Exhibit 10.14
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DIPLOMAT AMBASSADOR, INC.
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CORESTATES BANK, NA.,
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LOAN AGREEMENT
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JUNE 7, 1996
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LOAN AGREEMENT, dated June 7, 1996, between DIPLOMAT AMBASSADOR, INC.,
a Delaware corporation ("Borrower") and CORESTATES BANK, N.A. ("Lender").
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined).
"Acceptance" has the meaning given to such term in Section 2.11.
"Acceptance Commission" means the amount charged by Lender for the
creation of an Acceptance, calculated in accordance with generally accepted
financial practice on the basis of (A) Lender's Adjusted B/A Rate at the time of
acceptance and discount and (B) a commission charge based on Lender's standard
rate schedule at the time of acceptance and discount.
"Acceptance Liability" means, at any date of determination, the sum of
(A) the aggregate face amount of all Acceptances that have not then matured plus
(B) the aggregate amount of all matured Acceptances that have not theretofore
been paid by the Borrower to Lender.
"Acceptance Margin" means 2.3% per annum.
"Account" has the meaning given to such term in the Pennsylvania
Uniform Commercial Code as in effect on the date hereof.
"Account Advance Rate" means 75%.
"Adjusted B/A Rate" means, for each day, Lender's B/A Rate for such
day plus the Acceptance Margin.
"Adjusted Prime Rate" has the meaning given such term in Section 2.14.
"Advance" has the meaning given such term in Section 2.01.
"Advance Request" has the meaning given such term in Section 2.02.
"Affiliate" of any Person means any other Person who controls, is
Controlled by or is under common control with such Person.
"Amount of Unfunded Benefit Liabilities" has the meaning given to
such term in ss.4001 (a) (18) of ERISA.
"Applicable Margin" means .5%, provided that upon Lender's receipt of
Borrower's financial statements as of December 31, 1996 in accordance with
Section 5.02, the Applicable Margin shall be (A) .25% if despite the fact that
Borrower has not acquired substantially all the assets of Windsor Optical,
Borrower has (i) net income before taxes of not less than $1,711,500 for the
year ending December 31, 1996 and (ii) Tangible Net Worth of not less than
$1,050,000 as of December 31, 1996; or (B) zero if Borrower (1) acquires
substantially all of the assets of Windsor Optical and Lender is satisfied with
the terms of the purchase agreement relating to such acquisition, (2) has net
income before taxes of not less than $2,401,000 for the year ending December 31,
1996 and (3) has net sales of $20,457,000 as of December 31, 1996. If
applicable, the foregoing adjustment to the Applicable Margin shall become
effective on April 1, 1997.
"Audit Fee" has the meaning given such term in Section 2.16.
"B/A Rate" means for each day the basic rate determined by Lender to
be in effect on such day for the internal guidance of its personnel in pricing
bankers' acceptances accepted for discount for its customers in amounts and
maturities comparable to drafts offered by Borrower to Lender on such date for
acceptance and discount. Lender's B/A Rate is not necessarily the lowest rate
that Lender charges for acceptance and discount of bankers' acceptances.
"Base Rate" means at any time the higher of (A) the Federal Funds Rate
plus one-half percent, or (B) the Prime Rate.
"Borrower" has the meaning given to such terms in the introductory
paragraph hereof.
"Borrowing Base" means (A) the Account Advance Rate multiplied by the
face amount of Borrower's Eligible Accounts, minus (B) the face amount of
Borrower's unapplied Account credits, which have been carried on Borrower's
books for a period equal to or greater than 90 days, plus (C) the lesser of (1)
50% of Eligible Inventory, valued at the lower of cost or market, less an
Inventory reserve of $45,000, or (2) $3,000,000, minus (D) Borrower's Letter of
Credit Liability, minus (E) Borrower's Acceptance Liability.
"Borrowing Base Certificate" means a certificate in the form attached
hereto as Exhibit 3.01(M).
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"Budilov Mortgage" means the mortgage agreement, substantially in the
form of Exhibit 3.01(S), executed by the Budilov's in favor of Lender.
"Budilovs" means ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, husband and wife,
respectively, residing at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇.
"Business Day" means any day other than a Saturday, Sunday, or other
day on which commercial banks in Philadelphia, Pennsylvania are authorized or
required to close under the laws of the Commonwealth of Pennsylvania.
"Capital Asset" means any property or asset (real, personal or mixed,
tangible or intangible) which is of a kind subject to an allowance for
depreciation or amortization under GAAP.
"Capital Lease" means any lease or sublease of real, personal or mixed
property accounted for as a capitalized lease in accordance with GAAP.
"Cash Collateral Account" has the meaning given such term in Section
2.18.
"Cash Equivalents" means at any date demand deposits, time deposits or
certificates of deposit in United States commercial banks having shareholders'
equity of at least $500,000,000 and maturing not in excess of one year from the
date of acquisition; obligations backed by the full faith and credit of the
United States of America or an agency thereof maturing not in excess of one year
from the date of acquisition; and commercial paper maturing not in excess of one
year from the date of acquisition and rated P-2 or better by ▇▇▇▇▇'▇ Investors
Service, Inc. or A-2 or better by Standard & Poor's Rating Agency on the date of
acquisition.
"CERCLA" means the federal Comprehensive Environmental Response,
Compensation, and Liability Act, as amended from time to time.
"Chattel Paper" has the meaning given to such term in the Pennsylvania
Uniform Commercial Code as in effect on the date hereof.
"Closing Date" means the date on which all of the conditions precedent
contained in Article III are satisfied.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
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"Collateral" has the meaning given such term in Section 3.01 (N).
Collateral Pledge and Assignment Agreement" means the collateral
pledge and assignment agreement, substantially in the form of Exhibit 3.01(R),
executed by the Sluckers.
"Controlled Group" means all trades or business under common control
(as defined in ss.414(b) (1) of ERISA) with Borrower.
"Credit Limit" means the lesser of (A) the Borrowing Base or (B)
$6,000,000, provided that if Borrower does not acquire substantially all of the
assets of Windsor Optical within 30 days of the Closing Date, or Lender is
dissatisfied with the terms of the purchase agreement relating to such
acquisition, then the term "Credit Limit" shall mean the lesser of (A) the
Borrowing Base or (B) $5,000,000.
"Credit Obligation" means, for any Person, (A) any obligation of such
Person for the payment of borrowed money or the installment purchase price of
Capital Assets or under a Capital Lease or (B) any obligation secured by a lien
on or security interest in any asset of such Person, whether or not such Person
has assumed liability for such obligation.
"Default" means any event, occurrence or circumstance that, with the
giving of notice or the passage of time, or both, would, if unremedied, become
an Event of Default.
"Default Rate" has the meaning given such term in Section 2.23.
"Defined Benefit Pension Plan" means a defined benefit plan (other
than a Multiemployer Plan) as defined in ss.3(35) of ERISA.
"Defined Contribution Plan" means an individual account plan as
defined in ss.3(34) of ERISA.
"Delinquent Purchaser" means a Purchaser more than 50% of whose
aggregate Account indebtedness to the Borrower has remained unpaid for more than
90 days after the issuance of the related invoices.
"Demand Line" means Lender's obligation to make Advances under the
terms and conditions set forth in Section 2.02.
"Demand Note" means the promissory note duly executed by Borrower
pursuant to Section 2.03.
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"Document" has the meaning given to such term in the Pennsylvania
Uniform Commercial Code as in effect on the date hereof.
"Eligible Acceptance" means an Acceptance (A) with respect to which
Lender is not required to maintain any reserve under Regulation D or any law or
regulation amending or replacing Regulation D (by reason of ss.2.04(a) (1) (vii)
(E) of Regulation D or any provision amending or replacing such provision), and
(B) which is eligible for discount by Federal Reserve Banks under paragraph 7 of
ss.13 of the Federal Reserve Act, 12 U.S.C. ss.372, or any law or regulation
amending or replacing such law, in either case as such law or regulation may be
interpreted from time to time by the Board of Governors of the Federal Reserve
System or its staff or the staff of any Federal Reserve Bank.
"Eligible Account" means any Account created in an arm's length
transaction which meets all of the following specifications at the time of
determination of Eligible Accounts: (A) the Account is lawfully owned by
Borrower free and clear of all liens, security interests and assignments except
as set forth in clause (B), and Borrower has the right of assignment thereof and
the power to grant a security interest therein; (B) the Account is subject to a
first priority perfected security interest in favor of Lender; (C) the Account
is valid and enforceable, representing the undisputed indebtedness of the
Purchaser to Borrower; (D) the Account is not subject to any claim of defense,
set-off, counterclaim, warranty claim, credit, allowance or adjustment; (E) if
the Account arises from the sale of goods, such sale was an absolute sale and
not on consignment or on approval basis, and such goods have been shipped or
otherwise made available to the Purchaser in accordance with the Borrower's
agreements with such Purchaser; (F) if the Account arises from the performance
of services, such services have actually been performed; (G) the Account arose
in the ordinary course of business of Borrower; (H) no notice of the bankruptcy,
receivership, reorganization or insolvency of the Purchaser owing such Account
has been received by Lender or Borrower; (I) the Account has remained unpaid for
less than 90 days from the date of original invoice; (J) the Purchaser is not
any federal, state or local government or governmental agency; (K) the Account
does not arise out of the shipment of goods outside of the United States; (L)
the Account does not arise out of transactions between Borrower and (1) a
non-United States government, governmental agency or government-controlled
business or (2) a Person who is not subject to the jurisdiction of the court
system of the United States or any state of the United States; (M) the Purchaser
for such Account is not otherwise in default pursuant to the terms underlying
the agreement creating such Account; (N) the Purchaser owing such Account is not
Borrower or an Affiliate of Borrower; (0) if the Account is a contra Account,
the amount is net of any amounts owed to the Purchaser thereof; (P) the
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Account is not owed by a Delinquent Purchaser or any Subsidiary or Affiliate of
a Delinquent Purchaser; and (Q) such Account is otherwise acceptable to Lender
in its reasonable discretion.
"Eligible Inventory" means all Inventory of Borrower which: (A) is
finished goods or raw materials; (B) is located at one of the locations
identified in the Security Agreement (and Borrower has obtained a lien waiver
from the landlord, if any); (C) in the case of finished goods, conforms in all
respects to the representations and warranties relating thereto; (D) is in good
condition and repair; (E) is not damaged, outdated or obsolete or otherwise
deemed unsalable by Lender; (F) is held for sale in the ordinary course of
business of the Borrower as conducted on the date hereof; (G) is not being held
on consignment; (H) is not subject to a security interest other than in favor of
Lender and, in the case of finished goods, is subject to a first priority
perfected security interest in favor of Lender; (I) is not display racks or
components thereof; and (J) is otherwise acceptable to Lender in its reasonable
discretion.
"Employee Benefit Plan" has the meaning given to such term in ss.3(3)
of ERISA.
"Environmental Law" means any federal, state, or local statute,
ordinance, regulation, rule or other law concerning or relating to the
protection of health and the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations thereunder.
"Event of Default" has the meaning given to such term in Section 6.01.
"Federal Funds Rate" means, for each day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) which is the weighted average
of the rates on overnight federal funds transactions arranged on such day by
federal funds brokers, computed and released by the Federal Reserve Bank of
Philadelphia (or any successor).
"Fiscal Year" means the fiscal year of Borrower ending December 31.
"GAAP" means generally accepted accounting principles, applied in a
consistent manner.
"Inventory" has the meaning given to such term in the Pennsylvania
Uniform Commercial Code as in effect on the date hereof.
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"Letters of Credit" means one or more letters of credit issued by
Lender for the account of the Borrower in accordance with the provisions of
Article II, Part B, available upon presentation of documents evidencing the sale
or shipment of goods to, or the purchase of goods by, the Borrower in the
ordinary course of business.
