1
EXHIBIT 10.19
FINANCING AGREEMENT
-------------------
THE CIT GROUP/BUSINESS CREDIT, INC.
(AS LENDER)
AND
ROCK OF AGES QUARRIES, INC.
AND
XXXXXXX GRANITE COMPANY, INC.
AND
ROYALTY GRANITE CORPORATION
(as Borrowers)
DATED: AUGUST 25, 1994
-1-
2
TABLE OF CONTENTS
Page
----
SECTION 1. Definitions ................................................. 3
SECTION 2. Conditions Precedent ........................................ 11
SECTION 3. Revolving Loans ............................................. 13
SECTION 4. Term Loan ................................................... 16
SECTION 5. Letters of Credit ........................................... 17
SECTION 6. Collateral .................................................. 19
SECTION 7. Representations, Warranties and Covenants ................... 22
SECTION 8. Interest, Fees and Expenses ................................. 31
SECTION 9. Powers ...................................................... 32
SECTION 10. Events of Default and Remedies .............................. 33
SECTION 11. Termination ................................................. 35
SECTION 12. Miscellaneous ............................................... 36
EXHIBIT
-------
Exhibit A - Form of Promissory Note
-2-
3
THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation, (hereinafter
"CITBC") with offices located at 1211 Avenue of the Americas Xxx Xxxx, Xxx Xxxx
00000, is pleased to confirm the terms and conditions under which CITBC shall
make a term loan and revolving loans, advances and other financial
accommodations to ROCK OF AGES QUARRIES, INC., a Vermont Corporation (herein
"ROA Quarries"), having a principal place of business at Xxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxxxx 00000; XXXXXXX GRANITE COMPANY, INC., a New Hampshire
Corporation (herein "Xxxxxxx"), having a principal place of business at 000
Xxxxx Xxxxx Xxxxxx, Xxxxxxx, Xxx Xxxxxxxxx 00000; and ROYALTY GRANITE
CORPORATION, a Georgia corporation (herein "Royalty"), having a principal place
of business at SR 000 Xxxxxxx Xxxxxx Xxxx, Xxxxxxx, Xxxxxxx 00000 (ROA Quarries,
Xxxxxxx and Royalty are hereafter individually referred to as "Company" and
collectively referred to as the "Companies").
WHEREAS, ROA Quarries, Xxxxxxx and Royalty have entered into written
arrangements to enhance their operations, reduce operating costs, increase
efficiencies and increase sales;
WHEREAS, ROA Quarries will provide centralized financial and cash management
services and centralized cash disbursement and payables services to Xxxxxxx and
Royalty;
WHEREAS, CITBC currently finances Xxxxxxx and Royalty (the "Existing Financing")
and which Existing Financing will be terminated and replaced, in part, by this
financing arrangement;
NOW, THEREFORE, in consideration of the mutual conditions and agreements set
forth in this Financing Agreement, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, CITBC and each of
the Companies hereby agree as follows:
SECTION 1. DEFINITIONS
ACCOUNTS shall mean all of each Company's now existing and future: (a) accounts
receivable, (whether or not specifically listed on schedules furnished to
CITBC), and any and all instruments, documents, contract rights, chattel paper,
general intangibles, including, without limitation, all accounts created by or
arising from each Company's sales of goods or rendition of services to its
customers, and all accounts arising from sales or rendition of services made
under any Company's trade names or styles, or through any of a Company's
divisions; (b) unpaid seller's rights (including rescission, replevin,
reclamation and stoppage in transit) relating to the foregoing or arising
therefrom; (c) rights to any goods represented by any of the foregoing,
including rights to returned or repossessed goods; (d) reserves and credit
balances arising hereunder; (e) guarantees or collateral for any of the
foregoing; (f) insurance policies or rights relating to any of the foregoing;
and (g) cash and non-cash proceeds of any and all the foregoing.
ANNIVERSARY DATE shall mean the date occurring five (5) years from the date
hereof and the same date in every year thereafter.
ANNUM shall mean a year consisting of three hundred and sixty (360) days.
-3-
4
AVAILABILITY shall mean at any time of determination the excess of the sum of a)
Eligible Accounts Receivable multiplied by the percentage provided for in clause
(a) of paragraph 1 of Section 3 of this Financing Agreement and b) Eligible
Inventory multiplied by the percentage provided for in clause (b) of paragraph 1
of Section 3 of this Financing Agreement over the sum of x) the outstanding
aggregate amount of all Obligations (other than the Term Loan) and y) the
Availability Reserve.
AVAILABILITY RESERVE shall mean, at any time of determination, the then
outstanding amount of all Letters of Credit.
BUSINESS DAY shall mean any day on which both CITBC and Chemical Bank are open
for business.
CAPITAL EXPENDITURES for any period shall mean the aggregate of all expenditures
of the Companies during such period that in conformity with GAAP are required to
be included in or reflected by the property, plant or equipment or similar fixed
asset account reflected in the balance sheets of the Companies.
CAPITAL LEASE shall mean any lease of property (whether real, personal or mixed)
which, in conformity with GAAP, is accounted for as a capital lease or a Capital
Expenditure on the balance sheets of the Companies.
CHEMICAL BANK RATE shall mean the rate of interest per annum announced by
Chemical Bank from time to time as its prime rate in effect at its principal
office in the City of New York. (The prime rate is not intended to be the lowest
rate of interest charged by Chemical Bank to its borrowers).
COLLECTERAL shall mean all present and future Accounts, Equipment, Inventory,
Documents of Title, General Intangibles and Real Estate of the Company.
COLLATERAL MANAGEMENT FEE shall mean the sum of $1,000.00 which shall be paid to
CITBC in accordance with paragraph 8 of Section 8 hereof to offset the expenses
and costs of CITBC in connection with record keeping, periodic examinations,
analyzing and evaluating the Collateral.
CONSOLIDATED BALANCE SHEET shall mean a consolidated balance sheet of the
Companies and their consolidated subsidiaries eliminating all inter-company
transactions and prepared in accordance with GAAP.
CONSOLIDATING BALANCE SHEET shall mean a Consolidated Balance Sheet plus
individual balance sheets for the Companies and their subsidiaries showing all
eliminations of inter-company transactions and prepared in accordance with GAAP
and including a balance sheet for EACH Company exclusively.
CURRENT ASSETS shall mean, wherever used throughout this Financing Agreement,
those assets of the Companies, which in accordance with GAAP, are classified as
"current".
CURRENT LIABILITIES shall mean, wherever used throughout this Financing
Agreement, those liabilities of the Companies, which in accordance with GAAP,
are classified as "current", provided, however, that notwithstanding GAAP, the
Revolving Loans and the current portion of Permitted Indebtedness shall be
considered "current liabilities".
-4-
5
CUSTOMARILY PERMITTED LIENS shall mean
---------------------------
(a) liens of local or state authorities for franchise or other like taxes
provided the aggregate amounts of such liens shall not exceed $100,000.00 in the
aggregate at any one time;
(b) statutory liens of landlords and liens of carriers, warehousemen,
mechanics, materialmen and other like liens imposed by law, created in the
ordinary course of business and for amounts not yet due (or which are being
contested in good faith by appropriate proceedings or other appropriate actions
which are sufficient to prevent imminent foreclosure of such liens) and with
respect to which adequate reserves or other appropriate provisions are being
maintained in accordance with GAAP;
(c) deposits made (and the liens thereon) in the ordinary course of
business (including, without limitation, security deposits for leases, surety
bonds and appeal bonds) in connection with workers' compensation, unemployment
insurance and other types of social security benefits or to secure the
performance of tenders, bids, contracts (other than for the repayment or
guarantee of borrowed money or purchase money obligations), statutory
obligations and other similar obligations arising as a result of progress
payments under government contracts; and
(d) easements (including, without limitation, reciprocal easement
agreements and utility agreements), encroachments, minor defects or
irregularities in title, variations and other restrictions, charges or
encumbrances (whether or not recorded) affecting the Real Estate and which are
listed in Schedule B of the title insurance policies delivered to CITBC
herewith.
DEFAULT shall mean any event specified in Section 10 hereof, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, event or act, has been satisfied.
DEFAULT RATE OF INTEREST shall mean a rate of interest per annum equal to the
sum of: a) two and one-half percent (2 1/2%) and b) the Chemical Bank Rate,
which CITBC shall be entitled to charge on all Obligations due CITBC by the
Companies to the extent provided in paragraph 2 of Section 10 of this Financing
Agreement.
DEPOSITORY ACCOUNT shall mean those accounts owned by CITBC and designated for
the deposit of proceeds of Collateral.
DOCUMENTATION FEE shall mean i) the sum of $7,500.00 intended to compensate
CITBC for the use of CITBC's in-house Legal Department and facilities in
documenting, in whole or in part, the initial transaction solely on behalf of
CITBC, exclusive of Out-of-Pocket Expenses, and ii) CITBC's standard fees
relating to any and all modifications, waivers, releases, amendments or
additional collateral with respect to this Financing Agreement, the Collateral
and/or the Obligations.
-5-
6
DOCUMENTS OF TITLE shall mean all present and future warehouse receipts, bills
of lading, shipping documents, chattel paper, instruments and similar documents,
all whether negotiable or not and all goods and Inventory relating thereto and
all cash and non-cash proceeds of the foregoing.
EARLY TERMINATION DATE shall mean the date on which ROA Quarries terminates this
Financing Agreement or the Line of Credit which date is prior to the first
Anniversary Date.
EARLY TERMINATION FEE shall: i) mean the fee CITBC is entitled to charge in the
event ROA Quarries terminates the Line of Credit or this Financing Agreement on
a date prior to the first Anniversary Date; and ii) be determined by calculating
the average daily loan balance under the Revolving Loan for the period from the
date of this Financing Agreement to the Early Termination Date and multiplying
that number by one percent (1%) per annum for the number of days from the Early
Termination Date to the first Anniversary Date.
EBIT shall mean, in any period, all earnings of the Companies before all
interest and tax obligations of the Companies for said period, determined in
accordance with GAAP.
EVENT(S) OF DEFAULT shall have the meaning provided for in Section 10 of this
Financing Agreement.
ELIGIBLE ACCOUNTS RECEIVABLE shall mean, in the aggregate, the gross amount of
each Company's accounts receivable provided, however, that in each instance the
accounts receivable conform to the warranties contained herein and at all times
continue to be acceptable to CITBC in the exercise of its reasonable business
judgment, less, without duplication, the sum of: a) any returns, discounts,
claims, credits and allowances of any nature (whether issued, owing, granted or
outstanding) and b) reserves for: i) sales to the United States of America or
to any agency, department or division thereof; ii) foreign sales other than
sales x) secured by stand-by letters of credit (in form and substance
satisfactory to CITBC) issued or confirmed by, and payable at, banks having a
place of business in the United States of America and payable in United States
currency, or y) to customers residing in Canada provided such sales otherwise
comply with all of the other criteria for eligibility hereunder, are payable in
United States currency and such sales do not exceed $3,000,000.00 in the
aggregate at any one time; iii) accounts that remain unpaid more than the
greater of a) ninety (90) days from invoice date or b) sixty (60) days from due
date but in no event more than one hundred and eighty (180) days from invoice
date; iv) contras; v) sales to any Company, any subsidiary, or to any company
affiliated with a Company in any way other than sales to any foreign company
(other than ROA Canada) affiliated with a Company or ROA provided such sales x)
are on terms no less beneficial to the Company than sales to companies not
affiliated with the Company and y) are secured by stand-by letters of credit
issued or confirmed by, and payable at, banks having a place of business in the
United States and payable in United States currency; vi) xxxx and hold (deferred
shipment) or consignment sales; vii) sales to any customer which is a)
insolvent, b) the debtor in any bankruptcy, insolvency, arrangement,
reorganization, receivership or similar proceedings under any federal or state
law, c) negotiating, or has called a meeting of its creditors for purposes of
negotiating, a compromise of its debts or d) financially unacceptable to CITBC
or has a credit rating unacceptable to CITBC; viii) all sales to any customer if
fifty percent (50%) or more of either x) all outstanding invoices or y) the
aggregate dollar amount of all outstanding invoices, are unpaid more than the
greater of a) ninety (90) days from invoice date or b) sixty (60) days from due
date but in no event more than
-6-
7
one hundred and eighty (180) days from invoice date; ix) any other reasons
deemed necessary by CITBC in its reasonable business judgment and which are
customary either in the commercial finance industry or in the lending practices
of CITBC; and x) an amount representing, historically, returns, discounts,
claims, credits and allowances.
