AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
BETWEEN
PNC BANK, NATIONAL ASSOCIATION
AND
USA DETERGENTS, INC.
FEBRUARY 25, 1998
TABLE OF CONTENTS
1. DEFINITIONS...................................................................................2
2. CREDIT FACILITIES.............................................................................7
2.1 Revolving Loan............................................................................7
2.2 Capital Expenditure Facility..............................................................9
2.3 Bridge Loan...............................................................................10
2.4 Additional Provisions Re: Interest, Fees and
Payments on All Loans..................................................................11
3. SECURITY INTEREST.............................................................................12
3.1 Grant of Security Interests...............................................................12
3.2 Further Assurances........................................................................13
3.3 Release of Mortgage Lien..................................................................13
4. REPRESENTATIONS AND WARRANTIES................................................................14
4.1 Organization and Qualification............................................................14
4.2 Due Authorization; No Default.............................................................14
4.3 No Governmental Consent Necessary.........................................................15
4.4 No Proceedings............................................................................15
4.5 Financial Statements......................................................................15
4.6 No Change in Financial Condition; Solvency................................................15
4.7 Compliance With Laws......................................................................15
4.8 No Other Violations.......................................................................16
4.9 Taxes and Assessments.....................................................................16
4.10 Accounts.................................................................................16
4.11 Inventory................................................................................16
4.12 Books and Records........................................................................16
4.13 Location of Collateral...................................................................16
4.14 Places of Business.......................................................................16
4.15 Other Name or Entities...................................................................16
4.16 Title and Liens..........................................................................16
4.17 ERISA....................................................................................17
4.18 O.S.H.A..................................................................................17
4.19 Environmental Matters....................................................................17
4.20 Prohibited Business Activities...........................................................18
4.21 Margin Stock.............................................................................19
4.22 Representations and Warranties True, Accurate
and Complete............................................................................19
5. AFFIRMATIVE COVENANTS.........................................................................19
5.1 Maintenance of Existence and Qualifications...............................................19
5.2 Payment of Taxes and Other Obligations....................................................19
5.3 Maintenance of Properties.................................................................19
5.4 Notice of Adverse Events..................................................................19
5.5 Information and Documents to be Furnished to Lender.......................................20
5.6 Access to Records and Property............................................................22
5.7 Insurance.................................................................................22
5.8 Condition of Collateral; No Liens.........................................................23
5.9 Records...................................................................................23
5.10 Delivery of Documents....................................................................23
5.11 United States Contracts..................................................................23
5.12 Further Assurances.......................................................................23
5.13 Operating Accounts.......................................................................23
5.14 Related Entities.........................................................................23
5.15 Environmental Site Assessments...........................................................23
5.16 Additional Documents.....................................................................24
5.17 Undertaking to Prepay Bridge Note........................................................24
6. NEGATIVE COVENANTS............................................................................24
6.1 No Consolidation, Merger, Acquisition, Liquidation........................................24
6.2 Disposition of Assets or Collateral.......................................................24
6.3 Other Liens...............................................................................24
6.4 Other Liabilities.........................................................................25
6.5 Loans.....................................................................................25
6.6 Investments...............................................................................25
6.7 Guaranties; Contingent Liabilities........................................................25
6.8 Dividends and Other Distributions.........................................................25
6.9 Transactions with Affiliates..............................................................26
6.10 Sale of Inventory........................................................................26
6.11 Removal of Collateral....................................................................26
6.12 Transfer of Notes or Accounts............................................................26
6.13 Settlements..............................................................................26
6.14 Modification of Governing Documents......................................................26
6.15 Change Business..........................................................................26
6.16 Change of Location or Name...............................................................26
6.17 Change of Accounting Practices...........................................................26
6.18 Inconsistent Agreement...................................................................26
6.19 Current Ratio............................................................................27
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7. CONDITIONS TO MAKING EXTENSIONS OF CREDIT.....................................................27
7.1 Initial Extension of Credit...............................................................27
7.2 Conditions to All Advances................................................................29
8. ADDITIONAL POWERS OF LENDER...................................................................30
8.1 Powers of Attorney........................................................................30
8.2 Irrevocability; Lender's Discretion.......................................................31
9. EVENTS OF DEFAULT.............................................................................32
9.1 Failure to Pay............................................................................32
9.2 Failure to Perform........................................................................32
9.3 Cross Default; Default on Other Debt......................................................32
9.4 False Representation or Warranty..........................................................32
9.5 Cessation of Business.....................................................................32
9.6 Change in Condition.......................................................................32
9.7 Change in Management......................................................................33
9.8 Liquidation or Dissolution................................................................33
9.9 Inability to Pay Debts....................................................................33
9.10 Bankruptcy; Insolvency...................................................................33
9.11 Judgments................................................................................33
9.12 Attachment...............................................................................33
9.13 Condemnation.............................................................................33
9.14 ERISA....................................................................................33
9.15 Guaranty.................................................................................34
10. REMEDIES......................................................................................34
10.1 Rights in General........................................................................34
10.2 Specific Rights Regarding Collateral.....................................................34
10.3 Set-Off..................................................................................36
10.4 Cumulative Remedies; No Waiver by Lender.................................................36
10.5 Waivers and Agreements Relating to Remedies..............................................36
11. ADDITIONAL WAIVERS AND CONSENTS OF BORROWER...................................................37
11.1 Waivers..................................................................................37
11.2 Consents.................................................................................37
11.3 Applications of Payments.................................................................37
11.4 Tax Refunds..............................................................................37
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12. TERMINATION OF AGREEMENT......................................................................37
12.1 Termination Charge.......................................................................37
12.2 Rights upon Termination..................................................................38
12.3 Release..................................................................................38
13. COSTS, EXPENSES AND TAXES.....................................................................38
14. INDEMNIFICATION BY BORROWER/WAIVER OF CLAIMS..................................................39
14.1 Indemnification..........................................................................39
14.2 Waiver of Claims.........................................................................39
14.3 Claims Procedure.........................................................................40
15. MISCELLANEOUS.................................................................................40
15.1 Entire Agreement; Amendments; Lender's Consent...........................................40
15.2 Notices..................................................................................40
15.3 Gender...................................................................................41
15.4 Joint Borrowers..........................................................................41
15.5 Maintaining Accounts Payable.............................................................41
15.6 Cross Default; Cross Collateral..........................................................41
15.7 Binding Effect; Governing Law............................................................42
15.8 Further Assurances.......................................................................42
15.9 Execution in Counterparts................................................................42
15.10 Severability of Provisions..............................................................42
15.11 Table of Contents; Headings.............................................................42
15.12 Exhibits and Schedules..................................................................42
15.13 Further Acknowledgments and Agreements of
Borrower and Lender....................................................................42
15.14 General Limitation on Amount of Liability...............................................43
16. WAIVER OF JURY TRIAL, CONSENT TO JURISDICTION.................................................43
16.1 Waiver of Jury Trial.....................................................................43
16.2 Consent to Jurisdiction; Service of Process..............................................43
17. ACKNOWLEDGMENT OF WAIVERS.....................................................................44
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This is an AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this
"Agreement") made this 25th day of February, 1998 between PNC BANK, NATIONAL
ASSOCIATION ("Lender"), having offices at Xxx Xxxxx Xxxxxx Xxxxxxxxx, Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000, and USA DETERGENTS, INC., a corporation organized
under the laws of the State of Delaware ("Borrower"), having its principal
place of business at 0000 Xxxxxx Xxxxxx, Xxxxx Xxxxxxxxx, Xxx Xxxxxx 00000.
WITNESSETH
WHEREAS, Borrower and Lender have previously entered into a commercial
lending relationship as evidenced by a Loan Agreement dated December 17, 1996,
as same has or may have been amended or modified from time to time (the
"December 1996 Loan Agreement"), and the Security Agreement dated March 31,
1997, which includes the Bridge Loan as defined in Section 2.3(1) infra (the
"Bridge Loan Agreement"); and
WHEREAS, Borrower acknowledges that certain Events of Default have
occurred and are continuing under the December 1996 Loan Agreement, and the
Bridge Loan Agreement, and in consideration for Borrower entering into and
executing this Agreement (which shall become the operating agreement governing
the terms and conditions relating to the liabilities of Borrower to Lender),
Lender has agreed to waive all Events of Default under the December 1996 Loan
Agreement and the Bridge Loan Agreement existing on the date hereof; and
WHEREAS, Borrower has requested and Lender has agreed to restructure
certain of Borrower's obligations to Lender and extend the time for repayment
of same as hereinafter set forth; and
WHEREAS, in order to secure the payment of the obligations due to
Lender from Borrower, Lender requires a security interest in and to
substantially all assets of Borrower as hereinafter set forth; and
WHEREAS, Borrower has represented to Lender that Borrower is actively
seeking to refinance its obligations to Lender with another lender; and
WHEREAS, Lender is relying upon the representations of Borrower in
entering into this Agreement; and
WHEREAS, the parties hereto seek to memorialize the terms of their
agreements by this writing.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained and for other good and valuable consideration,
receipt of which is hereby acknowledged, it is agreed as follows:
1. DEFINITIONS
"Account" - all items described in the UCC definition thereof and all
of the following, whether or not so described (in all cases whether now
existing or hereafter created): all
obligations of any kind at any time due or owing to Borrower and all rights of
Borrower to receive payment or any other consideration (whether classified
under the UCC or the law of any other state as accounts, accounts receivable,
contract rights, chattel paper, General Intangibles, or otherwise) including
without limitation invoices, contract rights, accounts receivable, General
Intangibles, choses-in- action, notes, drafts, acceptances, instruments and all
other debts, obligations and liabilities in whatever form owing to Borrower
from any person, firm, corporation, governmental authority or other entity,
together with all security for any thereof, and all of Borrower's rights to
goods sold (whether delivered, undelivered, in transit or returns), represented
by any thereof, together with all proceeds and products of any of the
foregoing.
"Account Debtor" - as described in the UCC definition thereof,
including, whether or not so described, any Person who is or may become
obligated under or with respect to or upon an Account, General Intangible or
chattel paper.
"Affiliate" - any Person, which directly or indirectly through one or
more intermediaries controls, is controlled by, or is under common control
with, any other Person; for the purposes of this definition, "control" when
used with respect to any Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement" - this Amended and Restated Loan and Security Agreement,
all exhibits and schedules hereto and all extensions, renewals, amendments,
modifications, substitutions and replacements hereto and hereof.
"Banking Day" - any day other than a Saturday, Sunday or legal holiday
for banks under the laws of the State wherein the New Jersey office of the
Lender as set forth above is located.
"Borrower" - shall have the meaning ascribed to such term in the
preamble of this Agreement and shall be used throughout this Agreement as
agreed in Section 15.4 of this Agreement.
"Bridge Loan" - as defined in Section 2.3(1).
"Bridge Note" - as defined in Section 2.3(1).
"Capital Expenditure Loan" or "Capital Expenditure Loans" - as defined
in Section 2.2(1).
"Capital Expenditure Note" - as defined in Section 2.2(1).
"Collateral" - all the following, wherever located and whether now
existing or hereafter created or arising and whether now owned or hereafter
acquired by Borrower or Guarantors: (i) the Accounts; (ii) the Inventory; (iii)
the Equipment; (iv) General Intangibles; (v) the premises commonly known as (a)
0000 Xxxxxxxx Xxxx, Xxxxxxxxxxxxx, Xxxxxxxx (the "Missouri Property") and (b)
0000 X.X. Xxxxxxx One North, North Brunswick, New Jersey (the "North Brunswick
Property"), both owned by the Borrower; (vi) the unlimited continuing corporate
guarantees of Chicago Management Powder Corp., Big Cloud Powder Corporation and
Chicago Contract
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Powder Corporation; (vii) the Warrant (as hereinafter defined); (viii) the
Pledge (as hereinafter defined); (ix) the Post-Closing Collateral (as
hereinafter defined); (x) all documents of title, policies or certificates of
insurance, securities, chattel paper and other documents and instruments
evidencing or pertaining to any thereof; all claims of Borrower against third
parties for loss of or damage to, or otherwise relating to, any of the
Collateral; (xi) all moneys, tax refunds, drafts, notes, items, leases, general
or special deposits, balances, sums, proceeds and credits of Borrower; (xii)
all other property of Borrower; (xiii) all rights and remedies which Borrower
might exercise with respect to any of the foregoing but for the execution of
this Agreement; and (xiv) all accessions and additions to, replacements and
substitutions for, and proceeds and products of, the items described in the
preceding clauses (i) through (xiii).
"Credit Facility" - any loans and other financial accommodations made
available to Borrower at any time pursuant to or encompassed by this Agreement.
"Default Rate" - a rate of interest two (2%) percent per annum in
excess of the then applicable rate.
"Encumbrance" - any security interest, mortgage, charge, claim,
pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or other), preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any
capitalized lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the UCC) in, upon,
or against Borrower or any asset of Borrower, whether or not voluntarily given.
"Environmental Claim" - any claim, suit, notice, order, demand or
other communication made by any Person, including Borrower, with respect to
Borrower or any of its properties, whether owned or leased, that: (i) asserts a
violation of an Environmental Law; (ii) asserts a liability under an
Environmental Law; (iv) demands information under an Environmental Law; (v)
alleges personal injury or property damage resulting from Hazardous Substances;
or (vi) alleges that there is or may be contamination.
"Environmental Law" - any Governmental Rule concerning protection or
regulation of the discharge of substances into the environment, including but
not limited to those concerning air emissions, water discharges and treatment,
storage tanks, and the handling, generation, treatment, storage and disposal of
waste materials, chemical substances, pollutants, contaminants, toxic
substances, pathogens, radioactive materials or hazardous substances of any
kind, whether solid, liquid or gaseous, including without limitation the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. ss.6901 et seq., the
Federal Water Pollution Control Act, 33 U.S.C. ss.1251 et seq.,; the Clean Air
Act, 42 U.S.C. ss.7401 et seq.; the Hazardous Materials Transportation Act of
1975, 49 U.S.C. ss.ss.1801-1812; the Toxic Substances Control Act, 15 U.S.C.
ss.2601 et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7
U.S.C. ss.136 et seq.; the Safe Drinking Water Act, 42 U.S.C. ss.300 et seq.;
and each as amended and as now or hereinafter in effect, and their state and
local counterparts or equivalents, including any regulations promulgated
thereunder.
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"Equipment" - all items described in the UCC definition thereof and
all of the following, whether or not so described (in all cases whether now
owned or hereafter acquired by Borrower and wherever located): all of
Borrower's equipment, machinery, furniture, fixtures, motor vehicles, parts,
supplies and tools, and all other tangible personal property similar to any of
the foregoing, and all repairs, modifications, alterations, replacements,
additions, controls and operating accessories therefor.
"ERISA" - as defined in Section 4.17.
"Event of Default"- as defined in Section 9.
"Existing Loans" - all of the following: (i) a Revolving Loan of up to
$10,000,000.00 and a Capital Expenditure Loan of up to $20,000,000.00, both
made in accordance with a Loan Agreement between the Borrower and Lender dated
December 17, 1996, as amended; and (ii) a Bridge Loan of $10,000,000.00 made in
accordance with a Security Agreement dated March 31, 1997.