"Letter of Credit Liability" means, at any date of determination, the
sum of (A) the maximum aggregate amount that is or at any time thereafter may
become available for drawing or demand under all Letters of Credit then
outstanding, plus (B) the aggregate amount of all drawings and demands under
Letters of Credit that have not theretofore been reimbursed by the Borrower,
plus (C) accrued and unpaid interest on the amounts described in clause (B) at
the rate stated in Section 2.14.
"License Inventory Liquidation Agreement" means the letter agreement,
substantially in the form of Exhibit 3.0l(AA), executed by Borrower and each of
the Sluckers and each of the Budilovs.
"Loan Documents" means this Agreement, the Demand Note, the Security
Agreement, the Surety Agreements, the Budilov Mortgage, the Collateral Pledge
and Assignment Agreement, the Subordination Agreements and each other agreement,
instrument, certificate and other document executed and delivered in connection
with this Agreement or the transactions contemplated hereby.
"Lockbox" has the meaning give such term in Section 2.18.
"Margin Stock" has the meaning given to that term in Regulation U of
the Board of Governors of the Federal Reserve System.
"Multiemployer Plan" has the meaning given to such term in ss.4001 (a)
(3) of ERISA.
"Operating Account" has the meaning given such term in Section 2.18.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Liens" has the meaning given such term in Section 5.06.
"Person" means any individual, corporation, partnership, joint
venture, joint-stock company, trust,
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unincorporated organization or government or any agency or political subdivision
thereof.
"Plan" means an Employee Benefit Plan or other plan maintained for
employees of Borrower or any member of Borrower's Controlled Group and covered
by ERISA.
"Prime Rate" means for each day the rate of interest for loans
established and publicly announced by Lender from time to time as its prime rate
as in effect on such day. The Prime Rate is not necessarily the lowest rate of
interest that Lender charges any of its customers.
"Prohibited Transaction" has the meaning given to such term in ss.406
of ERISA, ss.4975(c) of the Code and any Treasury regulations issued thereunder.
"Purchaser" means a buyer of goods from Borrower or a customer for
whom services have been rendered or materials furnished by Borrower.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as amended or supplemented from time to time.
"Reportable Event" has the meaning given to such term in ss.4043(b) of
ERISA.
"Security Agreement" means the Security Agreement, substantially in
the form of Exhibit 3.01(B), executed by Borrower in favor of Lender.
"Sluckers" means ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇, husband and wife,
respectively, residing at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇.
"Subordinated Indebtedness" means Borrower's indebtedness as of the
Closing Date to ▇▇▇▇ ▇▇▇▇▇▇▇ in the original principal amount of $851,500 and
▇▇▇▇▇ ▇▇▇▇▇▇▇ in the original principal amount of $343,500.
"Subordination Agreements" means the subordination agreements,
substantially in the form of Exhibit 3.01(U), executed by the Sluckers and the
Budilovs.
"Subsidiary" of a Person means any corporation or other entity, more
than 50 percent of the voting capital stock or other ownership interests of
which is owned, directly or indirectly, by such Person.
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"Surety Agreements" means the surety agreements, substantially in the
form of Exhibit 3.01(Q), executed by the Sluckers and the Budilovs.
"Tangible Assets" means those assets of Borrower which would, in
accordance with GAAP, be classified as tangible assets.
"Tangible Net Worth" means Tangible Assets less Total Liabilities.
"Total Liabilities" means all indebtedness of Borrower which would, in
accordance with GAAP, be classified as liabilities, plus any and all
obligations, contingent or otherwise, of Borrower under any guarantee or surety
agreement.
"Withdrawal Liability" has the meaning given to such term in ss.4201
of ERISA.
SECTION 1.02. Accounting Terms. All accounting terms not specifically
defined herein shall be construed, and all financial data submitted pursuant to
this Agreement shall be prepared, in accordance with GAAP.
ARTICLE II
A. THE DEMAND LINE.
SECTION 2.01. The Demand Line. (A) Subject to the terms and conditions
hereinafter provided, and in reliance upon the representations and warranties of
Borrower herein set forth, until the earlier of demand or termination of the
Demand Line pursuant to Section 6.02, Lender agrees from time to time:
(1) to make advances (each such advance, an "Advance") to Borrower
pursuant to Section 2.02;
(2) to issue Letters of Credit for the account of Borrower pursuant to
Section 2.06; and
(3) to create Acceptances pursuant to Section 2.12.
(B) The aggregate unpaid principal amount of the Demand Line, plus the
Letter of Credit Liability, plus the Acceptance Liability shall not at any time
exceed the Credit Limit.
(C) If, at any time, the limitation in subsection (B) is exceeded,
Borrower shall immediately repay to Lender the amount of such excess.
SECTION 2.02. Making Advances under the Demand Line. (A) Borrower may make
requests by telephone, facsimile or other
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writing for an Advance under the Demand Line on any Business Day, provided that
such requests (each such request, an Advance Request") are made to Lender no
later than 12:00 P.M. (Philadelphia time) on such Business Day. Each such
Advance Request shall constitute Borrower's representation that, at the time
thereof and giving effect to the Advance requested thereby: (1) no Event of
Default or Default has occurred hereunder; (2) the representations and
warranties contained in this Agreement are reaffirmed and are correct; (3) the
conditions precedent for such Advance as set forth in Section 3.02 hereof have
been satisfied; and (4) the sum of the outstanding principal plus the requested
Advance will not exceed the Credit Limit. Borrower agrees to hold Lender
harmless from any liability for any loss resulting from Lender's reliance on any
telephone call, writing or facsimile copy purportedly made by an authorized
officer of Borrower.
(B) Upon fulfillment of the applicable conditions set forth in Article
III hereof, Lender will immediately make such funds available to Borrower by
depositing the amount thereof into the Operating Account.
SECTION 2.03. The Demand Note. The obligation of Borrower to repay the
outstanding principal, interest and other amounts due under the Demand Line and
its obligation in respect of the Letter of Credit Liability and the Acceptance
Liability shall be evidenced by a promissory note of even date with this
Agreement, payable to the order of Lender, in a principal amount of $6,000,0000
and otherwise substantially in the form of Exhibit 2.03.
SECTION 2.04. Repayment. Upon Lender's demand, (A) Borrower shall repay in
full (1) the aggregate principal amount outstanding principal of the Demand
Line, (2) the amount of any drawings and demands under Letters of Credit that
have not theretofore been reimbursed by Borrower, (3) the amount of all matured
Acceptances that have not theretofore been repaid, and (4) all accrued interest
and other amounts then outstanding hereunder, under the Demand Note or under the
other Loan Documents in respect of the Demand Line; and (B) if there remain any
unexpired Letters of Credit or unmatured Acceptances on such date, Borrower
shall deposit with Lender funds or a letter of credit issued by an issuer
reasonably acceptable to Lender in an amount equal to l05% of the sum of the
Letter of Credit Liability and the Acceptance Liability.
B. LETTERS OF CREDIT
SECTION 2.05. Letters of Credit. Subject to the terms and conditions
hereof, and in reliance upon the representations and warranties of Borrower
herein set forth, until the earlier of demand of amounts owing under the Demand
Line by Lender or
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termination of Lender's obligation to issue Letters of Credit pursuant to
Section 6.02, Lender will issue irrevocable and, if Borrower so requests,
transferable Letters of Credit for the account of Borrower, subject to the
limitations stated in Section 2.01, and subject to the further limitation that
no Letter of Credit shall be issued that expires more than 365 days after
issuance.
SECTION 2.06. Issuance Procedures. (A) The issuance of Letters of Credit
shall be governed by such electronic and other issuance procedures as shall be
agreed upon from time to time between Lender and Borrower.
(B) Subject to subsection (A), whenever Borrower wishes to request
the issuance of a Letter of Credit, it shall deliver to Lender a written notice
not later than 11:00 A.M. at least three Business Days in advance of the
proposed date of issuance. That notice shall specify (1) the proposed date of
issuance (which shall be a Business Day), (2) the face amount of the Letter of
Credit, (3) the expiration date of the Letter of Credit, (4) the purpose of the
Letter of Credit, and (5) the name and address of the beneficiary. Prior to the
date of issuance, Borrower shall deliver to Lender an application for such
Letter of Credit in the form customarily required by Lender for the issuance of
letters of credit, executed by Borrower and shall specify a precise description
of the documents and the verbatim text of any certificate to be presented by the
beneficiary which, if presented by the beneficiary prior to the expiration date
of the Letter of Credit, would require Lender to make payment under the Letter
of Credit.
(C) Lender may reasonably require customary changes in any documents
and certificates relating to any proposed Letter of Credit issuance, whether
under subsection (A) or (B).
SECTION 2.07. Payment of Amounts Drawn Under Letters of Credit. In
determining whether to pay under any Letter of Credit, Lender shall be
responsible only to determine that the documents and certificates required to be
delivered under that Letter of Credit have been delivered and that they appear
on their face to comply with the requirements of that Letter of Credit. Within
one Business Day of receipt, Lender shall notify Borrower of any documents,
drafts, certificates or other documents that do not on their face comply with
the requirements of the corresponding Letter of Credit. Borrower may authorize
Lender to waive such documentary deficiencies, provided that Borrower gives such
authorization within one Business Day after notification from Lender and in any
event not later than the deadline for payment or dishonor of the draw.
SECTION 2.08. Reimbursement of Lender. Upon the presentation of any
conforming draft or any nonconforming draft
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as to which Borrower authorizes Lender to pay notwithstanding documentary
deficiencies or demand for payment under any Letter of Credit by the beneficiary
thereof and upon notice to Borrower, Borrower shall reimburse Lender on the day
on which such draft or demand is honored in same day funds in an amount equal to
the amount of such draft or demand. Unless Borrower shall have notified Lender
prior to 11:00 A.M. on the date such draft or demand is honored that Borrower
intends to reimburse Lender for the amount of such draft or demand with funds
other than the proceeds of Advances, Borrower shall be deemed to have given
notice to Lender requesting Lender to make an Advance in accordance with Section
2.02 on the day on which such draft or demand is honored in an aggregate amount
equal to the amount of such draft or demand.
SECTION 2.09. Letter of Credit Compensation. (A) Borrower shall pay to
Lender in respect of the Letters of Credit a fee equal to .25% per annum of the
average daily undrawn amount of outstanding Letters of Credit.
(B) Borrower shall also pay to Lender documentary and processing
charges with respect to the issuance, amendment, transfer, administration,
negotiation, cancellation or conversion of each Letter of Credit and for other
services in connection with the Letter of Credit. Such charges shall be based on
Lender's rate schedule at the time of the issuance of the Letter of Credit.
SECTION 2.10. Obligations Absolute. The obligation of Borrower to
reimburse Lender for drawings made under Letters of Credit, shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances including, without limitation,
the following circumstances:
(A) any lack of validity or enforceability of any Letter of Credit;
(B) the existence of any claim, set-off, defense or other right
which Borrower may have at any time against a beneficiary or any transferee of
any Letter of Credit (or any Person for whom any such transferee may be acting),
Lender or any other Person, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction (including any
underlying transaction between Borrower and the beneficiary for which the Letter
of Credit was procured);
(C) any draft, demand, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect;
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(D) any breach of this Agreement or any document delivered in
connection herewith by any party hereto or thereto;
(E) the fact that a Default or an Event of Default shall have
occurred and be continuing.
C. ACCEPTANCES
SECTION 2.11. Acceptances. Subject to the terms and conditions hereof, and
in reliance upon the representations and warranties herein set forth, until the
earlier of demand of amounts owing under the Demand Line by Lender or
termination of Lender's obligation to create Acceptances under Section 6.02,
Lender agrees to accept and discount for Borrower at such Lender's Adjusted B/A
Rate drafts drawn by Borrower on Lender, payable not more than 180 days from the
date of drawing (each such draft, when accepted and discounted by Lender, being
an "Acceptance"), subject to the limitations stated in Section 2.01, and subject
to the further limitation that each Acceptance shall constitute an Eligible
Acceptance.
