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Exhibit 10.1
EXECUTION COPY
AMENDED AND RESTATED FINANCING AND SECURITY AGREEMENT
THE CIT GROUP/BUSINESS CREDIT, INC.
(AS LENDER AND LENDERS AGENT)
AND
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, INC.,
(BORROWER)
DATED: JANUARY 17, 1997
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TABLE OF CONTENTS
Page
SECTION 1. Definitions............................................... 1
SECTION 2. Conditions Precedent...................................... 21
SECTION 3. Revolving Loans........................................... 24
SECTION 4. Term Loans................................................ 29
SECTION 5. Letters of Credit......................................... 32
SECTION 6. Collateral................................................ 35
SECTION 7. Representations and Warranties............................ 39
SECTION 8. Certain Covenants......................................... 49
SECTION 9. Interest, Fees, Expenses and
Assignments............................................... 61
SECTION 10. Powers.................................................... 70
SECTION 11. Events of Default and Remedies............................ 71
SECTION 12. Termination............................................... 76
SECTION 13. Indemnification........................................... 77
SECTION 14. Miscellaneous............................................. 78
SECTION 15. Agency.................................................... 82
EXHIBITS
Exhibit A1 - Form of Term Loan I Promissory Note
Exhibit A2 - Form of Term Loan II Promissory Note
Exhibit A3 - Form of Term Loan III Promissory Note
Exhibit A4 - Form of Term Loan IV Promissory Note
Exhibit A5 - Form of Revolving Loans Promissory Note
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Exhibit B - Form of Opinion of ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇
Exhibit C - Form of Mortgage
Exhibit D - Assignment of Key Man Life Insurance
Exhibit E - Form of Weekly Availability Report
Exhibit F - Form of Assignment and Transfer Agreement
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SCHEDULES
Schedule 1(a) - Real Estate
Schedule 1(b) - Permitted Encumbrances
Schedule 1(c) - Permitted Indebtedness
Schedule 1(d) - Shawmut Letters of Credit
Schedule 3.5 - Bank Accounts
Schedule 7.1 - Corporate Existence
Schedule 7.4 - Required Consents
Schedule 7.6 - Litigation
Schedule 7.10 - Subordinated Debt
Schedule 7.14 - Possession of Patents
Schedule 7.15 - Broker's or Finder's Commissions
Schedule 7.18 - ERISA
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THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation (hereinafter
"CITBC") with offices located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, is pleased to confirm the terms and conditions under which CITBC shall
make term loans and revolving loans, advances and other financial accommodations
to ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, Inc., a Delaware corporation (as successor of a merger of
The National Acme Company with and into ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, Inc.) (herein the
"Borrower").
AMENDED AND RESTATED. Reference is made to the Financing and Security
Agreement dated October 23, 1995 between CITBC and Borrower, as amended by the
First Amendment dated April 12, 1996 ("Original Financing Agreement"). CITBC and
Borrower agree that to the extent this Amended and Restated Financing and
Security Agreement amends the Original Financing Agreement the Original
Financing Agreements is amended and to the extent this Amended and Restated
Financing and Security Agreement restates the Original Security Agreement the
Original Financing Agreement is restated.
SECTION 1. DEFINITIONS
ACCOUNTS shall mean all of the Borrower's now existing and future: (a)
accounts receivable (whether or not specifically listed on schedules furnished
to Lenders Agent), and any and all instruments, documents, contract rights,
chattel paper, general intangibles relating to such accounts receivable,
including, without limitation, all accounts created by or arising from all of
the Borrower's sales of goods or rendition of services to its customers, and all
accounts arising from sales or rendition of services made under any of the
Borrower's trade names or styles, or through any of the Borrower's divisions;
(b) unpaid seller's rights (including rescission, replevin, reclamation and
stoppage in transit) relating to the foregoing or arising therefrom; (c) rights
to any goods represented by any of the foregoing, including rights to returned
or repossessed
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goods; (d) reserves and credit balances arising thereunder; (e) guarantees or
collateral for any of the foregoing; (f) insurance policies or rights relating
to any of the foregoing; and (g) cash and non-cash proceeds of any and all the
foregoing.
ACCOUNTS (▇▇▇▇▇▇▇▇) shall mean all of the Accounts purchased by DeVlieg
from ▇▇▇▇▇▇▇▇ pursuant to the Asset Purchase Agreement (▇▇▇▇▇▇▇▇).
ACQUISITION (▇▇▇▇▇▇▇▇) shall mean the acquisition by DeVlieg of certain
assets of ▇▇▇▇▇▇▇▇ from ▇▇▇▇▇▇▇▇ under and pursuant to the Asset Purchase
Agreement (▇▇▇▇▇▇▇▇).
ACQUISITION (NATIONAL ACME) shall mean the acquisition by DeVlieg of all of
the issued and outstanding capital stock of National Acme from Seller (National
Acme) under or pursuant to the Stock Purchase Agreement.
ASSET PURCHASE AGREEMENT (▇▇▇▇▇▇▇▇) shall mean the Asset Purchase Agreement
dated December 18, 1996 between ▇▇▇▇▇▇▇▇ and DeVlieg.
ASSIGNMENT AND TRANSFER AGREEMENT shall mean an Assignment and Transfer
Agreement substantially in the form of Exhibit F hereto, pursuant to which a
Lender assigns and a Transferee assumes rights and obligations in accordance
with Section 9, paragraph 17(b) of this Financing Agreement.
ASSIGNMENT OF CLAIMS ACT shall mean ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code Annotated Section
3727 and all amendments and supplements thereto and all rules and regulations
promulgated thereunder.
ASSIGNMENT OF KEY MAN LIFE INSURANCE POLICY shall mean the assignment of
Key Man Life Insurance Policy delivered pursuant to Section 11, paragraph i of
the Original Financing Agreement as the same may be amended or modified from
time to time.
AVAILABILITY shall mean at any time the excess, as determined by Lenders
Agent based upon the most recently delivered Weekly Availability Report of (A)
the sum of a) Eligible Accounts Receivable multiplied by the percentage provided
for in clause (b)(i) of the third sentence of
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Section 3(1)(a) of this Financing Agreement plus b) Eligible Inventory
multiplied by the percentage provided for in clause (b)(ii) of the third
sentence of Section 3(1)(a) of this Financing Agreement but not to exceed the
limitation set forth therein, over (B) the sum of y) the outstanding aggregate
amount of all Revolving Loans of the Borrower plus z) the maximum amount
drawable under the Letters of Credit of the Borrower and the maximum amount
guaranteed under the guaranties of CITBC issued pursuant to the Letter of
Guaranty Agreement.
BALANCE SHEET shall mean a balance sheet for the Borrower prepared in
accordance with GAAP.
BANKRUPTCY COURT ORDER (▇▇▇▇▇▇▇▇) means the Order Confirming Sale entered
by ▇▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ December 20, 1996 in the matter of: ▇▇▇▇▇▇▇▇
Technologies, Inc. FEIN #▇▇-▇▇▇▇▇▇▇ (Case No. 96B51545).
CAPITAL EXPENDITURES shall mean, for any period, the aggregate of all
expenditures of the Borrower and its Subsidiaries during such period that in
conformity with GAAP are required to be included in or reflected by the
property, plant or equipment or similar fixed asset account reflected in the
balance sheet of the Borrower and its Subsidiaries.
CAPITAL LEASE shall mean any lease of property (whether real, personal or
mixed) which, in conformity with GAAP, is accounted for as a capital lease or a
Capital Expenditure on the balance sheet of the Borrower.
CHASE BANK RATE shall mean the rate of interest per annum announced by The
Chase Manhattan Bank from time to time as its prime rate in effect at its
principal office in the City of New York. (The prime rate is not intended to be
the lowest rate of interest charged by The Chase Manhattan Bank to its
borrowers).
CODE shall mean the Internal Revenue Code of 1986, as amended.
COLLATERAL shall mean all present and future Accounts, Equipment,
Inventory, Documents of Title, General Intangibles, Real Estate and all other
personal property of the Borrower and any other collateral delivered to Lenders
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Agent or any Lenders pursuant to any collateral agreement, including, without
limitation, this Financing Agreement, the Assignment of Key Man Life Insurance
Policy, the Patent Security Agreement, the Trademark Security Agreement, and any
other security agreement, if any, requested pursuant to Section 8 paragraph 1 of
this Financing Agreement.
COLLATERAL MANAGEMENT FEE shall mean (a) during the period from the First
Closing Date to the Second Closing Date, the sum of $50,000 per year for each
year this Financing Agreement is in effect and (b) during the period on and
after the Second Closing Date the sum of $60,000 per year for each year this
Financing Agreement is in effect, and such fee shall be paid to Lenders Agent in
accordance with Section 9, paragraph 13 hereof to offset the expenses and costs
of Lenders Agent in connection with record keeping, periodic examinations,
analyzing and evaluating the Collateral.
COLLECTION ACCOUNTS shall mean the Collection Accounts described in
Section 3, paragraph 5 of this Financing Agreement.
COLLECTION BANK(S) shall mean the Collection Bank(s) described in
Section 3, paragraph 5 of this Financing Agreement.
CONSOLIDATED CURRENT ASSETS shall mean those assets of the Borrower and its
Consolidated Subsidiaries, on a consolidated basis, which in accordance with
GAAP, are classified as "current".
CONSOLIDATED CURRENT LIABILITIES shall mean those liabilities of the
Borrower and its Consolidated Subsidiaries, on a consolidated basis, which in
accordance with GAAP, are classified as "current"; provided, however, that
notwithstanding GAAP, the Revolving Loans and the current portion of Permitted
Indebtedness shall be considered "current liabilities".
CONSOLIDATED EBITDA shall mean, in any period, all earnings of the Borrower
and its Consolidated Subsidiaries, on a consolidated basis, before all interest,
tax obligations, depreciation and amortization of intangibles, of the Borrower
and its Consolidated Subsidiaries, on a
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consolidated basis, for said period, determined in accordance with GAAP.
CONSOLIDATED FIXED CHARGE COVERAGE RATIO shall mean, for any period, a
ratio determined as of the relevant calculation date by dividing (a)
Consolidated EBITDA by (b) the sum for such period of (i) Consolidated Interest
Expense (other than any such Expenses incurred under the Seller Note
(▇▇▇▇▇▇▇▇)), plus (ii) payments made on the Term Loans (other than Term Loan
III) pursuant to Section 4 of this Financing Agreement, plus (iii) Capital
Expenditures, plus (iv) income taxes of the Borrower and its Consolidated
Subsidiaries determined in accordance with GAAP.
CONSOLIDATED INTEREST COVERAGE RATIO shall mean a ratio determined as of
the relevant calculation date by dividing Consolidated EBITDA by Consolidated
Interest Expense for the relevant period.
CONSOLIDATED INTEREST EXPENSE shall mean total consolidated interest
obligations of the Borrower and its Consolidated Subsidiaries, on a consolidated
basis, determined in accordance with GAAP and in a manner consistent with the
latest audited statements of the Borrower but exclusive of amortization of debt
discount.
CONSOLIDATED NET WORTH shall mean, with respect to the Borrower and its
Consolidated Subsidiaries, assets in excess of liabilities, and determined in
accordance with GAAP, in a manner consistent with the latest audited financial
statements of the Borrower and its Consolidated Subsidiaries.
CONSOLIDATED SUBSIDIARIES shall mean all subsidiaries of the Borrower that
should be included in the Borrower's consolidated financial statements, all as
determined in accordance with GAAP.
CONSOLIDATED TOTAL LIABILITIES shall mean total liabilities of the Borrower
and its Consolidated Subsidiaries, on a consolidated basis, all as determined in
accordance with GAAP.
CUSTOMARILY PERMITTED LIENS shall mean:
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(a) liens of local or state authorities for franchise or other like
taxes provided the aggregate amounts of such liens shall not exceed
$500,000 in the aggregate at any one time;
(b) statutory liens of landlords and liens of carriers, warehousemen,
mechanics, materialmen and other like liens imposed by law, created in the
ordinary course of business and for amounts not yet due (or which are being
contested in good faith by appropriate proceedings or other appropriate
actions which are sufficient to prevent imminent foreclosure of such liens)
and with respect to which adequate reserves or other appropriate provisions
are being maintained in accordance with GAAP;
(c) deposits made (and the liens thereon) in the ordinary course of
business (including, without limitation, security deposits for leases,
surety bonds and appeal bonds) in connection with workers' compensation,
unemployment insurance and other types of social security benefits or to
secure the performance of tenders, bids contracts (other than for the
repayment or guarantee of borrowed money or purchase money obligations),
statutory obligations and other similar obligations arising as a result of
progress payments under government contracts; and
(d) easements (including, without limitation, reciprocal easement
agreements and utility agreements), encroachments, minor defects or
irregularities in title, variation and other restrictions, charges or
encumbrances (whether or not recorded) affecting the Real Estate and which
are listed in Schedule B of the title insurance policy delivered to CITBC
herewith and previously approved by Required Lenders or its special
counsel.
DEFAULT shall mean any event specified in Section 11 hereof, whether or not
any requirement for the giving of notice, the lapse of time, or both, or any
other condition, event or act, has been satisfied.
DEFAULT RATE OF INTEREST shall mean a rate of interest per annum equal to
the sum of: a) four percent
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(4%) and b) the Chase Bank Rate, which each Lender shall be entitled to charge
the Borrower on all Obligations due each Lender by the Borrower to the extent
provided in Section 9, paragraph 2 of this Financing Agreement.
DEVLIEG means ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, Inc., a Delaware corporation.
DOCUMENTS OF TITLE shall mean all present and future warehouse receipts,
bills of lading, shipping documents, chattel paper, instruments and similar
documents, all whether negotiable or not and all goods and inventory relating
thereto and all cash and non-cash proceeds of the foregoing.
DOLLAR(S) and the sign "$" means lawful money of the United States of
America.
EARLY TERMINATION DATE shall mean the date on which the Borrower terminates
this Financing Agreement or the Revolving Line of Credit if such date is prior
to the Final Maturity Date.
EARLY TERMINATION FEE shall: i) mean the fee the Lenders are entitled to
charge the Borrower in the event the Borrower terminates the Revolving Line of
Credit or this Financing Agreement on a date prior to the Final Maturity Date;
and ii) be an amount equal to (x) $400,000 if the Early Termination Date is a
date after the Second Closing Date but prior to the first anniversary of the
Second Closing Date; (y) $300,000 if the Early Termination Date is a date on or
after the first anniversary of the Second Closing Date but prior to the second
anniversary of the Second Closing Date; and (z) $200,000 if the Early
Termination Date is a date on or after the second anniversary of the Second
Closing Date.
ELIGIBLE ACCOUNTS RECEIVABLE shall mean the gross amount of the Borrower's
accounts receivable that conform to the warranties contained herein and at all
times continue to be acceptable to Required Lenders in the exercise of their
reasonable business judgment, less, without duplication, the sum of a) any
returns, discounts, claims, credits and allowances of any nature (whether
issued, owing, granted or outstanding) and b) reserves for: i) sales to the
▇▇▇▇▇▇
▇
▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ or to any agency, department or division thereof except where
assignment of all resulting accounts receivable or to become due under a
particular contract is made by the Borrower to Lenders Agent and Required
Lenders are satisfied that all requirements for compliance with the Assignment
of Claims Act and/or other applicable statutes, rules or regulations have been
fulfilled, provided that the aggregate amount of accounts receivable described
in this exception which shall be permitted to constitute Eligible Accounts
Receivable shall not exceed at any one time $1,000,000; ii) foreign sales other
than sales x) secured by stand-by letters of credit (in form and substance
satisfactory to Required Lenders) issued or confirmed by, and payable at, banks
having a place of business in the United States of America and payable in United
States currency, or y) to customers residing in Canada provided such sales
otherwise comply with all of the other criteria for eligibility hereunder, are
payable in United States currency and such sales do not exceed $2,000,000 in the
aggregate at any one time; iii) accounts that remain unpaid more than ninety
(90) days from invoice date; iv) contras; v) sales to any subsidiary, or to any
company affiliated with the Borrower in any way; vi) ▇▇▇▇ and hold (deferred
shipment) or consignment sales; vii) sales to any customer which is a)
insolvent, b) the debtor in any bankruptcy, insolvency, arrangement,
reorganization, receivership or similar proceedings under any federal or state
law, c) negotiating, or has called a meeting of its creditors for purposes of
negotiating, a compromise of its debts or d) financially unacceptable to
Required Lenders or has a credit rating unacceptable to the Required Lenders;
viii) all sales to any customer if fifty percent (50%) or more of either x) all
outstanding invoices or y) the aggregate dollar amount of all outstanding
invoices, are unpaid more than ninety (90) days from invoice date; ix) any other
reasons deemed necessary by Required Lenders in their reasonable business
judgment and which are customary either in the commercial finance industry or in
the lending practices of the Required Lenders; and x) an amount representing,
historically, returns, discounts, claims, credits and allowances.
Notwithstanding the foregoing, none of the Accounts (▇▇▇▇▇▇▇▇) will be covered
by or included in this definition of "Eligible Accounts Receivable".
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ELIGIBLE INVENTORY shall mean the gross amount of the Borrower's inventory
that conforms to the warranties contained herein and which at all times continue
to be acceptable to the Required Lenders in the exercise of their reasonable
business judgment less any work-in-process, supplies (other than raw material),
goods not present in the United States of America, goods returned or rejected by
the Borrower's customers other than goods that are undamaged and resalable in
the normal course of business, goods to be returned to the Borrower's suppliers,
goods in transit to third parties (other than the Borrower's agents or
warehouses) and less any reserves required by Required Lenders in their
reasonable discretion for special order goods, market value declines and ▇▇▇▇
and hold (deferred shipment) or consignment sales. Notwithstanding the
foregoing, until February 28, 1997, Eligible Inventory shall include
work-in-process to the extent of the lesser of (1) ten percent (10%) of
work-in-process, and (2) $1,000,000. Eligible Inventory shall be valued at the
lower of cost or market on a first in first out basis.
EMPLOYEE BENEFIT PLAN shall mean any plan, agreement, arrangement or
commitment which is an employee benefit plan, as defined in section 3(3) of
ERISA, maintained by the Borrower or any ERISA Affiliate with respect to which
the Borrower or any ERISA Affiliate at any relevant time has any liability or
obligation to contribute.
EQUIPMENT shall mean all present and hereafter acquired machinery,
equipment, furnishings and fixtures owned by the Borrower, and all additions,
substitutions and replacements thereof, wherever located, together with all
attachments, components, parts, equipment and accessories installed thereon or
affixed thereto and all proceeds of whatever sort.
ERISA shall mean the Employee Retirement Income Security Act or 1974, as
amended from time to time and the rules and regulations promulgated thereunder
from time to time.
ERISA AFFILIATE shall mean, with respect to the Borrower, any entity
required to be aggregated with the Borrower under Section 414(b), (c), (m) or
(o) of the Code.
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EUROCURRENCY RESERVE REQUIREMENTS shall mean, for any day as applied to a
Revolving Loan or any Term Loan, the aggregate (without duplication) of the
rates (expressed as a decimal) of reserve requirements in effect with respect to
The Chase Manhattan Bank on such day (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of the Board
of Governors of the Federal Reserve System or other Governmental Authority
having jurisdiction with respect thereto), dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) maintained by The Chase Manhattan
Bank.
EUROCURRENCY BASE RATE shall mean, with respect to the LIBOR Rate Period,
the rate per annum at which The Chase Manhattan Bank is offered Dollar deposits
two business days prior to the beginning of such LIBOR Rate Period in the
interbank eurodollar market where the eurodollar and foreign currency and
exchange operations of The Chase Manhattan Bank are customarily conducted at or
about 10:00 A.M., New York City time, for delivery on the first day of such
LIBOR Rate Period for the number of days comprised therein and in an amount
comparable to the amount of the Revolving Loan or any Term Loan to which such
LIBOR Rate Period applies.
EVENT(S) OF DEFAULT shall have the meaning provided for in Section 11 of
this Financing Agreement.
EXECUTIVE OFFICERS shall mean the Chairman, President, Chief Executive
Officer, Chief Operating Officer, Chief Financial Officer, Executive Vice
President(s), Senior Vice President(s), Treasurer, Controller and Secretary of
the Borrower.
EXCESS CASH FLOW shall mean, for any fiscal year, (a) net income plus (i)
amortization, plus (ii) depreciation expense, plus (iii) interest expense, each
to the extent deducted in computing net income, (less, to the extent included in
calculating EBITDA, gains realized on the sale of assets other than Inventory in
the normal course of business, and plus, to the extent deducted in calculating
EBITDA, losses realized on the sale of assets other than Inventory in the normal
course of business), plus (iv) any decrease during such period in the aggregate
of all items
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constituting working capital other than cash, less (b) (i) interest expense paid
in cash, (ii) principal payments (other than Mandatory Prepayments in accordance
with paragraphs 1(c) and (d) of Section 3 hereof, and paragraph 13 of Section 4
hereof) on Indebtedness paid in cash, (iii) Capital Expenditures (if permitted
hereunder) paid in cash and (iv) any increase during such period in the
aggregate of all items constituting working capital other than cash. Excess Cash
Flow will exclude an amount equal to any decrease in working capital resulting
from the payment of Obligations with proceeds of sales of assets (other than
Inventory in the normal course of business) to the extent not otherwise deducted
pursuant to clause (b) (ii) of the preceding sentence.
FINAL MATURITY DATE shall mean October 31, 2000.
FINANCING AGREEMENT shall mean this Amended and Restated Financing and
Security Agreement as further amended supplemented or modified from time to
time.
FIRST CLOSING DATE shall mean October 23, 1995.
GAAP shall mean generally accepted accounting principles in the United
States of America as in effect from time to time and for the period as to which
such accounting principles are to apply.
GENERAL INTANGIBLES shall mean the Borrower's general intangibles with such
term having the meaning set forth in the Uniform Commercial Code as in effect in
the State of New York and shall include, without limitation, all present and
future right, title and interest in and to all tradenames, trademarks (together
with the goodwill associated therewith), patents, licenses, engineers' drawings,
customer lists, distribution agreements, supply agreements and tax refunds,
together with all monies and claims for monies now or hereafter due and payable
in connection with any of the foregoing or otherwise, and all cash and non-cash
proceeds thereof.
HAZARDOUS SUBSTANCES shall have the meaning set forth in Section 7,
paragraph 19(b) of this Financing Agreement.
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INDEBTEDNESS shall mean, without duplication, all liabilities, contingent
or otherwise, which are any of the following: (a) obligations in respect of
money (borrowed or otherwise) or for the deferred purchase price of property,
services or assets, other than Inventory, (b) lease obligations which, in
accordance with GAAP, have been, or which should be capitalized, (c) obligations
as guarantor or in any like capacity under any arrangement with respect to
liabilities for borrowed money or pursuant to take or pay contracts, or (d) any
other obligations (other than deferred taxes) which are required by generally
accepted accounting principles to be shown as liabilities on a balance sheet and
which are payable or remain unpaid more than one year from the date of
determination thereof.
INSOLVENCY shall mean, at any particular time, a Multiemployer Plan which
is insolvent within the meaning of section 4245 of ERISA.
INTERCREDITOR AGREEMENT shall mean the intercreditor agreement dated
October 23, 1995, among the Borrower, the Subordinating Creditors and CITBC
pursuant to which the Subordinated Debt is subordinated to the prior payment and
satisfaction of the Borrower's Obligations to CITBC, as amended pursuant to the
First Amendment to Intercreditor Agreement dated January 17, 1997 among the
Borrower, the Subordinating Creditors and Lenders Agent, as the same may be
further amended or modified from time to time.
INVENTORY shall mean all of the Borrower's present and hereafter acquired
merchandise, inventory and goods, and all additions, substitutions and
replacements thereof, wherever located, together with all goods and materials
used or usable in manufacturing, processing, packaging or shipping same; in all
stages of production -- from raw materials through work-in-process to finished
goods -- and all proceeds thereof of whatever sort.
ISSUING BANK shall mean any Bank issuing a Letter of Credit for the
Borrower.
KEY MAN LIFE INSURANCE POLICY shall mean an insurance policy maintained by
the Borrower insuring the life of ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and providing for a
payment of
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at least Two Million Dollars ($2,000,000) upon ▇▇. ▇▇▇▇▇▇' death.
▇▇▇▇▇▇▇▇▇ LITIGATION shall mean the litigation entitled ▇▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ Oil & Gas.
LENDER shall mean CITBC and any Transferee hereunder.
LENDERS AGENT shall mean CITBC, or any successor thereof, acting as Agent
for the Lender(s) pursuant to this Financing Agreement.
LETTER OF CREDIT OR LETTERS OF CREDIT shall mean all letters of credit
issued with the assistance of CITBC by any Issuing Bank for or on behalf of the
Borrower.