ELIGIBLE INVENTORY shall mean, in the aggregate, the gross amount of each
Company's Inventory provided, however, that in each instance the Inventory
conforms to the warranties contained herein and which at all times continue to
be acceptable to CITBC in the exercise of its reasonable business judgment less
any work-in-process, goods not present in the United States of America, goods
returned or rejected by customers of a Company, other than goods that are
undamaged and resalable in the normal course of business, goods to be returned
to the suppliers of a Company, goods in transit to third parties (other than to
agents or warehouses of a Company) and less any reserves required by CITBC in
its reasonable discretion for special order goods, market value declines and
xxxx and hold (deferred shipment) or consignment sales.
EQUIPMENT shall mean all present and hereafter acquired machinery, equipment,
furnishings and fixtures, and all additions, substitutions and replacements
thereof, wherever located, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto and all proceeds
of whatever sort.
FIXED CHARGE COVERAGE RATIO shall mean, for any period of computation, a ratio
determined by dividing the sum of x) EBIT, y) depreciation and z) amortization
of General Intangibles by the sum of i) all interest expense on Permitted
Indebtedness, ii) cash capital expenditures, iii) principal repaid on the Term
Loan and iv) taxes paid or accrued.
ERISA shall mean the Employee Retirement Income Security Act or 1974, as amended
from time to time and the rules and regulations promulgated thereunder from time
to time.
GAAP shall mean generally accepted accounting principles in the United States of
America as in effect on the date of this Financing Agreement.
GENERAL INTANGIBLES shall have the meaning set forth in the Uniform Commercial
Code as in effect in the State of New York and shall include, without
limitation, all present and future right, title and interest in and to all
tradenames, trademarks (together with the goodwill associated therewith),
patents, licenses (other than licenses which are not assignable and for which
consents to any assignment have not been obtained), customer lists, distribution
agreements, supply agreements and tax refunds, together with all monies and
claims for monies now or hereafter due and payable in connection with any of the
foregoing or otherwise, and all cash and non-cash proceeds thereof.
GUARANTORS shall mean i) the Companies, ii) ROA, iii) Xxxx X. Xxxxxxx, and iv)
Xxxxx X. Xxxxxxx and v) ROA Canada.
INDEBTEDNESS shall mean, without duplication, all liabilities, contingent or
otherwise, which are any of the following: (a) obligations in respect of
borrowed money or for the deferred purchase price of property,
-7-
8
services or assets, other than Inventory, or (b) lease obligations which, in
accordance with GAAP, have been, or which should be, capitalized.
INTEREST EXPENSE shall mean, in the aggregate, the total interest obligations
(paid or accrued) of the Companies determined in accordance with GAAP on a basis
consistent with the latest audited statements of the Companies.
INVENTORY shall mean all of each Company's present and hereafter acquired
merchandise, inventory and goods, and all additions, substitutions and
replacements thereof, wherever located, together with all goods and materials
used or usable in manufacturing, processing, packaging or shipping same, in all
stages of production--from raw materials through work-in-process to finished
goods--and all proceeds thereof of whatever sort.
ISSUING BANK shall mean the bank issuing Letters of Credit for a Company.
LETTERS OF CREDIT shall mean all letters of credit issued with the assistance of
CITBC by the Issuing Bank for or on behalf of a Company.
LETTER OF CREDIT GUARANTY shall mean the guaranty or obligation delivered by
CITBC to the Issuing Bank of a Company's reimbursement obligation under the
Issuing Bank's Reimbursement Agreement, Application for Letter of Credit or
other like document.
LETTER OF CREDIT GUARANTY FEE shall mean the fee CITBC may charge under
paragraph 3 of Section 8 of this Financing Agreement for: i) issuing the Letter
of Credit Guaranty or ii) otherwise aiding a Company in obtaining Letters of
Credit.
LEVERAGE RATIO shall mean the ratio determined by dividing Total Liabilities by
Net Worth.
LINE OF CREDIT shall mean the commitment of CITBC to make loans and advances
pursuant to Section 3 of this Financing Agreement and to assist the Companies in
obtaining Letters of Credit under Section 4 of this Financing Agreement in an
amount equal to $4,000,000.00.
LINE OF CREDIT FEE shall: i) mean the fee due CITBC at the end of each month for
the Line of Credit, and ii) be determined by multiplying the difference between
the Line of Credit, and the average daily Revolving Loans for said month by
one-quarter of one percent (1/4 of 1%) per annum TIMES the number of days in
said month.
LOAN FACILITY FEE shall mean the fee payable to CITBC in accordance with, and
pursuant to, the provisions of paragraph 7 of Section 8 of this Financing
Agreement.
MANDATORY PREPAYMENT shall: i) mean the amount by which the Companies must
prepay the Term Loan on or before the 90th day after the end of the Companies'
fiscal year and which payment shall not be subject to
-8-
9
the Prepayment Premium; and ii) be determined as set forth in Section 4,
paragraph 6 of this Financing Agreement.
NET WORTH shall mean assets in excess of liabilities, determined in accordance
with GAAP, on a consistent basis with the latest audited statements.
OBLIGATIONS shall mean all loans and advances made or to be made by CITBC to a
Company or to others for a Company's account; any and all indebtedness and
obligations which may at any time be owing by the Companies to CITBC howsoever
arising, whether now in existence or incurred from time to time hereafter;
whether secured by pledge, lien upon or security interest in any Company's
assets or property or the assets or property of any other person, firm, entity
or corporation; whether such indebtedness is absolute or contingent, joint or
several, matured or unmatured, direct or indirect and whether a Company is
liable to CITBC for such indebtedness as principal, surety, endorser, guarantor
or otherwise. Obligations shall also include indebtedness owing to CITBC by the
Companies under this Financing Agreement or under any other agreement or
arrangement now or hereafter entered into between the Companies and CITBC;
indebtedness or obligations incurred by, or imposed on, CITBC as a result of
environmental claims (other than as a result of actions of CITBC) arising out of
any Company's operations, premises or waste disposal practices or sites; a
Company's liability to CITBC as maker or endorser on any promissory note or
other instrument for the payment of money; a Company's liability to CITBC under
any instrument of guaranty or indemnity, or arising under any guaranty,
endorsement or undertaking which CITBC may make or issue to others for any
Company's account, including any accommodation extended with respect to
applications for Letters of Credit, CITBC's acceptance of drafts or CITBC's
endorsement of notes or other instruments for any Company's account and benefit.
OPERATING LEASES shall mean all leases of property (whether real, personal or
mixed) other than Capital Leases.
OUT-OF-POCKET EXPENSES shall mean all of CITBC's present and future reasonable
expenses incurred relative to this Financing Agreement, whether incurred
heretofore or hereafter, which expenses shall include, without being limited to,
the cost of record searches, all costs and expenses incurred by CITBC in opening
bank accounts, depositing checks, receiving and transferring funds, and any
charges imposed on CITBC due to "insufficient funds" of deposited checks and
CITBC's standard fee relating thereto, any amounts paid by CITBC, incurred by or
charged to CITBC by the Issuing Bank under the Letter of Credit Guaranty or a
Company's Reimbursement Agreement, Application for Letter of Credit or other
like document which pertain either directly or indirectly to such Letters of
Credit, and CITBC's standard fees relating to the Letters of Credit and any
drafts thereunder, reasonable local counsel fees, title insurance premiums, real
estate survey costs, the Georgia General Intangible Tax, fees and taxes relative
to the filing of financing statements, costs of preparing and recording
mortgages/deeds of trust against the Real Estate and all expenses, costs and
fees set forth in paragraph 3 of Section 10 of this Financing Agreement.
PERMITTED ENCUMBRANCES shall mean: i) liens expressly permitted, or consented
to, by CITBC; ii) Purchase Money Liens; iii) Customarily Permitted Liens; iv)
liens granted CITBC by the Companies; v) liens of judgment creditors provided
such liens do not exceed, in the aggregate, at any time, $100,000.00 (other than
-9-
10
liens bonded or insured to the reasonable satisfaction of CITBC); and vi) liens
for taxes not yet due and payable or which are being diligently contested in
good faith by any Company by appropriate proceedings and which liens are not x)
other than with respect to Real Estate, senior to the liens of CITBC or y) for
taxes due the United States of America.
PERMITTED INDEBTEDNESS, shall mean: i) current indebtedness maturing in less
than one year and incurred in the ordinary course of business for raw materials,
supplies, equipment, services, taxes or labor; ii) the indebtedness secured by
the Purchase Money Liens; iii) indebtedness of any Company which is unsecured
and subordinated to the prior payment and satisfaction of the Obligations due
CITBC by the Companies by means of a subordination agreement in form and
substance satisfactory to CITBC; iv) indebtedness arising under the Letters of
Credit and this Financing Agreement; v) deferred taxes and other expenses
incurred in the ordinary course of business; and vi) other indebtedness existing
on the date of execution of this Financing Agreement and listed in the most
recent financial statement delivered to CITBC or otherwise disclosed to CITBC in
writing or which is not material to the financial condition of the Companies.
PREPAYMENT PREMIUM shall: i) mean the amount due CITBC upon a voluntary
prepayment, in whole or in part, of the Term Loan, prior to the first
Anniversary Date, provided, however, that no such Prepayment Premium shall be
due if the proceeds for such prepayment are derived solely from x) Surplus Cash,
y) sales of Equipment and/or Real Estate or z) the public or private placement
of the stock or subordinated and unsecured notes of a Company provided a) the
Financing Agreement is not terminated and b) CITBC continues to be the primary
lender of the Companies notwithstanding such prepayment, and ii) be computed by
multiplying the amount so prepaid by one and one-half percent (1 1/2%) if the
prepayment occurs prior to the first Anniversary Date.
PROMISSORY NOTE shall mean the note, in the form of Exhibit A attached hereto,
delivered by the Companies to CITBC to evidence the Term Loan pursuant to, and
repayable in accordance with, the provisions of Section 4 of this Financing
Agreement.
PURCHASE MONEY LIENS shall mean liens on any item of Equipment acquired after
the date of this Financing Agreement provided that i) each such lien shall
attach only to the property to be acquired, ii) a description of the property so
acquired is furnished to CITBC, and iii) the debt incurred in connection with
such acquisitions shall not exceed, in the aggregate, $250,000.00 in any fiscal
year.
Real Estate shall mean the fee and/or leasehold interests in the real property
which have been, or will be, encumbered, mortgaged, pledged or assigned to CITBC
or its designee.
REVOLVING LOANS shall mean the loans and advances made, from time to time, to or
for the account of the Companies, or any one of them, by CITBC pursuant to
Section 3 of this Financing Agreement.
ROA shall mean Rock of Ages Corporation, a Vermont corporation.
ROA CANADA shall mean Rock of Ages Canada Quarries Inc., a corporation formed
under the federal laws of Canada.
-10-
11
ROA FINANCING AGREEMENT shall mean the Financing Agreement, of even date
herewith, between ROA and CITBC.
SURPLUS CASH shall mean for any fiscal year the sum of i) EBIT, ii) depreciation
and iii) other non-cash charges less the sum of a) all interest obligations paid
or due CITBC by the Companies, b) the amount of principal repaid CITBC on the
Term Loan, c) capital expenditures of the Companies, and d) all federal, state
and local tax obligations of the Companies.
Term Loan shall mean the term loan in the principal amount of $15,400,000.00
made by CITBC pursuant to, and repayable in accordance with, the provisions of
Section 4 of this Financing Agreement.
TOTAL LIABILITIES shall mean, in the aggregate, the total liabilities of the
Companies, determined in accordance with GAAP, on a basis consistent with the
latest audited statements of the Companies.
WORKING CAPITAL shall mean Current Assets in excess of Current Liabilities.
