CREDIT AND SECURITY AGREEMENT
THIS AGREEMENT is made as of February 4, 1997, by and between FBS
BUSINESS FINANCE CORPORATION, a Delaware corporation (the "Lender"), and
PREMIUMWEAR, INC., a Delaware corporation (the "Borrower").
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
1.1 DEFINITIONS. In addition to terms defined elsewhere in this
Agreement or any Supplement, Exhibit or Schedule hereto, the following terms
shall have the following respective meanings (and such meanings shall be equally
applicable to both the singular and plural forms of the terms defined, as the
context may require):
"Account Debtor": Any Person who is or who may become obligated to the
Borrower under, with respect to, or on account of an Account Receivable, General
Intangible or other Collateral.
"Account Receivable": Any account of the Borrower and any other right
of the Borrower to payment for goods sold or leased or for services rendered,
whether or not evidenced by an instrument or chattel paper and whether or not
yet earned by performance.
"Accounts Receivable Availability": The term "Accounts Receivable
Availability" shall have the meaning given such term in Supplement A.
"Adverse Event": The occurrence of any event that could have a material
adverse effect on the business, operations, property, assets or condition
(financial or otherwise) of the Borrower and the Subsidiaries as a consolidated
enterprise] or on the ability of the Borrower or any other Obligor to perform
its obligations under the Loan Documents.
"Affiliate" Any Person which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
the Lender, including, without limitation, FBNA. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of stock, by contract or otherwise.
"Agreement": This Credit and Security Agreement, as it may be amended,
modified, supplemented, restated or replaced from time to time.
"Application": An application by the Borrower, in a form and containing
terms and provisions acceptable to the Lender, for the issuance by the Lender,
or any Affiliate, of a Letter of Credit.
"Attorneys' Fees": The value of the services (and costs, charges and
expenses related thereto) of the attorneys employed by the Lender (including,
without limitation, attorneys and paralegals who are employees of the Lender or
any Affiliate) from time to time (a) in connection with the negotiation,
preparation, execution delivery, administration and enforcement of the Loan
Documents, (b) to prepare documentation related to the Loans and other
Obligations, (c) to represent the Lender in any litigation, contest, dispute,
suit or proceeding or to commence, defend or intervene in any litigation
contest, dispute, suit or proceeding or to file a petition, complaint, answer,
motion or other pleading, or to take any other action in or with respect to, any
litigation, contest, dispute, suit or proceeding (whether instituted by the
Lender, the Borrower or any other Person and whether in bankruptcy or otherwise)
in any way or respect relating to the Collateral, any Third Party Collateral,
the Loan Documents, or the Borrower's or any other Obligor's or any Subsidiary's
affairs, (d) to protect, collect, lease, sell, take possession of, or liquidate
any of the Collateral or any Third Party Collateral, (e) to attempt to enforce
any security interest in any of the Collateral or any Third Party Collateral or
to give any advice with respect to such enforcement, and (f) to enforce any of
the Lender's rights to collect any of the Obligations.
"Borrowing Base": The term "Borrowing Base" shall have the meaning
given such term in Supplement A.
"Borrowing Base Certificate": The term "Borrowing Base Certificate"
shall have the meaning given such term in Section 2.5(c).
"Business Day": Any day (other than a Saturday, Sunday or legal holiday
in the State of Minnesota) on which national banks are permitted to be open in
Minneapolis, Minnesota.
"Capital Expenditure": Any amount debited to the fixed asset account on
the consolidated balance sheet of the Borrower in respect of (a) the acquisition
(including, without limitation, acquisition by entry into a Capitalized Lease),
construction, improvement, replacement or betterment of land, buildings,
machinery, equipment or of any other fixed assets or leaseholds, and (b) to the
extent related to and not included in clause (a), materials, contract labor and
direct labor (excluding expenditures properly chargeable to repairs or
maintenance in accordance with GAAP).
"Capitalized Lease": Any lease which is or should be capitalized on the
books of the lessee in accordance with GAAP.
"Code": The Internal Revenue Code of 1986, as amended, or any successor
statute, together with the regulations thereunder.
"Collateral": The term "Collateral" shall have the meaning given such
term in Section 3.1.
"Collateral Account": The term "Collateral Account" shall have the
meaning given such term in Section 3.2(b).
"Controlled Disbursement Account": The term "Controlled Disbursement
Account" shall have the meaning given such term in Section 2.3(c).
"Credit": The facility established under this Agreement pursuant to
which the Lender will make Loans to the Borrower or issue, or cause any
Affiliate to issue, Letters of Credit for the account of the Borrower.
"Credit Amount": The term "Credit Amount" shall have the meaning given
such term in Supplement A.
"Default Rate": The term "Default Rate" shall have the meaning given
such term in Supplement A.
"Disbursement Account": The term "Disbursement Account" shall have the
meaning given such term in Section 2.3(b).
"EBITDA": For any period, the consolidated net income of the Borrower
and the Subsidiaries before provision for income taxes, interest expense
(including, without limitation, implicit interest expense on Capitalized
Leases), depreciation, amortization and other non-cash expenses or charges, all
as determined in accordance with GAAP, excluding therefrom (to the extent
included): (a) non-operating gains (including, without limitation, extraordinary
or nonrecurring gains, gains from discontinuance of operations and gains arising
from the sale of assets other than Inventory) during the applicable period; and
(b) similar non-operating losses during such period.
"Eligible Account Receivable": An Account Receivable owing to the
Borrower which meets the following requirements:
(a) it is genuine and in all respects what it purports to be;
(b) it arises from either (i) the performance of services by
the Borrower, which services have been fully performed and, if
applicable, acknowledged and/or accepted by the Account Debtor with
respect thereto; or (ii) the sale or lease of goods by the Borrower and
(A) such goods comply with such Account Debtor's specifications (if
any) and have been shipped to, or delivered to and accepted by, such
Account Debtor, (B) the Borrower has possession of, or has delivered to
the Lender, at the Lender's request, shipping and delivery receipts
evidencing such shipment, delivery and acceptance, and (C) such goods
have not been returned to the Borrower;
(c) it (i) is evidenced by an invoice rendered to the Account
Debtor with respect thereto which (A) is dated not earlier than the
date of shipment or performance and (B) has payment terms not
unacceptable to the Lender; and (ii) meets the Eligible Account
Receivable requirements set forth in Supplement A;
(d) it is not subject to any assignment, claim or Lien other
than (i) a Lien in favor of the Lender and (ii) Liens consented to by
the Lender in writing;
(e) it is a valid, legally enforceable and unconditional
obligation of the Account Debtor with respect thereto and is not
subject to setoff, counterclaim, credit or allowance (except any credit
or allowance which has been deducted in computing the net amount of the
applicable invoice as shown in the original schedule or Borrowing Base
Certificate furnished to the Lender identifying or including such
Account Receivable) or adjustment by the Account Debtor with respect
thereto, or to any claim by such Account Debtor denying liability
thereunder in whole or in part, and such Account Debtor has not refused
to accept any of the goods or services which are the subject of such
Account Receivable or offered or attempted to return any of such goods;
(f) there are no proceedings or actions which are then
threatened or pending against the Account Debtor with respect thereto
or to which such Account Debtor is a party which might result in any
material adverse change in such Account Debtor's financial condition or
in its ability to pay any Account Receivable in full when due;
(g) it does not arise out of a contract or order which, by its
terms, forbids, restricts or makes void or unenforceable the assignment
by the Borrower to the Lender of such Account Receivable;
(h) the Account Debtor with respect thereto is not a
Subsidiary, Related Party or Obligor, or a director, officer, employee
or agent of the Borrower, a Subsidiary, Related Party or Obligor;
(i) the Account Debtor with respect thereto is a resident or
citizen of and is located within the United States of America or Canada
unless the sale of goods giving rise to such Account Receivable is on
letter of credit, banker's acceptance or other credit support terms
satisfactory to the Lender;
(j) it does not arise from a "sale on approval," "sale or
return" or "consignment," nor is it subject to any other repurchase or
return agreement;
(k) it is not an Account Receivable with respect to which
possession and/or control of the goods sold giving rise thereto is
held, maintained or retained by the Borrower, any Subsidiary, Related
Party or Obligor (or by any agent or custodian of the Borrower, any
Subsidiary, Related Party or Obligor) for the account of or subject to
further and/or future direction from the Account Debtor with respect
thereto;
(l) it does not, in any way, fail to meet or violate any
warranty, representation or covenant contained in the Loan Documents
relating directly or indirectly to the Borrower's Accounts Receivable;
(m) the Account Debtor with respect thereto is not located in
the States of Indiana, New Jersey or Minnesota, provided, however, that
such restriction shall not apply if (i) the Borrower has filed and has
effective a Notice of Business Activities Report with the appropriate
office or agency of the States of Indiana, New Jersey or Minnesota, as
applicable, for the then current year or (ii) the Borrower is exempt
from the filing of such report;
(n) it arises in the ordinary course of the Borrower's
business;
(o) if the Account Debtor with respect thereto is the United
States of America or any department, agency or instrumentality thereof,
the Borrower has assigned its right to payment of such Account
Receivable to the Lender pursuant to the Assignment of Claims Act of
1940 as amended;
(p) if the Lender, in its sole and absolute discretion, has
established a credit limit for the Account Debtor with respect thereto,
the aggregate dollar amount of Accounts Receivable due from such
Account Debtor, including such Account Receivable, does not exceed such
credit limit; and
(q) if it is evidenced by chattel paper or instruments, (i)
the Lender shall have specifically agreed to include such Account
Receivable as an Eligible Account Receivable, (ii) only payments then
due and payable under such chattel paper or instrument shall be
included as an Eligible Account Receivable and (iii) the originals of
such chattel paper or instruments have been assigned and delivered to
the Lender in a manner satisfactory to the Lender.
An Account Receivable which is at any time an Eligible Account Receivable but
which subsequently fails to meet any of the foregoing requirements shall
forthwith cease to be an Eligible Account Receivable. Further, with respect to
any Account Receivable, if the Lender at any time or times hereafter determines,
in its sole and absolute discretion, that the prospect of payment or performance
by the Account Debtor with respect thereto is or will be impaired for any reason
whatsoever, notwithstanding anything to the contrary contained above, such
Account Receivable shall forthwith cease to be an Eligible Account Receivable.
"Eligible Inventory": Inventory of the Borrower which meets the
following requirements:
(a) it is owned by the Borrower and is not subject to any
prior assignment, claim or Lien other than (i) a Lien in favor of the
Lender and (ii) Liens consented to by the Lender in writing;
(b) if held for sale or lease or furnishing under contracts of
service, it is (except as the Lender may otherwise consent in writing)
new and unused;
(c) except as the Lender may otherwise consent, it is not
stored with a bailee, warehouseman or similar party; if so stored with
the Lender's consent, such bailee, warehouseman or similar party has
issued and delivered to the Lender, in form and substance acceptable to
the Lender, such documents and agreements as the Lender may require,
including, without limitation, warehouse receipts therefor in the
Lender's name;
(d) the Lender has determined, in its sole and absolute
discretion, that it is not unacceptable due to age, type, category,
quality and/or quantity;
(e) it is not held by the Borrower on "consignment" and is not
subject to any other repurchase or return agreement;
(f) it complies with all standards imposed by any governmental
agency having regulatory authority over such goods and/or their use,
manufacture or sale;
(g) it does not, in any way, fail to meet or violate any
warranty, representation or covenant contained in the Loan Documents
relating directly or indirectly to the Borrower's Inventory; and
(h) it satisfies the Eligible Inventory requirements, if any,
set forth in Supplement A.
Inventory of the Borrower which is at any time Eligible Inventory but which
subsequently fails to meet any of the foregoing requirements shall forthwith
cease to be Eligible Inventory.
"Environmental Laws": The Resource Conservation and Recovery Act of
1987, the Comprehensive Environmental Response, Compensation and Liability Act,
any so-called "Superfund" or "Superlien" law, the Toxic Substances Control Act,
and any other federal, state or local statue, law, ordinance, code, rule,
regulation, order or decree regulating, relating to, or imposing liability or
standards of conduct concerning any Hazardous Materials or other hazardous,
toxic or dangerous waste, substance or constituent, or other substance, whether
solid, liquid or gas, as now or at any time hereafter in effect.
"Environmental Lien": A Lien in favor of any governmental entity for
(a) any liability under any Environmental Law, or (b) damages arising from or
costs incurred by such governmental entity in response to a spillage, disposal,
or release into the environment of any Hazardous Material or other hazardous,
toxic or dangerous waste, substance or constituent, or other substance.
"Equipment": All equipment of the Borrower of every description,
including, without limitation, fixtures, furniture, vehicles and trade fixtures,
together with any and all accessions, parts and equipment attached thereto or
used in connection therewith, and any substitutions therefor and replacements
thereof.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended, or any successor statute, together with the regulations thereunder.
"ERISA Affiliate": Any trade or business (whether or not incorporated)
that is a member of a group of which the Borrower is a member and which is
treated as a single employer under Section 414 of the Code.
"Event of Default": The term "Event of Default" shall have the meaning
given such term in Section 7.1.
"FBNA": First Bank National Association, a national banking association
having its offices at First Bank Place, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
"Federal Reserve Board": The Board of Governors of the Federal Reserve
System or any successor thereto.
"GAAP": Generally accepted accounting principles promulgated by the
Financial Accounting Standards Board, as applied in the preparation of the
audited financial statement of the Borrower referred to in Section 4.6.
"General Intangibles": All of the Borrower's intangible personal
property including things in action, causes of action and all other personal
property of the Borrower of every kind and nature (other than goods, accounts,
chattel paper, documents, instruments and money) including, without limitation,
corporate or other business records, inventions, designs, patents, patent
applications, trademarks, trademark applications, trade names, trade secrets,
goodwill, copyrights, registrations, licenses, franchises, customer lists, tax
refund claims, claims against carriers and shippers, guarantee claims, security
interests, security deposits or other security held by or granted to the
Borrower to secure payment by an Account Debtor of any of the Accounts
Receivable, any other rights to payment, including, without limitation, rights
to reimbursement or indemnification, and any other rights of whatsoever nature.
"Hazardous Materials": Any hazardous substance or pollutant or
contaminant defined as such in (or for the purposes of) any Environmental Law
including, without limitation, petroleum, including crude oil or any fraction
thereof which is liquid at standard conditions of temperature or pressure (60
degrees fahrenheit and 14.7 pounds per square inch absolute), any radioactive
material, including any source, special nuclear or by-product material as
defined at 42 U.S.C. section 2011 et. seq., as amended or hereafter amended, and
asbestos in any form or condition.
"Indebtedness": Without duplication, all obligations, contingent or
otherwise, which in accordance with GAAP should be classified upon the obligor's
balance sheet as liabilities, but in any event including the following (whether
or not they should be classified as liabilities upon such balance sheet): (a)
any obligation secured by any mortgage, pledge, security interest, lien, charge
or other encumbrance existing on property owned or acquired subject thereto,
whether or not such obligation shall have been assumed and whether or not such
obligation is the obligation of the owner or another party; (b) any obligation
on account of deposits or advances; (c) any obligation for the deferred purchase
price of any property or services, except accounts payable arising in the
ordinary course of business; (d) any obligation as lessee under any Capitalized
Lease; (e) any guaranty, endorsement or other contingent obligation in respect
to Indebtedness of others; and (f) any undertaking or agreement to reimburse or
indemnify issuers of letters of credit. For all purposes of this Agreement, the
Indebtedness of any Person shall include the Indebtedness of any partnership or
joint venture in which such Person is a general partner or a joint venturer.
