/or other
Collateral; (iv) use Borrower's stationery and sign the name of
Borrower to verification of Accounts Receivable and notices thereof to
Account Debtors; and (v) if not done by Borrower, do all acts and
things determined by Lender to be necessary, to fulfill Borrower's
obligations under this Agreement; and
(b) At such time or times after the occurrence and during the
continuance of an Event of Default, as Lender or said agent, in its
sole and absolute discretion, may determine, in
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Borrower's or Lender's name: (i) demand payment of the Accounts
Receivable; (ii) enforce payment of the Accounts Receivable, by legal
proceedings or otherwise; (iii) exercise all of Borrower's rights and
remedies with respect to the collection of the Accounts Receivable and
other Collateral; (iv) settle, adjust, compromise, extend or renew the
Accounts Receivable; (v) settle, adjust or compromise any legal
proceedings brought to collect the Accounts Receivable; (vi) if
permitted by applicable law, sell or assign the Accounts Receivable
and/or other Collateral upon such terms for such amounts and at such
time or times as Lender may deem advisable; (vii) discharge and release
the Accounts Receivable and/or other Collateral; (viii) prepare, file
and sign Borrower's name on any proof of claim in bankruptcy or similar
document against any Account Debtor; (ix) prepare, file and sign
Borrower's name on any notice of lien, assignment or satisfaction of
lien or similar document in connection with the Accounts Receivable
and/or other Collateral; and (x) do all acts and things necessary, in
Lender's sole and absolute discretion, to obtain repayment of the
Liabilities and to fulfill Borrower's other obligations under this
Agreement.
11.3 Expenses; Attorneys' Fees. Borrower agrees, whether or not any
Loan is made hereunder, to pay upon demand all Attorneys' Fees and all other
reasonable expenses incurred by Lender in connection with (i) the preparation,
negotiation and execution of this Agreement, any Related Agreement, the Other
Loan Agreements, the Other Loan Documents and any document required to be
furnished in connection herewith or therewith, (ii) the preparation of any and
all amendments to this Agreement or any of the Related Agreements and all other
instruments or documents provided for therein or delivered or to be delivered
thereunder or in connection therewith, (iii) the collection or enforcement of
Borrower's or any other Obligor's obligations hereunder or under any Related
Agreement, and (iv) the collection or enforcement of any of Lender's rights in
or to any Collateral or Third Party Collateral; provided, however, that Borrower
shall have no obligation to pay the Attorney's Fees in clause (i) of this
sentence to the extent that the same exceed $30,000. Lender may advance all such
amounts to Borrower as a Loan. Borrower also agrees, (v) to indemnify and hold
Lender harmless from any loss or expense which may arise or be created by the
acceptance of telephonic or other instructions for making Loans except for
losses and expenses arising from Lender's gross negligence or willful
misconduct, and (vi) to pay, and save Lender harmless from all liability for,
any stamp or other taxes which may be payable with respect to the execution or
delivery of this Agreement, or any Related Agreement or Supplemental
Documentation, or the issuance of any Note or of any other instruments or
documents provided for herein or to be delivered hereunder or in connection
herewith. Borrower's foregoing obligations shall survive any termination of this
Agreement.
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11.4 Lender Fees and Charges. Borrower agrees to pay Lender on demand
the customary fees and charges of Lender for maintenance of accounts with Lender
or for providing other services to Borrower. Lender may, in its sole and
absolute discretion, provide for such payment by advancing the amount thereof to
Borrower as a Loan.
11.5 Lawful Interest. In no contingency or event whatsoever shall the
interest rate charged pursuant to the terms of this Agreement exceed the highest
rate permissible under any law which a court of competent jurisdiction shall, in
a final determination, deem applicable hereto. In the event that such a court
determines that Lender has received interest hereunder in excess of the highest
applicable rate, Lender shall promptly refund such excess interest to Borrower.