SECTION 2. CONDITIONS PRECEDENT
The obligation of CITBC to make loans hereunder is subject to the
satisfaction of, or waiver of, immediately prior to or concurrently with the
making of such loans, the following conditions precedent:
a) LIEN SEARCHES - CITBC shall have received tax, judgment and Uniform
Commercial Code searches satisfactory to CITBC for all locations presently
occupied or used by the Companies.
b) CASUALTY INSURANCE - The Companies shall have delivered to CITBC
evidence satisfactory to CITBC that casualty insurance policies listing CITBC as
loss payee or mortgagee, as the case may be, are in full force and effect, all
as set forth in Section 7, paragraph 5 of this Financing Agreement.
c) MORTGAGES/DEEDS OF TRUST - The Companies shall have executed and
delivered to either CITBC or an agent of CITBC or of a title insurance company
acceptable to CITBC such mortgages and deeds of trust as CITBC may reasonably
require to obtain first liens on. the Real Estate.
d) UCC FILINGS - Any documents (including without limitation, financing
statements) required to be filed in order to create, in favor of CITBC, a first
and exclusive perfected security interest in the Collateral with respect to
which a security interest may be perfected by a filing under the Uniform
Commercial Code shall have been properly filed in each office in each
jurisdiction required in order to create in favor of CITBC a perfected lien on
the Collateral. CITBC shall have received acknowledgement copies of all such
filings (or, in lieu thereof, CITBC shall have received other evidence
satisfactory to CITBC that all such filings have been made); and CITBC shall
have received evidence that all necessary filing fees and all taxes or other
expenses related to such filings have been paid in full.
e) TITLE INSURANCE POLICIES - CITBC shall have received, in respect of
each mortgage or deed of trust, a new or updated mortgagee's title policy or
marked-up unconditional binder for such insurance substantially similar to those
delivered to CITBC in connection with the Existing Financing. Each such policy
shall (i) be in an amount satisfactory to CITBC; (ii) insure that the mortgage
or deed of trust insured thereby creates a valid first lien on the property
covered by such mortgage or deed of trust, free and clear of all defects and
encumbrances except those x) acceptable to CITBC or y) currently listed in the
title policies delivered to
-11-
12
CITBC in connection with the Existing Financing; (iii) name CITBC as the insured
thereunder; and (iv) contain such endorsements and effective coverage as CITBC
currently has in the title policies delivered to CITBC in connection with the
Existing Financing, including, without limitation, the revolving line of credit
endorsement. CITBC shall also have received evidence that all premiums in
respect of such policies have been paid and that all charges for mortgage
recording taxes, if any, shall have been paid.
f) SURVEYS - CITBC and the title insurance company issuing each policy
referred to in the immediately preceding paragraph (each a "TITLE INSURANCE
Company") shall have received copies of the currently existing maps or plats of
a perimeter or boundary of the site of each of the properties covered by the
mortgages or deeds of trust.
g) EXAMINATION & VERIFICATION - CITBC shall have completed, to the
satisfaction of CITBC, an examination and verification of the Accounts,
Inventory, books and records of each Company.
h) GUARANTIES - The Guarantors shall have executed and delivered to CITBC
guaranties, in form acceptable to CITBC, guaranteeing all present and future
Obligations of the Companies to CITBC.
i) OPINIONS - Counsel for the Companies shall have delivered to CITBC
opinions satisfactory to CITBC opining, inter alia, that, subject to the i)
filing, priority and remedies provisions of the Uniform Commercial Code, ii) the
provisions of the Bankruptcy Code, insolvency statutes or other like laws, iii)
the equity powers of a court of law and iv) such other matters as may be agreed
upon with CITBC: a) the Guaranty of the Guarantors is valid, binding and
enforceable according to its terms; b) all documents of each Company are x)
valid, binding and enforceable according to their terms, y) are duly authorized
and z) do not violate any terms, provisions, representations or covenants in the
charter or by-laws of any Company or, to the best knowledge of such counsel, of
any loan agreement, mortgage, deed of trust, note, security or pledge agreement
or indenture to which any Company is a signatory or by which any Company or its
assets are bound.
j) PLEDGE AGREEMENT - Xxxx X. Xxxxxxx and Xxxxx X. Xxxxxxx shall x)
execute and deliver to CITBC an unconditional pledge, as additional security for
the Obligations, of certain personal assets, in form acceptable to CITBC, having
a then face value of not less than $1,800,000.00 and y) deliver to CITBC the
additional security with, to the extent applicable, executed stock powers and/or
endorsements. ROA shall x) execute and deliver to CITBC i) an unconditional
pledge, as additional security for the Obligations, of all of the issued and
outstanding capital stock of ROA Canada and ii) blank stock powers for each
stock certificate so pledged and y) deliver to CITBC the original stock
certificates so pledged.
k) ADDITIONAL DOCUMENTS - The Companies shall have executed and delivered
to CITBC all loan documents necessary to consummate the lending arrangement
contemplated between the Companies and CITBC.
1) BOARD RESOLUTION - CITBC shall have received a copy of the resolutions
of the Board of Directors of each Company authorizing the execution, delivery
and performance of (i) this Financing Agreement, and (ii) any related
agreements, in each case certified by the Secretary or Assistant Secretary of
the applicable Company, together with a certificate of the Secretary or
Assistant Secretary of each Company as to the incumbency and signature of the
officers of the Company executing this Financing Agreement and any certificate
or other documents to be delivered by it pursuant hereto, together with evidence
of the incumbency of such Secretary or Assistant Secretary.
m) CORPORATE ORGANIZATION - CITBC shall have received (i) a copy of the
Certificate of Incorporation of each Company certified by the Secretary of State
of its incorporation, and (ii) a copy of the By-Laws (as
-12-
13
amended through the date hereof) of each Company certified by the Secretary or
Assistant Secretary of the Company.
n) OFFICER'S CERTIFICATE - CITBC shall have received an executed
Officer's Certificate of each Company, satisfactory in form and substance to
CITBC, certifying that (i) the representations and warranties contained herein
are true and correct in all material respects on and as of the date hereof; (ii)
each Company is in compliance with all of the terms and provisions set forth
herein; and (iii) no Event of Default, or any event which, with the giving of
notice or the passage of time or both would constitute an Event of Default, has
occurred.
o) ABSENCE OF DEFAULT - No Default, Event of Default or material adverse
change in the financial condition, business, prospects, profits, operations or
assets of any Company shall have occurred.
p) LEGAL RESTRAINTS/LITIGATION - At the date of execution of this
Financing Agreement, there shall be no x) litigation, investigation or
proceeding (judicial or administrative) pending or threatened against any
Company, or its assets, by any agency, division or department of any county,
city, state or federal government arising out of this Financing Agreement, y)
injunction, writ or restraining order restraining or prohibiting the
consummation of the financing arrangements contemplated under this Financing
Agreement or z) any suit, action, investigation or proceeding (judicial or
administrative) pending or threatened against any Company, or its assets, which,
in the opinion of CITBC, if adversely determined could have a material adverse
effect on the business, operation, assets, financial condition or Collateral of
any Company.
q) DISBURSEMENT AUTHORIZATION - ROA Quarries shall have delivered to
CITBC all information necessary for CITBC to issue wire transfer instructions on
behalf of the Companies for the initial and subsequent loans and/or advances to
be made under this Agreement including, but not limited to, disbursement
authorizations in form acceptable to CITBC.
Upon the execution of this Financing Agreement and the initial disbursement of
loans hereunder, all of the above Conditions Precedent shall have been deemed
satisfied except as the Companies and CITBC shall otherwise agree herein or in a
separate writing.
SECTION 3. REVOLVING LOANS
1. CITBC agrees, subject to the terms and conditions of this Financing
Agreement from time to time, and within x) the Availability and y) the Line of
Credit, but subject to CITBC's right to make "overadvances", to make loans and
advances to ROA Quarries to and for the benefit of the Companies on a revolving
basis (i.e. subject to the limitations set forth herein, the Companies may,
through ROA Quarries, borrow, repay and re-borrow Revolving Loans). Such loans
and advances shall be in amounts up to: a) eighty percent (80%) of the
outstanding Eligible Accounts Receivable, in the aggregate, of the Companies,
and b) fifty percent (50%) of the value of Eligible Inventory, in the aggregate,
of the Companies as determined at the lower of cost or market, provided,
however, that in no event may advances under this clause b exceed $2,000,000.00
in the aggregate at any one time. All requests for loans and advances must be
received by an officer of CITBC no later than 1:00 p.m., New York time, of the
Business Day on which such loans and advances are required. Should CITBC for any
reason honor requests for advances in excess of the limitations set forth
herein, such advances shall be considered "overadvances" and shall be made in
CITBC's sole discretion, subject to any additional terms CITBC deems necessary.
No single advance or overadvance hereunder may be outstanding more than
thirty-six (36) months from the date of such advance.
-13-
14
2. In furtherance of the continuing assignment and security interest in
each Company's Accounts, each Company will, upon the creation of Accounts,
execute and deliver to CITBC in such form and manner as CITBC may reasonably
require, solely for CITBC's convenience in maintaining records of collateral,
such confirmatory schedules of Accounts as CITBC as were submitted to CITBC
under the Existing Financing, and such other appropriate reports designating,
identifying and describing the Accounts as CITBC may reasonably require. In
addition, upon CITBC's request, each Company shall provide CITBC with copies of
agreements with, or purchase orders from, that Company's customers, and copies
of invoices to customers, proof of shipment or delivery and such other
documentation and information relating to said Accounts and other collateral as
CITBC may reasonably require. Failure to provide CITBC with any of the foregoing
shall in no way affect, diminish, modify or otherwise limit the security
interests granted herein. Each Company hereby authorizes CITBC to regard that
Company's printed name or rubber stamp signature on assignment schedules or
invoices as the equivalent of a manual signature by that Company's authorized
officers or agents.
3. Each Company hereby represents and warrants that: each Account is
based on an actual and bona fide sale and delivery of goods or rendition of
services to customers, made by a Company in the ordinary course of business; the
goods and inventory being sold and the Accounts created are the exclusive
property of the Company so selling the inventory, and are not and shall not be
subject to any lien, consignment arrangement, encumbrance, security interest or
financing statement whatsoever, other than the Permitted Encumbrances; the
invoices evidencing such Accounts are in the name of the Company so selling the
inventory; and the customers of that Company have accepted the goods or
services, owe and are obligated to pay the full amounts stated in the invoices
according to their terms, without dispute, offset, defense, counterclaim or
contra, except for disputes and other matters arising in the ordinary course of
business of which a Company advised CITBC pursuant to paragraph 5 of this
Section 3. Each Company confirms to CITBC that any and all taxes or fees
relating to its business, its sales, the Accounts or goods relating thereto, are
its sole responsibility and that same will be paid by the Companies when due and
that none of said taxes or fees represent a lien on or claim against the
Accounts. Each Company also warrants and represents that it is a duly and
validly existing corporation and is qualified in all states where the failure to
so qualify would have an adverse effect on the business of such Company or the
ability of such Company to enforce collection of Accounts due from customers
residing in that state. Each Company agrees to maintain such books and records
regarding Accounts as CITBC may reasonably require and agrees that the books and
records of such Company will reflect CITBC's interest in the Accounts. All of
the books and records of each Company will be available to CITBC at normal
business hours, including any records handled or maintained for the Company by
any other company or entity.
4. Until CITBC has advised a Company to the contrary after the occurrence
of an Event of Default, each Company may, and will, enforce, collect and receive
all amounts owing on the Accounts for CITBC's benefit and on CITBC's behalf, but
at the expense of such Company. Such privilege shall terminate automatically
upon the institution by or against any Company of any proceeding under any
bankruptcy or insolvency law or, at the election of CITBC, upon the occurrence
of any other Event of Default and until such Event of Default is waived. Any
checks, cash, notes or other instruments or property received with respect to
any Accounts shall be held by the Company in trust for CITBC, separate from its
own property and funds, and immediately turned over to CITBC with proper
assignments or endorsements by deposit to the Depository
-14-
15
Accounts. All amounts received by CITBC in payment of Accounts will be credited
to the loan account upon CITBC's receipt of "collected funds" at CITBC's bank
account in New York, New York on the Business Day of receipt if received no
later than 1:00 pm or on the next succeeding Business Day if received after
1:00 pm. No checks, drafts or other instrument received by CITBC shall
constitute final payment to CITBC unless and until such instruments have
actually been collected.