"GAAP" - generally accepted accounting principles in effect in the
United States of America, consistently applied from reporting period to
reporting period.
"General Intangibles" - all items described in the UCC definition
thereof and all of the following whether or not so described, owned by Borrower
or in which Borrower has any right, title or interest, whether now owned or in
existence or hereafter created or acquired, and including, without limitation:
any chose in action, cause of action, business records, deposit account,
invention, design, patent, patent application, trademark, trademark application
(with the exception of an intent to use application), service xxxx, service
xxxx application (with the exception of an intent to use application), trade
name, trade name application, trade secret, good-will, copyright, copyright
application, registration, license, franchise, customer list, tax refund claim,
tax refund, computer program, claims under guaranties, security interests,
rights to indemnification or any other intangible property of any kind or
nature (other than an Account).
"Governmental Authority" - any (i) nation, state, government,
jurisdiction or jurisdictional authority (domestic, foreign or international),
any political subdivision thereof, and any governmental, quasi-governmental,
judicial, public, statutory, administrative or regulatory body, agency,
department, bureau, authority, court, commission, board, office,
instrumentality, administrative tribunal or other entity of any of the
foregoing and any official thereof and (ii) any arbitrator, arbitration
tribunal or other non-governmental entity which has jurisdiction over Borrower
as a result of (A) the consent of Borrower or (B) being vested with such
jurisdiction by any Governmental Authority.
"Governmental Rule" - any constitutional provision, law, statute,
code, act, rule, regulation, permit, license, treaty, ordinance, order, writ,
injunction, decree, judgment, guideline, award, standard, directive, decision,
determination, demand or holding of any Governmental Authority, whether in
existence on the date hereof or whether issued, enacted or adopted hereafter,
and any change therein or in the interpretation or application thereof
following the date hereof.
4
"Guarantor" or "Guarantors" - Chicago Management Powder Corp., Big
Cloud Powder Corporation, Chicago Contract Powder Corporation, Xxxx Xxxxxx,
Xxxxxx Xxxxxxx, Xxxxxx Xxxxx, Uri Xxxx and Xxxxxxxxx Xxxxxxxx and their
successors and assigns and any other Person who, at any time, shall agree to
guaranty and be a surety for the Obligations. (Xxxx Xxxxxx, Xxxxxx Xxxxxxx,
Xxxxxx Xxxxx, Uri Xxxx and Xxxxxxxxx Xxxxxxxx are hereinafter sometimes
referred to as the "Individual Guarantors".)
"Inventory" - all items described in the UCC definition thereof and
all of the following, whether or not so described (in all cases whether now
owned or hereafter acquired by Borrower and wherever located): all goods,
merchandise or other personal property held by Borrower for sale or lease or to
be furnished under labels and other devices, names or marks affixed thereto for
purposes of selling or identifying the same or the seller or manufacturer
thereof, and all right, title and interest of Borrower therein and thereto; all
raw materials work or goods in process; and all materials and supplies of any
kind or description used or usable in connection with the manufacture,
packaging, shipping, advertisement, sale or finishing of any of the foregoing,
together with all proceeds and products of any of the foregoing.
"ISRA" - as defined in Section 4.19.
"Loans" - the Revolving Loan, the Capital Expenditure Loan and the
Bridge Loan, as the context may require, when not referred to by their full
titles.
"Maturity Date" - shall mean, in relation to the Bridge Loan (absent
the existence of an Event of Default), January 4, 1999.
"Notes" - the Amended and Restated Secured Revolving Promissory Note,
the Amended and Restated Secured Capital Expenditure Note and the Amended and
Restated Secured Bridge Note, as the context may require, when not referred to
by their full titles.
"Obligations" - all the following: (i) all principal of and interest
on the Revolving Loan, the Capital Expenditure Loan and the Bridge Loan, and
all other sums payable by Borrower or any Related Entity under the terms of
this Agreement or any of the Relevant Documents; (ii) all other indebtedness,
liabilities, obligations and agreements of every kind and nature of Borrower or
any Related Entity to or with Lender or any affiliate of Lender whether
pursuant to this Agreement, any of the Relevant Documents or otherwise, whether
in the form of refinancing, letters of credit, bankers acceptances, interest
rate agreements, hedge or currency contracts, guarantees, loans, interest,
overdrafts charges, fees, expenses or otherwise, whether direct or indirect,
whether acquired outright, conditionally or as collateral security from
another, whether absolute or contingent, joint or several, liquidated or
unliquidated, secured or unsecured, and whether arising by operation of law or
otherwise. (iii) all guarantees of any of Borrower's indebtedness to Lender;
(iv) any participation or interest of Lender or any affiliate of Lender in any
indebtedness, liabilities or agreements of Borrower, any Related Entity or any
such guarantor to or with others; (v) all out-of-pockets costs and expenses
incurred by Lender in connection with this Agreement and the Relevant Documents
at any time, including, but not limited to the expenses and reasonable fees of
Lender's counsel, whether of outside counsel or the allocated cost of Lender's
in-house counsel; (vi) in each case whether now existing or hereafter created,
5
whether now or hereafter contemplated, and including without limitation any
future advances, renewals, extensions modifications or changes in form of, or
substitutions for, any of the items described in the preceding clauses (i)
through (v).
"Permitted Encumbrance" - any one or combination of the following: (i)
The liens and security interests in the Collateral granted to Lender; (ii)
Liens for taxes, assessments, governmental charges or levies on Borrower or any
of Borrower's properties, but only if such taxes, assessments, governmental
charges or levies (A) are at the time due and payable or if they can thereafter
be paid without penalty or are being contested in good faith by appropriate
proceedings diligently conducted and with respect to which Borrower has created
adequate reserves; or (B) are not pursuant to any Environmental Law; (iii)
Pledges or deposits to secure payment of workers' compensation obligations,
unemployment insurance, deposits or indemnities to secure public or statutory
obligations or for similar purposes; (iv) Mechanics', carriers' workmen's',
repairmen's and other similar statutory liens incurred in the ordinary course
of Borrower's business, so long as the liability secured is not overdue or, if
overdue, is being contested in good faith by appropriate actions or proceedings
diligently conducted with respect to which Borrower has created adequate
reserves or has adequate insurance protection; provided, however, that at no
time may the aggregate amount of such liens exceed $100,000.00; (v)
Encumbrances existing on the date hereof and listed on Schedule 4.16; provided,
however, that the amount of the indebtedness secured by each such encumbrance
shall not exceed the indebtedness secured by such encumbrance existing on the
date hereof; and (vi) with regard to the North Brunswick Property, a second
mortgage lien (the "Second Mortgage") granted by the Borrower to 101 Realty
Associates, a New Jersey limited liability company formed by the Individual
Guarantors to secure the principal sum of $4,000,000.00, and interest thereon,
dated the same date as this Agreement.
"Post-Closing Collateral" - a mortgage on the leasehold estate located
at 0000 Xxxx 00xx Xxxxxx, Xxxxxxx (Clearing), Illinois (the "Chicago Property")
owned by Chicago Contract Powder Corporation ("Chicago Contract"), which Lender
recognizes requires the consent of the ground lessor, Witco Chemical
Corporation (the "Witco Consent"), and that such mortgage is not effective
until and unless the Witco Consent is obtained.
"Person" - any individual, partnership, corporation, association,
trust, business trust, joint venture, joint stock company, limited liability
company, limited liability partnership, limited partnership, unincorporated
organization or enterprise or Governmental Authority.
"Pledge" - shall mean, collectively, the Pledge of Trademark as
Security and the General Pledge of Trademark as Security delivered by Borrower
to Lender dated the date hereof and all amendments, modifications,
substitutions and replacements thereto and thereof.
"Prime Rate" - the rate of interest announced from time to time by
Lender as its "prime rate" or "prime lending rate," which rate is determined
from time to time by Lender as a means of pricing some loans to its customers
and is neither tied to any external rate of interest or index nor necessarily
reflects the lowest rate of interest actually charged by Lender to any
particular class or category of customers.
6
"Related Entity" - any corporate subsidiary of Borrower and any
unincorporated association or other Person through which Borrower conducts any
part of its business.
"Relevant Documents" - any and all documents and instruments delivered
to Lender pursuant or incident to this Agreement or any of the Loans (i) by
Borrower or any Related Entity; (ii) by any pledgor or grantor of a lien,
security interest or other right, or (iii) by any Guarantor of any of the
Obligations, including without limitation the guarantees of the Obligations of
Borrower executed by the Guarantors under even date.
"Revolving Loan" or "Revolving Loans" - as defined in Section 2.1(2).
"Revolving Loan Limit" - as defined in Section 2.1(1).
"Revolving Note" - as defined in Section 2.1(1).
"Termination Date" - shall mean, in relation to the Revolving Loan and
the Capital Expenditure Loan (absent the existence of an Event of Default),
January 4, 1999.
"Time Zone" - the time zone wherein the Lender's office set forth on
the first page hereof is listed.
"UCC" - the Uniform Commercial Code as in effect from time to time in
the State wherein Lender's office as set forth on the first page hereof is
located.
"Warrant" - the Common Stock Purchase Warrant delivered by Borrower to
Lender dated the date hereof and all extensions, renewals, amendments,
modifications, substitutions and replacements thereto and thereof.
2. CREDIT FACILITIES
2.1 REVOLVING LOAN
2.1(1) WAIVER OF EXISTING DEFAULTS . Pursuant to the request of
Borrower, Lender hereby waives all Events of Default under the December 1996
Loan Agreement and the Bridge Loan Agreement existing on the date hereof.
Notwithstanding such waiver, Borrower further acknowledges that it is bound by
the terms and provisions contained in this Agreement, and that the Lender has
the right to enforce all of its rights and remedies as set forth in this
Agreement.
2.1(2) AMOUNT AND CERTAIN DEFINITIONS.
MAKING OF LOANS. Lender and Borrower have previously entered
into the December 1996 Loan Agreement pursuant to which Lender has made loans
to Borrower on a revolving loan basis. Borrower hereby agrees and acknowledges
that there is due and owing, on account of the Loans, the aggregate principal
sum of $39,997,983.16 plus accrued and unpaid interest and costs. Lender and
Borrower have agreed to restructure, amend and restate the
7
December 1996 Loan Agreement as set forth herein. Provided no Event of Default
has occurred or is continuing hereunder, and subject to the terms and
conditions set forth herein, Lender shall, upon the request of Borrower, from
the date hereof through the Termination Date, make Loans to Borrower
("Revolving Loan" or the "Revolving Loans") from time to time on a revolving
loan basis in an aggregate principal amount not in excess at any time
outstanding of Borrower's Revolving Loan Limit of Ten Million ($10,000,000.00)
Dollars. The Revolving Loans shall be evidenced by the Amended and Restated
Secured Revolving Promissory Note, as the same may be renewed, amended,
extended or substituted from time to time (the "Revolving Note") substantially
in the form of Exhibit A annexed to this Agreement. The Revolving Loans shall
be payable in accordance with the terms of this Agreement.
2.1(3) INTEREST RATE. The Revolving Loans shall bear interest
at a fluctuating interest rate per annum equal to the following: (i)
one-quarter (1/4) of one percentage point above Lender's Prime Rate in effect
from time to time, from the date of this Agreement through and including May
31, 1998; (ii) three quarters (3/4) of one percentage point above Lender's
Prime Rate in effect from time to time from June 1, 1998 through and including
August 31, 1998; (iii) one (1) percentage point above Lender's Prime Rate in
the effect from time to time from September 1, 1998 through and including
September 30, 1998; (iv) one and one quarter (1 1/4) percentage points above
Lender's Prime Rate in effect from time to time from October 1, 1998 through
and including October 31, 1998; (v) one and one half (1 1/2) percentage points
above Lender's Prime Rate in effect from time to time from November 1, 1998
through and including November 30, 1998; (vi) two (2) percentage points above
Lender's Prime Rate in effect from time to time from December 1, 1998 through
and including January 4, 1999. Each change in such fluctuating interest rate to
take effect simultaneously with the corresponding change in the Prime Rate,
without notice to Borrower.
2.1(4) REPAYMENT. Interest on the Revolving Loans shall be
due at the end of each calendar month and shall be payable immediately. Any
failure or delay by Lender in presenting invoices for interest payments shall
not discharge or relieve Borrower of the obligation to make such interest
payments. The Revolving Loans plus all accrued and unpaid interest and fees
thereon, shall be payable (x) on the Termination Date, or (y) at such other
time as is provided in Section 10, Section 12 or elsewhere in this Agreement,
whichever of (x) or (y) shall first occur.
2.1(5) DETERMINATION OF BALANCE OF REVOLVING LOANS. In
determining the outstanding balance of the Revolving Loans, (i) domestic checks
received by Lender before Noon in the Time Zone of a Banking Day will be
credited on that Banking Day, and thereafter on the following Banking Day; (ii)
any other form of funds received by Lender will be credited on the Banking Day
when Lender has received notification of collection if before Noon (in the Time
Zone), and thereafter on the following Banking Day; and (iii) all credits shall
be conditioned upon final payment to Lender in cash or solvent credits of the
items giving rise to them and, if any item is not paid, the amount of any
credit given for it shall be charged to the balance of the Revolving Loans
whether or not the item is returned.
2.1(6) MONTHLY AND INTERIM STATEMENTS. Once each month Lender
shall render a statement of account to Borrower showing the current status of
principal, interest and service charges with respect to the Revolving Loans.
The statement of account rendered by Lender shall
8
be considered correct, accepted by Borrower and conclusively binding upon
Borrower, unless Borrower gives Lender written notice to the contrary within
ten (10) Banking Days after the sending of the statement by Lender. If Borrower
disputes the correctness of Lender's statement, Borrower's notice shall specify
in detail the particulars of its basis for contending that Lender's statement
is incorrect.
2.1(7) ACCOUNT DEFICIENCIES. In the event Borrower's
operating accounts with Lender contain a negative balance at any time, then
Lender shall be deemed to have loaned the amount of such deficiency to
Borrower, pursuant to the terms of this Section 2.1, on Lender's Banking Day
immediately preceding the day on which such deficiency occurs. Nothing
contained herein shall be deemed or construed to: (i) obligate Lender to honor
any items presented to Lender for payment against any account of Borrower in
which a deficiency exists, whether or not it has done so in the past; or (ii)
relieve Borrower of its obligations to pay usual and customary charges of
Lender imposed generally, in addition to the interest accrued as a result of
any Revolving Loan made pursuant to this subsection.