SECTION 2.12. Acceptance Procedures. (A) Not later than 10:00 A.M.,
Philadelphia time, on the day of each proposed creation of Acceptances, Borrower
shall give Lender irrevocable notice of (1) the aggregate amount of all time
drafts to be accepted and discounted, which shall not be less than $5,000, (2)
the proposed date of creation of such Acceptances, (3) the maturity of the time
drafts, and (4) the payee of each such draft. Simultaneously with such notice,
Borrower shall submit the time drafts to Lender. Lender may, in its reasonable
discretion, decline to accept for discount any one or more time drafts which it
deems irregular or otherwise unacceptable on account of the identity of the
payee or other party to, or any condition or circumstances of, the transaction
being financed. Each draft presented to Lender for acceptance and discount shall
be accompanied by an eligibility certificate in form and substance satisfactory
to Lender and any bills of lading or other documents as shall be required in
connection therewith. No draft shall be accepted and discounted on any occasion
unless all time drafts so submitted are acceptable to Lender.
(B) If all time drafts submitted are acceptable to the Lender in
accordance with this Agreement, Lender shall notify Borrower of such fact and of
the applicable Adjusted B/A Rates and Lender shall accept and discount the time
drafts so submitted to it. Lender shall make the proceeds of each Acceptance,
less the amount of the applicable Acceptance Commission (which Borrower hereby
authorizes Lender to deduct from such proceeds), available to Borrower at
Lender's principal office by crediting the Operating Account of Borrower or
other account designated by Borrower on the books of such office.
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SECTION 2.13. Payment of Acceptances. (A) Borrower will pay to Lender the
full amount of each Acceptance at its maturity, together with any unpaid
interest or other charges, commissions or costs thereon (other charges and
commissions shall be based on Lender's standard rate schedule at the time of
acceptance and discount). Lender's records of an Acceptance shall constitute
presumptive evidence of the indebtedness relating thereto in the absence of the
executed and accepted draft.
(B) Unless Borrower shall have notified Lender prior to 11:00 A.M.
on the date such Acceptance matures that Borrower intends to pay Lender the
amount of such Acceptance with funds other than the proceeds of Advances,
Borrower shall be deemed to have given notice to Lender requesting Lender to
make an Advance in accordance with Section 2.01 on the day such Acceptance
matures in an aggregate amount of such Acceptance.
D. GENERAL PROVISIONS
SECTION 2.14. Interest. Borrower shall pay interest to Lender on the
principal of the Demand Line outstanding from time to time in arrears commencing
on the first day of the first full month after this Agreement is executed and on
the first day of each month thereafter at an interest rate (the "Adjusted Prime
Rate") equal to the Prime Rate plus the Applicable Margin. The Adjusted Prime
Rate shall change (a) simultaneously with each change in the Prime Rate and (b)
with each change in the Applicable Margin in accordance with the definition
thereof.
SECTION 2.15. Demand Obligation. Lender shall have no obligation to make
any Advance under the Demand Line at any time. Satisfaction or compliance with
the terms and conditions contained herein and the availability under the
Borrowing Base cannot and do not bind or obligate Lender to make Advances under
the Demand Line, issue Letters of Credit or accept and discount Acceptances and
are set forth for informational purposes only. The mere existence of
representations and warranties, covenants and Events of Default contained herein
shall not convert the Demand Line into a term obligation to Lender.
SECTION 2.16. Audit Fees. Borrower shall pay to Lender a fee ("Audit
Fee"), subject to a cap of $3,000 per audit for two audits per year, to
reimburse Lender for its costs and out-of-pocket expenses associated with field
audits of the collateral and inspections of Borrower's books and records. The
initial fee shall be payable no later than the Closing Date and subsequent fees
shall be payable within 30 days of Lender's invoice to Borrower. If a Default or
an Event of Default shall occur and be continuing, Lender may perform collateral
audits as frequently as Lender desires and Borrower shall pay to Lender an Audit
Fee for each such audit, subject to a cap of $3,000 per audit.
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SECTION 2.17. Computation of Interest. The interest on the Loans and other
sums payable hereunder shall be computed on the basis of a year of 360 days for
the actual number of days elapsed.
SECTION 2.18. The Lockbox; the Cash Collateral Account; the Operating
Account. (A) Borrower shall establish and, while any amount is outstanding under
the Demand Line, shall maintain a single post office box which will be under the
exclusive control of Lender (the "Lockbox") into which Borrower shall notify all
Purchasers to make all payments of any of Borrower's Accounts to be made, and
Borrower shall upon the request of Lender indicate on all invoices and other
correspondence with Purchasers to make all payments to Borrower in care of the
Lockbox and further hereby appoints Lender, as Borrower's true and lawful
attorney-in-fact to receive all incoming mail, open all such mail, remove all
collections and remittances therefrom in payment of or on account of Borrower's
Accounts and use Lender's reasonable efforts to forward all other mail so
received to Borrower's chief executive office. Borrower agrees to pay to Lender
promptly when billed a fee for operating the Lockbox equal to the rate, adjusted
for inflation, that Lender customarily charges for lockbox services. Borrower
shall execute such other documents and agreements as may be requested by Lender
in connection with the Lockbox.
(B) Amounts received in the Lockbox shall be deposited upon
collection into a single non-interest bearing account with Lender established by
Borrower over which Lender alone shall have the power of withdrawal (the "Cash
Collateral Account").
(C) Borrower shall establish and maintain its primary operating
checking account (the "operating Account") with Lender, and will use Lender for
all cash management services.
(D) Borrower hereby grants, bargains, conveys and sets over to
Lender a security interest in and lien upon the Lockbox, the Cash Collateral
Account, the Operating Account and any other account established by Borrower
with Lender or any affiliate thereof, and all cash and any other assets at any
time hereafter contained therein.
SECTION 2.19. Payments. (A) Borrower hereby authorizes Lender to charge
the Operating Account for any payments of principal and interest of the Demand
Line, amounts paid by Lender under Letters of Credit not theretofore reimbursed
by Borrower, the amount of each matured Acceptance, interest and Audit Fees, and
any other amounts owing hereunder or under the Demand Note or the other Loan
Documents as and when due. In addition, Lender may, on a daily basis, apply all
collected deposits against the principal balance of the Demand Line. In the
event that Borrower maintains insufficient funds in the Operating Account to
meet
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Borrower's obligations hereunder when due, Borrower hereby authorizes Lender to
make an Advance to pay such obligations to the extent of Borrower's availability
under the Demand Line. If Borrower has insufficient availability under the
Demand Line, Borrower will make all payments of principal, all payments in
reimbursement of amounts paid under Letters of Credit, all payments in respect
of matured Acceptances, all payments of interest and all payments of Audit Fees,
to Lender at Lender's principal office in Philadelphia, Pennsylvania, not later
than 2:00 P.M. Philadelphia time on the applicable due date, in other funds
immediately available to Lender.
(B) Lender shall apply all payments and collections received by it
(including all funds in the Operating Account), as follows: first, to all costs
and expenses (including, without limitation, reasonable attorneys' fees and
expenses which Borrower is obligated to pay pursuant to the terms hereof);
second, to accrued and unpaid fees which Borrower is obligated to pay pursuant
to the terms hereof (other than attorneys' fees and expenses already paid
pursuant to "first" above); third, to accrued interest; fourth, to the unpaid
principal amount of the Demand, Line; fifth, to the amounts of unreimbursed
drawings and demands under Letters of Credit and the amount of matured
Acceptances not theretofore paid by Borrower; sixth, all other amounts which
shall have come due hereunder; and seventh, into the Operating Account.
SECTION 2.20. Payment on Non-Business Days. Whenever any payment to be
made hereunder or under the Demand Note shall be stated to be due on a day that
is not a Business Day, such payment shall be made on the next succeeding
Business Day, and, except as otherwise specifically provided herein, such
extension of time shall in such case be included in the computation of payment
of interest hereunder or under the Demand Note.
SECTION 2.21. Indemnification in Respect of Letters of Credit and
Acceptances. (A) In addition to amounts payable as elsewhere provided in this
Agreement, Borrower hereby agrees to protect, indemnify and save Lender harmless
from and against any and all claims, demands, liabilities, damages, losses,
costs, charges and expenses (including reasonable attorneys' fees) which Lender
may incur or be subject to as a direct or indirect consequence of (1) the
issuance of any Letter of Credit or the creation of any Acceptance, or (2) the
failure of Lender to honor a draft or demand under any Letter of Credit as a
result of any act or omission, whether rightful or wrongful, of any present or
future de jure or de facto government or governmental authority. Without
limiting the foregoing, Lender shall have no obligation to ascertain whether the
stated purpose of any requested Letter of Credit or Acceptance is permitted by
this Agreement and shall not be liable for Borrower's use of a Letter of Credit
or the
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proceeds of any Acceptance in violation of Borrower's covenants contained
herein.
(B) Borrower assumes all risks of the acts and omissions of, or
misuse of the Letters of Credit by, the respective beneficiaries of such Letters
of Credit. In furtherance and not in limitation of the foregoing, Lender shall
not be responsible for: (1) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in connection
with the application for and issuance of Letters of Credit, even if it should in
fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (2) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any Letter of
Credit or the rights or accounts thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (3) failure
of the beneficiary of any Letter of Credit to comply fully with conditions
required in order to obtain payment under any Letter of Credit; (iv) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;
(v) errors in interpretation of technical terms; (vi) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Letter of Credit or of the proceeds thereof; (vii) the misapplication
by the beneficiary of any Letter of Credit; or (viii) any consequences arising
from causes beyond the control of Lender. None of the above shall affect,
impair, or prevent the vesting of any of Lender's rights or powers hereunder.
(C) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by Lender
under or in connection with the Letters of Credit or the related certificates
including, without limitation, any action taken or omitted by Lender under
Section 2.10, if taken or omitted in good faith and substantially in accordance
with the terms thereof, shall not put Lender under any resulting liability to
Borrower in the absence of Lender's gross negligence or wilful misconduct.
SECTION 2.22. Late Charges. In the event that Borrower fails to make any
payment required hereunder within five days of the date first due, Borrower
shall pay to Lender a late charge equal to 1% of the amount of such payment as a
late charge.
SECTION 2.23. Default Interest. After the earlier of demand or an Event of
Default, the interest otherwise payable hereunder in effect for each Loan shall
increase immediately without notice and thereafter shall be payable at a rate of
3% per annum in excess of the applicable interest rate (said higher rate is
hereinafter called the "Default Rate"). Each time the Prime Rate shall change
the Default Rate shall change effective
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as of the date the Prime Rate changes. The Default Rate shall also change
with each change in the Applicable Margin.
SECTION 2.24. Reimbursement to Lender for Cost Increases Imposed by Law.
If any change in existing law, any new law, or any other factor having the force
of law shall impose or change any tax, reserve, insurance, special deposit or
similar requirements or charges with respect to funds obtained by Lender to make
any Advance or maintain amounts outstanding under the Demand Line, and the
result is to increase the cost to Lender of obtaining or maintaining such funds
or to reduce the return to Lender, then Lender shall so notify Borrower in
writing, certifying the amount of and reasons for such increased costs or
reduced return, and Borrower shall immediately pay to Lender an amount
sufficient to compensate Lender in full (on an after-tax basis) for such
increased costs or such reduced return.
