Exhibit 4
LOAN AGREEMENT
THIS LOAN AGREEMENT (the "Agreement") is made and entered into this 9th
day of March, 1998, by and among LaSALLE NATIONAL BANK, a national banking
association (the "Lender"), and XXXX INDUSTRIES, INC., a Delaware corporation
("Borrower").
THE PARTIES HERETO agree as follows:
ARTICLE ONE. DEFINITIONS
SECTION 1.1. DEFINED TERMS. In addition to the terms defined elsewhere in
this Agreement or any Exhibit hereto, the following terms shall have the
following meanings:
(A) "ACCOUNT DEBTOR" shall mean any Person who is or who may become
obligated to Borrower under, with respect to, or on account of an Account
Receivable.
(B) "ACCOUNTS RECEIVABLE" shall mean any and all accounts (as such term is
defined in the UCC) of Borrower and each and every right of Borrower to: (i) the
payment of money; or (ii) the receipt or disbursement of products, goods,
services or other valuable consideration, whether such right now exists or
hereafter arises, whether such right arises out of a sale, lease or other
disposition of inventory, or out of a rendering of services, or any other
transaction or event, whether such right is created, generated or earned by
Borrower or by some other Person who subsequently transfers its interest to
Borrower, whether such right is or is not already earned by performance, and
howsoever such right maybe evidenced, together with all other rights and
interests (including all liens and security interests) which Borrower may at any
time have by law or agreement against any Account Debtor or other Person
obligated to make any such payment or against any property of such Account
Debtor or other Person.
(C) "AFFILIATE" shall mean any Person which, directly or indirectly, owns
or controls, on an aggregate basis, at least a 5% interest in any other Person,
or which is controlled by or is under common control with any other Person. For
purposes of this definition, "control" shall mean the possession, directly or
indirectly, of the power to direct or to cause the direction of management and
policies, whether through ownership of voting securities, by contract or
otherwise.
(D) "CODE" shall mean the Internal Revenue Code of 1986, along with the
regulations issued pursuant thereto, as amended from time to time.
(E) "DOCUMENTS" shall mean this Agreement, the Revolving Note, and any
other instrument or document required or contemplated hereunder or thereunder,
whether now existing or at any time hereafter arising.
(F) "ENVIRONMENTAL LAWS" shall mean all federal, state and local laws,
rules, regulations, ordinances, orders and consent decrees relating to
environmental matters, including, without limitation, the Resource Conservation
and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Toxic Substances
Control Act, the Clean Water Act, the Clean Air Act, and the Superfund
Amendments and Reauthorization Act of 1986, State and Federal Superlien and
Environmental Cleanup Programs and Laws, and U.S. Department of
Transportation Regulations.
(G) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, along with the regulations issued pursuant thereto, as amended from time
to time.
(H) "EVENT OF DEFAULT" or "EVENTS OF DEFAULT" shall have the meaning set
forth in Section 7.1 of this Agreement.
(I) "LIABILITIES" shall mean all liabilities, indebtedness and obligations
of Borrower to Lender, howsoever created, arising or evidenced, whether now
existing or hereafter arising, whether direct or indirect (including those
acquired by assignment), absolute or contingent, due or to become due, primary
or secondary, joint or several, whether existing or arising through discount,
overdraft, purchase, direct loan, participation, operation of law, or otherwise,
including, without limitation, all liabilities, indebtedness and obligations of
Borrower to the Lender pursuant to any letter of credit, any standby letter of
credit or any of the Documents, and reasonable outside attorneys' and
paralegals' fees or charges relating to the preparation of the Documents and the
enforcement of Lender's rights, remedies, powers and security interests under
this Agreement, including, without limitation, the drafting of any documents in
the preparation and enforcement of the Loans.
(J) "LOANS" shall mean collectively, the Revolving Loans and each Letter
of Credit.
(K) "NET WORTH" shall mean the Borrower's total amount of issued and
outstanding capital stock, plus paid in capital and retained earnings, less
treasury stock, all as defined by generally accepted accounting principles.
(L) "NOTE" shall mean the Revolving Note.
(M) "PERSON" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, limited
liability company, corporation, institution, entity, party or government
(whether national, federal, state, county, city, municipal or otherwise
including, without limitation, any instrumentality, division, agency, body or
department thereof).
(N) "PRIME RATE" shall mean, as of the date of any determination, the rate
per annum then most recently announced publicly by the Lender as its prime rate
of interest in Chicago, Illinois. The Prime Rate is the interest rate charged
by the Lender on commercial loans to a substantial number of the Lender's good
business customers, but it is not necessarily the Lender's lowest interest rate
charged to any customer. The Prime Rate is subject to change by the Lender
without notice of any kind.
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(O) "REVOLVING LOAN" or "REVOLVING LOANS" shall mean the loans being made
by the Lender on a revolving basis pursuant to Section 2.1 of this Agreement.
(P) "REVOLVING NOTE" shall mean the revolving note given to the Lender by
Borrower pursuant to Section 2.3 of this Agreement.
(Q) "TANGIBLE NET WORTH" shall mean Borrower's Net Worth minus the
aggregate amount of any asset that would be treated as an intangible under
generally accepted accounting principles.
(R) "UCC" shall mean the Uniform Commercial Code as enacted and amended in
the State of Illinois.
SECTION 1.2. OTHER TERMS. Accounting terms used in this Agreement that
are not specifically defined shall have the meanings customarily given them in
accordance with generally accepted accounting principles. Terms used in this
Agreement that are defined in the UCC, shall, unless the context indicates
otherwise or are otherwise defined in this Agreement, have the meanings provided
for by the UCC.
ARTICLE TWO. LOANS
SECTION 2.1. LOAN AMOUNT.
(A) Subject to the terms and conditions of this Agreement, on the date
upon which all of the terms and conditions of the Documents have been met or
fulfilled to Lender's satisfaction (the "Closing Date"), Lender agrees to make
loans to Borrower on a revolving basis (such loans being herein called
individually, a "Revolving Loan," and collectively, the "Revolving Loans") from
time to time in such amounts as Borrower may from time to time request up to an
aggregate amount outstanding of $15,000,000.00; provided, however, that: (i)
each borrowing by Borrower hereunder with respect to any Revolving Loan shall be
in the aggregate principal amount of at least $10,000.00; (ii) Lender's
commitment to make Revolving Loans shall remain in effect for a 364 day period
to and including March 8, 1999 (the "Revolver Termination Date"); (iii)
notwithstanding any provision herein to the contrary (1) upon the occurrence
and continuance of any Event of Default, and in each such event, the Lender
may, in its sole discretion, immediately cease to make Revolving Loans; and
(2) on the Revolver Termination Date, Borrower shall repay to the Lender all
Revolving Loans, plus interest accrued to the date of payment; and (iv) for a
period of at least 30 consecutive days at any time from the date hereof to the
Revolver Termination Date, the amount of Revolving Loans outstanding shall be
zero.