2.2 CAPITAL EXPENDITURE FACILITY
2.2(1) AMOUNT. Pursuant to the terms and conditions of the
December 1996 Loan Agreement, Lender has previously made loans to Borrower for
capital expenditures ("Capital Expenditure Loan" or the "Capital Expenditure
Loans"). Borrower hereby agrees and acknowledges that there is due and owing
the principal sum of Twenty Million ($20,000,000.00) Dollars plus accrued and
unpaid interest under said Capital Expenditure Loans. The Capital Expenditure
Loans shall be evidenced by the Amended and Restated Secured Capital
Expenditure Note, as the same may be renewed, amended, extended or substituted
from time to time (the "Capital Expenditure Note") substantially in the form of
Exhibit B annexed to this Agreement. The Capital Expenditure Loans shall be
payable in accordance with the terms of this Agreement and the Capital
Expenditure Note and secured by the Collateral.
2.2(2) INTEREST RATE. The Capital Expenditure Loans shall
bear interest at a fluctuating interest rate per annum equal to the following:
(i) one-quarter (1/4) of one percentage point above Lender's Prime Rate in
effect from time to time, from the date of this Agreement through and including
May 31, 1998; (ii) three quarters (3/4) of one percentage point above Lender's
Prime Rate in effect from time to time from June 1, 1998 through and including
August 31, 1998; (iii) one (1) percentage point above Lender's Prime Rate in
the effect from time to time from September 1, 1998 through and including
September 30, 1998; (iv) one and one quarter (1 1/4) percentage points above
Lender's Prime Rate in effect from time to time from October 1, 1998 through
and including October 31, 1998; (v) one and one half (1 1/2) percentage points
above Lender's Prime Rate in effect from time to time from November 1, 1998
through and including November 30, 1998; (vi) two (2) percentage points above
Lender's Prime Rate in effect from time to time from December 1, 1998 through
and including January 4, 1999. Each change in such fluctuating interest rate to
take effect simultaneously with the corresponding change in the Prime Rate,
without notice to Borrower.
2.2(3) REPAYMENT. Interest on the Capital Expenditure Loans
shall be due at the end of each calendar month and shall be payable
immediately. Any failure or delay by Lender in
9
presenting invoices for interest payments shall not discharge or relieve
Borrower of the obligation to make such interest payments. The Capital
Expenditure Loans plus all accrued and unpaid interest and fees thereon shall
be payable (x) on the Termination Date, or (y) at such other time as is
provided in Section 10, Section 12 or elsewhere in this Agreement, whichever of
(x) or (y) shall first occur.
2.3 BRIDGE LOAN
2.3(1) AMOUNT. Lender and Borrower have previously entered
into the Bridge Loan Agreement pursuant to which Lender has made a loan to
Borrower ("Bridge Loan"). Borrower hereby agrees and acknowledges that there is
due and outstanding on the Bridge Loan the principal sum of $10,000,000.00 plus
accrued and unpaid interest and costs. The Bridge Loan shall be evidenced by
the Amended and Restated Secured Bridge Loan Note, as the same may be renewed,
amended, extended or substituted from time to time ("Bridge Note")
substantially in the form of Exhibit C annexed to this Agreement. The Bridge
Loan shall be paid in accordance with the terms of the Bridge Note but shall be
secured by the Collateral and to the extent not inconsistent with the Bridge
Note, governed by the terms of this Agreement.
2.3(2) INTEREST RATE. The Bridge Loan shall bear interest at
a fluctuating interest rate per annum equal to the following: (i) one-quarter
(1/4) of one percentage point above Lender's Prime Rate in effect from time to
time, from the date of this Agreement through and including May 31, 1998; (ii)
three quarters (3/4) of one percentage point above Lender's Prime Rate in
effect from time to time from June 1, 1998 through and including August 31,
1998; (iii) one (1) percentage point above Lender's Prime Rate in the effect
from time to time from September 1, 1998 through and including September 30,
1998; (iv) one and one quarter (1 1/4) percentage points above Lender's Prime
Rate in effect from time to time from October 1, 1998 through and including
October 31, 1998; (v) one and one half (1 1/2) percentage points above Lender's
Prime Rate in effect from time to time from November 1, 1998 through and
including November 30, 1998; (vi) two ( 2) percentage points above Lender's
Prime Rate in effect from time to time from December 1, 1998 through and
including January 4, 1999. Each change in such fluctuating interest rate to
take effect simultaneously with the corresponding change in the Prime Rate,
without notice to Borrower.
2.3(3) REPAYMENT. Interest on the Bridge Loan shall be due at
the end of each calendar month. Any failure or delay by Lender in presenting
invoices for interest payments shall not discharge or relieve Borrower of the
obligation to make such interest payments. The entire outstanding principal
balance of the Bridge Loan, plus all accrued and unpaid interest and fees
thereon, shall be due and payable in full on the Maturity Date. IT IS
UNDERSTOOD AND AGREED THAT LENDER SHALL BE UNDER NO OBLIGATION TO EXTEND THE
MATURITY DATE.
2.3(4) RECEIPT OF PAYMENT. Lender acknowledges that it is in
receipt of the sum of $5,000,000.00, which sum was delivered by the Borrower to
the Lender upon the signing of this Agreement and the Relevant Documents, and
which sum was applied to the outstanding principal sum due and owing under the
Bridge Note.
10
2.4 ADDITIONAL PROVISIONS RE: INTEREST, FEES AND PAYMENTS ON ALL
LOANS
2.4(1) INTEREST CALCULATION; LAWFUL RATE. Interest on the
Revolving Loan, Capital Expenditure Loan and the Bridge Loan shall be
calculated on a daily basis upon the unpaid principal balance, with each day
representing 1/360th of a year. If the interest rate calculated in accordance
with any provision of this Agreement for any of the Loans would at any time
exceed the maximum permitted by any law then applicable to such Loans, then for
such period as such rate would exceed the maximum permitted by such law (and no
longer), the rate of interest payable on the Loans shall be reduced to the
maximum permitted by such law.
2.4(2) CHARGING PRINCIPAL AND INTEREST PAYMENTS. Lender may,
at its discretion, charge the amount of any payment of principal or interest on
any of the Loans to any checking or loan account of Borrower, deduct such
amount from any future Loan to Borrower or other funds received by Lender
against payment of such amount. Borrower hereby consents to all such charges.
2.4(3) DEFAULT RATE. Upon the occurrence and during the
continuance of any Event of Default hereunder, the Loans shall, at the option
of Lender, bear interest at the Default Rate.
2.4(4) NON-BANKING DAYS. If any payment pursuant to this
Agreement or any of the Relevant Documents shall be stated to be due on a day
other than a Banking Day, such payment may be made on the next succeeding
Banking Day and such extension of time shall be included in computation of the
interest or other payment due.
2.4(5) REIMBURSEMENT OF INCREASED COST TO LENDER. If any law,
regulation or guideline, or change in any law, regulation or guideline or in
the interpretation thereof, or any order or ruling by any Governmental
Authority, or compliance by the Bank with any Governmental Rule of any such
Governmental Authority, shall impose, modify, or deem applicable to Lender any
reserve, capital, special deposit or other requirement or condition in respect
of this Agreement or any of the Loans, which results in an increased cost or
reduced benefit to Lender in maintaining any of the Loans (as determined by
reasonable allocation of the aggregate of such increased costs or reduced
benefits to Lender resulting from such event), then Borrower shall pay to
Lender from time to time, upon demand, additional amounts sufficient to
compensate Lender for such increased costs or reduced benefits. Interest shall
be due and payable on each such amount if not paid within ten (10) days after
the date of such demand until payment in full thereof at the Default Rate. A
certificate setting forth in reasonable detail such increased cost incurred or
reduced benefit realized by Lender as a result of any such event shall be
conclusive as to the amount thereof, absent manifest error.
2.4(6) FEES. Borrower shall pay to Lender a restructure fee
of $50,000.00 upon the execution of this Agreement, which fee shall be deemed
fully earned and non-refundable. The Borrower acknowledges the obligation to
pay all costs, expenses and taxes of Lender referred to in Section 13 herein
("Lender's Costs"). The restructure fee shall be applied to all Lender's Costs
provided however, in the event Lender's Costs are in excess of $50,000.00, the
Borrower shall be
11
responsible for such excess. In the event Lender's Costs are less than
$50,000.00, the remainder shall be retained by Lender as the restructure fee.
2.4(7) EXISTING LOANS. Borrower hereby acknowledges that:
A. the Existing Loans are due from the Borrower to
Lender without any defense, offset or counterclaim whatsoever;
B. the Existing Loans shall henceforth be governed and
paid pursuant to this Agreement; and
C. all Existing Loans shall be secured by the
Collateral set forth herein.
3. SECURITY INTEREST
3.1 GRANT OF SECURITY INTERESTS. As security for the due and punctual
payment and performance of all of the Obligations, whether pursuant to this
Agreement or otherwise, Borrower hereby pledges, transfers and assigns to
Lender, and grants to Lender security interests in, (a) all of the Collateral
wherever located and whether now existing or hereafter created and whether now
owned or hereafter acquired by Borrower, and (b) all accessions and additions
thereto, replacements and substitutions therefor, and proceeds including,
without limitation, all insurance proceeds and products thereof. The security
interests granted hereby, and all remedies and other rights stated or referred
to in this Agreement or any of the Relevant Documents, shall continue in full
force and effect until full and final payment and performance of the Loans and
all other Obligations under this Agreement and the Relevant Documents.
3.2 FURTHER ASSURANCES. Borrower shall execute and deliver such
financing statements and other documents (in form and substance satisfactory to
Lender) and take such other actions as Lender may reasonably request from time
to time in order to create, perfect or continue the security interests and
other liens provided for by this Agreement under the UCC or other applicable
state or federal law.
3.3 RELEASE OF MORTGAGE LIEN. Provided no scheduled payment default
under Section 9.1 hereof shall have occurred, Lender shall discharge its
mortgage lien on the North Brunswick Property upon receipt by Lender of the
principal sum of Five Million ($5,000,000.00) Dollars and accrued interest
thereon in immediately available funds (which sum is in addition to the payment
received and referred to in Section 2.3(4) above). Provided no Event of Default
shall have occurred, and provided no event which with the passage of time or
giving of notice or both would constitute an Event of Default, the Lender shall
discharge its mortgage lien (i) on the Missouri Property upon its sale to a
bona fide purchaser under an arms length transaction and receipt by Lender of
the sum of Four Million One Hundred Thousand ($4,100,000.00) Dollars in
immediately available funds; and (ii) on the Chicago Property upon its sale to
a bona fide purchaser under an arms length transaction and receipt by Lender of
the net proceeds (as hereinafter defined) derived from such sale in immediately
available funds; the term "net
12
proceeds" shall mean the sale price minus brokerage commissions, customary
closing adjustments (i.e., taxes, utilities and the like), and reasonable legal
fees and costs related to the sale of the Chicago Property. If a scheduled
payment default under Section 9.1 hereof shall have occurred, the Lender shall
discharge the mortgage on the North Brunswick Property upon Lender's receipt of
(x) the principal amount outstanding under the Bridge Note, plus accrued
interest thereon and all reasonable costs and expenses in connection therewith
(collectively, the "Guaranteed Sum"), plus (y) all proceeds from the
refinancing or sale of the North Brunswick Property to a bona fide purchaser
under an arms length transaction ( or if to the Individual Guarantors, or their
nominee, for an amount and under no less favorable terms than could have been
obtained in an arms length transaction) in excess of the Guaranteed Sum and the
amount required to discharge the Second Mortgage (up to the amount of the third
mortgage lien on the North Brunswick Property held by the Lender), and the
Lender shall retain all of its rights and remedies as set forth in the
mortgages on the Missouri Property and the Chicago Property and shall not
discharge said mortgages until all of the Obligations are paid in full.
Provided no scheduled payment default under Section 9.1 hereof shall
have occurred, any monies received by Lender by virtue of the sale or
refinancing (as the case may be) of the North Brunswick Property shall be
applied to the repayment of the Bridge Loan in full (inclusive of principal,
interest, reasonable legal fees, costs and expenses, if applicable). Provided
no Event of Default shall have occurred and is continuing, any monies received
by Lender by virtue of the sale or refinancing (as the case may be) of the
Missouri Property and/or the Chicago Property shall be applied to the repayment
of the Loans (inclusive of interest, reasonable legal fees, costs and expenses,
if applicable), in the following manner: (i) monies derived from the Missouri
Property shall be applied first to the principal and interest, due as of the
date of payment, on the Capital Expenditure Loan; up to the sum of Four Million
($4,000,000.00) Dollars, with the balance, if any, to the principal of the
Revolving Loan; and (ii) monies derived from the Chicago Property, if any,
shall be applied in such order and to such Loan or Loans as Lender in its sole
discretion shall determine. Anything herein to the contrary notwithstanding,
with respect to any proceeds derived from the Missouri Property which are
applied to the Revolving Loan, the Borrower shall have the right to reborrow
same pursuant to the terms and conditions of this Agreement.
4. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender, knowing and intending that
Lender will rely thereon in making the Loans contemplated hereby, that the
following statements are true and accurate.
4.1 ORGANIZATION AND QUALIFICATION
4.1(1) Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction stated at the
beginning of this Agreement.
4.1(2) Borrower has the power and authority, and all
necessary licenses or other authorizations, to own its properties and to carry
on its business as now conducted, and is duly
13
qualified and in good standing in each jurisdiction wherein the nature of the
property owned or used or of the business conducted requires such
qualification, except where the failure to satisfy such requirements would not
have a material adverse effect on the Borrower's operations, financial
condition, or ability to perform under the terms of this Agreement.
4.2 DUE AUTHORIZATION; NO DEFAULT
4.2(1) The execution, delivery and performance by Borrower of
this Agreement, the Notes and the Relevant Documents are within Borrower's
powers, have been duly authorized by all necessary action on the part of
Borrower, and do not and will not (a) violate Borrower's Certificate of
Incorporation or By-Laws, or any Governmental Rule of any Governmental
Authority, (b) constitute a breach of, or default under, any agreement,
undertaking or instrument [upon receipt of appropriate consents from the New
Jersey Economic Development Authority ("NJEDA") and the Banque Nationale De
Paris, Houston agency ("BNP") relative to a Loan Agreement between Borrower and
NJEDA, Trust Indenture by and among the NJEDA and The National Bank, or the
Reimbursement Agreement between Borrower and BNP and related documents, all
dated as of April 15, 1993 (separately, the "NJEDA Consent" and the "BNP
Consent")] to which Borrower is a party or by which it may be affected, or (c)
result in the imposition of any lien, Encumbrance or restriction on any assets
of Borrower.
4.2(2) Borrower has delivered to Lender true and complete
copies of Borrower's resolutions necessary to authorize the transactions
contemplated by this Agreement, and of Borrower's Certificate of Incorporation
and By-Laws, all as in effect on the date hereof and certified by a duly
authorized officer of Borrower.
4.2(3) This Agreement and the Relevant Documents upon their
execution and delivery, and the Notes upon their issuance, will be legal, valid
and binding obligations of Borrower, enforceable against Borrower in accordance
with their respective terms.
4.3 NO GOVERNMENTAL CONSENT NECESSARY. Except for the NJEDA Consent,
no authorization, approval or other action by, and no notice to or filing with,
any Governmental Authority is required for the due execution, delivery and
performance by Borrower of this Agreement, any of the Notes or any of the
Relevant Documents.