11.6 No Waiver by Lender; Amendments. No failure or delay on the part
of Lender in the exercise of any power or right, and no course of dealing
between Borrower and Lender shall operate as a waiver of such power or right,
nor shall any single or partial exercise of any power or right preclude other or
further exercise thereof or the exercise of any other power or right. The
remedies provided for herein are cumulative and not exclusive of any remedies
which may be available to Lender at law or in equity. No notice to or demand on
Borrower not required hereunder shall in any event entitle Borrower to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the right of Lender to any other or further action in any
circumstances without notice or demand. No amendment, modification or waiver of,
or consent with respect to, any provision of this Agreement or any Related
Agreement shall in any event be effective unless the same shall be in writing
and signed and delivered by Lender and Borrower. Any waiver of any provision of
this Agreement, and any consent to any departure by Borrower from the terms of
any provision of this Agreement, shall be effective only in the specific
instance and for the specific purpose for which given.
11.7 Termination of Credit.
(a) Unless the Termination Date is extended pursuant to clause
(b) of this Section 11.7, the Credit shall terminate on the
then-scheduled Termination Date. Borrower may terminate the Credit at
any time prior to the Termination Date upon notice to Lender and
payment in full of the outstanding principal balance of the Loans and
all other Liabilities. All of Lender's rights and remedies, the liens
and security interests of Lender in the Collateral and the Third Party
Collateral and all of Borrower's duties and obligations under this
Agreement shall survive termination of the Credit extended to Borrower
hereunder until all of the Liabilities have been finally paid and
performed in full. The termination or cancellation of the Credit shall
not affect or impair the
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liabilities and obligations of Borrower or any one or more of the
Obligors to Lender or Lender's rights with respect to any Loans and
advances made and other Liabilities incurred prior to such termination
or with respect to the Collateral or any Third Party Collateral.
(b) Borrower may, not more than 90 days nor less than 75 days
prior to any scheduled Termination Date, request that Lender extend the
Credit for an additional one-year period to the next anniversary of
such date. Unless Lender, in the exercise of its sole and complete
discretion, notifies Borrower of its willingness to extend the Credit
for such additional one-year period, the Credit shall terminate on the
then scheduled Termination Date (and all Loans and other Liabilities
shall be thereupon due and payable).
11.8 Notices. Except as otherwise expressly provided herein, any notice
hereunder to Borrower or Lender shall be in writing (including telegraphic,
telex, or facsimile communication) and shall be given to Borrower or Lender at
its address, telex number or facsimile number set forth on the signature pages
hereof or at such other address, telex number or facsimile number as Borrower or
Lender may, by written notice, designate as its address, telex number or
facsimile number for purposes of notices hereunder. All such notices shall be
deemed to be given when transmitted by telex and the appropriate answerback is
received, transmitted by facsimile, delivered to the telegraph office, delivered
by courier, personally delivered or, in the case of notice by mail, three (3)
Banking Days following deposit in the United States mails, properly addressed as
herein provided, with proper postage prepaid; provided, however, that notice to
Lender of Borrower's intent to terminate the Credit shall not be effective until
actually received by Lender.
11.9 Assignments and Participations; Information. Borrower hereby
consents to Lender's grant of participations in or sale, assignment, transfer or
other disposition, at any time and from time to time hereafter, of this
Agreement or any Related Agreement, or of any portion of any thereof, including
without limitation Lender's rights, titles, interests, remedies, powers and/or
duties. Lender may furnish any information concerning Borrower in the possession
of Lender from time to time to assignees of the rights and/or obligations of
Lender hereunder and to Participants in any Loan (including prospective
assignees and Participants) and may furnish information in response to credit
inquiries consistent with general banking practice. Lender shall promptly notify
Borrower of Lender's grant of any participation in or sale, assignment, transfer
or other disposition of this Agreement or any Related Agreement, or of any
portion of any thereof. Borrower shall use its reasonable efforts to assist
Lender in its efforts to sell assignments and participations.
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11.10 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
11.11 Successors. This Agreement shall be binding upon Borrower and
Lender and their respective successors and assigns, and shall inure to the
benefit of Borrower and Lender and the successors and assigns of Lender.
Borrower shall not assign its rights or duties hereunder without the consent of
Lender.
11.12 Construction. Borrower acknowledges that this Agreement shall not
be binding upon Lender until and unless accepted by Lender in writing. If so
accepted by Lender, this Agreement and the Related Agreements and Supplemental
Documentation shall, unless otherwise expressly provided therein, be deemed to
have been negotiated and entered into in, and shall be governed and controlled
by the laws of, the State of Illinois as to interpretation, enforcement,
validity, construction, effect, choice of law, and in all other respects,
including, but not limited to, the legality of the interest rate and other
charges, but excluding perfection of security interests and liens which shall be
governed and controlled by the laws of the relevant jurisdiction.