"Indemnified Liabilities": The term "Indemnified Liabilities" shall
have the meaning given such term in Section 10.2.
"Indemnitees": The term "Indemnitees" shall have the meaning given such
term in Section 10.2.
"Inventory": Any and all of the Borrower's goods, including, without
limitation, goods in transit, wheresoever located which are or may at any time
be leased by the Borrower to a lessee, held for sale or lease, furnished under
any contract of service or held as raw materials, work in process, or supplies
or materials used or consumed in the Borrower's business, or which are held for
use in connection with the manufacture, packing, shipping, advertising, selling
or finishing of such goods, and all goods, the sale or other disposition of
which has given rise to an Account Receivable, which are returned to and/or
repossessed and/or stopped in transit by the Borrower or the Lender, or at any
time hereafter in the possession or under the control of the Borrower or the
Lender, or any agent or bailee of either thereof, and all documents of title or
other documents representing the same.
"Inventory Availability": The term "Inventory Availability" shall have
the meaning given such term in Supplement A.
"Investment": The acquisition, purchase, making or holding of any stock
or other security, any loan, advance, contribution to capital, extension of
credit (except for trade and customer accounts receivable for inventory sold or
services rendered in the ordinary course of business and payable in accordance
with customary trade terms), any acquisitions of real and personal property
(other than real and personal property acquired in the ordinary course of
business) and any purchase or commitment or option to purchase stock or other
debt or equity securities of, or any interest in, another Person or any integral
part of any business or the assets comprising such business or part thereof.
"L/C Draft": A draft drawn on the Lender, or any Affiliate, pursuant to
a Letter of Credit.
"Letter of Credit": A letter of credit issued by the Lender, or any
Affiliate, on the Application of the Borrower.
"Letter of Credit Obligations": An amount equal to the aggregate of the
original face amounts of all Letters of Credit minus the sum of (a) the amount
of any reduction(s) in the original face amount of any Letter of Credit which
did not result from a draw made under such Letter of Credit, (b) the amount of
any payments made by the Lender, or any Affiliate, with respect to a Letter of
Credit or L/C Draft for which the Borrower has reimbursed the Lender, or such
Affiliate, and (c) the undrawn portion of any issued, but expired, Letter of
Credit plus the amount of any increase(s) in the original face amount of any
Letter of Credit. For purposes of determining the outstanding Letter of Credit
Obligations at any time, the Lender's, or any Affiliate's, acceptance of an L/C
Draft shall constitute a draw on the applicable Letter of Credit at the time of
such acceptance.
"Letter of Credit Sublimit": The term "Letter of Credit Sublimit" shall
have the meaning given such term in Supplement A.
"Lien": Any security interest, mortgage, pledge, lien, hypothecation,
judgment lien or similar legal process, charge, encumbrance, title retention
agreement or analogous instrument or device (including, without limitation, the
interest of lessors under Capitalized Leases and the interest of a vendor under
any conditional sale or other title retention agreement).
"Loan": A Loan referred to in Section 2.1 and any other loans or
advances made to the Borrower by the Lender under or pursuant to this Agreement.
"Loan Account": The term "Loan Account" shall have the meaning given
such term in Section 2.3(a).
"Loan Availability": The lesser of (a) the Credit Amount minus the
Letter of Credit Obligations and (b) the Borrowing Base minus the Letter of
Credit Obligations.
"Loan Documents": This Agreement, any Note, [other documents] and each
other instrument, document, guaranty, mortgage, deed of trust, chattel mortgage,
pledge, power of attorney, consent, assignment, contract, notice, security
agreement, lease, financing statement, subordination agreement, trust account
agreement, or other agreement executed and delivered by the Borrower or any
guarantor or party granting security interests in connection with this
Agreement, the Loans or the Collateral.
"Net Worth": At any determination date, the total of all assets
appearing on a consolidated balance sheet of the Borrower at such date, prepared
in accordance with GAAP, after deducting all proper reserves (including reserves
for depreciation, obsolescence and amortization) minus all liabilities which in
accordance with GAAP would be included on the liability side of a consolidated
balance sheet.
"Note": Any promissory note of the Borrower evidencing any loan or
advance (including but not limited to the Loans) made by the Lender to the
Borrower pursuant to this Agreement.
"Obligations": All of the liabilities, obligations and indebtedness of
the Borrower to the Lender, or any Affiliate, of any kind or nature, however
created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing or due or to become due, and including,
without limitation, (a) the Borrower's obligations under the Loan Documents,
including obligations of performance, (b) the Borrower's obligations with
respect to any Letter of Credit or any Application, and (c) interest, charges,
expenses, Attorneys' Fees and other sums chargeable to the Borrower by the
Lender under the Loan Documents. "Obligations" shall also include any and all
amendments, extensions, renewals, refundings or refinancings of any of the
foregoing.
"Obligor": The Borrower and each other Person who is or shall become
primarily or secondarily liable on any Obligations or who grants to the Lender a
Lien on any property of such Person as security for any Obligations.
"Occupational Safety and Health Law": The Occupational Safety and
Health Act of 1970 and any other federal, state or local statute, law,
ordinance, code, rule, regulation, order or decree regulating, relating to or
imposing liability or standards of conduct concerning employee health and/or
safety.
"Over Advance": The term "Over Advance" shall have the meaning given
such term in Section 2.8.
"Overdraft Loan": The term "Overdraft Loan" shall have the meaning
given such term in Section 2.7.
"Participant": Any Person, now or at any time or times hereafter,
participating with the Lender in the Loans made to the Borrower hereunder.
"PBGC": The Pension Benefit Guaranty Corporation, established pursuant
to Subtitle A of Title IV of ERISA, or any successor thereto or to the functions
thereof.
"Person": Any natural person, corporation, partnership, joint venture,
firm, association, trust, unincorporated organization, government or
governmental agency or political subdivision thereof, or any other entity,
whether acting in an individual, fiduciary or other capacity.
"Plan": An employee benefit plan or other plan, maintained for
employees of the Borrower or of any ERISA Affiliate, and subject to Title IV of
ERISA or Section 412 of the Code.
"Reference Rate": The rate of interest from time to time publicly
announced by FBNA as its "reference rate." The Lender may lend to its customers
at rates that are at, above or below the Reference Rate. For purposes of
determining any interest rate which is based on the Reference Rate, such
interest rate shall change on the effective date of any change in the Reference
Rate.
"Related Party": Any Person (other than a Subsidiary): (a) which
directly or indirectly, through one of more intermediaries, controls, is
controlled by or is under common control with, the Borrower, (b) which
beneficially owns or holds 5% or more of the equity interest of the Borrower, or
(c) 5% or more of the equity interest of which is beneficially owned or held by
the Borrower or a Subsidiary. The term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Reportable Event": A reportable event, as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC, by regulation, has waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event; provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and Section 302 of ERISA
shall be a reportable event regardless of the issuance of any such waivers in
accordance with Section 412(d) of the Code.
"Subordinated Debt": That portion of any liabilities, obligations or
Indebtedness of the Borrower which contains terms satisfactory to the Lender and
is subordinated, in a manner satisfactory to the Lender, as to right and time of
payment of principal and interest thereon, to any and all Obligations.
"Subsidiary": Any Person of which or in which the Borrower and its
other Subsidiaries own directly or indirectly 50% or more of: (a) the combined
voting power of all classes of stock having general voting power under ordinary
circumstances to elect a majority of the board of directors of such Person, if
it is a corporation, (b) the capital interest or profits interest of such
Person, if it is a partnership, joint venture or similar entity, or (c) the
beneficial interest of such Person, if it is a trust, association or other
unincorporated organization.
"Supplemental Documentation": The term "Supplemental Documentation"
shall have the meaning given such term in Section 3.5.
"Taxes": With respect to any Person means taxes, assessments or other
governmental charges or levies imposed upon such Person, its income or any of
its properties, franchises or assets.
"Termination Date": The term "Termination Date" shall have the meaning
given such term in Supplement A.
"Third Party Collateral": Any property of any Person other than the
Borrower which secures payment or performance of any Obligations.
"UCC": The Uniform Commercial Code as in effect in the State of
Minnesota and any successor statute, together with any regulations thereunder,
in each case as in effect from time to time. References to sections of the UCC
shall be construed to also refer to any successor sections.
"Unmatured Event of Default": Any event which, with the giving of
notice to the Borrower or lapse of time, or both, would constitute an Event of
Default.
"Unused Credit Amount": The Credit Amount (as determined as of the last
day of each month for the month ending on such date) minus the sum of (a) the
outstanding principal balance of the Loans plus (b) the Letter of Credit
Obligations.
1.2 ACCOUNTING TERMS AND CALCULATIONS. Except as may be expressly
provided to the contrary herein, all accounting terms used herein or in any
certificate or other document made or delivered pursuant hereto shall be
interpreted and all accounting determinations hereunder (including, without
limitation, determination of compliance with financial ratios and restrictions
in Articles V and VI) shall be made in accordance with GAAP consistently
applied, using a first in first out method of Inventory valuation. Any reference
to "consolidated" financial terms shall be deemed to refer to those financial
terms as applied to the Borrower and the Subsidiaries in accordance with GAAP.
1.3 OTHER DEFINITIONAL PROVISIONS. Unless otherwise defined herein, all
terms defined in this Agreement shall have such defined meanings when used in
any other Loan Document. Terms used in this Agreement which are defined in any
Supplement, Exhibit or Schedule hereto shall, unless the context otherwise
indicates, have the meanings given them in such Supplement, Exhibit or Schedule.
Other terms used in this Agreement shall, unless the context otherwise
indicates, have the meanings given such terms in the Minnesota Uniform
Commercial Code to the extent the same are used or defined therein. The words
"hereof," "herein," and "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. Reference to "this Agreement" shall
include the provisions of Supplement A. References to Sections, Exhibits,
Schedules and like references are to this Agreement unless otherwise expressly
provided. Section captions used in this Agreement are for convenience only, and
shall not affect the construction of this Agreement.
ARTICLE II CREDIT; LETTERS OF CREDIT; OTHER MATTERS
2.1 LOANS.
(a) Subject to the terms and conditions of the Loan Documents,
and in reliance upon the warranties of the Borrower set forth herein
and in the other Loan Documents, the Lender agrees to make such loans
or advances (individually, a "Loan" and collectively, the "Loans") to
the Borrower as the Borrower may from time to time request, up to but
not in excess of the Loan Availability. Loans made by the Lender may be
repaid and, subject to the terms and conditions hereof, reborrowed to
the Termination Date unless the Credit extended under this Agreement is
otherwise terminated as provided in this Agreement.
(b) In the event the aggregate outstanding principal balance
of the Loans exceeds the Loan Availability, the Borrower shall, unless
the Lender shall otherwise consent, immediately and without notice of
any kind, make such payments or take such other action as shall be
necessary to eliminate such excess.
(c) All Loans and other Obligations hereunder shall be paid by
the Borrower on the Termination Date, unless payable sooner pursuant to
the provisions of this Agreement, but may, at the Borrower's election
and subject to the provisions of Supplement A, be repaid in whole or in
part at any time prior to such date without premium or penalty.
Recourse to Collateral, Third Party Collateral or other security is not
required at any time.
2.2 LETTERS OF CREDIT.
(a) In addition to Loans made pursuant to Section 2.1, the
Lender, or any Affiliate, may, upon receipt of duly executed
Applications and such other documents, instruments and/or agreements as
the Lender, or such Affiliate, may require, issue Letters of Credit on
such terms as are satisfactory to the Lender; provided, however, that
no Letter of Credit will be issued if, before or after taking such
Letter of Credit into account, the Letter of Credit Obligations exceeds
the least of (i) the Letter of Credit Sublimit, (ii) the Credit Amount
minus the outstanding principal balance of the Loans and (iii) the
Borrowing Base minus the outstanding principal balance of the Loans.
(b) The Borrower agrees to pay the Lender, or any Affiliate,
on demand, the Lender's, or such Affiliate's, standard administrative
operating fees and charges in effect from time to time for issuing and
administering any Letters of Credit. The Borrower further agrees to pay
the Lender, or any Affiliate, a commission on the undrawn amount of
each Letter of Credit and on each L/C Draft accepted by the Lender, or
such Affiliate, in the amount indicated in Supplement A. Such
commissions shall be paid at such frequency as the Lender, or such
Affiliate, shall determine.
(c) The Borrower agrees to reimburse the Lender, or any
Affiliate, on demand for each payment made by the Lender, or such
Affiliate, under or pursuant to any Letter of Credit or L/C Draft. The
Borrower further agrees to pay to the Lender, or any Affiliate, on
demand, interest at the Default Rate, on any amount paid by the Lender,
or such Affiliate, under or pursuant to any Letter of Credit or L/C
Draft from the date of payment until the date of reimbursement to the
Lender, or such Affiliate.
(d) Notwithstanding anything to the contrary herein or in any
Application of the Borrower, upon the occurrence of an Event of
Default, or on the Termination Date, an amount equal to the aggregate
amount of the outstanding Letter of Credit Obligations shall, at the
Lender's option and without further notice to the Borrower, be deemed
(as between the Lender and the Borrower) to have been paid or disbursed
by the Lender under the Letters of Credit and L/C Drafts accepted by
the Lender, or any Affiliate, notwithstanding that such amounts may not
in fact have been so paid or disbursed, and a Loan to the Borrower, in
the amount of such Letter of Credit Obligations, to have been made and
accepted, which Loan shall be immediately due and payable. In lieu of
the foregoing, at the election of the Lender, the Borrower shall, upon
the Lender's demand, deliver to the Lender, or any Affiliate, cash or
other Collateral of a type satisfactory to the Lender, or such
Affiliate, having a value, as determined by the Lender, or such
Affiliate, equal to the aggregate Letter of Credit Obligations. Any
such Collateral and/or any amounts received by the Lender, or any
Affiliate, in payment of the Loan made pursuant to this paragraph (d)
shall be held by the Lender, or such Affiliate, in the Collateral
Account or a separate account appropriately designated as a cash
collateral account in relation to this Agreement and the Letters of
Credit and retained by the Lender, or such Affiliate, as collateral
security for the Obligations and each of the Letters of Credit and L/C
Drafts. Such amounts shall not be used by the Lender, or any Affiliate,
to pay any amounts drawn or paid under or pursuant to any Letter of
Credit or L/C Draft but may be applied to reimburse the Lender, or any
Affiliate, for drawings or payments under or pursuant to Letters of
Credit or L/C Drafts which the Lender, or such Affiliate, has paid or,
if no such reimbursement is required, to payment of such other
Obligations as the Lender shall determine. Following payment in full of
all Obligations, any amounts remaining in any cash collateral account
established pursuant to this paragraph (d) which are not (as determined
by the Lender) to be applied to reimburse the Lender, or any Affiliate,
for amounts actually paid by the Lender, or such Affiliate, in respect
of a Letter of Credit or L/C Draft shall be returned to the Borrower
(after deduction of the Lender's, or such Affiliate's expenses).
2.3 LOAN ACCOUNT; DISBURSEMENT ACCOUNT; CONTROLLED DISBURSEMENT
ACCOUNT.
