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Exhibit (10)(r)
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT ("Agreement"), dated as of November
22, 1996, is between COLD METAL PRODUCTS, INC., a New York corporation (the
"Debtor"), and THE CIT GROUP/EQUIPMENT FINANCING, INC., a New York corporation
(the "Lender").
BACKGROUND
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The Lender and the Debtor desire to set forth the terms and conditions
under which the Lender will make available to the Debtor certain credit
facilities to be used for the purposes specified in this Agreement. Accordingly,
the Lender and the Debtor, each intending to be legally bound hereby, agree as
follows:
ARTICLE I
DEFINITIONS
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Terms used herein without definition that are defined in the Uniform
Commercial Code shall have the meanings ascribed to them therein, unless the
context requires otherwise. The following terms shall have the following
meanings in this Agreement:
"Affiliate" shall mean any Subsidiary of the Debtor and any Person or
entity that, now or hereafter, directly or indirectly through one or more
intermediaries, controls, is controlled by or is under common ownership or
control with the Debtor. For purposes of this definition, the terms "control,"
"controls" and "controlled" shall refer to the power to determine the management
or policies of a Person, whether resulting from an official position or capacity
with such Person, direct or indirect beneficial ownership of at least twenty
percent (20%) of the voting securities or other equity interests of such Person,
or otherwise.
"Agreement" shall mean this agreement, together with all exhibits,
amendments, restatements, modifications, riders and supplements hereto as may be
in effect from time to time, as from time to time amended.
"Applicable Law" shall mean all applicable provisions of (i)
constitutions, statutes, rules, regulations and orders of governmental
authorities of any kind having jurisdiction over the Lender or the Debtor, (ii)
authorizations, consents, approvals, and licenses of such governmental
authorities, (iii) judgments, and (iv) common law and equity.
"Business Day" shall mean any day other than a Saturday, Sunday or
legal holiday under the laws of the State of New York.
"Capital Lease" shall mean any lease of property which, in accordance
with GAAP, should be capitalized on the lessee's balance sheet.
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"Capital Lease Obligation" shall mean the amount of the liability
which, according to GAAP, should be capitalized or disclosed with respect to a
Capital Lease.
"Cash Flow Coverage Ratio" shall mean, for any period, the ratio of (i)
the sum of (A) Net Income (or Net Loss) for such period, PLUS (B) depreciation
and amortization expense for such period, LESS (C) dividends paid during such
period, TO (ii) the current portion of scheduled long term debt principal
payments and Capital Lease Obligations, excluding any short term revolving
credit debt due within one year, all as determined in accordance with GAAP.
"Change of Control" shall mean (a) the occurrence of any event (whether
in one or more transactions) which result in a transfer of Control of Debtor to
a Person other than Aarque Capital Corporation or (b) any merger or
consolidation of or with Debtor or sale of all or substantially all of the
property or assets of Debtor. For purposes of this definition, "Control of
Debtor" shall mean the power, direct or indirect (x) to vote 35% or more of the
securities having ordinary voting power for the election of directors of Debtor
or (y) to direct or cause the direction of the management and policies of Debtor
by contract or otherwise.
"Closing" shall mean the execution and delivery to the Lender of all of
the documents and instruments required by the terms of this Agreement and the
closing of the transactions contemplated by this Agreement.
"Closing Date" shall mean the date on which the Closing takes place.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall mean the following property, whether now owned or
hereafter acquired:
(a) the Equipment;
(b) all general intangibles, contracts and contract rights
related to the Equipment, which term shall have the meaning given to it in the
Uniform Commercial Code and shall additionally include but not be limited to all
licenses related to the Equipment;
(c) all leases, rental agreements, contracts and contract
rights relating to the Equipment between the Debtor (whether by origination or
derivation) and any and all persons or parties, and all rentals, purchase option
amounts, and other sums due thereunder;
(d) all other property of the Debtor relating to the
Equipment, including without limitation, securities, instruments, chattel paper
and documents, which at any time the Lender shall have or have the right to have
in its possession, or which is in transit to it;
(e) the Real Property;
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(f) all books and records evidencing or relating to the
foregoing of every kind and description;
(g) all additions, replacements, attachments, accretions,
accessions, components and substitutions to or for any items listed in
subparagraphs (a) through (e) above; and
(h) all proceeds of the Collateral, which term shall have the
meaning given to it in the Uniform Commercial Code and shall additionally
include but not be limited to, whatever is received upon the use (outside of the
ordinary course of business), lease, sale, exchange, collection or other
utilization (outside of the ordinary course of business) or any disposition of
any of the Collateral described in subparagraphs (a) through (g) above, whether
cash or noncash, and including without limitation, rental or lease payments,
chattel paper, instruments, documents, contract rights, general intangibles,
equipment, and insurance proceeds; and all such proceeds of the foregoing.