(B) The Lender agrees to issue letters of credit (individually, a "Letter
of Credit," and collectively, the "Letters of Credit") at the Borrower's request
on a revolving basis from time to time; provided, however, that: (a) in no event
shall total amount of Letters of Credit and Revolving Loans issued and
outstanding exceed $15,000,000.00; (b) all Letters of Credit shall expire prior
to the
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Revolver Termination Date; (c) Borrower shall immediately pay to Lender an
amount equal to all amounts drawn on a Letter of Credit, without notice or
demand by Lender, on the day such draw is paid by Lender; (d) all Letters of
Credit shall be in form and substance and in favor of beneficiaries
satisfactory to Lender; (e) no Letter of Credit shall be issued until
Borrower executes a properly completed application and agreement for such
Letter of Credit, in form satisfactory to Lender; (f) Borrower shall pay a
nonrefundable fee to Lender for each Letter of Credit in an amount equal to
the Letter of Credit amount multiplied by 75 basis points; and (g) no Letters
of Credit shall be issued upon the occurrence and continuance of any Event of
Default. Interest on any amount owed by Borrower to Lender pursuant to this
Section 2.1(B) shall be paid upon demand, and shall accrue at the Prime Rate.
Upon the occurrence and continuance of an Event of Default, interest shall
accrue and be payable of the Prime Rate plus 2%.
SECTION 2.2. USE OF LOAN PROCEEDS. The proceeds of any borrowing by
Borrower pursuant to the Loans shall be used by Borrower solely to refinance
existing bank debt, provide working capital for joint venture investments, and
provide ongoing working capital support in the form of direct borrowings and
standby and trade letters of credit.
SECTION 2.3. REVOLVING NOTE. The Revolving Loans shall be evidenced by a
promissory note (herein called the "Revolving Note") in the form attached
hereto, and made a part hereof, as Exhibit 2.3, dated the date first above
written, payable to the order of Lender, in the principal amount of
$15,000,000.00. The date and amount of each Revolving Loan made by Lender and
of each repayment of principal thereon received by Lender shall be recorded by
Lender in its records and the aggregate unpaid principal amount shown on such
records shall be rebuttable, presumptive evidence of the principal owing and
unpaid on such Revolving Note. The failure to record any such amount on such
records shall not, however, limit or otherwise affect the obligations of
Borrower hereunder or under the Revolving Note to repay the principal amount of
the Revolving Loans together with all interest accruing thereon. The unpaid
principal amount from time to time outstanding on the Revolving Note shall, at
Borrower's choice, bear interest at either: (a) the Prime Rate, adjusted as of
each change of the Prime Rate (each Revolving Loan bearing interest at such rate
a "Prime Rate Loan"); or (b) provided that an Event of Default has not occurred
and is not continuing, a rate per annum that shall be 75 basis points in excess
of the per annum rate of interest at which U.S. dollar deposits of an amount
comparable to the amount of the Revolving Loan and for a period equal to the
relevant Interest Period (as hereinafter defined) are offered generally to
Lender (rounded upward if necessary, to the nearest 1/16 of 1.0%) in the London
Interbank Eurodollar market at 10:00 a.m. (London time) two Business Days prior
to the commencement of each Interest Period ("LIBOR" and each Revolving Loan
bearing interest at such rate a "LIBOR Loan"), such rate to remain fixed for
such Interest Period. "Interest Period" shall mean 30, 60, 90, or 180 day
periods as selected from time to time by the Borrower by irrevocable notice (in
writing, by telex, telegram or cable) given to Lender not less than two Business
Days prior to the first day of each respective Interest Period commencing on the
date hereof; provided that: (i) each such Interest Period may be continued upon
its expiration by Borrower by irrevocable notice (in writing, by telex, telegram
or cable) given to Lender not less than two Business Days prior to the
expiration thereof, which notice shall specify that such Interest Period shall
continue for a one-month, two month or three month
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period; (ii) the final Interest Period shall be such that its expiration
occurs on or before the stated maturity date hereof; (iii) if for any reason
the Borrower shall fail to select time a period, then interest on such LIBOR
Loan shall accrue and be payable at the Prime Rate; and (iv) each such LIBOR
Loan shall be in an amount of at least $500,000.00, and shall be in
$100,000.00 increments. "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which banks in London, England, and Chicago,
Illinois, are required or permitted by law to close.
Lender's determination of LIBOR as provided above shall be conclusive,
absent manifest error. Further, if Lender determines in good faith (which
determination shall be conclusive, absent manifest error), prior to the
commencement of any Interest Period that: (a) U.S. dollar deposits of
sufficient amount and maturity for funding the Revolving Loan are not available
to Lender in the London Interbank Eurodollar market in the ordinary course of
business; or (b) by reason of circumstances that affect the London Interbank
Eurodollar market, adequate and fair means do not exist to ascertain the rate of
interest to be applicable to the Revolving Loan, Lender may, at its sole and
absolute option, promptly notify the Borrower that interest on the Revolving
Loan shall be determined using the Prime Rate.
If, after the date hereof, the introduction of, or any change in any
applicable law, treaty, rule, regulation or guideline or in the interpretation
or administration thereof by any governmental authority or any central bank or
other fiscal, monetary or other authority having jurisdiction over Lender or its
lending office (a "Regulatory Change"), shall, in the opinion of counsel to
Lender, make it unlawful for Lender to make or maintain the Revolving Loan
evidenced hereby, then Lender may, at its sole and absolute option, promptly
notify the Borrower that interest on the Revolving Loan shall be determined
using the Prime Rate. If, for any reason, the Revolving Loan is paid prior to
the last Business Day of any Interest Period, the Borrower agrees to indemnify
Lender against any loss, including any loss on redeployment of the funds repaid,
cost or expense incurred by Lender as a result of such prepayment. If any
Regulatory Change, whether or not having the force of law, shall (a) impose,
modify or deem applicable any assessment, reserve, special deposit or similar
requirement against assets held by, or deposits in or for the account of or
loans by, or any other acquisition of funds or disbursements by, Lender; (b)
subject Lender or the Revolving Loan to any tax, duty, charge, stamp tax, or fee
or change the basis of taxation of payments to Lender of principal or interest
due from the Borrower to Lender hereunder (other than a change in the taxation
of the overall net income of Lender); or (c) impose on Lender any other
condition regarding the Revolving Loan or Lender's funding thereof, and Lender
shall determine (which determination shall be conclusive absent manifest error)
that the result of the foregoing is to increase the cost to Lender of making or
maintaining the Revolving Loan or to reduce the amount of principal and interest
received by Lender hereunder, then the Borrower shall pay to Lender, on demand,
such additional amounts as Lender shall, from time to time, determine are
sufficient to compensate and indemnify Lender for such increased costs or
reduced amount.