11.13 Consent to Jurisdiction. To induce Lender to accept this
Agreement, Borrower irrevocably agrees that, subject to Lender's sole and
absolute election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT,
ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT, THE RELATED AGREEMENTS, THE
SUPPLEMENTAL DOCUMENTATION OR THE COLLATERAL SHALL BE LITIGATED IN COURTS HAVING
SITUS WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS. BORROWER HEREBY CONSENTS
AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED
WITHIN SAID CITY AND STATE AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
UPON BORROWER, AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL DIRECTED TO BORROWER AT THE ADDRESS STATED ON THE SIGNATURE PAGE
HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT
THEREOF.
11.14 Subsidiary Reference. Any reference herein to a Subsidiary or
Subsidiaries of Borrower, and any financial definition, ratio, restriction or
other provision of this Agreement which is stated to be applicable to "Borrower
and its Subsidiaries" or which is to be determined on a "consolidated" or
"consolidating" basis, shall apply only to the extent Borrower has any
Subsidiaries and, where applicable, to the extent any such Subsidiaries are
consolidated with Borrower for financial reporting purposes.
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11.15 WAIVER OF JURY TRIAL. BORROWER AND LENDER EACH WAIVES ANY RIGHT
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
(i) UNDER THIS AGREEMENT OR ANY RELATED AGREEMENT OR UNDER ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR (ii) ARISING FROM ANY BANKING RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
Initials of ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President of Borrower:
.
11.16 Prior Actions. Borrower hereby waives, releases and forever
discharges Lender, its officers, employees and agents, from any and all rights,
claims, demands or causes of action against Lender, in law or in equity, arising
out of Lender's past actions or omissions with respect to the Original Loan
Agreement, any other agreements or documents, or any lien or collateral securing
any Liabilities under and as defined in the Original Loan Agreement.
12. BORROWER GUARANTY.
12.1 Guaranty of Payment. Borrower hereby absolutely,
unconditionally and irrevocably
(i) guarantees the full and prompt payment and performance
when due, whether by required payment, declaration, acceleration, or
otherwise, and at all times thereafter, of all of the monetary
obligations of each of Delaware, Contempo and Contempo West under, or
in respect of, the Indebtedness of such Subsidiaries under the Other
Loan Agreements and the Other Loan Documents (the "Guaranteed
Obligations"); and
(ii) agrees to reimburse Lender for all costs and expenses,
including, without limitation, Attorneys' Fees, which Lender expends or
incurs in collecting or compromising any Guaranteed Obligation and in
enforcing this Section 12, whether or not suit is filed, including all
costs, expenses, reasonable Attorneys' Fees, and other charges incurred
by Lender in connection with any insolvency, bankruptcy,
reorganization, liquidation, dissolution, arrangement, or other similar
proceeding involving Borrower which in any way affects the exercise by
Lender of its rights, powers, remedies, and privileges with respect to
this Section 12 or the outstanding principal amount of the Guaranteed
Obligations.
12.2 Obligations Absolute, Unconditional, etc. Borrower agrees that its
obligations under this Section 12 shall be absolute, unconditional, and
irrevocable, irrespective of the genuineness, validity, legality, or
enforceability of the Guaranteed Obligations, the Other Loan Agreements, or any
Other Loan Document, or any other
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instrument or collateral relating to or securing the payment, performance, or
observance thereof or any other circumstance which could otherwise constitute a
legal or equitable discharge of a surety or guarantor, and Lender may proceed to
enforce this Section 12 without pursuing or collecting a judgment against any
other Person, without resorting to or enforcing any other collateral or security
and without any other action whatsoever. Lender shall have no obligation to
protect, secure, perfect, or insure any collateral security document or property
at any time held as security for the Guaranteed Obligations or this Section 12.