"Commitment" shall mean the Lender's obligation to make the Term Loan
to the Debtor in the maximum amount of $21,800,000.
"Covenant Compliance Certificate" shall mean a certificate in the form
of EXHIBIT A attached hereto.
"Debtor" shall have the meaning specified in the initial paragraph of
this Agreement, together with its successors and assigns.
"Encumbrance" shall mean, as to any Person, any mortgage, lien, pledge,
adverse claim, charge, security interest or other encumbrance in or on, or any
interest or title of any vendor, lessor, lender to, or other secured party of
the Person under any conditional sale or other title retention agreement or
capital lease with respect to, any property or asset of the Person.
"Environmental Laws" shall mean the Federal Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Sections 9601, ET SEQ., the
Federal Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901, ET
SEQ., the Hazardous Materials Transportation Act, 49 U.S.C. 1801, ET SEQ., and
all other federal, state (including, without limitation, the State of Ohio) and
local environmental or health laws applicable to the Debtor or its business,
operations or assets now or hereafter enacted, and all rules, regulations,
orders and publications adopted or promulgated pursuant thereto from time to
time.
"Equipment" shall mean all of the Debtor's now existing and hereafter
acquired machinery, equipment tools, motor vehicles, and all accessories, parts
and equipment now or hereafter attached thereto or used in connection therewith,
and all other tangible personal property (except inventory, raw materials, or
supplies) located at the Debtor's Ottawa Plant (as defined herein), together
with all now existing and hereafter acquired land, buildings, improvements and
fixtures located at the Ottawa Plant.
"ERISA" shall mean the federal Employee Retirement Income Security Act
of 1974, as amended.
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"Event of Default" shall have the meaning set forth in Article VIII of
this Agreement.
"Financial Statements" shall have the meaning set forth in Section
4.4(a) of this Agreement.
"GAAP" shall mean generally accepted accounting principles, as in
effect on May 16, 1996, and consistently applied.
"Hazardous Materials" shall mean all materials of any kind which are
flammable, explosive, toxic, radioactive or otherwise hazardous to animal or
plant life or the environment, including, without limitation, "hazardous
wastes," "hazardous substances" and "contaminants," as such terms are defined by
Environmental Laws.
"Indebtedness" shall mean any obligation for borrowed money, including,
without limitation:
(a) any obligation owed for all or any part of the purchase
price of property or other assets or for the cost of property or other assets
constructed or of improvements thereto, other than accounts payable included in
current liabilities and incurred in respect of property purchased in the
ordinary course of business;
(b) any Capital Lease Obligation; and
(c) any reimbursement obligations and other obligations under
any letter of credit, currency swap agreement, interest rate swap, cap, collar
or floor agreement or other interest rate management devise, or any forward sale
or purchase agreement for foreign currencies.
"Installment Date" shall have the meaning given such term in Section
2.1(a).
"Judgment" shall have the meaning set forth in Section 8.6 of this
Agreement.
"Late Charge Rate" shall mean the rate of interest per annum equal to
three percent (3.0%) over the highest interest rate payable hereunder, but not
to exceed the highest rate permitted by applicable law.
"Lender" shall have the meaning specified in the initial paragraph of
this Agreement, together with its successors and assigns.
"Liabilities" shall mean, at any time, all liabilities which, in
accordance with GAAP, shall be classified as liabilities of the Debtor.
"Loan Documents" shall mean this Agreement, the Note, the Mortgage, and
all agreements, amendments, certificates, financing statements, schedules,
annexes, reports, notices, and exhibits now or hereafter executed or delivered
in connection with any of the foregoing, as may be in effect from time to time.
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"Loan" shall mean the Term Loan.
"Mortgage" shall mean that certain mortgage, dated the same day as this
Agreement, in form and substance satisfactory to the Lender, by which the Debtor
shall grant to the Lender a first priority mortgage lien on real property
located at Ottawa, Ohio, together with all amendments, modifications, exhibits
and schedules thereto as may be in effect from time to time.