Notwithstanding any provision in this Section 2.3 to the contrary, upon the
occurrence and continuance of an Event of Default, the Revolving Note shall bear
interest at a rate 2% in excess of the rate on Prime Rate Loans. The accrued
interest on: (i) Prime Rate Loans shall be payable
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monthly on the first day of each month commencing with the first day of the
month while such Prime Rate Loan is outstanding; and (ii) LIBOR Loans shall
be payable the earlier to occur of 90 days or the maturity thereof; and in
all events on the basis of a year that consists of 360 days.
SECTION 2.4. OPTIONAL PREPAYMENT. Borrower may from time to time, prepay
the Note in whole or in any part. Prepayments of LIBOR Loans shall be made only
with payment of a penalty; provided, however, any partial prepayment shall be:
(a) applied to the unpaid installments thereof in the inverse order of maturity;
and (b) accompanied by accrued interest to the date of prepayment on the
principal amount being prepaid.
ARTICLE THREE. NEGATIVE PLEDGE AND CONVEYANCE
Borrower agrees that it will at all times neither: (a) sell, transfer,
convey, assign, hypothecate or dispose, whether by gift or otherwise, unless
such is made on an arm's length basis for fair market value; nor (b) create or
permit to exist any mortgage, pledge, title retention lien, or any other lien,
encumbrance or security interest, in and to its assets and properties, except as
provided in Article 4(E) and Section 5.1(E) hereof, whether such assets and
properties are now owned or existing, or hereafter existing or acquired.
Further, Borrower agrees not to grant a negative pledge obligation similar to
that provided in this Article Three to any individual or entity whatsoever,
other than to Lender as herein provided.
ARTICLE FOUR. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender that as of the date hereof:
(A) ORGANIZATION, ETC. Borrower is duly organized, validly existing and
in good standing under the laws of the State of Delaware, and is duly qualified
and in good standing or has applied for qualification as foreign corporation
authorized to do business in each jurisdiction where, because of the nature of
its activities or properties such qualification is required.
(B) AUTHORIZATION; NO CONFLICT. The execution and delivery of the
Documents are all within its corporate powers and have been duly authorized by
all necessary action. Borrower has, or by the time of the execution and
delivery of the Documents shall have, received all necessary governmental or
regulatory approval for the execution and delivery of the Documents (if any
shall be required), and said execution and delivery does not and will not
contravene or conflict with any provision of: (i) law, rule, regulation or
ordinance; (ii) its articles of incorporation or by-laws; or (iii) any agreement
binding upon it or any of its properties, as the case may be.
(C) VALIDITY AND BINDING NATURE. The Documents are the legal, valid and
binding obligations of it, enforceable against it, in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization and other similar laws of general application
affecting the rights and remedies of creditors and except as the availability of
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specific performance or injunctive relief is subject to the discretion of the
court before which any proceeding therefor may be brought.
(D) TITLE TO ASSETS. Except as set forth in Section (E) of this Article
Four, it has good and marketable title to all its assets free and clear of all:
(i) liens, encumbrances, security interests or mortgages; (ii) zoning, building,
fire, health or environmental code violations of any governmental authority; and
(iii) violations of any covenants, conditions or restrictions of record.
(E) LIENS. None of its assets are subject to any mortgage, pledge, title
retention lien, or other lien, encumbrance or security interest, except: (i)
for current taxes not delinquent or taxes being contested in good faith and by
appropriate proceedings and for which adequate reserves have been established;
(ii) liens arising in the ordinary course of business for sums not due or sums
being contested in good faith and by appropriate proceedings and for which
adequate reserves have been established, but not involving any deposits,
advances or borrowed money or the deferred purchase price of property or
services; and (iii) liens specifically permitted pursuant to this Agreement,
which are set forth on Exhibit 4(E), attached hereto and made a part hereof.
(F) FINANCIAL STATEMENTS. Its financial statement dated December 31,
1997, and for the fiscal year then ended, and unaudited and unreviewed financial
statement dated January 31, 1998 (the "Last Statement Date"), and for the fiscal
period then ended, copies of which have been previously delivered to Lender,
have been prepared on a basis and in conformity with generally accepted
accounting principles applied on a basis consistent with that of the preceding
fiscal year are true and correct, and fairly present its consolidated financial
condition on such dates and the results of its operations for the periods then
ended, and since the Last Statement Date there has been no material adverse
change in such financial condition or operations.
(G) LITIGATION. No litigation (including, without limitation, derivative
actions), arbitration proceedings, administrative proceedings or governmental
proceedings are pending or threatened against it which would, if adversely
determined, materially and adversely affect its financial condition or continued
operations, except: (i) for litigation for which it is fully insured against
any loss; and (ii) as set forth on Exhibit 4(G) attached hereto and made a part
hereof, including estimates of the dollar amounts involved. Except for any
liability incident to such litigation or proceeding, it has no contingent
liabilities.
(H) NO VIOLATIONS OF LAWS. It is not in material violation of any law,
statute, ordinance, rule, regulation, judgment, decree, order, writ or
injunction of any federal, state or local authority, court, agency, bureau,
board, commission, department or governmental body, and it has not received any
notice, letter or other communication that concerns such.
(I) BURDENSOME OBLIGATIONS. Except for indentures, agreements, leases,
contracts, deeds or other instruments entered into in the ordinary course of
business that are not otherwise precluded or prohibited pursuant to the
Documents, it is not a party to any indenture, agreement, lease, contract, deed
or other instrument, or subject to any partnership restrictions or has any
knowledge of anything
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which would materially and adversely affect or impair its business, assets,
operations, properties, prospects or condition, financial or otherwise.
(J) TAXES. Except as set forth on Exhibit 4(J) attached hereto and made a
part hereof: (i) federal, state and local tax returns, reports and statements
(including, without limitation, for personal property taxes), required to be
filed by it which, if not so filed, could have an adverse affect on its
business, operations, assets, properties, prospects or condition, financial or
otherwise, have been filed with the appropriate governmental agencies in all
jurisdictions in which such returns, reports or statements are required to be
filed, and all taxes due and payable by it have been timely paid; (ii) it has
neither given nor been requested to give a waiver of any statute of limitations
relating to the payment of federal, state or local taxes; and (iii) periodic
payments of sales and use taxes required by any applicable state or local law,
statute, ordinance, rule or regulation have been made by it.