5. Each Company agrees to notify CITBC promptly of any matters materially
affecting the value, enforceability or collectibility of any material Account
and of all material customer disputes, offsets, defenses, counterclaims,
returns, rejections and all reclaimed or repossessed merchandise or goods. Each
Company agrees to issue credit memoranda promptly (with duplicates to CITBC upon
request after the occurrence of an Event of Default) upon accepting material
returns or granting material allowances, and may continue to do so until CITBC
has notified such Company that an Event of Default has occurred and that all
future credits or allowances are to be made only after CITBC's prior written
approval. Upon the occurrence of an Event of Default and until such time as such
Event of Default is waived and on notice from CITBC, each Company agrees that
all returned, reclaimed or repossessed merchandise or goods shall be set aside
by such Company, marked with CITBC's name and held by such Company for CITBC's
account as owner and assignee.
6. In order to utilize the collective borrowing powers of the Companies
in the most efficient and economical manner, and in order to facilitate the
handling of the accounts of the Companies on CITBC's books, the Companies have
requested CITBC, and CITBC has agreed, to handle the accounts of all Companies
on CITBC's books on a combined basis, in accordance with the following
provisions: (i) in lieu of maintaining separate accounts on CITBC'S books in the
name of each of the Companies, CITBC shall maintain a single account under the
name: Rock of Ages Quarries, Inc. (herein the "Collective Loan Account"); ii)
loans and advances made by CITBC to, or for, any of the Companies will be
charged to the Collective Loan Account, along with all charges and expenses
under this Financing Agreement; (iii) the Collective Loan Account will be
credited with all amounts received by CITBC from any of the Companies or from
others for the account of any Company including all amounts received by CITBC in
accordance with the terms of paragraph 4 hereof and as provided in this
Financing Agreement; iv) each month CITBC will render to ROA Quarries to and for
the benefit of the Companies one extract of the combined Collective Loan
Account, which shall be deemed to be an account stated as to each of the
Companies and which will be deemed correct and accepted by all of the Companies
unless ROA Quarries has forwarded to CITBC a written statement of exceptions
within thirty (30) days after such extract, or any corrected extract; v) it is
expressly understood and agreed by each of the Companies that CITBC shall have
no obligation to account separately to any of the Companies; vi) requests for
loans and advances may be made by any of the Companies and CITBC is hereby
authorized and directed to accept, honor and rely on such instructions and
requests, subject to the limitation and provisions set forth in this Financing
Agreement; vii) it is expressly understood and agreed by each of the Companies
that CITBC shall have no responsibility to inquire into the correctness of the
apportionment, allocation, or disposition of (A) any loans and advances made to
any of the Companies or (B) any of CITBC's expenses and charges relating
thereto; viii) all loans and advances are made for the collective benefit of the
Companies; ix) the Companies jointly and severally unconditionally guarantee to
CITBC the prompt payment in full of (A) all loans and advances made and to be
made by CITBC to any of them under this Financing Agreement, as well as (B) all
other Obligations of the Companies
-15-
16
to CITBC and hereby expressly confirm in all respects the guarantees executed by
each of the Companies in CITBC's favor of even date herewith (the "Guarantees"),
as more fully set therein; x) all Collateral assigned to CITBC by any of the
Companies and any other collateral security now or hereafter given to CITBC by
any of the Companies, shall secure all loans and advances made by CITBC to, or
for, any Company, and shall be deemed to be pledged to CITBC as security for any
and all other Obligations of the Companies to CITBC as set forth under this
Financing Agreement, the Guarantees, or any other agreements between CITBC and
any Company; and xi) it is understood that the handling of the account of the
Companies in a combined fashion, as more fully set forth herein, is done solely
as an accommodation to the Companies and at their request, and that CITBC shall
incur no liability to the Companies as a result of such combination. To induce
CITBC to do so, and in consideration thereof, each Company hereby agrees to
indemnify CITBC and hold CITBC harmless against any and all liability, expense,
loss or claim of damage or injury, except for any liability, injury, expense,
loss or claim of damages arising by reason of CITBC's negligence or misconduct,
made against CITBC by any Company or by any third party whosoever, arising from
or incurred by reason of (A) CITBC handling the accounts of the Companies as
herein provided, (B) CITBC relying on any instructions of any of the Companies,
or (c) any other reasonable action taken by CITBC in accordance with this
paragraph 6 of Section 3 of this Financing Agreement. In no event shall prior
recourse to any Accounts or other security granted to or by any Company be a
prerequisite to CITBC's right to demand payment of any Obligation. Further, it
is understood that CITBC shall have no obligation whatsoever to perform in any
respect any Company's contracts or obligations relating to the Accounts. The
foregoing request was made because the Companies are engaged in an integrated
operation that requires financing on a basis permitting the availability of
credit from time to time to each of the Companies as required for the continued
successful operation of each Company and the integrated operation. Each Company
expects to derive benefit, directly or indirectly, from such availability since
the successful operation of each Company is dependent on the continued
successful performance of the functions of the integrated group.
SECTION 4. TERM LOAN
1. Each Company hereby agrees to execute and deliver to CITBC the
Promissory Note, in the form of Exhibit A attached hereto, to evidence the Term
Loan to be extended by CITBC. Each Company shall be jointly and severally liable
for the Term Loan.
2. Upon receipt of such Promissory Note, CITBC hereby agrees to extend to
the Companies the Term Loan in the principal amount of $15,400,000.00.
3. The principal amount of the Term Loan shall be repaid CITBC by the
Companies by: i) one (1) principal installment of $500,000.00 due and payable on
September 1, 1994; ii) one (1) principal installment of $500,000.00 due and
payable on the first Business Day of October, 1994; iii) four (4) equal
quarterly principal installments of $300,000.00 each on the first Business Day
of January, April, July and October of 1995; iv) twelve (12) equal quarterly
principal installments of $400,000.00 each on the first Business Day of each
January, April, July and October of 1996, 1997 and 1998, followed by v) one (1)
installment of $8,400,000.00 on the first Business Day of January, 1999.
-16-
17
4. In the event this Financing Agreement or the Line of Credit is
terminated by either CITBC or ROA Quarries for any reason whatsoever, the Term
Loan shall become due and payable on the effective date of such termination
notwithstanding any provision to the contrary in the Promissory Note or this
Financing Agreement.
5. The Companies may prepay at any time, at their option, in whole or in
part, the Term Loan, provided that on each such prepayment, the Companies shall
pay: i) accrued interest on the principal so prepaid to the date of such
prepayment and ii) the Prepayment Premium, if any.
6. In the event the Companies have, on a consolidated basis, Surplus Cash
in any fiscal year, commencing with the fiscal year beginning January 1, 1995,
in excess of $250,000.00, the Companies must make a Mandatory Prepayment of the
Term Loan by an amount equal to fifty percent (50%) of said Surplus Cash in
excess of $250,000.00.
7. Each prepayment shall be applied to the then last maturing
installments of principal of the Term Loan.
8. ROA Quarries, on behalf of each Company, hereby authorizes CITBC to
charge the Collective Loan Account with the amount of all amounts due under this
Section 4 as such amounts become due. Each Company confirms that any charges
which CITBC may so make to the account as herein provided will be made as an
accommodation to the Companies and solely at CITBC's discretion.
SECTION 5. LETTERS OF CREDIT
In order to assist a Company in establishing or opening Letters of Credit
with an Issuing Bank to cover the purchase of Inventory, Equipment or otherwise,
the Company has requested CITBC to join in the applications for such Letters of
Credit, and/or guarantee payment or performance of such Letters of Credit and
any drafts or acceptances thereunder through the issuance of the Letters of
Credit Guaranty, thereby lending CITBC's credit to the Company and CITBC has
agreed to do so. These arrangements shall be handled by CITBC subject to the
terms and conditions set forth below.
1. The amount, purpose and extent of the Letters of Credit and changes or
modifications thereof by the Company and/or the Issuing Bank of the terms and
conditions thereof shall in all respects be subject to the prior approval of
CITBC provided however that: a) in no event may the aggregate amount of all such
outstanding Letters of Credit exceed, in the aggregate, at any one time
$2,000,000.00, and b) the Letter of Credit and all documentation in connection
therewith shall be in form and substance satisfactory to the applicable Company,
CITBC and the Issuing Bank.
2. CITBC shall have the right, without notice to the applicable Company,
to charge the Collective Loan Account with the amount of any and all
indebtedness, liability or obligation of any kind incurred by CITBC under the
Letters of Credit Guaranty at the earlier of a) payment by CITBC under the
Letters of Credit Guaranty, or b) the termination of this Financing Agreement.
Any amount charged to the Collective Loan
-17-
18
Account shall be deemed a Revolving Loan hereunder and shall incur interest at
the rate provided in Section 8, paragraph 1 of this Financing Agreement.
3. Each Company unconditionally indemnifies CITBC and holds CITBC
harmless from any and all loss, claim or liability incurred by CITBC arising
from any transactions or occurrences relating to Letters of Credit established
or opened hereunder, the collateral relating thereto and any drafts or
acceptances thereunder, and all Obligations thereunder, including any such loss
or claim due to any errors or omission, negligence or misconduct by, or any
action taken by, any Issuing Bank, other than for any such loss, claim or
liability arising out of the negligence or misconduct by CITBC under the Letters
of Credit Guaranty. Each Company's unconditional obligation to CITBC hereunder
shall not be modified or diminished for any reason or in any manner whatsoever,
other than as set forth in the prior sentence. Each Company agrees that any
charges incurred by, or imposed on, CITBC by the Issuing Bank shall be
conclusive on CITBC and may be charged to the Collective Loan Account.
4. CITBC shall not be responsible for: the existence, character, quality,
quantity, condition, packing, value or delivery of the goods purporting to be
represented by any documents; any difference or variation in the character,
quality, quantity, condition, packing, value or delivery of the goods from that
expressed in the documents; the validity, sufficiency or genuineness of any
documents or of any endorsements thereon, even if such documents should in fact
prove to be in any or all respects invalid, insufficient, fraudulent or forged;
the time, place, manner or order in which shipment is made; partial or
incomplete shipment, or failure or omission to ship any or all of the goods
referred to in the Letters of Credit or documents; any deviation from
instructions; delay, default, or fraud by the shipper and/or anyone else in
connection with the Collateral or the shipping thereof; or any breach of
contract between the shipper or vendors and the Company.
5. Each Company agrees that any action taken by CITBC, if taken in good
faith, or any action taken by any Issuing Bank, under or in connection with the
Letters of Credit, the guarantees, the drafts or acceptances, or the Collateral,
shall be binding on each Company and shall not put CITBC in any resulting
liability to any Company. In furtherance thereof, CITBC shall have, subject to
paragraph 6 below, the full right and authority to clear and resolve any
questions of non-compliance of documents; to give any instructions as to
acceptance or rejection of any documents or goods; to execute any and all
steamship or airways guaranties (and applications therefore), indemnities or
delivery orders; to grant any extensions of the maturity of, time of payment
for, or time of presentation of, any drafts, acceptances, or documents; and to
agree to any amendments, renewals, extensions, modifications, changes or
cancellations of any of the terms or conditions of any of the applications,
Letters of Credit, drafts or acceptances; all in CITBC's sole name, and the
Issuing Bank shall be entitled to comply with and honor any and all such
documents or instruments executed by or received solely from CITBC, all without
any notice to or any consent from any Company.
6. Without CITBC's express consent and endorsement in writing, each
Company agrees: a) not to execute any and all applications for steamship or
airway guaranties, indemnities or delivery orders; to grant any extensions of
the maturity of, time of payment for, or time of presentation of, any drafts,
acceptances or documents; or to agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions of any
of the applications, Letters of Credit, drafts or acceptances; and b) after the
occurrence of an Event of Default which is not waived by CITBC, not to i) clear
and resolve any
-18-
19
questions of non-compliance of documents, or ii) give any instructions as to
acceptances or rejection of any documents or goods.
7. Each Company agrees that any necessary import, export or other
licenses or certificates for the import or handling of the Collateral will have
been promptly procured; all foreign and domestic governmental laws and
regulations in regard to the shipment and importation of the Collateral, or the
financing thereof will have been promptly and full complied with; and any
certificates in that regard that CITBC may at any time request will be promptly
furnished. In this connection, each Company warrants and represents that it has
no knowledge that any shipments made under any such Letters of Credit are not in
accordance with the laws and regulations of the countries in which the shipments
originate and terminate, or are prohibited by any such laws and regulations.
Each Company assumes all risk, liability and responsibility for, and agrees to
pay and discharge, all present and future local, state, federal or foreign
taxes, duties, or levies. Any embargo, restriction, laws, customs or regulations
of any country, state, city, or other political subdivision, where such
Collateral is or may be located, or wherein payments are to be made, or wherein
drafts may be drawn, negotiated, accepted, or paid, shall be solely the
Company's risk, liability and responsibility.