"Net Income" shall mean, for any period, the net income (after the
deduction of federal and state income taxes) of the Debtor for such period,
determined in accordance with GAAP.
"Net Loss" shall mean, for any period, the net loss of the Debtor for
such period, determined in accordance with GAAP, after the provision for federal
and state income taxes.
"Note" shall mean the Term Loan Note and all replacements, amendments,
restatements, extensions and renewals thereof.
"Obligations" shall mean the obligations of the Debtor:
(a) To pay the principal, interest, commitment fees and any
other liabilities of the Debtor to the Lender under this Agreement, the Note and
the other Loan Documents in accordance with the terms thereof;
(b) To satisfy all of the other direct or indirect liabilities
of the Debtor to the Lender, whether hereunder or otherwise, whether now
existing or hereafter incurred, whether or not evidenced by any note or other
instrument, matured or unmatured, direct, absolute or contingent, joint or
several, including any extensions, modifications, renewals thereof and
substitutions therefor;
(c) To repay the Lender all amounts advanced by the Lender
hereunder or otherwise on behalf of the Debtor, including, but without
limitation, advances for principal or interest payments to prior secured
parties, mortgagors or lienors, or for taxes, levies, insurance, rent, wages,
repairs to or maintenance or storage of any Collateral; and
(d) To reimburse the Lender, on demand, for all of the
Lender's expenses and costs, including the reasonable fees and expenses of its
counsel (up to a maximum of $20,000), in connection with the negotiation,
preparation, administration, amendment, modification, or enforcement of this
Agreement and the documents required hereunder, including all amounts payable
under Section 10.3 hereof.
"Ottawa Plant" shall have the meaning given such term in Section 2.1(a)
hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
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"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, joint
venture, court or governmental or political subdivision or agency thereof.
"Primary Credit Facility" shall mean the Second Amended and Restated
Credit and Security Agreement between the Bank of New York and Cold Metal
Products, Inc., dated as of August 1, 1994, as amended, restated or modified
from time to time, or any one or more facilities with any one or more other
financial institutions which may in the future exist in full or partial
replacement thereof.
"Primary Lender" shall mean the Bank of New York, its successors and
assigns, or any other lender or lenders under the Primary Credit Facility.
"Primary Credit Facility Liens" shall mean the liens and security
interest heretofore or hereafter granted by the Debtor to the Primary Lender as
security for advances and other financial accommodations under the Primary
Credit Facility, provided, however, that the Primary Credit Facility Liens shall
not include the Collateral.
"Prohibited Transaction" shall mean any transaction in which: (i) the
Debtor enters into any transaction of merger or consolidation where (x) it shall
not be the surviving corporation, or (y) if it is the surviving corporation,
after giving effect to such merger or consolidation, its tangible net worth,
determined in accordance with GAAP, does not equal or exceed that which existed
prior to such merger or consolidation; or (ii) the Debtor sells, transfers or
otherwise disposes of all or any substantial part of its assets; (iii) any
Person, or group of Persons acting together, becomes or agrees to become the
beneficial owner (directly or indirectly) of 25% or more of the Debtor's shares
of voting stock (excluding current shareholders as of the date of this Agreement
owning 25% or more of the Debtor's shares of voting stock), or (iv) any Person,
or group of Persons owning 25% or more of the Debtor's voting stock as of the
date of this Agreement ceases to own at least 25% of the Debtor's voting stock
at any time.
"Real Property" shall mean all of the Borrower's right, title and
interest in and to the Real Estate (as such term is defined in the Mortgage).
"Regulatory Change" means (a) the enactment or effectuation after the
date of this Agreement of any new, or change in any existing, Applicable Law,
(b) the adoption after such date of any new, or the adoption or other
effectuation after such date of any change in any existing, interpretation,
directive or request (whether or not having the force of law), or (c) any change
after such date in the administration or enforcement of any Applicable Law to
which the Lender is subject. As used in this definition, the "effectuation" of a
change shall include, without limitation, that consisting of or resulting from a
determination of a court or regulatory authority.
"Security Agreement Questionnaire" shall mean that certain Security
Agreement Questionnaire, dated October 8, 1996, in the form of SCHEDULE 3.1,
executed by the Debtor.