(K) NO DEFAULT OR EVENT OF DEFAULT. Except as described on Exhibit 4(K)
attached hereto and made a part hereof, there exists no event or condition under
any mortgage, indenture, lease, contract, agreement, instrument, judgment,
decree or order to which it is a party or may be subject, or by which it or any
of its properties may be bound, which constitutes a material default or an Event
of Default thereunder, or will, with the passage of time, constitute a material
default or event of default thereunder, which has any reasonable likelihood of
resulting in an adverse change in its business, assets, operations, properties,
prospects or condition, financial or otherwise.
(L) EMPLOYEE BENEFIT PLANS. Each employee benefit plan, if any (as defined
in Section 3(3) of ERISA), maintained by Borrower is described on Exhibit 4(L)
attached hereto, complies in all material respects with all applicable
requirements of law and regulations and: (i) no Reportable Event (as defined in
Section 4043 of ERISA) for which the report has not been waived by regulation
has occurred with respect to any such plan; (ii) no steps have been taken to
terminate any such plan; (iii) no accumulated funding deficiency (as defined in
Section 412(a) of the Code) exists with respect to any such plan, whether or not
waived; (iv) no transaction prohibited by Section 406 of ERISA or Section 4975
of the Code has occurred with respect to any such plan which could result in
liability to it; and (v) each such plan which is a stock bonus, pension or
profit sharing plan described in Section 401(a) of the Code has been determined
by the Internal Revenue Service to meet the requirements for qualification under
Section 401(a) of the Code, and each such plan meets the requirements for
qualification under Section 401(a) of the Code, and each trust established to
fund any such plan meets all requirements for tax exemption under Section 501(a)
of the Code, except for amendments to such plans required to comply with new
legislation and any other laws, regulations or rulings, including Section 401(a)
and 501(a) of the Code, and with respect to which the remedial amendment period
provided in Section 401(b) of the Code has not yet expired, which amendments
will be adopted in a timely manner or such plan will be terminated. It has not
withdrawn or initiated any steps to withdraw from any multi-employer pension
plan (as defined in Section 3(37) of ERISA) contributed to by it.
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(M) FEDERAL LAWS AND REGULATIONS. It is not: (i) an "investment company"
or a company "controlled", whether directly or indirectly, by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended;
(ii) a "holding company", or a "subsidiary company" of a "holding company", or
an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company Act of 1935,
as amended; or (iii) engaged principally, or as one of its important activities,
in the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System).
(N) FISCAL YEAR. Its fiscal year ends on December 31 of each year.
(O) OPERATION. It has obtained all required permits, certificates,
licenses, approvals and other authorizations from governmental agencies and
entities (whether federal, state or local) necessary to carry on its operation.
(P) GENUINENESS OF ACCOUNTS RECEIVABLE. All the Accounts Receivable are
genuine and were incurred in the ordinary course of business and are not in
default.
(Q) OFFICERS OF BORROWER. Each Person listed on Exhibit 4(Q), attached
hereto and made a part hereof, holds the respective office or offices in it set
forth next to his or her name on such Exhibit.
(R) INSURANCE. Borrower's insurance policies described on Exhibit 4(R),
attached hereto and made a part hereof, which Exhibit summarizes the property
and casualty insurance program carried by Borrower, are complete and accurate.
Exhibit 4(R) includes the insurer's(s') name(s), policy number(s), expiration
date(s), amount(s) of coverage, type(s) of coverage, the annual premium(s),
Best's policyholder's and financial size ratings of the 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 imposed upon the Borrower by such insurer. this
summary also includes any self-insurance program that is in effect.
(S) SOLVENCY. Borrower is now and, after giving effect to the Loans to be
made hereunder, and the pledges to be made pursuant to the Documents will be,
solvent in that it: (i) owns property whose fair saleable value is greater than
the amounts required to pay all of its debts, liabilities, and obligations,
including contingent debts; (ii) is able to pay all of its indebtedness as such
indebtedness matures; and (iii) has sufficient capital to carry on its business
and transactions and all business and transactions in which it is about to
engage.
ARTICLE FIVE. COVENANTS
SECTION 5.1. BORROWER. Until all the Liabilities are paid in full, or
unless otherwise agreed to by Lender in writing, Borrower covenants and agrees
that:
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(A) FINANCIAL STATEMENTS AND CERTIFICATES. It will furnish to Lender: (i)
within 120 days after the close of each its fiscal years, a copy of its annual
audited report prepared on a consolidating and consolidated basis and in
conformity with generally accepted accounting principles, duly audited by
certified public accountants of recognized standing selected by it and approved
by Lender, together with a certificate from such accountants to the effect that,
in making the examination necessary for the signing of such annual audit report
by such accountants, they have not become aware of any Event of Default that has
occurred and is continuing, or if they have become aware of any such event,
describing it and the steps, if any taken or being taken to cure it; (ii) within
30 days after the close of each calendar month, a copy of its unaudited internal
financial statements on a consolidated and consolidating basis; (iii) within 30
days after the close of each calendar quarter, a certificate signed by an
officer of the Borrower certifying that except as described therein, (1) no
Event of Default has occurred and is continuing, (2) no litigation, arbitration
proceeding or governmental or regulatory proceeding has been instituted or
adversely determined, or is threatened which is materially adverse to it on a
consolidated basis, all as of the date of such certificate, and (3) that
Borrower is in compliance with the terms and financial covenants of this Loan
Agreement; (iv) copies of all publicly released or filed statements or documents
including, without limitation, 10-K reports, 10-Q reports, press releases and
financial statements; (v) annual business plan including forecast and
projections; and (vi) such other information as Lender from time to time
reasonably requests.
(B) BOOKS, RECORDS AND INSPECTIONS. It will: (i) maintain complete and
accurate books and records; (ii) permit reasonable access by Lender to its books
and records; and (iii) permit Lender, upon reasonable notice, to inspect its
properties, whether real or personal, and operations.
(C) INSURANCE. It will maintain such insurance as may be required by law
and such other insurance to the extent and against such hazards and liabilities
as is customarily maintained by companies similarly situated, and as are
reasonably acceptable to Lender.
(D) TAXES AND LIABILITIES. It will pay when due all taxes, assessments
and other liabilities except as contested in good faith and by appropriate
proceedings and for which adequate reserves have been established.
(E) LIENS. It will not create or permit to exist any mortgage, pledge,
title retention lien, or other lien, encumbrance or security interest with
respect to any assets now owned or hereafter acquired, except: (i) liens for
current taxes not delinquent or for taxes being contested in good faith and by
appropriate proceedings and for which adequate reserves have been established;
(ii) liens arising in the ordinary course of business for sums not due or sums
being contested in good faith and by appropriate proceedings and for which
adequate reserves shall have been established and not involving any advances or
borrowed money or the deferred purchase price of property or services; and (iii)
those described in Article 4(E) of this Agreement.