SECTION 2.25. Reimbursement to Lender for Increased Costs Due to Capital
Adequacy Requirements. If any law or regulation or the interpretation thereof by
any court or administrative or governmental authority charged with the
administration thereof, or compliance by Lender or its holding company with any
request or directive (whether or not having the force of law) of any such
authority, applicable from time to time now or after the date hereof, shall (a)
impose, modify, deem applicable or result in the application of any capital
maintenance, capital ratio or similar requirement against loan commitments or
other facilities made by Lender or its holding company and the result thereof
shall be to impose upon Lender or its holding company a fee or a requirement to
increase any capital requirement applicable as a result of the making or
maintenance of the Demand Line (which imposition of or increase in capital
requirements may be determined by Lender's or its holding company's reasonable
allocation of the aggregate of such capital impositions or increases) , or (b)
subject Lender or its holding company to any tax, duty or other charge with
respect to the principal of the Demand Line, the Letter of Credit Liability or
the Acceptance Liability, the Demand Note which it holds, or its obligation to
advance under the Demand Line, or change the basis of taxation of payments to
Lender of the principal of or interest on the Demand Line or any other amounts
due under this Agreement in respect of the Demand Line or its obligation to
advance under Demand Line (except for changes in the rate of tax on the overall
net income of Lender imposed by any jurisdiction in which Lender or its holding
company is obligated to pay taxes), then, upon written demand by Lender,
Borrower shall pay to Lender from time to time as specified by Lender, such
additional amounts or fees as shall be sufficient to compensate Lender or its
holding company for such impositions of or increases in capital requirements or
taxes from the date of such change, together with interest on each such amount
from the date demanded until payment in full thereof at a rate equal to 3% in
excess of the Base Rate with respect to
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amounts or fees not paid when due. Upon the occurrence of any event referred to
above, a certificate setting forth in reasonable detail the amounts necessary to
compensate Lender or its holding company as a result of an imposition of or
increase in capital requirements or taxes submitted by Lender to Borrower shall
be conclusive, absent manifest error or bad faith, as to the amount thereof.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to the Initial Advance, Creation or
Issuance. The obligation of Lender to make the initial Advance, create the
initial Acceptance, or issue the initial Letter of Credit, whichever shall first
occur, is subject to the completion of Lender's due diligence investigation with
results satisfactory to Lender and the additional conditions precedent that
Lender shall have received, on or before the day on which such initial Advance,
creation or issuance is to occur all of the following, in form and substance
reasonably satisfactory to Lender:
(A) The Demand Note, duly executed by Borrower.
(B) The Security Agreement, together with such number of UCC-1
financing statements for filing under the Uniform Commercial Code of
all jurisdictions necessary or, in the opinion of Lender, desirable
to perfect the security interest created by the Security Agreement,
and each document required thereby, duly executed by Borrower.
(C) A favorable opinion of outside counsel for Borrower as to the
matters set forth in Schedule 3.01(C).
(D) A copy of the certificate of incorporation of Borrower
certified, within thirty days of the initial Advance, creation or
issuance, by the Secretary of State of the State of Delaware, and a
copy, certified in writing by the Secretary or an Assistant
Secretary of Borrower, of (1) Borrower's by-laws, and (2)
resolutions of the Board of Directors of Borrower evidencing
approval of the Loan Documents executed by Borrower and the other
matters contemplated hereby.
(E) A certificate of the Secretary or an Assistant Secretary of
Borrower as to the names and signatures of the officers of Borrower
authorized to sign the Loan Documents and the other documents or
certificates of Borrower to be executed and delivered pursuant
hereto.
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Lender may conclusively rely on, and shall be protected in acting
upon, such certificate until Lender shall receive a further
certificate by the Secretary or an Assistant Secretary of Borrower
amending the prior certificate.
(F) Certificates with respect to Borrower, dated within ten days
before such initial Advance, creation or issuance, issued by the
Secretary of State of each jurisdiction in which Borrower is
incorporated or does business, stating that Borrower is a
corporation duly incorporated or authorized to do business, as the
case may be, in good standing under the laws of such jurisdiction
and has paid all taxes and filed all reports.
(G) Payment by Borrower of all Audit Fees then due and fees and
expenses set forth in Section 7.05(A).
(H) Certificates of insurance issued in the name of Lender, showing
Lender as lender loss payee, evidencing insurance coverage as
required hereunder together with a copy of the underlying policy.
(I) Borrower's audited balance sheet and statements of operations
and cash flows for the Fiscal Year ending December 31, 1995.
(J) Borrower's unaudited balance sheet as of April 30, 1996 and
statements of operations and cash flows for the four months ending
April 30, 1996.
(K) Projections for Borrower's fiscal year ending December 31, 1996,
which shall be certified by the chief executive officer or chief
financial officer of Borrower as representing Borrower's reasonable
and accurate projections of anticipated results based upon all of
the information available to Borrower as to projections for time
periods after the date hereof.
(L) The results of searches of all relevant public records showing
no prior liens or judgments against Borrower or any of their assets,
except as disclosed on Schedule 4.08 hereto.
(M) A completed, executed Borrowing Base Certificate as of a date
satisfactory to Lender.
(N) Copies of all leases or other similar agreements relating to
facilities not owned by Borrower where the
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collateral granted under the Security Agreement (the "Collateral")
is located.
(0) [Deliberately Omitted]
(P) All necessary UCC termination statements to assure that Lender's
liens are first priority liens in accordance with the Security
Agreement.
(Q) The Surety Agreements duly executed by each of the Sluckers and
the Budilovs.
(R) The Collateral Pledge and Assignment Agreement duly executed by
each of the Sluckers.
(S) The Budilov Mortgage duly executed by each of the Budilovs.
(T) Personal financial statements of each of the Sluckers and each
of the Budilovs as of April 30, 1996, together with a certification
from each such Person that since April 30, 1996 through the Closing
Date, there have been no material adverse changes in such Person's
financial condition.
(U) The Subordination Agreements duly executed by each of the
Sluckers and each of the Budilovs.
(V) An Explanation and Waiver of Rights Regarding Confession of
Judgment duly executed by Borrower.
(W) An Explanation and Waiver of Rights Regarding Confession of
Judgment duly executed by each of the Sluckers and each of the
Budilovs.
(X) [Deliberately Omitted]
(Y) Copies of all license agreements and amendments thereto listed
on Schedule 4.15(D).
(Z) Written evidence that Borrower has engaged a third party payroll
service to process and pay Borrower's payroll taxes.
(AA) The Licensed Inventory Liquidation Agreement duly executed by
Borrower and each of the Sluckers and each of the Budilovs.
(AB) Such other documents as may be reasonably requested by Lender.
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SECTION 3.02. Conditions Precedent to All Advances, Creations and
Issuances. The obligation of Lender to make any Advance or to create any
Acceptance or to issue any Letter of Credit (including the initial Advance,
creation or issuance) is subject to the further conditions precedent that:
(A) The representations and warranties contained in Article IV
hereof shall be accurate on and as of the date of such disbursement, creation or
issuance as though made on and as of such date.
(B) No Default or Event of Default shall have occurred and be
continuing or will result from the making of such Advance or from such creation
or issuance.
(C) No material adverse change shall have occurred since December
31, 1995 in the financial condition, assets, nature of the assets, business,
operations or prospects of Borrower.
(D) Lender shall have received a certificate, executed by the, chief
executive officer or chief financial officer of Borrower to the foregoing
effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender as follows:
SECTION 4.01. Existence. Borrower is a corporation duly incorporated,
validly existing and in good standing under the laws of its state of
incorporation. Borrower has all requisite power and authority, corporate and
otherwise, to conduct its business and to own its properties and is duly
qualified as a foreign corporation in good standing in all jurisdictions in
which its failure so to qualify could have a material adverse effect on its
financial condition or business.
SECTION 4.02. Authorization. The execution, delivery and performance by
Borrower of this Agreement, the Demand Note and the other Loan Documents have
been duly authorized by all necessary corporate action, and do not and will not
violate any provision of any law or regulation or of the charter or by-laws of
Borrower or result in a breach of or constitute a default under any instrument
or other agreement to which Borrower is a party or by which it or its properties
is bound or affected.
SECTION 4.03. Validity. This Agreement constitutes, and the Demand Note
and the other Loan Documents when duly executed and delivered will constitute,
valid and legally binding obligations of Borrower, enforceable in accordance
with their
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respective terms, except as such enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
generally.
SECTION 4.04. Financial Statements. The audited balance sheet and
statements of operations and cash flows of Borrower as of and for the year ended
December 31, 1995 and the unaudited balance sheet and statements of operations
and cash flows as of and for the four months ended April 30, 1996 are fair and
accurate, show all material liabilities, direct and contingent, and present
fairly Borrower's financial position and the results of operations and cash
flows at such dates and for the year ended on such date, all in accordance with
GAAP. Since December 31, 1995, there has been no material adverse change either
in such financial position or in such results of operations.
SECTION 4.05. Litigation. Except as disclosed in Exhibit 4.05, there are
no actions, suits or proceedings pending or, to the knowledge of Borrower,
threatened against Borrower or any of its properties before any court or
governmental department, commission, board, bureau, agency or instrumentality
(domestic or foreign) that, if determined adversely to Borrower, could have a
material adverse effect on its financial condition, assets, business, operations
or prospects.
SECTION 4.06. Credit Obligations and Contingent Liabilities. (A) All
Credit Obligations of Borrower are accurately described on Schedule 4.06 or in
the December 31, 1995 audited financial statements.
(B) There are no suretyship agreements, guarantees or other
contingent liabilities of Borrower that are not disclosed in the financial
statements mentioned in Section 4.04 or the notes thereto or on Schedule 4.06.
SECTION 4.07. Taxes. Borrower has filed all tax returns and reports, or
has timely filed reasonable requests for legally permissible extensions to file
such returns and reports, required to be filed before the date of this Agreement
and has paid all taxes, assessments and charges imposed upon it or its property,
or that it is required to withhold and pay over, to the extent that they were
required to be paid before the date of this Agreement except for taxes,
assessments and charges which Borrower disputes in good faith and for which
Borrower has reserved the amount so disputed on its books and records.
SECTION 4.08. Encumbrances. Except for liens disclosed on Schedule 4.08,
none of the properties or assets of Borrower is subject to any lien, encumbrance
or security interest.
SECTION 4.09. First Liens. Upon filing the financing statements delivered
to Lender pursuant to the Security
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Agreement, Lender's liens and security interests in the Collateral which can be
perfected by filing will immediately become duly perfected, first-priority liens
and security interests therein.
SECTION 4.10. Consents. No authorization, consent, approval, license,
exemption by or filing or registration with any court or governmental
department, commission, board (including the Board of Governors of the Federal
Reserve System), bureau, agency or instrumentality, domestic or foreign, is or
will be necessary for the valid execution, delivery or performance by Borrower
of this Agreement, the Demand Note or any of the other Loan Documents.
SECTION 4.11. ERISA. Borrower and the members of its Controlled Group
maintain only those Defined Benefit Pension Plans, Defined Contribution Plans
and other Plans listed on Schedule 4.11 and contribute to only those
Multiemployer Plans listed on Schedule 4.11. Except as disclosed on Schedule
4.11, to the best of Borrower's knowledge (1) all such Defined Benefit Pension
Plans and Defined Contribution Plans meet the minimum funding standards of ss.
412 of the Code, the Treasury regulations thereunder and ss. 302 of ERISA
without regard to any funding waiver; (2) no Prohibited Transaction has occurred
with respect to any Plan; (3) no Reportable Event has occurred with respect to
any Defined Benefit Pension Plan; (4) no Defined Benefit Pension Plan sponsored
by Borrower or any member of its Controlled Group has any Amount of Unfunded
Benefit Liabilities; (5) no trust was established in connection with any such
Defined Benefit Pension Plan pursuant to ss. 4049 of ERISA; and (6) no
liabilities (whether or not such liability is being litigated) have been
asserted against Borrower or any member of its Controlled Group in connection
with any such Defined Benefit Pension Plan by the PBGC or by a trustee appointed
pursuant to ss. 4042(b) or (c) of ERISA; and (7) no lien has been attached and
no person has threatened to attach a lien on any property of Borrower or any
member of its Controlled Group as a result of any failure to comply with the
Code or the Treasury regulations thereunder or ERISA. All Plans maintained by
Borrower or any member of its Controlled Group comply (A) in operation with the
requirements of the Code and the Treasury regulations thereunder and ERISA, and
(B) in form with those requirements of the Code and the Treasury regulations
thereunder and ERISA which must be met on the date hereof except to the extent
where a failure to comply will not have a material adverse effect on Borrower's
financial condition or operations.
SECTION 4.12. Ownership of Subsidiaries and other Persons. Borrower does
not have any Subsidiaries or own any other ownership interests in any other
Person.