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"Severable Additions" shall mean any Equipment acquired after the date
hereof which does not constitute accessories, parts, replacements,
substitutions, attachment, additions to or otherwise constitute an integral part
of the Equipment identified on Schedule 1 attached hereto.
"Stockholders' Equity" shall mean, at any time, stockholders' equity as
determined in accordance with GAAP.
"Subsidiary" shall mean, as to any designated corporation, any
corporation, the outstanding shares of which having sufficient voting power (not
depending on the happening of a contingency) to elect at least a majority of the
members of its board of directors, are at the time owned by the designated
corporation.
"Tangible Net Worth" shall mean, at any time, the aggregate
Stockholders' Equity, less all intangible assets of the Debtor (including,
without limitation, organization costs, securities issuance costs, unamortized
debt discount and expense, goodwill, excess of purchase costs over net assets
acquired, patents, trademarks, trade names, copyrights, trade secrets, knowhow,
licenses, franchises, capitalized research and development expenses, amounts
owing from officers and/or Affiliates and any amount reflected as treasury
stock), plus foreign exchange losses or minus foreign exchange gains, as
applicable.
"Tax" means any federal, state or foreign tax, assessment or other
governmental levy or duty or other charge (including any withholding tax) upon a
person or entity or upon its assets, revenues, income or profits, other than
income and franchise taxes imposed upon the Lenders by the jurisdictions (or any
political subdivision thereof) in which the Lender or any office of the Lender
is located.
"Term Loan" shall have the meaning given such term in Section 2.1(a)
hereof.
"Term Loan Note" shall have the meaning given such term in Section
2.1(c) hereof.
"Treasury" or "Treasuries" shall mean a United States fixed rate
security (i.e., a Treasury bond, note or xxxx, but excluding any security (a)
which can be surrendered at the option of the holder at face value in payment of
any estate tax, (b) which provides tax benefits to the holder, other than
withholding tax benefits to nonresident aliens, or (c) which was issued at a
discount) maturing in the same month and year as the Loan for which any interest
rate calculation is being made based upon the Treasury Rate.
"Treasury Rate" shall mean the rate per annum, as reported on page 5
("U.S. Treasury and Money Markets") of the information ordinarily provided by
Telerate Systems Incorporated, equal to the yield to maturity for the Treasury
having a remaining term to maturity closest to six (6) years as at the close of
the third Business Day prior to the Closing Date.
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"Uniform Commercial Code" shall mean the Uniform Commercial Code, as in
effect from time to time in any applicable jurisdiction.
ARTICLE II
CREDIT ACCOMMODATIONS
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2.1 TERM LOAN.
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(a) GENERALLY. The Lender shall make available to the Debtor
on the Closing Date a term loan in an amount equal to Twenty-One Million Eight
Hundred Thousand Dollars ($21,800,000) (the "Term Loan"), to be used by the
Borrower to purchase new and/or refurbished equipment for use at its Ottawa,
Ohio facility (the "Ottawa Plant"), to retire short term debt associated with
the expansion of the Ottawa Plant, to pay vendors, suppliers, subcontractors, or
to reimburse the Borrower for expenditures made in connection with the expansion
of the Ottawa Plant. The Debtor shall repay the outstanding principal of the
Term Loan together with all interest accrued thereon at the rate set forth in
Section 2.1(b) below, in thirty-three (33) equal, consecutive, quarterly
installments of principal and interest in arrears on the last Business Day of
each fiscal quarter, commencing March 31, 1997, and a final thirty-fourth (34th)
installment, consisting of all remaining principal together with all accrued but
unpaid interest thereon, due and payable on September 30, 2005. Each date on
which an installment is due under this Section 2.1(a) is referred to herein as
an "Installment Date."
(b) INTEREST. Interest shall accrue on the outstanding
principal during the entire term of the Term Loan at a fixed rate equal to the
Treasury Rate plus two hundred and sixty (260) basis points.
(c) TERM LOAN NOTE. The obligations of the Debtor to repay the
aggregate outstanding principal under the Term Loan made by the Lender and to
pay accrued interest thereon shall be evidenced by a promissory note payable to
the Lender, in form and substance satisfactory to the Lender, to be executed and
delivered by the Debtor to the Lender concurrently with the execution and
delivery of this Agreement (the "Term Loan Note").