LETTER OF CREDIT GUARANTIES shall mean both the guaranties delivered by
CITBC to any Issuing Bank, providing the guaranty of the obligations of the
Borrower to such Issuing Bank under the related letter of credit application or
reimbursement agreement (or other similar document) between such Issuing Bank
and the Borrower and the execution by CITBC as a co-applicant of a letter of
credit application or reimbursement agreement (or other similar agreement) with
the Borrower for delivery to an Issuing Bank with regard to a Letter of Credit.
LETTER OF GUARANTY AGREEMENT shall mean the letter of guaranty agreement
dated January 11, 1996 between the Borrower and CITBC.
LETTER OF CREDIT GUARANTY FEE shall mean the fee CITBC may charge the
Borrower under Section 9, paragraph 15 of this Financing Agreement for i)
issuing the Letter of Credit Guaranty, or ii) otherwise aiding the Borrower in
obtaining Letters of Credit.
LIBOR RATE shall mean, with respect to any LIBOR Rate Period pertaining to
the Revolving Loans or any of the Term Loans, the rate per annum (rounded
upwards to the next higher 1/16th of one percent) equal to the following:
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Eurocurrency Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
LIBOR RATE PERIOD shall mean with respect to each Revolving Loan or any
Term Loan whereby the Borrower has elected a LIBOR Rate:
(a) initially, the period commencing on the First Closing Date or the
date as selected by the Borrower pursuant to the Notice of Revolving
Borrowing or pursuant to Section 9, paragraphs 1, 2, or 3 of this Financing
Agreement, as the case may be, and ending one, two, three or six months
thereafter, as selected by the Borrower in its irrevocable Notice of
Revolving Borrowing as provided herein; and
(b) thereafter, each period commencing on the last day of the next
preceding LIBOR Rate Period applicable to such LIBOR loan or advance and
ending one, two, three or six months thereafter, as selected by the
Borrower;
provided, however, that all of the foregoing provisions relating to LIBOR Rate
Periods are subject to the following:
(i) if any LIBOR Rate Period pertaining to a LIBOR loan or advance
would otherwise end on a day which is not a business day, such LIBOR Rate
Period shall be extended to the next succeeding business day unless the
result of such extension would be to carry such LIBOR Rate Period into
another calendar month, in which event such LIBOR Rate Period shall end on
the immediately preceding business day;
(ii) any LIBOR Rate Period pertaining to a LIBOR loan or advance that
begins on the last business day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end
of such LIBOR Rate Period) shall end on the last business day of the
calendar month at the end of such LIBOR Rate Period;
(iii) no LIBOR Rate Period selected in respect of any loan or advance
shall end after the Final Maturity Date;
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(iv) the Borrower shall select LIBOR Rate Periods so as not to have
more than ten (10) different LIBOR Rate Periods outstanding at any one
time; and
(v) the Borrower shall select LIBOR Rate Periods such that, on each
date that a mandatory scheduled principal payment is required to be made
pursuant to this Financing Agreement, the outstanding principal amount of
the portion of such Term Loan bearing interest at the Chase Bank Rate, when
added to the aggregate principal amount of the portion of such Term Loan
bearing interest at a LIBOR Rate the applicable LIBOR Rate Period of which
shall end on such date, shall equal or exceed the aggregate principal
amount of such Term Loan required to be paid on such date pursuant to
Section 4, of this Financing Agreement.
LINE OF CREDIT FEE shall: (i) mean the fee due the Lenders at the end of
each month for the Revolving Line of Credit, and (ii) be determined by
multiplying the difference between (A) the Revolving Line of Credit and (B) the
average daily Revolving Loans of the Borrower for said month, by one-quarter of
one percent (0.25%) per annum for the number of days in said month.
LIBOR RATE ELECTION FEE shall mean the fee payable to Lenders Agent in
accordance with, and pursuant to, the provisions of Section 9, paragraph 14 of
this Financing Agreement.
LOAN DOCUMENTS shall mean each of this Financing Agreement, the Revolving
Loans Promissory Note, the Term Loan I Promissory Note, the Term Loan II
Promissory Note, the Term Loan III Promissory Note, the Term Loan IV Promissory
Note, the Mortgages, the Intercreditor Agreement, the Letters of Credit, the
Assignment of Key Man Life Insurance Policy, the Trademark Security Agreement,
the Patent Security Agreement, and any other security agreement, if any,
requested pursuant to Section 8 paragraph 1 of this Financing Agreement.
MANDATORY PREPAYMENT shall mean (i)the amount by which the Borrower must
prepay the Revolving Loans immediately upon demand as provided in Section 3,
paragraph
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1(c) or (d) of this Financing Agreement or (ii) the amount by which the Borrower
must prepay the Term Loan II pursuant to Section 4, paragraph 5 of this
Financing Agreement, or (iii) the amount by which the Borrower must prepay the
Term Loan III pursuant to Section 4, paragraph 8 of this Financing Agreement, or
any or all of the foregoing, all as the context may require.
▇▇▇▇▇▇▇▇ means ▇▇▇▇▇▇▇▇ Technologies, Inc.
MONTHLY DATE means the last business day of each month.
MORTGAGE shall mean each of the mortgages, or deeds of trust, deeds to
secure debt or other similar documents, as the case may be, substantially in the
form of Exhibit C (with any changes to such form as may be necessary to obtain
first (or other contemplated priority) liens on the Real Estate described on
Schedule 1(a) and comply with applicable state law requirements) executed or to
be executed by the Borrower or any subsidiary of the foregoing, as the case may
be, to CITBC or Lenders Agent, at any time and in connection with this Financing
Agreement, as the same may be amended, supplemented or otherwise modified from
time to time; collectively, "Mortgages."
MULTIEMPLOYER PLAN shall mean a plan which is a multiemployer plan as
defined in Section 3(37) of ERISA.
NATIONAL ACME means The National Acme Company, an Ohio corporation.
NOTICE OF REVOLVING BORROWING shall mean the notice described in Section 3,
paragraph 1(b) of this Financing Agreement.
OBLIGATIONS shall mean all loans and advances made or to be made by CITBC
or any other Lender to the Borrower or to others for the Borrower's account; any
and all indebtedness and obligations which may at any time be owing by the
Borrower to Lenders Agent or CITBC or any other Lender howsoever arising,
whether now in existence or incurred by the Borrower from time to time
hereafter; whether secured by pledge, lien upon or security interest in any of
the Borrower's assets or property or the assets or
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property of any other person, firm, entity or corporation; whether such
indebtedness is absolute or contingent, joint or several, matured or unmatured,
direct or indirect and whether the Borrower is liable to Lenders Agent or CITBC
or any other Lender for such indebtedness as principal, surety, endorser,
guarantor or otherwise. Obligations shall also include indebtedness owing to
Lenders Agent or CITBC or any other Lender by the Borrower under this Financing
Agreement or under any other agreement or arrangement now or hereafter entered
into between the Borrower and Lenders Agent or CITBC or such other Lender;
indebtedness or obligations incurred by, or imposed on, Lenders Agent or CITBC
or any other Lender as a result of environmental claims (other than as a result
of actions of CITBC or such other Lender, as the case may be) arising out of the
Borrower's operation, premises or waste disposal practices or sites; the
Borrower's liability to Lenders Agent or CITBC or any other Lender as maker or
endorser on any promissory note or other instrument for the payment of money;
the Borrower's liability to Lenders Agent or CITBC or any other Lender under any
instrument of guaranty or indemnity, or arising under any guaranty, endorsement
or undertaking which Lenders Agent or CITBC or such other Lender may make or
issue to others for the Borrower's account, including any accommodation extended
with respect to applications for Letters of Credit entered into in connection
with this Financing Agreement, the Lenders Agents or CITBC's or any other
Lender's acceptance of drafts or the Lenders Agents or CITBC's or any other
Lender's endorsement of notes or other instruments for the Borrower's account
and benefit.
OFFICER'S CERTIFICATE shall mean a certificate signed in the name of the
Borrower by one of its Executive Officers.
OPERATING LEASES shall mean all leases of property (whether real, personal
or mixed) other than Capital Leases.
ORIGINAL FINANCING AGREEMENT shall have the meaning set forth in the
preamble to this Financing Agreement.
OUT-OF-POCKET EXPENSES shall mean all of the Lenders Agent's or CITBC's
present and future expenses incurred in connection with the preparation and
execution of
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and closing under this Financing Agreement and amendments, supplements and
modifications of or waivers of any condition of, this Financing Agreement, the
enforcement of any rights of Lenders Agent, CITBC or any other Lender under this
Financing Agreement and all other documents entered into in connection with this
Financing Agreement, the perfection and maintenance of liens and security
interests in favor of Lenders Agent, CITBC or any other Lender pursuant to this
Financing Agreement, the cost of record searches, all costs and expenses
incurred by Lenders Agent or CITBC in opening bank accounts, depositing checks,
receiving and transferring funds, and any charges imposed on Lenders Agent or
CITBC due to "insufficient funds" of deposited checks and Lenders Agent or
CITBC's, as the case may be, standard fee relating thereto, any amounts paid by
Lenders Agent or CITBC, as the case may be, incurred by or charged to Lenders
Agent or CITBC by the Issuing Bank under any Letter of Credit Guaranty or any of
the Borrower's reimbursement agreements, application for letter of credit or
other like document which pertain either directly or indirectly to such Letter
of Credit, special counsel fees, local counsel fees, title insurance premiums,
real estate survey costs, fees and taxes relative to the filing of financing
statements, costs of preparing and recording mortgages/deeds of trust against
the Real Estate and all expenses, costs and fees set forth in Section 9,
paragraph 3, of this Financing Agreement, and all expenses of each Lender
incurred by such Lender (including reasonable counsel fees) in connection with
the enforcement of any rights of such Lender under this Financing Agreement and
all other documents entered into in connection with this Financing Agreement.
PATENT SECURITY AGREEMENT shall mean the patent security agreement
delivered pursuant to Section 2, paragraph i of the Original Financing Agreement
as the same may be amended or modified from time to time.
PBGC shall mean Pension Benefit Guaranty Corporation.
PENSION PLAN shall mean any Employee Benefit Plan which is a "pension plan"
within the meaning of Section 3(2) of ERISA.
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PERMITTED ENCUMBRANCES shall mean: (i) liens described on Schedule 1(b)
hereto existing on the First Closing Date, and liens expressly permitted, or
consented to, by Required Lenders in writing; (ii) Purchase Money Liens; (iii)
Customarily Permitted Liens; iv) liens granted Lenders Agent, CITBC or any other
Lender by the Borrower; (v) liens of judgment creditors provided such liens do
not exceed, in the aggregate for the Borrower, at any time, $100,000 (other than
liens bonded or insured to the reasonable satisfaction of Required Lenders);
(vi) liens for taxes not yet due and payable or which are being diligently
contested in good faith by the Borrower by appropriate proceedings and which
liens are not (x) senior to the liens of Lenders Agent, CITBC or any other
Lender or (y) for taxes due the United States of America; and (vii) liens on the
Accounts (▇▇▇▇▇▇▇▇) securing Borrower's obligations under the Seller Note
(▇▇▇▇▇▇▇▇).
PERMITTED INDEBTEDNESS shall mean: (i) Indebtedness maturing in less than
one year and incurred in the ordinary course of business for raw materials,
supplies, equipment, services, taxes or labor; (ii) Indebtedness secured by the
Purchase Money Liens; (iii) Indebtedness of the Borrower which is subordinated
to the prior payment and satisfaction of the Borrower's Obligations to Lenders
Agent, CITBC and the Other Lenders by means of the Intercreditor Agreement; (iv)
Indebtedness arising under this Financing Agreement; (v) deferred taxes and
other expenses incurred in the ordinary course of business; (vi) other
Indebtedness existing on the First Closing Date and listed in Schedule 1(c);
(vii) Capital Leases, provided the amount thereof shall not exceed $5,000,000 in
the aggregate outstanding at any one time; and (viii) Indebtedness of the
Borrower under the Seller Note (▇▇▇▇▇▇▇▇).
PERSON shall mean and include an individual, a corporation, an association,
a partnership, a trust estate, a government or any department or agency thereof.
PROCEEDS shall mean "proceeds", as such term is defined in the UCC and, to
the extent not included in such definition, shall include, without limitation,
(a) any and all proceeds of any insurance, indemnity, warranty, guaranty or
letter of credit payable to the Borrower, from time to time with respect to any
of the Collateral, (b) all payments
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(in any form whatsoever) paid or payable to the Borrower from time to time in
connection with any taking of all or any part of the Collateral by any
governmental authority or any Person acting under color of governmental
authority, (c) all judgments in favor of the Borrower in respect of the
Collateral and (d) all other amounts from time to time paid or payable or
received or receivable under or in connection with any of the Collateral.
PURCHASE MONEY LIENS shall mean liens on any item of equipment acquired
after the date of this Financing Agreement; provided, however, that (i) each
such lien shall attach only to the property to be acquired, (ii) a description
of the property so acquired is furnished to Lender's Agent, and (iii) the debt
incurred in connection with such acquisitions shall not exceed in the aggregate
$500,000 in any fiscal year.
REAL ESTATE shall mean all of the Borrower's fee and/or leasehold interests
in the real property which has been, or will be, encumbered, mortgaged, pledged
or assigned to Lenders Agent, CITBC or any other Lender or its designee.
REMAINING LIBOR RATE PERIOD shall mean: (i) in the event that the Borrower
shall fail for any reason to borrow after they shall have notified Lenders Agent
of their intent to do so pursuant to Section 3, paragraph 1, of this Financing
Agreement, whereby it shall have requested a loan or advance governed by the
LIBOR Rate pursuant to the terms hereof, a period equal to the LIBOR Rate Period
that the Borrower elected in respect of such loan or advance, or (ii) in the
event that a loan or advance governed by the LIBOR Rate shall terminate for any
reason prior to the last day of the LIBOR Rate Period applicable thereto, a
period equal to the remaining portion of such LIBOR Rate Period if such LIBOR
Rate Period had not been so terminated; and (iii) in the event that the Borrower
shall prepay or repay all or any part of the principal amount of a loan or
advance governed by the LIBOR Rate prior to the last day of the LIBOR Rate
Period applicable thereto, a period equal to the period from and including the
date of such prepayment or repayment to but excluding the last day of such LIBOR
Rate Period.
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REORGANIZATION shall mean with respect to any Multiemployer Plan, the
condition that such plan is in reorganization under section 4241 of ERISA.
REPORTABLE EVENT shall mean an event described in section 4043 of ERISA or
in the regulations thereunder.
REQUIRED LENDERS shall mean at any time the Lenders holding at least 51% of
the then aggregate unpaid principal amount of the Revolving Credit Loans and the
Term Loans taken together or, if no Revolving Credit Loans or Term Loans are
then outstanding, the Lenders having at least 51% of the aggregate of the
Revolving Line of Credit. In calculating the outstanding Revolving Credit Loans,
the Term Loans and the Revolving Line of Credit of each Lender for purposes of
this definition of "Required Lenders", (1) each Lender (other than CITBC) shall
be deemed to have a portion of the total Letter of Credit Guaranties equal to
that Lender's Share of the total Letter of Credit Guaranties and CITBC shall be
deemed to have a portion of the total Letter of Credit Guaranties equal to 100%
minus the sum of the Shares of the other Lenders.
REVOLVING LINE OF CREDIT shall mean the commitment of the Lenders to make
loans and advances pursuant to Section 3 of this Financing Agreement, to the
Borrower in a maximum outstanding principal amount of $30,000,000.
REVOLVING LOANS shall mean the loans and advances made, from time to time,
to or for the account of the Borrower by the Lenders pursuant to Section 3 of
this Financing Agreement, plus any amounts drawn on the Letter of Credit
Guaranties.
REVOLVING LOANS PROMISSORY NOTE shall mean the note, in the form of Exhibit
A5 attached hereto, delivered by the Borrower to the applicable Lender to
evidence the Revolving Loans pursuant to, and repayable in accordance with, the
provisions of Section 3 of this Financing Agreement.
ROLLING PERIOD shall mean (a) with respect to any fiscal quarter ending on
or prior to October 31, 1996, the period commencing with first fiscal quarter
commencing November 1, 1995 and ending on the last day of such fiscal
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quarter, and (b) with respect to a fiscal quarter ending after October 31, 1996,
such fiscal quarter and the preceding three fiscal quarters.
SALE OF ▇▇▇▇▇▇▇▇ 1996 MACHINERY AND EQUIPMENT means each and every sale of
all or a portion of the machinery and equipment of ▇▇▇▇▇▇▇▇ purchased by DeVlieg
from ▇▇▇▇▇▇▇▇ pursuant to the Asset Purchase Agreement (▇▇▇▇▇▇▇▇).
SECOND CLOSING DATE shall mean January 17, 1997.
SELLER (NATIONAL ACME) shall mean each of Acme-Cleveland Corporation, an
Ohio corporation and AC Intermediate Company, an Ohio corporation.
SELLER NOTE (▇▇▇▇▇▇▇▇) means the $3,000,000 Promissory Note dated January
17, 1997 made by Borrower and payable to ▇▇▇▇▇▇▇▇.
SHAWMUT LETTERS OF CREDIT shall mean the letters of credit issued by
Shawmut Bank N.A. as set forth on Schedule 1(d) to this Financing Agreement.
SHARE shall mean with respect to each Lender the percentage specified in
the applicable Assignment and Transfer Agreement.
SOLVENT shall mean, when used with respect to any Person, that (1) the fair
value of the property of such Person, on a going concern basis, is greater than
the total amount of liabilities (including, without limitation, contingent
liabilities) of such Person, (2) the present fair salable value of the assets of
such Person, on a going concern basis, is not less than the amount that will be
required to pay the probable liabilities of such Person on its debts as they
become absolute and matured, (3) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay as such debts and liabilities mature, and (4) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute unreasonably
small capital after giving due consideration to the prevailing practice in the
industry in which such Person is engaged. Contingent liabilities will be
computed at the
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amount that, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
STOCK PURCHASE AGREEMENT shall mean the stock purchase agreement dated
September 7, 1995 between DeVlieg and Seller (National Acme).
SUBORDINATED DEBT shall mean (1) the debt of the Borrower due the
Subordinating Creditors (and the debentures evidencing such debt) pursuant to
the Investment Agreement dated May 25, 1994 among Allied Investment Corporation,
Allied Investment Corporation II, Allied Capital Corporation II, Banc One
Capital Partners Corporation, and PNC Capital Corp., as amended by a First
Amendment to Investment Agreement dated as of October 23, 1995 and a Second
Amendment to Investment Agreement dated April 12, 1996, which has been
subordinated pursuant to the Intercreditor Agreement, to the prior payment and
satisfaction of the Obligations of the Borrower to the Lenders, (2) such
Investment Agreement, as so amended by such First Amendment to Investment
Agreement dated as of October 23, 1995, and (3) the Credit Support Agreement
dated as of October 23, 1995, between the Borrower and CPS Holdings, Inc.
SUBORDINATING CREDITORS shall mean Banc One Capital, PNC Capital Corp.,
▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
SUBSIDIARY shall mean, as to any Person, a corporation of which shares of
stock having ordinary voting power (other than stock having such power only by
reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation are at the time owned, or the
management of which is otherwise controlled, directly, or indirectly through one
or more intermediaries, or both, by such Person.
TERM LOAN I shall mean the term loan in the principal amount of $5,000,000
made by CITBC on the First Closing Date pursuant to, and repayable in accordance
with, the provisions of Section 4 of this Financing Agreement.
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TERM LOAN II shall mean the term loan in the principal amount of $3,000,000
made by CITBC on April 12, 1996 pursuant to, and repayable in accordance with,
the provisions of Section 4 of this Financing Agreement.
TERM LOAN III shall mean the term loan in the principal amount of
$2,000,000 made by CITBC on the Second Closing Date pursuant to, and repayable
in accordance with, the provisions of Section 4 of this Financing Agreement.
TERM LOAN IV shall mean the term loan in the principal amount of $1,500,000
made by CITBC on the Second Closing Date pursuant to, and repayable in
accordance with, the provisions of Section 4 of this Financing Agreement.
TERM LOANS shall mean Term Loan I, Term Loan II, Term Loan III or Term Loan
IV, or any or all of the foregoing, all as the context may require.
TERM LOAN I PROMISSORY NOTE shall mean the note, in the form of Exhibit A1
attached hereto, delivered by the Borrower to CITBC to evidence the Term Loan I
pursuant to, and repayable in accordance with, the provisions of Section 4 of
this Financing Agreement.
TERM LOAN II PROMISSORY NOTE shall mean the note, in the form of Exhibit A2
attached hereto, delivered by the Borrower to CITBC to evidence the Term Loan II
pursuant to, and repayable in accordance with, the provisions of Section 4 of
this Financing Agreement.
TERM LOAN III PROMISSORY NOTE shall mean the note, in the form of Exhibit
A3 attached hereto, delivered by the Borrower to CITBC to evidence the Term Loan
III pursuant to, and repayable in accordance with, the provisions of Section 4
of this Financing Agreement.
TERM LOAN IV PROMISSORY NOTE shall mean the note, in the form of Exhibit A4
attached hereto, delivered by the Borrower to CITBC to evidence the Term Loan IV
pursuant to and repayable in accordance with, the provisions of Section 4 of the
Financing Agreement.
TERM LOAN NOTES shall mean the Term Loan I Note, Term II Loan Note, Term
Loan III Note or Term Loan IV Note,
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or any or all of the foregoing, all as the context may require.
TRADEMARK SECURITY AGREEMENT shall mean the trademark security agreement
delivered pursuant to Section 2, paragraph (z) of the Original Financing
Agreement, as the same may be amended or modified from time to time.
TRANSFEREE shall have the meaning set forth in Section 9, paragraph 17(b)
to this Financing Agreement.
UCC shall mean the Uniform Commercial Code as in effect from time to time
in the State of New York; provided that if by reason of mandatory provisions of
law, the perfection or the effect of perfection or non-perfection of the
security interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than New York, "UCC" means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or
non-perfection.
▇▇▇▇▇▇ ▇▇▇▇▇▇ JUDGMENT shall mean the judgment, dated February 9, 1996, of
the Supreme Court of State of New York, County of Erie in the litigation
entitled ▇▇▇▇▇▇ ▇▇▇▇▇▇ Acme Corp. ▇. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, Inc.
WEEKLY AVAILABILITY REPORT shall mean the report in the form of Exhibit E
hereto, to be (i) delivered by the Borrower to Lenders Agent on or before the
fifth (5th) day of each week, or if such day is not a business day, then the
next succeeding business day and (ii) delivered in connection with the delivery
of any Notice of Revolving Borrowing and from time to time.
SECTION 2. CONDITIONS PRECEDENT
1. CONDITIONS PRECEDENT TO LOANS ON THE SECOND CLOSING DATE. The obligation
of CITBC to make loans hereunder on the Second Closing Date is subject to the
satisfaction of, or waiver of, immediately prior to or concurrently with the
making of such loans, the following conditions precedent:
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(A) CASUALTY INSURANCE - The Borrower shall have delivered to Lenders Agent
evidence satisfactory to the Required Lenders that casualty insurance policies
listing Lenders Agent as loss payee or mortgagee, as the case may be, are in
full force and effect, with respect to all the assets of ▇▇▇▇▇▇▇▇ purchased by
the Borrower pursuant to the Asset Purchase Agreement (▇▇▇▇▇▇▇▇).
(B) EXAMINATION & VERIFICATION - Required Lenders shall have completed to
the satisfaction of Required Lenders an examination and verification of the
Accounts, Inventory, books and records of the Borrower, including but not
limited to all assets of ▇▇▇▇▇▇▇▇ purchased by the Borrower pursuant tot he
Asset Purchase Agreement (▇▇▇▇▇▇▇▇).
(C) OPINIONS - The Borrower shall have delivered to Lenders Agent a
favorable opinion of ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ satisfactory to Lenders Agent and their
special counsel dated the Second Closing Date substantially in the form and to
the effect set forth in Exhibit B hereto.
(D) BANKRUPTCY COURT ORDER - A certified copy (dated at least 10 days after
the entry of the Bankruptcy Court Order (▇▇▇▇▇▇▇▇) of the docket for the
▇▇▇▇▇▇▇▇ bankruptcy proceeding indicating that the Bankruptcy Court Order
(▇▇▇▇▇▇▇▇) has been duly entered into such docket and that there are no motions
appealing such Order or requesting a stay of such Order.
(E) ACQUISITION (▇▇▇▇▇▇▇▇) - Required Lenders shall be satisfied with the
terms of the Bankruptcy Order (▇▇▇▇▇▇▇▇) and the Acquisition (▇▇▇▇▇▇▇▇) shall
have been completed in accordance with the terms of such Order. Required Lenders
shall be satisfied with the terms and the structure of the Asset Purchase
Agreement (▇▇▇▇▇▇▇▇) and the Acquisition (▇▇▇▇▇▇▇▇) and the Acquisition
(▇▇▇▇▇▇▇▇) shall have been consummated in accordance with the terms of the Asset
Purchase Agreement (▇▇▇▇▇▇▇▇).