SECTION 4.13. Margin Stock. Borrower does not engage in the business of
making loans for the purchase of Margin Stock.
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SECTION 4.14. Environmental Matters. Borrower is in possession of all
required permits and in compliance with Environmental Laws relating to the
discharge or release of liquids, gases or solids into the air, water and soil,
if the failure of Borrower to possess or so comply does have a material adverse
effect on the financial condition, assets, business, operations or prospects of
Borrower. Except as set forth in Schedule 4.14, Borrower does not refine,
process, generate, store, recycle, transport, dispose of, or release into the
environment any "hazardous substance" as that term is defined under ss. 101(14)
of CERCLA or any hazardous or toxic substances as those terms are defined by the
provisions of any Environmental Law except in compliance with such Environmental
Laws. Borrower has not received notice from any governmental agency that it is a
potentially responsible party in any proceeding under CERCLA or any similar
state or local environmental statute or regulation, or any notice of violation,
citation, complaint, request for information, order, directive, compliance
schedule, notice of claim, proceeding or litigation from any party concerning
such entity's compliance with any Environmental Law except as set forth on
Schedule 4.14.
SECTION 4.15. Patents, Trademarks. Copyrights and Licenses. (A) Schedule
4.15(A) contains a list of all patents, patent applications and patentable
inventions owned by Borrower and accurately states each United States and
foreign registration number of each registered patent owned by Borrower. Except
as disclosed in Schedule 4.15(A), Borrower has not granted a license in any such
patent to any other Person and no licensee has granted any sublicense or
assigned its rights under any such license.
(B) Schedule 4.15(B) contains a list of all, trademarks, trademark
applications, trademark registrations, tradenames, trade dress owned by Borrower
and accurately states each United States and foreign registration number of each
registered trademark owned by Borrower. Except as disclosed in Schedule 4.15(B),
Borrower has not granted a license in any such trademark to any other Person and
to Borrower's knowledge no licensee has granted any sublicense or assigned its
rights under any such license.
(C) Schedule 4.15(C) contains a list of copyrights, copyright
applications and copyright registrations owned by Borrower and accurately states
each United States and foreign registration number of each registered copyright
owned by Borrower. Except as disclosed in Schedule 4.15(C), Borrower has not
granted a license in any such copyright to any other Person and to Borrower's
knowledge no licensee has granted any sublicense or assigned its rights under
any such license.
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(D) Schedule 4.15(D) contains a complete list of all patents,
copyrights and trademarks licensed to Borrower and accurately states the
identity of each licensor and the term, geographic areas and product lines
covered by each such license. True and correct copies of all of the license
agreements relating to the patents, copyrights and trademarks identified on
Schedule 4.15(D), including all amendments thereto, have been furnished to
Lender. Neither the licensor to Borrower's knowledge nor the licensee has
violated or is otherwise in default under any material provision of such
license, and no condition exists that permits any licensor to terminate the
exclusive nature of any exclusive license.
(E) No claim of infringement or invalidity of any patent, trademark,
trade dress or copyright owned or licensed by Borrower is pending or, to the
best of Borrower's knowledge, threatened, and to the best of Borrower's
knowledge no such patent, trademark, trade dress or copyright has been or is
being infringed.
SECTION 4.16. Regulation U, Etc. Making Advances will not constitute a
violation of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System. No Letter of Credit or any part of the proceeds of the Demand
Line or Acceptances will be used for any purpose which violates or is
inconsistent with the provisions of any of such regulations.
SECTION 4.17. Licenses, Permits, Etc. Borrower is in possession of and
operating in compliance with all franchises, grants, authorizations, licenses,
permits, easements, consents, certificates and orders required for the conduct
of its business, and all of them are valid and in full force and effect except
to the extent that the failure to possess any such franchise, grant,
authorization, license, permit, easement, consent, certificate or order does not
and does not have a material adverse effect on the financial condition, assets,
business, operations or prospects of Borrower.
SECTION 4.18. Compliance with Laws. Borrower is in compliance with all
laws, rules, regulations, and orders of all Federal, state and governmental
agencies and courts which are applicable to it, to the conduct of its business,
or to the ownership and use of properties except to the extent that the failure
to comply with such laws, rules, regulations and orders does not and will not
have a material adverse effect on the financial condition, assets, business,
operations or prospects of Borrower.
SECTION 4.19. Labor Matters. There are no existing or, to the best of
Borrower's knowledge, threatened or contemplated strikes, slowdowns, picketing
or work stoppages by any employees against Borrower, any lockouts by Borrower of
any of its
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employees, or any labor trouble or other occurrence, event or condition of a
similar character affecting, or which may materially affect, the financial
condition or results of operations of Borrower.
SECTION 4.20. Payroll Tax Service. Borrower has engaged a third party
payroll service to process and pay Borrower's payroll taxes.
SECTION 4.21. Full Disclosure. No representation or warranty by Borrower
in this Agreement or any of the other Loan Documents and no information in any
written statement, certificate, schedule or other document furnished or to be
furnished to Lender pursuant hereto, or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact necessary to make the
statements contained herein or therein not misleading. There is no fact known to
Borrower which Borrower has not disclosed to Lender in writing which materially
adversely affects, or, so far as Borrower can now foresee, may materially
adversely affect, the financial condition, assets, business, operations or
prospects of Borrower.
ARTICLE V
COVENANTS OF BORROWER
So long as any amount due Lender hereunder remains unpaid, or Lender
shall have any obligation hereunder, or any Letter of Credit or Acceptance
remains outstanding, Borrower agrees that:
SECTION 5.01. Use of Proceeds of Demand Line. Borrower will:
(A) use the proceeds of the Demand Line to (1) support its working
capital requirements and (2) finance up to $1,000,000 for the acquisition of
substantially all of the assets of Windsor Optical;
(B) use the Acceptances and Letters of Credit to support Borrower's
need for trade finance and working capital; and
(C) not use such proceeds, Letters of Credit or Acceptances for the
benefit of any person other than Borrower.
SECTION 5.02. Financial Information. (A) Borrower will furnish to Lender
(1) balance sheets and statements of operations and cash flows of Borrower
within 30 days after the close of each month, (2) balance sheets and statements
of operations and cash
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flows of Borrower within 120 days after the close of Fiscal Year, (3) on the
last Business Day of each week or for such other day that Lender may require, a
completed executed Borrowing Base Certificate as of such day, executed on behalf
of Borrower by the chief executive officer or chief financial officer of
Borrower, (4) within 20 days after the end of each month, (a) an aging of
Borrower's Accounts, (b) an Account status report and (c) a report concerning
Borrower's Inventory, each in such detail as Lender may reasonably require, (5)
on or before the close of each Fiscal Year, an annual budget and projections for
Borrower's performance for the subsequent Fiscal Year and (6) such other
information as Lender may reasonably require. All financial statements will be
prepared in accordance with GAAP and shall be certified by the chief executive
officer or chief financial officer of Borrower.
(B) The annual financial statements of Borrower shall be audited by
an independent accounting firm satisfactory to Lender, whose report thereon
shall be unqualified, and shall be accompanied by (1) a copy of the management
letter furnished to Borrower by such auditors in connection with their audits,
and (2) a certificate by such auditors that, in the course of their audits of
such financial statements, such auditors did not become aware that a Default or
an Event of Default had occurred and is continuing on the date of the annual
financial statements (or if such statement cannot be made, a description of any
Default or Event of Default of which such auditors shall have become aware).
(C) Each monthly and annual statement delivered to Lender pursuant
to Section 3.01 and this Section 5.02 will be accompanied by a certificate of
the chief executive officer or chief financial officer of Borrower stating
whether such officer has any knowledge that a Default or an Event of Default has
occurred and, if so, a description thereof and what action Borrower is taking or
proposes to take with respect thereto.
SECTION 5.03. Insurance. Borrower shall: (A) keep itself, the Collateral
and all of its other property insured against fire (with all-risk coverage and,
if required by the location of Borrower's premises on a flood plain, flood
coverage), liability (including product liability) and all other hazards and all
such insurance shall be in form and in amounts and issued by such insurers as
are reasonably satisfactory to Lender (casualty insurance shall at all times be
in an amount equal to the replacement value of the property insured) ; (B) cause
Lender's security interests to be endorsed on all policies of insurance thereon
in such manner that all payments for losses will be paid to Lender as lender
loss payee or additional insured; (C) furnish Lender with evidence of such
insurance and endorsements; and (D) keep such insurance in full force and effect
at all times. Borrower assigns to Lender all right to receive the proceeds of
insurance covering the Collateral, directs any insurer to pay all
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such proceeds directly to Lender and authorizes Lender to endorse in the name
of Borrower any draft for such proceeds. Any amounts received or collected by
Lender in its capacity as such attorney-in-fact shall be deposited in the
Operating Account, provided that if a Default or an Event of Default has
occurred and is continuing Lender may apply such proceeds as provided in Section
2.19. All insurance policies will name Lender as lender loss payee or an
additional insured, as the case may be, and contain provisions (X) that, with
respect to Lender, the insurance policies may be canceled only after not less
than thirty (30) days notice of intent to cancel provided to Lender, and (Y)
stating "[t]his policy shall not be invalidated by any act, neglect, breach of
warranty or misrepresentation of the primary insured." Lender shall have the
right at any time and from time to time, with notice to Borrower, to obtain
insurance which Lender may reasonably require or as otherwise required by any of
the Loan Documents covering any of the Collateral if Borrower fails to do so.
Borrower will reimburse Lender, on demand, with interest thereon at the Default
Rate payable hereunder, for any payment Lender makes, or any expense Lender
incurs, under this authorization.
SECTION 5.04. Taxes. Borrower will pay when due all taxes, assessments and
charges imposed upon it or its property or that it is required to withhold and
pay over, except where contested in good faith and where appropriate reserves
have been established.
SECTION 5.05. Indebtedness. Borrower shall not create, incur, assume or
suffer to exist any liability on account of any Credit Obligation other than (1)
liabilities under this Agreement, the Demand Note and the other Loan Documents;
(2) Credit Obligations in existence on the date of this Agreement and described
in Schedule 4.06 (but not any increase, renewal or extension thereof); (3)
liabilities secured by liens or security interests permitted by Section 5.06,
provided that Borrower shall not create, incur or assume more than $200,000 of
such liabilities in any Fiscal Year; (4) loans permitted under the Subordination
Agreements; and (5) liabilities secured by liens or security interests permitted
by Schedule 4.08 (but not any increase, renewal or extension thereof).
SECTION 5.06. Encumbrances. (A) Borrower will not create, incur, assume or
suffer to exist, any mortgage, pledge, judgment, lien or other encumbrance of
any kind (including the interest of the lessor under any Capital Lease) upon, or
any security interest in, any of its property or assets except for (1) liens for
taxes (a) not yet delinquent or (b) being contested in good faith and by
appropriate proceedings and where appropriate reserves have been established,
(2) liens in connection with workers' compensation, unemployment insurance or
other social security obligations, (3) mechanics', materialmen's, landlords',
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carriers', or other similar liens arising in the ordinary course of
business with respect to obligations that are not due or that are being
contested in good faith, (4) purchase money liens or security interests on any
property hereafter acquired by Borrower, or a lien incurred in connection with a
Capital Lease; provided that the Credit Obligations secured by such liens shall
not exceed $500,000 at any time outstanding in the aggregate, (5) the
encumbrances described in Schedule 4.08 and (6) liens in favor of Lender.
(B) Borrower will not agree with any other Person to restrict its
ability to grant mortgages, pledges, liens, or other encumbrances upon, or
security interests in, any of its property or assets to Lender.
SECTION 5.07. Compliance with Laws. Borrower will comply with all laws and
regulations applicable to it in the operation of its business if the failure to
so comply could have a material adverse effect on Borrower's financial
condition, assets, business, operations or prospects.