2.2 PAYMENTS AND COMPUTATIONS. All amounts payable by the Debtor to the
Lender under this Agreement and the Note shall be paid directly to the Lender,
in immediately available funds, at the address of the Lender set forth in
Section 10.2 hereof or at such other address of which the Lender shall give
notice to the Debtor pursuant to Section 10.2 hereof. All computations of
interest hereunder shall be made by the Lender on the basis of a year of 360
days for the actual number of days elapsed. All payments under the Note shall be
applied first to the payment of interest due and payable thereunder and then to
the reduction of the outstanding principal balance thereof.
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2.3 PREPAYMENT.
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(a) For the period from the Closing Date to the third
anniversary of the Closing Date, the Debtor shall not be permitted to make any
prepayment of any amounts of principal of the Term Loan.
(b) After the third anniversary of the Closing Date, the
Debtor may, on any Installment Date, prepay the outstanding principal balance of
the Term Loan, in full and not in part, at the greater of: (i) the outstanding
principal amount of the Term Loan together with all accrued interest thereon; or
(ii) the present value of the remaining interest and principal payments,
discounted at a rate equal to the current yield to maturity for Treasuries with
a term to maturity closest to that of the remaining average life of the Term
Loan plus two percent (2.0%); PLUS any other amounts then due and owing under
the Loan Documents. Partial prepayments shall not be permitted.
2.4 REQUIREMENTS OF LAW. In the event that after the date hereof, any
change in any law, regulation or treaty or in the interpretation or application
thereof or compliance by the Lender with any request or directive (whether or
not having the force of law) from any central bank or other governmental
authority, agency or instrumentality:
(a) subjects or shall subject the Lender to any tax of any
kind whatsoever with respect to this Agreement, the Loan made hereunder, or
changes the basis of taxation of payments to the Lender of principal, commitment
fees, interest or any other amount payable hereunder (except for changes in the
rate of tax on the overall net income of the Lender);
(b) imposes, modifies or holds or shall impose, modify or hold
applicable any reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for the account
of, advances or loans by, or other credit extended by, or any other acquisition
of funds by, any office of the Lender, which reserve, special deposit,
compulsory loan or similar requirement is not otherwise included in
determination of the interest rate hereunder; or
(c) imposes or shall impose on the Lender any other condition;
and the result of any of the foregoing is to, directly or indirectly, increase
the cost to the Lender of making, renewing or maintaining advances or extensions
of credit or to reduce any amount receivable thereunder then, in any such case,
the Debtor shall promptly pay to the Agent, for the benefit of the Lender, upon
its demand, any additional amounts necessary to compensate the Lender for such
additional cost or reduced amount receivable. If the Lender becomes entitled to
claim any additional amounts pursuant to this subsection, the Lender shall
promptly notify the Debtor of the event by reason of which it has become so
entitled. The good faith determination as to any additional amounts payable
pursuant to the foregoing sentence by the Lender shall be conclusive in the
absence of manifest error.
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2.5 FUNDING LOSSES. If any Regulatory Change:
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(a) shall subject the Lender to any Tax determined by such
Lender to be applicable to the Loan, to the Lender's obligation to make or
maintain the Loan, to this Agreement or the Note, or shall, in the determination
of the Lender, change the basis of taxation of payments to the Lender of the
principal of or interest on the Loan or of any other amounts payable under this
Agreement in respect of the Loan or its obligation to make or maintain the Loan;
or
(b) shall impose, increase, modify or deem applicable any Tax,
reserve, insurance charge, special deposit, assessment or other requirement or
condition against assets of, deposits with or to the account of, credit extended
by, or the obligations of the Lender under this Agreement, or shall impose on
the Lender or on any relevant interbank market for U.S. Dollars, any condition;
and the result of the foregoing, in the determination of the Lender, is to (x)
reduce the amount of any sum received or receivable by the Lender with respect
to the Loan or the return to be earned by the Lender on the Loan, (y) impose a
cost on the Lender that is attributable to the making or maintaining of, or its
commitment to make, the Loan, or (z) require the Lender to make any payment on,
or calculated by reference to, the gross amount of any amount received by it
hereunder or under the Loan, then, within 15 days after request by the Lender,
the Debtor shall pay to the Lender such additional amount or amounts as the
Lender determines will compensate the Lender for such reduction, increased cost
or payment. The Lender will promptly notify the Debtor of any Regulatory Change
of which it has knowledge that will entitle the Lender to compensation, but the
failure to give such notice shall not affect the Lender's right to such
compensation. The Lender agrees to take any reasonable action which the Lender
determines, in its discretion, may be available without cost or expense to the
Lender in order to eliminate or mitigate the effect of such Regulatory Change.