(F) ADDITIONAL DOCUMENTS - The Borrower shall have executed and delivered
to Lenders Agent all loan documents necessary to consummate the lending
arrangement contemplated between the Borrower and the Lenders.
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(G) INTERCREDITOR AGREEMENT (FIRST AMENDMENT) The Subordinating Creditors
shall have executed and delivered to Lenders Agent the First Amendment to the
Intercreditor Agreement.
(H) SUBORDINATED DEBT - The $12,000,000 of Subordinated Debt owed by the
Borrower to the Subordinating Creditors shall not be secured by any assets of
the Borrower and the other terms and conditions of such Subordinated Debt shall
be satisfactory to Required Lenders.
(I) BOARD RESOLUTION - Lenders Agent shall have received a copy of the
resolutions of the Board of Directors of the Borrower authorizing the execution,
delivery and performance of (i) this Financing Agreement and (ii) any related
agreements, in each case certified by the Secretary or Assistant Secretary of
such Person as of the date hereof, together with a certificate of the Secretary
or Assistant Secretary of such Person as to the incumbency and signature of the
officers of such Person executing this Financing Agreement and any certificate
or other documents to be delivered by it pursuant hereto, together with evidence
of the incumbency of such Secretary or Assistant Secretary.
(J) CORPORATE ORGANIZATION - Lenders Agent shall have received (i) a copy
of the Certificate of Incorporation of the Borrower certified by the Secretary
of State of its incorporation, and (ii) a copy of the By-Laws (as amended
through the date hereof) of the Borrower certified by the Secretary or Assistant
Secretary of the Borrower.
(K) OFFICER'S CERTIFICATE - Lenders Agent shall have received an executed
Officer's Certificate of the Borrower, satisfactory in form and substance to
Required Lenders, certifying that (i) the representations and warranties
contained herein are true and correct on and as of the Second Closing Date; (ii)
the Borrower is in compliance with all of the terms and provisions set forth
herein; and (iii) no Default has occurred.
(L) NO MATERIAL ADVERSE CHANGE - No material adverse change in the
financial condition, business, prospects, profits, operations or assets of the
Borrower shall have occurred since July 31, 1996.
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(M) APPRAISALS - Lenders Agent shall have received an appraisal on
Mattison's Equipment indicating a "forced liquidation" value in a minimum
aggregate amount of $1,850,000 which appraisals shall be by an appraiser(s)
mutually agreed upon by Required Lenders and the Borrower. The Borrower shall
bear the cost of such appraisals.
(N) DISBURSEMENT AUTHORIZATION - The Borrower shall have delivered to
Lenders Agent all information necessary for Lenders Agent to issue wire transfer
instructions on behalf of the Borrower for the initial and subsequent loans
and/or advances to be made under this Financing Agreement including, but not
limited to, disbursement authorizations in form acceptable to Lenders Agent.
(O) FEES AND EXPENSES - On the Second Closing Date, the Borrower shall have
reimbursed Lenders Agent and CITBC for all Out-of-Pocket Expenses for which a
request for payment shall have been made at or prior to the Second Closing Date
and shall have paid the Collateral Management Fee due at Closing and the Loan
Facility Fee.
(P) THE NOTES - CITBC shall have received Revolving Loans Promissory Note
and Term Loan I Promissory Note, Term Loan II Promissory Note, Term Loan III
Promissory Note and Term Loan IV Promissory payable to it and each duly executed
and delivered by the Borrower with all blanks appropriately filled in.
(Q) PROJECTIONS - Lenders Agent shall have received financial projections
from the Borrower in form and substance satisfactory to Required Lenders.
(R) PROCEEDINGS - On or prior to the Second Closing Date, all corporate and
other proceedings taken or to be taken in connection with the transactions
contemplated hereby, and all documents incident thereto shall be satisfactory in
form and substance to Required Lenders, and Required Lenders shall have received
all such counterpart originals or certified or other copies of such documents as
it may reasonably request.
Upon the execution of this Financing Agreement and the disbursement of loans
hereunder on the Second Closing Date,
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all of the above Conditions Precedent shall have been deemed satisfied except as
the Borrower and CITBC shall otherwise agree herein or in a separate writing.
2. CONDITIONS PRECEDENT TO EACH REVOLVING LOAN. The obligations of each
Lender to make each Revolving Loan hereunder shall be subject to the
satisfaction of, or waiver of, immediately prior to or concurrently with the
making of such Revolving Loan, the following further conditions precedent:
(A) REPRESENTATIONS AND WARRANTIES. All the representations and warranties
contained in this Financing Agreement and in each other agreement entered into
in connection herewith shall be true and correct in all material respects on and
as of the date of providing such Revolving Loan as though made on and as of such
date, except representations and warranties made with respect to a specified
earlier date in which case such representation and warranty shall be correct on
and as of such specified earlier date.
(B) NO DEFAULT. No Default or Event of Default shall have occurred and be
continuing, or could result from providing such Revolving Loan.
(C) ADDITIONAL DOCUMENTS. Upon the request of any Lender, the Borrower
shall have executed and delivered to Lenders Agent an Officer's Certificate of
the Borrower stating that the conditions set forth in this Section 2, paragraphs
2(a) and 2(b) hereof have been satisfied as of the date of the requested
Revolving Loan.
(D) DEEMED REPRESENTATION. Each delivery of a Notice of Revolving Borrowing
by the Borrower requesting a Revolving Loan shall constitute a representation
and warranty that the statements contained in this Section 2, paragraph 2(a)
hereof are true and correct both on the date of such delivery of the Notice of
Revolving Borrowing and, unless the Borrower otherwise notifies Lenders Agent
prior to the receipt of such Revolving Loan, as of the date of the providing of
such Revolving Loan.
SECTION 3. REVOLVING LOANS
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1. (A) The Lenders agrees, subject to the terms and conditions of this
Financing Agreement from time to time from the First Closing Date to October 31,
2000, and within x) the Availability and y) the Revolving Line of Credit to make
loans and advances to the Borrower on a revolving basis (i.e., subject to the
limitations set forth herein, the Borrower may borrow, repay and re-borrow
Revolving Loans). The Borrower hereby agrees to execute and deliver to each
Lender a Revolving Loans Promissory Note, in the form of Exhibit A4 hereto, to
evidence the Revolving Loans to be extended by such Lender. Such loans and
advances shall be in amounts up to the lesser of (a) $30,000,000 less the
aggregate face amount of all outstanding Letter of Credit Guaranties or (b) the
sum of the following less the aggregate face amount of all outstanding Letter of
Credit Guaranties (i) eighty-five percent (85%) of the outstanding Eligible
Accounts Receivable of the Borrower, plus (ii) fifty percent (50%) of the
aggregate value of Eligible Inventory of the Borrower; provided, however, that
the amount calculated pursuant to clause (ii) shall not exceed $20,000,000 at
any time.
(B) All requests for loans and advances must be made pursuant to a Notice
of Revolving Borrowing delivered by the Borrower and received by an officer of
Lenders Agent no later than 1:00 p.m., New York time, of the day on which such
loans and advances are required; provided, however, any Lender shall have the
right to request and receive from the Borrower a Weekly Availability Report at
any time, including, without limitation, upon receipt from the Borrower of a
Notice of Revolving Borrowing. The Notice of Revolving Borrowing shall specify:
(1) the proposed date of funding (which shall be a business day); (2) the amount
of Revolving Loans requested; (3) the interest rate to be applied, and if the
Borrower shall have elected the LIBOR Rate for all or any portion of such
Revolving Loan (such Revolving Loan or portion to be in a minimum amount of
$1,000,000), the LIBOR Rate Periods; (4) whether or not a Default has occurred
and is continuing; and (5) that no Event of Default has occurred and is
continuing. In lieu of delivering the above described Notice of Revolving
Borrowing, the Borrower may give Lenders Agent telephonic notice by the required
time of the proposed borrowing; provided, however, that such notice shall be
promptly, and in any event within one business day, confirmed in writing
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by delivery of a Notice of Borrowing to Lenders Agent; and provided, further,
however, that at such time any Lender may request and receive from the Borrower
a Weekly Availability Report. At any time any Lender requests a Weekly
Availability Report from Borrower, no Lender shall be required to make any loan
or advance hereunder until after receipt by all Lenders of such Weekly
Availability Report. Lenders Agent shall not incur any liability to the Borrower
for acting upon any telephonic notice that Lenders Agent believes in good faith
to have been given by a duly authorized officer or other person authorized to
borrow on behalf of the Borrower or for otherwise acting in good faith under
this paragraph 1(b). The making of an advance pursuant to telephonic notice
shall constitute a Revolving Loan under this Financing Agreement. Each advance
to the Borrower of a Revolving Loan shall, on the date of funding, be deposited,
in immediately available funds, in such account as the Borrower may from time to
time designate to Lenders Agent in writing. Each repayment of a Revolving Loan
shall be deemed a repayment of the oldest then outstanding advances hereunder.
(C) The Borrower shall make Mandatory Prepayments on the Revolving Loans if
at any time the Revolving Loans exceed the limitations set forth in paragraph
1(a) above. Such Mandatory Prepayments shall be due in an amount equal to the
amount that the outstanding balance of the Revolving Loans exceeds such
limitations and shall be payable immediately upon demand by Lenders Agent.
(D) The proceeds of the Key Man Life Insurance Policy shall be applied by
Lenders Agent to such of the Obligations hereunder, and in such amounts, as
Required Lenders may determine in their sole discretion.
2. In furtherance of the continuing assignment and security interest in the
Borrower's Accounts, the Borrower will, upon the creation of Accounts, execute
and deliver to Lenders Agent in such form and manner as Lenders Agent may
reasonably require, solely for Lenders Agent's convenience in maintaining
records of collateral, such confirmatory schedules of Accounts as Lenders Agent
may reasonably request, and such other appropriate reports designating,
identifying and describing the Accounts as Lenders Agent may reasonably require.
In addition, upon
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Lenders Agent's request the Borrower shall provide Lenders Agent with copies of
agreements with, or purchase orders from, the Borrower's customers, and copies
of invoices to customers, proof of shipment or delivery and such other
documentation and information relating to said Accounts and other collateral as
Lenders Agent may reasonably require. Failure to provide Lenders Agent with any
of the foregoing shall in no way affect, diminish, modify or otherwise limit the
security interests granted herein. The Borrower hereby authorizes Lenders Agent
to regard the Borrower's printed name or rubber stamp signature on assignment
schedules or invoices as the equivalent of a manual signature by one of the
Borrower's authorized officers or agents.
3. The Borrower hereby represents and warrants as to itself that: each
Account is based on an actual and bona fide sale and delivery of goods or
rendition of services to customers, made by the Borrower in the ordinary course
of its business; the goods and inventory being sold and the Accounts created are
the exclusive property of the Borrower and are not and shall not be subject to
any lien, consignment arrangement, encumbrance, security interest or financing
statement whatsoever, other than the Permitted Encumbrances; the invoices
evidencing such Accounts are in the name of the Borrower; and the customers of
the Borrower have accepted the goods or services, owe and are obligated to pay
the full amounts stated in the invoices according to their terms, without
dispute, offset, defense, counterclaim or contra, except for disputes and other
matters arising in the ordinary course of business of which the Borrower has
advised Lenders Agent pursuant to paragraph 4 of this Section 3. The Borrower
confirms to Lenders Agent and each Lender that any and all taxes or fees
relating to its business, its sales, the Accounts or goods relating thereto, are
its sole responsibility and that same will be paid by the Borrower when due and
that none of said taxes or fees represent a lien on or claim against the
Accounts. The Borrower also warrants and represents that it is a duly and
validly existing corporation and is qualified in all states where the failure to
so qualify would have a adverse effect on the business of the Borrower or the
ability of the Borrower to enforce collection of Accounts due from customers
residing in that state. The Borrower agrees to maintain such books and records
regarding Accounts as Lenders Agent may reasonably require and agrees that the
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books and records of the Borrower will reflect Lenders Agent's and the Lenders
interest in the Accounts. All of the books and records of the Borrower will be
available to Lenders Agent and each Lender at normal business hours, including
any records handled or maintained for the Borrower by any other company or
entity.
4. The Borrower agrees to notify Lenders Agent promptly of any matters
materially affecting the value, enforceability or collectability of any Account
or Accounts in excess of $250,000 in the aggregate outstanding at any time and
of all material customer disputes, offsets, defenses, counterclaims, returns,
rejections and all reclaimed or repossessed merchandise or goods. The Borrower
agrees to issue credit memoranda promptly (with duplicates to Lenders Agent upon
request after the occurrence of an Event of Default) upon accepting returns or
granting allowances, and may continue to do so until Lenders Agent has notified
the Borrower that an Event of Default has occurred and that all future credits
or allowances are to be made only after Lenders Agent's prior written approval.
Upon the occurrence and during the continuance of an Event of Default and on
notice from Lenders Agent , the Borrower agrees that all returned, reclaimed or
repossessed merchandise or goods shall be set aside by the Borrower, marked with
Lenders Agent's name and held by the Borrower for Lenders Agent's account as
owner and assignee.
5. The Borrower shall maintain the bank accounts listed on Schedule 3.5
hereto in the name of the Borrower for the purpose of, inter alia, receiving
proceeds relating to the Accounts with the banks specified therein (the
"Collection Bank(s)") hereby designated as the "Collection Accounts." The
Borrower agrees that it will not designate any other bank account as a
Collection Account without the prior written consent of Lenders Agent. Any
checks, cash, notes or other instruments or property received by the Borrower
with respect to any Accounts shall be held by the Borrower in trust for Lenders
Agent separate from the Borrower's own property and funds and immediately turned
over to Lenders Agent with proper assignments or endorsements by deposit to the
Collection Account. All amounts received by Lenders Agent in payment of Accounts
will be credited to the Borrower's accounts upon Lenders Agent's receipt of
"collected funds" at Lenders Agent's bank
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account on the business day of receipt if received no later than 1:00 p.m. or on
the next succeeding business day if received after 1:00 p.m. No checks, drafts
or other instrument received by Lenders Agent shall constitute final payment to
Lenders Agent or any Lender unless and until such instruments have actually been
collected. Until Lenders Agent has advised the Borrower to the contrary after
the occurrence of an Event of Default, the Borrower may and will enforce,
collect and receive all amounts owing on the Accounts for Lenders Agent's
benefit and on Lenders Agent's behalf, but at the Borrower's expense; such
privilege shall terminate automatically upon the institution by or against the
Borrower of any proceeding under any bankruptcy or insolvency law or, at the
election of Lenders Agent, upon the occurrence and during the continuance of any
Event of Default.
Notwithstanding the foregoing, Lenders and the Borrower agree that the
proceeds of the Accounts (▇▇▇▇▇▇▇▇) will not be delivered to the Collection
Accounts and such proceeds will not be applied to repay the Revolving Credit
Loans. The Borrower agrees that such proceeds will be used by the Borrower to
repay the Seller Note (▇▇▇▇▇▇▇▇).
6. Lenders Agent shall maintain a separate account on its books in the name
of the Borrower in which the Borrower will be charged with loans and advances
made by Lenders to it or for its account, and with any other Obligations,
including any and all costs, expenses and reasonable attorney's fees which the
Lenders or Lenders Agent may incur in connection with the exercise by or for the
Lenders or Lenders Agent of any of the rights or powers herein conferred upon
the Lenders or Lenders Agent, or in the prosecution or defense of any action or
proceeding to enforce or protect any rights of the Lenders or Lenders Agent in
connection with this Financing Agreement or the Collateral assigned hereunder,
or any Obligations owing to the Lenders or Lenders Agent by the Borrower. The
Borrower will be credited with all amounts received by Lenders Agent from the
Borrower or from others for the Borrower's account, including, as above set
forth, all amounts received by Lenders Agent in payment of assigned Accounts and
such amounts will be applied to payment of the Obligations. In no event shall
prior recourse to any Accounts or other security granted to or by the Borrower
be a prerequisite to the
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Lenders or Lenders Agent's right to demand payment of any Obligation. Further,
it is understood that neither the Lenders nor the Lenders Agent shall have no
obligation whatsoever to perform in any respect any of the Borrower's contracts
or obligations relating to the Accounts.
7. After the end of each month, Lenders Agent shall promptly send the
Borrower a statement showing the accounting for the charges, loans, advances and
other transactions occurring between the Lenders and the Borrower during that
month. The monthly statements shall be deemed correct and binding upon the
Borrower and shall constitute an account stated between the Borrower and the
Lenders unless Lenders Agent receives a written statement of the exceptions
within thirty (30) days of the date of the monthly statement.
8. In the event this Financing Agreement or the Revolving Line of Credit is
terminated by the Lenders in accordance with the provisions hereof or the
Borrower for any reason whatsoever, the Revolving Loans shall become due and
payable on the effective date of such termination, notwithstanding any provision
to the contrary in the Revolving Loans Promissory Note or this Financing
Agreement.
SECTION 4. TERM LOANS
1. The Borrower hereby agrees to execute and deliver to CITBC the Term Loan
I Promissory Note, in the form of Exhibit A1 attached hereto, to evidence the
Term Loan I made by CITBC on the First Closing Date.
2. The principal amount of the Term Loan I shall be repaid to CITBC by the
Borrower:
(i) in fifty-eight (58) consecutive, monthly installments each in the
amount of $85,714.30 with the first installment due on November 30, 1995,
and with subsequent installments due on each Monthly Date thereafter to and
including July 31, 2000; and
(ii) in one (1) final installment of the remaining principal amount
outstanding, plus all other
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amounts having accrued and become outstanding payable on August 31, 2000.
3. The Borrower hereby agrees to execute and deliver to CITBC the Term Loan
II Promissory Note, in the form of Exhibit A2 attached hereto, to evidence the
Term Loan II made by CITBC on April 12, 1996.
4. The principal amount of the Term Loan II shall be repaid to CITBC by the
Borrower:
(i) in thirty-five (35) consecutive, monthly installments each in the
amount of $83,333.33 with the first installment due on June 30, 1996, and
with subsequent installments due on each Monthly Date thereafter to and
including April 30, 1999; and
(ii) in one (1) final installment of the remaining principal amount
outstanding, plus all other amounts having accrued and become outstanding
payable on May 31, 1999.
5. Mandatory Prepayments shall be made with respect to the Term Loan II
both: (i) within 90 days after the end of each fiscal year of the Borrower,
commencing with the fiscal year ended July 31, 1997, in an amount equal to fifty
percent (50%) of Excess Cash Flow of the Borrower for such fiscal year, and (ii)
if the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Judgment is reversed by a final unappealable order of an
appellate court of proper jurisdiction, within 30 days of such order becoming
unappealable and in an amount equal to the lesser of $1,269,000 or the aggregate
unpaid balance of the Term Loan II. The proceeds of all of these prepayments
shall be applied to the scheduled installments of principal in the inverse order
of maturity.
6. The Borrower hereby agrees to execute and deliver to CITBC the Term Loan
III Promissory Note, in the form of Exhibit A3 attached hereto, to evidence the
Term Loan II to be extended by CITBC.
7. Upon receipt of such Term Loan III Promissory Note, CITBC hereby agrees
to extend to the Borrower the Term Loan III in the principal amount of
$2,000,000.
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8. The principal amount of the Term Loan III shall be repaid to CITBC by
the Borrower on June 30, 1997. Mandatory prepayments shall be made with respect
to Term Loan III within 3 days after the sale of any or all of the ▇▇▇▇▇▇▇▇
Machinery and Equipment in an amount equal to the sale price (less the cost or
expenses of such sale) paid to the Borrower for such ▇▇▇▇▇▇▇▇ Machinery and
Equipment.
9. The Borrower hereby agrees to execute and deliver to CITBC the Term Loan
IV Promissory Note, in the form of Exhibit A4 attached hereto, to evidence the
Term Loan III to be extended by CITBC.
10. Upon receipt of such Term Loan IV Promissory Note, CITBC hereby agrees
to extend to the Borrower the Term Loan IV in the principal amount of
$1,500,000.
11. The principal amount of the Term Loan IV shall be repaid to CITBC by
the Borrower:
(i) in forty-five (45) consecutive, monthly installments each in the
amount of $33,333.33 with the first installment due on January 31, 1997,
and with subsequent installments due on each Monthly Date thereafter to and
including September 30, 2000; and
(ii) in one (1) final installment of the remaining principal amount
outstanding, plus all other amounts having accrued and become outstanding
payable on October 31, 2000.
12. The Borrower may prepay any or all of the Term Loans in whole or in
part at any time, at their option; provided, however, that on each such
prepayment, the Borrower shall pay accrued interest on the principal so prepaid
to the date of such prepayment. In the case of Term Loan I, Term Loan II and
Term Loan IV each optional prepayment made pursuant to this paragraph 4 shall be
applied to the last maturing installment(s) of principal on such Term Loan.
Each optional prepayment made pursuant to this paragraph 12 shall be
applied on a proportionate basis (based upon the unpaid principal amounts of the
Term Loans) to each of the Term Loans.
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13. In the event this Financing Agreement and the Revolving Line of Credit
are terminated by either the Lenders or the Borrower for any reason whatsoever,
each and every Term Loan shall become due and payable on the effective date of
such termination notwithstanding any provision to the contrary in the Term Loan
I Promissory Note, Term Loan II Promissory Note, Term Loan III Promissory Note,
or Term Loan IV Promissory Note, as the case may be, or this Financing
Agreement.
14. The Borrower hereby authorizes Lenders Agent to charge its Revolving
Loan account with the amount of all amounts due under this Section 4 as such
amounts become due. The Borrower confirms that any charges which Lenders Agent
may so make to its account as herein provided will be made as an accommodation
to the Borrower and solely at Lenders Agent's discretion.
SECTION 5. Letters of Credit
In order to assist the Borrower in continuing the Shawmut Letters of
Credit, on the First Closing Date, and in establishing or opening Letters of
Credit with an Issuing Bank to cover the purchase of inventory, equipment or
otherwise, the Borrower has requested CITBC to join in the applications for such
Letters of Credit, and/or guarantee payment or performance of such Letters of
Credit and any drafts or acceptances thereunder through the issuance of the
Letters of Credit Guaranty, thereby lending CITBC's credit to the Borrower and
CITBC has agreed to do so. These arrangements shall be handled by CITBC subject
to the terms and conditions set forth below.
1. (a) The amount, purpose and extent of the Letters of Credit and changes
or modifications thereof by the Borrower and/or the Issuing Bank of the terms
and conditions thereof shall in all respects be subject to the prior approval of
CITBC in the exercise of its reasonable discretion provided however, that: a) in
no event may the aggregate amount of all such outstanding Letters of Credit
exceed, in the aggregate, at any one time $5,000,000, and b) the Letters of
Credit and all documentation in connection therewith shall be in form and
substance satisfactory to the Borrower, CITBC and the Issuing Bank and (c) in no
event may
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the aggregate amount of all such outstanding Letters of Credit plus outstanding
Revolving Credit Loans exceed, in the aggregate, at any one time $30,000,000.
(b) The Borrower and CITBC hereto agree that the documentation in
connection with the Shawmut Letters of Credit is satisfactory in form and
substance and such documentation shall not be amended without the prior written
consent of CITBC.
2. CITBC shall have the right, without notice to the Borrower, to charge
the Borrower's account on CITBC's books with the amount of any and all
indebtedness, liability or obligation of any kind incurred by CITBC under the
Letter of Credit Guaranties at the earlier of a) payment by CITBC under the
Letter of Credit Guaranties, or b) the occurrence of an Event of Default. Any
amount charged to Borrower's loan account shall be deemed a Revolving Loan
hereunder and shall incur interest at the rate provided in Section 9, paragraph
1 of this Financing Agreement.
3. The Borrower unconditionally indemnifies CITBC and holds CITBC harmless
from any and all loss, claim or liability incurred by CITBC arising from any
transactions or occurrences relating to Letters of Credit established or opened
for the Borrower's account, the collateral relating thereto and any drafts or
acceptances thereunder, and all Obligations thereunder, including any such loss
or claim due to any action taken by any Issuing Bank, other than for any such
loss, claim or liability arising out of the gross negligence or willful
misconduct by CITBC under the Letter of Credit Guaranties. The Borrower further
agrees to hold CITBC harmless from any errors or omission, negligence or
misconduct by the Issuing Bank. The Borrower's unconditional obligation to CITBC
hereunder shall not be modified or diminished for any reason or in any manner
whatsoever, other than as a result of CITBC's gross negligence or willful
misconduct. The Borrower agrees that any charges incurred by CITBC for the
Borrower account by the Issuing Bank shall be conclusive on CITBC and may be
charged to the Borrower's account.