SECTION 5.08. Inspection by Lender. Upon reasonable notice and at
reasonable times, Borrower will permit representatives of Lender to (1) inspect
the property and books and records of Borrower and to make extracts therefrom;
and (2) perform periodic collateral audits not more than twice per any year,
provided that if a Default or Event of Default shall occur and be continuing,
Borrower will permit representatives of Lender to make such inspections and
perform such audits as frequently as Lender desires, without notice to Borrower.
SECTION 5.09. Reports. Borrower will furnish to Lender:
(A) as soon as possible after Borrower becomes aware of the
occurrence of any Default or Event of Default, a written statement executed on
behalf of Borrower by the chief executive or chief financial officer of
Borrower setting forth details of such Default or Event of Default, stating
whether or not the same is continuing and, if so, the action that Borrower
proposes to take with respect thereto;
(B) within three Business Days after receiving notice thereof,
notice in writing of all actions, suits and proceedings before any court or
governmental department, commission, board, bureau, agency or instrumentality
that, if determined adversely to Borrower, could have a material adverse effect
on the financial condition, assets, business, operations or prospects of
Borrower;
(C) as soon as practicable after becoming aware of the occurrence of
a change in the business, properties, operations, financial condition or
prospects of Borrower that could be
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materially adverse, a statement setting forth details of such material adverse
change and the action that Borrower proposes to take with respect thereto;
(D) written notice promptly after the death or incapacity of either
of the Budilovs or the Sluckers or the termination of Borrower's chief executive
officer or chief financial officer;
(E) promptly after the occurrence thereof, written notice of the
cancellation or discontinuance of one or more licenses in which Borrower is
licensee; and
(G) such other information respecting the business, properties,
condition and operations of Borrower as Lender may at any time and from time to
time reasonably request be furnished to it.
SECTION 5.10. ERISA. (A) Borrower and each member of its Controlled Group
will comply in all material respects with the provisions of ERISA and the Code
and the regulations thereunder with respect to any Plan, including the timely
filing of required annual reports and the payment of PBGC premiums.
(B) Borrower will cause to be made, when due, all contributions
required to avoid any accumulated funding deficiency (as defined in ss.
412(a) of the Code and the regulations thereunder and ss. 302(a) of ERISA), with
respect to any pension plan (as defined in ss. 3(2) of ERISA) which is subject
to Part 3 of Subtitle B of Title I of ERISA or Section 412 of the Code and the
regulations thereunder and which is maintained by Borrower or any member of its
Controlled Group.
(C) Borrower will promptly notify Lender of the adoption of any Plan
or any material obligation to contribute to any Multiemployer Plan by Borrower
or any member of its Controlled Group.
(D) Borrower will not withdraw, or permit any member of its
Controlled Group to withdraw, from any Multiemployer Plan to which any of them
now or hereafter contribute if the Withdrawal Liability which would thereupon be
incurred would have a material adverse effect directly or indirectly on the
financial condition of Borrower.
SECTION 5.11. Environmental Matters. (A) Borrower will obtain and comply
with all required permits, licenses, registrations, and approvals relating to
the discharge or release of liquids, gases or solids to the environment if the
failure to obtain and so comply could have a material adverse effect on the
financial condition, assets, business, operations or prospects of Borrower. To
the extent that such are applicable to the
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operation of its business, Borrower will comply with all laws, rules,
regulations and governmental orders and directives relating to the generation,
treatment, storage, transportation, disposal and release into the environment
and cleanup of any "hazardous substance" as that term is defined under Section
101(14) of CERCLA, or any hazardous or toxic substances as defined by the
provisions of any Environmental Law at all premises owned or operated by
Borrower if the failure to so comply could have a material adverse effect on the
financial condition, assets, business, operations or prospects of Borrower.
(B) Borrower will notify Lender in writing of the receipt by it of
(1) any notice from any governmental agency that it is a potentially responsible
party in any proceeding under CERCLA or any similar state or local environmental
statute or regulation, (2) any notice of any claim, proceeding, litigation,
order, directive, citation, or request for information concerning its compliance
with the Environmental Laws, (3) notice of any alleged violation of the
Environmental Laws, or (4) any information concerning any potentially material
adverse environmental condition on, above, or beneath its premises.
SECTION 5.12. Corporate Existence. Borrower will preserve and maintain its
corporate existence and good standing in the jurisdiction of its incorporation,
and qualify and remain qualified as a foreign corporation in each jurisdiction
in which such qualification is required and failure to maintain its corporate
existence and good standing would have a material adverse effect on Borrower's
financial condition or business.
SECTION 5.13. Regulation U. Borrower will not use the proceeds of the
Demand Line, Letter of Credit or Acceptance to purchase or carry any Margin
Stock, or engage in the business of making loans for the purchase of Margin
Stock.
SECTION 5.14. Disposal of Assets. Except for sales of Inventory in the
ordinary course of business and of obsolete equipment, Borrower will not
dispose of assets.
SECTION 5.15. Guarantees and other Contingent Liabilities. Borrower will
not become liable on the obligation of anyone except by endorsement of
negotiable instruments for deposit or collection in the usual course of
business. Borrower will not incur or remain liable in respect of any other
contingent liability except for contingent liabilities in connection with
standard warranties and sales programs of Borrower offered in the ordinary
course of business.
SECTION 5.16. Transactions with Affiliates. Borrower shall not use any of
the proceeds of the Demand Line or any Letter of Credit or Acceptance for the
benefit of any Affiliate of Borrower unless otherwise permitted by this
Agreement and shall not engage
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in any transaction with any Affiliate except on terms no less favorable to
Borrower than are available from a third party. Nothing in this Section 5.16
shall be construed to prohibit Borrower from paying reasonable salaries or
consulting fees to ▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇ in the ordinary course
Borrower's business pursuant to pre-existing employment and/or consulting
contracts between Borrower and ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇.
SECTION 5.17. Maintenance of Property. Borrower will maintain all of its
property in good condition and repair (ordinary wear and tear excepted) and keep
any patents, trademarks, copyrights, licenses, and permits it may have in full
force and effect, provided that Borrower may, upon prior written notice to
Lender, terminate any license that Borrower deems desirable to terminate in the
exercise of Borrower's reasonable business judgment.
SECTION 5.18. Merger; Corporate Structure; Acquisitions. Borrower will not
enter into any merger or consolidation, change its corporate structure or the
nature or character of its stock or, except for the acquisition of the assets of
Windsor Optical pursuant to and in accordance with the terms of a purchase
agreement approved by Lender, acquire all or substantially all of the assets of
another Person. Borrower shall not create or acquire any Subsidiary.
SECTION 5.19. Loans and Investments. Borrower shall not make any loan or
investment except investments in (a) Cash Equivalents, (b) obligations of
Lender, or (c) bank deposits as otherwise permitted hereby.
SECTION 5.20. Dividends and Distributions. Borrower will not declare or
pay any dividend or distribution on, or redeem, purchase or otherwise acquire
for value, any of its capital stock.
SECTION 5.21. Payroll Tax Service. Borrower shall at all times retain the
services of a third party payroll tax service reasonably satisfactory to Lender
to process and pay Borrower's payroll taxes.
SECTION 5.22. Post-Closing Requirements. Within 10 days of the date of
this Agreement, Borrower shall deliver to Lender a (A) Pledged Collateral
Account Agreement substantially in the form of Exhibit 5.22 and (B) lien waivers
executed by the landlord of each facility not owned by Borrower where the
Collateral is located.
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ARTICLE VI
DEFAULT
SECTION 6.01. Events of Default. Each of the following shall be an Event
of Default:
(A) If Borrower shall fail to pay upon demand any principal of the
Demand Line, any Letter of Credit Liability or any Acceptance Liability and such
failure shall continue for a period of 45 days from the date of demand.
(B) If Borrower shall fail to pay any interest, Audit Fee, or any
other amount owing hereunder, under the Demand Note or under any of the other
Loan Documents when due.
(C) If any representation or warranty made in this Agreement, any of
the other Loan Documents, or any certificate, agreement, instrument, statement
or report contemplated hereby or made or delivered pursuant hereto or in
connection herewith shall prove to have been incorrect in any material respect
when made or deemed made.
(D) If Borrower shall fail to make any payment owing by it under a
Credit Obligation of more than $25,000, or any interest or premium thereon, when
due, whether such Credit Obligation shall become due by scheduled maturity, by
required prepayment, by acceleration, by demand or otherwise, or shall fail to
perform any term, covenant or agreement on its part to be performed under any
agreement or instrument evidencing or securing or relating to any such Credit
Obligation when required to be performed, if the effect of such failure is to
accelerate, or to permit the holder or holders of such Credit Obligation to
accelerate, the maturity of such Credit Obligation, whether or not such
failure to perform shall be waived by the holder or holders of such Credit
Obligation, unless such waiver has the effect of terminating the right of such
holder or holders to accelerate the maturity of such Credit Obligation as a
result of such failure.
(E) If Borrower shall be adjudicated a bankrupt or insolvent or the
equivalent under any law or admit in writing its inability to pay its debts as
they mature, or make an assignment for the benefit of its creditors; or shall
apply for or consent to the appointment of any receiver, trustee, or similar
officer or the equivalent under any law for such applicant or for all or any
substantial part of its property; or if any such receiver, trustee or similar
officer or the equivalent under any law shall be appointed without the
application or consent of Borrower and shall continue undischarged for a period
of 60 days; or if Borrower shall institute (by petition, application, answer,
consent or otherwise) any bankruptcy, insolvency, reorganization,
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arrangement, readjustment of debt, dissolution, liquidation or similar
proceeding relating to it under the laws of any jurisdiction; or if any such
proceeding shall be instituted (by petition, application or otherwise) against
Borrower and an order for relief or similar remedy shall be entered in such
proceeding or such proceeding shall remain undismissed for a period of 60 days;
or if any writ, warrant of attachment or execution or similar process shall be
issued or levied against any substantial portion of the properties of Borrower
and such writ, or similar process shall not be released, vacated or fully bonded
within 60 days after its issue or levy.
(F) If (1) there occurs any Reportable Event, or any failure of
compliance required by Section 5.10, that creates a reasonable possibility of
the termination of any Defined Benefit Pension Plan maintained by Borrower or
any member of its Controlled Group, or of the appointment by the appropriate
United States District Court of a trustee to administer any such Plan, or (2)
Borrower or any member of its Controlled Group withdraws from any Defined
Benefit Pension Plan for which it was a substantial employer within the meaning
of ss. 4063(b) of ERISA or from any Multiemployer Plan, or (3) the plan
administrator of any Defined Benefit Pension Plan maintained by Borrower or any
member of its Controlled Group files with the PBGC a notice of intention to
terminate such Plan in a "distress termination" (as defined in ss. 404l(c) of
ERISA), or (4) the PBGC institutes proceedings to terminate any such Plan or to
appoint a trustee to administer any such Plan and such proceedings remain
undismissed or unstayed for 3 Business Days; and if, in any of the cases
described in the foregoing clauses (1) through (4), Lender further determines
that the Amount of Unfunded Benefit Liabilities resulting upon termination of
such Plan (or resulting from the imposition of Withdrawal Liability) would have
a material adverse effect on the business, properties, operations, or condition
(financial or otherwise) of Borrower, or if a lien against the assets of
Borrower or any member of its Controlled Group were to result under ERISA.
(G) If the Sluckers and the Budilovs together cease to control at
least 51% of the voting shares of Borrower or if either of the Sluckers or
either of the Budilovs die or are subject to an event of the type described in
Section 6.01(E).
(H) If ▇▇▇▇▇ ▇▇▇▇▇▇▇ ceases to be, and actively perform the
functions of, the chief executive officer of Borrower, or if ▇▇▇▇ Sluckers
ceases to be, and actively perform the functions of, the Chairman of Borrower.
(I) If one or more judgments shall be entered against Borrower
aggregating $25,000 or more and the same shall not have been satisfied, or
stayed or bonded pending appeal, within ten days after the entry thereof.
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(J) If Borrower shall contest the validity or binding effect of this
Agreement, the Demand Note or any of the other Loan Documents, or if there shall
occur a judicial determination that any of the Loan Documents is not valid and
binding upon Borrower.