2.6 DETERMINATIONS.
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(a) In making the determinations contemplated by Section 2.4
or Section 2.5 hereof, the Lender may make such estimates, assumptions,
allocations and the like that it, in good faith, determines to be appropriate.
All such determinations shall be final, binding and conclusive upon the Debtor,
except to the extent of any manifest error in computation or transmission. The
Lender shall furnish to the Debtor, upon request, a certificate outlining in
reasonable detail the computation of any amounts claimed by it under Section 2.4
or Section 2.5 and the assumptions underlying such computations, provided that
the failure to deliver a certificate shall not affect the Lender's right to such
amounts.
(b) All statements of account rendered by the Lender to the
Debtor shall, in the absence of manifest error, be final, binding and conclusive
upon the Debtor, unless the Debtor makes a specific objection or objections to
such statement in writing within forty-five (45) days after such statement has
been sent to Debtor by the Lender in accordance with the provisions hereof.
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2.7 PROHIBITED TRANSACTIONS. A Prohibited Transaction may be
consummated only with the prior written consent of the Lender, which consent
shall not be unreasonably withheld. Not less than forty-five (45) days prior to
the date the proposed Prohibited Transaction is expected to be consummated, the
Debtor shall give the Lender written notice of the proposed Prohibited
Transaction. In the event the Lender does not consent to the Prohibited
Transaction and the Prohibited Transaction is nonetheless consummated, the
Debtor shall, on the Installment Date prior to the date the Prohibited
Transaction is to be consummated, prepay (i) the outstanding principal under the
Note, together with all accrued interest thereon, and (ii) all other Obligations
due and owing under the Loan Agreement, the Note and the other Loan Documents,
in accordance with and subject to the provisions of Section 2.3 hereof.
ARTICLE III
SECURITY
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3.1 SECURITY AGREEMENT. As security for the prompt payment,
performance, satisfaction and discharge when due of all the Obligations, the
Debtor hereby grants to the Lender a first priority security interest in all of
Debtor's right, title and interest in, to and under the Collateral. The Debtor
shall execute and deliver or shall cause to be executed and delivered to the
Lender, concurrently with the execution of this Agreement, the Mortgage. The
Security Agreement Questionnaire in the form of SCHEDULE 3.1 hereto is, as of
the Closing Date, complete and correct in all material respects.
3.2 ADDITIONAL DOCUMENTS. The Debtor shall execute and deliver and/or
cause to be executed and delivered, concurrently with the execution of this
Agreement and such other documents as the Lender may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE DEBTOR
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In order to induce the Lender to execute and deliver this Agreement and
to make the Loan available to the Debtor, the Debtor represents and warrants to
the Lender that, as of the date hereof:
4.1 GOOD STANDING OF THE DEBTOR; AUTHORIZATION.
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(a) The Debtor is duly incorporated, organized and existing
and in good standing in the State of New York and is duly qualified as a foreign
corporation and authorized to do business in Ohio and all other jurisdictions
wherein the nature of its business or property makes such qualification
necessary, and has the corporate power to own its properties and to carry on its
business as now conducted. The execution, delivery and performance of this
Agreement, the Note and the other Loan Documents have been duly authorized by
all necessary corporate proceedings on the part of the Debtor.
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4.2 COMPLIANCE WITH LAWS AND OTHER AGREEMENTS. The Debtor is in
compliance with all laws, rules, regulations, judgments, decrees, orders,
agreements and requirements which affect in any material way the Debtor, its
assets or the operation of its business and the Debtor has not received, and has
no knowledge of, any order or notice of any governmental investigation or of any
violation or claim of violation of any law, regulation, judgment, decree, order,
agreement, or other governmental requirement.
4.3 NO CONFLICT; GOVERNMENTAL APPROVALS. The execution, delivery, and
performance of this Agreement, the Note and each of the Loan Documents will not
(i) conflict with, violate, constitute a default under, or result in a breach of
any provision of any applicable law, rule, regulation, judgment, decree, order,
instrument or other agreement, or (ii) conflict with or result in a breach of
any provision of the certificate of incorporation or by-laws of the Debtor. No
authorization, permit, consent or approval of or other action by, and no filing,
registration or declaration with, any governmental authority or regulatory body
is required to be obtained or made by the Debtor for the due execution, delivery
and performance of this Agreement, the Note or any of the Loan Documents, except
such as have been duly obtained or made prior to the Closing Date and are in
full force and effect as of the Closing Date (copies of which have been
delivered to the Lender on or before the Closing Date).