(a) LOAN ACCOUNT. The Lender shall establish or cause to be
established on its books in the Borrower's name one or more accounts
(each, a "Loan Account") to evidence Loans made to the Borrower. Any
amounts advanced as Loans which are credited to the Disbursement
Account, together with any other amounts advanced to the Borrower as a
Loan pursuant to this Agreement, will be debited to the applicable Loan
Account and result in an increase in the principal balance outstanding
in such Loan Account in the amount thereof.
(b) DISBURSEMENT ACCOUNT. Unless otherwise provided in this
Agreement, the Lender will credit or cause to be credited to a
commercial account (the "Disbursement Account") maintained by the
Borrower at FBNA's First Bank Place, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ office the amount of any sums
advanced as Loans.
(c) CONTROLLED DISBURSEMENT ACCOUNT. The Borrower shall
maintain a commercial account (the "Controlled Disbursement Account")
with First Bank, East Grand Forks, Minnesota into which deposits from
the Disbursement Account may be authorized by the Borrower and/or the
Lender and from which the Borrower may draw checks for corporate
purposes.
2.4 INTEREST; FEES.
(a) INTEREST. The outstanding principal balance of each Loan
to the Borrower hereunder shall bear interest at the rate(s) applicable
to such Loan indicated in Supplement A; provided, however, that no
provision of this Agreement or any Note shall require the payment or
permit the collection of interest in excess of the rate permitted by
applicable law. Interest as aforesaid shall be charged for the actual
number of days elapsed over a year consisting of 360 days on the actual
daily balance of such Loan. Interest on the unpaid principal of any
Loan shall accrue from the date such Loan is made to the date such Loan
is paid. Interest shall be paid by the Borrower on the last day of each
month, commencing on the first such day to occur after the date hereof,
and on maturity. After maturity of any Loan, whether by acceleration or
otherwise, interest shall be payable on demand.
(b) INTEREST AFTER DEFAULT. At any time that an Event of
Default has occurred and is continuing, the outstanding principal
amount of all Loans, all past due fees and other sums payable to the
Lender or any Affiliate hereunder or under any other Loan Document
shall bear interest at the Default Rate.
(c) COMMITMENT FEE. The Borrower shall pay to the Lender a
commitment fee for the period from the date hereof to the date the
Credit terminates in the amount indicated in Supplement A. The
commitment fee shall be charged for the actual number of days elapsed
over a year consisting of 360 days on the actual daily balance of the
Loans. The commitment fee shall be paid by the Borrower on the last day
of each March, June, September and December, commencing on the first
such day to occur after the date hereof, and on the date the Credit
terminates for the period then ended.
(d) CREDIT TERMINATION FEE. . Upon termination or cancellation
of the Credit by the Borrower, the Borrower shall pay to the Lender a
termination fee in the amount indicated in Supplement A.
2.5 REQUESTS FOR LOANS; BORROWING BASE CERTIFICATES; OTHER INFORMATION.
(a) Loans shall be requested by telephone, except for
Overdraft Loans. Any such telephonic notice shall be promptly confirmed
by the Borrower in writing. The Borrower's failure to confirm any such
telephonic notice or otherwise comply with the provisions of this
Section 2.5(a) shall not in any manner affect the obligation of the
Borrower to repay such Loan in accordance with the terms of this
Agreement.
(b) In the event that the Borrower shall at any time, or from
time to time, (i) make a request for a Loan, or (ii) be deemed to have
requested an Overdraft Loan, the Borrower agrees to forthwith provide
the Lender with such information, at such frequency and in such format,
as is required by the Lender, such information to be current as of the
time of such request.
(c) The Borrower further agrees to provide to the Lender a
current borrowing base certificate ("Borrowing Base Certificate") at
the end of (i) each week when either (A) the Loan Availability is less
than $1,000,000, or (B) the outstanding balance of the Loans plus all
Letter of Credit Obligations exceeds $3,000,000, in each case
accompanied by an aging of Accounts Receivable, (ii) each month when
the provisions of clause (i) do not apply, and (iii) at such other
times as the Lender may request. Such Borrowing Base Certificate shall
be in substantially the form of Exhibit A, executed and certified as
accurate by such person or persons as the Borrower designates in
writing to the Lender pursuant to duly adopted resolutions of the
Borrower's Board of Directors authorizing such action.
(d) The Borrower shall provide the Lender with documentation
satisfactory to the Lender indicating the names of those employees of
the Borrower authorized by the Borrower to sign Borrowing Base
Certificates, among other things, and/or to make a telephone request
for a Loan, and/or to authorize disbursement of the proceeds of a Loan
by wire transfer or otherwise, and the Lender shall be entitled to rely
upon such documentation until notified in writing by the Borrower of
any change(s) in the names of persons so authorized. The Lender shall
be entitled to act on the instructions of anyone identifying himself as
one of the persons authorized to request Loans or disbursements of Loan
proceeds by telephone and the Borrower shall be bound thereby in the
same manner as if the person were actually so authorized. The Borrower
agrees to indemnify and hold the Lender harmless from any and all
claims, damages, liabilities, losses, costs and expenses (including
Attorneys' Fees) which may arise or be created by the acceptance of
instructions for making or paying Loans or wire transfers by telephone.
2.6 NOTES. Except to the extent a Loan may, in the Lender's sole and
absolute discretion, be evidenced by a Note, all Loans and payments hereunder
shall be recorded on the Lender's books, which shall be rebuttable presumptive
evidence of the amount of such Loans outstanding at any time hereunder. The
Lender will account monthly as to all Loans and payments hereunder and each
monthly accounting will be fully binding on the Borrower unless, within 15 days
following the Borrower's receipt thereof, the Borrower shall provide the Lender
with a specific listing of exceptions. Notwithstanding any term or condition of
this Agreement to the contrary, the failure of the Lender to record the date and
amount of any Loan shall not limit or otherwise affect the obligation of the
Borrower to repay any such Loan.
2.7 OVERDRAFT LOANS. The Lender, in its sole and absolute discretion
and subject to the terms hereof, may make a Loan to the Borrower in an amount
equal to the amount of any overdraft which may from time to time exist with
respect to the Disbursement Account or any other bank account which the Borrower
may now or hereafter have with FBNA or any other Affiliate. The existence of
such overdraft shall be deemed to be a request by the Borrower for such Loan.
The Borrower acknowledges that the Lender is under no duty or obligation to make
any Loan to the Borrower to cover any overdraft. The Borrower further agrees
that an overdraft shall constitute a separate Loan under this Agreement (an
"Overdraft Loan"), which shall bear, from the date on which the overdraft
occurred until paid, interest in an amount equal to the greater of 130% of the
highest rate of interest then charged for Loans (other than Overdraft Loans)
made hereunder, or $50.00 per day. If the Lender, in its sole and absolute
discretion, decides not to make a Loan to cover part or all of any overdraft,
the Lender may return any check(s) which created such overdraft.
2.8 OVER ADVANCES. The Lender, in its sole and absolute discretion, may
make Loans to the Borrower, either at the Borrower's request or to pay amounts
due to the Lender under this Agreement or any other Loan Document, in excess of
the Loan Availability or permit the total Loans to at any time exceed the Loan
Availability (such excess Obligations are hereinafter referred to as "Over
Advances") and no such event or occurrence shall cause or constitute a waiver by
the Lender of its right to refuse to make any further Loan or issue, or cause to
be issued, any Letters of Credit at any time that an Over Advance exists or
would result therefrom. During any period in which an Over Advance exists, the
amount of the Over Advances shall bear interest at a rate equal to 130% of the
highest rate of interest then charged for Loans (other than Overdraft Loans)
made hereunder.
2.9 ALL LOANS ONE OBLIGATION. All Loans under this Agreement shall
constitute one Loan, and all Indebtedness and other Obligations shall constitute
one general obligation secured by the Lien granted by the Borrower hereunder on
all of the Collateral and by all other Liens heretofore, now or at any time or
times hereafter granted by the Borrower or any other Obligor to secure the
Obligations. The Borrower agrees that all of the rights of the Lender set forth
in the Loan Documents shall, unless otherwise agreed to in writing, apply to any
modification of or supplement to the Loan Documents.
2.10 MAKING OF PAYMENTS; APPLICATION OF COLLECTIONS; CHARGING OF
ACCOUNTS.
(a) All payments hereunder (including payments with respect to
any Notes) shall be made without set-off or counterclaim and shall be
made to the Lender in immediately available funds (or as the Lender may
otherwise consent) prior to 12:30 p.m., Minneapolis time, on the date
due at its office at First Bank Place, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or at such other place as may be
designated by the Lender to the Borrower in writing. Any payments
received after such time shall be deemed received on the next Business
Day. Whenever any payment to be made hereunder or under any Note shall
be stated to be due on a date other than a Business Day such payment
may be made on the next succeeding Business Day and such extension of
time shall be included in the computation of payment of interest or any
fees.
(b) The Borrower authorizes the Lender to, and the Lender
will, subject to the provisions of this Section 2.10(b), apply the
whole or any part of any amounts received by the Lender, or any
Affiliate (whether deposited in the Collateral Account or otherwise
received by the Lender, or any Affiliate) from the collection of items
of payment and proceeds of any Collateral or Third Party Collateral
against the principal and/or interest of any Loans made hereunder
and/or any other Obligations, whether or not then due, in such order of
application as the Lender may determine, unless such payments or
proceeds are, in the Lender's sole and absolute discretion, released to
the Borrower; provided, however, that no checks, drafts or other
instruments received by the Lender, or any Affiliate, shall constitute
final payment to the Lender unless and until such item of payment has
actually been collected. All items or amounts which are delivered to
the Lender by or on behalf of the Borrower or any Obligor or any
Account Debtor on account of partial or full payment or otherwise as
proceeds of any of the Collateral or Third Party Collateral (including
any items or amounts which may have been deposited to the Collateral
Account) may from time to time, in the Lender's sole and absolute
discretion, be released to the Borrower or may be applied by the Lender
towards such of the Obligations, whether or not then due, in such order
of application as the Lender may determine. Notwithstanding anything to
the contrary herein, (i) all cash, checks, instruments and other items
of payment, solely for purposes of determining the occurrence of an
Event of Default hereunder, shall be deemed received upon actual
receipt by the Lender unless the same is subsequently dishonored for
any reason whatsoever, (ii) for purposes of determining whether, under
Sections 2.1 and 2.2, there is availability for Loans or Letters of
Credit, all cash, checks, instruments and other items of payment shall
be applied against the Obligations on the first Business Day following
receipt thereof by the Lender in Minneapolis, Minnesota or the second
Business Day following the initiation by the Lender of an ACH
transaction from a Collateral Account, and (iii) solely for purposes of
interest calculation hereunder, all cash, checks, instruments and other
items of payment shall be deemed to have been applied against the
Obligations no later than the second Business Day following receipt
thereof by the Lender in Minneapolis, Minnesota or the second Business
Day following the initiation by the Lender of an ACH transaction from a
Collateral Account.
(c) The Borrower hereby authorizes the Lender and the Lender
may, in its sole and absolute discretion, charge to the Borrower, at
any time, all or any portion of any Obligations (and interest, if any,
thereon) including, without limitation, any Attorneys' Fees and other
costs and expenses of the Lender for which the Borrower is liable
pursuant to the terms of the Loan Documents, by charging the
Disbursement Account or any other bank account of the Borrower with
FBNA or by advancing the amount thereof to the Borrower as a Loan;
provided, however, that the provisions of this Section 2.10(c) shall
not affect the Borrower's obligation to pay when due all amounts
payable by the Borrower under any of the Loan Documents whether or not
there are sufficient funds therefor in the Disbursement Account or any
such other bank account of the Borrower with FBNA, or sufficient Loan
Availability.
2.11 LENDER'S ELECTION NOT TO ENFORCE. Notwithstanding any term or
condition of this Agreement to the contrary, the Lender, in its sole and
absolute discretion, at any time and from time to time may suspend or refrain
from enforcing any or all of the restrictions imposed in this Section 2 but no
such suspension or failure to enforce shall impair the Lender's right and power
under this Agreement to refrain from making a Loan or issuing, or causing to be
issued, a Letter of Credit requested by the Borrower if all conditions precedent
to the Lender's obligation to make such Loan or issue, or cause to be issued,
such Letter of Credit have not been satisfied.
ARTICLE III COLLATERAL
3.1 GRANT OF SECURITY INTEREST. As security for the payment of all
Loans now or hereafter made by the Lender to the Borrower hereunder or under any
Note, and as security for the payment or other satisfaction of all other
Obligations, the Borrower hereby grants to the Lender, and its Affiliates, a
security interest in and to the following property of the Borrower, whether now
owned or existing, or hereafter acquired or coming into existence, wherever now
or hereafter located (all such property is hereinafter referred to collectively
as the "Collateral"):
(a) Accounts Receivable (whether or not Eligible Accounts
Receivable), including all other rights and interests (including all
liens and security interests) that the Borrower may at any time have by
law or agreement against any Account Debtor or other obligor obligated
to make any such payment or against any of the property of such Account
Debtor or other obligor;
(b) Inventory (whether or not Eligible Inventory);
(c) General Intangibles;
(d) documents;
(e) all chattel paper and instruments evidencing, arising out
of or relating to any obligation to the Borrower for goods sold or
leased or services rendered or otherwise arising out of or relating to
any property described in clauses (a) through (d) above;
(f) goods, instruments, documents or chattel paper that are in
the possession or control of, or in transit to, the Lender or any
Affiliate or any agent or bailee for the Lender or any Affiliate for
any reason and all interest on, dividends and distributions and other
rights in connection with such property, and any and all balances,
credits, deposits (general or special, time or demand, provisional or
final), accounts or monies of or in the name of the Borrower now or
hereafter with the Lender, or any Affiliate, and any and all property
of every kind or description of or in the name of the Borrower now or
hereafter, for any reason or purpose whatsoever, in the possession or
control of, in transit to or standing to the Borrower's credit on the
books of, the Lender, any Affiliate, or any agent or bailee for the
Lender, or any Affiliate, or any Participant;
(g) all interest of the Borrower in any goods the sale or
lease of which shall have given or shall give rise to, and in all
guaranties and other property securing the payment of or performance
under, any Accounts Receivable, General Intangibles or any chattel
paper or instruments referred to in clause (e) above;
(h) any and all other property of the Borrower of any kind or
description, including, without limitation, real estate of the
Borrower, subject to a separate mortgage, pledge or security interest
in favor of the Lender or in which the Lender now or hereafter has or
acquires a security interest securing any Obligations, pursuant to any
written agreement or instrument other than this Agreement;
(i) all replacements, substitutions, additions or accessions
to or for any of the foregoing;
(j) to the extent related to the property described in clauses
(a) through (i) above, all books, correspondence, credit files,
records, invoices and other papers and documents, including, without
limitation, to the extent so related, all tapes, cards, computer runs,
computer programs and other papers and documents in the possession or
control of the Borrower or any computer bureau from time to time acting
for the Borrower, and, to the extent so related, all rights in, to and
under all policies of insurance, including claims of rights to payments
thereunder and proceeds therefrom, including any credit insurance; and
(k) all proceeds (including, without limitation, any Accounts
Receivable or other proceeds arising from the sale or other disposition
of any Collateral, any returns of any Inventory sold by the Borrower
and the proceeds of any insurance covering any of the Collateral) of
any of the foregoing.