(F) GUARANTIES, LOANS OR ADVANCES. It will not become or be a guarantor or
surety of, or otherwise become or be responsible in any manner (whether by
agreement to purchase any
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obligations, stock, assets, goods, services, or to supply or advance any
funds, assets, goods or services or otherwise) with respect to any
undertaking of any other Person, or make or permit to exist any loans or
advances to any other Person, except for the endorsement, in the ordinary
course of collection, of instruments payable to it or to its order.
(G) MERGERS, CONSOLIDATIONS AND SALES. It will not sell, transfer, convey
or lease all or any material part of its assets or business, or sell or assign,
with or without recourse, any Accounts Receivable, except with Lender's prior
written consent.
(H) SELF-DEALING. It will not purchase, acquire or lease any property
from, or sell, transfer or lease any property to: (a) any Affiliate; or (b) any
officer, director or shareholder of it or any Affiliate, except on terms
reasonably comparable to the terms which would prevail in an arms-length
transaction between unaffiliated third parties.
(I) VIOLATION OF LAW. It will not materially violate any law, statute,
ordinance, rule, regulation, judgment, decree, order, writ or injunction of any
federal, state or local authority, court, agency, bureau, board, commission,
department or governmental body, including, without limitation, Environmental
Laws, and maintain and keep in force any and all licenses, permits, franchises,
or other governmental authorizations necessary to the ownership of its
properties or to the conduct of its business, which violation or failure to
obtain would materially and adversely effect its business, profits, properties
or financial condition.
(J) UNCONDITIONAL PURCHASE OBLIGATIONS. It will neither enter into nor 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 delivery is ever made of such materials, supplies or other
property or services.
(K) MAINTENANCE OF BUSINESS. It will preserve its corporate existences in
the jurisdictions of establishment as may be required by law, and will provide
written notice to Lender of material changes in its business operations.
(L) EMPLOYEE BENEFIT PLANS. It will maintain each employee benefit plan as
to which it may have any liability in compliance with all applicable
requirements of law and regulations, and will not cause or permit any event to
occur, or fail to take any action required, which would result in a violation of
any of the representations set forth in Section 4(L) of this Agreement as of any
date during the terms of this Agreement that would cause an adverse effect on
its financial condition.
(M) LIMITATIONS ON NEW PENSION PLANS. It will neither establish any new
employee pension benefit plan, agree to contribute to any multi-employer plan
(other than contributions to any such plan in existence as of the date hereof)
as defined in Section 3(37) of ERISA nor amend any existing employee pension
benefit plan in a manner which would materially increase its obligation to
contribute to such plan.
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(N) USE OF PROCEEDS. It will not 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 Board of Governors of the Federal Reserve System,
as amended from time to time.
(O) GOOD TITLE. It will shall at all times maintain good and marketable
title to all of its assets.
(P) OFFICERS OF BORROWER. Borrower shall provide written notice to Lender
of changes in its officers from those listed on Exhibit 4(Q).
(Q) CERTIFICATION. All reports, certificates, schedules, notices and
financial information submitted by Borrower to Lender pursuant to this Agreement
shall be certified as materially correct by a proper accounting officer of
Borrower.
(R) ASSET LOCATIONS; MATERIAL ADVERSE CHANGE. It shall give Lender prompt
written notice of: (i) the location of any assets at any place other than the
locations previously disclosed to Lender; and (ii) any event, occurrence or
other matter which has resulted or may result in a material adverse change in
its financial condition or business operations.
(S) NO DEFAULT OR EVENT OF DEFAULT. Except as described on Exhibit 4(K)
attached hereto, it shall not permit to exist any event or condition under any
mortgage, indenture, lease, contract, agreement, instrument, judgment, decree or
order to which it is a party or may be subject, or by which it or any of its
properties may be bound, which constitutes a material default or an event of
default thereunder, or will, with the passage of time, constitute a material
default or event of default thereunder, and which Borrower reasonably believes
will result in a material adverse change in its business, assets, operations,
properties, prospects or financial condition.
(T) MAXIMUM LEVERAGE. Borrower, on a consolidated basis, shall not cause,
suffer or permit the ratio of (i) its liabilities, to (ii) its Tangible Net
Worth, to be greater than 1.65 to 1.0.
(U) NET WORTH. Borrower, on a consolidated basis, shall not cause, suffer
or permit its Net Worth (including adjustments for transactions with Affiliates)
to be less than $50,000,000.00 at any time.
(V) MINIMUM FIXED CHARGE COVERAGE. Borrower, on a consolidated basis,
shall not cause, suffer or permit the ratio of (i) its earnings from operations
before interest, income taxes, depreciation, and amortization, to (ii) interest
expense on all its liabilities, indebtedness and obligations, to be less than
5.00 to 1.0.
(W) MAXIMUM FUNDED DEBT COVERAGE. Borrower, on a consolidated basis, shall
not cause, suffer or permit the ratio of (i) the Loans, to (ii) its earnings
from operations before interest, income taxes, depreciation and amortization, to
be greater than 1.00 to 1.00.
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(X) PRIMARY BANKING RELATIONSHIP AND ADDITIONAL BANK DEBT. Borrower shall
utilize Lender as its primary treasury management bank to all receipts,
disbursements and related services, and Borrower shall be liable for all fees,
costs and expenses customarily charged by Lender in connection with such
relationship and accounts. Further, Borrower may not incur or obtain any
liability or debt from another lending institution without Lender's prior
written consent.
(Y) NONUSAGE. Borrower shall pay to Lender a nonrefundable nonusage fee
in the amount of 25 basis points multiplied by the average unused portion of the
Loans, payable quarterly in arrears. Such fee shall be prorated for any partial
year that the Loans are outstanding.
ARTICLE SIX. CONDITIONS PRECEDENT
SECTION 6.1. CONDITIONS PRECEDENT TO THE LOANS. Lender's obligation to
make the Loans, including, without limitation, its obligation to make the
Revolving Loans and issue Letters of Credit from time to time, are subject to
the fulfillment of each and every one of the following conditions prior to or
contemporaneously with the making of each and every such extension of credit:
(A) DELIVERY OF DOCUMENTS. Lender shall have received each of the
following, in form and substance satisfactory to Lender and its counsel:
(i) Certified copies of all corporate actions taken and consents
made by Borrower to authorize the obtaining of credit by Borrower pursuant
to this Agreement, the Revolving Loans, the Letters of Credit and the
transactions otherwise provided for or contemplated under this Agreement
and the execution and delivery of, and performance in accordance with the
respective terms of, the Documents;
(ii) Certificates of the Secretary of Borrower certifying the names
of the officer or officers of Borrower authorized to sign the Documents,
together with a sample of the true signature of each such officer. Lender
may conclusively rely on such certificates until formally advised by a like
certificate of any changes therein;
(iii) Certificates of insurance and loss payable clauses covering
Borrower's assets that meet the requirements of this Agreement;
(iv) The Revolving Note duly executed;
(v) Certified copies of all documents evidencing any and all
required consents and governmental or regulatory approvals, if any, with
respect to the Documents;
Page 13
(vi) Certified copies of the Articles of Incorporation and By-laws
of Borrower, as restated or amended as to the date of this Agreement;
(vii) Certificates of good standing for Borrower from the appropriate
governmental authority in the jurisdiction of its incorporation, in the
principal places in which Borrower conducts business; and
(viii) Such other instruments or documents as Lender may reasonably
request.