Borrower hereby absolutely, unconditionally and irrevocably waives and agrees
not to assert or take advantage of:
(a) any right to require Lender to proceed against Delaware,
Contempo, Contempo West or any other Obligor or any other Person, or to
proceed against or exhaust any other security or collateral for the
payment, performance, or observance of the Guaranteed Obligations, or
to pursue any other remedy whatsoever before proceeding against
Borrower hereunder;
(b) any defense that may arise by reason of the incapacity,
lack of authority, death, or disability of any Person, or the failure
of Lender to file or enforce a claim against any estate (in
administration, bankruptcy or any other proceedings) of any Person;
(c) any defense based upon an election of remedies by
Lender, including an election to proceed by non-judicial rather
than judicial foreclosure;
(d) any other defense of Delaware, Contempo or Contempo West,
or the cessation of the liability of Delaware, Contempo or Contempo
West, for any cause whatsoever, with respect to any Guaranteed
Obligation;
(e) any other defense of any kind, whether now existing or
arising hereafter, of Borrower to any action, suit, or judicial or
legal proceeding that may be instituted with respect to this Section
12;
(f) presentment, demand, protest and notice of any kind,
including, without limitation, notice of the creation or non-payment or
non-performance of all or any of the Guaranteed Obligations, notice of
dishonor or protest, notice of acceptance by Lender of this Section 12,
notice of the existence, creation or incurrence of any new or
additional indebtedness, obligation, or other liability, and notice of
action or non-action on the part of Lender, Delaware, Contempo,
Contempo West or any other Obligor or other Person in connection with
the Guaranteed Obligations or otherwise; and
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(g) any duty on the part of Lender or any other Person to
disclose to Borrower any facts or information any such Person may now
or hereafter know or possess regarding Delaware, Contempo, Contempo
West, the Guaranteed Obligations or any other matter whatsoever,
regardless of whether such Person has reason to believe that such facts
or other information may materially increase the risk which Borrower
intends to assume or has reason to believe that such facts or other
information are unknown to Borrower or has a reasonable opportunity to
communicate such facts or other information, it being understood and
agreed that Borrower is fully and solely responsible for being and
keeping informed of the financial condition of Delaware, Contempo and
Contempo West and of all other circumstances bearing on the risk of
non-payment, non-performance, or non-observance of any Guaranteed
Obligation.
This Section 12 shall in all respects be a continuing, absolute, unconditional,
and irrevocable guaranty of payment, and shall remain in full force and effect
until all Guaranteed Obligations have been fully paid. This Section 12 shall
continue to be effective, or be reinstated, as the case may be, if at any time
any payment, in whole or in part, of any Guaranteed Obligation is rescinded or
must otherwise be restored or returned by Lender upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of Borrower or any of
Delaware, Contempo or Contempo West, or upon or as a result of the appointment
of a custodian, receiver, trustee, or other officer with similar powers with
respect to Borrower or any of Delaware, Contempo or Contempo West or any part of
the property of any thereof, or otherwise, all as though such payments had never
been made. If any Event of Default shall at any time have occurred and be
continuing and acceleration of the Indebtedness represented by any Other Loan
Agreement shall at any time be prevented by reason of the pendency against the
Subsidiary obligated thereunder of a case or proceeding under a bankruptcy or
insolvency law, Borrower agrees that, for purposes of this Section 12 and its
obligations hereunder, the maturity of such principal amount shall be deemed to
have been accelerated with the same effect as if the holder of such Indebtedness
had accelerated the same in accordance with the terms of such Other Loan
Agreement, and Borrower shall forthwith pay such principal amount and interest
(if any) thereon and other Guaranteed Obligations without further notice or
demand.