8. Upon any payments made to the Issuing Bank under the Letter of Credit
Guaranty, CITBC shall acquire by subrogation, any rights, remedies, duties or
obligations granted or undertaken by such Company to the Issuing Bank in any
application for Letters of Credit, any standing agreement relating to Letters of
Credit or otherwise, all of which shall be deemed to have been granted to CITBC
and apply in all respects to CITBC and shall be in addition to any rights,
remedies, duties or obligations contained herein.
SECTION 6. COLLATERAL
1. As security for the prompt payment in full of all loans and advances
made and to be made to, or for the benefit of, the Companies from time to time
by CITBC pursuant hereto, as well as to secure the payment in full of the other
Obligations, each Company hereby pledges and grants to CITBC a continuing
general lien upon and security interest in all of its:
(a) present and hereafter acquired Inventory;
(b) present and hereafter acquired Equipment;
(c) present and future Accounts;
(d) present and future Documents of Title;
(e) present and future General Intangibles; and
(f) Real Estate.
2. The security interests granted hereunder shall extend and attach to:
-19-
20
(a) All Collateral which is presently in existence and which is owned by
any Company or in which any Company has any interest, whether held by such
Company or others for its account, and, if any Collateral is Equipment, whether
such Company's interest in such Equipment is as owner or lessee or conditional
vendee;
(b) All Equipment whether the same constitutes personal property or
fixtures, including, but without limiting the generality of the foregoing, all
dies, jigs, tools, benches, tables, accretions, component parts thereof and
additions thereto, as well as all accessories, motors, engines and auxiliary
parts used in connection with or attached to the Equipment; and
(c) All Inventory and any portion thereof which may be returned,
rejected, reclaimed or repossessed by either CITBC or any Company from a
Company's customers, as well as to all supplies, goods, incidentals, packaging
materials, labels and any other items which contribute to the finished goods or
products manufactured or processed by any Company, or to the sale, promotion or
shipment thereof.
3. Each Company agrees to safeguard, protect and hold all Inventory for
CITBC's account and make no disposition thereof except in the regular course of
the business of such Company as herein provided. Until CITBC has given such
Company notice to the contrary, as provided for below, any Inventory may be sold
and shipped by such Company to its customers in the ordinary course of such
Company's business, for cash or on open account and on terms currently being
extended by such Company to its customers, provided that all proceeds of all
sales (including cash, accounts receivable, checks, notes, instruments for the
payment of money and similar proceeds) are forthwith transferred, endorsed, and
turned over and delivered to CITBC in accordance with paragraph 4 of Section 3
of this Financing Agreement. CITBC shall have the right to withdraw this
permission at any time upon the occurrence of an Event of Default and until such
time as such Event of Default is waived in which event no further disposition
shall be made of the Inventory by any Company without CITBC's prior written
approval. Sales of Inventory in which a lien upon, or security interest in,
Inventory is retained by the Company shall be made by such Company only with the
approval of CITBC, and the proceeds of such sales shall not be commingled with
such Company's other property, but shall be segregated, held by such Company in
trust for CITBC as CITBC's exclusive property, and shall be delivered
immediately by such Company to CITBC in the identical form received by such
Company by deposit to the Depository Accounts. Upon the sale, exchange, or other
disposition of Inventory, as herein provided, the security interest in such
Company's Inventory provided for herein shall, without break in continuity and
without further formality or act, continue in, and attach to, all proceeds,
including any instruments for the payment of money, accounts receivable,
contract rights, documents of tide, shipping documents, chattel paper and all
other cash and non-cash proceeds of such sale, exchange or disposition. As to
any such sale, exchange or other disposition, CITBC shall have all of the rights
of an unpaid seller, including stoppage in transit, replevin, rescission and
reclamation.
4. Each Company agrees at its own cost and expense to keep the Equipment
in as good and substantial repair and condition as the same is now or at the
time the lien and security interest granted herein shall attach thereto,
reasonable wear and tear excepted, making any and all repairs when and where
necessary. Each Company also agrees to safeguard, protect and hold all Equipment
for CITBC's account and make no disposition thereof unless such Company first
obtains the prior written approval of CITBC. Any sale, exchange or other
disposition of any Equipment shall only be made by a Company with the prior
written
-20-
21
approval of CITBC, and the proceeds of any such sales shall not be commingled
with such Company's other property, but shall be segregated, held by such
Company in trust for CITBC as CITBC's exclusive property, and shall be delivered
immediately by such Company to CITBC in the identical form received by such
Company by deposit to the Depository Accounts to be applied first to the then
last maturity installments of principal of the Term Loan and then, after payment
in full of the Term Loan, to payment of the Revolving Loans. Upon the sale,
exchange, or other disposition of the Equipment, as herein provided, the
security interest provided for herein shall, without break in continuity and
without further formality or act, continue in, and attach to, all proceeds,
including any instruments for the payment of money, accounts receivable,
contract rights, documents of title, shipping documents, chattel paper and all
other cash and non-cash proceeds of such sales, exchange or disposition. As to
any such sale, exchange or other disposition, CITBC shall have all of the rights
of an unpaid seller, including stoppage in transit, replevin, rescission and
reclamation. Notwithstanding anything hereinabove contained to the contrary, the
Companies may sell, exchange or otherwise dispose of obsolete Equipment or
Equipment no longer needed in a Company's operations, provided, however, that
(a) the then book value of the Equipment so disposed of does not exceed
$200,000.00 in the aggregate in any fiscal year and (b) the proceeds of such
sales or dispositions are delivered to CITBC in accordance with the foregoing
provisions of this paragraph.
5. The rights and security interests granted to CITBC hereunder are to
continue in full force and effect, notwithstanding the termination of this
Financing Agreement or the fact that the Collective Loan Account maintained on
the books of CITBC may from time to time be temporarily in a credit position,
until the final payment in full to CITBC of all Obligations and the termination
of this Financing Agreement. Any delay, or omission by CITBC to exercise any
right hereunder, shall not be deemed a waiver thereof, or be deemed a waiver of
any other right, unless such waiver be in writing and signed by CITBC. A waiver
on any one occasion shall not be construed as a bar to or waiver of any right or
remedy on any future occasion.
6. To the extent that the Obligations are now or hereafter secured by any
assets or property other than the Collateral or by the guarantee, endorsement,
assets or property of any other person, then CITBC shall have the right in its
sole discretion to determine which rights, security, liens, security interests
or remedies CITBC shall at any time pursue, foreclose upon, relinquish,
subordinate, modify or take any other action with respect to, without in any way
modifying or affecting any of them, or any of CITBC's rights hereunder.
7. Any reserves or balances to the credit of any Company and any other
property or assets of any Company in the possession of CITBC may be held by
CITBC as security for any Obligations and applied in whole or partial
satisfaction of such Obligations when due but shall be returned to the
applicable Company on request unless an Event of Default has occurred and has
not been waived. The liens and security interests granted herein and any other
lien or security interest CITBC may have in any other assets of any Company,
shall secure payment and performance of all now existing and future Obligations.
CITBC may in its discretion charge any or all of the Obligations to the
Collective Loan Account when due.
8. This Financing Agreement and the obligation of each Company to perform
all of the covenants and obligations hereunder are further secured by a
mortgage, deed of trust or assignment on the Real Estate.
-21-
22
9. Each Company shall give to CITBC from time to time such mortgage, deed
of trust or assignment on the Real Estate or real estate acquired after the date
hereof as CITBC shall require to obtain a valid first lien thereon subject only
to those exceptions of title as set forth in future title insurance policies
that are satisfactory to CITBC.
10. Each Company shall give to CITBC, and/or shall cause the appropriate
party to give to CITBC, from time to time such pledge or security agreements
with respect to General Intangibles and capital stock of ROA Canada as CITBC
shall require to obtain valid first liens thereon.
SECTION 7. REPRESENTATIONS, WARRANTIES AND COVENANTS
1. Each Company hereby warrants and represents and/or covenants that on a
consolidated basis i) the fair value of the Companies' assets exceeds the book
value of the Companies' liabilities; ii) the Companies are generally able to pay
their debts as they become due and payable; and iii) the Companies do not have
unreasonably small capital to carry on their business as currently conducted
absent extraordinary and unforeseen circumstances. Each Company further warrants
and represents that except for the Permitted Encumbrances, the security
interests granted herein constitute and shall at all times constitute the first
and only liens on the Collateral; that, except for the Permitted Encumbrances,
each Company is or will be at the time additional Collateral is acquired by it,
the absolute owner of the Collateral with full right to pledge, sell, consign,
transfer and create a security interest therein, free and clear of any and all
claims or liens in favor of others; that each Company will at its expense
forever warrant and, at CITBC's request, defend the same from any and all claims
and demands of any other person other than the holders of the Permitted
Encumbrances; that each Company will not grant, create or permit to exist, any
lien upon or security interest in the Collateral, or any proceeds thereof, in
favor of any other person other than the holders of the Permitted Encumbrances;
and that the Equipment does not comprise a part of the Inventory of each Company
and that the Equipment is and will only be used by each Company in its business
and will not be held for sale or lease, or removed from its premises, or
otherwise disposed of by each Company without the prior written approval of
CITBC except as otherwise permitted in paragraph 4 of Section 6 of this
Financing Agreement.
2. Each Company agrees to maintain books and records pertaining to the
Collateral in such detail, form and scope as the Companies are currently keeping
them as of the date hereof. Each Company agrees that CITBC or its agents may
enter upon such Company's premises at any time during normal business hours, and
from time to time, for the purpose of inspecting the Collateral, and any and all
records pertaining thereto. Each Company agrees to afford CITBC prior written
notice of any change in the location of any Collateral (other than a temporary
change in the location of mobile Equipment) other than to locations, that as of
the date hereof, are known to CITBC and at which CITBC has filed financing
statements and otherwise fully perfected its liens thereon. Each Company is also
to advise CITBC promptly, in sufficient detail, of any material adverse change
relating to the type, quantity or quality of the Collateral or to the security
interests granted to CITBC therein.
3. Each Company agrees to: execute and deliver to CITBC, from time to
time, solely for CITBC's convenience in maintaining a record of the Collateral,
such written statements, and schedules as CITBC may reasonably require,
designating, identifying or describing the Collateral pledged to CITBC
hereunder. The
-22-
23
Company's failure, however, to promptly give CITBC such statements or schedules
shall not affect, diminish, modify or otherwise limit CITBC's security interests
in the Collateral.
4. Each Company agrees to comply with the requirements of all state and
federal laws in order to grant to CITBC valid and perfected first security
interests in the Collateral, subject only to the Permitted Encumbrances. CITBC
is hereby authorized by each Company to file any financing statements coveting
the Collateral whether or not such Company's signature appears thereon. Each
Company agrees to do whatever CITBC may reasonably request, from time to time,
by way of: filing notices of liens, financing statements, amendments, renewals
and continuations thereof; cooperating with CITBC's custodians; keeping
Inventory records; transferring proceeds of Collateral to CITBC's possession;
and performing such further acts as CITBC may reasonably require in order to
effect the purposes of this Financing Agreement.
5.(a) Each Company agrees to maintain insurance on the Real Estate,
Equipment and Inventory under such policies of insurance, with such insurance
companies, in such reasonable amounts and covering such insurable risks as are
at all times reasonably satisfactory to CITBC and as to Inventory specifically,
as is customary in such Company's business. All policies covering the Real
Estate, Equipment and Inventory are, subject to the fights of any holders of
Permitted Encumbrances holding claims senior to CITBC, to be made payable to
CITBC, in case of loss, under a standard non-contributory "mortgagee", "lender"
or "secured party" clause and are to contain such other provisions as CITBC may
require to fully protect CITBC's interest in the Real Estate, Inventory and
Equipment and to any payments to be made under such policies. All original
policies or true copies thereof are to be delivered to CITBC, premium prepaid,
with the loss payable endorsement in CITBC's favor, and shall provide for not
less than ten (10) days prior written notice to CITBC of the exercise of any
fight of cancellation. At any Company's request, or if any Company fails to
maintain such insurance, CITBC may arrange for such insurance, but at such
Company's expense and without any responsibility on CITBC's part for: obtaining
the insurance, the solvency of the insurance companies, the adequacy of the
coverage, or the collection of claims. Upon the occurrence of an Event of
Default which is not waived, CITBC shall, subject to the rights of any holders
of Permitted Encumbrances holding claims senior to CITBC, have the sole fight,
in the name of CITBC or any Company, to file claims under any insurance
policies, to receive, receipt and give acquittance for any payments that may be
payable thereunder, and to execute any and all endorsements, receipts, releases,
assignments, reassignments or other documents that may be necessary to effect
the collection, compromise or settlement of any claims under any such insurance
policies.