4. CITBC shall not be responsible for: the existence, character, quality,
quantity, condition, packing, value or delivery of the goods purporting to be
represented
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by any documents; any difference or variation in the character, quality,
quantity, condition, packing, value or delivery of the goods from that
(expressed in the documents; the validity, sufficiency or genuineness of any
documents or of any endorsements thereon, even if such documents should in fact
prove to be in any or all respects invalid, insufficient, fraudulent or forged;
the time, place, manner or order in which shipment is made; partial or
incomplete shipment, or failure or omission to ship any or all of the goods
referred to in the Letters of Credit or documents; any deviation from
instructions; delay, default, or fraud by the shipper and/or anyone else in
connection with the Collateral or the shipping thereof; or any breach of
contract between the shipper or vendors and the Borrower. Furthermore, without
being limited by the foregoing, CITBC shall not be responsible for any act or
omission with respect to or in connection with any Collateral.
5. The Borrower agrees that any action taken by CITBC, if taken in good
faith, or any action taken by any Issuing Bank, under or in connection with the
Letters of Credit, the Letter of Credit Guaranties, the drafts or acceptances,
or the Collateral, shall be binding on the Borrower and shall not put CITBC in
any resulting liability to the Borrower. In furtherance thereof, CITBC shall
have the full right and authority to clear and resolve any questions of
non-compliance of documents; to give any instructions as to acceptance or
rejection of any documents or goods; to execute any and all steamship or airways
guaranties (and applications therefore), indemnities or delivery orders; to
grant any extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances, or documents; and to agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications, Letters of Credit, drafts
or acceptances; all in CITBC's sole name, and the Issuing Bank shall be entitled
to comply with and honor any and all such documents or instruments executed by
or received solely from CITBC, all without any notice to or any consent from the
Borrower.
6. Without CITBC's express consent and endorsement in writing, the Borrower
agrees: a) not to execute any and all applications for steamship or airway
guaranties, indemnities or delivery orders; to grant any
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extensions of the maturity of, time of payment for, or time of presentation of,
any drafts, acceptances or documents; or to agree to any amendments, renewals,
extensions, modifications, changes or cancellations of any of the terms or
conditions of any of the applications, Letters of Credit, drafts or acceptances;
and b) after the occurrence of an Event of Default which is not cured within any
applicable grace period, if any, or waived by CITBC, not to i) clear and resolve
any questions of non-compliance of documents, or ii) give any instructions as to
acceptance or rejection of any documents or goods.
7. The Borrower agrees that any necessary import, export or other licenses
or certificates for the import or handling of the Collateral will have been
promptly procured; all foreign and domestic governmental laws and regulations in
regard to the shipment and importation of the Collateral, or the financing
thereof will have been promptly and full complied with; and any certificates in
that regard that CITBC may at any time request will be promptly furnished. In
this connection, the Borrower warrants and represents that all shipments made
under any such Letters of Credit are in accordance with the laws and regulations
of the countries in which the shipments originate and terminate, and are not
prohibited by any such laws and regulations. The Borrower assumes all risk,
liability and responsibility for, and agrees to pay and discharge, all present
and future local, state, federal or foreign taxes, duties, or levies. Any
embargo, restriction, laws, customs or regulations of any country, state, city,
or other political subdivision, where the Collateral is or may be located, or
wherein payments are to be made, or wherein drafts may be drawn, negotiated,
accepted, or paid, shall be solely the Borrower's risk, liability and
responsibility.
8. Upon any payments made to the Issuing Bank under a Letter of Credit
Guaranty, CITBC shall acquire by subrogation, any rights, remedies, duties or
obligations granted or undertaken by the Borrower to the Issuing Bank in any
application for Letters of Credit, any standing agreement relating to Letters of
Credit or otherwise, all of which shall be deemed to have been granted to CITBC
and apply in all respects to CITBC and shall be in addition to any rights,
remedies, duties or obligations contained herein.
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SECTION 6. COLLATERAL
1. As security for the prompt payment in full of all loans and advances
made and to be made to the Borrower from time to time by the Lenders pursuant
hereto, as well as to secure the payment in full of the other Obligations, the
Borrower hereby pledges and grants to CITBC and to the Lenders Agent for the
benefit of each of the Lenders (including CITBC) a continuing first prior
general lien upon and security interest in all of its Collateral subject to
Permitted Encumbrances.
2. The security interests granted hereunder shall extend and attach to:
(a) All Collateral, whether presently in existence or hereafter
acquired or created, however acquired or created, and which is owned by the
Borrower or in which the Borrower has any interest, whether held by the
Borrower or others for its account, and, if any Collateral is Equipment,
whether the Borrower's interest in such Equipment is as owner or lessee or
conditional vendee;
(b) All Equipment whether the same constitutes personal property or
fixtures, including, but without limiting the generality of the foregoing,
all dies, jigs, tools, benches, tables, accretions, component parts thereof
and additions thereto, as well as all accessories, motors, engines and
auxiliary parts used in connection with or attached to the Equipment;
(c) All Inventory and any portion thereof which may be returned,
rejected, reclaimed or repossessed by either Lenders Agent or the Borrower
from the Borrower's customers, as well as to all supplies, goods,
incidentals, packaging materials, labels and any other items which
contribute to the finished goods or products manufactured or processed by
the Borrower, or to the sale, promotion or shipment thereof; and
(d) all proceeds and products of the Collateral.
3. The Borrower agrees to safeguard, protect and hold all Inventory for the
Lender's account and make no
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disposition thereof except in the ordinary course of business of the Borrower.
Until Lenders Agent has given the Borrower's notice to the contrary, as provided
for below, any Inventory may be sold and shipped by the Borrower to its
customers in the ordinary course of the Borrower's business, on open account and
on terms currently being extended by the Borrower to its customers; provided,
however, that all proceeds of all sales (including cash, accounts receivable,
checks, notes, instruments for the payment of money and similar proceeds) are
forthwith transferred, endorsed, and turned over and delivered to Lenders Agent
in accordance with this paragraph 3. Lenders Agent shall have the right to
withdraw this permission at any time upon the occurrence and during the
continuance of an Event of Default, in which event no further disposition shall
be made of the Inventory by the Borrower without Lenders Agent's prior written
approval. Sales of Inventory in which a lien upon, or security interest in,
Inventory is retained by the Borrower shall be made by the Borrower only with
the approval of Lenders Agent, and the proceeds of such sales of Inventory shall
not be commingled with the Borrower's other property, but shall be segregated,
held by the Borrower in trust for Lenders Agent as Lenders Agent's exclusive
property, and shall be delivered immediately by the Borrower to Lenders Agent in
the identical form received by the Borrower by deposit to the Collection
Accounts. Upon the sale, exchange, or other disposition of Inventory, as herein
provided, the security interest in the Borrowers' Inventory provided for herein
shall, without break in continuity and without further formality or act,
continue in, and attach to, all proceeds, including any instruments for the
payment of money, accounts receivable, contract rights, documents of title,
shipping documents, chattel paper and all other cash and non-cash proceeds of
such sale, exchange or disposition. As to any such sale, exchange or other
disposition, Lenders Agent shall have all of the rights of an unpaid seller,
including stoppage in transit, replevin, rescission and reclamation.
4. The Borrower will, at its own cost and expense, keep the Equipment in as
good and substantial repair and condition as the same is now or at the time the
lien and security interest granted herein shall attach thereto, reasonable wear
and tear excepted, making any and all repairs and replacements when and where
necessary.
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Except as provided herein, the Borrower also agrees to make no disposition
thereof whether by sale, exchange or otherwise, unless the Borrower first
obtains the prior written approval of Lenders Agent and the proceeds of any such
disposition shall be deposited in the Collection Accounts. Upon the sale,
exchange, or other disposition of the Equipment, as herein provided, the
security interest provided for herein shall, without break in continuity and
without further formality or act, continue in, and attach to, all proceeds,
including any instruments for the payment of money, accounts receivable,
contract rights, documents of title, shipping documents, chattel paper and all
other cash and non-cash proceeds of such sales, exchange or disposition. As to
any such sale, exchange or other disposition, Lenders Agent shall have all of
the rights of an unpaid seller, including stoppage in transit, replevin,
rescission and reclamation. Notwithstanding anything hereinabove contained to
the contrary, upon written notice from the Borrower prior to any disposition of
Equipment, the Borrower may sell, exchange or otherwise dispose of obsolete
Equipment or Equipment no longer needed in the Borrower's operations; provided,
however, that (a) then book value of the Equipment so disposed of by the
Borrower does not exceed $50,000 in any consecutive twelve-month period; and
provided, further, that no such prior notice shall be required in respect of
sales, exchanges, and other depositions of Equipment unless the book value of
such Equipment disposed of without such prior notice has exceeded, or would upon
such disposition, exceed $50,000 in the aggregate for the Borrower in any
consecutive twelve-month period, and (b) the proceeds of such sales or
dispositions are delivered to Lenders Agent in accordance with the foregoing
provisions of this paragraph, except that the Borrower may retain and use such
proceeds to purchase forthwith replacement Equipment which the Borrower
determines in its reasonable business judgment to have a collateral value at
least equal to the Equipment so disposed of or sold; provided, however, that the
aforesaid right shall automatically cease upon the occurrence and during the
continuance of an Event of Default which is not waived. Notwithstanding the
foregoing, the Borrower is permitted to sell the ▇▇▇▇▇▇▇▇ Machinery and
Equipment if the proceeds of such sale are applied in accordance with the terms
of this Financing Agreement.
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5. The rights and security interests granted to the Lenders and Lender
Agent hereunder are to continue in full force and effect, notwithstanding the
termination of this Financing Agreement or the fact that the account maintained
in the Borrower's name on the books of Lenders Agent may from time to time be
temporarily in a credit position, until the final payment in full to the Lenders
of all Obligations and the termination of this Financing Agreement. Any delay,
or omission by the Lenders or Lenders Agent to exercise any right hereunder,
shall not be deemed a waiver thereof, or be deemed a waiver of any other right,
unless such waiver be in writing and signed by the Lenders Agent. A waiver on
any one occasion shall not be construed as a bar to or waiver of any right or
remedy on any future occasion.
6. The Borrower will, at its sole cost and expense, do, execute,
acknowledge and deliver all and every such further acts, deeds, conveyances,
mortgages, assignments, notices of assignment, transfers and assurances as
Lenders Agent shall from time to time reasonably require, for the better
assuring, conveying, assigning, transferring and confirming unto the Lenders and
Lenders Agent the property and rights hereby conveyed or assigned or intended
now or hereafter so to be, or which the Borrower may be or may hereafter become
bound to convey or assign to the Lenders and Lenders Agent, or for carrying out
the intention or facilitating the performance of the terms of each mortgage
granted pursuant to the terms hereof, or for filing, registering or recording
such mortgage and, on demand, will execute and deliver, and hereby authorizes
Lenders Agent and CITBC to execute and file in the Borrower's name in the event
Borrower fails to promptly do so or if there has occurred a Default or Event of
Default, to the extent it may lawfully do so, one or more financing statements,
chattel mortgages or comparable security instruments, to evidence or perfect
more effectively Lenders Agent's or CITBC's security interest in and the lien
hereof upon the Collateral.
7. The rights and security interests granted to the Lender and Lenders
Agent hereunder and under the Mortgages are to continue in full force and effect
until the final payment in full to the Lenders of all Obligations and the
termination of this Financing Agreement.
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8. To the extent that the Obligations are now or hereafter secured by any
assets or property other than the Collateral or by the guarantee, endorsement,
assets or property of any other person, then Lenders Agent shall have the right
in its sole discretion to determine which rights, security, liens, security
interests or remedies Lenders Agent or the Lenders shall at any time pursue,
foreclose upon, relinquish, subordinate, modify or take any other action with
respect to, without in any way modifying or affecting any of them, or any of the
Lenders' or Lenders Agent's rights hereunder.
9. Any reserves or balances to the credit of the Borrower and any other
property or assets of the Borrower in the possession of Lenders Agent or any
Lender may be held by Lenders Agent or the Lenders as security for any
Obligations and applied in whole or partial satisfaction of such Obligations
when due. The liens and security interests granted herein and any other lien or
security interest Lenders Agent or the Lender may have in any other assets of
the Borrower, shall secure payment and performance of all now existing and
future Obligations. Lenders Agent may in its discretion charge any or all of the
Obligations to the account of the Borrower when due.
10. This Financing Agreement and the obligation of the Borrower to perform
all of its covenants and obligations hereunder are further secured by certain
Mortgages.
11. The Borrower shall give to Lenders Agent for the benefit of the Lender
from time to time such mortgage, deed of trust or assignment on the Real Estate
or real estate acquired after the date hereof as Lenders Agent shall require to
obtain a valid first lien thereon subject only to Permitted Encumbrances.
12. The Borrower shall (i) give to Lenders Agent for the benefit of the
Lender, and/or shall cause each subsequently acquired Subsidiary of the Borrower
to give to Lenders Agent for the benefit of the Lenders, from time to time such
pledge or security agreements with respect to subsequently acquired Collateral
of the Borrower, and such guaranty of the Obligations, as Lenders Agent shall
require to obtain an enforceable guaranty of the Obligations and
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valid first liens on such Collateral subject to Permitted Encumbrances and (ii)
cause the Borrower or any Subsidiary of the Borrower as the direct parent of any
subsequently acquired Subsidiary to become a party to a guaranty of the
Obligations and to a pledge agreement and deliver to Lenders Agent for the
benefit of the Lenders, as collateral thereunder, all capital stock owned by the
Borrower or such Subsidiary in such subsequently acquired Subsidiary, together
with duly executed stock powers in blank.
SECTION 7. REPRESENTATIONS AND WARRANTIES
The Borrower represents, covenants and warrants as follows:
1. CORPORATE EXISTENCE. (a) The Borrower has the corporate power to own its
property and to carry on its business as now being conducted. The Borrower has
delivered to Lender's Agent true, complete and correct copies of its respective
Certificate of Incorporation and By-laws, as amended and in full force and
effect on the date hereof and a list of all jurisdictions in which it is
qualified or licensed to do business.
(b) The Borrower has all requisite power and authority to enter into and
perform all its obligations under this Financing Agreement.
(c) The Borrower has identified on Schedule 7.1 the name and jurisdiction
of incorporation or organization of the Borrower and the number of shares of
capital stock and other equity securities issued and outstanding as of the date
hereof and the percentage of the issued and outstanding capital stock of each
subsidiary owned by the Borrower as of the date hereof. All such shares of
capital stock and other equity securities have been validly issued and are fully
paid and nonassessable and are owned by the Borrower beneficially and of record,
free and clear of any lien, except for the Permitted Encumbrances.
Except as set forth on Schedule 7.1 hereto, the Borrower does not have
outstanding stock or securities convertible into or exchangeable or exercisable
for any shares of its capital stock, nor does it have outstanding any rights to
subscribe for or to purchase, or any options
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for the purchase of, or any agreement providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to,
any shares of its capital stock or any securities convertible into or
exchangeable or exercisable for any shares of its capital stock. The Borrower
has reserved such number of shares of common stock for issuance pursuant to such
instruments or agreements as are set forth in Schedule 7.1 hereto. As of the
date hereof, no Person holds of record or beneficially owns 5% or more of the
outstanding shares of any class of the capital stock of the Borrower, except as
set forth in Schedule 7.1 hereto.
2. AUTHORIZATION OF FINANCING AGREEMENT AND OTHER DOCUMENTS. The Borrower
has taken all actions necessary to authorize it to enter into and perform its
obligations under this Financing Agreement and the other Loan Documents, and to
consummate the transactions contemplated hereby and thereby. Each Loan Document
when executed and delivered by the Borrower to the extent a party thereto as
provided in this Financing Agreement, will be, legal, valid and binding
obligations of the Borrower to the extent a party thereto, enforceable in
accordance with their respective terms, subject as to enforcement of remedies,
to applicable bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting the rights of creditors generally and
limitations imposed by federal or state law or equitable principles upon the
specific enforceability of any of the remedies, covenants or other provisions of
this Financing Agreement or any other Loan Document, and upon the availability
of injunctive relief or other equitable remedies.
3. FINANCIAL STATEMENTS. DeVlieg has furnished CITBC with the Balance Sheet
of DeVlieg as at July 31, 1996 and the related statements of earnings,
stockholders' equity and cash flows of DeVlieg for the fiscal year ended July
31, 1996, all certified by Price Waterhouse LLP, including in each case the
related schedules and notes.
National Acme has furnished CITBC with the Consolidated Balance Sheet of
National Acme and National Acme Trading Company for each twelve month period
ended September 30, 1993 and September 30, 1994 and for the ten month period
ended July 31, 1995 and the related statements
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of earnings, stockholders' equity and cash flows of National Acme for the
periods then ended, all certified by Ernst & Young, including in each case the
related schedules and notes.
All such financial statements (including any related schedules and/or
notes) have been prepared in accordance with generally accepted accounting
principles consistently applied, except to the extent set forth in the notes to
such financial statements, throughout the periods involved and to the extent
required by such principles show all liabilities, direct and contingent, of
DeVlieg, National Acme and National Acme Trading Company, respectively. The
balance sheets and the related schedules and notes fairly present the financial
condition of DeVlieg, National Acme and National Acme Trading Company,
respectively, as at the respective dates thereof; and the net income and
stockholders' equity statements and the related schedules and notes fairly
present the results of the operations of DeVlieg, National Acme and National
Acme Trading Company, respectively, for the respective periods indicated.
There have been no material adverse changes in the condition, financial or
other, of DeVlieg, since July 31, 1995.
There have been no material adverse changes in the condition, financial or
other, of National Acme and National Acme Trading Company, since July 31, 1995.
4. NO VIOLATION. Neither the execution or delivery of this Financing
Agreement or any other Loan Document, nor the performance by the Borrower to the
extent a party thereto, of its obligations hereunder or thereunder, nor the
consummation of the transactions contemplated hereby and thereby, will:
(a) violate any provision of the charter or by-laws of the Borrower;
(b) violate any statute or law or any judgment, decree, order,
regulation or rule of any court or governmental authority to which the
Borrower or any of its respective properties may be subject;
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(c) cause the acceleration of the maturity of any debt or obligation
of the Borrower;
(d) violate, or be in conflict with, or constitute a default under, or
permit the termination of, or require the consent of any Person under, or
result in the creation of any lien upon any property of the Borrower under,
any agreement to which the Borrower is a party or by which the Borrower (or
its respective properties) may be bound other than as would not have a
material adverse effect on the Borrower and its Subsidiaries, taken as a
whole; or
(e) except for the consents required and set forth on Schedule 7.4 to
this Financing Agreement, require any consent, approval or other action by
any court or administrative or governmental body or any other Person
pursuant to, the charter or by-laws of the Borrower, any award of any
arbitrator or any agreement (including any agreement with stockholders),
instrument, order, judgment, decree, statute, law, rule or regulation to
which the Borrower is subject.
The Borrower is not a party to, or otherwise subject to any provision
contained in, any instrument evidencing Indebtedness of the Borrower, any
agreement relating thereto or any other contract or agreement (including its
charter) which, except to the extent complied with by the Borrower or consented
to in connection with the execution of this Financing Agreement, the Term Loan I
Promissory Note, the Term Loan II Promissory Note, the Term Loan III Promissory
Note, the Term Loan IV Promissory Note and the Revolving Loans Promissory Note,
restricts or otherwise limits the incurring of the Indebtedness evidenced by
this Financing Agreement, the Term Loan I Promissory Note, the Term Loan II
Promissory Note, the Term Loan III Promissory Note, the Term Loan IV Promissory
Note or the Revolving Loans Promissory Note.
The Borrower is not in default (without giving effect to any grace or cure
period or notice requirement) under any agreement for borrowed money or under
any agreement pursuant to which any of its securities were sold.
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5. FULL DISCLOSURE. Neither this Financing Agreement nor any other Loan
Document, nor any of the other documents, certificates or statements furnished
to Lenders Agent or any Lender in writing by or on behalf of the Borrower in
connection herewith or therewith contains any untrue statement of a material
fact or, when read together, omits to state a material fact necessary to make
the statements contained herein or therein, in light of the circumstances under
which they were made, not misleading. There is no fact known to the Borrower
which the Borrower has not disclosed to Lenders Agent and each Lender which
materially adversely affects, or insofar as the Borrower can reasonably foresee
will materially adversely affect, the properties, business, prospects,
operations, earnings, assets, liabilities or condition (financial or otherwise)
of the Borrower or the ability of the Borrower to perform its obligations under
this Financing Agreement, the Term Loan I Promissory Note, the Term Loan II
Promissory Note, the Term Loan III Promissory Note, the Term Loan IV Promissory
Note and the Revolving Loans Promissory Note, or any other Loan Document
contemplated hereby or thereby.
The financial projections delivered in connection with Section 2.1(y) of
this Financing Agreement are based on the good faith estimates and assumptions
of the Executive Officers of the Borrower, who have no reason to believe that
such projections are not reasonable based upon current general economic
conditions.
6. LITIGATION. Except as disclosed on Schedule 7.6 hereto, there is no
action, proceeding or investigation pending, or to the best knowledge of the
Executive Officers of the Borrower after due inquiry, threatened, against or
affecting the Borrower in any court or before any governmental authority or
arbitration board or tribunal, foreign or domestic, except for such actions
which, if adversely determined, singly and in the aggregate, would not have a
material adverse effect on the Borrower, and there is no such action seeking to
restrain, enjoin, prevent the consummation of or otherwise challenge this
Financing Agreement or any other Loan Document or any of the other documents or
the transactions contemplated hereby or thereby.
The Borrower is not subject to any judgment, order, decree, rule or
regulation of any court, governmental
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authority or arbitration board or tribunal which has materially adversely
affected or which can reasonably be expected to have a material adverse effect
on the Borrower's business.
7. PROPERTIES. Schedule 1(a) lists all Real Estate owned by the Borrower.
The Borrower has good and marketable fee title to all such Real Estate and such
other Real Estate fee title to which it may acquire after the First Closing
Date. All material leases and other material agreements to which the Borrower is
a party are valid and binding and in full force and effect, no default has
occurred or is continuing thereunder which would have a material adverse effect
on the Borrower and its subsidiaries taken as a whole and no consent need be
obtained (other than consents, if any, which have been or will be obtained prior
to the First Closing Date, are identified on a schedule previously delivered to
CITBC and copies of which will be delivered to CITBC prior to the First Closing
Date) from any Person in respect of any such lease or agreement in connection
with the transactions contemplated hereby. The Borrower enjoys peaceful and
undisturbed possession of all leases necessary in any material respect for the
operation of its respective properties and assets, none of which contains any
unusual or burdensome provisions which materially or adversely affects or
impairs the operation of such properties or assets.
8. COMPLIANCE WITH LAWS. The Borrower is in not violation of any statutes,
laws, ordinances, governmental rules or regulations or any judgment, order,
writ, injunction, decree, rule or regulation (federal, state, local or foreign)
to which it is subject or has failed to obtain any licenses, permits, franchises
or other governmental authorizations necessary to the ownership or operation of
its properties or the conduct of its business, except for such violations and
failures to obtain those which would not have a material adverse effect on the
property, prospects, operations, earnings, assets, liabilities, or condition
(financial or otherwise) of the Borrower.
9. GOVERNMENTAL REGULATIONS. The Borrower is not subject to regulation
under the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of
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1935, as amended, the Federal Power Act, the Interstate Commerce Act or to any
federal or state statute or regulation limiting its ability to incur
indebtedness for borrowed money.
10. OUTSTANDING DEBT; NO DEFAULT. The Borrower does not have outstanding
Indebtedness except as set forth in the Balance Sheet of DeVlieg as at July 31,
1996. The Borrower does not have outstanding subordinated indebtedness other
than the subordinated indebtedness set forth on Schedule 7.10 hereto. No event
has occurred or failed to occur which would constitute a Default or Event of
Default under this Financing Agreement.
11. SECURITY INTEREST AND LIENS. The Borrower further warrants and
represents that, except for the Permitted Encumbrances, the security interests
granted herein constitute and shall at all times constitute the first and only
liens on the Collateral; that, except for the Permitted Encumbrances, the
Borrower is the absolute owner of the Collateral with full right to pledge,
sell, consign, transfer and create a security interest therein, free and clear
of any and all claims or liens in favor of others; and that the Equipment does
not comprise a part of the Inventory of the Borrower and that the Equipment is
and will only be used by the Borrower in its business and will not be held for
sale or lease, or removed from its premises, or otherwise disposed of by the
Borrower without the prior written approval of Lenders Agent.
12. TITLE, LIENS. The Borrower has good and marketable title to its
properties and assets reflected in the Balance Sheet of DeVlieg as at July 31,
1996 (other than properties and assets disposed of in the ordinary course of
business).