(K) If Borrower shall default, fail to perform or observe any term,
covenant or agreement contained in this Agreement (other than those referred to
in subsection (A) or (B)) or in any of the other Loan Documents on its part to
be performed or observed and shall continue for 15 days from the earlier of (1)
Borrower's knowledge of such failure or (2) written notice of such failure from
Lender to Borrower.
(L) If a default or an event of default shall occur under any other
Loan Document, which is not cured within the applicable grace period, if any.
(M) If there shall occur any material adverse change in the
financial condition, properties, business, operations or prospects of Borrower.
SECTION 6.02. Termination of Commitments; Acceleration. If any Event of
Default other than those described in Section 6.01(E) hereof shall occur and be
continuing, then upon notice by Lender to Borrower, or if any Event of Default
described in Section 6.01(E) shall occur, then automatically, (A) the Demand
Line shall terminate, whereupon the obligations of Lender to make Advances shall
forthwith terminate, (B) Lender shall not have any further obligation to issue
Letters of Credit, and Lender shall not have any further obligation to create
Acceptances, (C) Borrower shall pledge cash collateral and deposit in the
Operating Account an amount equal to or greater than the amount of any Letter of
Credit Liability and Acceptance Liability, (D) the entire unpaid principal
amount of the Demand Line, the entire amount of unreimbursed drawings under
Letters of Credit, the entire amount of all unmatured Acceptances, all interest
accrued and unpaid thereon and all other amounts payable hereunder and under the
Demand Note and the other Loan Documents shall become immediately due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by Borrower and (E) Lender may exercise all
rights and remedies provided hereby, by any of the other Loan Documents and by
applicable law.
The specification of Events of Default shall not be construed or interpreted and
is not intended to indicate that the credit facility made available hereby is a
term obligation. Rather, the credit facility contemplated hereby is a Demand
Line and Lender may at any time, without giving any reason therefor and whether
or not a Default or Event of Default exists, demand payment of
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all obligations of Borrower to Lender hereunder and under the other Loan
Documents.
SECTION 6.03. Warrant of Attorney. BORROWER HEREBY AUTHORIZES AND
EMPOWERS ANY ATTORNEY OF ANY COURT OF RECORD UPON THE OCCURRENCE OF ANY EVENT OF
DEFAULT TO APPEAR FOR AND CONFESS JUDGMENT AGAINST BORROWER FOR SUCH SUMS AS
SHALL HAVE BECOME DUE UNDER THE DEMAND NOTE OR THIS LOAN AGREEMENT, IN EITHER
CASE WITH OR WITHOUT DECLARATION, WITH COSTS OF SUIT, WITHOUT STAY OF EXECUTION
AND WITH THE GREATER OF FIVE PERCENT (5%) OF SUCH SUMS OR $3,000 ADDED AS A
REASONABLE ATTORNEY'S FEE FOR COLLECTION. BORROWER HEREBY WAIVES THE RIGHT OF
INQUISITION ON ANY REAL ESTATE LEVIED ON, VOLUNTARILY CONDEMNS THE SAME,
AUTHORIZES THE PROTHONOTARY OR CLERK TO ENTER UPON THE WRIT OF EXECUTION SAID
VOLUNTARY CONDEMNATION AND AGREES THAT SAID REAL ESTATE MAY BE SOLD ON A WRIT OF
EXECUTION; AND ALSO WAIVES AND RELEASES ALL RELIEF FROM ANY AND ALL
APPRAISEMENT, STAY OR EXEMPTION LAW OF ANY STATE NOW IN FORCE OR HEREAFTER
ENACTED. BORROWER ALSO HEREBY WAIVES ITS RIGHT TO OBJECT TO AND RELEASES ALL
PROCEDURAL ERRORS IN SUCH PROCEEDINGS. IF A COPY OF THIS AGREEMENT, VERIFIED BY
AFFIDAVIT LENDER OR SOMEONE ON BEHALF OF LENDER, SHALL HAVE BEEN FILED IN SUCH
ACTION, IT SHALL NOT BE NECESSARY TO FILE THE ORIGINAL AGREEMENT AS A WARRANT OF
ATTORNEY. THE AUTHORITY AND POWER TO APPEAR FOR AND ENTER JUDGMENT AGAINST
BORROWER SHALL NOT BE EXHAUSTED BY THE INITIAL EXERCISE THEREOF, AND THE SAME
MAY BE EXERCISED FROM TIME TO TIME AND AS OFTEN AS LENDER SHALL DEEM NECESSARY
OR DESIRABLE AND THIS AGREEMENT SHALL BE A SUFFICIENT WARRANT.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. No Waiver; Cumulative Remedies. No failure on the part of
Lender to exercise, and no delay in exercising, any right, power, or remedy
under any Loan Documents shall operate as a waiver thereof; nor shall any single
or partial exercise of any right under any Loan Documents preclude any other or
further exercise thereof or the exercise of any other right. The remedies
provided in the Loan Documents are cumulative and not exclusive of any remedies
provided by law.
SECTION 7.02. Amendments. No amendment, modification, termination, or
waiver of any provision of any Loan Document, nor consent to any departure by
Borrower from any Loan Document, shall in any event be effective unless the
same shall be in writing and signed by Lender, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
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SECTION 7.03. Notices. Unless this Agreement specifically provides
otherwise, all notices, requests, demands and other communications that this
Agreement requires or permits any party to give to any other party shall be in
writing (including telecopy) and shall be given (A) if to Lender, at:
CoreStates Bank, ▇.▇.
▇▇▇▇▇▇▇ Building - 4th Floor
F.C. 1-8-4-18
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
Telecopier: (▇▇▇)▇▇▇-▇▇▇▇
and (B) if to Borrower at:
Diplomat Ambassador, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, President
Telecopier: (▇▇▇)▇▇▇-▇▇▇▇
Any party may specify a different address or telecopy number in a notice to each
other party complying with the terms of this Section. Unless this Agreement
specifically provides otherwise, all notices, requests, demands and other
communications provided for hereunder shall be effective (A) if given by mail,
three Business Days after it is mailed, (B) if sent by overnight courier
service, on the Business Day after it is sent, (C) if given by telecopy, when
such telecopy is transmitted to the aforesaid telecopy number and the
appropriate confirmation of receipt is received by the sender or (D) if given by
any other means, when delivered at the aforesaid address. Notwithstanding the
the foregoing, notices from Borrower to Lender pursuant to any of the provisions
of Article II shall not be effective until received by Lender. Lender shall be
entitled to rely on any notice, oral or written, received by it from Borrower,
and in the event of conflicting notices received by Lender from Borrower, Lender
shall be entitled to rely on any notice received from Borrower as if such notice
were the only notice received by Lender.
SECTION 7.05. Costs and Expenses. Borrower agrees to pay on demand all
costs and expenses of Lender (including the reasonable fees and out-of-pocket
expenses of counsel for Lender) in connection with (A) the preparation,
printing, execution and delivery of this Agreement, (B) any waiver under or
amendment of, this Agreement, the Demand Note, the other Loan Documents and the
other instruments and documents to be delivered hereunder, and (C) the
enforcement of this Agreement, the Demand Note, the other
-38-
Loan Documents and the other instruments and documents to be delivered
hereunder.
SECTION 7.06. Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
SECTION 7.07. Binding Effect. This Agreement shall become effective when
it shall have been executed by Borrower and Lender, and it shall thereafter be
binding upon and inure to the benefit of Borrower and Lender.
SECTION 7.08. Governing Law. This Agreement, the Demand Note and the other
Loan Documents shall be governed in all respects by the law of the Commonwealth
of Pennsylvania and for all purposes shall be construed in accordance with the
law of the Commonwealth of Pennsylvania.
SECTION 7.09. Headings. Article and Section headings used in this
Agreement are for convenience only and shall not affect the construction of this
Agreement.
SECTION 7.10. Assignments. (A) The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that Borrower may not assign or otherwise
transfer any of its rights or obligations under this Agreement without the prior
written consent of Lender.
(B) Without otherwise limiting Lender's right to grant
participations or assign any of its rights or obligations hereunder, Lender may
at any time assign all or any portion of its rights under this Agreement and the
Demand Note to a Federal Reserve Bank. No such assignment shall release the
transferor bank from its obligations hereunder.
SECTION 7.11. Additional Indemnification of Lender. Borrower hereby agrees
to defend Lender and its directors, officers, agents, employees and counsel
from, and hold each of them harmless against, any and all losses, liabilities,
claims, damages, interest, judgments, costs and expenses, including reasonable
attorneys' fees, incurred by any of them arising out of or in connection (A)
with this Agreement, or Lender's financing of Borrower's business and
operations, or (B) any claim under any of the Environmental Laws relating to any
violation or alleged violation thereof by Borrower or the presence on or
disposal from any of its properties of any hazardous or toxic substance referred
to in Section 5.11. All obligations provided for in this Section shall survive
any termination of this Agreement, the Demand Note, the repayment of
indebtedness
-39-
hereunder, or any action taken by Lender in the enforcement of its rights and
remedies hereunder or thereunder.
SECTION 7.12. Consent to Jurisdiction and Service of Process; Waiver of
Jury Trial; Limitation on Damages. (A) Borrower irrevocably appoints its chief
executive officer and chief financial officer as its attorneys upon whom may be
served, by regular or certified mail at Borrower's address set forth in this
Agreement, any notice, process or pleading in any action or proceeding against
it arising out of or in connection with this Agreement or any of the other Loan
Documents. Borrower hereby consents that any action or proceeding against it may
be commenced and maintained in any court within the Commonwealth of Pennsylvania
or in the United States District Court for any District of Pennsylvania by
service of process on any such officer. Borrower further agrees that such courts
of the Commonwealth of Pennsylvania and the United States District Court for any
District of Pennsylvania shall have jurisdiction with respect to the subject
matter hereof and the person of Borrower. This paragraph shall not restrict
Lender from bringing a suit against Borrower is any other court or jurisdiction.
Notwithstanding the foregoing, Borrower agrees that any action brought by it
against Lender shall be commenced and maintained only in a court in the federal
judicial district or county in which Lender has its principal office in
Pennsylvania.
(B) EACH PARTY TO THIS AGREEMENT AGREES THAT ANY SUIT, ACTION OR
PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT OR INSTITUTED BY ANY PARTY
HERETO OR ANY SUCCESSOR OR ASSIGN OF ANY PARTY, ON OR WITH RESPECT TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE DEALINGS OF THE PARTIES WITH
RESPECT HERETO, OR THERETO, SHALL BE TRIED ONLY BY A COURT AND NOT BY A JURY,
AND EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT
TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING.
(C) EACH PARTY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER, IN
ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES.
(D) BORROWER ACKNOWLEDGES AND AGREES THAT THIS SECTION IS A SPECIFIC
AND MATERIAL ASPECT OF THIS AGREEMENT AND THAT LENDER WOULD NOT EXTEND CREDIT TO
BORROWER IF THE WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF THIS
AGREEMENT.
-40-
SECTION 6.l3. Non-Merger of Remedies. It is the intention of the parties
hereto that the covenants and obligations of the Borrower and the rights and
remedies of Lender hereunder and under any other Loan Document shall not merge
with or be extinguished by the entry of judgment hereunder or thereunder, and
such covenants, obligations, rights and remedies shall survive any entry of
judgment until payment in full of all obligations of Borrower to Lender. All
obligations under the Loan Documents shall continue to apply with respect to and
during the collection of amounts due under the Loan Documents or the proof and
allowability of any claim arising under this Agreement or any other Loan
Document, whether in bankruptcy or receivership proceedings or otherwise, and in
any workout, restructuring or in connection with the protection, preservation,
exercise or enforcement of any of the terms of this Agreement or of any rights
under this Agreement or under any other Loan Document or in connection with any
foreclosure, collection or bankruptcy proceedings. Without limiting the
generality of the foregoing, the post-judgment interest rate shall be the
interest rate provided herein.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
day and year first above written.