3.2 ACCOUNTS RECEIVABLE.
(a) The Borrower shall notify the Lender immediately of all
disputes and claims by any Account Debtor in an amount exceeding
$25,000 and settle or adjust them at no expense to the Lender. If the
Lender directs, no discount or credit allowance shall be granted
thereafter by the Borrower to any Account Debtor. All Account Debtor
payments and all net amounts received by the Lender in settlement,
adjustment or liquidation of any Account Receivable may be applied by
the Lender to the Obligations or credited to the Disbursement Account
(subject to collection), as the Lender may deem appropriate, as more
fully described in Section 2.10. If requested by the Lender, the
Borrower will make proper entries in its books, disclosing the
assignment of Accounts Receivable to the Lender.
(b) Unless otherwise consented to by the Lender, the Borrower
will, forthwith upon receipt by the Borrower of all checks, drafts,
cash and other remittances in payment or as proceeds of, or on account
of, any of the Accounts Receivable or other Collateral, deposit the
same in a special bank account (the "Collateral Account") with FBNA or
such other bank or financial institution as the Lender shall consent,
over which the Lender alone has power of withdrawal, and will designate
with each such deposit the particular Accounts Receivable or other item
of Collateral upon which the remittance was made. The Borrower
acknowledges that the maintenance of the Collateral Account is solely
for the convenience of the Lender in facilitating its own operations
and the Borrower does not and shall not have any right, title or
interest in the Collateral Account or in the amounts at any time
appearing to the credit thereof. Said proceeds shall be deposited in
precisely the form received except for the Borrower's endorsement where
necessary to permit collection of items, which endorsement the Borrower
agrees to make. Pending such deposit, the Borrower agrees not to
commingle any such checks, drafts, cash and other remittances with any
of its funds or property, but will hold them separate and apart
therefrom and upon an express trust for the Lender until deposit
thereof if made in the Collateral Account. Upon the full and final
liquidation of all Obligations, the Lender will pay over to the
Borrower any excess amounts received by the Lender as payment or
proceeds of Collateral, whether received by the Lender as a deposit in
the Collateral Account or received by the Lender as a direct payment on
any of the sums due hereunder.
(c) If any Accounts Receivable, chattel paper or General
Intangible arises out of contracts with the United States or any
department, agency, or instrumentality thereof, the Borrower will,
unless the Lender shall otherwise agree, immediately notify the Lender
in writing and execute any instruments and take any steps required by
the Lender in order that all monies due and to become due under such
contracts shall be assigned to the Lender and notice thereof given to
the government under the Federal Assignment of Claims Act of 1940, as
amended.
(d) If any Accounts Receivable is evidenced by chattel paper
or instruments, the Borrower will, unless the Lender shall otherwise
agree, deliver the originals of same to the Lender, appropriately
endorsed to the Lender's order and, regardless of the form of such
endorsement, the Borrower hereby expressly waives presentment, demand,
notice of dishonor, protest and notice of protest and all other notices
with respect thereto.
3.3 INVENTORY.
(a) Unless the Lender shall otherwise agree, if the Borrower
sells Inventory for cash, all full and partial payments therefor shall
immediately be delivered by the Borrower to the Lender in their
original form for deposit in the Collateral Account or other
application to reduction of the Obligations. All such cash shall be
held by the Borrower in trust for the Lender and shall be remitted to
the Lender at the end of the day received or at such other time as the
Lender may designate.
(b) The Lender shall not be liable or responsible in any way
for the safekeeping of any Inventory delivered to it, to any bailee
appointed by or for it, to any warehouseman, or under any other
circumstances. The Lender shall not be responsible for collection of
any proceeds or for losses in collected proceeds held by the Borrower
in trust for the Lender. Any and all risk of loss for any or all of the
foregoing shall be upon the Borrower except for such loss as shall
result from the Lender's gross negligence or willful misconduct.
(c) The Borrower shall, upon acquiring an interest in any
Inventory, deliver to the Lender schedules of such Inventory, together
with supplier's invoices, warranties, production, cost and other
records as the Lender may request. If requested by the Lender, the
Borrower shall deliver to the Lender schedules of the sale of any
Inventory immediately upon its sale. Any material change in the value
or condition of any Inventory and any errors discovered in schedules
delivered to the Lender shall be reported to the Lender immediately.
(d) The Borrower shall (i) notify the Lender immediately if
the Borrower obtains possession (by return, repossession or otherwise)
of any Inventory which has been sold and shall inform the Lender of the
identity of the returned or repossessed Inventory, the applicable
Account Debtor and the amount of the applicable Account Receivable;
(ii) receive such Inventory in trust; and (iii) resell such Inventory
for the Lender unless instructed to deliver it to the Lender.
3.4 EQUIPMENT. The Borrower will, upon request of the Lender, submit to
the Lender a current listing of all of the Borrower's Equipment which listing
shall indicate the type, model, serial number and location of such Equipment.
3.5 SUPPLEMENTAL DOCUMENTATION. At the Lender's request, the Borrower
shall execute and/or deliver to the Lender, at any time or times hereafter, such
agreements, documents, financing statements, warehouse receipts, bills of
lading, notices of assignment of Accounts Receivable, schedules of Accounts
Receivable assigned, and other written matter necessary or requested by the
Lender to perfect and maintain perfected the security interest in the Collateral
granted hereunder (all the above hereinafter referred to as "Supplemental
Documentation"), in form and substance acceptable to the Lender, and pay all
taxes, fees and other costs and expenses associated with any recording or filing
of the same. The Borrower hereby irrevocably makes, constitutes and appoints the
Lender (and all Persons designated by the Lender for that purpose) as the
Borrower's true and lawful attorney (and agent-in-fact) to sign the name of the
Borrower on any of the Supplemental Documentation and to deliver any of the
Supplemental Documentation to such Persons as the Lender in its sole and
absolute discretion, may elect. The Borrower agrees that a carbon, photographic,
photostatic, and other reproduction of this Agreement or of a financing
statement is sufficient as a financing statement.
3.6 POWER OF ATTORNEY. The Borrower irrevocably designates, makes,
constitutes, and appoints the Lender (and all Persons designated by the Lender)
as the Borrower's true and lawful attorney (and agent-in-fact) and the Lender,
or the Lender's agent, may, without notice to the Borrower:
(a) at such time or times hereafter as the Lender or said
agent, in its sole and absolute discretion, may determine, in the
Borrower's or the Lender's name, (i) receive, open and dispose of all
mail received at the lockbox address of the Borrower; (ii) notify
and/or require the Borrower to notify, any Account Debtor or other
Person obligated under or in respect of any Collateral, of the fact of
the Lender's Lien thereon and of the collateral assignment thereof to
the Lender; (iii) direct and/or require the Borrower to direct, any
Account Debtor or other Person obligated under or in respect of any
Collateral, to make payment directly to the Lender of any amounts due
or to become due thereunder or with respect thereto; (iv) endorse the
Borrower's name on any checks, notes, drafts or any other items of
payment relating to and/or proceeds of the Collateral which come into
the possession of the Lender or under the Lender's control and apply
such payment or proceeds to the Obligations; and (v) endorse the
Borrower's name on any chattel paper, document, instrument, invoice,
freight ▇▇▇▇, ▇▇▇▇ of lading or similar document or agreement in the
Lender's possession relating to Accounts Receivable, Inventory or any
other Collateral; and
(b) at such time or times after the occurrence of an Event of
Default, as the Lender or said agent, in its sole and absolute
discretion, may determine, in the Borrower's or the Lender's name: (i)
receive, open and dispose of all mail received at the street address or
any post office box address of the Borrower; (ii) demand, collect,
surrender, release or exchange all or any part of any Collateral or any
amounts due thereunder or with respect thereto; (iii) settle, adjust,
compromise, extend or renew for any period (whether or not longer than
the initial period) any and all sums which are now or may hereafter
become due or owing upon or with respect to any of the Collateral; (iv)
enforce, by suit or otherwise, payment or performance of any of the
Collateral; (v) settle, adjust or compromise any legal proceedings
brought to collect any sums due or owing upon or with respect to any of
the Collateral; (vi) exercise all of the Borrower's rights and remedies
with respect to the collection of any amounts due upon or with respect
to any of the Collateral; (vii) if permitted by applicable law, sell or
assign the Collateral upon such terms, for such amounts and at such
time or times as the Lender may deem advisable; (viii) discharge and
release the Collateral; (ix) prepare, file and sign the Borrower's name
on any proof of claim in bankruptcy or similar document against any
Account Debtor; (x) prepare, file and sign the Borrower's name on any
notice of lien, assignment or satisfaction of lien or similar document
in connection with the Accounts Receivable and/or other Collateral; and
(xi) do all acts and things necessary, in the Lender's sole and
absolute discretion, to obtain repayment of the Obligations and to
fulfill the Borrower's other obligations under this Agreement.
(c) at such time or times after the assertion by the Lender
that an Event of Default has occurred and is continuing (whether or not
an Event of Default has in fact occurred), as the Lender or said agent,
in its reasonable discretion, may determine, in the Borrower's or the
Lender's name, notify the post office authorities to change the address
for delivery of the Borrower's mail to an address designated by the
Lender.
Under no circumstances shall the Lender be under any duty to act in regard to
any of the foregoing matters. The costs relating to any of the foregoing
matters, including Attorneys' Fees and out-of-pocket expenses shall be borne
solely by the Borrower whether the same are incurred by the Lender or the
Borrower.
Neither the Lender nor any of its directors, officers, employees or agents will
be liable for any acts of commission or omission nor for any error in judgment
or mistake of fact or law, unless the same shall have resulted from gross
negligence or willful misconduct. This power, being coupled with an interest, is
irrevocable until either (i) all Obligations are paid in full, or (ii) this
Agreement is terminated, whichever shall last occur.
ARTICLE IV REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make Loans to
the Borrower hereunder, the Borrower makes the following representations and
warranties, all of which shall be true and correct as of the date the initial
Loan is made and survive the execution of this Agreement and the making of the
initial Loan:
4.1 ORGANIZATION. The Borrower and each of its corporate Subsidiaries
are corporations duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of their respective incorporation. All of the
Borrower's other Subsidiaries, if any, are entities duly organized, validly
existing and in good standing under the laws of the jurisdictions of their
respective organization. The Borrower and all of the Subsidiaries are in good
standing and are duly qualified to do business in each state where, because of
the nature of their respective activities or properties, such qualification is
required. On the date hereof, the Borrower and each Subsidiary conducts business
in its own name exclusively and has no trade names, styles or doing business
forms except as disclosed on Schedule 4.1. The Borrower's taxpayer
identification number is I.D. No. ▇▇-▇▇▇▇▇▇▇.
4.2 AUTHORIZATION. The Borrower is duly authorized to execute and
deliver the Loan Documents and any Supplemental Documentation contemplated by
this Agreement, and is and will continue to be duly authorized to borrow monies
hereunder and to perform its obligations under the Loan Documents and any
Supplemental Documentation contemplated by this Agreement and the borrowings
hereunder do not and will not require any consent or approval of any
governmental agency or authority.
4.3 NO CONFLICTS. The execution, delivery and performance by the
Borrower of the Loan Documents and any Supplemental Documentation contemplated
by this Agreement, do not and will not conflict with (a) any provision of law,
(b) the charter or by-laws of the Borrower, (c) any agreement binding upon the
Borrower, or (d) any court or administrative order or decree applicable to the
Borrower, and do not and will not require, or result in, the creation or
imposition of any Lien on any asset of the Borrower or any of the Subsidiaries
except as provided herein.
4.4 VALIDITY AND BINDING EFFECT. The Loan Documents and any
Supplemental Documentation contemplated by this Agreement, when duly executed
and delivered will be, legal, valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with their respective terms,
except as enforceability may be limited by bankruptcy, insolvency or other
similar laws of general application affecting the enforcement of creditors'
rights or by general principles of equity limiting the availability of equitable
remedies.
4.5 NO DEFAULT. Neither the Borrower nor any of the Subsidiaries is in
default under any agreement or instrument to which the Borrower or any
Subsidiary is a party or by which any of their respective properties or assets
is bound or affected, which default (a) might materially and adversely affect
the Lender's Lien on or rights with respect to any Collateral or Third Party
Collateral or (b) constitutes an Adverse Event. No Event of Default or Unmatured
Event of Default has occurred and is continuing.
4.6 FINANCIAL STATEMENTS. The Borrower's audited consolidated and
consolidating financial statement as at January 6, 1996 and the Borrower's
unaudited consolidated and consolidating financial statement as at November 30,
1996, copies of which have been furnished to the Lender, have been prepared in
conformity with generally accepted accounting principles promulgated by the
Financial Accounting Standards Board and applied on a basis consistent with that
of the preceding fiscal year and period and present fairly the financial
condition of the Borrower and the Subsidiaries as at such dates and the results
of their operations for the periods then ended, subject (in the case of the
interim financial statement) to year-end audit adjustments. Since November 30,
1996, no Adverse Event has occurred.
4.7 INSURANCE. Schedule 4.7 sets forth a summary of the property and
casualty insurance program carried by the Borrower and the Subsidiaries on the
date hereof, including the insurer's(s') name(s), policy number(s), expiration
date(s), amount(s) of coverage, type(s) of coverage, the annual premium(s),
Best's policyholder's and financial size ratings of the insurers, exclusions,
deductibles and self-insured retention, and describes in detail any
retrospective rating plan, fronting arrangement or any other self-insurance or
risk assumption agreed to by the Borrower or any Subsidiary or imposed upon the
Borrower or any Subsidiary by any such insurer. This summary also includes any
self-insurance program that is in effect.
4.8 LITIGATION; CONTINGENT LIABILITIES.
(a) Except for those referred to in Schedule 4.8, no claims
litigation, arbitration proceedings or governmental proceedings are
pending or threatened against or are affecting the Borrower or any
Subsidiary.
(b) Other than any liability incident to the claims,
litigation or proceedings disclosed in Schedule 4.8, neither the
Borrower nor any the Subsidiary has any contingent liabilities which
are material to the Borrower or any Subsidiary.
4.9 LIENS. None of the Collateral or other property or assets of the
Borrower or any Subsidiary is subject to any Lien (including, without
limitation, Liens pursuant to Capitalized Leases under which the Borrower or any
Subsidiary is a lessee) except: (a) Liens in favor of the Lender; (b) Liens for
current Taxes not delinquent or Taxes being contested in good faith and by
appropriate proceedings and as to which such reserves or other appropriate
provisions as may be required by GAAP are being maintained; (c) carriers',
warehousemen's, mechanics', materialmen's and other like statutory Liens arising
in the ordinary course of business securing obligations which are not overdue or
which are being contested in good faith and by appropriate proceedings and as to
which such reserves or other appropriate provisions as may be required by GAAP
are being maintained; and (d) Liens listed on Schedule 4.9.
4.10 SUBSIDIARIES. The Borrower has no Subsidiaries except as listed on
Schedule 4.10. The Borrower and the Subsidiaries own the percentage of the
Subsidiaries as set forth on Schedule 4.10.
4.11 PARTNERSHIPS. Neither the Borrower nor any of the Subsidiaries is
a partner or joint venturer in any partnership or joint venture other than the
partnerships and joint ventures listed on Schedule 4.11.
4.12 BUSINESS LOCATIONS. On the date hereof the office where the
Borrower keeps the Borrower's books and records concerning the Borrower's
Accounts Receivable and other Collateral, and the Borrower's chief place of
business and chief executive office, is located at the address of the Borrower
set forth on the signature pages of this Agreement, and all of the Borrower's
other places of business and all locations and places of business of each
Subsidiary are listed on Schedule 4.12. On the date hereof, the names of any
landlords and/or mortgagees of any of such locations are identified in Schedule
4.12.