4.4 FINANCIAL AND OTHER INFORMATION REGARDING DEBTOR.
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(a) The Debtor has delivered to the Lender true, correct and
complete copies of the balance sheets of the Debtor as of June 30, 1996, and
related statements of income for the period then ended, together with notes
thereto. Those financial statements ("Financial Statements") present fairly the
financial position of the Debtor as of June 30, 1996, and the results of the
operations of the Debtor for the period then ended in conformity with GAAP,
subject to normal year-end adjustments.
(b) The Debtor has no Indebtedness other than the Loan, and
as set forth on SCHEDULE 7.2.
(c) The Debtor has no "investment" (as such term is defined
under GAAP), whether by stock purchase, capital contribution, loan, advance,
purchase of property or otherwise, in any Person, other than as shown in the
most recent Financial Statements.
4.5 TAXES. The Debtor is not delinquent in payment of any income,
property or other tax, except for any delinquency in the payment of a tax which
is contested in good faith by the Debtor and for which appropriate reserves have
been established in accordance with GAAP.
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4.6 ENCUMBRANCES AND GUARANTIES.
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(a) All properties and assets of the Debtor are owned by the
Debtor free and clear of all Encumbrances except (i) those for taxes or other
government charges either not yet delinquent or the nonpayment of which is
permitted by Section 4.5 of this Agreement, (ii) those created under the Loan
Documents, and (iii) those described on SCHEDULE 7.3.
(b) The Debtor is not obligated under any Guaranty, except as
set forth on SCHEDULE 4.6(b).
4.7 MATERIAL ADVERSE CHANGES. Since June 30, 1996, there has not been
any material adverse change in the business, operations, properties or financial
position of the Debtor. The Debtor does not know of any fact (other than matters
of a general economic or political nature) which materially adversely affects,
or will materially adversely affect, the business, operations, properties or
financial position of the Debtor or the performance by the Debtor of its
obligations under this Agreement or the other Loan Documents.
4.8 ERISA. The provisions of each employee benefit plan as defined in
Section 3(3) of ERISA (each, a "Plan") maintained by the Debtor comply with all
applicable requirements of ERISA and of the Code, and with all applicable
rulings and regulations issued under the provisions of ERISA and the Code
setting forth those requirements. No reportable event, as defined in Section
4043 of ERISA, has occurred with respect to any Plan; no Plan to which Section
4021 of ERISA applies has been terminated; no Plan has incurred any liability to
PBGC as provided in Section 4062, 4063 and 4064 of ERISA; no Plan has been
involved in any prohibited transaction within the meaning of Section 406 of
ERISA or Section 4975 of the Code; and there are no unfunded liabilities of a
type which would normally be disclosed in financial statements under GAAP, with
respect to any Plan which are not disclosed in the Financial Statements.
4.9 PENDING LITIGATION. Except as set forth on SCHEDULE 4.9, there are
no actions, suits, proceedings or investigations pending, or, to the knowledge
of the Debtor, threatened against or affecting the Debtor, before any court,
arbitrator or administrative or governmental body which, in the aggregate, might
adversely affect any action taken or to be taken by the Debtor under this
Agreement or the other Loan Documents or which, in the aggregate, might
materially adversely affect the business, operations, properties or financial
position of the Debtor, or the ability of the Debtor to perform its obligations
under this Agreement, the Note or the other Loan Documents.
4.10 VALID, BINDING AND ENFORCEABLE. This Agreement, the Note and the
other Loan Documents have been duly and validly executed and delivered by the
Debtor and constitute the valid and legally binding obligations of the Debtor
enforceable in accordance with their respective terms, except as enforcement of
this Agreement and the other Loan Documents may be limited by bankruptcy,
insolvency or other laws of general application relating to or affecting the
enforcement of creditors' rights and except as enforcement is subject to general
equitable principles.
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4.11 PRIORITY OF SECURITY INTERESTS. This Agreement, upon the filing of
financing statements in the appropriate governmental offices and related
documents including, without limitation, partial releases under the Uniform
Commercial Code, upon the execution and filing thereof, will create valid first
perfected security interests in the Collateral as collateral for all the
Obligations, subject to no other Encumbrances. Upon request of Debtor, Lender
agrees to release its security interest in any Severable Addition with a cost of
less than $500,000 per item and to permit Debtor to grant a security interest in
such Severable Addition to a party other than Lender.