(B) NO EVENT OF DEFAULT. No Event of Default shall have occurred and be
continuing, may occur with the giving of notice, the passage of time, or both,
or shall result from the making of any Loan;
(C) CONTINUATION OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties contained in Article Four of this Agreement shall be true and
correct as of the making of any Loan, with the same effect as though made on
such dates; and
(D) NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change in Borrower's business or Borrower's financial condition from the most
recent financial statement submitted by it to Lender.
ARTICLE SEVEN. EVENTS OF DEFAULT
SECTION 7.1. EVENTS OF DEFAULT. Each of the following acts, occurrences
or omissions shall constitute an event of default under this Agreement (herein
referred to as an "Event of Default"), whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment or order of any court or any order,
rule or regulation of any governmental or nongovernmental body or tribunal:
(A) Borrower shall default in the payment when due of any amount due and
owing by Borrower to Lender under the Revolving Note or Letters of Credit; or
(B) Except for and other than the Event of Default set forth in Section
7.1(A) of this Agreement, Borrower shall default in the payment of any other
amount owing by Borrower to Lender pursuant to the Documents or pursuant to any
other agreement, note, instrument or guarantee between Borrower and Lender, and
said default shall continue unremedied for five days after written notice
thereof from Lender to Borrower; or
(C) Any representation or warranty made by Borrower contained in the
Documents shall at any time prove to have been incorrect in any material respect
when made; or
Page 14
(D) Borrower shall default in the performance or observance of any term,
covenant, condition or agreement on its part to be performed or observed under
the Documents (not constituting an Event of Default under any other clause of
this Section 7.1 of this Agreement) and such default shall continue unremedied
for five days after written notice thereof shall have been given by Lender to
Borrower; or
(E) Either: (i) the Borrower shall become insolvent or generally fail to
pay, or admit in writing its inability to pay, its debts as they become due, or
a proceeding under any bankruptcy, reorganization, arrangement of debt,
insolvency, readjustment of debt or receivership law or statute is filed by or
against Borrower, or Borrower makes an assignment for the benefit of creditors;
provided, however, that no Event of Default shall exist pursuant to this
Subsection E, Clause (i) due to an involuntary bankruptcy case, proceeding or
petition filed against Borrower unless such involuntary case, proceeding or
petition shall not have been dismissed or withdrawn within 60 days after the
date of such involuntary filing; or (ii) corporate or other action shall be
taken by Borrower for the purpose of effectuating any of the foregoing; or
(F) If notice is given that Borrower's assets are subject to levy,
attachment, seizure or confiscation uninsured loss; or
(G) There shall occur any uninsured loss, theft, damage to or destruction
of Borrower's assets; provided, however, that the deductible amount on any
insurance policy currently in effect on such assets shall not be considered an
uninsured loss pursuant to this Subsection G; or
(H) Borrower shall be dissolved, whether voluntarily or involuntarily, and
Borrower has not taken all actions required to become reinstated; or
(I) Subject to any applicable cure period, (i) an event of default or
events of default (howsoever designated) as defined in any note, security
agreement, mortgage, indenture, loan agreement, agreement, document or
instrument pursuant to which there may be issued, secured or evidenced any
indebtedness for money borrowed by Borrower, whether such indebtedness now
exists or shall hereafter be created, shall occur; (ii) any event shall occur
which would permit such indebtedness to be declared due and payable prior to
its date of maturing or due dates; or (iii) Borrower shall default in the
payment when due of any principal of or interest on any indebtedness for money
borrowed or guaranteed by Borrower; or (iv) Borrower shall default in the
payment when due, or in the performance or observance of, any material
obligation of, or material condition agreed to by, Borrower with respect to any
purchase or lease of any real or personal property or services, or the purchase
of stock or other interest in any Person; or
(J) There shall occur a cessation of a substantial part of the business of
Borrower for a period which significantly effects Borrower's capacity to
continue its business, on a profitable basis; or Borrower shall suffer the loss
or revocation of any governmental license or permit now held or hereafter
acquired by Borrower which is necessary for the continued or lawful operation of
its business (and which has not been reinstated within 90 days of such loss or
revocation); or Borrower
Page 15
shall be enjoined, restrained or in any way prevented by court, governmental
or administrative order from conducting all or any material part of its
business affairs; or
(K) Borrower fails to meet its minimum funding requirements under ERISA,
with respect to any of its plans subject thereto; or
(L) There shall have occurred any material adverse change in the business
or financial condition of Borrower; or
(M) Except for the lawsuit described on Exhibit 4(G) hereof, there shall
be entered against the Borrower one or more judgment or decree which shall cause
the aggregate amount of judgments and decrees at any one time outstanding
against the Borrower to exceed $100,000, excluding those judgments or decrees:
(i) that shall have been outstanding less than 30 calendar days from the entry
thereof; (ii) for which an appeal has been taken in good faith by appropriate
proceedings to the extent adequate reserves have been established therefor; or
(iii) for and to the extent which the Borrower is insured and with respect to
which the insurer has assumed responsibility in writing or for and to the extent
which Borrower is otherwise indemnified if the terms of such indemnification are
satisfactory to Lender; or
(N) Lender, in good faith, deems itself reasonably insecure for any reason
whatsoever.
ARTICLE EIGHT. REMEDIES
SECTION 8.1. REMEDIES UPON DEFAULT. In addition to Lender's rights under
applicable law, upon the occurrence and continuance of any Event of Default, and
the expiration of any applicable cure period, and in every such event:
(A) Notwithstanding anything to the contrary in the Documents, Lender may,
in its sole and arbitrary discretion, declare the principal of and interest on
the Revolving Loans and the Revolving Note, and all other amounts owed under the
Documents, to be immediately due and payable (and Letters of Credit to be
canceled) without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived; and
(B) Lender may require Borrower to make its assets and the records
pertaining thereto, available to Lender for inspection and audit by Lender at
their then current location.