4.4 NO PROCEEDINGS. Except as forth in Schedule 4.4 to this Agreement,
there are no pending or threatened claims, actions, proceedings or
investigations before any Governmental Authority that may, singly or in the
aggregate, have a material adverse effect on (a) the validity or enforceability
of this Agreement, any of the Notes or any of the Relevant Documents, or the
ability of Borrower to perform any of its Obligations, or (b) the financial
condition or the properties or operations of Borrower.
4.5 FINANCIAL STATEMENTS.
4.5(1) Subject to any limitation stated therein, all balance
sheets, income statements and other financial data which have been (as amended,
or hereafter to be amended by
14
the filing of a 10KA or a 10QA with the Securities and Exchange Commission) or
shall hereafter be furnished to Lender do and will truly and fairly present the
financial condition of Borrower as at the respective dates thereof and the
results of its operations for the periods ended on such dates, in accordance
with GAAP. All other information, reports and other papers and data furnished
to Lender are, or will be at the time the same are so furnished, true, accurate
and complete in all material respects.
4.5(2) Except as shown on the most recent financial
statements set forth on Schedule 4.5 to this Agreement, Borrower has no
liabilities as of the date hereof which would have an adverse effect on the
Collateral or on the financial condition, operations or other properties of
Borrower.
4.6 NO CHANGE IN FINANCIAL CONDITION; SOLVENCY.
4.6(1) There has been no material change in Borrower's
financial condition since the date of its last financial statements set forth
on Schedule 4.5 to this Agreement.
4.6(2) Borrower's assets, at a fair valuation, exceed
Borrower's liabilities (including, without limitation, contingent liabilities),
Borrower has the capacity to pay its debts, and Borrower has capital and assets
sufficient to carry on its business.
4.7 COMPLIANCE WITH LAWS. Except as set forth in Schedule 4.7,
Borrower is in compliance in all material respects with all Governmental Rules
applicable to its ownership or use of properties or the conduct of its
business; Borrower has not received any notice of violation of any of the
foregoing; and Borrower is not in violation of any judgment, order or decree of
any Governmental Rule.
4.8 NO OTHER VIOLATIONS. Borrower is not in violation of any term of
its Certificate or Articles of Incorporation or Bylaws.
4.9 TAXES AND ASSESSMENTS. Except as set forth on Schedule 4.9,
Borrower has filed all federal, state and local tax returns and other reports
it is required to file to the date hereof (or has obtained valid, written
extensions as to any not so filed), has paid all taxes, assessments, and other
governmental charges due and payable to the date hereof, and has made adequate
provision for the payment of such taxes, assessments and charges accrued but
not yet payable. Borrower has no knowledge of any deficiency or additional
assessment in a materially important amount in connection with any taxes,
assessments or other governmental charges not provided for or disclosed in the
financial statements set forth on Schedule 4.5 to this Agreement.
4.10 ACCOUNTS. The list of Accounts, dated December 31, 1997, made
available to Lender, is complete as of such date, and contains an accurate
aging thereof.
4.11 INVENTORY. Borrower's Inventory, as reflected by its most recent
balance sheet noted on Schedule 4.5, consists of items of a quality and
quantity usable or salable in the ordinary course of its business; values of
obsolete items, items below standard quality and items in the
15
process of repair have been written down to realizable market value, or
adequate reserves have been provided therefor; and values carried on said
balance sheet are set at the lower of cost or market, in accordance with GAAP.
4.12 BOOKS AND RECORDS. Borrower maintains its books and records
relative to its Accounts and its Inventory at the address listed in Schedule
4.12 to this Agreement.
4.13 LOCATION OF COLLATERAL. None of the Inventory, Equipment or other
tangible property constituting part of the Collateral is or will be located in
or on any premises other than those identified in Schedule 4.12 to this
Agreement. Schedule 4.12 contains an accurate record of all landlords of
premises leased by Borrower and of all mortgagees of premises owned by
Borrower.
4.14 PLACE OF BUSINESS. The principal place of business and chief
executive office of Borrower is located at 0000 Xxxxxx Xxxxxx, Xxxxx Xxxxxxxxx,
Xxx Xxxxxx 00000. Schedule 4.14 to this Agreement lists all of the other
offices or locations in or from which Borrower conducts any of its business or
operations.
4.15 OTHER NAME OR ENTITIES. Except as disclosed on Schedule 4.15 to
this Agreement, none of Borrower's business is conducted through any corporate
subsidiary, unincorporated association or other entity and Borrower has not,
within the seven years preceding the date of this Agreement, (a) changed its
name, (b) used any name other than the name stated at the beginning of this
Agreement, or (c) merged or consolidated with, or acquired the assets of, any
other corporation or business.
4.16 TITLE AND LIENS. Borrower has good and marketable title to all of
the Collateral as sole owner thereof, free and clear of any Encumbrance, except
the liens created by this Agreement and identified on Schedule 4.16 to this
Agreement and Permitted Encumbrances. None of the Collateral is subject to any
prohibition against encumbering, pledging, hypothecating, or assigning the same
or requires notice or consent in connection therewith.
4.17 ERISA. Borrower is in compliance in all material respects with
the provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the related provisions of the Internal Revenue Code, and
with all regulations and published interpretations issued thereunder by the
United States Treasury Department, the United States Department of Labor and
the Pension Benefit Guaranty Corporation ("PBGC"). Neither a reportable event
as defined in Section 4043 of ERISA, nor a prohibited transaction as defined in
Section 406 of ERISA or Section 4975 of the Internal Revenue Code, has occurred
and is continuing with respect to any employee benefit plan subject to ERISA
established or maintained, or to which contributions have been or may be made,
by Borrower or by any trade or business (whether or not incorporated) which
together with Borrower would be treated as a single employer under Section 4001
of ERISA (any such trade or business being referred to hereinafter as an "ERISA
Affiliate," and any such employee benefit plan being referred to hereinafter as
a "Plan"). No notice of intention to terminate a Plan has been filed nor has
any Plan been terminated; the PBGC has not instituted proceedings to terminate,
or to appoint a trustee to administer, any Plan, nor do
16
circumstances exist that constitute grounds for any such proceedings; and
neither Borrower nor any ERISA Affiliate has completely or partially withdrawn
from any multi-employer Plan described in Section 4001(a)(3) of ERISA. Borrower
and each ERISA Affiliate has met the minimum funding standards under ERISA with
respect to each of its Plans; no Plan of Borrower or of any ERISA Affiliate has
an accumulated funding deficiency or waived funding deficiency within the
meaning of ERISA; and no material liability to the PBGC under ERISA has been
incurred by Borrower or any ERISA Affiliate.
4.18 O.S.H.A. Borrower has duly complied with, and its facilities,
business, leaseholds, equipment and other property are in compliance in all
material respects with, the provisions of the federal Occupational Safety and
Health Act and all rules and regulations thereunder and all similar state and
local Governmental Rules; and there are no outstanding citations, notices or
orders of non-compliance issued to Borrower or relating to its facilities,
business, leaseholds, equipment or other property under any such Governmental
Rules.
4.19 ENVIRONMENTAL MATTERS.
Except as disclosed in Schedule 4.19 to this Agreement: (a) no
property owned or used by Borrower and located in the State of New Jersey is an
"industrial establishment" within the meaning of the New Jersey Industrial Site
Recovery Act ("ISRA") or is or has been used for the generation, manufacture,
refining, transportation, treatment, storage handling or disposal of any
"hazardous substances" or "hazardous wastes" within the meaning of ISRA; (b)
the following are all of the Standard Industrial Classification Codes
applicable to the properties and operations of Borrower: 2841; (c) Borrower is
in compliance with all applicable Environmental Laws; (d) there has been no
contamination or release of hazardous substances, at, upon, under or within any
property owned or, to the best of Borrower's knowledge, at, upon, or within any
property leased by Borrower, and there has been no contamination (as defined in
any applicable Environmental Law) or release of hazardous substances (as
defined in any applicable Environmental Law) on any other property that has
migrated or threatens to migrate to any property owned by Borrower or, to the
best of Borrower's knowledge, to any property leased by Borrower; (e) there are
not now and never have been above-ground or underground storage tanks at any
property owned by Borrower or, to the best of Borrower's knowledge, at any
property leased by Borrower; (f) there are no transformers, capacitors, or
other items of Equipment containing polychlorinated biphenyls at levels in
excess of 49 parts per million, violative of applicable Environmental Law, at
any property owned by Borrower or, to the best of Borrower's knowledge, at any
property leased by Borrower; (g) other than materials used or produced, held,
transported and disposed of in accordance with Environmental Laws, Borrower has
not used its operations for, and properties owned or leased by Borrower are not
now and have never been used by Borrower (or, to the best knowledge of Borrower
after due inquiry, by any predecessor in possession or other Person) for
treatment, generation, storage, recycling, or disposal of hazardous substances;
(h) no hazardous substances are present at any property owned by Borrower or,
to the best of Borrower's knowledge, at any property leased by Borrower, nor
will any hazardous substances be present upon any such property or utilized in
the operation thereof by Borrower except which are transported, used, stored,
disposed of and otherwise handled in accordance with all Environmental Laws, in
proper storage containers; (i) all permits and authorizations required
17
under Environmental Laws for all operations of Borrower have been duly issued
and are in full force and effect, including but not limited to those for air
emissions, water discharges and treatment, storage tanks and the generation,
treatment, storage and disposal of hazardous substances; (j) there are no
pending or threatened Environmental Claims against Borrower or any property
owned or leased by Borrower; and Borrower has not created or caused any
condition or occurrence with respect to any property owned or leased by
Borrower that could reasonably be anticipated (x) to form the basis of an
Environmental Claim against Borrower or its properties or (y) to cause any
property owned or leased by Borrower to be subject to any restrictions on its
ownership, occupancy or transferability under any Environmental Law; (k) no
notice relating to hazardous substances is contained in any deed relating to
any property owned by Borrower or, to the best of Borrower's knowledge, in any
deed relating to any property leased by Borrower and there are no facts or
conditions on any such property that would require that such a notice be placed
in the deed to any such property; (l) no portion of any property owned by
Borrower or, to the best of Borrower's knowledge, any property leased by
Borrower, contains asbestos-containing material that is or threatens to become
friable; and (m) the representations and warranties set forth in this Section
4.19 shall survive repayment of the Obligations and the termination of this
Agreement and the Relevant Documents.
4.20 PROHIBITED BUSINESS ACTIVITIES. Borrower is not (a) engaged
principally or as one of its important activities in the business of extending
credit for the purpose, immediately, incidentally, or ultimately, of purchasing
or carrying "margin stock" (within the meaning of Regulation U); (b) an
"investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended from time to time, or a company
under the "control" of an "investment company", as those terms are defined in
such Act, and shall not become such an "investment company" or under such
"control"; or (c) a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or an "affiliate" of a
"subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended from time to time.
4.21 MARGIN STOCK. No part of the proceeds of any Loan will be used,
directly or indirectly, to purchase or carry any margin stock, to extend credit
to others for the purpose of purchasing or carrying any margin stock, or for
any purpose that violates any provision of Regulations G, T, U or X issued by
the Board of Governors of the Federal Reserve System.
4.22 REPRESENTATIONS AND WARRANTIES TRUE, ACCURATE AND COMPLETE. None
of the representations, warranties or statements to Lender contained in this
Agreement, in any of the Relevant Documents or in any other writing delivered
to Lender in connection with the Collateral, this Agreement or any of the
transactions contemplated thereby, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make such representation, warranty or statement not misleading in
light of the circumstances under which it is made. All of such representations,
warranties and statements shall survive as of the date indicated therein until
full and final payment and performance of the Loans and all other Obligations
under this Agreement and the Relevant Documents.
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5. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, until full and final payment and
performance of the Loans and all other Obligations under this Agreement and the
Relevant Documents, Borrower shall, unless Lender shall otherwise consent in
writing:
5.1 MAINTENANCE OF EXISTENCE AND QUALIFICATIONS. Maintain and preserve
in full force and effect its existence and good standing and all other rights,
powers, franchises, licenses and qualifications necessary or desirable for its
ownership or use of properties material to, or the conduct of, its business.
5.2 PAYMENT OF TAXES AND OTHER OBLIGATIONS. Pay (a) before they become
delinquent, all taxes, assessments and governmental charges imposed upon it or
any of its property or required to be collected by it, and (b) in the ordinary
course of business, all other indebtedness and liabilities of any kind now or
hereafter owing by it, except, in either case, where the same is being
contested in good faith and the obligee has not instituted any action to
enforce collection.
5.3 MAINTENANCE OF PROPERTIES. Maintain its properties in good working
order and condition, normal wear and tear excepted.
5.4 NOTICE OF ADVERSE EVENTS. Promptly notify Lender in writing of the
occurrence or existence of any of the following: (a) any Event of Default as
defined in this Agreement or any event which, with the giving of notice, lapse
of time or other condition, would become such an Event of Default; (b) any
matter or event which has resulted in, or may result in, a material adverse
change in the financial condition or any property or operations of Borrower;
(c) any material claim, action, proceeding or investigation filed or instituted
against Borrower, or any adverse determination in any material pending action,
proceeding or investigation affecting it; (d) any loss from casualty or theft
in excess of $250,000.00, whether or not insured, affecting property of
Borrower; (e) whether or not otherwise reportable under this Section 5.4, any
complaint, citation, order or other notice of a violation of a claim involving
any of the following, if the liability or penalty therefor may exceed $100,000
singly or in the aggregate: any applicable Governmental Rules relating to air
emissions, water discharge, noise emissions, solid or liquid disposal,
hazardous waste or substances, or other environmental health or safety matters
(the notice to Lender to include, along with other relevant information, the
name of the complainant or claimant and the nature and potential amount of the
claim); (f) any event or condition described in Section 9.15 of this Agreement
relating to ERISA; or (g) if any of the representations and warranties
contained in this Agreement, or in any of the Relevant Documents or any other
writing delivered to Lender by Borrower in connection with this Agreement or
any of the transactions contemplated thereby, ceases to be true, correct and
complete in any material respect.
5.5 INFORMATION AND DOCUMENTS TO BE FURNISHED TO LENDER. Furnish to
Lender in form and substance satisfactory to it:
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5.5(1) ANNUAL FINANCIAL STATEMENTS. As soon as available but
in no event later than ninety (90) days after the end of each fiscal year of
Borrower, a consolidated and consolidating balance sheet of Borrower as of the
end of such year and consolidated and consolidating statements of income, cash
flows and changes in stockholders' equity for such year (all in reasonable
detail and with all notes and supporting schedules), audited by an independent
certified public accountants selected by Borrower and reasonably satisfactory
to Lender, as presenting the financial condition of Borrower as of the dates
and for the periods indicated and as having been prepared in accordance with
GAAP, except as may be otherwise disclosed in such financial statements or the
notes thereto.