(b)(i) In the event of any loss or damage by fire or other casualty,
insurance proceeds relating to Inventory shall first reduce the Revolving Loan
and then the Term Loan;
ii) In the event any part of a Company's Real Estate or Equipment is
damaged by fire or other casualty and the insurance proceeds for such damage or
other casualty (the "Proceeds") is less than or equal to $100,000.00, CITBC
shall promptly apply such Proceeds to reduce the Revolving Loan;
iii) As long as an Event of Default has not occurred (which is not
waived), the Company suffering a casualty loss has sufficient business
interruption insurance to replace the lost profits of any of such Company's
facilities, and the Proceeds are in excess of $100,000.00, such Company may
elect (by delivering
-23-
24
written notice to CITBC) to replace, repair or restore such Real Estate or
Equipment to substantially the equivalent condition prior to such fire or other
casualty as set forth herein. If such Company does not, or cannot, elect to use
the Proceeds as set forth above, CITBC may, subject to the fights of any holders
of Permitted Encumbrances holding claims senior to CITBC, apply the Proceeds to
the payment of the Obligations in such manner and in such order as CITBC may
reasonably elect; and
iv) If the Company suffering a casualty loss elects to use the Proceeds
for the repair, replacement or restoration of any Real Estate or Equipment, and
there is then no Event of Default, i) proceeds of insurance on Equipment and
Real Estate in excess of $100,000.00 will be applied to the reduction of the
Revolving Loans and ii) CITBC may set up a reserve against Availability for an
amount equal to the proceeds referred to in clause i) hereof. The reserve will
be reduced dollar-for-dollar upon receipt of non-cancelable executed purchase
orders, delivery receipts or contracts for the replacement, repair or
restoration of Equipment or the Real Estate and disbursements in connection
therewith. Prior to the commencement of any restoration, repair or replacement
of Real Estate, such Company shall provide CITBC with a restoration plan and a
total budget certified by an independent third party experienced in construction
costing. If there are insufficient Proceeds to cover the cost of restoration as
so determined, such Company shall be responsible for the amount of any such
insufficiency, prior to the commencement of restoration and shall demonstrate
evidence of such before the reserve will be reduced. Completion of restoration
shall be evidenced by a final, unqualified certification of the design architect
employed, if any; an unconditional Certificate of Occupancy, if applicable; such
other certification as may be required by law; or if none of the above is
applicable, a written good faith determination of completion by such Company
(herein collectively the "Completion"). Upon Completion, any remaining reserve
against Availability as established hereunder will be automatically released.
6. Each Company agrees to pay, when due, all taxes, assessments, claims
and other charges (herein "taxes") lawfully levied or assessed upon any Company
or the Collateral and if such taxes remain unpaid after the date fixed for the
payment thereof unless such taxes are being diligently contested in good faith
by such Company by appropriate proceedings or if any lien shall be claimed
thereunder x) for taxes due the United States of America or y) which in CITBC's
opinion might create a valid obligation having priority over the rights granted
to CITBC herein, CITBC may, on such Company's behalf, pay such taxes, and the
amount thereof shall be an Obligation secured hereby and due to CITBC on demand.
7. Each Company: (a) agrees to comply with all material acts, rules,
regulations and orders of any legislative, administrative or judicial body or
official, which the failure to comply with would have a material and adverse
impact on the Collateral, or any material part thereof, or on the operation of
any Company's business, provided that a Company may contest any acts, rules,
regulations, orders and directions of such bodies or officials in any reasonable
manner which will not, in CITBC's reasonable opinion, materially and adversely
effect CITBC's rights or priority in the Collateral; (b) agrees to comply with
all environmental statutes, acts, rules, regulations or orders as presently
existing or as adopted or amended in the future, applicable to the ownership
and/or use of its real property and operation of its business, which the failure
to comply with would have a material and adverse impact on the Collateral, or
any material part thereof, or on the operation of the business of such Company.
Each Company hereby indemnifies CITBC and agrees to defend and hold CITBC
harmless from and against any and all loss, damage, claim, liability, injury or
expense which CITBC may sustain or incur (other than as a result of actions of
CITBC) in connection with:
-24-
25
any claim or expense asserted against CITBC as a result of any environmental
pollution, hazardous material or environmental clean-up of any Company's real
property; or any claim or expense which results from any Company's operations
(including, but not limited to, any Company's off-site disposal practices) and
each Company further agrees that this indemnification shall survive termination
of this Financing Agreement as well as the payment of all Obligations or amounts
payable hereunder; and (c) shall not be deemed to have breached any provision of
this paragraph 7 if (i) the failure to comply with the requirements of this
paragraph 7 resulted from good faith error or innocent omission, and (ii) a
Company promptly commences and diligently pursues a cure of such breach and such
cure is eventually, within a reasonable time based upon the circumstances and
the amount of work required, completed.
8. Until termination of the Financing Agreement and payment and
satisfaction of all Obligations due hereunder, each Company agrees that, unless
CITBC shall have otherwise consented in writing, ROA Quarries will, and if it
does not do so, then any Company will, furnish to CITBC, within ninety-five (95)
days after the end of each fiscal year of the Companies, an audited Consolidated
Balance Sheet and an audited Consolidating Balance Sheet as at the close of such
year, and statements of profit and loss, cash flow and reconciliation of surplus
of the Companies and all subsidiaries for such year, audited by independent
public accountants selected by ROA Quarries and satisfactory to CITBC; and
within thirty (30) days after the end of each month x) a Consolidated Balance
Sheet as at the end of such period and statements of profit and loss, cash flow
and surplus of the Companies and all subsidiaries for such period and y) a
financial covenant compliance report, in each instance, certified by an
authorized financial or accounting officer of ROA Quarries; and from time to
time, such further information regarding the business affairs and financial
condition of the Companies, or any one of them, as CITBC may reasonably request,
including without limitation annual cash flow projections in form satisfactory
to CITBC. Each financial statement required hereunder must be accompanied by an
officer's certificate, signed by the President, Vice President, Controller, or
Treasurer, pursuant to which any one such officer must certify to the best of
such officer's knowledge that: (i) the financial statement(s) fairly and
accurately represent(s) the Companies' financial condition at the end of the
particular accounting period, as well as the Companies' operating results during
such accounting period, subject to year-end audit adjustments; (ii) during the
particular accounting period: (x) there has been no Default or Event of Default
under this Financing Agreement, provided, however, that if any such officer has
knowledge that any such Default or Event of Default, has occurred during such
period, the existence of and a detailed description of same shall be set forth
in such officer's certificate; and (y) no Company has received any notice of
cancellation with respect to its property insurance policies; and (iii) the
exhibits attached to such financial statement(s) constitute detailed
calculations showing compliance with all financial covenants contained in this
Financing Agreement.
9. The Companies shall maintain, on an aggregate basis, at all times
during the periods below, a Net Worth of not less than:
Period Net Worth
------ ---------
a) For the quarter commencing July 1, 1994
and ending September 30, 1994 $3,000,000.00
-25-
26
b) For the period commencing October 1, 1994
and ending December 30, 1994 $3,000,000.00
c) As of December 31, 1994 $3,546,000.00
d) For the quarter commencing January 1, 1995
and ending March 31, 1995 $2,700,000.00
e) For the quarter commencing April 1, 1995
and ending June 30, 1995 $3,345,000.00
t) For the quarter commencing July 1, 1995
and ending September 30, 1995 $4,245,000.00
g) For the period commencing October 1, 1995
and ending December 30, 1995 $4,245,000.00
h) As of December 31, 1995 $4,757,000.00
i) For the quarter commencing January 1, 1996
and ending March 31, 1996 $4,000,000.00
j) For the quarter commencing April 1, 1996
and ending June 30, 1996 $4,550,000.00
k) For the quarter commencing July 1, 1996
and ending September 30, 1996 $5,450,000.00
1) For the period commencing October 1, 1996
and ending December 30, 1996 $5,450,000.00
m) As of December 31, 1996 $6,517,000.00
n) For the quarter commencing January 1, 1997
and ending March 31, 1997 $5,800,000.00
o) For the quarter commencing April 1, 1997
and ending June 30, 1997 $6,315,000.00
p) For the quarter commencing July 1, 1997
and ending September 30, 1997 $7,215,000.00
-26-
27
q) For the period commencing October 1, 1997 and ending December 30, 1997
$7,215,000.00
r) As of December 31, 1997 $8,087,000.00
s) For the quarter commencing January 1, 1998
and ending March 31, 1998 $7,300,000.00
t) For the quarter commencing April 1, 1998
and ending June 30, 1998 $7,885,000.00
u) For the quarter commencing July 1, 1998
and ending September 30, 1998 $8,785,000.00
v) For the period commencing October 1, 1998
and ending December 30, 1998 $8,735,000.00
w) As of December 31, 1998 $9,586,000.00
x) At all times on and after January 1, 1999 $9,000,000.00
10. Until termination of the Financing Agreement and payment and
satisfaction of all Obligations due hereunder, each Company agrees that, without
the prior written consent of CITBC, except as otherwise herein provided, the
Companies, or any one of them, will not:
A. Mortgage, assign, pledge, transfer or otherwise permit any lien, charge,
security interest, encumbrance or judgment, (whether as a result of a
purchase money or title retention transaction, or other security
interest, or otherwise) to exist on any of its assets or goods, whether
real, personal or mixed, whether now owned or hereafter acquired, except
for the Permitted Encumbrances;
B. Incur or create any Indebtedness other than the Permitted Indebtedness;
C. Borrow any money on the security of a Company's Collateral from sources
other than CITBC;
D. Sell, lease, assign, transfer or otherwise dispose of i) Collateral,
except as otherwise specifically permitted by this Financing Agreement,
or ii) either all or substantially all of a Company's assets which do not
constitute Collateral;
E. Merge, consolidate or otherwise alter or modify its corporate name,
principal place of business, structure, status or existence, or enter
into or engage in any operation or activity materially different from
that presently being conducted by the Company;
F. Assume, guarantee, endorse, or otherwise become liable upon the
obligations of any person, firm, entity or corporation, except by the
endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business;
G. Declare or pay any dividend of any kind on, or purchase, acquire, redeem
or retire, any of the capital stock or equity interest, of any class
whatsoever, whether now or hereafter outstanding provided, however, that
the Companies may i) declare and pay dividends on their capital stock to
enable
-27-
28
Xxxxxxx to pay the income taxes due as a result of the filing of a
unitary or consolidated tax return on which the Companies' income is
reflected and ii) redeem the capital stock owned by its shareholders,
other than Xxxx X. Xxxxxxx and Xxxxx X. Xxxxxxx provided x) no Event of
Default is then in existence or will have occurred after giving effect to
such redemptions and y) the aggregate amount of all such redemptions
under this clause ii does not exceed $200,000.00 in the aggregate in any
fiscal year;
H. Make any advance or loan to, or any investment in, any firm, entity,
person or corporation in excess of $100,000.00 in the aggregate in any
fiscal year other than obligations issued by, or guaranteed by, the
United States of America or any agency or department thereof; or
I. Permit ROA Canada to i) incur any debts, indebtedness or obligations
other than the Permitted Indebtedness or ii) mortgage, pledge, assign,
transfer, hypothecate or permit any lien to attach to any of its assets
other than the Permitted Encumbrances.
11. Without the prior written consent of CITBC, the Companies will not:
a) enter into any Operating Lease if after giving effect thereto the aggregate
obligations with respect to Operating Leases of the Companies during any fiscal
year would exceed $250,000.00 or b) contract for, purchase, make expenditures
for, lease pursuant to a Capital Lease or otherwise incur obligations with
respect to Capital Expenditures (whether subject to a security interest or
otherwise) during any fiscal year in the aggregate amount in excess of:
a) $600,000.00 for the fiscal year ending December 31, 1994;
b) $900,000.00 for the fiscal year ending December 31, 1995;
c) $900,000.00 for the fiscal year ending December 31, 1996;
d) $900,000.00 for the fiscal year ending December 31, 1997, and for each
fiscal year thereafter.