SECTION 8.2. REMEDIES ARE SEVERABLE AND CUMULATIVE. All provisions
contained herein pertaining to any remedy of Lender shall be and are severable
and cumulative. Any notification required pursuant to this Article Eight or
under applicable law shall be reasonably and properly given to Borrower at the
address and by any of the methods of giving such notice as set forth in Section
9.3 of this Agreement, at least 5 days before taking any action.
ARTICLE NINE. MISCELLANEOUS
Page 16
SECTION 9.1. NO WAIVER; MODIFICATIONS IN WRITING. Any failure or delay on
the part of Lender in exercising any right, power or remedy pursuant to the
Documents shall not operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof, or the exercise of any other right, power or remedy. No
amendment, modification, supplement, termination or waiver of or to any
provision of the Documents, nor any consent to any departure by Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
Lender. Any waiver of any provision of the Documents and any consent to any
departure by Borrower from the terms of any provision of the Documents shall be
effective only in the specific instance and for the specific purpose for which
given. No notice to or demand on Borrower in any case shall entitle Borrower to
any other or further notice or demand in similar or other circumstances.
SECTION 9.2. SET-OFF. Lender shall have the right to set-off, appropriate
and apply toward payment of any of the Liabilities in such order of application
as Lender may from time to time and at any time elect, any cash, credit,
deposits, accounts, securities and any other property of Borrower which is in
transit to or in the possession, custody or control of Lender, or any agent or
bailee of Lender.
SECTION 9.3. NOTICES, ETC. All notices, demands, instructions and other
communications required or permitted to be given to or made upon any party
hereto shall be in writing personally delivered or sent by First Class Mail,
postage prepaid, or by facsimile machine, and shall be deemed to be given for
purposes of this Agreement on the day that such writing is delivered or sent by
facsimile machine (with proof of transmission) or three days after such notice
is sent by mail to the intended recipient thereof in accordance with the
provisions of this Section 9.3. Unless otherwise specified in a notice sent or
delivered in accordance with the foregoing provisions of this Section 9.3 of
this Agreement, notices, demands, instructions and other communications in
writing shall be given to or made upon the respective parties hereto at their
respective addresses indicated for such party below:
If to Borrower: XXXX Industries, Inc.
0000 Xxxx Xxxxx Xxxx
Xxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. XxXxxxx
Phone: 000.000.0000
Fax No.: 000.000.0000
With copies to:
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
Phone:
----------------------------------
Fax No.:
--------------------------------
Page 17
If to Lender: LaSalle National Bank
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx
Phone: 000.000.0000
Fax No.: 000.000.0000
With a copy to: Xxxxxx X. Xxxxx, Esq.
Fox and Grove, Chartered
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Phone: 000.000.0000
Fax No.: 000.000.0000
SECTION 9.4. COSTS, EXPENSES AND TAXES. Borrower agrees to pay all fees
plus out-of-pocket expenses of Lender (including, without limitation, field
audit expenses and costs of outside consultants, appraisers, counsel and
paralegals to Lender) in connection with the preparation, administration and
enforcement of the Documents and the administration and enforcement of the
Loans. If an Event of Default has occurred hereunder, Borrower shall pay any
and all stamp, transfer and other taxes payable or determined to be payable in
connection with the execution and delivery of the Documents and agrees to hold
Lender harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes. If any
action, suit or proceeding arising from any of the foregoing is brought against
Lender, Borrower, to the extent and in the manner directed by Lender, will
resist and defend such action, suit or proceeding or cause the same to be
resisted and defended by counsel designated by Borrower (which counsel shall be
subject to the approval of Lender). If Borrower shall fail to do any act or
thing which it has covenanted to do under this Agreement or any representation
or warranty on the part of Borrower contained in this Agreement shall be
breached, Lender may, in its sole and arbitrary discretion, after 10 days
written notice is sent to Borrower, do the same or cause it to be done or remedy
any such breach, and may expend its funds for such purpose; and any and all
amounts so expended by Lender shall be repayable to Lender by Borrower
immediately upon Lender's demand therefor, with interest at the Prime Rate
during the period from and including the date funds are so expended by Lender,
to the date of repayment, and any such amounts due and owing Lender shall be an
additional obligation of Borrower to Lender. The obligations of Borrower under
this Section 9.4 shall survive the termination of this Agreement and the
discharge of the other obligations of Borrower under the Documents. Any payment
required to be made pursuant to this Agreement not paid within five days of the
applicable due date shall be subject to a late charge which Borrower hereby
agrees to pay equal to the lesser of: (a) 5% of the overdue amount; or (b) the
maximum amount permitted by law.
SECTION 9.5. COMPUTATIONS. Where the character or amount of any asset or
liability or item of income or expense is required to be determined, or any
consolidation or other accounting computation is required to be made, for the
purpose of this Agreement, such determination or
Page 18
calculation shall, to the extent applicable and except as otherwise specified
in this Agreement, be made in accordance with generally accepted accounting
principles applied on a basis consistent with those at the time in effect.
SECTION 9.6. FURTHER ASSURANCES. Borrower agrees to do such further acts
and things and to execute and deliver to Lender such additional agreements,
documents and instruments as Lender may reasonably require or deem advisable to
carry into effect the purposes of the Documents, or to better assure and confirm
unto Lender its rights, powers and remedies under the Documents.
SECTION 9.7. COUNTERPARTS. This Agreement executed in any number of
counterparts, each of which counterparts, once they are executed and delivered,
shall be deemed to be an original and all of which counterparts, taken together
shall constitute but one and the same agreement.
SECTION 9.8. BINDING EFFECTS; ASSIGNMENTS. This Agreement shall be
binding upon, and inure to the benefit of Borrower and its successors and
assigns. Borrower shall not assign any of its rights nor delegate any of its
obligations under this Agreement without Lender's prior written consent and no
such consent by Lender shall, in any event, relieve Borrower of any of its
obligations under this Agreement. Lender may assign its rights hereunder.
SECTION 9.9. HEADINGS. Captions contained in this Agreement are inserted
only as a matter of convenience and in no way define, limit or extend the scope
or intent of this Agreement or any provision of this Agreement and shall not
affect the construction of this Agreement.
SECTION 9.10. ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties hereto with respect to the transactions
contemplated herein and supersedes all prior agreements and understandings,
whether oral or written, related to the subject matter of the Agreement.
SECTION 9.11. GOVERNING LAW. This Agreement shall be deemed to be a
contract made under and for all purposes shall be construed in accordance with
the internal laws, and not the choice of laws, of the State of Illinois.
SECTION 9.12. SEVERABILITY OF PROVISIONS. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective only to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 9.13. CONFLICT. In the event of any conflict between this
Agreement and any other instrument, document or agreement, including, but not
limited to, the Note, or any other
Page 19
instrument or document required or contemplated hereunder or thereunder, the
terms and provisions of this Agreement shall govern and control.