5.5(2) QUARTERLY FINANCIAL STATEMENTS. As soon as available
but in no event later than forty-five (45) days after the end of each of the
first, second and third quarters of each fiscal year of Borrower, a
consolidated and consolidating balance sheet of Borrower as of the end of such
quarter and consolidated and consolidating statements of income, cash flows and
changes in stockholders' equity for such quarter and for the period commencing
at the end of the previous fiscal year and ending with the end of such quarter
(all in reasonable detail and with all notes and supporting schedules),
certified by the chief financial officer of Borrower as presenting fairly the
consolidated financial condition of Borrower as of the dates and for the
periods indicated and as having been prepared in accordance with GAAP, except
as may be otherwise disclosed in such financial statements or the notes
thereto.
5.5(3) COMPLIANCE CERTIFICATE. Simultaneously with the
delivery of each annual and quarterly financial statement referred to in
Sections 5.5(1) and 5.5(2), a completed certificate in form and substance
acceptable to Lender ("Compliance Certificate"), executed by an authorized
officer of Borrower, and containing such additional information as Lender may
request from time to time, (a) certifying that the financial statements being
delivered with such Compliance Certificate are true, complete and correct in
all material respects, (b) setting forth in reasonable detail the calculations
required to establish whether Borrower was in compliance with all financial
covenants for the fiscal period in question, (c) stating (i) whether any Event
of Default has occurred or is continuing since the date of the previously
delivered Compliance Certificate and the details of same, (ii) without limiting
the requirements of (i), stating specifically whether any event has occurred
since the date of the previously delivered Compliance Certificate which, with
the giving of notice or the lapse of time, would constitute an Event of
Default; and (iii) such other information as Lender may from time to time
reasonably require to be included in the Compliance Certificate.
5.5(4) ACCOUNTANT'S CERTIFICATE/RELIANCE LETTER.
Simultaneously with the delivery of the annual financial statements referred to
in Section 5.5(1), a certificate of the certified public accountant preparing
such statements stating (a) whether or not his/her examination has disclosed
the occurrence or continuance of a Default or an Event of Default and, if so a
description of such occurrence; and (b) his/her acknowledgment of Lender's
reliance upon such financial statements in providing financial accommodations
to Borrower which certificate shall also include an affirmative acknowledgment
by Borrower that Borrower has knowledge of the submission of such financial
statements to Lender and of Lender's reliance thereon.
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5.5(5) DAILY REPORTS. Daily reports, in form and substance
satisfactory to Lender, of all sales and receipts for the previous business
day, and, if requested, copies of all invoices evidencing such sales.
5.5(6) ACCOUNTS, INVENTORY AND ACCOUNTS PAYABLE REPORTS.
Within twenty (20) days of the end of each month, beginning with the end of
month of February 1998, and from time to time as Lender may require:
certificates and assignment schedules describing the Accounts and Inventory in
detail and total, aging reports of Accounts, accounts payable aging reports,
and collateral and loan reconciliation reports, all as of the end of such month
and in such form as Lender may reasonably require.
5.5(7) ERISA DOCUMENTS. As soon as filed or distributed, all
ERISA reports, notices, returns and other documents filed as required by or in
compliance with ERISA, whether to the Internal Revenue Service, the Department
of Labor, the Pension Benefit Guaranty Corporation or any other appropriate
agency.
5.5(8) VIOLATIONS. Immediately, a copy of any complaint,
citation, order or other notice of a violation or claim required to be reported
pursuant to Subsection 5.4 of this Agreement.
5.5(9) OTHER DOCUMENTS. Promptly upon demand:
(A) A certificate executed by an officer of Borrower
satisfactory to Lender stating that there then exists no Event of Default
hereunder and no event which, with the giving of notice or lapse of time or
other condition, would constitute an Event of Default;
(B) Photocopies of documents evidencing right to
payment (and if an Event of Default occurs, all original documents evidencing
right to payment, including but not limited to invoices, original orders, and
shipping and delivery receipts); and
(C) Such other documents or information as Lender
may reasonably request, including financial projections and cash flow analysis.
5.6 ACCESS TO RECORDS AND PROPERTY. At any time and from time to time,
upon request by Lender, give any representative of Lender access, during normal
business hours, to inspect any of Borrower's properties and to examine, copy
and make extracts from any and all books, records, and documents in the
possession of Borrower or any independent contractor relating to Borrower's
affairs or the Collateral (including without limitation returns for federal
income tax and other taxes).
5.7 INSURANCE.
5.7(1) LIABILITY AND PROPERTY INSURANCE. Maintain at
Borrower's expense (with such insurers, in such amounts and with such
deductibles (not greater than $10,000.00) as is reasonably satisfactory to
Lender, public liability and third party property damage insurance and
21
insurance on the Collateral (including without limitation, insurance against
fire, explosion, boiler damage, theft, burglary, pilferage, loss in transit and
all other hazards and risks ordinarily insured against by other owners or users
of such properties in similar businesses), which insurance shall be evidenced
by policies (i) in form and substance reasonably satisfactory to Lender, (ii)
designating Lender and its assigns as additional co-insureds and loss payees as
their interests may appear from time to time, (iii) containing a "breach of
warranty clause" whereby the insurer agrees that (1) a breach of the insuring
conditions or any act or neglect of Borrower or any other named insured, (2)
the foreclosure or other proceedings or notice of sale or enforcement of any
lien or security relating to the property of the Borrower, (3) the occupation
of the premises wherein such property is located for purposes more hazardous
than are permitted by the policy of insurance, or (4) any errors, omissions, or
improper or incorrect reporting by the named insured, shall not invalidate the
insurance as to Lender and its assigns, and (iv) requiring at least thirty (30)
days' prior written notice to Lender and its assigns before cancellation or any
material change shall be effective.
5.7(2) COPIES OF POLICIES. Upon demand, deliver to Lender a
photocopy of each policy (and if an Event of Default has occurred, the original
of each policy) evidencing insurance required by this Section 5.7, together
with evidence of payment of all premiums therefor.
5.7(3) NOTICE AND PROOF OF LOSS. In the event of loss or
damage, forthwith notify Lender and file proofs of loss satisfactory to Lender
with the appropriate insurer, but without limiting the rights of Lender
pursuant to Subsection 8.1(11).
5.7(4) PROCEEDS. Forthwith upon receipt, endorse and deliver
insurance proceeds (for any loss or property damage) to Lender, but without
limiting the rights of Lender pursuant to Subsection 8.1(11).
In no event shall Lender be required either to (i)
ascertain the existence of or examine any insurance policy, or (ii) advise
Borrower in the event such insurance coverage shall not comply with the
requirements of this Agreement.
5.8 CONDITION OF COLLATERAL; NO LIENS. Maintain the Collateral in good
condition and repair at all times (normal wear and tear excepted), preserve the
Collateral from loss, damage, or destruction of any nature whatsoever, and keep
the Collateral free and clear of any Encumbrance, except Permitted Encumbrances
including any identified on Schedule 4.16 to this Agreement .
5.9 RECORDS. Maintain complete and accurate books and records of all
its operations and properties, including records of the Collateral and the
status of each of the Accounts.
5.10 DELIVERY OF DOCUMENTS. If any proceeds of Accounts shall include,
or any of the Accounts shall be evidenced by, notes, trade acceptances or
instruments or documents, or if any Inventory is covered by documents of title
or chattel paper, whether or not negotiable, immediately deliver them to Lender
appropriately endorsed. Borrower waives protest regardless
22
of the form of the endorsement. If Borrower fails to endorse any instrument or
document, Lender is authorized to endorse it on Borrower's behalf.
5.11 UNITED STATES CONTRACTS. If any of the Accounts arises out of a
contract with the United States or any of its departments, agencies or
instrumentalities, immediately notify Lender and execute any necessary
instruments in order that all money due or to become due under such contract
shall be assigned to Lender and proper notice of the assignment given under the
Federal Assignment of Claims Act.
5.12 FURTHER ASSURANCES. From time to time, execute and deliver such
further documents and take such further actions as Lender may reasonably
request in order to carry out the purposes of this Agreement, the Relevant
Documents and any other instruments, documents and agreements which shall be
executed concurrently herewith or thereafter with regard to the transactions
contemplated by this Agreement.
5.13 OPERATING ACCOUNTS. Borrower shall maintain its operating
accounts with Lender continuously until the Obligations are finally and fully
paid and performed.
5.14 RELATED ENTITIES. Cause each Related Entity to comply with the
covenants stated in this Section 5, to the extent relevant to such entity, as
if stated with reference to such entity.
5.15 ENVIRONMENTAL SITE ASSESSMENTS. In the event the Loans have not
been paid by June 25, 1998, then in that event, at the request of Lender,
Borrower shall deliver to Lender Phase I environmental site assessments for all
real property owned or leased by Borrower, in form and substance satisfactory
to Lender, and such additional reports that may be requested following the
completion of any remediation or further investigation recommended by such site
assessment, in a manner satisfactory to Lender.
5.16 ADDITIONAL DOCUMENTS. The Borrower, through its agents and
representatives, shall use its best efforts to obtain and deliver, or cause to
be delivered, to Lender the following documents within thirty (30) days from
the date of this Agreement, in form and substance satisfactory to Lender: (a)
the NJEDA Consent and the BNP Consent; (b) Subordination Agreement executed by
Xxxxx-Illinois; (c) Ground Lessor Estoppel Letter and Agreement executed by
Witco Chemical Corporation ("Witco") regarding the Chicago Property (the "Witco
Estoppel Letter"); and (d) an Estoppel and Consent Agreement executed by The
Okonite Company, Inc.; it being understood and agreed that the failure to so
obtain any or all of the foregoing items, notwithstanding Borrower's best
efforts, shall not be or give rise to a Default or Event of Default hereunder.
In addition, the Borrower shall deliver to Lender the mortgage loan title
insurance policies for the North Brunswick Property (unless Lender has released
its mortgage lien on the North Brunswick Property pursuant to Section 3.3
above); the Missouri Property; and the Chicago Property (if the Witco Estoppel
Letter is delivered as provided above with respect to the Chicago Property) on
or before June 25, 1998. Anything herein to the contrary notwithstanding, the
Borrower's best efforts shall not require it to make any payment or concession
to Witco in order to obtain the Witco Estoppel Letter.
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5.17 UNDERTAKING TO PREPAY BRIDGE NOTE. The Borrower, through its
agents and representatives, shall use its best efforts to pay in full the
Bridge Note on or before June 25, 1998; it being understood and agreed that the
failure to prepay the Bridge Note as aforesaid shall not be or give rise to a
Default or Event of Default hereunder.
6. NEGATIVE COVENANTS
Borrower covenants and agrees that, until full and final payment and
performance of the Loans and all other Obligations under this Agreement and the
Relevant Documents, Borrower shall not, unless Lender shall otherwise consent
in writing:
6.1 NO CONSOLIDATION, MERGER, ACQUISITION, LIQUIDATION. Enter into any
merger, consolidation, reorganization or recapitalization; take any steps in
contemplation of dissolution or liquidation; conduct any part of Borrower's
business through any corporate subsidiary, unincorporated association or other
entity not disclosed on Schedule 4.15 to this Agreement; or acquire the stock
or assets of any person, firm, joint venture, partnership, corporation or other
entity, whether by merger, consolidation, purchase of stock or otherwise.
6.2 DISPOSITION OF ASSETS OR COLLATERAL. Except for the sale-leaseback
transactions which are contemplated by Section 3.3, sell, lease, or otherwise
transfer or dispose of any or all of the Collateral or other assets of
Borrower, other than the sale of Inventory in the ordinary course of business
and the retirement of other assets in the normal course of operations.
6.3 OTHER LIENS. Except for the sale-leaseback transactions which are
contemplated by Section 3.3, incur, create or permit to exist, in an aggregate
amount at any time exceeding $100,000.00 in excess of Permitted Encumbrances,
any Encumbrance, conditional sale or other title retention agreement, financing
lease having substantially the same effect as any of the foregoing, or other
preferential arrangement of any type, in each case upon or with respect to any
assets of Borrower, whether now owned or hereafter acquired, except Permitted
Encumbrances.
6.4 OTHER LIABILITIES. Except as provided in Section 6.3, incur,
create, assume or permit to exist any indebtedness or liability on account of
either borrowed money or the deferred purchase price of property or services,
except (a) the Obligations, (b) indebtedness subordinated to payment of the
Obligations on terms approved by Lender in writing, or (c) those liabilities
existing on the date of this Agreement and shown by the financial statements
referred to in Schedule 4.5 to this Agreement.
6.5 LOANS. Make loans to any person or entity, other than loans or
advances to employees of Borrower, not exceeding $10,000.00 per employee and
$50,000.00 in the aggregate.
6.6 INVESTMENTS. Borrower shall not at any time purchase, acquire or
own any stock, bonds, notes, or securities of, or any partnership interest
(whether general or limited) in, or any other interest in, or make any capital
contribution to, any other Person, or become a joint venture
24
partner in any joint venture, or agree, become or remain liable to do any of
the foregoing, except for: (a) debt securities having a maturity of not more
than one year issued or guaranteed by the United States government or by an
agency or instrumentality thereof; (b) certificates of deposit, bankers
acceptances and time deposits, which in each case mature within one year from
the date of purchase thereof and which are issued by a Lender acceptable to
Lender; (c) commercial paper maturing in 270 days or less from the date of
issuance which, at the time of acquisition by Borrower either (i) is accorded
the highest rating by Standard and Poor's Rating Group or Xxxxx'x Investors
Service, Inc. or (ii) is issued by Lender; (d) capital stock of one or more of
its wholly-owned subsidiaries; and (e) direct obligations of the United States
of America or any agency or instrumentality of the United States of America,
the payment or guarantee of which constitutes a full faith and credit
obligation of the United States of America, in each case maturing in 12 months
or less from the date of acquisition.
6.7 GUARANTIES; CONTINGENT LIABILITIES. Except as set forth in Section
6.4, (a) assume, guarantee, endorse, contingently agree to purchase or
otherwise become liable upon the obligation of any person or entity (except a
subsidiary of Borrower), 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 working capital or net worth of any
person or entity or to make investments in any person or entity (except for
short-term investment of excess cash as permitted by Section 6.6 above).
6.8 DIVIDENDS AND OTHER DISTRIBUTIONS. Declare or pay any cash
dividend or make any distribution on, or redeem, retire or otherwise acquire
directly or indirectly, any share of its stock, or make any distribution of
assets to its stockholders without the prior written consent of Lender.
6.9 TRANSACTIONS WITH AFFILIATES. Enter into any transaction with a
person or entity directly or indirectly controlling, controlled by or under the
direct or indirect common control of Borrower, on a basis less favorable in a
material respect to Borrower than if such transactions were not with such a
person or entity.
6.10 SALE OF INVENTORY. Sell any of the Inventory on a xxxx-and-hold,
guaranteed sale, sale-and-return, sale on approval or consignment basis, or any
other basis subject to a repurchase obligation or return right (other than for
a customary right of return for damaged or defective goods).
6.11 REMOVAL OF COLLATERAL. Remove, or cause or permit to be removed,
any of the Collateral or other assets from the premises identified on Schedule
4.12 to this Agreement, except for sales of Inventory or the retirement of
other assets, all in the ordinary course of business.