4.13 COLLATERAL LOCATIONS. On the date hereof the Borrower's Inventory,
Equipment and, if applicable, fixtures (except any part thereof which prior to
the execution of this Agreement the Borrower shall have advised the Lender in
writing consists of Collateral normally used in more than one state) is located
at the addresses set forth in Schedule 4.13. The legal descriptions of any real
property on which any fixtures are located and the name(s) of the record owner
of such real property is set forth in Schedule 4.13.
4.14 ELIGIBILITY OF COLLATERAL. (a) All of the Accounts Receivable are
and will continue to be bona fide existing obligations created by the sale of
goods, the rendering of services, or the furnishing of other good and sufficient
consideration to Accounts Debtors in the regular course of business and all
shipping or delivery receipts and other documents furnished or to be furnished
to the Lender in connection therewith are and will be genuine; (b) Each Account
Receivable or item of Inventory which the Borrower shall, expressly or by
implication, request the Lender to classify as an Eligible Account Receivable or
as Eligible Inventory, respectively, will, as of the time when such request is
made, conform in all respects to the requirements of such classification set
forth in the respective definitions of "Eligible Account Receivable" and
"Eligible Inventory" set forth herein; (c) with respect to each schedule of
Inventory delivered to the Lender pursuant to Section 3.3: (i) the descriptions,
origins, size, qualities, quantities, weights, and markings of all goods stated
thereon, or on any attachment thereto, are true and correct in all material
respects; (ii) all goods stated thereon have been produced by the Borrower in
compliance with all requirements of the Fair Labor Standards Act; and (iii) none
of the goods stated thereon are defective, of second quality, used, or goods
returned after shipment, except where described as such; and (iv) all Inventory
not included on such schedule has been previously scheduled.
4.15 CONTROL OF COLLATERAL; LEASE OF PROPERTY. The Borrower is not now
conducting, or permitting or suffering to be conducted, any activities pursuant
to or in conjunction with which any of the Collateral is now, or will be (while
any Obligations exist or this Agreement is in effect), in the possession or
control of, any Subsidiary, Obligor (other than the Borrower) or Related Party.
Except as listed on Schedule 4.15, none of the machinery, equipment or real
property used by the Borrower or any Subsidiary is subject to a lease (excluding
only Capitalized Leases included on Schedule 6.11) under which the Borrower or
such Subsidiary is the lessee.
4.16 PATENTS, TRADEMARKS, ETC. The Borrower and each of the
Subsidiaries possesses or has the right to use all of the patents, trademarks,
trade names, service marks and copyrights, and applications therefor, and all
technology, know-how, processes, methods and designs used in or necessary for
the conduct of its business, without known conflict with the rights of others.
All such licenses, patents, trademarks, trade names, service marks and
copyrights, and applications therefor existing on the date hereof are listed on
Schedule 4.16.
4.17 SOLVENCY. The Borrower and each of the Subsidiaries now has
capital sufficient to carry on its respective business and transactions and all
business and transactions in which it is about to engage and is now solvent and
able to pay its respective debts as they mature, and the Borrower and each of
the Subsidiaries now owns property having a value, greater than the amount
required to pay the Borrower's or such Subsidiary's debts.
4.18 CONTRACTS; LABOR MATTERS. Except as disclosed on Schedule 4.18:
(a) neither the Borrower nor any Subsidiary is a party to any contract or
agreement, or subject to any charge, corporate restriction, judgment, decree or
order, the performance of which constitutes an Adverse Event; (b) no labor
contract to which the Borrower or any Subsidiary is subject is scheduled to
expire during the original term of this Agreement; and (c) on the date of this
Agreement (i) neither the Borrower nor any Subsidiary is a party to any labor
dispute and (ii) there are no strikes or walkouts relating to any labor
contracts to which the Borrower or any Subsidiary is subject.
4.19 ERISA. Each Plan complies with all material applicable
requirements of ERISA and the Code and with all material applicable rulings and
regulations issued under the provisions of ERISA and the Code setting forth
those requirements. No Reportable Event, other than a Reportable Event for which
the reporting requirements have been waived by regulations of the PBGC, has
occurred and is continuing with respect to any Plan. All of the minimum funding
standards applicable to such Plans have been satisfied and there exists no event
or condition which would permit the institution of proceedings to terminate any
Plan under Section 4042 of ERISA. The Current value of the Plans' benefits
guaranteed under Title IV of ERISA does not exceed the current value of the
Plans' assets allocable to such benefits. Except as listed on Schedule 4.8,
neither the Borrower nor any Subsidiary has any contingent liability with
respect to any "employee welfare benefit plans," as such term is defined in
Section 3(1) of ERISA, which covers retired or terminated employees and their
beneficiaries.
4.20 REGULATION U. The Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (as
defined in Regulation U of the Federal Reserve Board), and no part of the
proceeds of any Loan will be used to purchase or carry margin stock or for any
other purpose which would violate any of the margin requirements of the Federal
Reserve Board.
4.21 COMPLIANCE. The Borrower and each of the Subsidiaries are in
material compliance with all statutes and governmental rules and regulations
applicable to them. All Inventory of the Borrower has been produced in
compliance with all requirements of the Fair Labor Standards Act.
4.22 TAXES. The Borrower and each Subsidiary has filed all federal,
state and local tax returns required to be filed and has paid, or made adequate
provisions for the payment of, all Taxes due and payable pursuant to such
returns and pursuant to any assessments made against it or any of its property
(other than Taxes the amount or validity of which is currently being contested
in good faith by appropriate proceedings and with respect to which reserves in
accordance with GAAP have been provided on the books of the Borrower). No tax
Liens have been filed and no material claims are being asserted with respect to
any such Taxes. The charges, accruals and reserves on the books of the Borrower
in respect of Taxes are adequate. The Borrower is not aware of any proposed
assessment against the Borrower or any Subsidiary for additional Taxes (or any
basis for any such assessment) which might be material to the Borrower and the
Subsidiaries taken as a whole.
4.23 INVESTMENT COMPANY ACT. Neither the Borrower nor any Subsidiary is
an "investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
4.24 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Borrower nor any
Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
4.25 ENVIRONMENTAL AND SAFETY AND HEALTH MATTERS. Except as disclosed
on Schedule 4.25: (a) the operations of the Borrower and each of the
Subsidiaries complies in all respects with (i) all applicable Environmental
Laws, and (ii) all applicable Occupational Safety and Health Laws; (b) none of
the operations of the Borrower or any Subsidiary are subject to any judicial or
administrative proceeding alleging the violation of any Environmental Law or
Occupational Safety and Health Law; (c) none of the operations of the Borrower
or any Subsidiary is the subject of federal or state investigation evaluating
whether any remedial action is needed to respond to (i) a spillage, disposal or
release into the environment of any Hazardous Material or other hazardous, toxic
or dangerous waste, substance or constituent, or other substance, or (ii) any
unsafe or unhealthful condition at any premises of the Borrower or any
Subsidiary; (d) neither the Borrower nor any Subsidiary has filed any notice
under any Environmental Law or Occupation Safety and Health Law indicating or
reporting (i) any past or present spillage, disposal or release into the
environment of, or treatment, storage or disposal of, any Hazardous Material or
other hazardous, toxic or dangerous waste, substance or constituent, or other
substance or (ii) any unsafe or unhealthful condition at any premises of the
Borrower or any Subsidiary; and (e) neither the Borrower nor any Subsidiary has
any known contingent liability in connection with (i) any spillage, disposal or
release into the environment of, or otherwise with respect to, any Hazardous
Material or other hazardous, toxic or dangerous waste, substance or constituent,
or other substance, or (ii) any unsafe or unhealthful condition at any premises
of the Borrower or any Subsidiary.
ARTICLE V AFFIRMATIVE COVENANTS
From the date of this Agreement and thereafter until all Obligations are paid in
full, the Borrower agrees that unless the Lender shall otherwise consent in
writing, it will:
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
5.1.1 FINANCIAL REPORTS. Furnish to the Lender in form
satisfactory to the Lender:
(a) ANNUAL AUDIT REPORT. As soon as available and in
any event within 120 days after the end of each fiscal year of
the Borrower, the annual audit report of the Borrower and the
Subsidiaries prepared on a consolidating and consolidated
basis in conformity with GAAP, consisting of at least
statements of income, cash flow and stockholders' equity, and
a consolidated and consolidating balance sheet as at the end
of such year, setting forth in each case in comparative form
corresponding figures from the previous annual audit,
certified, without qualification, by independent certified
public accountants of recognized standing selected by the
Borrower and acceptable to the Lender, together with any
management letters, management reports or other supplementary
comments or reports to the Borrower or its board of directors
furnished by such accountants.
(b) ACCOUNTANT'S CERTIFICATE. Together with the
audited financial statements required under Section 5.1.1(a),
a certificate from the accounting firm performing such audit
stating that it has reviewed this Agreement and that in
performing its examination, nothing came to its attention that
caused it to believe that any Event of Default or Unmatured
Event of Default exists, or, if such Unmatured Event of
Default or Event of Default exists, describing its nature.
(c) MONTHLY FINANCIAL STATEMENT. As soon as available
and in any event within 20 days after the end of each month of
each fiscal year of the Borrower, a copy of the unaudited
financial statement of the Borrower and the Subsidiaries
prepared in the same manner as the audit report referred to in
Section 5.1.1(a), signed by the Borrower's chief financial
officer and consisting of at least consolidated statements of
income, cash flow and stockholders' equity for the Borrower
and the Subsidiaries for such month and for the period from
the beginning of such fiscal year to the end of such month,
and a consolidated and consolidating balance sheet of the
Borrower as at the end of such month.
(d) PROJECTIONS. As soon as available and in any
event not later than 30 days following the last day of each
fiscal year of the Borrower, a projected financial statement
of the Borrower and the Subsidiaries prepared in the same
manner as the audit report referred to in Section 5.1.1(a),
signed by the Borrower's chief financial officer and
presenting fairly the Borrower's best good faith projections
of the financial position and results of operations of the
Borrower and the Subsidiaries for each month of the following
fiscal year.
(e) OFFICER'S CERTIFICATE. Together with the
financial statements furnished by the Borrower under Section
5.1.1(a), and (c), a certificate of the Borrower's chief
financial officer, dated the date of such annual audit report
or such monthly financial statement, as the case may be, to
the effect that no Event of Default or Unmatured Event of
Default has occurred and is continuing, or, if there is any
such event, describing it and the steps, if any, being taken
to cure it, and containing a computation of, and showing
compliance with, each of the financial ratios and restrictions
contained in Articles V and VI and Supplement A.
(f) GAAP CHANGES. In the event that a material change
occurs, in the Lender's judgment, in GAAP, either the Lender
and the Borrower shall amend, in writing, the covenants in
this Agreement, Supplement A, and the other Loan Documents
which are calculated on the basis of GAAP to reflect such
change, or, if the Lender and the Borrower fail to agree on
and enter into such an amendment, the Lender shall have the
right to deem such change in GAAP to be an Event of Default.
5.1.2 AGINGS; INELIGIBLE ACCOUNTS RECEIVABLE CERTIFICATION.
Within 15 days after the end of each month, (a) a detailed aging of all
Accounts Receivable by invoice, including, without limitation, a
reconciliation to the aging report delivered to the Lender for the
preceding month, (b) a certification of ineligible Accounts Receivable
and (c) an aging of all accounts payable as of the end of the preceding
month, each in form and content acceptable to the Lender.
5.1.3 INVENTORY CERTIFICATION. Within 15 days after the end of
each month, an Inventory certification report as of the end of the
preceding month for all Inventory locations, in form and content
acceptable to the Lender.
5.1.4 INTENTIONALLY OMITTED.
5.1.5 OTHER REPORTS.
(a) SEC AND OTHER REPORTS. Promptly upon the making
or filing thereof, copies of all financial statements, reports
and proxy statements mailed to the Borrower's shareholders,
and copies of all registration statements, periodic reports
and other documents filed with the Securities and Exchange
Commission (or any successor thereto) or any national
securities exchange.
(b) REPORT OF CHANGE IN SUBSIDIARIES OR PARTNERSHIPS.
Promptly from time to time, a written report of any change in
the list of the Borrower's Subsidiaries set forth on Schedule
4.10 or in the list of partnerships and joint ventures set
forth on Schedule 4.11.
(c) PATENTS, ETC. Promptly from time to time, a
written report of any change to the list of patents,
trademarks, copyrights and other information set forth in
Schedule 4.16.
(d) OTHER REPORTS. The information required to be
provided pursuant to other provisions of this Agreement, and
such other reports from time to time requested by the Lender.
5.2 NOTICES. Notify the Lender in writing of any of the following
immediately upon learning of the occurrence thereof, describing the same and, if
applicable, the steps being taken by the Person(s) affected with respect
thereto:
(a) DEFAULT. The occurrence of (i) any Event of Default or
Unmatured Event of Default, and (ii) to the extent not included in
clause (i) above, the default by the Borrower, any other Obligor or any
Subsidiary under any note, indenture, loan agreement, mortgage, lease,
deed or other material similar agreement to which the Borrower, any
other Obligor or any Subsidiary, as appropriate, is a party or by which
it is bound.
(b) LITIGATION. The institution of any litigation, arbitration
proceeding or governmental proceeding affecting the Borrower, any other
Obligor, any Subsidiary, any Collateral or any Third Party Collateral,
whether or not considered to be covered by insurance wherein the claim
involves $25,000 or more.
(c) JUDGMENT. The entry of any judgment or decree against the
Borrower, any other Obligor or any Subsidiary, if the amount of such
judgment exceeds $50,000.
(d) ERISA. With respect to any Plan, the occurrence of a
Reportable Event (other than a Reportable Event for which the reporting
requirements have been waived by PBGC regulations) or any "prohibited
transaction" (as defined in Section 4975 of the Code), a notice
specifying the nature thereof and what action the Borrower proposes to
take with respect thereto, and, when received, copies of any notice
from PBGC of intention to terminate or have a trustee appointed for any
Plan; or the incurrence of any material increase in the contingent
liability of the Borrower, any other Obligor or any Subsidiary with
respect to any "employee welfare benefit plan" as defined in Section
3(1) of ERISA which covers retired employees and their beneficiaries.
(e) CHANGE IN COLLATERAL LOCATIONS. If any of the Borrower's
Inventory or Equipment is placed in locations other than those
identified in this Agreement or in Schedule 4.13.
(f) CHANGE IN PLACE(S) OF BUSINESS. Any proposed opening,
closing or other change in the list of offices and other places of
business of the Borrower and each Subsidiary set forth in Schedule
4.12, and any opening, closing or other change in the offices and other
places of business of each other Obligor.
(g) CHANGE OF NAME. Any change in the name of the Borrower,
any other Obligor or any Subsidiary, and any change in the list of
trade names and trade styles set forth in Schedule 4.1.
(h) ENVIRONMENTAL AND SAFETY AND HEALTH MATTERS. Receipt of
any notice that the operations of the Borrower, any other Obligor or
any Subsidiary are not in full compliance with requirements of any
applicable Environmental Law or any Occupational Safety and Health Law;
receipt of notice that the Borrower, any other Obligor or any
Subsidiary is subject to federal, state or local investigation
evaluating whether any remedial action is needed to respond to (i) any
spillage, disposal or release into the environment of any Hazardous
Material or other hazardous, toxic or dangerous waste, substance or
constituent, or other substance, or (ii) any unsafe or unhealthful
condition at any premises of the Borrower, any other Obligor or any
Subsidiary; or receipt of notice that any properties or assets of the
Borrower any other Obligor or any Subsidiary are subject to an
Environmental Lien.