13. TAXES. The Borrower has filed all federal, State and other income tax
returns that, to the knowledge of the Borrower, are required to be filed, and
have paid all taxes as shown on said returns and on all assessments received by
it to the extent that such taxes have become due. Federal income tax returns of
the Borrower have been examined and reported on by the taxing authorities or
closed by applicable statutes and satisfied for all fiscal years prior to and
including the fiscal year ended July 31, 1988.
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14. POSSESSION OF PATENTS, ETC. The Borrower possesses or has the right to
the use of all the patents, trademarks, trade names, service marks, copyrights,
licenses and other rights free from burdensome restrictions that are currently
used by it or are necessary in any material respect for the ownership,
maintenance and operation of its respective businesses, properties and assets.
All of the foregoing are listed in Schedule 7.14 hereto. Except as set forth in
Schedule 7.14 hereto, the Borrower is not in violation of any thereof in any
material respect and has neither received notice from nor has knowledge of any
material claim by any Person that it is now infringing any of the foregoing.
15. BROKER'S OR FINDER'S COMMISSIONS. [Except as set forth on Schedule 7.15
hereto], no broker's or finder's or placement fee or commission will be payable
with respect to this Financing Agreement, the Term Loan I Promissory Note, the
Term Loan II Promissory Note, the Term Loan III Promissory Note, the Term Loan
IV Promissory Note or the Revolving Loans Promissory Note or any other Loan
Document or the transactions contemplated thereby, and the Borrower will hold
each Lender harmless from any claim, demand or liability for broker's or
finder's or placement fees or commissions alleged to have been incurred in
connection with this Financing Agreement, the Term Loan I Promissory Note, the
Term Loan II Promissory Note, the Term Loan III Promissory Note, the Term Loan
IV Promissory Note, the Revolving Loans Promissory Note, any other Loan Document
or such transactions.
16. APPLICATION OF PROCEEDS. The Borrower does not own any "margin
security" within the meaning of Regulation G (12 CFR Part 207) of the Board of
Governors of the Federal Reserve System (herein called a "margin security"). The
Borrower represents and warrants that the proceeds of the Revolving Loans and
Term Loan I were used at the First Closing Date to (i) refinance all
Indebtedness owed by DeVlieg to Shawmut Bank N.A., (ii) make loans or advances
to the Borrower to enable the Borrower to finance the Acquisition (National
Acme). The Borrower represents and warrants that the proceeds of the Term Loan
II were used by the Borrower to make payments in connection with each of the
▇▇▇▇▇▇ ▇▇▇▇▇▇ Judgment and the ▇▇▇▇▇▇▇▇▇ Litigation. The proceeds of the
Revolving Loans up to an aggregate
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amount of $1,300,000 and the proceeds of the Term Loan III and Term Loan IV will
be used by Borrower to finance the Acquisition (▇▇▇▇▇▇▇▇). The other proceeds of
the Revolving Credit Loans will be used for working capital and other general
corporate purposes. Neither the Borrower nor any agent acting on its behalf has
taken or will take any action which might cause this Financing Agreement, the
Term Loan I Promissory Note, the Term Loan II Promissory Note, the Term Loan III
Promissory Note, the Term Loan IV Promissory Note, the Revolving Loans
Promissory Note or any other Loan Document to violate Regulation G, Regulation
T, Regulation U, Regulation X or any other regulation of the Board of Governors
of the Federal Reserve System or to violate the Exchange Act, in each case as in
effect now or as the same hereafter may be in effect.
17. GOVERNMENTAL CONSENT. Neither the nature of the Borrower, nor any of
its respective businesses or properties, nor any relationship between the
Borrower and any other Person, nor any circumstance in connection with the
transactions contemplated by this Financing Agreement is such as to require any
consent, approval or authorization of, or any notice to, or filing, registration
or qualification with, any court or administrative or governmental body in
connection with the execution and delivery of this Financing Agreement, the Term
Loan I Promissory Note, the Term Loan II Promissory Note, the Term Loan III
Promissory Note, the Term Loan IV Promissory Note, or the Revolving Loans
Promissory Note or any other Loan Document, or fulfillment of, or compliance
with, the terms and provisions of this Financing Agreement, the Term Loan I
Promissory Note, the Term Loan II Promissory Note, the Term Loan III Promissory
Note, the Term Loan IV Promissory Note or the Revolving Loans Promissory Note or
any other Loan Document, other than the filings, registrations or qualifications
under the state securities laws or blue sky laws of any state of the United
States of America that may be required to be made or obtained which either shall
have been made and obtained on the First Closing Date (and copies of which
delivered to CITBC) or shall have no bearing on the validity and enforceability
of this Financing Agreement, the Term Loan I Promissory Note, the Term Loan II
Promissory Note, the Term Loan III Promissory Note, the Term Loan IV Promissory
Note or the Revolving Loans Promissory Note or any other Loan Document.
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All approvals required from the Bankruptcy Court responsible for the
▇▇▇▇▇▇▇▇ reorganization proceeding for the purchase by the Borrower of certain
assets of ▇▇▇▇▇▇▇▇ pursuant to the Asset Purchase Agreement (▇▇▇▇▇▇▇▇) have been
obtained and the sale of certain assets of ▇▇▇▇▇▇▇▇ to the Borrower have been
completed in compliance with the terms of such consent and the terms of the
Asset Purchase Agreement (▇▇▇▇▇▇▇▇).
18. ERISA. Neither the Borrower nor any other Person, including any
fiduciary, has engaged in any prohibited transaction (as defined in section 4975
of the Code or section 406 of ERISA) which could subject the Borrower, or any
entity which the Borrower has an obligation to indemnify, to any tax or penalty
imposed under section 4975 of the Code or section 502 of ERISA. Each Employee
Benefit Plan intended to be qualified under section 401(a) or 401(k) of the Code
is so qualified. The Borrower has received a letter from the Internal Revenue
Service stating that each such plan is so qualified and the Borrower has no
knowledge of any operational defects that have occurred since the date of such
determination letter that could adversely affect such qualification. Each
Employee Benefit Plan is administered in accordance with its terms and in
compliance with all applicable law. With respect to any Employee Benefit Plan,
neither the Borrower nor any ERISA Affiliate has failed to make any contribution
due under the terms of such plan or as required by law. There is no lien
outstanding or security interest given in connection with a Pension Plan.
Neither the Borrower nor any ERISA Affiliate has incurred an accumulated funding
deficiency (as defined in section 302 of ERISA or section 412 of the Code)
whether or not waived. With respect to any terminated Pension Plan, the assets
have been distributed in full satisfaction of all benefit liabilities
thereunder, and any such plan has been terminated in compliance with section
4041 of ERISA and the PBGC has not issued a notice of noncompliance with respect
to any such termination. Neither the Borrower nor any ERISA Affiliate has
incurred or expects to incur any liability under Title IV or ERISA, including
any withdrawal liability. Neither the Borrower nor any ERISA Affiliate maintains
or contributes to any Employee Benefit Plan subject to Title IV of ERISA,
section 412 of the Code or section 302 of ERISA other than those defined benefit
pension plans set forth on Schedule 7.18.
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Neither the Borrower nor any ERISA Affiliate has ever sponsored or
maintained, has ever contributed to, or has ever incurred any withdrawal
liability under, a Multiemployer Plan, and neither the Borrower nor any ERISA
Affiliate has any written or verbal commitment to establish, maintain or
contribute to any Multiemployer Plan. Neither the Borrower nor any ERISA
Affiliate has received notice that any Multiemployer Plan is in Reorganization,
is Insolvent or is terminating. Neither the Borrower nor any ERISA Affiliate has
liability for retiree medical, life insurance or other death benefits
(contingent or otherwise) which provide for continuing benefits or coverage
after termination of employment or retirement other than as a result of a
continuation of medical coverage required under section 4980B of the Code and
except as set forth on Schedule 7.18.
The unfunded benefit liabilities as of the date of the most recent
actuarial valuation for each pension plan is set forth on Schedule 7.18 and to
the best knowledge of the Borrower, there has been no material adverse change in
such liabilities.
19. ENVIRONMENTAL COMPLIANCE. (a) Except as disclosed in a written report
to CITBC prior to the First Closing Date, the Borrower is not in violation, or
alleged to be in violation, of any judgment, decree, order, law, license, rule
or regulation pertaining to environmental matters, including, without
limitation, those arising under the Resource Conservation and Recovery Act
("RCRA"), the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA"), the Superfund Amendments and Reauthorization
Act of 1986 ("▇▇▇▇"), the Federal Clean Water Act, the Federal Clean Air Act,
the Toxic Substances Control Act, or any federal, state or local statute,
regulation, ordinance, order or decree relating to health, safety or the
environment (hereinafter "Environ mental Laws"), which violation would have a
material adverse effect on the business, assets or financial condition of the
Borrower.
(b) The Borrower has not received written notice from any third party,
including, without limitation, any federal, state or local governmental
authority, (i) that the Borrower has been identified by the United States
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Environmental Protection Agency ("EPA") as a potentially responsible party under
CERCLA with respect to a site listed on the National Priorities List, 40 C.F.R.
Part ▇▇▇ ▇▇▇▇▇▇▇▇ ▇ (1986); (ii) that any hazardous waste, as defined by 42
U.S.C. ss. 6903(5), any hazardous substances as defined by 42 U.S.C. ss.
9601(14), any pollutant or contaminant as defined by 42 U.S.C. ss. 9601(33), any
medical waste and any toxic substances, oil or hazardous materials or other
chemicals or substances regulated by any Environmental Laws ("Hazardous
Substances") which any one of them has generated, transported or disposed of has
been released at any site at which a federal, state or local agency has
conducted or has ordered that the Borrower conduct a remedial investigation,
removal or other response action pursuant to any Environmental Law or have named
the Borrower as a Potentially Responsible Party or are seeking contributions
from the Borrower; or (iii) that it is or shall be a name party to any claim,
action, cause of action, complaint, or legal or administrative proceeding (in
each case, contingent or otherwise) arising out of any third party's incurrence
of costs, expenses, losses or damages of any kind whatsoever in connection with
the release of Hazardous Substances.
(c) To the knowledge of the Borrower and except as disclosed in a written
report to CITBC prior to the First Closing Date, to the extent such activity
would have a material adverse effect on the business, assets or financial
condition of the Borrower: (i) no portion of the property of the Borrower has
been used for the handling, processing, storage or disposal of Hazardous
Substances, except in accordance with applicable Environmental Laws; and except
as disclosed in a written report to CITBC prior to the First Closing Date, no
underground tank or other underground storage receptacle for Hazardous
Substances is located on any portion of the property; (ii) in the course of any
activities conducted by the Borrower or operators of its properties, no
Hazardous Substances have been generated or are being used on the property
except in accordance with applicable Environmental Laws; (iii) there have been
no releases (i.e., any past or present releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, disposing or
dumping) or threatened releases of Hazardous Substances on, upon, into or from
the property of the Borrower, which releases would have a material adverse
effect on the value of any of the property or adjacent properties or the
environment; and (iv) in
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addition, any Hazardous Wastes as defined by 42 U.S.C. Section 6903(5), if any,
that have been generated on any of the property have been transported offsite
only by carriers having an identification number issued by the EPA, treated or
disposed of only by treatment or disposal facilities maintaining valid permits
as required under applicable Environmental Laws, which transporters and
facilities have been and are, to the best of the Borrower's knowledge operating
in material compliance with such permits and applicable Environmental Laws.
20. FREMONT PROPERTY. The Borrower has paid on or before August 1, 1996 all
amounts required to be paid in connection with the Bonds, as defined in the
Indenture of Mortgage between the County of Sandusky, Ohio and the Cleveland
Trust Company dated November 1, 1976 and recorded in Book 291, page 18.
21. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All statements contained in
any certificate or other document delivered to Lenders Agent or any Lender by or
on behalf of the Borrower pursuant to or in connection with this Financing
Agreement shall be deemed to constitute representations and warranties under
this Financing Agreement with the same force and effect as the representations
and warranties expressly set forth herein. All the Borrower's representations
and warranties thereunder and hereunder shall survive the execution and delivery
of the same and any investigation by Lenders Agent or any Lender.
SECTION 8. CERTAIN COVENANTS
1. ADDITIONAL COLLATERAL. The Borrower hereby covenants that, except for
the Permitted Encumbrances, the Borrower will be at the time additional
Collateral is acquired by it, the absolute owner of the Collateral with full
right to pledge, sell, consign, transfer and create a security interest therein,
free and clear of any and all claims or liens in favor of others; that the
Borrower will at any time Lenders Agent requests, execute and deliver to Lenders
Agent for the benefit of the Lenders a copyright security agreement in such form
as Lenders Agent may reasonably request in order to more effectively create and
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perfect in favor of Lenders Agent a first priority security interest in any
copyrights of the Borrower or its Subsidiaries; that the Borrower will at any
time Lenders Agent requests, execute and deliver to Lenders Agent for the
benefit of the Lenders a trademark security agreement covering the trademarks
purchased by Borrower from ▇▇▇▇▇▇▇▇ in such form as Lenders Agent may reasonably
request in order to more effectively create and perfect in favor of Lenders
Agent a first priority security interest in such trademarks; that the Borrower
will at its expense forever warrant and, at Lenders Agent's request, defend the
same from any and all claims and demands of any other Person other than the
Permitted Encumbrances; and that the Borrower will not grant, create or permit
to exist, any lien upon or security interest in the Collateral, or any Proceeds
thereof, in favor of any other person other than the holders of the Permitted
Encumbrances.
In addition to the foregoing, the Borrower hereby covenants that the
Borrower will take all steps requested by Lenders Agent (1) to modify the
Mortgages to reflect the terms of this Financing Agreement, including but not
limited to the execution of Mortgage Modifications for each Mortgage and (2) to
reflect that the grant of the security interest under this Financing Agreement
is to the Lenders Agent for the benefit of the Lenders.
2. INSPECTION RIGHTS. The Borrower will maintain books and records
pertaining to the Collateral in such detail, form and scope as Lenders Agent
shall reasonably require. The Borrower agrees that Lenders Agent and each Lender
or their respective agents may enter upon the Borrower's premises at any time
during normal business hours, and from time to time, for the purpose of
inspecting the Collateral, and any and all records pertaining thereto. The
Borrower agrees to afford Lenders Agent and each Lender prior written notice of
any change in the location of any Collateral, including but not limited to the
location of all engineers' drawings, other than to locations, that as of the
date hereof, are known to Lenders Agent and each Lender and at which Lenders
Agent has filed financing statements and otherwise fully perfected its liens
thereon. The Borrower also agrees to advise Lenders Agent promptly, in
sufficient detail, of any material adverse change relating to the type,
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quantity or quality of the Collateral or on the security interests granted to
Lenders Agent and any Lender therein.
3. COLLATERAL REPORTS. The Borrower will execute and deliver to Lenders
Agent, from time to time, solely for Lenders Agent's convenience in maintaining
a record of the Collateral, such written statements and schedules as Lenders
Agent may reasonably require, designating, identifying or describing the
Collateral pledged to Lenders Agent hereunder. The Borrower's failure, however,
to promptly give Lenders Agent such statements, or schedules shall not affect,
diminish, modify or otherwise limit Lenders Agent's or any Lenders security
interests in the Collateral.
4. PERFECTION OF SECURITY INTERESTS. The Borrower will comply with the
requirements of all state and federal laws in order to grant to Lenders Agent
for the benefit of the Lenders valid and perfected first security interests in
the Collateral, subject only to the Permitted Encumbrances. Lenders Agent is
hereby authorized by the Borrower to file any financing statements covering the
Collateral whether or not the Borrower's signature appears thereon. The Borrower
will do whatever Lenders Agent may reasonably request, from time to time, by way
of: filing notices of liens, financing statements, amendments, renewals and
continuations thereof; cooperating with Lenders Agent's custodians; keeping
stock records; transferring proceeds of Collateral to Lenders Agent's
possession; and performing such further acts as Lenders Agent may reasonably
require in order to effect the purposes of this Financing Agreement.
5. INSURANCE. (a) The Borrower will maintain insurance on the Real Estate,
Equipment and Inventory under such policies of insurance, with such insurance
companies, in such reasonable amounts and covering such insurable risks as are
at all times reasonably satisfactory to the Required Lenders. All policies
covering the Real Estate, Equipment and Inventory are, subject to the rights of
any holders of Permitted Encumbrances holding claims senior to the Lenders, to
be made payable to Lenders Agent, in case of loss, under a standard
non-contributory "mortgage", "lender" or "secured party" clause and are to
contain such other provisions as Lenders Agent may require to fully protect
Lenders Agent's interest in the Real Estate, Inventory and Equipment and to any
payments to be made under such policies. True copies
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thereof are to be delivered to Lenders Agent, premium prepaid, with the loss
payable endorsement in Lenders Agent's favor, and shall provide for not less
than thirty (30) days' prior written notice to Lenders Agent of the exercise of
any right of cancellation. At the Borrower's request or if the Borrower fails to
maintain such insurance, Lenders Agent may arrange for such insurance, but at
the Borrower's expense and without any responsibility on Lenders Agent's part
for: obtaining the insurance, the solvency of the insurance companies, the
adequacy of the coverage, or the collection of claims. Upon the occurrence and
during the continuation of an Event of Default, Lenders Agent shall, subject to
the rights of any holders of Permitted Encumbrances holding claims senior to the
Lenders, have the sole right, in the name of Lenders Agent or the Borrower, to
file claims under any insurance policies, to receive, receipt and give
acquittance for any payments that may be payable thereunder, and to execute any
and all endorsements, receipts, releases, assignments, reassignments or other
documents that may be necessary to effect the collection, compromise or
settlement of any claims under any such insurance policies.
(b) (i) In the event of any loss or damage by fire or other casualty,
insurance proceeds relating to Inventory shall first reduce the Borrower's
Revolving Loan, and then the Term Loans on a proportional basis based upon the
outstanding principal amount of the Term Loans and such payments will be applied
to the Term Loans in the inverse order of maturity.
(ii) In the event any part of the Borrower's Real Estate or Equipment is
damaged by fire or other casualty and the Proceeds from insurance for such
damage or other casualty is less than or equal to $100,000, Lenders Agent shall
promptly apply such Proceeds to reduce the Borrower's outstanding balances under
the Revolving Loan account.
(iii) As long as no Event of Default has occurred and is continuing, the
Borrower has sufficient business interruption insurance to replace the lost
profits of any of the Borrower's facilities, and the Proceeds are in excess of
$100,000, the Borrower may elect (by the Borrower delivering written notice to
Lenders Agent) to replace, repair or restore such Real Estate or Equipment to
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substantially the equivalent condition prior to such fire or other casualty as
set forth herein. If the Borrower does not, or cannot, elect to use the Proceeds
as set forth above, Lenders Agent may, subject to the rights of any holders of
Permitted Encumbrances holding claims senior to the Lender, apply the Proceeds
to the payment of the Obligations in such manner and in such order as Lenders
Agent may reasonably elect.
(iv) If the Borrower elects to use the Proceeds for the repair, replacement
or restoration of any Real Estate or Equipment, and there is then no Event of
Default, i) proceeds of insurance on Equipment and Real Estate in excess of
$100,000 will be applied to the reduction of the Revolving Loans of the Borrower
and ii) Lenders Agent may set up a reserve against Availability for an amount
equal to the proceeds referred to in clause i) hereof. The reserve will be
reduced dollar-for-dollar upon receipt of non-cancelable executed purchase
orders, delivery receipts or contracts for the replacement, repair or
restoration of Equipment or the Real Estate and disbursements in connection
therewith. Prior to the commencement of any restoration, repair or replacement
of Real Estate, the Borrower shall provide the Lenders Agent with a restoration
plan and a total budget certified by an independent third party experienced in
construction costing. If there are insufficient Proceeds to cover the cost of
restoration as so determined, the Borrower shall be responsible for the amount
of any such insufficiency prior to the commencement of restoration and shall
demonstrate evidence of such before the reserve will be reduced. Completion of
restoration shall be evidenced by a final, unqualified certification of the
design architect employed, if any; an unconditional certificate of occupancy, if
applicable; such other certification as may be required by law; or if none of
the above is applicable, a written good faith determination of completion by the
Borrower (herein collectively the "Completion"). Upon Completion, any remaining
reserve as established hereunder will be automatically released.
(v) The Borrower will pay any reasonable costs, fees or expenses which
Lenders Agent or any Lender may reasonably incur in connection herewith.
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6. TAXES. The Borrower will pay, prior to their becoming delinquent, all
taxes, assessments, claims and other charges (herein "taxes") lawfully levied or
assessed upon the Borrower or the Collateral and if such taxes remain unpaid
after the date fixed for the payment thereof, unless such taxes are being
diligently contested in good faith by the Borrower by appropriate proceedings,
or if any lien shall be claimed thereunder x) for taxes due the United States of
America or y) which in the opinion of Required Lenders might create a valid
obligation having priority over the rights granted to Lenders Agent or the
Lenders herein, Lenders Agent may, on the Borrower's behalf, pay such taxes, and
the amount thereof shall be an Obligation secured hereby and due to the Lenders
on demand.
7. COMPLIANCE WITH LAWS. The Borrower: (a) will comply with all acts,
rules, regulations and orders of any legislative, administrative or judicial
body or official, which the failure to comply with would have a material and
adverse impact on the Collateral, or any part thereof, or on the operation of
the Borrower's business; provided, however, that the Borrower may contest any
acts, rules, regulations, orders and directions of such bodies or officials in
any reasonable manner which will not, in Required Lender's reasonable opinion,
materially and adversely affect the operation of the business of the Borrower or
Lenders Agent or any Lenders rights or priority in the Collateral; (b) will
comply with all environmental statutes, acts, rules, regulations or orders as
presently existing or as adopted or amended in the future, applicable to the
ownership and/or use of its real property and operation of its business, which
the failure to comply with would have a material and adverse impact on the
Collateral, or any part thereof, or on the operation of the business of the
Borrower. The Borrower hereby indemnifies Lenders Agent and each Lender and
agrees to defend and hold Lenders Agent and each Lender harmless from and
against any and all loss, damage, claim, liability, injury or expense which
Lenders Agent and each Lender may sustain or incur (other than as a result of
actions of Lenders Agent or the applicable Lender, as the case may be) in
connection with: any claim or expense asserted against Lenders Agent or any
Lender as a result of any environmental pollution, hazardous material or
environmental clean-up of the Borrower's real property; or any claim or expense
which results from the Borrower's operations (including, but not limited to, the
Borrower's
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off-site disposal practices) and the Borrower further agrees that this
indemnification shall survive termination of this Financing Agreement as well as
the payment of all Obligations or amounts payable hereunder.
8. FINANCIAL STATEMENTS. Until termination of the Financing Agreement and
payment and satisfaction of all Obligations due hereunder, the Borrower agrees
that, unless the Required Lenders shall have otherwise consented in writing, the
Borrower will furnish to each Lender, within ninety (90) days after the end of
each fiscal year of the Borrower, an audited Consolidated Balance Sheet as at
the close of such year, and statements of consolidated earnings, cash flow and
reconciliation of surplus of the Borrower and its Consolidated Subsidiaries,
audited by Price Waterhouse LLP, LLP, or such other independent public
accountants selected by the Borrower, and satisfactory to the Required Lenders;
within forty-five (45) days after the end of each fiscal quarter a Balance Sheet
as at the end of such period and statements of earnings, cash flow and surplus
of the Borrower, certified by an authorized financial or accounting officer of
the Borrower; and within thirty (30) days after the end of each month monthly
interim financial statements, certified by an authorized financial or accounting
officer of the Borrower; and from time to time, such further information
regarding the business affairs and financial condition of the Borrower as any
Lender may reasonably request. The Borrower shall deliver to each Lender no
later than (30) days prior to each fiscal year end of the Borrower a preliminary
budget for the following fiscal year. The Borrower shall deliver to each Lender
no later than sixty (60) days from the start of each fiscal year of the
Borrower, annual cash flow projections for such fiscal year, including a
projected consolidated balance sheet and consolidated statements of earnings,
cash flow and surplus (and such consolidating statements as any Lender may
request). All such financial statements shall be prepared in accordance with
generally accepted accounting principles consistently applied, subject to year
end adjustments. Each financial statement which the Borrower is required to
submit hereunder must be accompanied by an Officer's Certificate certifying
that: (i) the financial statement(s) fairly and accurately represent(s) the
Borrower's and Consolidated Subsidiaries' financial condition at the end of the
particular accounting period, as well as the Borrower's and
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Consolidated Subsidiaries' operating results during such accounting period,
subject to year-end audit adjustments; (ii) during the particular accounting
period: (x) there has been no default or condition which, with the passage of
time or notice, or both, would constitute a Default or Event of Default under
this Financing Agreement; provided, however, that if any Executive Officer has
knowledge that any such Default or Event of Default has occurred during such
period, the existence of and a detailed description of same shall be set forth
in the Officer's Certificate; and (y) the Borrower has not received any notice
of cancellation with respect to its property insurance policies; and (iii) the
exhibits attached to such financial statement(s) constitute detailed
calculations showing compliance with all financial covenants contained in this
Financing Agreement.