6.12 TRANSFER OF NOTES OR ACCOUNTS. Sell, assign, transfer, discount
or otherwise dispose of any Accounts or any promissory note or other instrument
payable to it with or without recourse, except for collection without recourse
in the ordinary course of business.
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6.13 SETTLEMENTS. Compromise, settle or adjust any claim in a material
amount relating to any of the Collateral, other than settlements previously
disclosed in writing to Lender and the consolidated class action lawsuit
described in Schedule 4.4 hereof. Notwithstanding anything contained herein to
the contrary, provided no Event of Default has occurred or is continuing,
Borrower shall be permitted to offer and accept trade discounts on Accounts in
the ordinary course of its business.
6.14 MODIFICATION OF GOVERNING DOCUMENTS. Change, alter or modify, or
permit any change, alteration or modification of, its Certificate of
Incorporation or Bylaws (or partnership agreement) or other governing
documents.
6.15 CHANGE BUSINESS. Cause or permit a material change in the nature
of its business as conducted on the date of this Agreement.
6.16 CHANGE OF LOCATION OR NAME. Change any of the following: (a) the
location stated in Section 4.12 of this Agreement for the maintenance of the
books and records relative to the Accounts and Inventory, (b) the location of
the principal place of business or chief executive office of Borrower as stated
in Section 4.14 of this Agreement, or (c) the name under which Borrower
conducts any of its business or operations.
6.17 CHANGE OF ACCOUNTING PRACTICES. Change its present accounting
principles or practices in any material respect, except as may be required or
permitted by changes in or pursuant to GAAP.
6.18 INCONSISTENT AGREEMENT. Enter into any agreement containing any
provision that would be violated by the performance of the Obligations or
Borrower's obligations under any of the Relevant Documents or under any
document delivered or to be delivered by it in connection therewith.
6.19 CURRENT RATIO. Cause, suffer or permit the ratio of Current
Assets to Current Liabilities (excluding the Loans, one-half of the principal
sum due to the New Jersey Economic Development Authority, and fifty (50%)
percent of the trade debt owed to Xxxxx-Illinois, not to exceed $4,500,000.00,
but all determined in accordance with GAAP) to be or become less than 1.1 to
1.0 at any time as measured at the end of each month beginning January 31,
1998.
7. CONDITIONS TO MAKING EXTENSIONS OF CREDIT
7.1 INITIAL EXTENSION OF CREDIT. The obligation of Lender to make the
Loans hereunder is subject to the satisfaction of each of the following
conditions precedent:
7.1(1) RESTRUCTURED AND RESTATED LOAN AND SECURITY AGREEMENT.
Receipt by Lender of a fully-executed copy of this Agreement.
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7.1(2) SCHEDULES. Receipt by Lender of all schedules to this
Agreement prepared by Borrower and Lender's determination that any exceptions
shown on such schedules are satisfactory.
7.1(3) NOTES. Receipt by Lender of the fully-executed
Revolving Note, Capital Expenditure Note and Bridge Note.
7.1(4) FINANCING STATEMENTS. Receipt by Lender and filing in
the applicable recording office of all required UCC financing statements or
amendments reasonably requested by it in connection with the Loans, each signed
by the applicable party.
7.1(5) LANDLORD'S WAIVERS. Receipt by Lender and filing in
the applicable recording office of landlord's waivers for each real property
location occupied by Borrower, executed by the owner and/or lessor of such
location.
7.1(6) MORTGAGES. Receipt by Lender and filing in the
applicable recording office of a mortgage for each real property location which
is to secure the Obligations, each executed by the fee owner thereof and in
recordable form.
7.1(7) REAL ESTATE APPRAISALS. Receipt by Lender of real
estate appraisals for all real property locations which are subject to a
mortgage to Lender, in form and substance satisfactory to Lender.
7.1(8) TITLE INSURANCE COMMITMENTS. Receipt by Lender of
title insurance commitments, with mortgagee endorsements, in all respects
satisfactory to Lender, for all of the real property locations subject to a
mortgage.
7.1(9) SURVEYS. Receipt by Lender of existing surveys,
containing flood plain certificates and in all other respects satisfactory to
Lender, for all of the real property locations subject to a mortgage, certified
to Lender and the title insurer.
7.1(10) GUARANTY AGREEMENT. Receipt by Lender of a guaranty
agreement executed by the Guarantor in form and substance acceptable to Lender
and its counsel and any Relevant Document to be delivered in connection
therewith.
7.1(11) INSURANCE. Receipt by Lender of (a) copies of
Borrower's insurance policies, containing long-form lender loss payable and
mortgagee endorsements satisfactory to Lender and which in all other respects
comply with the requirements hereof and any insurance requirements set forth in
the Relevant Documents, (b) satisfactory evidence of flood insurance and (c)
current insurance certificates for all such policies.
7.1(12) ENVIRONMENTAL INDEMNITY AGREEMENT. Receipt by Lender
of an Environmental Indemnity Agreement in form and substance satisfactory to
Lender and its counsel, indemnifying Lender against Environmental Claims and
violation by Borrower of Environmental Laws.
27
7.1(13) SEARCHES. Receipt by Lender of lien, judgment, and
standing searches satisfactory to Lender.
7.1(14) WARRANT. Receipt by Lender of the Warrant.
7.1(15) COMPLETION OF DUE DILIGENCE. Receipt by Lender of all
information requested from Borrower in connection with Lender's due diligence
review of Borrower and all other parties, and completion of such review by
Lender, with results satisfactory to Lender.
7.1(16) GOVERNING DOCUMENTS. Receipt by Lender of the
following documents for Borrower and any Person comprising Borrower and the
Guarantor and any Person comprising the Guarantor;
(A) a copy of its articles and/or certificate of
incorporation, certified as true and correct by an authorized officer of such
person;
(B) good standing certificates issued by the
Secretaries of State of the state where such Person is incorporated and each
state where such Person is required to be qualified to do business, each dated
not more than 90 days prior to the date hereof;
(C) resolutions of its board of directors
authorizing the execution of this Agreement and the Relevant Documents and
their performance pursuant thereto, certified by the secretary of such Person
as being true, correct, complete and in effect as of the date hereof and in
form and substance satisfactory to Lender;
(D) a copy of its by-laws and all amendments
thereto, certified by an authorized officer of such Person as being true,
correct, complete and in effect;
(E) an incumbency certificate for such Person,
showing the names of the officers, their respective titles and containing their
true signatures; and
(F) such other documents, instruments, records,
opinions, assurances and papers relating to Borrower and any Person comprising
Borrower and the Guarantor and any Person comprising the Guarantor, all as
Lender or its counsel may reasonably require, all in form and substance
satisfactory to Lender and its counsel.
7.1(17) OPINION OF COUNSEL. Receipt by Lender of an opinion
of counsel to Borrower and the Guarantor, addressed to Lender and in all
respects satisfactory to Lender and its counsel.
7.1(18) NO DEFAULT CERTIFICATE. Receipt by Lender of a
certificate, dated as of the date hereof and executed by an authorized officer
of Borrower, stating that, as of such date, there is no Event of Default and to
such further effect as Lender or its counsel may reasonably require.
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7.1(19) FEES. Receipt by Lender of all fees and expenses
which are payable to Lender, its counsel, or to third-party providers of
services related to the Existing Loans or the closing of this Agreement.
7.1(20) GUARANTEE AGREEMENT. Receipt by Lender of a Guarantee
Agreement from the Individual Guarantors in form and substance satisfactory to
Lender and its counsel, providing, among other things, for the Individual
Guarantors to pay to Lender the principal sum of $5,000,000.00, and all accrued
interest thereon, on or before June 25, 1998, if the Borrower has not paid or
caused to be paid said sum on or before the aforesaid date, which sum shall be
applied to the repayment of the Bridge Note, provided no scheduled payment
default under Section 9.1 hereof has occurred.
7.1(21) MISCELLANEOUS. Receipt by Lender of such other
documents, instruments, records, opinions, assurances and papers as Lender or
its counsel may reasonably require, all in form and substance reasonably
satisfactory to Lender and its counsel.
7.2 CONDITIONS TO ALL ADVANCES.
7.2(1) Lender's obligations to advance any Revolving Loan is
subject to the condition that, as of the date of such advance or issuance, no
Event of Default or event which, for the lapse of time or giving of notice or
both would constitute an Event of Default, shall have occurred and be
continuing.
7.2(2) Borrower's acceptance of each Revolving Loan under
this Agreement shall constitute a confirmation of the matters set forth in
Sections 4.1 through 4.22 above as of the date of such Loans. If requested by
Lender, Borrower shall further confirm such matters by delivery of a
certificate dated the day of the Revolving Loan and signed by a duly authorized
officer of Borrower satisfactory to Lender.
8. ADDITIONAL POWERS OF LENDER
8.1 POWERS OF ATTORNEY. Borrower hereby constitutes and appoints
Lender (and any employee or agent of Lender, with full power of substitution)
its true and lawful attorney and agent in fact to take any or all of the
actions described below in Lender's or Borrower's name and at Borrower's
expense.
8.1(1) CHARGES AGAINST CREDIT BALANCES. Lender, without
demand, may charge and withdraw from any credit balance that Borrower may then
have with Lender, or with any affiliate of Lender, any amount that shall become
due from Borrower to Lender under this Agreement or any of the Relevant
Documents.
8.1(2) EVIDENCE OF LIENS. Lender may execute such financing
statements and other documents and take such other actions as Lender deems
reasonably necessary or proper in order to create, perfect or continue the
security interests and other liens provided for by this
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Agreement or any of the Relevant Documents, and Lender may file the same (or a
photocopy of this Agreement or of any financing statement signed by Borrower)
in any appropriate governmental office.
8.1(3) PRESERVATION OF COLLATERAL. Lender, acting in good
faith, may take any and all actions that it deems necessary or proper to
preserve its interest in the Collateral, including without limitation the
payment of debts of Borrower that might impair the Collateral or Lender's
security interest therein, the purchase of insurance on Collateral, the repair
or safeguarding of Collateral, or the payment of taxes, assessments or other
liens thereon. All sums so expended by Lender shall be added to the
Obligations, shall be secured by the Collateral, and shall be payable on demand
with interest at the Default Rate from the respective dates such sums are
expended.
8.1(4) LENDER'S RIGHT TO CURE. In the event Borrower fails to
perform any of its Obligations, then Lender may perform the same but shall not
be obligated to do so. All sums so expended by Lender shall be added to the
Obligations, shall be secured by the Collateral, and shall be payable on demand
with interest at the Default Rate from the respective dates such sums are
expended.
8.1(5) VERIFICATION OF ACCOUNTS. Lender may make test
verifications of any and all Accounts in any manner and through any medium
Lender considers advisable, and Borrower shall render any necessary assistance.
8.1(6) COLLECTIONS; MODIFICATION OF TERMS. Upon the
occurrence and during the continuance of any Event of Default, Lender may
demand, xxx for, collect and give receipts for any money, instruments or
property payable or receivable on account of or in exchange for any of the
Collateral, or make any compromises it deems necessary or proper, including
without limitation extending the time of payment, permitting payment in
installments, or otherwise modifying the terms or rights relating to any of the
Collateral, all of which may be effected without notice to or consent by
Borrower and without otherwise discharging or affecting the Obligations, the
Collateral or the security interest granted under this Agreement or any of the
Relevant Documents.
8.1(7) NOTIFICATION OF ACCOUNT DEBTORS. Upon the occurrence
of an Event of Default, Borrower, at the request of Lender, shall notify the
Account Debtors of Lender's security interest in its Accounts. Upon the
occurrence of any Event of Default, Lender may notify the Account Debtors on
any of the Accounts to make payment directly to Lender, and Lender may endorse
all items of payment received by it that are payable to Borrower; until such
time as Lender elects to exercise such right of notification, Borrower is
authorized to collect and enforce the Accounts.
8.1(8) NOTIFICATION AS TO INVENTORY. Upon the occurrence of
an Event of Default, Lender may notify the bailee of any Inventory of Lender's
security interest therein.
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8.1(9) ENFORCEMENTS. Upon the occurrence of an Event of
Default, Lender may endorse Borrower's name on checks, notes, acceptances,
drafts, invoices, bills of lading and any other documents or instruments
requiring Borrower's endorsement.
8.1(10) MAILS. Upon the occurrence of any Event of Default,
Lender may notify the postal authorities to deliver all mail, parcels, and
other material addressed to Borrower to Lender at such address as Lender may
direct, and Lender may open and deal with same as it deems necessary or proper.
8.1(11) INSURANCE. Lender may file proofs of loss and claim
with respect to any of the Collateral with the appropriate insurer, and may
endorse in its own and Borrower's name any checks of drafts constituting
insurance proceeds.
8.2 IRREVOCABILITY; LENDER'S DISCRETION. Borrower covenants and agrees
that any action described in Section 8.1 may be taken at Lender's sole and
absolute discretion, acting in good faith, at any time and from time to time,
and (unless stated specifically to the contrary in Section 8.1 with respect to
any power) whether prior or subsequent to an Event of Default, and Borrower
hereby ratifies and confirms at actions so taken. Borrower further covenants
and agrees that the power of attorney granted by Section 8.1 are coupled with
an interest and shall be irrevocable until full and final payment and
performance of the Loans and all other Obligations under this Agreement and the
Relevant Documents; that said powers are granted solely for the protection of
Lender's interest and Lender shall have no duty to exercise any thereof; that
the decision whether to exercise any of such powers, and the manner of
exercise, shall be solely within Lender's discretion; and that neither Lender
nor any of its directors, officers, employees or agents shall be liable for any
act of omission or commission, or for any mistake or error of judgment, in
connection with any such powers.