(i) ADVERSE EVENT. The occurrence of an Adverse Event.
(j) DEFAULT BY OTHERS. Any material default by any Account
Debtor or other Person obligated to the Borrower, any other Obligor, or
any Subsidiary, under any contract, chattel paper, note or other
evidence of amounts payable or due or to become due to the Borrower,
such Obligor or Subsidiary if the amount payable under such contract,
chattel paper, note or other evidence of amounts payable or due or to
become due is material.
(k) MOVEABLE COLLATERAL. If any of the Collateral or Third
Party Collateral shall consist of goods of a type normally used in more
than one state, whether or not actually so used, any use of any such
goods in any state other than a state in which the Borrower shall have
previously advised the Lender such goods will be used. The Borrower
agrees that such goods will not, unless the Lender shall otherwise
consent in writing, be used outside the continental United States or in
Louisiana.
(l) CHANGE IN MANAGEMENT OR LINE(S) OF BUSINESS. Any
substantial change in the senior management of the Borrower or any
Subsidiary, or any change in the Borrower's or any Subsidiary's line(s)
of business.
(m) OTHER EVENTS. The occurrence of such other events as the
Lender may reasonably from time to time specify.
5.3 EXISTENCE. Maintain and preserve, and cause each Subsidiary to
maintain and preserve, its respective existence as a corporation or other form
of business organization, as the case may be, and all rights, privileges,
licenses, patents, patent rights, copyrights, trademarks, trade names,
franchises and other authority to the extent material and necessary for the
conduct of its respective business in the ordinary course as conducted from time
to time.
5.4 NATURE OF BUSINESS. Engage, and cause each Subsidiary to engage, in
substantially the same fields of business as it is engaged in on the date
hereof.
5.5 BOOKS, RECORDS AND ACCESS. Maintain, and cause each Subsidiary to
maintain, complete and accurate books and records (including, without
limitation, records relating to Accounts Receivable, Inventory, Equipment and
other Collateral), in which full and correct entries in conformity with GAAP
shall be made of all dealings and transactions in relation to its respective
business and activities. Cause its books and records as at the end of any
calendar month to be posted and closed not more than 15 days after the last
business day of such month. Permit, and cause each Subsidiary to permit, access
by the Lender and its agents or employees to the books and records of the
Borrower and such Subsidiary at the Borrower's or such Subsidiary's place or
places of business at intervals to be determined by the Lender and without
hindrance or delay, and permit, and cause each Subsidiary to permit, the Lender
or its agents and employees to inspect the Borrower's Inventory and Equipment
and such Subsidiary's inventory and equipment, and to inspect, audit, check and
make copies and/or extracts from the books, records, journals, orders, receipts,
correspondence and other data relating to Inventory, Accounts Receivable,
chattel paper, General Intangibles, Equipment and any other Collateral or Third
Party Collateral, or to any other transactions between the parties hereto. Any
and all such inspections and/or audits shall be at the Borrower's expense.
5.6 INSURANCE. Maintain, and cause each Subsidiary to maintain,
insurance to such extent and against such hazards and liabilities as is commonly
maintained by companies similarly situated or as the Lender may reasonably
request from time to time. Keep the Collateral properly housed and insured for
its full insurable value against loss or damage by fire, theft, explosion,
sprinklers, collision (in the case of motor vehicles) and such other risks as
are customarily insured against by persons engaged in business similar to that
of the Borrower, with such companies, in such amounts and under policies in such
form as shall be satisfactory to the Lender. Certificates of such policies of
insurance have been delivered to the Lender prior to the date hereof together
with evidence of payment of all premiums therefor. The Borrower hereby directs
all insurers under such policies of insurance to pay all proceeds payable
thereunder directly to the Lender. The Borrower irrevocably makes, constitutes
and appoints the Lender and any Person whom the Lender may from time to time
designate (and all officers, employees or agents designated by the Lender or
such Person) as the Borrower's true and lawful attorney (and agent-in-fact) for
the purpose of making, settling and adjusting claims under such policies of
insurance, endorsing the name of the Borrower on any check, draft, instrument or
other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect to such policies of
insurance. In the event the Borrower at any time or times hereafter shall fail
to obtain or maintain any of the policies of insurance required herein or to pay
any premium in whole or in part relating thereto, the Lender, without waiving or
releasing any obligations or default by the Borrower hereunder, may at any time
or times thereafter (but shall be under no obligation to do so) obtain and
maintain such policies of insurance and pay such premiums and take any other
action with respect thereto which the Lender deems advisable. All sums so
disbursed by the Lender, including reasonable Attorneys' Fees, court costs,
expenses and other charges relating thereto, shall be payable on demand by the
Borrower to the Lender.
5.7 INSURANCE SURVEY. Provide to the Lender at least annually within 90
days of the end of the Borrower's fiscal year, a certificate signed by its chief
financial officer that attests to and summarizes the property and casualty
insurance program carried by the Borrower and the Subsidiaries. This summary
shall include the insurer's(s') name, policy number(s), expiration date(s),
amount(s) of coverage, type(s) of coverage, the annual premium(s), Best's
policyholder's and financial size ratings of the insurers, exclusions,
deductibles and self-insured retention and shall describe in detail any
retrospective rating plan, fronting arrangement or any other self-insurance or
risk assumption agreed to by the Borrower or any Subsidiary or imposed upon the
Borrower or any Subsidiary by any such insurer, as well as any self-insurance
program that is in effect. The Borrower shall (a) notify the Lender in writing
at least 30 days prior to any cancellation or material change of any such
insurance by the Borrower or any Subsidiary and (b) within five business days
after receipt of any notice (whether formal or informal) thereof, of any
cancellation or change in any of its insurance by any of its insurers or any
material change in the cost thereof or which reduces the policyholder's or
financial size ratings of the insurance carriers of the Borrower or any
Subsidiary, as established by Best's Insurance Reports. Annually, the Lender
shall have the right to request the Borrower to have a risk management survey
completed by a recognized independent risk management consultant acceptable to
it and the Lender which will identify, quantify and assess any catastrophic
uninsured, underinsured or self-insured exposures faced by the Borrower and the
Subsidiaries. The cost of such survey shall be borne solely by the Borrower. A
copy of the results of each such a survey shall be promptly delivered by the
Borrower to the Lender.
5.8 REPAIR. Maintain, preserve and keep, and cause each Subsidiary to
maintain, preserve and keep, its properties in good repair, working order and
condition, and from time to time make, and cause each Subsidiary to make, all
necessary and proper repairs, renewals, replacements, additions, betterments and
improvements thereto so that at all times the efficiency thereof shall be fully
preserved and maintained.
5.9 TAXES. Pay, and cause each Subsidiary to pay, when due, all of its
Taxes, unless and only to the extent that the Borrower or such Subsidiary, as
the case may be, is contesting such Taxes in good faith and by appropriate
proceedings and the Borrower or such Subsidiary has set aside on its books such
reserves or other appropriate provisions therefor as may be required by GAAP.
5.10 COMPLIANCE. Comply, and cause each Subsidiary to comply, with all
statutes and governmental rules and regulations applicable to it, including,
without limitation, the Fair Labor Standards Act.
5.11 COLLATERAL MONITORING. Permit the Lender to (a) use the Borrower's
stationery and sign the name of the Borrower to request verification of Accounts
Receivable or other Collateral from Account Debtors, and (b) use the information
recorded on or contained in any data processing equipment and computer hardware
and software to which the Borrower has access relating to Accounts Receivable,
Inventory, Equipment and/or other Collateral.
ARTICLE VI NEGATIVE COVENANTS
From the date of this Agreement and thereafter until all Obligations
are paid in full, the Borrower agrees that, unless the Lender shall otherwise
consent in writing, it will not, and will not permit any Subsidiary to, do any
of the following:
6.1 MERGER. Merge or consolidate or enter into any analogous
reorganization or transaction with any Person.
6.2 SALE OF ASSETS. Sell, transfer, convey, lease, assign or otherwise
dispose (with or without recourse) of any of its assets (including, without
limitation, any Accounts Receivable, instruments or chattel paper) except for
sales and leases of Inventory in the ordinary course of business.
6.3 PURCHASE OF ASSETS. Purchase or lease or otherwise acquire all or
substantially all the assets of any Person.
6.4 ERISA. Permit any condition to exist in connection with any Plan
which might constitute grounds for the PBGC to institute proceedings to have
such Plan terminated or a trustee appointed to administer such Plan; permit any
Plan to terminate under any circumstances which would cause the lien provided
for in Section 4068 of ERISA to attach to any property, revenue or asset of the
Borrower or any Subsidiary; or permit the underfunded amount of Plan benefits
guaranteed under Title IV of ERISA to exceed $25,000.
6.5 CHANGES IN COLLATERAL OR BUSINESS LOCATIONS. Change (a) the
location of its chief executive office or chief place of business; (b) its name;
or (c) the locations where it stores or maintains Inventory or Equipment
without, in each case, at least 30 days' prior written notice to the Lender.
6.6 SUBSIDIARIES, PARTNERSHIPS AND JOINT VENTURES. Either: (a) form or
acquire any corporation which would thereby become a Subsidiary; or (b) form or
enter into any partnership as a limited or general partner or into any joint
venture.
6.7 OTHER AGREEMENTS. Enter into any agreement, bond, note or other
instrument with or for the benefit of any Person other than the Lender which
would (a) prohibit the Borrower or such Subsidiary from granting, or otherwise
limit the ability of the Borrower or such Subsidiary to grant, to the Lender any
Lien on any assets or properties of the Borrower or such Subsidiary, or (b) be
violated or breached by the Borrower's performance of its obligations under the
Loan Documents.
6.8 RESTRICTED PAYMENTS. Purchase or redeem or otherwise acquire for
value any shares of the Borrower's or any Subsidiary's stock, declare or pay any
dividends thereon (other than stock dividends and dividends payable to the
Borrower), make any distribution to, or set aside any funds for distributions
to, stockholders as such (other than the Borrower), except for a distribution to
the Borrower's stockholders in the amount of up to $12,525,000 to be paid in the
first quarter of 1997; prepay, purchase or redeem any subordinated Indebtedness
of the Borrower or any Subsidiary; and not take any action which will result in
a decrease in the Borrower's or any Subsidiary's ownership interest in any
Subsidiary.
6.9 LEASES. Enter into or permit to exist any arrangements for the
leasing by the Borrower or any Subsidiary, as lessee, of any real or personal
property (or any interest therein) under leases (other than Capitalized Leases),
except as listed on Schedule 4.15, which require the payment by the Borrower and
the Subsidiaries on a consolidated basis of rental amounts in the aggregate in
excess of (a) $450,000 in any one fiscal year, or (b) $1,500,000 during the full
remaining terms of such leases.
6.10 INVESTMENTS. Acquire for value, make, have or hold any
Investments, except: (a) advances to employees of the Borrower or any Subsidiary
for travel or other ordinary business expenses, provided that the aggregate
amount outstanding at any one time shall not exceed $10,000 for any single
employee and $50,000 in the aggregate for all employees; (b) advances to
subcontractors and suppliers in maximum aggregate amounts reasonably acceptable
to the Lender; (c) extensions of credit in the nature of Accounts Receivable or
notes receivable arising from the sale of goods and services in the ordinary
course of business; (d) shares of stock, obligations or other securities
received in settlement of claims arising in the ordinary course of business; (e)
Investments (other than Investments in the nature of loans or advances)
outstanding on the date hereof in subsidiaries by the Borrower and other
Subsidiaries; (f) other Investments outstanding on the date hereof and listed on
Schedule 6.10; and (g) other Investments consented to by the Lender in writing.
6.11 INDEBTEDNESS. Incur, create, issue, assume or suffer to exist any
Indebtedness, including, without limitation, Indebtedness as lessee under any
Capitalized Lease, except: (a) Indebtedness under the terms of this Agreement;
(b) Subordinated Debt; (c) Indebtedness hereafter incurred in connection with
Liens permitted under Section 6.12(d); (d) other Indebtedness outstanding on the
date hereof and listed on Schedule 6.11; and (e) other Indebtedness approved in
writing by the Lender.
6.12 LIENS. Create, incur, assume or suffer to exist any Lien with
respect to any property, revenues or assets now owned or hereafter arising or
acquired, except: (a) Liens for current Taxes not delinquent or Taxes being
contested in good faith and by appropriate proceedings and as to which such
reserves or other appropriate provisions as may be required by GAAP are being
maintained; (b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, and other like statutory Liens arising in the ordinary course of
business securing obligations which are not overdue or which are being contested
in good faith and by appropriate proceedings and as to which such reserves or
other appropriate provisions as may be required by GAAP are being maintained;
(c) pledges or deposits in connection with workers' compensation, unemployment
insurance and other social security legislation; (d) Liens in connection with
Capital Expenditures attaching only to the property being acquired if the
Indebtedness secured thereby does not exceed 100% of the fair market value of
such property at the time of acquisition thereof; (e) Liens in favor of the
Lender; (f) Liens referred to in Section 4.9; and (g) Liens consented to by the
Lender in writing.
6.13 CONTINGENT LIABILITIES. Either: (a) endorse, guarantee,
contingently agree to purchase or to provide funds for the payment of, or
otherwise become contingently liable upon, any obligation of any other Person,
except by the endorsement of negotiable instruments for deposit or collection
(or similar transactions) in the ordinary course of business, or (b) agree to
maintain the net worth or working capital of, or provide funds to satisfy any
other financial test applicable to, any other Person.
6.14 CHANGE IN ACCOUNTS RECEIVABLE. After the occurrence of an Event of
Default or receipt of notice from the Lender that the Lender intends to commence
direct collection of Accounts Receivable, permit or agree to any extension,
compromise or settlement or make any change or modification of any kind or
nature with respect to any Account Receivable, including any of the terms
relating thereto.
6.15 UNCONDITIONAL PURCHASE OBLIGATIONS. Enter into or be a party to
any contract for the purchase of materials, supplies or other property or
services, if such contract requires that payment be made by it regardless of
whether or not delivery is ever made of such materials, supplies or other
property or services.
6.16 USE OF PROCEEDS. Use or permit any proceeds of the Loans to be
used, either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of "purchasing or carrying any margin stock" within the
meaning of Regulation U of the Federal Reserve Board, as amended from time to
time, and furnish to the Lender upon request, a statement in conformity with the
requirements of Federal Reserve Form U-1 referred to in Regulation U of the
Federal Reserve Board.
6.17 TRANSACTIONS WITH RELATED PARTIES. Enter into or be a party to any
transaction or arrangement, including, without limitation, the purchase, sale,
lease or exchange of property or the rendering of any service, with any Related
Party, except in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than would
obtain in a comparable arm's-length transaction with a Person not a Related
Party.