(Corporate Seal) DIPLOMAT AMBASSADOR, INC.
Attest:
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
/s/ ▇. ▇▇▇▇▇▇▇
------------------------------ Title: President
Secretary
CORESTATES BANK, N.A.,
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, VP
-------------------------------
Title: Vice President
-▇▇-
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ :
: SS
COUNTY OF PHILADELPHIA :
On this, the 7th day of June, 1996, before me, the undersigned officer,
personally appeared ▇▇▇▇▇ ▇▇▇▇▇▇▇ known to me (or satisfactorily proven) to be
the President of Diplomat Ambassador, Inc., a Delaware corporation, and that he
as such President being authorized to do so, executed the foregoing Loan
Agreement and acknowledged that he executed the same for the purposes therein
contained by signing the name of the corporation by himself as President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ ▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
NOTARY PUBLIC
My Commission Expires:
------------------------------------
NOTARIAL SEAL
▇▇▇▇ ▇. ▇▇▇▇, Notary Public
City of Philadelphia, Phila. County
My Commission Expires Jan. 15, 2000
------------------------------------
-42-
SCHEDULE 3.01(c)
Matters To Be Covered in Opinion of Counsel for
Diplomat Ambassador, Inc. ("Borrower")
▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ (together, the "Sluckers")
and ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (together, the "Budilovs"; Borrower, the
Sluckers and the Budilovs, each an "Obligor" and collectively "Obligors")
1. Borrower is a corporation duly organized, validly existing and in good
standing under the laws of Delaware. The failure of Borrower to be qualified in
any other jurisdiction will not adversely affect its business or operations or
its ability to perform its obligations under the Loan Documents, as that term is
defined in the Loan Agreement.
2. Borrower has the corporate power and authority to own its assets and to
transact the business in which it is now engaged and to enter into, deliver and
perform its obligations under each of the Loan Documents to be executed,
delivered and performed by it. The execution, delivery and performance of the
Loan Documents has been authorized by all requisite corporate action on the part
of Borrower.
3. Each Obligor has duly executed and delivered the Loan Documents to
which it is a party.
4. The Loan Documents are, or when executed and delivered by each Obligor
will be, the legal, valid and binding obligations of each Obligor, enforceable
against each Obligor in accordance with their respective terms, except as may be
limited by general principles of equity and by bankruptcy, insolvency
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally.
5. No authorization, approval or consent of, or filing or registration
with, any governmental or regulatory body is required in connection with the
execution, delivery and performance by any Obligor, or the validity or
enforceability, of the Loan Documents.
6. Neither the execution and delivery by Borrower of the Loan Documents
nor the performance and observance by any of them of its obligations thereunder,
will conflict with, or result in any violation or breach of or constitute a
default under (i) its Articles of Incorporation or By-Laws, (ii) any existing
law, statute or governmental regulation applicable to Borrower or (iii) any
judgment, order, decree, writ or injunction of any court, arbitrator or
governmental department, commission, agency or instrumentality or any indenture,
contract, guaranty or other agreement or instrument known to us to which
Borrower is a party or by which it or its properties may be bound or affected.
7. We know of no action, suit, proceeding or investigation at law or in
equity, before any court, public board or body, pending or, to the best of our
knowledge, threatened against or affecting any Obligor, wherein an unfavorable
decision, ruling or finding would result, either individually or collectively,
in any material adverse change in the business, property, operation or condition
of any Obligor or adversely affect the transactions contemplated by the Loan
Documents or the validity or enforceability of any of the Loan Documents.
8. The Security Agreement is sufficient to create in favor of Lender a
security interest under the Uniform Commercial Code (the "UCC") in Borrower's
inventory, equipment, accounts, general intangibles (as those terms are defined
in the UCC).
9. Upon the filing of UCC-1 Financing Statements with the Office of the
Secretary of the Commonwealth, the Prothonotary of Philadelphia County, and the
Recorder of Philadelphia County (the "Filing Offices"), the security interest
referred to in paragraph 8 will be perfected, to the extent a security interest
in the property described in paragraph 8 can be perfected by filing financing
statements under the UCC.
SCHEDULE 4.05 - LITIGATION
-None
SCHEDULE 4.06 - CREDIT OBLIGATIONS
Capital Leases:
Leases Type of Equipment
---------------------------------------------------------
Funding Services Computer Upgrade
Funding Services Panasonic Telephone System
Funding Services Paging System
Funding Services Laptop Computers
Funding Services Laptop Computers
Funding Services Show Booth
Schedule 4.08 - Encumbrances
Filing Date/
Jurisdiction: Debtor: Secured Party: Filing No.: Collateral:
------------- ------- -------------- ----------- -----------
Pennsylvania
Sec. of State: Chanuk, Inc. ▇▇▇▇▇ Financial Corp. 1/2/92 Computer U6000/55 Disk
(Lessee) (Lessor) 20381133 Magnetic Disk Drive
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ The Beaumont Building 4MB upgrade and accessories
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Diplomat Optical Corp.
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Chanuk, Inc. Colonial Pacific Leasing 5/4/92 Design "A" Basic 20' x 30'
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 20761778 Exhibit
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Chanuk, Inc. Advanta Leasing Corp. 10/19/92 Everpower 486/33 mini top cas
Diplomat Optical Corp. 2 Echelon Plaza, Ste. 300 21290906 computer and equipment
Chanuk, Inc. Corporate Capital Leasing 10/21/92 Display booth showcases
31 ▇. ▇▇▇▇▇ Street 21471661
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Chanuk, Inc. Advanta Leasing Corp. 3/12/93 Toshiba computer system
Diplomat Optical Corp. 21740557
Chanuk, Inc. Pitney ▇▇▇▇▇ Credit Corp. 4/1/93 Equipment manufactured, sold
21800202 distributed by Pitney ▇▇▇▇▇,
Monarch Marketing, Dictaphon
Corp. & subject to lease
#9996117-503
Chanuk, Inc. Rockland Lease Funding 8/11/93 Computer U6000/55 Disk
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 22291763 Magnetic ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 4MB upgrade and accessories
Chanuk, Inc. AT&T Capital Corporation 2/22/94 DFI 486 DX/2-66 Motherboard
Diplomat Optical Corp. ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇ ▇▇. 22860123 and accessories
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Chanuk, Inc. Bank of ▇▇▇▇ Burnie 2/25/94 Zenith Notebook computers an
Diplomat Optical Corp. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇. 22870651 accessories
Ambassador Optical ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Chanuk, Inc. Rock Island Bank 6/6/94 486 DX-33 Motherboard and
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 23191674 accessories
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Schedule 4.08 - Encumbrances
Filing Date/
Jurisdiction: Debtor: Secured Party: Filing No.: Collateral:
------------- ------- -------------- ----------- -----------
Chanuk, Inc. Advanta Leasing Corp. 3/16/96 Toshiba computer system
Diplomat Optical Corp. 931231
Chanuk, Inc. Rockland Lease Funding 8/16/93 Computer U6000/55 Disk
933931 Magnetic Disk Drive
4MB upgrade and accessories
Chanuk, Inc. AT&T Capital Corporation 2/23/94 DFI 486 DX/2-66 Motherboard
Diplomat Optical Corp. 94716 and accessories
Chanuk, Inc. Bank of ▇▇▇▇ Burnie 2/25/94 Zenith Notebook computers an
Diplomat Optical Corp. 94757 accessories
Ambassador Optical
Chanuk, Inc. Copelco Credit Corp 2/10/95 Copier
95708
Chanuk, Inc. Finova Capital Corp 11/15/95 Panasonic Digital Business
Diplomat Ambassador 955177 System and accessories
Eyeware
Chanuk, Inc. Funding Services U.S. 11/27/95 Dell Notebook computer and
955352 accessories
Chanuk, Inc. Finova Capital Corp 3/29/96 Display Booth
Diplomat Ambassador 961376
Eyeware
Diplomat Ambassador, Inc. ▇▇▇▇ ▇▇▇▇▇▇▇ To be recorded Accounts, including proceeds
Post Closing
Philadelphia Chanuk, Inc. Bucks Co. Bank & Trust 2/24/92 Accounts, chattel paper
County Diplomat Optical ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ 0012446 contract rights, general
Recorder: Suite 201 intangibles, etc...
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Schedule 4.08 - Encumbrances
Filing Date/
Jurisdiction: Debtor: Secured Party: Filing No.: Collateral:
------------- ------- -------------- ----------- -----------
Chanuk, Inc. Copelo Credit Corp 2/10/95 Copier
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Chanuk, Inc. ▇▇▇▇▇▇▇ Leasing Corp 7/24/95 Unisys Pentium Model 6000/22
Two Clinton Square 24510296 and accessories
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Chanuk, Inc. Funding Services U.S. 11/27/95 Dell Notebook computer and
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 24911054 accessories
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Chanuk, Inc. Finova Capital Corp 12/4/95 Panasonic Digital Business
Diplomat Ambassador P.O. Box 907 24941285 System and accessories
Eyeware ▇▇ ▇. ▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Chanuk, Inc. Finova Capital Corp 3/26/96 Display Booth
Diplomat Ambassador 25291636
Eyeware
Diplomat Ambassador, Inc. ▇▇▇▇ ▇▇▇▇▇▇▇ To be recorded Accounts, including proceeds
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 66 ▇▇▇▇▇▇▇▇ ▇▇. Post Closing
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ S. ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Philadelphia
County
Prothonotary: Chanuk, Inc. Advanta Leasing Corp. 9/9/91 Micro general smart meter system
Diplomat Optical Corp. 9144477
Chanuk, Inc. ▇▇▇▇▇ Financial Corp. 1/2/92 Computer U6000/55 Disk
(Lessee) (Lessor) 9212 Magnetic Disk Drive
4MB upgrade and accessories
SCHEDULE - 4.11 ERISA PLANS
Diplomat Ambassador offers a Simplified Employee Pension Plan which provides
benefits upon retirment for the individuals who are eligible to participate.
This plan is in conformity with ERISA guidelines. See attachments.
SCHEDULE-4.14 ENVIRONMENTAL MATTERS
-None
SCHEDULE - 4.15 PATENTS, COPYRIGHTS, TRADEMARKS AND LICENSES
(A) None
(B) None
(C) None
(D) Licensee Geographic Areas Product Lines
--------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ United States & Canada Ophthalmic spectacle
frames with the
trademark ▇▇▇▇▇ ▇▇▇▇▇▇*
▇▇▇▇▇ Coventry United States & Canada Ophthalmic frames and
cases
▇▇▇▇▇ New York United States & Canada All ophthalmic eyewear,
sunglasses and eyewear
accessories which embody
the trademark "▇▇▇▇▇ New
York".
Playschool, Inc. United States Eyewear frames for
prescription eyewear
only and eyewear
accessories. License
excludes prescription
ophthalmic lenses and
non-prescription
sunglasses.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Co. Worldwide ▇▇▇▇▇ ▇▇▇▇▇▇▇ sunglass
line
(E) None
SCHEDULE 5.15 - Contingent Liabilities
MIDLANTIC BANK, N.A. TLX #: 825648
TRADE SERVICE OPERATIONS FAX #: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ SWIFT: MILAUS33
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
CUSTOMER NUMBER STATEMENT DATE RELATIONSHIP MANAGER
--------------- -------------- --------------------
DIPLOMAT 05/31/96 ▇. ▇▇▇▇▇▇▇▇ 772-2213/▇. ▇▇▇▇▇▇ 22
DIPLOMAT AMBASSADOR, INC.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
SUMMARY OF TRADE SERVICE PRODUCTS PAGE: 1
--------------------------------------------------------------------------------
BANKERS ACCEPTANCES
ACCEPTANCE TENOR MATURITY
NO DATE DATE CUR AMOUNT US$ AMOUNT
-- ---- ---- --- ------ ----------
52785-01 03/26/96 06/19/96 USD 33725.00 33725.00
52786-01 03/25/96 06/24/96 USD 23485.00 23485.00