9. EVENTS OF DEFAULT
The occurrence of any of the following shall constitute an Event of
Default:
9.1 FAILURE TO PAY. Borrower fails to pay when due any principal of or
interest on any Revolving Loan, Capital Expenditure Loan or Bridge Loan or any
other sum owing to Lender, including without limitation any of the Obligations
arising under this Agreement or any of the Relevant Documents or under any
other agreement with Lender;
9.2 FAILURE TO PERFORM. Borrower fails to perform or observe any
covenant (including, without limitation, Section 5.16 subject to the
qualifications contained therein), term or condition of this Agreement or any
of the Relevant Documents, and such default is not cured within three (3)
business days following written notification of such violation;
9.3 CROSS DEFAULT; DEFAULT ON OTHER DEBT. (a) Any other default on any
of the Obligations or under any of the Relevant Documents occurs, after
applicable notice and cure periods, if any, or (b) default occurs under any
indebtedness or other obligation of Borrower, or
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of any Guarantor of any of the Obligations, to any third party which in the
aggregate exceeds One Hundred Thousand ($100,000.00) Dollars, entitling such
third party to declare such indebtedness or other obligation due prior to its
date of maturity, provided, however, with respect to defaults that exist as of
the date of this Agreement, or hereafter occur, in the payment of NJEDA
indebtedness; the Borrower's trade debt; or any indebtedness of Borrower to
Xxxxx-Illinois, such defaults shall not constitute an Event of Default
hereunder unless and until NJEDA or such trade creditor and/or Xxxxx- Illinois
takes affirmative action to enforce its rights with respect to such
indebtedness and/or trade debt. With respect to any default currently existing
under Borrower's obligations to Sanwa Business Credit Corporation ("Sanwa")
relating to the sale to Borrower of the Oracle Software System, such default
shall not constitute an Event of Default hereunder unless and until Sanwa takes
(or threatens to take) any action that in the sole opinion of Lender may have a
material adverse effect on Borrower's ability to operate its business in the
ordinary course;
9.4 FALSE REPRESENTATION OR WARRANTY. Any representation, warranty or
statement contained in this Agreement, in any of the Relevant Documents or in
any other writing delivered to Lender in connection with the Collateral, this
Agreement or any of the transactions contemplated thereby, proves to have been
incorrect in any material respect when made;
9.5 CESSATION OF BUSINESS. Borrower ceases to do business as a going
concern;
9.6 CHANGE IN CONDITION. There occurs any material and adverse change
in the condition or affairs, financial or otherwise, of Borrower or of any
endorser, guarantor or surety for any of the Obligations, which in the
reasonable opinion of Lender impairs Lender's security or increases its risks;
9.7 CHANGE IN MANAGEMENT. At any time Uri Evan ceases to be Chief
Executive Officer or otherwise actively involved in the daily management of
Borrower.
9.8 LIQUIDATION OR DISSOLUTION. Borrower takes any action to authorize
its liquidation or dissolution;
9.9 INABILITY TO PAY DEBTS. Borrower (a) becomes unable or fails to
pay its debts generally as they become due, (b) admits in writing its inability
to pay its debts, or (c) proposes or makes a composition agreement with
creditors, a general assignment for the benefit of creditors, or a bulk sale;
9.10 BANKRUPTCY; INSOLVENCY. Any proceeding is instituted by or
against Borrower (a) seeking to adjudicate it bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or (b) seeking appointment of a receiver, trustee, or other similar
official for it or for any substantial part of its property, or Borrower takes
any action to authorize or consent to any action described in this Section 9.10
and not stayed or dismissed within sixty (60) days.
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9.11 JUDGMENTS. One or more judgments or orders for the payment of
money exceeding $100,000.00 in the aggregate are rendered against Borrower, and
any such judgment(s) or order(s) continues unsatisfied and not effectively
stayed for a period of thirty (30) consecutive days;
9.12 ATTACHMENT. Any substantial part of the assets of Borrower
becomes subject to attachment, execution, levy or like process which shall not
have been effectively stayed;
9.13 CONDEMNATION. Any governmental agency, or other entity with power
to do so, commences proceedings to condemn, seizes or expropriates assets of
Borrower (unless Borrower obtains an injunction against such actions within
thirty (30) days from the date of their commencement) necessary for the conduct
of Borrower's business as conducted on the date of this Agreement, without
material change, or Borrower abandons such assets or suspends operation thereof
for a period of thirty (30) consecutive days;
9.14 ERISA. With respect to any Plan (as defined in Section 4.17 of
this Agreement), there occurs or exists any of the events or conditions
described in the following clauses (a) through (h) and such event or condition,
together with all like events or conditions, could in the opinion of Lender
subject Borrower to any tax, penalty or other liability that might, singly or
in the aggregate, have a material adverse effect on the financial condition or
the properties or operations of Borrower: (a) a reportable event as defined in
Section 4043 of ERISA, (b) a prohibited transaction as defined in Section 406
of ERISA or Section 4975 of the Internal Revenue Code, (c) termination of the
Plan or filing of notice of intention to terminate, (d) institution of the
Pension Benefit Guaranty Corporation of proceedings to terminate, or to appoint
a trustee to administer, the Plan, or circumstances that constitute grounds for
any such proceedings, (e) complete or partial withdrawal from a multi-employer
Plan, or the reorganization, insolvency or termination of a multi-employer
Plan, (f) an accumulated funding deficiency within the meaning of ERISA, (g)
violation of the reporting, disclosure or fiduciary responsibility requirements
of ERISA or the Internal Revenue Code, or (h) any act or condition which could
result in direct, indirect or contingent liability to any Plan or the Pension
Benefit Guaranty Corporation; or
9.15 GUARANTY. Any guaranty of any of the Obligations ceases to be
effective or any Guarantor denies liability thereunder, it being the
understanding of the parties hereto that any default under the terms and
conditions of the guarantee agreement executed and delivered to the Lender by
the Individual Guarantors shall not constitute an Event of Default hereunder.
10. REMEDIES
10.1 RIGHTS IN GENERAL. Automatically upon the occurrence of an Event
of Default described in Section 9.10, and at the option of Lender upon the
occurrence of any other Event of Default, (a) all provisions for additional
Loans under this Agreement shall terminate, (b) the principal and accrued
interest of the Revolving Loans, Capital Expenditure Loans and the Bridge Loan,
all other amounts payable under this Agreement and all other Obligations shall
become and
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be immediately due and payable, without presentment, demand, protest, or
further notice of any kind, all of which are hereby expressly waived by
Borrower, and (c) Lender shall be entitled to exercise forthwith (to the extent
and in such order as Lender may elect, in its sole and absolute discretion) any
or all rights and remedies provided for in this Agreement, the Revolving Note,
the Capital Expenditure Note, the Bridge Note or any Relevant Documents, all
rights and remedies of a secured party under the UCC, and all other rights and
remedies that may otherwise be available to Lender by agreement or at law or in
equity.
10.2 SPECIFIC RIGHTS REGARDING COLLATERAL. In addition to the rights
as stated generally in Section 10.1, Borrower agrees that, upon the occurrence
of an Event of Default, Lender shall be entitled to the rights and remedies,
and Borrower shall have the obligations, set forth below:
10.2(1) Lender may enter upon the premises where any of the
Collateral is located and take possession thereof and, at Lender's option,
remove or sell in place any or all thereof.
10.2(2) Upon notice from Lender, Borrower shall promptly at
its expense assemble any or all of the Collateral and make it available at a
reasonably convenient place designated by Lender.
10.2(3) Lender may, with or without judicial process, sell,
lease or otherwise dispose of any or all of the Collateral at public or private
sale or proceedings, by one or more contracts, in one or more parcels, at the
same or different times and places, with or without having the Collateral at
the place of sale or other disposition, to such persons or entities, for cash
or credit or for future delivery and upon such other terms, as Lender may in
its discretion deem best in each instance. The purchaser of any of the
Collateral at any such sale shall hold the same free of any equity of
redemption or other right or claim of Borrower, all of which - together with
all rights of stay, exemption or appraisal under any statute or other law now
or hereafter in effect - Borrower hereby unconditionally waives to the fullest
extent permitted by law. If any of the Collateral is sold on credit or for
future delivery, Lender shall not be liable for the failure of the purchaser to
pay for same and, in the event of such failure, Lender may resell such
Collateral.
10.2(4) Borrower hereby further agrees that notice of the
time and place of any public sale, or of the time after which any private sale
or other intended disposition or action relating to any of the Collateral is to
be made or taken, shall be deemed commercially reasonable notice thereof, and
shall satisfy the requirements of any applicable statute or other law, if such
notice (a) is delivered not less than three (3) business days prior to the date
of the sale, disposition or other action to which the notice relates, or (b) is
mailed (by ordinary first class mail, postage prepaid) not less than ten (10)
days prior thereto. Lender shall not be obligated to make any sale or other
disposition or take other action pursuant to such notice and may, without other
notice or publication, adjourn or postpone any public or private sale or other
disposition or action by announcement at the time and place previously fixed
therefor, and such sale, disposition or action may be held or accomplished at
any times or places to which the same may be so adjourned or postponed.
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10.2(5) Lender may purchase any or all of the Collateral at
any public sale and may purchase at private sale any of the Collateral that is
of the type customarily sold in a recognized market or the subject of widely
distributed price quotations or as may be further permitted by law. Lender may
make payment of the purchase price of any Collateral by credit against the then
outstanding amount of the Obligations.
10.2(6) Lender may at its discretion retain any or all of the
Collateral and apply the same in satisfaction of part or all of the
Obligations.
10.2(7) Any cash proceeds of sale, lease or other disposition
of Collateral shall be applied as follows:
First: To the expenses of collecting, enforcing,
safeguarding, holding and disposing of Collateral, and to
other expenses of Lender in connection with the enforcement
of this Agreement, any of the Notes, any of the Relevant
Documents, or any other agreement relating to any of the
Obligations (including without limitation court costs and the
fees and expenses of attorneys, accountants and appraisers),
together with interest at the Default Rate from the
respective dates such sums are expended;
Second: Any surplus then remaining to the payment of interest
and principal of the Loans and other sums payable as part of
the Obligations, in such order as Lender elects; and
Third: Any surplus then remaining to Borrower or whoever may
be lawfully entitled thereto.
10.3 SET-OFF. Borrower further agrees that:
10.3(1) Upon the occurrence of an Event of Default, Lender is
hereby authorized at any time and from time to time, without notice to Borrower
(any such notice being expressly waived by Borrower), to set off and apply (or
cause any affiliate of Lender to set off and apply) any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owning by Lender or such affiliate to or for the
credit or the account of Borrower, against any or all of the Obligations of
Borrower now or hereafter existing under this Agreement, any of the Notes or
otherwise, irrespective of whether or not Lender shall have made any demand and
although such Obligations may be unmatured.
10.3(2) If any other lender has participated with Lender with
respect to any of the Loans, Borrower hereby authorizes such participating
lender, upon the occurrence of any Event of Default, immediately and without
notice or other action, at request of Lender, to set off against any of
Borrower's Obligations to Lender any deposits held or money owed by such
participating lender in any capacity to Borrower, whether or not due, and to
remit the money set off to Lender.
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10.3(3) Any such set-off shall be deemed to have occurred
upon the occurrence of such Event of Default, notwithstanding that the book
entries relating to same may be made at a later date.
10.3(4) The rights stated in this Section 10.3 are in
addition to other rights and remedies (including, without limitation, other
rights of set-off or lien) that Lender or any participating lender may have.
10.4 CUMULATIVE REMEDIES; NO WAIVER BY LENDER. No remedy referred to
in this Agreement is intended to be exclusive, but each shall be cumulative and
in addition to any other remedy referred to in this Agreement or otherwise
available to Lender by agreement or at law or in equity, and Lender may
exercise its remedies concurrently, independently, or successively. No express
or implied waiver by Lender of any default or Event of Default shall in any way
be, or be construed to be, a waiver of any future or subsequent default or
Event of Default. The failure or delay of Lender in exercising any rights
granted it hereunder upon any occurrence of any of the contingencies set forth
herein shall not constitute a waiver of any such right upon the continuation or
recurrence of any such contingency or similar contingencies, and any single or
partial exercise of any particular right by Lender shall not exhaust the same
or constitute a waiver of any other right.
10.5 WAIVERS AND AGREEMENTS RELATING TO REMEDIES. In connection with
any action or proceeding arising out of or relating in any way to this
Agreement, any of the Notes, any of the Loans, any of the Relevant Documents,
any other agreement relating to any of the Obligations, any of the Collateral,
or any act or omission relating to any of the foregoing:
10.5(1) Borrower agrees that all of the Collateral
constitutes equal security for all of the Obligations, and agrees that Lender
shall be entitled to sell, retain or otherwise deal with any or all of the
Collateral, in any order or simultaneously as Lender shall determine in its
sole and absolute discretion, free of any requirement for the marshaling of
assets or other restriction upon Lender in dealing with the Collateral; and
10.5(2) Borrower agrees that Lender may proceed directly
against Borrower for collection of any or all of the Obligations without first
selling, retaining or otherwise dealing with any of the Collateral.
11. ADDITIONAL WAIVERS AND CONSENTS OF BORROWER
11.1 WAIVERS. Borrower waives demand, presentment, notice of dishonor
or protest of any instruments either of Borrower or others which may be
included in the Collateral.
11.2 CONSENTS. Borrower consents to (a) any extension, postponement of
time of payment or other indulgence, (b) any substitution, exchange or release
of Collateral, (c) any addition to, or release of, any party or person
primarily or secondarily liable, and (d) after the
36
occurrence of an Event of Default, any acceptance of partial payments on
any Accounts or instruments and the settlement, compromising or adjustment
thereof.
11.3 APPLICATIONS OF PAYMENTS. Subject to the provisions of Section
3.3, Borrower consents and agrees that, whether or not an Event of Default
shall have occurred, Lender shall be entitled to apply the proceeds of any
payment on account of the Loans made to Lender by or on behalf of Borrower,
including, without limitation, any and all proceeds arising from any of the
Collateral securing the obligations of Borrower to Lender, in the manner and
against the Obligation or Obligations as determined in the sole and absolute
discretion of Lender.
11.4 TAX REFUNDS. Anything herein to the contrary notwithstanding,
provided no Event of Default shall have occurred and is continuing, then upon
receipt of any tax refund or refunds, Borrower shall pay over to Lender fifty
(50%) percent of the amount of each such refund and Lender shall apply said
sums to the Loans then outstanding in the manner Lender, in its sole and
absolute discretion, shall elect.
12. TERMINATION OF AGREEMENT
12.1 TERMINATION CHARGE. On the Termination Date or if this Agreement
is terminated at any time and for any reason, Borrower shall pay to Lender:
(i) The principal and interest due on the Loans; plus
(ii) All other Obligations under this Agreement and the
Relevant Documents; plus
(iii) The sum of Two Hundred Fifty Thousand Dollars
($250,000.00).
12.2 RIGHTS UPON TERMINATION. Notwithstanding the termination of this
Loan Agreement as herein provided, Lender's security interest, rights and
remedies herein set forth shall remain in full force and effect until all
Borrower's Obligations are paid in full.