The Borrower shall furnish to each Lender promptly upon receipt thereof,
copies of any reports submitted to the Borrower by independent certified
accountants in connection with the examination of the financial statements and
financial, accounting and auditing controls (including, without limitation,
management letters) of the Borrower and its Consolidated Subsidiaries made by
such accountants.
9. CERTAIN RESTRICTIONS. Until termination of the Financing Agreement and
payment and satisfaction of all Obligations due hereunder, the Borrower will
not, without the prior written consent of the Required Lenders, except as
otherwise herein provided:
A. Mortgage, assign, pledge, transfer or otherwise permit any lien, charge,
security interest, encumbrance or judgment (whether as a result of a
purchase money or title retention transaction, or other security interest,
or otherwise) to exist on any of its assets or goods, whether real,
personal or mixed, whether now owned or hereafter acquired, except for the
Permitted Encumbrances;
B. Incur or create any Indebtedness other than the Permitted Indebtedness or
increase the principal amount of any Permitted Indebtedness;
C. Borrow any money on the security of the Collateral from sources other than
the Lenders;
D. Sell, lease, assign, transfer or otherwise dispose of i) Collateral, except
as otherwise specifically
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permitted by this Financing Agreement, or ii) either all or substantially
all of the Borrower's assets, which do not constitute Collateral;
E. Merge, consolidate or otherwise alter or modify its corporate name,
principal place of business, structure, status or existence, or enter into
or engage in any operation or activity materially different from that
presently being conducted by the Borrower;
F. Assume, guarantee, endorse, or otherwise become liable upon the obligations
of any person, firm, entity or corporation, except by the endorsement of
negotiable instruments for deposit or collection or similar transactions in
the ordinary course of business;
G. Declare or pay any dividend of any kind on, or purchase, acquire, redeem or
retire, any of the capital stock or equity interest, of any class
whatsoever, whether now or hereafter outstanding;
H. Make any advance or loan to, or any investment in, any firm, entity, person
or corporation;
I. Change its fiscal year; or
J. Amend the terms of any stock warrant of the Borrower outstanding on October
23, 1995 or any registration agreement in effect on such date relating to
the registration of its securities under the Securities Act of 1933, as
amended.
10. MINIMUM CONSOLIDATED NET WORTH. The Borrower and its Consolidated
Subsidiaries shall maintain at the end of each Rolling Period, a Consolidated
Net Worth of not less than the following:
Rolling Period Amount
-------------- ------
January 31, 1996 $20,000,000
April 30, 1996 $20,000,000
July 31, 1996 $20,000,000
October 31, 1996 $20,000,000
January 31, 1997 $20,000,000
April 30, 1997 $20,000,000
July 31, 1997 $25,000,000
October 31, 1997 $25,000,000
January 31, 1998 $25,000,000
April 30, 1998 $25,000,000
July 31, 1998 $30,000,000
and thereafter
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11. CONSOLIDATED INTEREST COVERAGE RATIO. The Borrower and its Consolidated
Subsidiaries shall maintain at the end of each Rolling Period, a Consolidated
Interest Coverage Ratio of not less than the following:
Rolling Period Ratio
-------------- -----
January 30, 1996 1.90 to 1.00
April 30, 1996 2.50 to 1.00
July 31, 1996 2.75 to 1.00
October 31, 1996 2.75 to 1.00
January 30, 1997 2.75 to 1.00
April 30, 1997 2.75 to 1.00
July 31, 1997 3.25 to 1.00
October 31, 1997 3.25 to 1.00
January 30, 1998 3.25 to 1.00
April 30, 1998 3.25 to 1.00
July 31, 1998 4.00 to 1.00
and thereafter
12. CONSOLIDATED TOTAL LIABILITIES TO CONSOLIDATED NET WORTH. The Borrower
and its Consolidated Subsidiaries will not at the end of each Rolling Period,
permit the ratio of Consolidated Total Liabilities to Consolidated Net Worth to
be greater than the following:
Rolling Period Ratio
-------------- -----
January 31, 1996 5.00 to 1.00
April 30, 1996 4.90 to 1.00
July 31, 1996 4.60 to 1.00
October 31, 1996 4.60 to 1.00
January 31, 1997 4.60 to 1.00
April 30, 197 4.60 to 1.00
July 31, 1997 3.80 to 1.00
October 31, 1997 3.80 to 1.00
January 31, 1998 3.80 to 1.00
April 30, 1998 3.80 to 1.00
July 31, 1998 3.00 to 1.00
and thereafter
13. CONSOLIDATED CURRENT RATIO. The Borrower and its Consolidated
Subsidiaries shall have at the end of each Rolling Period a ratio of
Consolidated Current Assets to
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Consolidated Current Liabilities of not less than the following:
Rolling Period Ratio
-------------- -----
January 31, 1996 1.00 to 1.00
April 30, 1996 1.00 to 1.00
July 31, 1996 1.05 to 1.00
October 31, 1996 1.05 to 1.00
January 31, 1997 1.05 to 1.00
April 30, 1997 1.05 to 1.00
July 31, 1997 1.20 to 1.00
October 31,1997 1.20 to 1.00
January 31, 1998 1.20 to 1.00
April 30, 1998 1.20 to 1.00
July 31, 1998 1.40 to 1.00
and thereafter
14. CONSOLIDATED FIXED CHARGE COVERAGE RATIO. The Borrower and its
Consolidated Subsidiaries shall maintain at the end of each Rolling Period a
Consolidated Fixed Charge Coverage Ratio of not less than the following:
Rolling Period Ratio
-------------- -----
January 31, 1996 0.60 to 1.00
April 30, 1996 0.85 to 1.00
July 31, 1996 1.00 to 1.00
October 31, 1996 1.00 to 1.00
January 31, 1997 1.00 to 1.00
April 30, 1997 1.00 to 1.00
July 31, 1997 1.50 to 1.00
October 31, 1997 1.50 to 1.00
January 31, 1998 1.50 to 1.00
April 30, 1998 1.50 to 1.00
July 31, 1998 1.60 to 1.00
and thereafter
15. CONSOLIDATED EDITDA. The Borrower and its Consolidated Subsidiaries
shall have as of the end of each Rolling Period an amount of Consolidated EDITDA
of not less than the following:
Rolling Period Amount
-------------- ------
January 31, 1996 $ 1,900,000
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April 30, 1996 $ 5,000,000
July 31, 1996 $ 7,500,000
October 31, 1996 $ 7,500,000
January 31, 1997 $ 7,500,000
April 30, 1997 $ 7,500,000
July 31, 1997 $13,500,000
October 31, 1997 $13,500,000
January 31, 1998 $13,500,000
April 30, 1998 $13,500,000
July 31, 1998 $16,500,000
and thereafter
16. CERTAIN ADJUSTMENTS. Notwithstanding the foregoing financial covenants
set forth in paragraphs 10 through 15 of this Section 8 as they relate to the
Borrower and its Consolidated Subsidiaries, until such time as the Borrower has
a Consolidated Subsidiary each such covenant shall be measured based solely on
the Borrower.
Notwithstanding the foregoing financial covenants set forth in paragraphs
10 through 15 of this Section 8, to the extent the Borrower is obligated to pay
any amounts in settlement of the ▇▇▇▇▇▇▇▇▇ Litigation and such obligation or
payment results in noncompliance by the Borrower and its Consolidated
Subsidiaries for any period with any or all of such financial covenants, then
for the relevant periods and for the purpose of determining such compliance:
(a) Consolidated EBITDA (in the case of the financial covenants in
paragraphs 11, 14 and 15) will be increased; Consolidated Current
Liabilities (in the case of the financial covenant in paragraph 13)
will be decreased; Consolidated Total Liabilities (in the case of the
financial covenant in paragraphs 10 and 12) will be decreased; in each
case by the lesser of (i) $2,000,000, or (ii) such amount as may be
necessary to effect the minimum level of compliance with such
financial covenant;
(b) Consolidated Interest Expense (in the case of the financial covenant
in paragraph 11) will be decreased by the lesser of (i) the interest
expense on $2,000,000 at The Chase
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Manhattan Bank Rate plus one percent (1.00%) per annum, or (ii) such
amount as may be necessary to effect the minimum level of compliance
with such financial covenant after giving effect to the application of
clause (a) above, and
(c) The denominator in the Consolidated Fixed Charge Coverage Ratio (in
the case of the financial covenant in paragraph 14) will be decreased
by the lesser of (i) one-third of the scheduled amortization of the
principal of the Term Loan II in accordance with Section 4 paragraph
4, or (ii) such amount as may be necessary to effect the minimum level
of compliance with such financial covenant after giving effect to the
application of clause (a) above.
17. CAPITAL EXPENDITURES. The aggregate amount of all Capital Expenditures
of Borrower and its Subsidiaries (if any) will not exceed $1,500,000 for the
period from October 23, 1995 through July 31, 1996 or $1,500,000 in any fiscal
year thereafter. In any fiscal year the Borrower and its Subsidiaries (if any)
shall be entitled to add to the $1,500,000 ceiling for such fiscal year Capital
Expenditures equal to one-half of the amount, if any, by which $1,500,000
exceeds the amount of Capital Expenditures which were made in the preceding
fiscal year, provided that for the fiscal year commencing August 1, 1996 the
applicable addition shall be one-half of the excess of $1,500,000 over the
amount of Capital Expenditures made in the period from October 23, 1995 through
July 31, 1996.
18. ENVIRONMENTAL COMPLIANCE. The Borrower will advise Lenders Agent in
writing of: a) all expenditures (actual or anticipated) in excess of $150,000
for x) environmental clean-up, y) environmental compliance or z) environmental
testing and the impact of said expenses on the Borrower's working capital; and
b) any notices the Borrower receives from any local, state or federal authority
advising the Borrower of any environmental liability (real or potential)
stemming from the Borrower's operations, its premises, its waste disposal
practices, or waste disposal
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sites used by the Borrower and to provide each Lender with copies of all such
notices if so required.
19. TRANSACTIONS WITH AFFILIATES. Without the prior written consent of the
Required Lenders, the Borrower will not enter into any transaction, including,
without limitation, any purchase, sale, lease, loan or exchange of property with
any Subsidiary or affiliate of the Borrower unless such transaction shall be on
an arm's-length basis on terms no less favorable to the Borrower than a
transaction with a third party.
20. ERISA NOTICES. The Borrower will deliver to Lenders Agent, if and when
(but in no case less than ten (10) days from the date of such event) (i) the
Borrower or any ERISA Affiliate gives or is required to give notice to the PBGC
of any Reportable Event with respect to any Pension Plan, a copy of the notice
of such Reportable Event; (ii) the Borrower or any ERISA Affiliate becomes
obligated to contribute to a Multiemployer Plan to which such entity was not
obligated to contribute on the First Closing Date, a letter of a financial
officer describing such event and estimating the future contingent withdrawal
liability with respect thereto; (iii) the Borrower or any ERISA Affiliate
receives notice of complete or partial withdrawal liability with respect to a
Multiemployer Plan or receives notice that a Multiemployer Plan may be or has
been terminated, in Reorganization or Insolvency, or receives notice from the
administrator of a Multiemployer Plan that indicates the existence of potential
withdrawal liability under a Multiemployer Plan, a copy of such notice; (iv) the
Borrower or any ERISA Affiliate receives notice from the PBGC of an intent to
terminate or appoint a trustee to administer any Pension Plan or Multiemployer
Plan, a copy of such notice; (v) the Borrower or any ERISA Affiliate fails to
make a timely contribution to a Pension Plan which may give rise or has given
rise to an accumulated funding deficiency or a lien, a letter of a financial
officer describing such event; (vi) the Borrower or any ERISA Affiliate adopts
or proposes to adopt an amendment which may require or requires the granting of
a security interest, a letter of a financial officer describing such event;
(vii) the Borrower or any ERISA Affiliate fails to make a contribution required
under the terms of an Employee Benefit Plan or Pension Plan or as required by
law, which failure has a material adverse effect
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on such Employee Benefit Plan or Pension Plan, a letter of a financial officer
describing such event; (ix) if any Pension Plan intending to qualify under
section 401(a) or 401(k) of the Code fails to so qualify, a letter of a
financial officer describing such event; (x) a transaction prohibited under
section 4975 of the Code or section 406 of ERISA occurs resulting in liability
to the Borrower or any entity which the Borrower has an obligation to indemnify,
a letter of a financial officer describing such event. Upon the request of any
Lender made from time to time, the Borrower will deliver a copy of the most
recent actuarial report and annual report completed with respect to any Employee
Benefit Plan or any other financial information the Borrower or any ERISA
Affiliate has with respect to any Employee Benefit Plan.
21. ERISA COVENANT. The Borrower will, and will cause each of its ERISA
Affiliates to, maintain all Employee Benefit Plans and Pension Plans in material
compliance with all applicable law, including any reporting requirements, and
make all contributions due under the terms of each Pension Plan and Employee
Benefit Plan or as required by law.
22. CERTAIN NOTICES. The Borrower will notify Lenders Agent of litigation
involving the Borrower or its Subsidiaries to the same extent and in the same
manner in which it notifies the Subordinated Creditors of such litigation
pursuant to the Investment Agreement, as amended by the First Amendment to the
Investment Agreement, referred to in the definition of "Subordinated Debt" set
forth in Section 1 hereof.
SECTION 9. INTEREST, FEES, EXPENSES AND ASSIGNMENTS.
1. INTEREST ON REVOLVING LOANS. Interest on the Revolving Loans shall be
payable monthly on each Monthly Date commencing October 31, 1995, and shall be
an amount equal to (a) the Chase Bank Rate plus one percent (1.0%) per annum or
(b) the LIBOR Rate for the applicable LIBOR Rate Period(s) elected by the
Borrower plus three percent (3.0%) per annum on the average of the net balances
owing by the Borrower to the Lenders in the Borrower's account at the close of
each day during such month, but in no event in
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excess of the maximum amount of interest permitted by law, as the Borrower may
elect with respect to all or any portion of the outstanding Revolving Loans,
such election to be set forth in the Notice of Revolving Borrowing delivered
pursuant to Section 3, paragraph 1(b) of this Financing Agreement or in a notice
delivered pursuant to Section 9, paragraph 3 of this Financing Agreement. In the
event of any change in said The Chase Manhattan Bank Rate, the rate applicable
to the Revolving Loans under clause (a) above shall change, as of the first day
of the month following any change, so as to remain one percent (1.00%) above the
Chase Manhattan Bank Rate. All rates hereunder shall be calculated based on a
360-day year for the actual number of days elapsed. Lenders Agent shall be
entitled to charge the Borrower's account at the rate provided for herein when
due until all Obligations have been paid in full.
2. INTEREST ON TERM LOAN. Interest on each of the Term Loans shall be
payable monthly on each Monthly Date, commencing October 31, 1995 in the case of
Term Loan I, commencing June 30, 1996 in the case of Term Loan II and January
31, 1997 in the case of Term Loan III and Term Loan IV, on the unpaid balance or
on payment in full prior to maturity in an amount equal to (a) the Chase Bank
Rate plus one and one-quarter of one percent (1.25%) per annum or, (b) the LIBOR
Rate for the applicable LIBOR Rate Period(s) elected by the Borrower plus three
and one-quarter of one percent (3.25%) per annum. In the event of any change in
said Chase Bank Rate, the rate applicable to the Term Loans under clause (a)
above shall change, as of the first day of the month following any change, so as
to remain one and one-quarter percent (1.25%) above the Chase Bank Rate. All
rates applicable to the Term Loans under clause (a) above shall be calculated
based on a 360-day year for the actual number of days elapsed. Lenders Agent
shall be entitled to charge the Borrower's account at the rate provided for
herein when due until all Obligations have been paid in full.
3. SUBSTITUTED INTEREST RATE AT OPTION OF BORROWER. (a) If the Borrower has
elected to base all or a portion of the interest payments due pursuant to
paragraphs 1 or 2 above on the Chase Bank Rate plus the appropriate percentage,
then at any time during the term of this Financing Agreement and upon three (3)
days' prior written
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notice to Lenders Agent, the Borrower may elect to substitute in whole or in
part for such rate a LIBOR Rate for the applicable LIBOR Rate Period(s) elected
by the Borrower plus three percent (3%) or three and one-quarter of one percent
(3.25%), as applicable. Alternatively, if the Borrower has elected to base all
or a portion of the interest payments due pursuant to paragraphs 1 or 2 above on
a LIBOR Rate plus the appropriate percentage, then upon written notice from the
Borrower received by Lenders Agent, at least three (3) days prior to the
expiration of then current LIBOR Rate Period with respect to such loan, the
Borrower may elect to substitute in whole or in part for such LIBOR Rate the
Chase Bank Rate plus one percent (1.0%) or one and one-quarter of one percent
(1.25%), as applicable.
(b) If the Borrower has elected to base all or a portion of the interest
payments due pursuant to paragraphs 1 or 2 above on the LIBOR Rate plus the
appropriate percentage, or have elected to substitute in whole or in part for a
Chase Base Rate a LIBOR Rate for the applicable LIBOR Rate Period(s) elected by
the Borrower pursuant to paragraph 3(a) above, then at any time during the term
of this Financing Agreement the Borrower may elect to substitute in whole or in
part for the LIBOR Rate Period(s) then in effect with respect to any loan one or
more new LIBOR Rate Period(s); provided, however, that Lenders Agent shall
receive written notice from Borrower of such election at least three (3) days
prior to the expiration of then current LIBOR Rate Period with respect to such
loan(s); provided, further, however, that such substitution may be made only
upon the expiration of then current LIBOR Rate Period with respect to such
loan(s). Unless the Borrower shall elect to substitute for a LIBOR Rate Period
then in effect one or more new LIBOR Rate Periods, upon the expiration of such
LIBOR Rate Period, the Borrower shall be deemed to have elected a new LIBOR Rate
Period of the same duration.
(c) At any time a Default or Event of Default shall have occurred and be
continuing under this Financing Agreement, the Borrower shall not have the
option to elect a LIBOR Rate for any loan or advance pursuant to paragraphs 1 or
2, or this paragraph 3, and (i) any requested loan or advance, if made, shall be
made at the Chase Bank Rate plus one percent (1.0%) or one and one-quarter of
one percent
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(1.25%), as applicable, and (ii) any loan or advance that was to have been
converted to the LIBOR Rate pursuant to this paragraph 3 shall be converted to
or continue at the Chase Bank Rate plus one percent (1.0%) or one and
one-quarter of one percent (1.25%), as applicable, and (iii) any outstanding
loan or advance accruing interest at a LIBOR Rate shall be converted, on the
last day of the then current LIBOR Rate Period with respect thereto, to a loan
at the Chase Bank Rate plus one percent (1.0%) or one and one-quarter of one
percent (1.25%), as applicable. During the continuation of any such Default or
Event of Default, no further LIBOR loans and advances shall be made hereunder by
the Lenders nor shall the Borrower have the right to convert any loan or advance
to the LIBOR Rate.
4. SUBSTITUTED INTEREST RATE AT OPTION OF LENDER. In the event that (a)
Lenders Agent shall have determined (which determination shall be conclusive and
binding upon the Borrower) that by reason of circumstances affecting the
interbank LIBOR market adequate and reasonable means do not exist for
ascertaining the LIBOR Rate applicable pursuant to the Borrower's election as
provided herein or (b) in the event any Lender determines (which determination
shall be conclusive and binding on the Borrower) that the applicable LIBOR Rate
will not adequately and fairly reflect the cost to it of maintaining or funding
loans bearing interest based on such LIBOR Rate, with respect to a proposed loan
or advance that the Borrower has requested be made at the LIBOR Rate, or a loan
or advance that will result from the requested conversion of the Chase Bank Rate
into the LIBOR Rate (any such loan or advance being herein called an "Affected
Loan"), Lenders Agent shall promptly notify the Borrower (by telephone or
otherwise) of such determination, confirmed in writing, to the Borrower on or
prior to the requested borrowing date for such Affected Loan or the requested
conversion date of such loan or advance. If Lenders Agent shall give such
notice, (i) any requested Affected Loan shall be made at the Chase Bank Rate
plus the appropriate percentage, (ii) any loan that was to have been converted
to an Affected Loan shall be converted to or continued at the Chase Bank Rate
plus the appropriate percentage and (iii) any outstanding Affected Loan shall be
converted, on the last day of the then current LIBOR Rate Period with respect
thereto, to a loan at the Chase Bank Rate plus the appropriate percentage. Until
any such notice
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under clause (a) of this paragraph 4 has been withdrawn by Lenders Agent (by
notice to the Borrower promptly upon Lenders Agent's having determined that such
circumstances affecting the interbank LIBOR market and that adequate and
reasonable means do exist for determining the LIBOR Rate) no further LIBOR loans
and advances shall be made by the Lenders nor shall the Borrower have the right
to convert any loans or advances to the LIBOR Rate. Until any such notice under
clause (b) of this paragraph 4 has been withdrawn by Lenders Agent (by notice to
the Borrower promptly upon Lenders Agent's determination that circumstances no
longer render any loan or advance an Affected Loan), no further LIBOR loans or
advances shall be required to be made by the Lenders nor shall the Borrower have
the right to convert any loan or advance of the Lenders to the LIBOR Rate.
The Borrower shall pay Lenders Agent a processing fee in amount equal to
$500 upon the effective date of each election by the Borrower of the LIBOR Rate
(the "LIBOR Rate Election Fee").
5. ILLEGALITY. Notwithstanding any other provisions herein, if any law,
regulation, treaty or directive, or any change therein or in the interpretation
or application thereof, shall make it unlawful for any Lender to make or
maintain any LIBOR loans or advances as contemplated by this Financing
Agreement, (a) the commitment of such Lender hereunder to make or continue LIBOR
loans and advances, shall forthwith be suspended and (b) such Lender's loans and
advances, then outstanding at the LIBOR Rate affected hereby, if any, shall be
converted automatically to the Chase Bank Rate plus the applicable percentage on
the last day of then current LIBOR Rate Period applicable thereto or within such
earlier period as required by law. If the commitment of any Lender with respect
to any LIBOR loans or advances is suspended pursuant to this paragraph and such
Lender shall notify the Borrower that it is once again legal for such Lender to
make or maintain LIBOR loans and advances, such Lender's commitment to make or
maintain such LIBOR loans and advances shall be reinstated.
6. INCREASED COSTS. In the event that any law, regulation, treaty or
directive hereafter enacted, promulgated, approved or issued or any change in
any presently existing law, regulation, treaty or directive
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therein or in the interpretation or application thereof by any governmental
authority charged with the administration thereof or compliance by any Lender
(or any corporation directly or indirectly owning or controlling such Lender)
with any request or directive from any central bank or other governmental
authority, agency or instrumentality:
(a) does or shall subject such Lender to any tax of any kind whatsoever
with respect to any loans or advances or its obligations under this Financing
Agreement to make loans or advances, or changes the basis of taxation of
payments to such Lender of principal, interest or any other amount payable
hereunder in respect of its loans or advances (except for imposition of, or
change in the rate of, tax on the overall net income of such Lender, other than
a tax imposed solely or primarily on United States branches or subsidiaries of
foreign corporations); or
(b) does or shall impose, modify or make applicable any reserve, special
deposit, compulsory loan, assessment, increased cost or similar requirement
against assets held by, or deposits of, or advances or loans by, or other credit
extended by, or any other acquisitions of funds by, any office of such Lender in
respect of its loans or advances which is not otherwise included in the
determination of the applicable rate or rates of interest hereunder;
and the result of any of the foregoing is to increase the cost to such Lender of
making, renewing, converting or maintaining its loans or advances hereunder or
its commitment to make such loans or advances, or to reduce any amount
receivable hereunder in respect of its loans and advances, then, in any such
case, the Borrower shall promptly pay such Lender, upon its demand, any
additional amounts necessary to compensate such Lender for such additional cost
or reduction in such amount receivable which such lender deems to be material as
determined by such Lender. No failure by any Lender to demand compensation for
any increased cost shall constitute a waiver of such Lender's right to demand
such compensation at any time; provided, however, that such Lender shall notify
the Borrower of any such increased cost within ninety (90) days after the
officer of such Lender having primary responsibility for this Financing
Agreement has obtained knowledge of such increased cost. A statement setting
forth
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the calculations of any additional amounts payable pursuant to the foregoing
sentence submitted by any Lender to the Borrower shall be conclusive absent
manifest error.