SECTION 9.14. JURISDICTION; WAIVERS. BORROWER ACKNOWLEDGES THAT THIS
AGREEMENT IS BEING SIGNED BY LENDER IN PARTIAL CONSIDERATION OF LENDER'S RIGHT
TO ENFORCE IN THE JURISDICTION STATED BELOW THE TERMS AND PROVISION OF THIS
AGREEMENT AND THE DOCUMENTS. BORROWER CONSENTS TO JURISDICTION IN THE STATE OF
ILLINOIS AND VENUE IN THE COUNTY OF XXXX FOR SUCH PURPOSES AND THEY WAIVE ANY
AND ALL RIGHTS TO CONTEST SAID JURISDICTION AND VENUE. LENDER AND BORROWER
HEREBY EACH EXPRESSLY WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY
WITH RESPECT TO ANY MATTER WHATSOEVER RELATING TO, ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THE LOANS, THE DOCUMENTS OR THE TRANSACTIONS WHICH ARE THE
SUBJECT OF THE DOCUMENTS.
SECTION 9.15. CAPITAL ADEQUACY INDEMNIFICATION. If Lender shall determine
at any time after the date hereof that the adoption of any law, rule or
regulation regarding capital adequacy, or any change therein or in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by Lender with any request or directive regarding capital
adequacy (whether or not having the force of law) from any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on Lender's capital as a consequence of its obligations hereunder
to a level below that which Lender could have achieved but for such adoption,
change or compliance (taking into consideration Lender's policies with respect
to capital adequacy) by an amount deemed by Lender to be material, then the
Borrower shall pay to Lender upon demand such amount or amounts, in addition to
the amounts payable under the other provisions of this Agreement or under the
Note, as will compensate Lender for such reduction. Determinations by Lender
for purposes of this Section 9.15 of the additional amount or amounts required
to compensate lender in respect of the foregoing shall be conclusive in the
absence of manifest error. In determining such amount or amounts, Lender may
use any reasonable averaging and attribution methods. Lender represents that as
of the date of this Agreement it is not aware of any claim it may have under
this Section 9.15.
SECTION 9.16. APPLICATION OF PAYMENTS. Borrower waives the right to
direct the application of any and all payments at any time or times hereafter
received by lender on account of any obligations owed by Borrower to Lender and
Borrower agrees that Lender shall have the right to apply the proceeds of
payments received by Lender to the obligations in any order or manner as Lender
may deem advisable, including, without limitation, the continuing exclusive
right to apply and reapply such proceeds and payments in any order or manner as
lender may deem advisable.
Page 20
SECTION 9.17. INDEMNIFICATION. Except for any Indemnified Liabilities (as
hereinafter defined) resulting from, arising out of, or relating to Lender's
acts or omissions, and in consideration of the execution and delivery of the
Documents by Lender and agreement of Lender to make the Loans hereunder,
Borrower hereby agrees to indemnify, exonerate and hold Lender and each of its
officers, directors, employees, attorneys and agents (collectively, the "Bank
Parties"), free and harmless from any against any and all actions, causes of
action, suits, losses, liabilities and damages, and expenses in connection
therewith, including, without limitation, reasonable attorneys' fees and
disbursements (the "Indemnified Liabilities"), incurred by the Bank Parties, or
any of them, as a result of, or arising out of, or relating to: (a) any
transaction financed or to be financed in whole or in part directly or
indirectly with the proceeds of any Revolving Loan; (b) the execution and
delivery of the Documents by Borrower; (c) Borrower's possession, use, operation
or control of any of its assets. If and to the extent that the foregoing
undertakings may be unenforceable for any reason, Borrower jointly and severally
agrees to make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law. All
obligations of Borrower under this Section 9.17 shall survive any termination of
this Agreement.
SECTION 9.18. ENVIRONMENTAL WARRANTY AND INDEMNITY. Borrower hereby
represents and warrants to Lender that it, occupies the property(ies) more fully
described on Exhibit 9.18 attached hereto and made a part hereof (collectively,
the "Property"). Borrower hereby represents and warrants to Lender that
collectively, no hazardous or toxic substances, within the meaning of any
applicable statute or regulation, whether federal, state or local, are presently
stored or otherwise located on the Property in violation of Environmental Laws.
Borrower covenants and agrees with Lender that while any Liabilities are
outstanding, all toxic substances within the definition of Environmental Laws,
which may be used by any person for any purpose upon the Property, shall be used
or stored thereon in accordance with all laws, regulations, and requirements for
such storage promulgated by any governmental authority, and that the Property
will not be used for the principal purpose of storing such substances.
Borrower hereby agrees to give Lender immediate notice of any violation or
suspected violation of any federal, state, or local statute, rule, or regulation
dealing with the presence or suspected presence of any hazardous, toxic, or
environmentally dangerous substances or condition affecting the Property.
Borrower hereby unconditionally gives Lender the right, but not the obligation,
and Lender does not so obligate itself, to undertake to contain and clean up
releases of hazardous substances on the Property before the costs of doing so
exceeds the value of the Property. Upon the written request of Lender to
Borrower, Lender, its attorneys, employees, agents or other persons or entities
designated by Lender, shall, from time to time and at any time, be allowed to
enter upon the Property and conduct environmental examinations and environmental
audits of the Property, all in form, manner and type as Lender may then require
in its sole discretion. Borrower shall fully cooperate and make the Property,
all improvements on the Property and the land which is the subject of the
Property available to Lender at such times as Lender may request in order to
conduct such environmental examinations and environmental audits.
Page 21
Borrower hereby indemnifies and saves Lender harmless of and from any and
all loss, costs (including reasonable attorneys' fees), liability and damage
whatsoever incurred by Lender, by reason of any violation by Borrower of any
applicable statute, rule or regulation for the protection of the environment
which occurs upon the Property or any adjacent parcels of real estate that
affect the Property or by reason of the imposition of any governmental lien for
the recovery of environmental cleanup costs expended by reason of such
violation; provided however, that to the extent Lender is strictly liable under
any such statute, Borrower's obligation to Lender under this indemnity shall
likewise be without regard to fault on the part of the undersigned with respect
to the violation of law which results in liability to Lender. Borrower further
agrees that this indemnity and the representations and warranties contained
herein shall continue and remain in full force and effect beyond the term of the
Liabilities and shall be terminated only when there is no further obligation of
any kind whether in law or equity or otherwise of Lender in connection with any
such environmental clean-up costs, environmental liens, or environmental matters
involving the Property.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered at Chicago, Illinois, as of the date first above
written.
BORROWER: XXXX INDUSTRIES, INC.
By:
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Title:
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ATTEST: By:
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Title:
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LENDER: LaSALLE NATIONAL BANK
By:
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Title:
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