12. The Companies shall maintain, on an aggregate basis, at all times
during the particular periods below, Working Capital of not less than:
Period WORKING CAPITAL
------ ---------------
a) For the quarter commencing July 1, 1994
and ending September 30, 1994 $3,580,000.00
b) For the period commencing October 1, 1994
and ending December 30, 1994 $3,880,000.00
c) As of December 31, 1994 $4,600,000.00
d) For the quarter commencing January 1, 1995
and ending March 31, 1995 $3,600,000.00
e) For the quarter commencing April 1, 1995
and ending June 30, 1995 $3,600,000.00
-28-
29
f) For the quarter commencing July 1, 1995
and ending September 30, 1995 $3,700,000.00
g) For the period commencing October 1, 1995
and ending December 30, 1995 $4,000,000.00
h) As of December 31, 1995 $4,595,000.00
i) For the quarter commencing January 1, 1996
and ending March 31, 1996 $3,500,000.00
j) For the quarter commencing April 1, 1996
and ending June 30, 1996 $3,500,000.00
k) For the quarter commencing July 1, 1996
and ending September 30, 1996 $3,900,000.00
1) For the period commencing October 1, 1996
and ending December 30, 1996 $4,500,000.00
m) As of December 31, 1996 $5,100,000.00
n) For the quarter commencing January 1, 1997
and ending March 31, 1997 $4,000,000.00
o) For the quarter commencing April 1, 1997
and ending June 30, 1997 $4,000,000.00
p) For the quarter commencing July 1, 1997
and ending September 30, 1997 $5,000,000.00
q) For the period commencing October 1, 1997
and ending December 30, 1997 $5,000,000.00
r) As of December 31, 1997 $5,436,000.00
s) For the quarter commencing January 1, 1998
and ending March 31, 1998 $4,400,000.00
t) For the quarter commencing April 1, 1998
and ending June 30, 1998 $4,400,000.00
-29-
30
u) For the quarter commencing July 1, 1998
and ending September 30, 1998 $4,735,000.00
v) For the period commencing October 1, 1998
and ending December 30, 1998 $5,335,000.00
w) As of December 31, 1998 $5,856,000.00
x) At all times on and after January 1, 1999 $5,800,000.00
13. The Companies shall maintain, on an aggregate basis, at the end of
each fiscal year a Fixed Charge Coverage Ratio of at least:
FISCAL YEAR RATIO
----------- -----
For the fiscal year ending
December 31, 1994 .85 to 1
For the fiscal year ending
December 31, 1995 .92 to 1
For the fiscal year ending
December 31, 1996 and for each
fiscal year thereafter 1 to 1
14. Intentionally Omitted.
15. The Companies shall maintain, on an aggregate basis, at all times
during each of the following fiscal years a Leverage Ratio of not more than:
FISCAL YEAR RATIO
----------- -----
For the fiscal year ending
December 31, 1994 5.96 to 1
For the fiscal year ending
December 31, 1995 4.18 to 1
For the fiscal year ending
December 31, 1996 2.99 to 1
For the fiscal year ending
December 31, 1997 2.19 to 1
For the fiscal year ending
December 31, 1998 and for each 1.66 to 1
fiscal year thereafter.
-30-
31
16. ROA Quarries and/or Xxxxxxx shall maintain life insurance on: a) Xxxx X.
Xxxxxxx and b) Xxxxx X. Xxxxxxx, each in the amount of $2,000,000.00 and an
assignment to CITBC of all rights under the aforesaid life insurance policy as
additional collateral for Obligations.
17. Each Company agrees to advise CITBC in writing of: a) all expenditures
(actual or anticipated) in excess of $100,000.00 for x) environmental clean-up,
y) environmental compliance or z) environmental testing and the impact of said
expenses on the Working Capital; and b) any notices a Company receives from any
local, state or federal authority advising the Company of any environmental
liability (real or potential) stemming from the Company's operations, its
premises, its waste disposal practices, or waste disposal sites used by a
Company and to provide CITBC with copies of all such notices if so required.
18. Without the prior written consent of CITBC, each Company agrees that it
will not enter into any transaction, including, without limitation, any
purchase, sale, lease, loan or exchange of property with any subsidiary or
affiliate provided, however that a Company may sell to, or purchase Inventory
from, any other Company, ROA Canada, or ROA provided such transactions are x)
conducted on an arms length basis and y) on terms no less beneficial to the
Company than the Company would have obtained from an entity that was not
relating to the Company.
SECTION 8. INTEREST, FEES AND EXPENSES
1. Interest on the Revolving Loan shall be payable monthly as of the end of
each month and shall be an amount equal to eight and three-quarters percent (8
3/4%) per annum on the average of the net balances owing by the Companies to
CITBC in the Collective Loan Account at the close of each day during such month.
This rate of interest is based on the seven and three-quarters percent (7 3/4%)
per annum Chemical Bank Rate as of August 17, 1994. In the event of any change
in said Chemical Bank Rate, the rate hereunder shall change, as of the first of
the month following any change, so as to remain one percent (1%) above the
Chemical Bank Rate. The rate hereunder shall be calculated based on a 360-day
year. CITBC shall be entitled to charge the Collective Loan Account at the rate
provided for herein when due until all Obligations have been paid in full.
2. Interest on the Term Loan shall be payable monthly as of the end of each
month on the unpaid balance or on payment in full prior to maturity in an amount
equal to nine percent (9%) per annum. The rate of interest is based upon the
seven and three-quarters percent (7 3/4%) per annum Chemical Bank Rate as of
August 17, 1994. In the event of any change in said Chemical Bank Rate, the rate
hereunder shall change, as of the first of the month following any change, so as
to remain one and one-quarter percent (1 1/4%) above the Chemical Bank Rate. The
rate hereunder shall be calculated based on a 360 day year. CITBC shall be
entitled to charge the Collective Loan Account at the rate provided for herein
when due until all Obligations have been paid in full.
3. In consideration of the Letter of Credit Guaranty of CITBC, the Companies
shall pay CITBC the Letter of Credit Guaranty Fee which shall be an amount equal
to one and one-quarter percent (1 1/4%) per annum, payable monthly, on the face
amount of each Letter of Credit less the amount of any and all amounts
previously drawn under the Letter of Credit.
-31-
32
4. Any charges, fees, commissions, costs and expenses charged to CITBC for a
Company's account by any Issuing Bank in connection with or arising out of
Letters of Credit issued pursuant to this Financing Agreement or out of
transactions relating thereto will be charged to the Collective Loan Account in
full when charged to or paid by CITBC and when made by any such Issuing Bank
shall be conclusive on CITBC.
5. The Companies shall reimburse or pay CITBC, as the case may be, for: i)
all Out-of-Pocket Expenses of CITBC and b) any applicable Documentation Fee.
6. Upon the last Business Day of each month, commencing with August 31,
1994, the Companies shall pay CITBC the Line of Credit Fee.
7. To induce CITBC to enter into this Financing Agreement and to extend to
the Companies the Revolving Loan and the Term Loan, the Companies shall pay to
CITBC a Loan Facility Fee in the amount of $25,000.00 payable upon execution of
this Financing Agreement.
8. Upon the date of execution of this Financing Agreement and on the first
Business Day of each month thereafter, the Companies shall pay to CITBC the
Collateral Management Fee.
9. The Companies shall pay CITBC's standard charges for, and the fees and
expenses of, the CITBC personnel used by CITBC for reviewing the books and
records of any Company and for verifying, testing protecting, safeguarding,
preserving or disposing of all or any part of the Collateral provided, however,
that the foregoing shall not be payable until the occurrence of an Event of
Default if the Companies are paying a Collateral Management Fee.
10. Each Company hereby authorizes CITBC to charge the Collective Loan
Account with CITBC with the amount of all payments due hereunder as such
payments become due. Each Company confirms that any charges which CITBC may so
make to the Collective Loan Account as herein provided will be made as an
accommodation to the Company and solely at CITBC's discretion.
SECTION 9. POWERS
Each Company hereby constitutes CITBC or any person or agent CITBC may
designate as its attorney-in-fact, at each Company's cost and expense, to
exercise all of the following powers, which being coupled with an interest,
shall be irrevocable until all of the Obligations to CITBC have been paid in
full:
(a) To receive, take, endorse, sign, assign and deliver, all in the name of
CITBC or any Company, any and all checks, notes, drafts, and other documents or
instruments relating to the Collateral;
(b) To receive, open and dispose of all mail addressed to any Company and to
notify postal authorities to change the address for delivery thereof to such
address as CITBC may designate;
(c) To request from customers indebted on Accounts at any time, in the name
of CITBC or any Company or that of CITBC's designee, information concerning the
amounts owing on the Accounts;
-32-
33
(d) To transmit to customers indebted on Accounts notice of CITBC's interest
therein and to notify customers indebted on Accounts to make payment directly to
CITBC; and
(e) To take or bring, in the name of CITBC or any Company, all steps,
actions, suits or proceedings deemed by CITBC necessary or desirable to enforce
or effect collection of the Accounts.
Notwithstanding anything hereinabove contained to the contrary, the powers
set forth in (b), (d) and (e) above may only be exercised after the occurrence
of an Event of Default and until such time as such Event of Default is waived.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
1. Notwithstanding anything hereinabove to the contrary, CITBC may terminate
this Financing Agreement immediately upon the occurrence of any of the following
(herein "Events of Default"):
a) cessation of the business of a Company or the calling of a meeting of the
creditors of any Company for purposes of compromising the debts and
obligations of any Company;
b) the failure of any Company to generally meet debts as they mature;
c) the commencement by any Company of any bankruptcy, insolvency,
arrangement, reorganization, receivership or similar proceedings under
any federal or state law;
d) the commencement against any Company of any bankruptcy, insolvency,
arrangement, reorganization, receivership, or similar proceedings under
any federal or state law, provided, however, that such Default shall not
be deemed an Event of Default if such is dismissed within sixty (60) days
from the date of commencement;
e) material breach by any Company of any warranty, representation or
covenant contained herein (other than those otherwise referred to in this
paragraph 1) or in any other written agreement between any Company or
CITBC, provided that such Default by any Company of any of the
warranties, representations or covenants referred in this clause shall
not be deemed to be an Event of Default unless and until such Default
shall remain unremedied or uncured to CITBC's satisfaction for a period
of thirty (30) days from the date of such breach;
f) breach by any Company of any warranty, representation or covenant of
Section 3, Paragraphs 3 (other than the third sentence of paragraph 3)
and 4; Section 6, Paragraphs 3 and 4 (other than the first sentence of
paragraph 4); Section 7, Paragraphs 1,5,6, and 9 through 16;
g) failure of any Company to pay any of the Obligations within five (5)
business days of the due date thereof, provided that nothing contained
herein shall prohibit CITBC from charging such amounts to the Collective
Loan Account on the due date thereof;
h) the Companies, on a consolidated basis, sustain a loss in any fiscal
year, as determined in accordance with GAAP in effect as of the date of
this Financing Agreement, in excess of $500,000.00;
i) any Company shall i) engage in any "prohibited transaction" as defined in
ERISA, ii) have any "accumulated funding deficiency" as defined in ERISA,
iii) have any Reportable Event as defined in ERISA, iv) terminate any
underfunded Plan, as defined in ERISA or v) be engaged in any proceeding
in which the Pension Benefit Guaranty Corporation shall seek appointment,
or is appointed, as trustee or administrator of any Plan, as defined in
ERISA, and with respect to this sub-paragraph i such event
-33-
34
or condition x) remains uncured for a period of ninety (90) days from
date of occurrence and y) could, in the reasonable opinion of CITBC,
subject such Company to any tax, penalty or other liability material to
the business, operations or financial condition of the Company;
j) the occurrence of any Event of Default under the ROA Financing Agreement;
k) Xxxx X. Xxxxxxx ceases for any reason whatsoever (other than as a result
of death) to be actively engaged in the management of the Companies or
the stock of i) Xxxxxxx presently held by Xxxx X. Xxxxxxx and/or members
of his family; ii) ROA Quarries or Royalty Granite presently held by
Xxxxxxx, is transferred other than to i) Xxxx X. Xxxxxxx, or ii) Xxxxx X.