7. INDEMNIFICATION FOR LOSS. Notwithstanding anything contained herein to
the contrary, if the Borrower shall fail to borrow on a borrowing date after it
shall have given notice to do so in which it shall have requested the LIBOR Rate
pursuant to the terms hereof, or if a LIBOR loan or advance shall be terminated
for any reason prior to the last day of the LIBOR Rate Period applicable
thereto, or if, while a LIBOR loan or advance is outstanding, any repayment or
prepayment of such LIBOR loan or advance is made for any reason (including,
without limitation, as a result of acceleration or illegality) on a date which
is prior to the last day of the LIBOR Rate Period applicable thereto, the
Borrower agrees to indemnify any Lender against, and to pay on demand directly
to such Lender, any loss or expense suffered by such Lender as a result of such
failure to borrow, termination or repayment, including, without limitation, an
amount, if greater than zero, equal to:
A x (B-C) x D
---
360
where:
"A" equals such Lender's pro rata share of the Affected Principal Amount;
"B" equals the LIBOR Rate (expressed as a decimal), applicable to such Loan;
"C" equals the applicable LIBOR Rate (expressed as a decimal), in effect on or
about the first day of the applicable Remaining LIBOR Rate Period, based on the
applicable rates offered or bid, as the case may be, on or about such date, for
deposits in an amount equal approximately to such Lender's pro rata share of the
Affected Principal Amount with an LIBOR Rate Period equal approximately to the
applicable Remaining LIBOR Rate Period, as determined by such Lender;
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"D" equals the number of days from and including the first day of the applicable
Remaining LIBOR Rate Period to but excluding the last day of such Remaining
LIBOR Rate Period;
and any other out-of-pocket loss or expense (including any internal processing
charge customarily charged by such Lender) suffered by such Lender in
liquidating deposits prior to maturity in amounts which correspond to such
Lender's pro rata share of such proposed borrowing, terminated LIBOR loan or
advance or repayment.
8. OPTION TO FUND. Each Lender has indicated that, if the Borrower elects
to borrow or convert to the LIBOR Rate, such Lender may wish to purchase one or
more deposits in order to fund or maintain its funding of such LIBOR loans or
advances during the LIBOR Rate Period in question; it being understood that the
provisions of this Financing Agreement relating to such funding are included
only for the purpose of determining the rate of interest to be paid in respect
of such LIBOR Loan and any amounts owing under this Section 9, paragraphs 1, 2,
3, 6, and 7. Each Lender shall be entitled to fund and maintain its fundings of
all or any part of each LIBOR loan or advance made by it in any manner it sees
fit, but all determinations under this Section 9, paragraphs 1, 2, 3, 6, and 7
shall be made as if such Lender had actually funded and maintained such LIBOR
Rate during the applicable LIBOR Rate Period through the purchase of deposits in
an amount equal to such LIBOR Rate and having a maturity corresponding to such
LIBOR Rate Period. The obligations of the Borrower under this Section 9,
paragraphs 1, 2, 3, 6 and 7 shall survive the termination of the Revolving Line
of Credit and the payment of the Obligations hereunder.
9. CAPITAL ADEQUACY. (a) If either (i) the introduction of, the adoption or
effectiveness of or any change or phasing in of any law or regulation or in the
interpretation thereof by any United States or foreign governmental authority
charged with the administration thereto, (ii) compliance with any directive,
guideline, decision or request from any central bank or United States or foreign
governmental authority (whether or not having the force of law) promulgated or
made after the First Closing Date, or (iii) compliance with the Risk-Based
Capital Guidelines of the Federal Reserve System as set forth in 12
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C.F.R., Parts 208 and 225, or of the Comptroller of the Currency, Department of
Treasury, as set forth in 12 C.F.R., Part 3 or similar legislation, rules,
guidelines, directives or regulations issued by any United States or foreign
governmental authority affects or would affect the amount of capital required or
expected to be maintained by any Lender (or any lending office of any Lender) or
any corporation directly or indirectly owning or controlling any Lender, and
such Lender shall have determined that such introduction, change or compliance
has or would have the effect of reducing the rate of return on such Lender's
capital or the asset value to such Lender of any loan or advance made by such
Lender as a consequence, directly or indirectly, of its obligations to make and
maintain the funding of loans and advances hereunder to a level below that which
such Lender could have achieved but for such introduction, change or compliance
(after taking into account such Lender's policies regarding capital adequacy) by
an amount deemed by such Lender to be material, then, upon demand by such
Lender, the Borrower shall promptly pay to such Lender such additional amount or
amounts as shall be sufficient to compensate such Lender for such reduction in
the rate of return. A certificate as to such amounts submitted to the Borrower
and by any Lender setting forth the determination of such amounts that will
compensate such Lender for such reductions shall be presumed correct absent
manifest error.
(b) If any Lender requests compensation pursuant to paragraph 6(a), the
Borrower may require that such Lender transfer all of its right, title and
interest under this Financing Agreement to any commercial bank (having undivided
capital and surplus of no less than $1,000,000,000) identified by the Borrower,
pursuant to an assignment and acceptance agreement, if such bank (a "Proposed
Lender") agrees to assume all of the obligations of such Lender hereunder and
under any other documents entered into by such Lender in connection with this
Financing Agreement for consideration equal to the sum of (i) the outstanding
principal amount of such Lender's pro rata share of loans and advances
hereunder, (ii) accrued interest on such loans and advances to the date of such
transfer, and (iii) all other amounts payable hereunder to such Lender on or
prior to the date of such transfer (including any fees accrued hereunder and any
amounts which would be payable under paragraph 6(a) as if all of such Lender's
loans and advances were being prepaid in full on such date). Subject to the
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approval of such Proposed Lender in the reasonable discretion of such Lender,
and such assignment and acceptance agreement, such Proposed Lender be a "Lender"
for all purposes hereunder.
10. OUT-OF-POCKET EXPENSES. The Borrower shall reimburse or pay the Lender
and the Lenders Agent, as the case may be, for all Out-of-Pocket Expenses of the
Lender and the Lenders Agent on the Second Closing Date.
11. LINE OF CREDIT FEE. Upon each Monthly Date, commencing with the month
in which the First Closing Date occurs, the Borrower shall pay the Lender the
Line of Credit Fee.
12. LOAN FACILITY FEE. To induce CITBC to enter into this Amended and
Restated Financing and Security Agreement and to extend to the Borrower the
Revolving Loan and the Term Loans, the Borrower shall pay to CITBC a Loan
Facility Fee in the amount of $120,000 payable on the Second Closing Date.
13. COLLATERAL MANAGEMENT FEE. On the Second Closing Date, the Borrower
shall pay the increase in the Collateral Management Fee effective as of the
Second Closing Date ($8,334) to Lenders Agent to cover the period from the
Second Closing Date to the next anniversary date of the First Closing Date and
thereafter the Collateral Management Fee will be paid on each anniversary of the
First Closing Date.
14. LIBOR RATE ELECTION FEE. In connection with paragraph 4 of this Section
9, the Borrower shall pay Lenders Agent the LIBOR Rate Election Fee.
15. LETTER OF CREDIT GUARANTY FEE. The Borrower shall pay CITBC the Letter
of Credit Guaranty Fee which shall be an amount equal to two percent (2%) per
annum, payable monthly in arrears, on the maximum amount drawable from time to
time under Letters of Credit.
16. MISCELLANEOUS FEES. The Borrower shall pay Lenders Agent's standard
charges for, and the fees and expenses of, the Lenders Agent personnel used by
Lenders Agent for reviewing the books and records of the Borrower
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and for verifying, testing protecting, safeguarding, preserving or disposing of
all or any part of the Collateral; provided, however, that the foregoing shall
not be payable until the occurrence of and during the continuance of an Event of
Default.
17. CHARGE TO BORROWER'S ACCOUNT. The Borrower hereby authorize Lenders
Agent to charge the Borrower's accounts with Lenders Agent or any Lender with
the amount of all payments due hereunder as such payments become due. The
Borrower confirms that any charges which Lenders Agent may so make to the
Borrower's account as herein provided will be made as an accommodation to the
Borrower and solely at Lenders Agent's discretion.
18. ASSIGNMENTS AND PARTICIPATIONS. (A) Each Lender may assign its rights
and delegate its obligations under this Financing Agreement and further may
assign, or sell participations in, all or any part of the Obligations, the
Revolving Line of Credit, the Term Loans, and any other interest herein or
therein to any affiliate or to one or more other Persons. The Borrower
acknowledges that in assigning or selling participations of any of its interests
under this Financing Agreement, such Lender may grant to such participant
certain rights which would require the participant's consent to certain waivers,
amendments and other actions with respect to the provisions of this Financing
Agreement.
(B) The Borrower authorizes each Lender to disclose to any participant or
purchasing lender (each, a "Transferee") and any bona fide prospective
Transferee any and all financial information in such Lender's possession
concerning the Borrower and its affiliates which has been delivered to such
Lender by or on behalf of the Borrower pursuant to this Financing Agreement or
which has been delivered to such Lender by or on behalf of the Borrower in
connection with such Lender's credit evaluation of the Borrower and its
affiliates prior to entering into this Financing Agreement.
(C) In the case of an assignment authorized under this paragraph 17, the
assignee shall have, to the extent of such assignment, the same rights, benefits
and obligations as it would if it were a party hereunder and the assigning
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party shall be relieved of its obligations hereunder with respect to its
Revolving Line of Credit, or Term Loans commitment or assigned a portion thereof
on and after the date of such assignment. The Borrower hereby acknowledges and
agrees that any assignment permitted hereunder will give rise to a direct
obligation of Borrower to the assignee and that the assignee shall be considered
to be a Lender under this Financing Agreement.
(D) The Borrower may not assign or transfer any of its rights or
obligations hereunder.
SECTION 10. POWERS
The Borrower hereby authorizes Lenders Agent or any person or agent Lenders
Agent may designate as its attorney-in-fact, at the Borrower's cost and expense,
to exercise all of the following powers, which being coupled with an interest,
shall be irrevocable until all of the Borrower's Obligations to Lenders Agent
and the Lenders have been paid in full:
(A) To receive, take, endorse, sign, assign and deliver, all in the
name of Lenders Agent or the Borrower, any and all checks, notes, drafts,
and other documents or instruments relating to the Collateral;
(B) To receive, open and dispose of all mail addressed to the Borrower
and to notify postal authorities to change the address for delivery thereof
to such address as Lenders Agent may designate;
(C) To request from customers indebted on Accounts at any time, in the
name of Lenders Agent or the Borrower or that of Lenders Agent's designee,
information concerning the amounts owing on the Accounts;
(D) To transmit to customers indebted on Accounts notice of Lenders
Agent's interest therein and to notify customers indebted on Accounts to
make payment directly to Lenders Agent for the Borrower's account; and
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(E) To take or bring, in the name of Lenders Agent or the Borrower,
all steps, actions, suits or proceedings deemed by Lenders Agent necessary
or desirable to enforce or effect collection of the Accounts.
Notwithstanding anything hereinabove contained to the contrary, the powers
set forth in (b), (d) and (e) above may only be exercised after the occurrence
of and during the continuance of an Event of Default.
SECTION 11. EVENTS OF DEFAULT AND REMEDIES
1. Notwithstanding anything hereinabove to the contrary, the Lenders may
terminate this Financing Agreement immediately upon the occurrence of any of the
following (herein "Events of Default"):
(A) cessation of the business of the Borrower or the calling of a
meeting of the creditors of the Borrower for purposes of compromising the
debts and obligations of the Borrower;
(B) the Borrower shall generally not pay its debts as they become due
or shall admit in writing its inability to pay its debts, or shall make a
general assignment for the benefit of creditors; or the Borrower shall
commence any case, proceeding or other action seeking to have an order for
relief entered on its behalf as debtor or to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors or seeking
appointment of a receiver, trustee, custodian or other similar official for
it or for all or any substantial part of its property or shall file an
answer or other pleading in any such case, proceeding or other action
admitting the material allegations of any petition, complaint or similar
pleading filed;
(C) any involuntary case, proceeding or other action against the
Borrower shall be commenced seeking to have an order for relief entered
against it as debtor or to adjudicate it a bankrupt or insolvent, or
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seeking reorganization, arrangement, adjustment, liquidation, dissolution
or composition of it or its debts under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors or seeking appointment of a
receiver, trustee, custodian or other similar official for it or for all or
any substantial part of its property, and such case, proceeding or other
action (i) results in the entry of any order for relief against it or (ii)
shall remain undismissed for a period of sixty (60) days;
(D) any representation or warranty contained herein shall prove to
have been false in any material respect when made (other than those
referred to in sub-paragraph (f) below) or in any other written agreement
including, without limitation, any Loan Document or any document delivered
by the Borrower to Lenders Agent or any Lender in connection herewith or
therewith or the transactions contemplated hereby or thereby;
(E) breach by the Borrower of any covenant in this Financing Agreement
(other than those referred to in sub-paragraph (f) below) or in any other
written agreement between the Borrower and the Lenders or Lenders Agent
including, without limitation, any Loan Document, or any other document
delivered by the Borrower to the Lenders or Lenders Agent in connection
herewith or therewith or the transactions contemplated hereby or thereby,
if such breach shall not have been remedied within thirty (30) days after
such breach;
(F) breach by the Borrower of any warranty, representation or covenant
of Section 3, paragraphs 3 (other than the third sentence of paragraph 3);
Section 6, Paragraphs 3 or 4; Section 8, Paragraphs 1, 5(a) or (b), 6, or 9
through 16;
(G) failure of the Borrower to pay when due i) any of the principal of
the Revolving Credit Loans or Term Loans, or ii) to pay any of the interest
on the Revolving Credit Loans or any of the Term Loans within five (5)
business days of the due date thereof or (iii) to reimburse CITBC on any
Letter of Credit Guaranty when requested by CITBC; provided, however, that
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nothing contained herein shall prohibit Lenders Agent from charging such
amounts to the Borrower's account on the due date thereof;
(H) (i) a default by the Borrower shall have occurred and be
continuing in any payment of principal of or interest on any other
obligation for borrowed money (or any obligation or obligations under a
conditional sale or other title retention agreement or any obligation or
obligations issued or assumed as full or partial payment for property
whether or not secured by a purchase money mortgage or any obligation under
notes payable or drafts accepted representing extensions of credit) beyond
any period of grace provided with respect thereto in each case involving
any individual obligation or one or more obligations in an aggregate
principal amount of $250,000 or more or (ii) a default by the Borrower
shall have occurred and be continuing in the performance of any other
agreement, term or condition contained in any agreement under which any
such obligation referred to in clause (i) is created (or if any other
default under any such agreement shall occur and be continuing) if the
effect of such default is to cause, or permit the holder or holders of such
obligation or obligations (or a trustee on behalf of such holder or
holders) to cause, such obligation or obligations to become due prior to
its or their stated maturity in each case involving any individual
obligation or one or more obligations in an aggregate principal amount of
$250,000 or more;
(I) The Borrower or any other person engages in a transaction in
connection with which the Borrower or any entity which the Borrower has an
obligation to indemnify, could be subject to liability for either a civil
penalty assessed pursuant to section 502 of ERISA or a tax imposed by
section 4975 of the Code; an accumulated funding deficiency (as defined in
section 302 of ERISA or section 412 of the Code), whether or not waived,
exists with respect to any Pension Plan; a lien arises or security interest
is granted with respect to any Pension Plan; a Pension Plan is terminated;
a Reportable Event occurs or proceedings commence to terminate or to have a
trustee appointed to terminate any Pension Plan which Reportable Event or
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commencement of proceedings or appointment is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of any such
Pension Plan; the Borrower or any ERISA Affiliate incurs or is likely to
incur any liability in connection with a withdrawal from or the Insolvency,
Reorganization or termination of a Multiemployer Plan or with respect to
section 515 of ERISA; or any other similar event or condition shall occur
or exist with respect to any Employee Benefit Plan;
(J) without the prior written consent of all the Lenders, the Borrower
shall x) amend or modify the Subordinated Debt or y) make any payment on
account of the Subordinated Debt except as permitted herein;
(K) if the Borrower fails to cause the County, promptly after the
Second Closing Date, to convey directly to the Borrower the fee interest in
the Fremont Property, as hereinafter defined;
(L) if the Borrower fails to perform any one or more of the following
actions, simultaneously with the transfer of the Fremont Property, as
hereinafter defined, from the County of Sandusky, Ohio to the Borrower:
(I) execute, deliver and cause to be filed in the appropriate
recorder's office a confirmatory spreader agreement as contemplated by
Section 1.10(c) of that certain leasehold mortgage between the Borrower and
CITBC dated as of the date hereof with respect to the real property located
in Fremont, Ohio (the "Fremont Property"); or
(II) deliver to Lenders Agent an ALTA Lender's Fee Title Policy 1992
containing exceptions and requirements satisfactory to Required Lenders in
their sole discretion; or
(III) deliver to Lenders Agent an opinion from Ohio counsel, in the
form previously approved by the Required Lenders, opining that the
confirmatory spreader agreement referenced in clause (i) above has been
duly authorized, executed and delivered and that
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such confirmatory spreader agreement is enforceable in accordance with its
terms.
2. Upon the occurrence and continuation of a Default and/or an Event of
Default, at the option of the Lenders, all loans and advances provided for in
Section 3, paragraph 1 of this Financing Agreement shall be thereafter in the
Lender's sole discretion and the obligation of the Lenders or CITBC, as the case
may be, to make Revolving Loans and/or assist in opening Letters of Credit shall
cease, and at the option of the Required Lenders upon the occurrence and
continuation of an Event of Default: i) all Obligations shall become immediately
due and payable; provided, however, that Lenders Agent has given the Borrower
written notice of the Event of Default; provided, further, however, that no
notice is required if the Event of Default is an Event of Default listed in
paragraph 1(b) or 1(c) of this Section 11; ii) the Lenders may charge the
Borrower the Default Rate of Interest on all then outstanding or thereafter
incurred Obligations in lieu of the interest provided for in Section 9,
paragraphs 1, 2, 3 and 4 of this Financing Agreement; and iii) the Lenders may
immediately terminate this Financing Agreement upon notice to the Borrower;
provided, however, that no notice of termination is required if the Event of
Default is the Event listed in paragraph 1(b) or 1(c) of this Section 11. The
exercise of any option is not exclusive of any other option which may be
exercised at any time by the Lenders.
3. Immediately upon the occurrence of any Event of Default and as long as
such Event of Default is continuing, Lenders Agent may to the extent permitted
by law: (a) remove from any premises where same may be located any and all
documents, instruments, files and records, and any receptacles or cabinets
containing same, relating to the Accounts, or Lenders Agent may use, at the
Borrower's expense, such of the Borrower's personnel, supplies or space at the
Borrower's places of business or otherwise, as may be necessary to properly
administer and control the Accounts or the handling of collections and
realizations thereon; (b) bring suit, in the name of the Borrower or Lenders
Agent, and generally shall have all other rights respecting said Accounts,
including, without limitation, the right to: accelerate or extend the time of
payment, settle, compromise, release in whole or in part any amounts owing on
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any Accounts and issue credits in the name of the Borrower or Lenders Agent; (c)
sell, assign and deliver the Collateral and any returned, reclaimed or
repossessed merchandise, with or without advertisement to the extent permitted
by applicable law, at public or private sale, for cash, on credit or otherwise,
at Lenders Agent's sole option and discretion, and Lenders Agent may bid or
become a purchaser at any such sale, free from any right of redemption, which
right is hereby expressly waived by the Borrower to the extent permitted by law;
(d) foreclose the security interests created herein by any available judicial
procedure, or to take possession of any or all of the Inventory and Equipment
without judicial process, and to enter any premises where any Inventory and
Equipment may be located for the purpose of taking possession of or removing the
same and (e) exercise any other rights and remedies provided in law, in equity,
by contract or otherwise. Lenders Agent shall have the right, without notice or
advertisement, to sell, lease, or otherwise dispose of all or any part of the
Collateral whether in its then condition or after further preparation or
processing, in the name of the Borrower or Lenders Agent, or in the name of such
other party as Lenders Agent may designate, either at public or private sale or
at any broker's board, in lots or in bulk, for cash or for credit, with or
without warranties or representations, and upon such other terms and conditions
as Lenders Agent in its sole discretion may deem advisable, and Lenders Agent
and the Lenders shall have the right to purchase at any such sale. If any
Inventory and Equipment shall require rebuilding, repairing, maintenance or
preparation, Lenders Agent shall have the right, at its option, to do such of
the aforesaid as is necessary, for the purpose of putting the Inventory and
Equipment in such saleable form as Lenders Agent shall deem appropriate. The
Borrower agrees, at the request of Lenders Agent, to assemble the Inventory and
Equipment and to make it available to Lenders Agent at premises of the Borrower
or elsewhere and to make available to Lenders Agent the premises and facilities
of the Borrower for the purpose of Lenders Agent's taking possession of,
removing or putting the Inventory and Equipment in saleable form. However, if
notice of intended disposition of any Collateral is required by law, it is
agreed that ten (10) days' notice shall constitute reasonable notification and
full compliance with the law. The net cash proceeds resulting from Lenders
Agent's exercise of any of the foregoing rights, (after
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deducting all charges, costs and expenses, including reasonable attorneys' fees)
shall be applied by Lenders Agent to the payment of the Obligations, whether due
or to become due, in such order as Lenders Agent may elect, and the Borrower
shall remain liable to Lenders Agent for any deficiencies, and Lenders Agent in
turn agrees to remit to the Borrower or its successors or assigns, any surplus
resulting therefrom. The enumeration of the foregoing rights is not intended to
be exhaustive and the exercise of any right shall not preclude the exercise of
any other rights, all of which shall be cumulative. The Mortgages shall govern
the rights and remedies of Lenders Agent thereto.
SECTION 12. TERMINATION
Except as otherwise permitted herein, the Borrower or the Lenders may
terminate this Financing Agreement and the Revolving Line of Credit only as of
the Final Maturity Date or any anniversary date of the Final Maturity Date and
then only by giving the other at least sixty (60) days' prior written notice of
termination. Notwithstanding the foregoing, the Lenders may terminate the
Financing Agreement immediately upon the occurrence of an Event of Default;
provided, however, that if the Event of Default is an event listed in Section
11, paragraph 1(b) or 1(c) of this Financing Agreement, the Lenders may regard
the Financing Agreement as terminated and notice to that effect is not required.
This Financing Agreement, unless terminated as herein provided, shall
automatically continue from year to year after the Final Maturity Date.
Notwithstanding the foregoing, the Borrower may terminate this Financing
Agreement and the Revolving Line of Credit at any time upon sixty (60) days'
prior written notice to each of the Lenders; provided, however, that the
Borrower pay to the Lender immediately on demand, an Early Termination Fee, if
applicable. All Obligations shall become due and payable as of any termination
hereunder or under Section 11 hereof and, pending a final accounting, Lenders
Agent and each of the Lenders may withhold any balances in the Borrower's
account (unless supplied with an indemnity satisfactory to all the Lenders) to
cover all of the Borrower's Obligations, whether absolute or contingent. All of
Lenders Agent's and each Lender's rights, liens and security interests shall
continue
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after any termination until all Obligations have been paid and satisfied in
full.
SECTION 13. INDEMNIFICATION
In addition to the payment of expenses pursuant to Section 9 of this
Financing Agreement, whether or not the transactions contemplated hereby shall
be consummated, the Borrower agrees to indemnify, pay and hold Lenders Agent and
each Lender and the officers, directors, partners, employees, agents, affiliates
and attorneys of Lenders Agent and each Lender (collectively called the
"Indemnitees") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever (including the reasonable
fees and disbursements of attorneys and accountants for such Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened by the Borrower or by any other Person as against
Lenders Agent or such Lender or any other Person, whether or not such Indemnitee
shall be designated a party thereto) that may be imposed on, incurred by, or
asserted against that Indemnitee, in any manner relating to or arising out of a
Default or Event of Default under this Financing Agreement or (except to the
extent provided for or limited elsewhere in this Financing Agreement) the
consummation of the transactions contemplated hereby, the use or intended use of
the proceeds of the Revolving Loans and the Term Loans or the exercise of any
right or remedy hereunder, including, without limitation, any obligations which
may become due and payable after the termination of this Financing Agreement
(the "Indemnified Liabilities"); provided, however, that the Borrower shall not
have any obligation to an Indemnitee hereunder with respect to Indemnified
Liabilities to the extent arising from the gross negligence or willful
misconduct of any Indemnitee as determined by a court of competent jurisdiction.
To the extent that the undertaking to indemnify, pay and hold harmless set forth
in the preceding sentence may be unenforceable because it is violative of any
law or public policy, the Borrower will contribute the maximum portion that it
is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any
of them.
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SECTION 14. MISCELLANEOUS
1. The Borrower hereby waives diligence, demand, presentment and protest
and any notices thereof as well as notice of nonpayment. No delay or omission of
Lenders Agent or any Lender or the Borrower to exercise any right or remedy
hereunder, whether before or after the happening of any Event of Default, shall
impair any such right or shall operate as a waiver thereof or as a waiver of any
such Event of Default. No single or partial exercise by Lenders Agent or any
Lender of any right or remedy precludes any other or further exercise thereof,
or precludes any other right or remedy.