12.3 RELEASE. IN CONSIDERATION OF LENDER'S ENTERING INTO THIS
AGREEMENT, BORROWER AND GUARANTORS HEREBY RELEASE THE LENDER, ITS SUCCESSORS
AND ASSIGNS, ATTORNEYS, AGENTS, OFFICERS, DIRECTORS AND EMPLOYEES, FROM ANY AND
ALL CLAIMS THEY OR ANY OF THEM HAVE, HAD OR MAY CLAIM TO HAVE, AT ANY TIME,
AGAINST THE LENDER RELATING TO, ARISING OUT OF OR RESULTING FROM THE DECEMBER
1996 LOAN AGREEMENT, BRIDGE LOAN AGREEMENT, ANY DOCUMENTS AND/OR INSTRUMENTS
RELATING THERETO OR SECURING THE OBLIGATIONS, THIS AGREEMENT AND ANY AMENDMENTS
HERETO OR THERETO, AT ANY TIME FROM THE BEGINNING OF TIME THROUGH THE DATE
HEREOF. LENDER SHALL NOT BE LIABLE OR RESPONSIBLE TO BORROWER OR GUARANTORS FOR
ANY ACTS OR OMISSIONS NOR FOR ANY ERROR OF JUDGMENT OR MISTAKE OF LAW OR FACT
EXCEPT FOR GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
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13. COSTS, EXPENSES AND TAXES
Borrower agrees to pay on demand: (a) all costs and expenses in
connection with the preparation, execution, delivery and administration of this
Agreement, the Notes, the Relevant Documents, and the other documents to be
delivered in connection with this Agreement or any amendments to any of the
foregoing (including, without limitation, the fees and out-of-pocket expenses
of the attorneys for Lender, whether outside counsel or the allocated costs of
Lender's internal counsel and the cost of appraisals and reappraisals of
Collateral); (b) all losses, costs and expenses incurred by Lender in
connection with the enforcement of this Agreement, any of the Notes, any of the
Relevant Documents, or any other agreement relating to any of the Obligations,
or in the preservation of any rights of Lender under any thereof, or in
connection with legal advice relating to the rights or responsibilities of
Lender under any thereof (including with limitation court costs and the fees
and expenses of attorneys, accountants and appraisers), and any expenditure
made by Lender in accordance with this Agreement; and (c) any and all stamp and
other taxes payable or determined to be payable in connection with the
execution and delivery of this Agreement, any of the Notes, or any of the
Relevant Documents, and all liabilities to which Lender may become subject as
the result of delay in paying or omission to pay such taxes. With respect to
any amount advanced by Lender and required to be reimbursed by Borrower
pursuant to the foregoing provisions of this Section 13, Borrower shall also
pay Lender interest on such amount at the Default Rate. Borrower's obligations
under this Section 13 shall survive termination of the other provisions of this
Agreement.
14. INDEMNIFICATION BY BORROWER/WAIVER OF CLAIMS
14.1 INDEMNIFICATION. Borrower hereby covenants and agrees to
indemnify, defend and hold harmless Lender and its officers, directors,
employees and agents from and against any and all claims, damages, liabilities,
costs and expenses (including without limitation, the reasonable fees and
out-of-pocket expenses of counsel) which may be incurred by or asserted against
Lender or any such other individual or entity in connection with: (a) any
investigation, action or proceeding arising out of or in any way relating to
this Agreement, any of the Notes, any of the Loans, any of the Relevant
Documents, any other agreement relating to any of the Obligations, any of the
Collateral, or any act or omission relating to any of the foregoing; (b) any
taxes (other than income taxes applicable to the Lender), liabilities, claims
or damages relating to the Collateral or Lender's liens thereon; (c) the
correctness, validity or genuineness of any instruments or documents that may
be released or endorsed to Borrower by Lender (which shall automatically be
deemed to be without recourse to Lender in any event), or the existence,
character, quantity, quality, condition, value or delivery of any goods
purporting to be represented by any such documents; or (d) any broker's
commission, finder's fee or similar charge or fee in connection with the Loans
and the transactions contemplated in this Agreement. It being further
understood and agreed that, excluded from the indemnification set forth above,
are any claims attributable to the gross negligence or willful misconduct of
the Lender and such indemnified person.
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To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this Section 14.1 may be unenforceable because it is
violative of any law or public policy, Borrower shall contribute the maximum
portion which it is permitted to pay and satisfy under applicable law, to the
payment and satisfaction of all matters referred to under this Section. It is
further understood and agreed that, to the extent a claim indemnified by the
Borrower set forth hereunder is in fact paid by the Borrower and/or an insurer
under a policy of insurance maintained by the Borrower, the Borrower and/or
such insurer, as the case may be, shall be subrogated to the extent of such
payment to the rights and remedies of the indemnified person on whose behalf
such claim was paid with respect to the transaction or event giving rise to
such claim; provided further that such right of subrogation shall not extend to
any insurance policy maintained by or on behalf of the Lender or any
indemnified person.
14.2 WAIVER OF CLAIMS. To the extent permitted by applicable law, no
claim may be made by Borrower or any other person against Lender or any of its
affiliates, directors, officers, employees, agents, attorneys or consultants
for any special, indirect, consequential or punitive damages in respect of any
claim for breach of contract, tort or any other theory of liability arising out
of or related to the transactions contemplated by this Agreement or any act,
omission or event occurring in connection therewith; and Borrower hereby
waives, releases and agrees not to xxx upon any claim for any such damages,
whether or not accrued and whether or not known or suspected to exist in its
favor. Neither Lender nor any of its affiliates, directors, officers, employees
or agents shall be liable for any action taken or omitted to be taken by it or
them under or in connection with this Agreement or the transactions
contemplated hereby, except for its or their own gross negligence or willful
misconduct.
14.3 CLAIMS PROCEDURE. The Lender and such indemnified person shall
promptly notify the Borrower of any claim as to which indemnification is
sought, provided that the failure to provide such notice shall not release the
Borrower from any of its obligations to indemnify hereunder, so long as such
failure does not in any way prejudice the rights of the Borrower with respect
to the availability or extent of coverage of insurance or otherwise result in
any material adverse consequence to the Borrower. Subject to the rights of
insurers under policies of insurance maintained by the Borrower, the Borrower
shall have the right to investigate, and a right in its sole discretion to
defend or compromise any claim for which indemnification is sought under this
Section 14, and the Lender or such indemnified person shall cooperate with all
reasonable requests of the Borrower in connection therewith. Nothing contained
in this Section 14 shall be deemed to require the Lender or such indemnified
person to contest any claim or to assume responsibility for or control of any
judicial proceeding with respect thereto.
15. MISCELLANEOUS
15.1 ENTIRE AGREEMENT; AMENDMENTS; LENDER'S CONSENT. This Agreement
(including the Exhibits and Schedules thereto), the Revolving Note, the Capital
Expenditure Note, the Bridge Note and the Relevant Documents supersede, with
respect to their subject matter, all prior and contemporaneous agreements,
understandings, inducements or conditions between the respective parties,
whether express or implied, oral or written. No amendment or waiver of any
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provision of this Agreement, any of the Notes or any of the Relevant Documents,
nor consent to any departure by Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by Lender, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
15.2 NOTICES. All notices and other communications relating to this
Agreement or any of the Notes (or to any of the Relevant Documents, unless
otherwise specified therein) shall be in writing, and addressed as follows and
sent by hand delivery, registered or certified mail, recognized overnight
courier service or telecopier with confirmation of delivery:
If to Lender: PNC Bank, National Association
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxx X. XxXxxx,
Senior Vice President
If to Borrower: USA Detergents, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx Xxxxxx, Chief
Financial Officer
With a copy to:
Xxxxxxx Xxxxxxxx, Esq.
Fulbright & Xxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(The failure to transmit a copy of the notice to the
foregoing shall not constitute defective notice to the Borrower.)
or to such other address as the respective party or its successors or
assigns may subsequently designate by proper notice. All notices shall be
deemed effective (i) upon receipt of same (whether by personal delivery or
transmittal by facsimile/telecopier with confirmation thereof); or (ii) two (2)
Banking Days after deposit with an overnight courier; or (iii) three (3)
Banking Days if sent by registered or certified mail, postage prepaid,
whichever is earlier.
15.3 GENDER. Throughout this Agreement, the masculine shall include
the feminine and vice versa and the singular shall include the plural and vice
versa, unless the context of this Agreement indicates otherwise.
15.4 JOINT BORROWERS. If more than one party executes this Agreement
as Borrower, then for the purpose of this Agreement the term Borrower shall be
read to mean each such party and each party shall be jointly and severally
liable as Borrower for the Obligations as defined herein without regard to
which party receives the proceeds of any of the Loans. Each such party hereby
acknowledges that it expects to derive economic advantage from each of the
Loans.
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15.5 MAINTAINING ACCOUNTS PAYABLE. Borrower acknowledges that its
outstanding accounts payable (exclusive of accrued expenses) has averaged (on a
monthly basis) approximately $30,000,000 over the past year. Borrower agrees
that it will not alter its business practices concerning the payment of its
accounts payable as conducted during the period of November 1, 1996 to November
1, 1997, and in this regard, further covenants and agrees that, at all times
there shall remain owing to Lender any Obligations hereunder, it will maintain
its accounts payable (exclusive of (i) borrowed money and indebtedness for the
payment of machinery and equipment, and (ii) accrued expenses ) at a level of
not less than Seven Million Five Hundred Thousand ($7,500,000) Dollars.
15.6 CROSS DEFAULT; CROSS COLLATERAL. Borrower hereby agrees that (a)
all other agreements between Borrower and Lender or any of Lender's affiliates
are hereby amended so that a default (after applicable notice and cure periods,
if any,) under this Agreement is a default under all other agreements and a
default (after applicable notice and cure periods, if any,) under any one of
the other agreements is a default under this Agreement, and (b) the Collateral
under this Agreement secures the Obligations now or hereafter outstanding under
all other agreements between Borrower and Lender or any of Lender's affiliates
and the collateral pledged under any other agreement with Lender or any of its
affiliates secures the Obligations under this Agreement.
15.7 BINDING EFFECT; GOVERNING LAW. This Agreement shall be binding
upon and inure to the benefit of Borrower and Lender and their respective
successors and assigns, except that Borrower shall not have the right to assign
its rights hereunder or any interest herein without the prior written consent
of Lender. This Agreement, the Notes, the Relevant Documents and the other
documents delivered in connection with this Agreement shall be governed by, and
construed in accordance with, the laws of the State of New Jersey.
15.8 FURTHER ASSURANCES. The Borrower shall execute and deliver from
time to time hereafter, such additional instruments, certificates and
documents, and shall take all actions, as the Lender shall reasonably request
for the purpose of implementing or effectuating the provisions of this
Agreement, the Notes, or any other Relevant Documents, and upon the exercise by
the Lender of any power, right, privilege or remedy pursuant to this Agreement,
or any other Relevant Documents, which require any consent, approval,
registration, qualification or authorization of any governmental authority,
execute and deliver all applications, certifications, instruments and other
documents and papers that the Lender that may be so required to obtain.
15.9 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement.
15.10 SEVERABILITY OF PROVISIONS. Any provision of this Agreement, any
of the Notes or any of the Relevant Documents that 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 of this Agreement, such Notes or such
Relevant Documents or affecting the validity or enforceability of such
provision in any other jurisdiction.
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15.11 TABLE OF CONTENTS; HEADINGS. The table of contents and headings
preceding the text of this Agreement are inserted solely for convenience of
reference and shall not constitute a part of this Agreement nor affect its
meaning, construction or effect.
15.12 EXHIBITS AND SCHEDULES. All of the Exhibits and Schedules to
this Agreement are hereby incorporated by reference herein and made a part
hereof.
15.13 FURTHER ACKNOWLEDGMENTS AND AGREEMENTS OF BORROWER AND LENDER.
(A) Borrower and Lender acknowledge and agree that they (i)
have independently reviewed and approved each and every provision of this
Agreement, including the Exhibits and Schedules attached hereto and any and all
other documents and items as they or their counsel have deemed appropriate, and
(ii) have entered into this Agreement and have executed the closing documents
voluntarily, without duress or coercion, and have done all of the above with
the advice of their legal counsel or have knowingly and voluntarily elected to
proceed without advice of legal counsel.
(B) Borrower and Lender agree that this Agreement is an
amendment and restatement, in its entirety, of the terms and conditions of the
December 1996 Loan Agreement and the Bridge Loan Agreement.
15.14 GENERAL LIMITATION ON AMOUNT OF LIABILITY. Notwithstanding any
other provisions of this Agreement, the obligations of Borrower hereunder shall
be limited to a maximum aggregate amount equal to the largest amount that would
not render its obligations hereunder subject to avoidance as a fraudulent
transfer or conveyance under Section 548 of Title 11 of the United States
Bankruptcy Code or any applicable provisions of comparable state law
(collectively, the "Fraudulent Transfer Laws"), in each case after giving
effect to all other liabilities of Borrower, contingent or otherwise, that are
relevant under the Fraudulent Transfer Laws (specifically excluding, however,
any liabilities of Borrower in respect of intercompany indebtedness to the
Affiliates of the Borrower to the extent that such indebtedness would be
discharged in an amount equal to the amount paid by Borrower hereunder) and
after giving effect as assets to the value (as determined under the applicable
provisions of the Fraudulent Transfer Laws) of any rights to subrogation,
contribution, reimbursement, indemnity or similar rights of Borrower pursuant
to (i) applicable law or (ii) any agreement providing for an equitable
allocation among Borrower and other Affiliates of the Borrower of obligations
arising under any security provided by such parties.
16. WAIVER OF JURY TRIAL, CONSENT TO JURISDICTION.
16.1 WAIVER OF JURY TRIAL. BORROWER AND LENDER ACKNOWLEDGE AND AGREE
THAT ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT OR
INSTITUTED BY BORROWER OR LENDER ON OR WITH RESPECT TO ANY LOANS, LETTERS OF
42
CREDIT, THE OBLIGATIONS OR THE RELEVANT DOCUMENTS OR THE DEALINGS OF THE
PARTIES WITH RESPECT HERETO OR THERETO SHALL BE TRIED ONLY BY COURT AND NOT BY
A JURY AND EACH PARTY HEREBY WAIVES THE RIGHT TO TRIAL BY JURY. BORROWER AND
LENDER AGREE THAT THIS SECTION IS A MATERIAL AND SPECIFIC ASPECT OF THIS
AGREEMENT AND LENDER WOULD NOT CONTINUE TO EXTEND CREDIT IF THE WAIVER SET
FORTH IN THIS SECTION WAS NOT A PART OF THIS AGREEMENT.
16.2 CONSENT TO JURISDICTION; SERVICE OF PROCESS.
16.2(1) Borrower and Lender consent to the jurisdiction of
any court of the State wherein the office of Lender set forth in the first page
hereof is located and of any federal court located in such State and waive any
right to object to such court as an inconvenient forum.
16.2(2) Borrower waives personal service of any summons,
complaint or other process in connection with any such action or proceeding and
agrees that service thereof may be made as Lender may elect, by certified mail
directed to Borrower at the location provided in Section 15.2 for notices to
Borrower or, in the alternative, in any other form or manner permitted by law.
17. ACKNOWLEDGMENT OF WAIVERS. THIS AGREEMENT PROVIDES FOR THE WAIVER OF RIGHTS
AND REMEDIES. BORROWER ACKNOWLEDGES THAT IT IS REPRESENTED BY COUNSEL (OR HAS
HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL) AND THAT SUCH COUNSEL HAS REVIEWED
AND EXPLAINED THE MEANING OF THESE WAIVERS TO BORROWER.
IN WITNESS WHEREOF, the undersigned have set their hands and seals or
caused these presents to be executed by their proper corporate officers and
sealed with their seal the day and year first above written.
USA DETERGENTS, INC., Borrower
By: /s/ Uri Evan
________________________________
Name: Uri Evan
_______________________________
Title: Chairman of the Board and
Chief Executive Officer
______________________________
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PNC BANK, NATIONAL ASSOCIATION,
Lender
By: /s/ Xxxxx X. Xxxx
--------------------------------
Xxxxx X. Xxxx, Vice President
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