Xxxxxxx or iii) members of their families or iv) trusts for the benefit
of their families.
i) the occurrence of any default or event of default which is not cured
within any applicable grace period or waived under any instrument or
agreement evidencing any other Indebtedness having a then principal
balance in excess of $250,000.00 and which default or event of default
gives the holder of such Indebtedness a then right to accelerate such
Indebtedness.
2. Upon the occurrence of a Default and/or an Event of Default, at the
option of CITBC, all loans and advances provided for in paragraph 1 of Section 3
of this Financing Agreement shall be thereafter in CITBC's sole discretion and
the obligation of CITBC to make revolving loans and/or open Letters of Credit
shall cease unless such Default is cured to CITBC's satisfaction or such Event
of Default is waived, and at the option of CITBC upon the occurrence of an Event
of Default: i) all Obligations shall become immediately due and payable; ii)
CITBC may charge the Default Rate of Interest on all then outstanding or
thereafter incurred Obligations in lieu of the interest provided for in
paragraphs one and two of Section 8 of this Financing Agreement provided a)
CITBC has given the Companies written notice of the Event of Default, provided,
however, that no notice is required if the Event of Default is the Event of
Default listed in paragraph l(c) or l(d) of this Section 10 and b) the Companies
have failed to cure the Event of Default within ten (10) days after x) CITBC
deposited such notice in the United States mail or y) the occurrence of the
Event of Default listed in paragraph l(c) or l(d) of this Section 10; and iii)
CITBC may immediately terminate this Financing Agreement upon notice to ROA
Quarries to and for the benefit of the Companies, provided, however, that no
notice of termination is required if the Event of Default is the Event of
Default listed in paragraph 1(c) or l(d) of this Section 10. The exercise of any
option is not exclusive of any other option which may be exercised at any time
by CITBC. A Default Rate of Interest shall cease as soon as CITBC waives the
Event of Default giving rise to the Default Rate of Interest. In the event the
Default Rate of Interest is charged as a result of a breach or violation of
paragraphs 9 and 12 through 15 of Section 7 of this Financing Agreement, the
Default Rate of Interest shall cease as soon as the Companies demonstrate on the
next succeeding test date that they have not breached or violated the covenants
applicable for said test date and that there is not another outstanding Event of
Default.
3. Immediately upon the occurrence of any Event of Default, CITBC may to the
extent permitted by law: (a) remove from any premises where same may be located
any and all documents, instruments, files and records, and any receptacles or
cabinets containing same, relating to the Accounts, or CITBC may use, at any
Company's expense, such of a Company's personnel, supplies or space at any
Company's places of business or otherwise, as may be necessary to properly
administer and control the Accounts or the handling of collections and
realizations thereon; (b) bring suit, in the name of any Company or CITBC, and
generally shall have all other fights respecting said Accounts, including,
without limitation, the right to: accelerate or
-34-
35
extend the time of payment, settle, compromise, release in whole or in part, any
amounts owing on any Accounts and issue credits in the name of any Company or
CITBC; (c) sell, assign and deliver the Collateral and any returned, reclaimed
or repossessed merchandise, with or without advertisement, at public or private
sale, for cash, on credit or otherwise, at CITBC's sole option and discretion,
and CITBC may bid or become a purchaser at any such sale, free from any right of
redemption, which right is hereby expressly waived by each Company; (d)
foreclose the security interests created herein by any available judicial
procedure, or to take possession of any or all of the Inventory and Equipment
without judicial process, and to enter any premises where any Inventory and
Equipment may be located for the purpose of taking possession of or removing the
same; and (e) exercise any other fights and remedies provided in law, in equity,
by contract or otherwise. CITBC shall have the right, without notice or
advertisement, to sell, lease, or otherwise dispose of all or any part of the
Collateral whether in its then condition or after further preparation or
processing, in the name of any Company or CITBC, or in the name of such other
party as CITBC may designate, either at public or private sale or at any
broker's board, in lots or in bulk, for cash or for credit, with or without
warranties or representations, and upon such other terms and conditions as CITBC
in its sole discretion may deem advisable, and CITBC shall have the right to
purchase at any such sale. If any Inventory and Equipment shall require
rebuilding, repairing, maintenance or preparation, CITBC shall have the right,
at its option, to do such of the aforesaid as is necessary, for the purpose of
putting the Inventory and Equipment in such saleable form as CITBC shall deem
appropriate. Each Company agrees, at the request of CITBC, to assemble the
Inventory and Equipment and to make it available to CITBC at the premises of a
Company where then located and to make available to CITBC the premises and
facilities of any Company for the purpose of CITBC's taking possession of,
removing or putting the Inventory and Equipment in saleable form. However, if
notice of intended disposition of any Collateral is required by law, it is
agreed that ten (10) days notice shall constitute reasonable notification and
full compliance with the law. The net cash proceeds resulting from CITBC's
exercise of any of the foregoing rights (after deducting all reasonable charges,
costs and expenses, including reasonable attorneys' fees) shall be applied by
CITBC to the payment of the Obligations, whether due or to become due, in such
order as CITBC may elect, and each Company shall remain liable to CITBC for any
deficiencies, and CITBC in turn agrees to remit to ROA Quarries to and for the
benefit of the Companies or their successors or assigns, any surplus resulting
therefrom. The enumeration of the foregoing rights is not intended to be
exhaustive and the exercise of any right shall not preclude the exercise of any
other rights, all of which shall be cumulative. The mortgage, deed of trust or
assignment on the Real Estate shall govern the fights and remedies of CITBC
thereto.
SECTION 11. TERMINATION
Except as otherwise permitted herein, CITBC may terminate this Financing
Agreement and the Line of Credit only as of an Anniversary Date and then only by
giving ROA Quarries at least sixty (60) days prior written notice of
termination. Notwithstanding the foregoing CITBC may terminate the Financing
Agreement immediately upon the occurrence of an Event of Default, provided,
however, that if the Event of Default is the event listed in paragraph l(c) or
l(d) of Section 10 of this Financing Agreement, CITBC may regard the Financing
Agreement as terminated and notice to that effect is not required. This
Financing Agreement, unless terminated as herein provided, shall automatically
continue from Anniversary Date to Anniversary Date. ROA Quarries, on behalf of
the Companies, may terminate this Financing Agreement and the Line of Credit at
any time upon sixty (60) days' prior written notice to CITBC, provided, however,
that
-35-
36
if such termination is prior to the first Anniversary Date, the Companies pay to
CITBC, immediately on demand, an Early Termination Fee and the Prepayment
Premium, if applicable. In the event CITBC terminates this Financing Agreement
for any reason whatsoever, no Early Termination Fee and/or Prepayment Premium
shall be due and payable. All Obligations shall become due and payable as of any
termination hereunder or under Section 10 hereof and, pending a final
accounting, CITBC may withhold any balances in the Collective Loan Account
(unless supplied with an indemnity satisfactory to CITBC) to cover all of the
Obligations, whether absolute or contingent. All of CITBC's rights, liens and
security interests shall continue after any termination until all Obligations
have been paid and satisfied in full.
SECTION 12. MISCELLANEOUS
1. Each Company hereby waives diligence, demand, presentment and protest and
any notices thereof as well as notice of nonpayment. No delay or omission of
CITBC or the Companies to exercise any right or remedy hereunder, whether before
or after the happening of any Event of Default, shall impair any such right or
shall operate as a waiver thereof or as a waiver of any such Event of Default.
No single or partial exercise by CITBC or the Companies of any right or remedy
precludes any other or further exercise thereof, or precludes any other right or
remedy.
2. This Financing Agreement and the documents executed and delivered in
connection therewith constitute the entire agreement between the Companies and
CITBC; supersede and terminate any prior agreements, including, but not limited
to, the Existing Financing; can be changed only by a writing signed by the
Companies and CITBC; and shall bind and benefit the Companies and CITBC and
their respective successors and assigns.
3. In no event shall any Company, upon demand by CITBC for payment of any
indebtedness relating hereto, by acceleration of the maturity thereof, or
otherwise, be obligated to pay interest and fees in excess of the amount
permitted by law. Regardless of any provision herein or in any agreement made in
connection herewith, CITBC shall never be entitled to receive, charge or apply,
as interest on any indebtedness relating hereto, any amount in excess of the
maximum amount of interest permissible under applicable law. If CITBC ever
receives, collects or applies any such excess, it shall be deemed a partial
repayment of principal and treated as such; and if principal is paid in full,
any remaining excess shall be refunded to ROA Quarries to and for the benefit of
the Companies. This paragraph shall control every other provision hereof and of
any other agreement made in connection herewith.
4. If any provision hereof or of any other agreement made in connection
herewith is held to be illegal or unenforceable, such provision shall be fully
severable, and the remaining provisions of the applicable agreement shall remain
in full force and effect and shall not be affected by such provision's
severance. Furthermore, in lieu of any such provision, there shall be added
automatically as a part of the applicable agreement a legal and enforceable
provision as similar in terms to the severed provision as may be possible.
5. THE COMPANIES AND CITBC ACKNOWLEDGE THAT THE FINANCIAL COVENANTS ARE
BASED ON GAAP AS IN EFFECT ON THE DATE OF THIS FINANCING AGREEMENT. FURTHERMORE,
WITH RESPECT TO THE FINANCIAL COVENANTS, FINANCIAL STATEMENTS AND COVENANT
COMPLIANCE TESTING, NOTWITHSTANDING ANY CHANGES IN GAAP, ARE TO BE PREPARED,
-36-
37
OR TESTED, AS THE CASE MAY BE, IN ACCORDANCE WITH GAAP AS IN EFFECT ON THE DATE
OF THIS FINANCING AGREEMENT. SHOULD SUBSEQUENT CHANGES IN GAAP IMPOSE AN UNDUE
BURDEN ON THE COMPANIES TO REPORT AND/OR TEST IN ACCORDANCE WITH GAAP AS IN
EFFECT ON THE DATE HEREOF, THEN EACH OF CITBC AND THE COMPANIES AGREE THAT THEY
WILL REASONABLY, DILIGENTLY AND IN GOOD FAITH ATTEMPT TO RENEGOTIATE THE
AFORESAID COVENANTS, PROVIDED, HOWEVER, THAT UNTIL SUCH TIME AS THE COVENANTS
ARE SO AMENDED, THE COMPANIES WILL REPORT AND/OR TEST, AS THE CASE MAY BE, IN
ACCORDANCE WITH GAAP AS IN EFFECT ON THE DATE HEREOF.
6. EACH COMPANY AND CITBC EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING ARISING OUT OF THIS FINANCING AGREEMENT. EACH COMPANY
HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO SERVICE OF
PROCESS BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED.
7. Except as otherwise herein provided, any notice or other communication
required hereunder shall be in writing, and shall be deemed to have been validly
served, given or delivered when hand delivered or sent by facsimile, or three
days after deposit in the United State mails, with proper first class postage
prepaid and addressed to the party to be notified as follows:
(A) if to CITBC, at:
The CIT Group/Business Credit, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No. (000) 000-0000
Attn: Regional Manager
(B) if to any Company at:
Rock of Ages Quarries, Inc.
care of Xxxxxxx Granite Company, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: President
or to such other address as any party may designate for itself by like notice.
8. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS FINANCING AGREEMENT
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
-37-
38
IN WITNESS WHEREOF, the parties hereto have caused this Financing Agreement
to be executed, agreed to, accepted and delivered in New York, New York by their
proper and duly authorized officers as of the date set forth above.
THE CIT GROUP/BUSINESS CREDIT, INC.
By /s/ Xxxxx Xxxxxxxxx
---------------------------
Vice President
ROCK OF AGES QUARRIES. INC.
By /s/ Xxxx X. Xxxxxxx /s/ Xxxx X. Xxxxxx (Seal)
--------------------------- -------------------------------
Title: President Assistant Secretary
XXXXXXX GRANITE COMPANY, INC.
By /s/ Xxxx X. Xxxxxxx /s/ Xxxx X. Xxxxxx (Seal)
--------------------------- -------------------------------
Title: President Assistant Secretary
ROYALTY GRANITE COMPANY
By /s/ Xxxx X. Xxxxxxx /s/ Xxxx X. Xxxxxx (Seal)
--------------------------- -------------------------------
Title: President Assistant Secretary
-38-