12.3 Waiver of All Defenses. Lender may, from time to time, in its sole
discretion and without notice to the Borrower, take any or all of the following
actions, all without in any way diminishing, impairing, releasing, or affecting
the liability or obligations of Borrower under or with respect to this Section
12, and Borrower hereby irrevocably consents to any or all of the following
actions by Lender or any holder of any Guaranteed Obligation:
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(a) retain or obtain a Lien in any property to secure any
of the Guaranteed Obligations or any obligation hereunder;
(b) retain or obtain the primary or secondary obligation
of any obligor or obligors with respect to any of the
Guaranteed Obligations;
(c) extend or renew for one or more periods (whether or not
longer than the original period), or alter or exchange, any of the
Guaranteed Obligations, or release or compromise any obligation of any
nature of any other Obligor or any other Person with respect to any of
the Guaranteed Obligations or amend or modify in any respect any Other
Loan Agreement or any Other Loan Document;
(d) waive, modify, subordinate, compromise or release its Lien
in, or surrender, release, or permit any substitution or exchange for,
all or any part of any property securing any of the Guaranteed
Obligations or any obligation hereunder, or extend or renew for one or
more periods (whether or not longer than the original period) or waive,
release, subordinate, compromise, modify, alter or exchange any
guaranty or other obligations of any nature of any obligor with respect
to any such property; and
(e) resort to Borrower for payment of any of the Guaranteed
Obligations, whether or not Lender shall have resorted to or exhausted
any other remedy or any other security or collateral for any obligation
hereunder or shall have proceeded against Delaware, Contempo, Contempo
West or any other Obligor or any other Person primarily or secondarily
obligated with respect to any of the Guaranteed Obligations.
Borrower absolutely, unconditionally, and irrevocably agrees that its liability
hereunder, and the remedies for the enforcement of such liability, shall in no
way be diminished or affected by:
(i) the release or discharge of Delaware, Contempo or Contempo
West or any other Obligor or any other Person responsible for the
payment, performance, or observance of any Guaranteed Obligation in any
creditors', receivership, bankruptcy, reorganization, insolvency, or
other case or proceeding;
(ii) the rejection or disaffirmance in any such proceeding
of any instrument evidencing, securing, or executed in
connection with the Guaranteed Obligations; or
(iii) the impairment, limitation, or modification of the
Guaranteed Obligations resulting from the operation of any present or
future provision of the federal Bankruptcy Code or
66
any other statute or law of any kind or from the decision or
order of any court.
Borrower absolutely, unconditionally, and irrevocably further agrees that:
(x) the creation from time to time of Guaranteed Obligations,
and the application or allocation of amounts received by the Lender or
any other Person to the payment of such Guaranteed Obligations, and the
creation, existence, or enforcement from time to time of any security
for the Guaranteed Obligations, and the application and allocation of
the proceeds of such security, shall in no way affect or impair the
rights, remedies, powers and privileges of Lender or any other holder
of a Guaranteed Obligation or the obligations of Borrower under this
Section 12; and
(y) any amounts received by Lender from whatsoever source on
account of the Guaranteed Obligations may be applied by it toward the
payment of such of the Guaranteed Obligations and in such order of
application as Lender may in its sole discretion determine.
Borrower hereby expressly waives notice of the creation of the Guaranteed
Obligations and all diligence in collection or protection of or realization upon
the Guaranteed Obligations or any thereof, any obligation hereunder, or any
security for or guaranty of any of the foregoing.
12.4 Payment, etc., by Borrower. Borrower hereby unconditionally covenants
and agrees that, in the event any of Delaware, Contempo or Contempo West shall
fail duly and punctually to pay any Guaranteed Obligation on the date on which
such payment is due (whether at scheduled maturity, by acceleration, or
otherwise), Borrower will, within five Business Days after the receipt of
written notice from Lender demanding payment of the amount of the Guaranteed
Obligation which the Subsidiary primarily obligated thereon has failed to pay,
pay the entire amount of Guaranteed Obligations demanded to Lender at its office
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, in same day funds. If
Borrower fails to pay any such amount, Lender may institute any action or
proceeding, and make, obtain and enforce a judgment or final decree, against
Borrower and collect in the manner provided by law or in equity out of
Borrower's property, wherever situated, all amounts adjudged or decreed to be
payable. Borrower further agrees that Lender may from time to time, upon receipt
by Lender of any proceeds of any collateral granted by Borrower to Lender in
connection herewith, apply such proceeds to the payment of the Guaranteed
Obligations.