ARTICLE VII EVENTS OF DEFAULT AND REMEDIES
7.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an Event of Default:
(a) NON-PAYMENT. The Borrower shall fail to pay, when due or
declared due, any Obligations;
(b) NON-PAYMENT OF OTHER INDEBTEDNESS. The Borrower, any other
Obligor or any Subsidiary shall fail to pay, when due, whether by
acceleration or otherwise (subject to any applicable grace period), any
Indebtedness of, or guaranteed by, the Borrower, such other Obligor or
such Subsidiary;
(c) ACCELERATION OF OTHER INDEBTEDNESS. Any event or condition
shall occur which results in the acceleration of the maturity of any
Indebtedness of, or guaranteed by, the Borrower, any other Obligor or
any Subsidiary or enables the holder or holders of such other
Indebtedness or any trustee or agent for such holders (any required
notice of default having been given and any applicable grace period
having expired) to accelerate the maturity of such other Indebtedness;
(d) OTHER OBLIGATIONS. The Borrower, any other Obligor or any
Subsidiary shall fail to pay, when due, whether by acceleration or
otherwise, or perform or observe (subject to any applicable grace
period or waiver of such default) (i) any obligation or agreement of
the Borrower, such other Obligor or such Subsidiary to or with the
Lender (other than any obligation or agreement of the Borrower
hereunder and under any Notes) or (ii) any material obligation or
agreement of the Borrower, such other Obligor or such Subsidiary to or
with any other Person (other than (A) any such material obligation or
agreement constituting or related to Indebtedness, (B) accounts payable
arising in the ordinary course of business, and (C) any material
obligation or agreement of any Subsidiary to the Borrower or to any
other Subsidiary), except only to the extent that the occurrence of any
such failure is being contested by the Borrower, such other Obligor or
such Subsidiary, as the case may be, in good faith and by appropriate
proceedings and the Borrower, such other Obligor or such Subsidiary, as
applicable, shall have set aside on its books such reserves or other
appropriate provisions therefor as may be required by GAAP;
(e) INSOLVENCY. The Borrower, any other Obligor or any
Subsidiary becomes insolvent, or generally fails to pay, or admits in
writing its inability to pay, its debts as they mature, or applies for,
consents to, or acquiesces in, the appointment of a trustee, receiver
or other custodian for the Borrower, such other Obligor or such
Subsidiary, or for a substantial part of the property of the Borrower,
such other Obligor or such Subsidiary, or makes a general assignment
for the benefit of creditors; or, in the absence of such application,
consent or acquiescence, a trustee, receiver or other custodian is
appointed for the Borrower, any other Obligor or any Subsidiary or for
a substantial part of the property of the Borrower, any other Obligor
or any Subsidiary and is not discharged or dismissed within 30 days; or
any bankruptcy, reorganization, debt arrangement or other proceeding
under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding, is instituted by or against the Borrower, any
other Obligor or any Subsidiary; or any warrant of attachment or
similar legal process is issued against any substantial part of the
property of the Borrower, any other Obligor or any Subsidiary;
(f) ERISA. The institution by the Borrower or any ERISA
Affiliate of steps to terminate any Plan if, in order to effectuate
such termination, the Borrower or any ERISA Affiliate would be required
to make a contribution to such Plan or would incur a liability or
obligation to such Plan, in excess of $25,000; or the institution by
the PBGC of steps to terminate any Plan;
(g) NON-COMPLIANCE WITH THIS AGREEMENT.
(i) The Borrower shall fail to comply with any of the
Borrower's agreements set forth in Section 7 of Supplement A);
or
(ii) The Borrower shall fail to comply with any of
the Borrower's agreements set forth in this Agreement (and
not constituting an Event of Default under any of the other
subsections of this Section 7.1, including, without
limitation, Section 7.1(g)(i)), and such failure to comply
shall continue for ten days;
(h) NON-COMPLIANCE WITH LOAN DOCUMENTS. Failure by the
Borrower, any other Obligor or any Subsidiary to comply with any of its
respective agreements set forth in any Loan Documents other than this
Agreement (and not constituting an Event of Default under any of the
other subsections of this Section 7.1), and such failure to comply
shall continue after the grace period (if any) set forth therein;
(i) WARRANTY. Any warranty made by the Borrower or any other
Obligor in any of the Loan Documents is untrue or misleading in any
material respect when made or deemed made; or any schedule, statement,
report, notice, certificate or other writing furnished by the Borrower
or any other Obligor to the Lender is untrue or misleading in any
material respect on the date as of which the facts set forth therein
are stated or certified; or any certification made or deemed made by
the Borrower or any other Obligor to the Lender is untrue or misleading
in any material respect on or as of the date made or deemed made;
(j) LITIGATION. There shall be entered against any one of the
Borrower, any other Obligor or any Subsidiary one or more judgments or
decrees in excess of $100,000 in the aggregate at any one time
outstanding, excluding those judgments or decrees (i) that shall have
been outstanding less than 30 calendar days from the entry thereof,
(ii) for and to the extent which the Borrower, such Obligor or such
Subsidiary, as applicable, is insured and with respect to which the
insurer has assumed responsibility in writing or for and to the extent
which the Borrower, such Obligor or such Subsidiary, as applicable, is
otherwise indemnified if the terms of such indemnification are
satisfactory to the Lender or (iii) that are subject to a properly
perfected and timely appeal and execution under which have been stayed
by bond;
(k) DEATH OF OBLIGOR. If any natural person who is an Obligor,
partner in a partnership which is an Obligor, or owner of a material
interest in a corporate Obligor, shall die or be declared legally
incompetent;
(l) VALIDITY. If the validity or enforceability of any of the
Loan Documents shall be challenged by the Borrower, any other Obligor
or any other Person, or shall fail to remain in full force and effect;
(m) CONDUCT OF BUSINESS. If the Borrower, any other Obligor or
any Subsidiary is enjoined, restrained or in any way prevented by court
order, which has not been dissolved or stayed within five Business
Days, from conducting all or any material part of its business affairs;
[and]
(n) ADVERSE EVENT. The Lender shall have determined in good
faith (which determination shall be conclusive) that (i) an Adverse
Event has occurred or (ii) the Lender's interest in any material
Collateral or Third Party Collateral has been adversely affected or
impaired, or the value thereof to the Lender has been diminished to a
material extent, or (iii) the prospect of payment or performance of any
obligation or agreement of the Borrower or any other Obligor under any
of the Loan Documents is materially impaired, and the condition giving
rise to such determination does not constitute an Event of Default
under any of the other subsections of this Section 7.1; and
(o) CHANGE IN MANAGEMENT OR LINE(S) OF BUSINESS. Any
substantial change in the senior management of the Borrower or any
change in the Borrower's line(s) of business.
7.2 EFFECT OF EVENT OF DEFAULT; REMEDIES.
(a) In the event that one or more Events of Default described
in Section 7.1(e) shall occur, then the Credit extended under this
Agreement shall terminate and all Obligations hereunder and under any
Notes shall be immediately due and payable without demand, notice or
declaration of any kind whatsoever.
(b) In the event an Event of Default other than one described
in Section 7.1(e) shall occur, then the Lender may declare all
Obligations hereunder and under any Notes immediately due and payable
without demand or notice of any kind whatsoever, whereupon the Credit
extended under this Agreement shall terminate and all Obligations
hereunder and under any Notes shall be immediately due and payable. The
Lender shall promptly advise the Borrower of any such declaration, but
failure to do so shall not impair the effect of such declaration.
(c) In the event of the occurrence of any Event of Default the
Lender may exercise any one or more or all of the following remedies,
all of which are cumulative and non-exclusive:
(i) any remedy contained in the Loan Documents or any
Supplemental Documentation;
(ii) any rights and remedies available to the Lender
under the Uniform Commercial Code as enacted in Minnesota as
of the date of this Agreement, and any other applicable law;
(iii) without notice, demand or legal process of any
kind, the Lender may take possession of any or all of the
Collateral (in addition to Collateral which it might already
have in its possession), wherever it might be found, and for
that purpose may pursue the same wherever it may be found, and
may enter into any premises where any of the Collateral may be
or is supposed to be, and search for, take possession of,
remove, keep and store any of the Collateral until the same
shall be sold or otherwise disposed of, and the Lender shall
have the right to store the same in any of the Borrower's
premises without cost to the Lender;
(iv) at the Lender's request, the Borrower will, at
the Borrower's expense, assemble the Collateral and make it
available to the Lender at a place or places to be designated
by the Lender which is reasonably convenient to the Lender and
the Borrower; and
(v) the Lender at its option, and pursuant to
notification given to the Borrower as provided for below, may
sell any Collateral actually or constructively in its
possession at public or private sale and apply the proceeds
thereof as provided below.
7.3 SETOFF. In addition to and not in limitation of all rights of
offset that the Lender or any other holder of a Note may have under applicable
law, the Lender or such other holder of a Note shall, upon the occurrence of any
Event of Default, or any Unmatured Event of Default described in Section 7.1(e)
hereof, have the right to appropriate and apply to the payment of the
Obligations any and all balances, credits, deposits, accounts or moneys of the
Borrower then or thereafter with the Lender, or any Affiliate, or other holder.
ARTICLE VIII COLLATERAL AND THE LENDER'S RIGHTS
8.1 NOTICE OF DISPOSITION OF COLLATERAL. Any notification of intended
disposition of any of the Collateral required by law shall be deemed reasonably
and properly given if given at least ten calendar days before such disposition.
8.2 APPLICATION OF PROCEEDS OF COLLATERAL. Any proceeds of any
disposition by the Lender of any of the Collateral may be applied by the Lender
to the payment of expenses in connection with the taking possession of, storing,
preparing for sale, and disposition of Collateral, including Attorneys' Fees and
legal expenses, and any balance of such proceeds may be applied by the Lender
toward the payment of such of the Obligations, and in such order of application,
as the Lender may from time to time elect.
8.3 CARE OF COLLATERAL. The Lender shall be deemed to have exercised
reasonable care in the custody and preservation of any Collateral in its
possession if it takes such action for that purpose as the Borrower requests in
writing, but failure of the Lender to comply with such request shall not, of
itself, be deemed a failure to exercise reasonable care, and no failure of the
Lender to preserve or protect any rights with respect to such Collateral against
prior parties, or to do any act with respect to the preservation of such
Collateral not so requested by the Borrower, shall be deemed a failure to
exercise reasonable care in the custody or preservation of such Collateral.
8.4 PERFORMANCE OF BORROWER'S OBLIGATIONS. The Lender shall have the
right, but shall not be obligated, to discharge any claims against or Liens, and
any Taxes at any time levied or placed upon any or all Collateral including,
without limitation, those arising under statute or in favor of landlords, taxing
authorities, government, public and/or private warehousemen, common and/or
private carriers, processors, finishers, draymen, coopers, dryers, mechanics,
artisans, laborers, attorneys, courts, or others. The Lender may also pay for
maintenance and preservation of Collateral. The Lender may, but is not obligated
to, perform or fulfill any of the Borrower's responsibilities under this
Agreement which the Borrower has failed to perform or fulfill.
8.5 LENDER'S RIGHTS. None of the following shall affect the obligations
of the Borrower to the Lender under this Agreement or the Lender's rights with
respect to the remaining Collateral or any Third Party Collateral (any or all of
which actions may be taken by the Lender at any time, whether before or after an
Event of Default, at its sole and absolute discretion and without notice to the
Borrower):
(a) acceptance or retention by the Lender of other property or
interests in property as security for the Obligations, or acceptance or
retention of any obligor(s), in addition to the Borrower, with respect
to any Obligations;
(b) release of its security interest in, or surrender or
release of, or the substitution or exchange of or for, all or any part
of the Collateral or any Third Party Collateral or any other property
securing any Obligations (including, without limitation, any property
of any Obligor other than the Borrower), or any extension or renewal
for one or more periods (whether or not longer than the original
period) , or release, compromise, alteration or exchange, of any
obligations of any guarantor or other Obligor with respect to any
Collateral or any such property;
(c) extension or renewal for one or more periods (whether or
not longer than the original period), or release, compromise,
alteration or exchange of any Obligations, or release or compromise of
any obligation of any Obligor with respect to any Obligations; or
(d) failure by the Lender to resort to other security or
pursue any Person liable for any Obligations before resorting to the
Collateral.
ARTICLE IX CONDITIONS PRECEDENT
9.1 CONDITIONS PRECEDENT TO INITIAL LOAN. The obligation of the Lender
to make the initial Loan shall be subject to the satisfaction of the following
conditions precedent, in addition to the applicable conditions precedent set
forth in Section 9.2:
9.1.1 NO CHANGE IN CONDITION. No change in the condition or
operations, financial or otherwise, of the Borrower, any other Obligor
or any Subsidiary, shall have occurred which change, in the sole credit
judgment of the Lender, may constitute an Adverse Event or have a
material adverse effect on any Collateral or Third Party Collateral or
the Lender's interest therein.
9.1.2 ACCOUNTING METHODS. The Borrower shall not have made any
material, as determined by the Lender, change in its accounting methods
or principles.
9.1.3 SURVEY. The Lender shall have completed its updated
survey of the business, operations and assets of the Borrower, each
Subsidiary and each other Obligor, and such survey shall provide the
Lender with results and information which, in the Lender's
determination, are satisfactory to the Lender.
9.1.4 NO MATERIAL TRANSACTION. None of the Borrower, any other
Obligor or any Subsidiary shall have entered into any material, as
determined by the Lender, commitment or transaction, including, without
limitation, transactions for borrowings and capital expenditures, which
are not in the ordinary course of their respective businesses.
9.1.5 LITIGATION. No litigation shall be outstanding or have
been instituted or threatened which the Lender determines to be
material against the Borrower, any other Obligor or any Subsidiary.
9.1.6 FILING OF DOCUMENTS. All financing statements, mortgages
and other documents relating to the Collateral and Third Party
Collateral shall have been filed or recorded, as appropriate.
9.1.7 DELIVERY OF DOCUMENTS. The Borrower shall have delivered
to the Lender with each of the following, each duly executed and dated
the date of the initial Loan or such earlier date as shall be
acceptable to the Lender:
(a) RESOLUTIONS. A copy, duly certified by the
secretary or an assistant secretary of the Borrower, of (i)
the resolutions of the Board of Directors of the Borrower
authorizing (1) the borrowings by the Borrower hereunder, (2)
the execution, delivery and performance by the Borrower of the
Loan Documents to which the Borrower is a party or by which it
is bound and (3) certain officers or employees of the Borrower
to request borrowings by telephone and to execute Borrowing
Base Certificates; (ii) all documents evidencing other
necessary corporate action; and (iii) all approvals or
consents, if any, with respect to the Loan Documents;
(b) INCUMBENCY CERTIFICATE. A certificate of the
secretary or an assistant secretary of the Borrower,
certifying the names of the officers of the Borrower
authorized to sign the Loan Documents to which it is a party
and any Supplemental Documentation, together with the true
signatures of such officers;
(c) OTHER AGREEMENTS. Duly executed copies of each of
the Loan Documents not specifically identified herein which
the Lender determines to be necessary or desirable, each in
form and content satisfactory to the Lender;
(d) OPINION. A legal opinion of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
PLLP, counsel to the Borrower, substantially in the form set
forth as Exhibit C;
(e) BORROWER'S CERTIFICATE. The certificate of the
President of the Borrower certifying, to the best of his/her
knowledge after diligent inquiry, to the fulfillment of all
conditions precedent to closing and funding the secured
financing transaction contemplated by this Agreement and to
the truth and accuracy, as of such date, of the
representations and warranties of the Borrower contained in
the Loan Documents to which the Borrower is a party;
(f) INSURANCE. Evidence satisfactory to the Lender of
the existence of insurance on the Collateral and Third Party
Collateral in amounts and with insurers acceptable to the
Lender, together with evidence establishing that the Lender is
named as a loss payee and, if required by the Lender,
additional insured, on all related insurance policies and an
endorsement or an independent instrument from each issuer of
an insurance policy substantially in the form set forth as
Exhibit D;
(g) BYLAWS. A copy, duly certified by the secretary
or an assistant secretary of the Borrower, of the Borrower's
Bylaws;
(h) ARTICLES OF INCORPORATION. A copy, duly certified
by the secretary or an assistant secretary of the Borrower, of
the Borrower's Articles of Incorporation;
(i) GOOD STANDING CERTIFICATES. Certificates of good
standing as to the Borrower and each of other corporate or
partnership Obligor issued by the Secretary of State of the
state in which the Borrower or such other Obligor, as
applicable, is organized, and each other state in which the
failure of the Borrower or such other Obligor, as applicable,
to be in good standing would constitute an Adverse Event or
have a material adverse effect on the Lender's rights in any
Collateral or Third Party Collateral;
(j) DISBURSEMENT LETTER. Written authorization and
instructions from the Borrower, in form satisfactory to the
Lender, for disbursement of the proceeds of the initial Loan;
(l) LANDLORDS AND WAREHOUSEMEN WAIVERS. If required
by the Lender, (i) from each lessor or landlord identified on
Schedule 4.12 or Schedule 4.13, a landlord waiver and (ii)
from each operator of a public warehouse where Inventory is
stored, a letter from such operator, in each case in form
acceptable to the Lender; and
(m) OTHER. Such other documents, instruments or
agreements as the Lender shall determine to be necessary or
desirable.