2. This Financing Agreement and the documents executed and delivered in
connection therewith constitute the entire agreement between the Borrower and
the Lenders Agent and the Lenders; supersede any prior agreements; can be
amended, modified or supplemented only by a writing signed by the Borrower and
the Lenders Agent and the Lender; and shall bind and benefit the Borrower and
the Lenders Agent and the Lenders and their respective successors and assigns.
3. In no event shall the Borrower, upon demand by the Lenders Agent for
payment of any indebtedness relating hereto, by acceleration of the maturity
thereof, or otherwise, be obligated to pay interest and fees in excess of the
amount permitted by law. Regardless of any provision herein or in any agreement
made in connection herewith, no Lender shall ever be entitled to receive, charge
or apply, as interest on any indebtedness relating hereto, any amount in excess
of the maximum amount of interest permissible under applicable law. If any
Lender ever receives, collects or applies any such excess, it shall be deemed a
partial repayment of principal and treated as such; and if principal is paid in
full, any remaining excess shall be refunded to the Borrower. This paragraph
shall control every other provision hereof and of any other agreement made in
connection herewith.
4. If any provision hereof or of any other agreement made in connection
herewith is held to be illegal or unenforceable, such provision shall be fully
severable,
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and the remaining provisions of the applicable agreement shall remain in full
force and effect and shall not be affected by such provision's severance.
Furthermore, in lieu of any such provision, there shall be added automatically
as a part of the applicable agreement a legal and enforceable provision as
similar in terms to the severed provision as may be possible.
5. (a) THE BORROWER AND EACH LENDER HEREBY IRREVOCABLY SUBMIT TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN NEW YORK, NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS FINANCING AGREEMENT, OR
ANY OF THE OTHER DOCUMENTS ENTERED INTO IN CONNECTION WITH THIS FINANCING
AGREEMENT, TO WHICH THE BORROWER IS A PARTY, AND THE BORROWER AND EACH LENDER
HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR IN SUCH FEDERAL
COURT. THE BORROWER AND EACH LENDER HEREBY IRREVOCABLY WAIVE, TO THE FULLEST
EXTENT THEY MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING. THE BORROWER AND EACH LENDER AGREE
THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW.
(b) THE BORROWER AND EACH LENDER HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS FINANCING AGREEMENT. THE
BORROWER AND EACH LENDER HEREBY IRREVOCABLY WAIVE PERSONAL SERVICE OF PROCESS
AND CONSENT TO SERVICE OF PROCESS BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED, ADDRESSED TO THE BORROWER, OR SUCH LENDER, AS THE CASE MAY
BE, AT THE ADDRESS PROVIDED HEREIN FOR NOTICES.
6. (a) The obligations of the Borrower hereunder and under the other loan
documents shall be construed as continuing, absolute and unconditional without
regard to (and the Borrower hereby waives any right or claim it may have with
respect to) (a) the validity or enforceability of this Financing Agreement, or
any other loan document at any time or from time to time held by the Lenders
Agent or any Lender, as against or with respect to the Borrower, (b) any
defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available
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to or be asserted by the Borrower against the Lenders Agent or any Lender, or
(c) any other circumstances whatsoever which constitute, or might be construed
to constitute, an equitable or legal discharge of the Borrower hereunder, in
bankruptcy or in any other instance. When Lenders Agent or any Lender is
pursuing rights and remedies hereunder against the Borrower, Lenders Agent or
such lender, as the case may be, may, but shall be under no obligation to,
pursue such rights and remedies as it may have against another person or against
any collateral security or guaranty or any right of offset with respect thereto,
and any failure by Lenders Agent or such Lender, as the case may be, to pursue
such other rights or remedies or to collect any payments from such other
Borrower or person or to realize upon any such collateral security or guaranty
or to exercise any such right of offset, or any release of such other person or
of any such collateral security, guaranty or right of offset, shall not relieve
the Borrower of any liability hereunder, and shall not impair or affect the
rights and remedies, whether express, implied or available as a matter of law,
of Lenders Agent or such Lender, as the case may be, against the Borrower.
(b) The obligations of the Borrower hereunder shall continue to be
effective, or be reinstated, as the case may be, if at any time any payment of,
by or for the Borrower is rescinded or must otherwise be restored or returned by
Lenders Agent or any Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrower or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Borrower or any substantial part of its property, or otherwise,
all as though such payments had not been made.
7. The Borrower authorizes and Lenders Agent and each of the Lenders shall
have the right, upon five (5) business days' prior written notice, upon any
amount becoming due and payable hereunder, to set-off and apply against any and
all property held by, or in the possession of Lenders Agent or any Lender or the
Collateral the Obligations due and payable to Lenders Agent or any of the
Lenders; provided, however, that if an Event of Default has occurred and is
continuing, Lenders Agent and each of the
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Lenders shall not be required to give notice prior to the exercise of their
rights set forth in this paragraph 7.
8. Except as otherwise herein provided, any notice or other communication
required hereunder shall be in writing, and shall be deemed to have been validly
served, given or delivered when hand delivered or sent by telegram or telex, or
three days after deposit in the United State mails, with proper first class
postage prepaid and addressed to the party to be notified as follows:
(A) if to CITBC, at:
The CIT Group/Business Credit, Inc.
1211 Avenue of the ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
(B) if to the Borrower, at:
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, Inc.
One ▇▇▇▇▇▇ Island
Westport, Connecticut
Attn: ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Bass, ▇▇▇▇▇ & ▇▇▇▇
First ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: J. Page Davidson
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party may designate for itself by like notice.
9. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS FINANCING AGREEMENT
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.
10. All representations, warranties and indemnities contained herein or
made in writing by the
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Borrower in connection herewith shall survive the execution and delivery of this
Financing Agreement, for so long as any Obligations remain outstanding, unless
otherwise stated herein, regardless of any investigation made by Lenders Agent
or any Lender or on behalf of Lenders Agent or any Lender.
11. All covenants and agreements contained in this Financing Agreement by
or on behalf of any party hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not.
12. If any agreement, certificate or other writing, or any action taken or
to be taken, is by the terms of this Financing Agreement required to be
satisfactory to any or all of the Lenders, the determination of such
satisfaction shall be made by such Lender in its sole and exclusive judgment
exercised in good faith.
13. The descriptive headings of the several paragraphs of this Financing
Agreement and the table of contents are inserted for convenience only and do not
constitute a part of this Financing Agreement.
14. This Financing Agreement may be executed in two or more counterparts,
all of which shall be deemed but one and the same instrument and each of which
shall be deemed an original, and it shall not be necessary in making proof of
this Financing Agreement to produce or account for more than one such
counterpart.
15. If the date for making any payment or the last date for performance of
any or the exercising of any right, as provided in this Financing Agreement
(other than in connection with any Term Loan or any Revolving Loan for which a
LIBOR Rate Period is selected), shall not be a business day, such payment may be
made or act performed or right exercised on the next succeeding business day,
with the same force and effect as if done on the nominal date provided in this
Financing Agreement, except that interest shall accrue and be payable for the
period after such nominal date.
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16. The Borrower will hold Lenders Agent and each Lender harmless from any
claim, demand or liability for broker's or finder's or placement fees or
commissions alleged to have been incurred in connection with this Financing
Agreement, the Revolving Loans Promissory Note, the Term Loan Notes or the
transactions contemplated hereby or thereby.
17. Each party hereto shall do and perform or cause to be done and
performed all such further acts and things and shall execute and deliver all
such other agreements, certificates, instruments and documents as any other
party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Financing Agreement and the consummation of the
transactions contemplated hereby.
18. All of the obligations of the Borrower hereunder shall survive the
repayment of principal and interest under any loans or advances made or issued
hereunder.
SECTION 15. AGENCY
1. THE LENDERS AGENT. Each Lender hereby irrevocably designates and
appoints CITBC as Lenders Agent for the Lender(s) under this Financing Agreement
and any Loan Document and irrevocably authorizes CITBC as Agent for such Lender,
to take such action on its behalf under the provisions of the Financing
Agreement and all Loan Documents and to exercise such powers and perform such
duties as are expressly delegated to Lenders Agent by the terms of the Financing
Agreement and all Loan Documents together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Financing Agreement, Lenders Agent shall not have any duties
or responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into the
Financing Agreement, any other Loan Document.
2. DELEGATION OF DUTIES. Lenders Agent may execute any of its duties under
this Financing Agreement or any other Loan Document by or through agents or
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attorneys-in-fact and shall be entitled to the advice of counsel concerning all
matters pertaining to such duties.
3. EXCULPATORY PROVISIONS. Neither Lenders Agent nor any of its officers,
directors, employees, agents, or attorneys-in-fact shall be liable to any Lender
for any action lawfully taken or omitted to be taken by it or such person under
or in connection with the Financing Agreement or any other Loan Document (except
for its or such person's own gross negligence or willful misconduct), or
responsible in any manner to any of the Lender(s) for any recitals, statements,
representations or warranties made by Borrower or any officer thereof contained
in the Financing Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for in, or received
by Lenders Agent under or in connection with, the Financing Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of the Financing Agreement or any other Loan
Document or for any failure of Borrower to perform its obligations thereunder.
Lenders Agent shall not be under any obligation to any Lender to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, the Financing Agreement or any other Loan Document or to
inspect the properties, books or records of Borrower.
4. RELIANCE BY LENDERS AGENT. Lenders Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation reasonably
believed by it to be genuine and correct and to have been signed, sent or made
by the proper person or persons and upon advice and statements of legal counsel
(including, without limitation, an opinion of counsel to any Borrower or
Guarantor), independent accountants and other experts selected by Lenders Agent.
Lenders Agent shall be fully justified in failing or refusing to take any action
under the Financing Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Required
Lenders against any and all liability and expense which may be
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incurred by it by reason of taking or continuing to take any such action.
Lenders Agent shall in all cases be fully protected in acting, or in refraining
from acting, under the Financing Agreement or any other Loan Document in
accordance with a request of the Required Lenders and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lender(s).
5. NOTICE OF DEFAULT. Lenders Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default hereunder unless
Lenders Agent has received written notice from a Lender or Borrower describing
such Default or Event of Default. In the event that Lenders Agent receives such
a notice, Lenders Agent shall promptly give notice thereof to the Lender(s).
Lenders Agent shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required Lenders; provided that
unless and until Lenders Agent shall have received such direction, Lenders Agent
may in the interim (but shall not be obligated to) take such action, or refrain
from taking any such action, with respect to such Default or Event of Default as
it shall deem advisable and in the best interests of the Lender(s).
6. NON-RELIANCE ON LENDERS AGENT AND OTHER LENDER(S). Each Lender expressly
acknowledges that neither Lenders Agent nor any of its officers, directors,
employees, agents or attorneys-in-fact has made any representations or
warranties to it and that no act by Lenders Agent hereinafter taken, including
any review of the affairs of Borrower shall be deemed to constitute any
representation or warranty by Lenders Agent to any Lender. Each Lender
represents to Lenders Agent that it has, independently and without reliance upon
Lenders Agent or any other Lender and based on such documents and information as
it has deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of Borrower and made its own decision to enter into this
Financing Agreement and any other Loan Document. Each Lender also represents
that it will, independently and without reliance upon Lenders Agent or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis, appraisals and decisions
in taking or not taking action under the Financing
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Agreement or any other Loan Document and to make such investigation as it deems
necessary to inform itself as to the business, operations, property, financial
and other condition or creditworthiness of Borrower. Lenders Agent, however,
shall provide the Lender(s) with copies of all financial statements, projections
and business plans which come into the possession of Lenders Agent or any of its
officers, employees, agents or attorneys-in-fact.
7. INDEMNIFICATION. The Lender(s) agree to indemnify Lenders Agent in its
capacity as such (to the extent not reimbursed by Borrower and without limiting
the obligation of Borrower to do so), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time be
imposed on, incurred by or asserted against Lenders Agent in any way relating to
or arising out of the Financing Agreement, any other Loan Document or any
documents contemplated by or referred to herein or the transactions contemplated
hereby or any action taken or omitted by Lenders Agent under or in connection
with any of the foregoing; provided that no Lender shall be liable for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
solely from Lenders Agent's gross negligence or willful misconduct. The
agreements in this paragraph shall survive the payment of the Obligations.
8. LENDERS AGENT IN ITS INDIVIDUAL CAPACITY. Lenders Agent may make loans
to, and generally engage in any kind of business with Borrower as though Lenders
Agent were not Lenders Agent hereunder. With respect to its loans made or
renewed by it or loan obligations hereunder as Lender, Lenders Agent shall have
the same rights and powers, duties and liabilities under the Financing Agreement
as any Lender and may exercise the same as though it were not Lenders Agent and
the "Lender" and "Lenders" shall include Lenders Agent in its individual
capacity.
9. SUCCESSOR LENDERS AGENT. Lenders Agent may resign as Lenders Agent upon
30 days' notice to the Lender(s) and such resignation shall be effective upon
the appointment of a successor Lenders Agent. If Lenders Agent shall resign as
Lenders Agent, then the Required Lenders
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shall, appoint a successor agent for the Lenders whereupon such successor agent
shall succeed to the rights, powers and duties of Lenders Agent and the term
"Lenders Agent" shall mean such successor agent effective upon its appointment,
and the former Lenders Agent's rights, powers and duties as Lenders Agent shall
be terminated, without any other or further act or deed on the part of such
former Lenders Agent or any of the parties to this Financing Agreement. After
any retiring Lenders Agent's resignation hereunder as Lenders Agent the
provisions of this Section 16 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Lenders Agent.
10. AMENDMENTS CONCERNING AGENCY FUNCTION. Lenders Agent shall not be bound
by any waiver, amendment, supplement or modification of this Financing Agreement
or any other Loan Document which affects its duties hereunder or thereunder
unless it shall have given its prior consent thereto.
11. LIABILITY OF LENDERS AGENT. Lenders Agent shall not have any
liabilities or responsibilities to the Borrowers on account of the failure of
any Lender to perform its obligations hereunder or to any Lender on account of
the failure of Borrower to perform its obligations hereunder or under any other
Loan Document.
12. TRANSFER OF AGENCY FUNCTION. Without the consent of Borrower or any
Lender, Lenders Agent may at any time or from time to time transfer its
functions as Lenders Agent hereunder to any of its offices wherever located
within the U.S., provided that Lenders Agent shall promptly notify the Borrowers
and the Lender(s) thereof.
13. WITHHOLDING TAXES. Each Lender will furnish to Lenders Agent and to
Borrower such forms, certifications, statements and other documents as Lenders
Agent or Borrower may request from time to time to evidence such Lender's
exemption from withholding taxes imposed by any jurisdiction or to enable
Lenders Agent or Borrower to comply with any applicable laws or regulations
relating thereto. Without limiting the effect of the foregoing, if any Lender is
not created or organized under the laws of the United States of America or any
state thereof, such Lender will furnish to Lenders Agent and to Borrower two
copies of (i) Form 4224 or
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Form 1001 of the Internal Revenue Service, or such other forms, certifications,
statements or documents, duly executed and completed by such Lender as evidence
of such Lender's complete exemption from United States withholding taxes with
respect to any payments of interest made hereunder in respect of any loan or
such Lender's commitment to may any loan hereunder and (ii) new Forms 4224 or
1001, as applicable, or any successor forms thereto, upon the expiration or
obsolescence of any previously entered form.
SECTION 16. PARTICIPATIONS
1. PARTICIPATIONS IN LETTER OF CREDIT GUARANTIES. Subject to the terms and
conditions hereinafter set forth in this Section 16, CITBC hereby agrees to sell
and each Lender hereby agrees to purchase a participation ("Participation") from
CITBC in each Letter of Credit Guaranty to the extent of its Share (as such
percentage may be reduced or otherwise modified from time to time in accordance
with the terms of this Section 16).
Subject to the first paragraph of this Section, each Lender hereby
irrevocably and unconditionally agrees to purchase and CITBC hereby agrees to
sell and transfer to each Lender, an undivided fractional interest equal to such
Lender's Share in each Letter of Credit Guaranty upon issuance thereof and each
draw thereunder upon such drawing and the obligations of Borrower in respect of
each such Letter of Credit Guaranty.
Each Lender will be entitled to receive its Share of all Letter of Credit
Guaranty Fees paid by Borrower to CITBC. CITBC shall pay each Lender its Share
of each Letter of Credit Guaranty Fee within 5 days of receipt by CITBC of such
Fee.
2. SHARING IN COLLATERAL. In addition to the foregoing, each Lender hereby
purchases, and CITBC hereby sells to each Lender, an undivided fractional
interest equal to such Lender's Share in the Collateral and all the other Loan
Documents.
3. RELATIONSHIP FORMED. The relationship between CITBC (in its capacity as
seller of Participations pursuant to this Section 16) and each Lender (in its
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capacity as purchaser of Participations pursuant to this Section 16) is and
shall be that of a purchaser and seller of a property interest and not a
creditor-debtor relationship or joint venture.
4. PROCEDURES. Whenever a draw shall be made under a Letter of Credit
Guaranty and Borrower shall fail to reimburse CITBC therefor in accordance with
this Agreement, CITBC will promptly notify each Lender regarding such draw as
follows: (1) the date of such draw, and (2) the amount of such draw. Although
CITBC shall be responsible for paying each such draw on each Letter of Credit
Guaranty, each Lender shall bear its Share of the credit risk associated with
each such draw. Accordingly, in the event that the amount of any such draw is
not paid in full by or on behalf of Borrower when required in accordance with
the terms of this Financing Agreement, for any reason, CITBC shall give prompt
notice by telephone (promptly confirmed in writing) or telex to each Lender of
such event. Upon receipt of such telephone or telex notice, each Lender shall
cause to be transmitted to CITBC, to an account specified by CITBC an amount in
immediately available funds equivalent to its Share of such draw or payment.
5. COLLECTIONS AND REMITTANCES. Whenever CITBC receives any payment,
interest, reimbursement, collection, or recovery on account of a Letter of
Credit Guaranty whether from Borrower, the Collateral, or otherwise, it shall
allocate such receipts between each Lender and CITBC pro rata, with each such
Lender's percentage of the principal amount based on its Share.
6. RETURN OF PAYMENTS. If any payment received by CITBC, as the case may
be, and distributed or credited to a Lender is later rescinded or is otherwise
returned by CITBC, as the case may be, for whatever reason (including, without
limitation, settlement of an alleged claim), each such Lender, upon demand by
CITBC, shall immediately pay to CITBC, such Lender's Share of the principal
amount so returned plus interest and/or commission on such amount at the rate
required to be paid by CITBC. The covenants contained in this paragraph shall
survive the termination of this Financing Agreement.
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7. SHARING OF SETOFFS AND COLLECTIONS. Each Lender agrees that to the
extent any payment is received by it on any of Borrower's obligations under a
Letter of Credit Guaranty, whether by counterclaim, setoff, banker's lien, by
realizing on Collateral or otherwise and such payment results in such Lender
receiving a greater payment than it would have been entitled to under paragraph
5 above had the total amount of such payment been paid directly to CITBC, for
disbursement according to that paragraph, then such Lender shall immediately
purchase for cash from CITBC, an additional Participation and a participation
from the other Lenders in such Letter of Credit Guaranty, (subject to the same
terms and conditions provided for herein), sufficient in amount so that such
payment shall effectively be shared pro rata with CITBC, and the other Lenders
in accordance with the amount, and to the extent, of their respective interests
in the Letter of Credit Guaranties; provided, however, that if all or any
portion of such payment is thereafter recovered from such Lender at any time,
the purchase shall be rescinded and the purchase price returned to the extent
of such recovery, but without interest or other return thereof.
8. INDEMNIFICATION; COSTS AND EXPENSES. To the extent not reimbursed by
Borrower and without limiting the obligation of Borrower to do so, each Lender
agrees to reimburse CITBC, against, and hold CITBC, harmless from, on demand, to
the extent of each such Lender's Share of any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements of any kind whatsoever (including, without limitation,
disbursements necessary, in the judgment of CITBC, to preserve or protect the
Collateral), that may at any time be imposed on, incurred by, or asserted
against CITBC, in any way relating to this Financing Agreement, a Letter of
Credit, the Letter of Credit Guaranties or any other Loan Document or other
instrument relating to any of the foregoing, or the transactions contemplated
thereby and hereby, or any action taken or omitted by CITBC, under or in
connection with any of the foregoing; provided, however, that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, or
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disbursements resulting from CITBC's, gross negligence or willful misconduct.
The covenants contained in this paragraph 8 shall survive the termination of
this Financing Agreement.
9. ADMINISTRATION; STANDARD OF CARE. CITBC will administer each Letter of
Credit Guaranty and Letter of Credit in the ordinary course of business and in
accordance with its usual practices, modified from time to time as it deems
appropriate under the circumstances. CITBC shall be entitled to use its
discretion in taking or refraining from taking any actions in connection with
any of the foregoing as if it were the sole party involved in any of the
foregoing and no Participations existed.
Each Lender acknowledges that its Participations hereunder are without
recourse to CITBC and that each such Lender expressly assumes all risk of loss
in connection with its Participation in the Letter of Credit Guaranties, as if
such Lender had directly provided such Letter of Credit Guaranty. CITBC shall
have no liability express or implied, for any action taken or omitted to be
taken by CITBC or for any failure or delay in exercising any right or power
possessed by CITBC, under any of the Loan Documents except for actual losses, if
any, suffered by any Lender that are proximately caused by CITBC's gross
negligence or willful misconduct. Without limiting the foregoing, CITBC (1) may
consult with legal counsel, independent public accountants, appraisers, and
other experts, selected by CITBC and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
persons, (2) shall be entitled to rely on, and shall incur no liability by
acting upon, any conversation, notice, consent, certificate, statement, order,
or any document or other writing (including, without limitation, telegraph,
telex, telecopy, TWX, or other telecommunication device) believed by CITBC to be
genuine and correct and to have been signed, sent, or made by the proper person,
(3) makes no warranty or representation of any kind of character relating to
Borrower, or the Collateral, and shall not be responsible for any warranty or
representation made in or in connection with any of the Loan Documents, (4)
makes no warranty or representation as to, and shall not be responsible for the
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correctness as to form, the due execution, legality, validity, enforceability,
genuineness, sufficiency, or collectability of any of the Loan Documents, for
any failure by Borrower or any Person to perform its obligations thereunder, for
Borrower's use of the proceeds therefrom, or for the preservation of the
Collateral or the loss, depreciation, or release thereof, (5) makes no warranty
or representation as to, and assumes no responsibility for, the authenticity,
validity, accuracy, or completeness of any notice, financial statement, or other
document or information received by CITBC, or any Lender in connection with, or
otherwise referred to in, any of the Loan Documents, and (6) shall not be
required to make any inquiry concerning the observance or performance of any
agreement contained in, or conditions of, any of the Loan Documents, or to
inspect the property, books, or records of Borrower or any Person.
Notwithstanding the provisions of the first paragraph of this paragraph 9,
CITBC agrees that it will not knowingly take any of the following actions
without the written consent of each Lender: (1) extend the time of payment on
Borrower's obligations to CITBC with respect to any of the Letter of Credit
Guaranties for more than thirty (30) days after any due date or (2) reduce the
fees charged for the Letter of Credit Guaranties. CITBC shall be fully justified
in failing or refusing to take any action under any of the Loan Documents unless
it shall first receive such advice or concurrence of the Lenders as CITBC shall
deem appropriate.
CITBC may lend money to, accept deposits from, and generally engage in any
kind of business with Borrower as freely as though no Participations had been
granted to a Lender.
10. INDEPENDENT INVESTIGATION BY THE LENDERS. Each Lender acknowledges (1)
that it has made an informed judgment with respect to the desirability of
purchasing Participations in the Letter of Credit Guaranties, (2) that CITBC has
not made any representations or warranties to such Lender and that no prior or
future act by CITBC shall be deemed to constitute a representation or warranty
of CITBC
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and (3) that such Lender has independently, without reliance upon CITBC, and
based on such information as such Lender has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial condition, and general creditworthiness of the Borrower, made its own
analysis of the value and Lien status of any Collateral, and made its own
decision to execute this Financing Agreement and thereby purchase Participations
in accordance with this Financing Agreement. Each Lender agrees that,
independently and without reliance upon CITBC or any representations or
statements of CITBC, and based on such information as such Lender deems
appropriate at the time, it will continue to make and rely upon its own credit
analysis and decisions in taking or not taking any action under this Article 16
or any of the Loan Documents.
[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Financing Agreement
to be executed and delivered by their proper and duly authorized officers as of
the date set forth above. This Financing Agreement shall take effect as of the
date set forth above after being accepted below by an officer of CITBC after
which, CITBC shall forward to the Borrower a fully executed original for its
files.
Lender:
THE CIT GROUP/BUSINESS CREDIT, INC.
By \s\ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
Borrower:
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief
Executive Officer
Lenders Agent:
THE CIT GROUP/BUSINESS CREDIT, INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
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