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12.5 Subrogation. Borrower hereby irrevocably agrees not to assert any
claim or other right which it may now or hereafter acquire against each of
Delaware, Contempo and Contempo West or any other Obligor that arises from the
existence, payment, performance or enforcement of Borrower's obligations under
this Section 12 or any other Related Agreement, including any right of
subrogation, reimbursement, exoneration, or indemnification, any right to
participate in any claim or remedy of Lender against the Borrower or any other
Obligor or any collateral which Lender now has or hereafter acquires, whether or
not such claim, remedy or right arises in equity, or under contract, statute or
common law, including the right to take or receive from Borrower or any other
Obligor, directly or indirectly, in cash or other property or by set-off or in
any manner, payment or security on account of such claim or other right, until
all Guaranteed Obligations have been finally paid in full in cash and all
obligations of Lender to make advances to Borrower, Delaware, Contempo and
Contempo West have been terminated.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
AZIMUTH CORPORATION
By:____________________________________
Title:_________________________________
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇-▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
BANK OF AMERICA ILLINOIS
By:____________________________________
Title:_________________________________
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Facsimile number: 312/828-3889
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SUPPLEMENT A
to
SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Dated as of October 9, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ("Lender") and AZIMUTH CORPORATION ("Borrower")
1. Loan Agreement Reference. This Supplement A, as it may be amended or modified
from time to time, is a part of the Second Amended and Restated Loan and
Security Agreement dated as of October 9, 1995 between Borrower and Lender
(together with all amendments, modifications and supplements thereto, the "Loan
Agreement"). Terms used herein which are defined in the Loan Agreement shall
have the meaning ascribed to them therein unless the context requires otherwise.
2. Interest.
2.1 Loans. (a) Interest to Maturity. The unpaid principal
balance of the Loans shall bear interest to maturity at 11% per
annum.
(b) Default Rate. If any amount of the Loans is not paid when due,
whether by acceleration or otherwise, the entire unpaid principal balance of the
Loans shall bear interest until paid at a rate per annum equal to 13%.
2.2 Computation. Interest shall be calculated on the basis of a year
consisting of 360 days and paid for actual days elapsed. Changes in any interest
rate provided for herein which are due to changes in the Reference Rate shall
take effect on the date of the change in the Reference Rate.
2.3 Payment. Until maturity, interest on the Loans shall be payable
monthly in arrears on the last day of each calendar month at maturity. After
maturity, whether by acceleration or otherwise, accrued interest shall be
payable on demand. Notwithstanding the foregoing, if no Event of Default or
Unmatured Event of Default shall have occurred and be continuing (excluding any
Unmatured Event or Default relating to the non-payment of interest which is
capitalized pursuant to this Section 2.3), until the Termination Date, at
Borrower's option, all interest payable on the Loans shall be capitalized and
added at the end of each March, June, September and December to the unpaid
principal amount of the Loans on which such interest was payable.
3. Additional Covenants. From the date of the Loan Agreement and
thereafter until all of Borrower's Liabilities under the Loan
Agreement are paid in full, Borrower agrees that, unless Lender otherwise
consents in writing, it will:
3.1 Consolidated Net Worth. Not permit Borrower's
Consolidated Net Worth to be less than $2,750,000.
3.2 Current Ratio. Not permit the ratio of Borrower's
consolidated current assets to Borrower's consolidated current
liabilities to be less than 1.35:1.
3.3 Liabilities to Net Worth Ratio. Not permit the ratio of
Borrower's consolidated total liabilities to Borrower's Consolidated
Net Worth to exceed 6.2:1.
3.4 Working Capital. Not permit the excess of Borrower's consolidated
current assets over Borrower's consolidated current liabilities (excluding
interest bearing Indebtedness with a maturity of less than one year from the
date of calculation) to be less than $3,500,000.
3.5 Capital Expenditures. Not, and not permit any Subsidiary to,
purchase or otherwise acquire (including, without limitation, acquisition by way
of Capitalized Lease), or commit to purchase or otherwise acquire, any fixed
asset if, after giving effect to such purchase or other acquisition, the
aggregate cost of all fixed assets purchased or otherwise acquired by Borrower
and its Subsidiaries on a consolidated basis in any one Fiscal Year would exceed
$425,000 in any Fiscal Year.
3.6 Consolidated Senior Debt-Equity Ratio. Not permit the
Consolidated Senior Debt-Equity Ratio to exceed 250%.
3.7 Consolidated Senior Interest Coverage Ratio. From and
after October 31, 1995, not permit the Consolidated Senior Interest
Coverage Ratio to be less than 100%.
Borrower's Initials:___________________
Lender's Initials:_____________________
Date: October 9, 1995
2