9.1.8 SECURITY INTEREST. The Lien in the Collateral and Third
Party Collateral granted to the Lender to secure the Obligations shall
be senior, perfected Liens except as otherwise agreed by the Lender.
9.1.9 RESTRICTED ACCESS LOCKBOX; COLLATERAL ACCOUNT AND
DISBURSEMENT ACCOUNT AGREEMENTS. The Borrower shall have entered into
(a) a Restricted Access Lockbox; Collateral Account and Disbursement
Account Agreement, substantially in the form of Exhibit E, with the
Lender and FBNA, and (b) a Controlled Disbursement Account Agreement,
substantially in the form set forth as Exhibit F, with First Bank,
Havre, Montana and the Lender for, among other things, the collection
and remittance to the Lender of cash proceeds of the Collateral.
9.1.10 EFFECT OF LAW. No law or regulation affecting the
Lender's entering into the secured financing transaction contemplated
by this Agreement shall impose upon the Lender any material obligation,
fee, liability, loss, cost, expense or damage.
9.1.11 EXHIBITS; SCHEDULES. All Exhibits and Schedules to the
Loan Documents shall have been completed in form and substance
satisfactory to the Lender and shall contain no facts or information
which the Lender, in its sole judgment, determines to be unacceptable.
9.2 CONDITIONS PRECEDENT TO ALL LOANS. The obligation of the Lender to
make any Loan or to issue, or cause to be issued, any Letter of Credit
(including the initial Loan) shall be subject to the satisfaction of the
following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. All of the representations
and warranties of the Borrower and each other Obligor set forth in the
Loan Documents to which the Borrower or such other Obligor, as
applicable, is a party shall be true and correct.
(b) EVENT OF DEFAULT. Immediately before and after making such
Loan or issuing, or causing to be issued such Letter of Credit, no
Event of Default or Unmatured Event of Default shall exist or be
continuing.
ARTICLE X INDEMNITY
10.1 ENVIRONMENTAL AND SAFETY AND HEALTH INDEMNITY. The Borrower hereby
indemnifies the Lender and agrees to hold the Lender harmless from and against
any and all losses, liabilities, damages, injuries, costs, expenses and claims
of any and every kind whatsoever (including, without limitation, court costs and
Attorneys' Fees) which at any time or from time to time may be paid, incurred or
suffered by, or asserted against, the Lender for, with respect to, or as a
direct or indirect result of the violation by the Borrower or any Subsidiary, of
any Environmental Law or Occupational Safety and Health Law; or with respect to,
or as a direct or indirect result of (a) the presence on or under, or the
escape, seepage, leakage, spillage, disposal, discharge, emission or release
from, properties utilized by the Borrower and/or any Subsidiary in the conduct
of its business into or upon any land, the atmosphere, or any watercourse, body
of water or wetland, of any Hazardous Material or other hazardous, toxic or
dangerous waste, substance or constituent, or other substance (including,
without limitation, any losses, liabilities, damages, injuries, costs, expenses
or claims asserted or arising under the Environmental Laws) or (b) the existence
of any unsafe or unhealthful condition on or at any premises utilized by the
Borrower and/or any Subsidiary in the conduct of its business. The provisions of
and undertakings and indemnification set out in this Section 10.1 shall survive
satisfaction and payment of the Obligations and termination of this Agreement.
10.2 GENERAL INDEMNITY. In addition to the payment of expenses pursuant
to Section 12.3, whether or not the transactions contemplated hereby shall be
consummated, the Borrower agrees to indemnify, pay and hold the Lender and any
holder of any Notes, and the officers, directors, employees, agents, and
affiliates of the Lender and such holders (collectively called the
"Indemnitees") harmless from and against, any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbursements of counsel for any of
such Indemnitees in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not any of such
Indemnitees shall be designated a party thereto), that may be imposed on,
incurred by, or asserted against the Indemnitees, in any manner relating to or
arising out of the Loan Documents, the statements contained in any commitment
letters delivered by the Lender, the Lender's agreement to make the Loans or to
issue Letters of Credit hereunder, or the use or intended use of any Letters of
Credit, or the use or intended use of the proceeds of any of the Loans (the
"Indemnified Liabilities"); provided, however, that the Borrower shall have no
obligation to an Indemnitee hereunder with respect to indemnified liabilities
arising from the gross negligence or willful misconduct of an Indemnitee. 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 shall 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. The provisions of the undertakings and indemnification set out in this
Section 10.2 shall survive satisfaction and payment of the Obligations and
termination of this Agreement.
10.3 CAPITAL ADEQUACY. If the Lender shall reasonably determine that
the application or adoption of any law, rule, regulation, directive,
interpretation, treaty or guideline regarding capital adequacy, or any change
therein or in the interpretation or administration thereof, whether or not
having the force or law (including, without limitation, application of changes
to Regulation H and Regulation Y of the Federal Reserve Board issued by the
Federal Reserve Board on January 19, 1989 and regulations of the Comptroller of
the Currency, Department of the Treasury, 12 CFR Part 3, Appendix A, issued by
the Comptroller of the Currency on January 27, 1989) increases the amount of
capital required or expected to be maintained by the Lender or any Person
controlling the Lender, and such increase is based upon the existence of the
Lender's obligations hereunder and other commitments of this type, then from
time to time, within 10 days after demand from the Lender, the Borrower shall
pay to the Lender such amount or amounts as will compensate the Lender or such
controlling Person, as the case may be, for such increased capital requirement.
The determination of any amount to be paid by the Borrower under this Section 10
shall take into consideration the policies of the Lender or any Person
controlling the Lender with respect to capital adequacy and shall be based upon
any reasonable averaging, attribution and allocation methods. A certificate of
the Lender setting forth the amount or amounts as shall be necessary to
compensate the Lender as specified in this Section 10.3 shall be delivered to
the Borrower and shall be conclusive in the absence of manifest error.
ARTICLE XI ADDITIONAL PROVISIONS
Additional provisions are set forth in Supplement A.
ARTICLE XII GENERAL
12.1 BORROWER'S WAIVER. Except as otherwise provided for in this
Agreement, the Borrower waives (a) presentment, demand and protest and notice of
presentment, protest, default, non-payment, maturity, release, compromise,
settlement, one or more extensions or renewals of any or all commercial paper,
accounts, documents, instruments, chattel paper and guaranties at any time held
by the Lender on which the Borrower may in any way be liable and hereby ratifies
and confirms whatever the Lender may do in this regard; (b) all rights to notice
and a hearing prior to the Lender's taking possession or control of, or the
Lender's relevy, attachment or levy on or of, the Collateral or any bond or
security which might be required by any court prior to allowing the Lender to
exercise any of the Lender's remedies; and (c) the benefit of all valuation,
appraisement and exemption laws. The Borrower acknowledges that it has been
advised by counsel of its choice with respect to this Agreement and the
transactions evidenced by this Agreement.
12.2 EXPENSES; ATTORNEY'S FEES. The Borrower agrees, whether or not any
Loan is made hereunder, to pay the Lender upon demand for all expenses and
Attorneys' Fees, including, without limitation, those incurred by the Lender in
connection with (a) the preparation, negotiation and execution of the Loan
Documents, (b) the preparation of any and all amendments to the Loan Documents
and all other instruments or documents provided for therein or delivered or to
be delivered thereunder or in connection therewith, (c) the collection or
enforcement of the Borrower's or any other Obligor's obligations under any of
the Loan Documents and (d) the collection or enforcement of any of the Lender's
rights in or to any Collateral or Third Party Collateral. The Borrower also
agrees (y) to indemnify and hold the Lender harmless from any loss or expense
which may arise or be created by the acceptance of telephonic or other
instructions for making Loans and (z) to pay, and save the Lender harmless from
all liability for, any stamp or other taxes which may be payable with respect to
the execution or delivery of this Agreement or the issuance of any Note or of
any other instruments or documents provided for herein or to be delivered
hereunder or in connection herewith. The Borrower's foregoing obligations shall
survive any termination of this Agreement.
12.3 LENDER FEES AND CHARGES. The Borrower agrees to pay the Lender, or
any Affiliate, on demand the customary fees and charges of the Lender, or such
Affiliate, for maintenance of accounts with the Lender, or such Affiliate, or
for providing other services to the Borrower. The Lender may, in its sole and
absolute discretion, provide for such payment by charging the Disbursment
Account or any other account of the Borrower with FBNA or any other Affiliate,
or advancing the amount thereof to the Borrower as a Loan.
12.4 NO WAIVER BY LENDER; AMENDMENTS. No failure or delay on the part
of the Lender in the exercise of any power or right, and no course of dealing
between the Borrower and the Lender shall operate as a waiver of such power or
right, nor shall any single or partial exercise of any power or right preclude
other or further exercise thereof or the exercise of any other power or right.
The remedies provided for herein are cumulative and not exclusive of any
remedies which may be available to the Lender at law or in equity. No notice to
or demand on the Borrower not required hereunder shall in any event entitle the
Borrower to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the right of the Lender to any other or
further action in any circumstances without notice or demand. No amendment,
modification or waiver of, or consent with respect to, any provision of this
Agreement shall in any event be effective unless the same shall be in writing
and signed and delivered by the Lender. Any waiver of any provision of this
Agreement, and any consent to any departure by the Borrower from the terms of
any provision of this Agreement, shall be effective only in the specific
instance and for the specific purpose for which given.
12.5 NOTICE. Except as otherwise expressly provided herein, any notice
hereunder to the Borrower or the Lender shall be in writing (including
telegraphic, telex, or telecopy communication) and shall be given to the
Borrower or the Lender at its address, telex number or fax number set forth on
the signature pages hereof or at such other address, telex number or telecopier
number as the Borrower or the Lender may, by written notice, designate as its
address, telex number or fax number for purposes of notice hereunder. All such
notices shall be deemed to be given when transmitted by telex and the
appropriate answer back is received, transmitted by fax, delivered to the
telegraph office, delivered by courier, personally delivered or, in the case of
notice by mail, three days following deposit in the United States mails,
properly addressed as herein provided, with proper postage prepaid.
12.6 PARTICIPATIONS; INFORMATION. The Borrower hereby consents to the
Lender's grant of participations in or sale, assignment, transfer or other
disposition, at any time and from time to time hereafter, of the Loan Documents,
or of any portion of any thereof, including without limitation lender's rights,
titles, interests, remedies, powers and/or duties. The Lender may furnish any
information concerning the Borrower in the possession of the Lender from time to
time to assignees of the rights and/or obligations of the Lender hereunder and
to participants in any Loan (including prospective assignees and participants)
and may furnish information in response to credit inquiries consistent with
general banking practice.
12.7 SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
12.8 SUCCESSORS. This Agreement shall be binding upon the Borrower and
the Lender and their respective successors and assigns, and shall inure to the
benefit of the Borrower and the Lender and the successors and assigns of the
Lender. The Borrower shall not assign its rights or duties hereunder without the
consent of the Lender.
12.9 ENTIRE AGREEMENT. This Agreement and the other Loan Documents
embody the entire agreement and understanding between the Borrower and the
Lender with respect to the subject matter hereof and thereof. This Agreement
supersedes all prior agreements and understandings relating to the subject
matter hereof.
12.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and either of the parties hereto may execute this Agreement by
signing any such counterpart.
12.11 CONSTRUCTION. The Borrower acknowledges that this Agreement shall
not be binding upon the Lender or become effective until and unless accepted by
the Lender, in writing. If so accepted by the Lender, THE LOAN DOCUMENTS AND ANY
SUPPLEMENTAL DOCUMENTATION SHALL, UNLESS OTHERWISE EXPRESSLY PROVIDED THEREIN,
BE DEEMED TO HAVE BEEN NEGOTIATED AND ENTERED INTO IN, AND SHALL BE GOVERNED AND
CONTROLLED BY THE LAWS OF, THE STATE OF MINNESOTA AS TO INTERPRETATION,
ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT, CHOICE OF LAW, AND IN ALL OTHER
RESPECTS, INCLUDING, BUT NOT LIMITED TO, THE LEGALITY OF THE INTEREST RATE AND
OTHER CHARGES, BUT EXCLUDING PERFECTION OF SECURITY INTERESTS AND LIENS WHICH
SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE RELEVANT JURISDICTION.
12.12 CONSENT TO JURISDICTION. To induce the Lender to accept this
Agreement, the Borrower, irrevocably, agrees that, subject to the Lender's sole
and absolute election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT,
ARISING OUT OF OR FROM OR RELATED TO THE LOAN DOCUMENTS OR ANY SUPPLEMENTAL
DOCUMENTATION OR THE COLLATERAL SHALL BE LITIGATED IN COURTS HAVING SITUS WITHIN
THE CITY OF MINNEAPOLIS, STATE OF MINNESOTA. THE BORROWER HEREBY CONSENTS AND
SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURTS LOCATED WITHIN
SAID CITY AND STATE AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON THE
BORROWER, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED
MAIL DIRECTED TO THE BORROWER AT THE ADDRESS STATED ON THE SIGNATURE PAGE HEREOF
AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF.
12.13 SUBSIDIARY REFERENCE. Any reference herein to a Subsidiary or
Subsidiaries of the Borrower, and any financial definition, ratio, restriction
or other provision of this Agreement which is stated to be applicable to "the
Borrower" and the Subsidiaries or which is to be determined on a "consolidated"
or "consolidating" basis, shall apply only to the extent the Borrower has any
Subsidiaries and, where applicable, to the extent any such Subsidiaries are
consolidated with the Borrower for financial reporting purposes.
12.14 WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER EACH WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS (a) UNDER THE LOAN DOCUMENTS OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT
OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
THEREWITH OR (b) ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS
AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
PREMIUMWEAR, INC.
By: (illegible
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Title: VP Finance
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Address:
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▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
FBS BUSINESS FINANCE CORPORATION
By: (illegible)
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Title: vp
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Address:
First Bank Place MPFP0804
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▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Business Credit Division
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