4.12 ENVIRONMENTAL MATTERS.
----------------------
(a) The Debtor has performed all of its obligations under, has
obtained all necessary approvals, permits, authorizations and other consents
required by, and is not in material violation of, any Environmental Laws, except
as set forth on SCHEDULE 4.12.
(b) The Debtor has not received any notice, citation, summons,
directive, order or other communication, written or oral, from, and the Debtor
has no knowledge of the filing or giving of any such notice, citation, summons,
directive, order or other communication by, any governmental or
quasi-governmental authority or agency or any other Person concerning the
presence, generation, treatment, storage, transportation, transfer, disposal,
release or other handling of any Hazardous Materials within, on, from, related
to, or affecting (i) the Real Property or (ii) except for any such notice,
citation, summons, directive, order or other communication which, as of the date
hereof, is no longer outstanding or has been resolved to the satisfaction of
such authority, agency or other person, any other real property owned or
occupied by the Debtor, except as set forth on SCHEDULE 4.12.
(c) To the best of the Debtor's knowledge, after reasonable
inquiry, the Real Property has never been used, either by the Debtor or any of
its predecessors in interest, to generate, treat, store, transport, transfer,
dispose of, release or otherwise handle any Hazardous Material in violation of
any applicable Environmental Laws, except as set forth on SCHEDULE 4.12. To the
best of the Debtor's knowledge, after reasonable inquiry, no other real property
owned or occupied by the Debtor has ever been used, either by the Debtor or any
of its predecessors in interest, to generate, treat, store, transport, transfer,
dispose of, release or otherwise handle any Hazardous Material in violation of
any applicable Environmental Laws, which violation could have a material adverse
effect on the Debtor's financial condition, results or operations, business,
properties, assets, operations or prospects, except as set forth on SCHEDULE
4.12.
(d) To the best of the Debtor's knowledge, after due
inspection, there are no Hazardous Materials within, on or under any real
property owned or occupied by the Debtor in violation of any applicable
Environmental Laws, except as set forth on SCHEDULE 4.12.
4.13 NO UNTRUE STATEMENTS. Neither this Agreement, the Loan Documents
nor any other document, certificate or statement furnished or to be furnished
by the Debtor or by any other party to the Lender in connection herewith
contains, or at the time of delivery will contain, any untrue
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statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained herein and therein not
misleading.
4.14 MAINTENANCE OF EQUIPMENT. The Debtor has maintained all of the
Equipment in good operating condition and repair (reasonable wear and tear
excepted) and all necessary replacements of and repairs thereto have been made
so that the value and operating efficiency of the Equipment has been maintained
and preserved.
4.15 LOCATION OF BOOKS AND RECORDS. The locations of the offices where
Debtor maintains its books and records concerning the Collateral are as set
forth in SCHEDULE 4.15 or at the location(s) hereafter disclosed to the Lender
upon thirty (30) days prior written notice.
4.16 CHIEF EXECUTIVE OFFICE. The chief executive offices of the Debtor
are at the address set forth in SCHEDULE 4.16 or at the location(s) hereafter
disclosed to the Lender upon thirty (30) days prior written notice.
4.17 LOCATION OF COLLATERAL. The locations where the Debtor maintains
the Collateral are as set forth on SCHEDULE 4.17.
4.18 PATENTS AND TRADEMARKS. The Debtor does not own any patents,
trademarks, service marks, trade names, copyrights, or other intellectual
property or proprietary rights which are related in any way or used in
connection with the Collateral.
ARTICLE V
CONDITIONS PRECEDENT TO THE LENDER'S OBLIGATIONS
------------------------------------------------
The Lender's obligations hereunder are conditioned upon the completion
by the Lender or its designated representatives of an inspection of the Debtor's
books and records, which inspection shall be satisfactory to the Lender, and
satisfaction by the Debtor of the following conditions precedent:
5.1 DOCUMENTS TO BE DELIVERED BY THE DEBTOR AT CLOSING. The Debtor
shall deliver or cause to be delivered to the Lender at the Closing the
following:
(a) This Agreement duly executed by the Debtor;
(b) The Note duly executed by the Debtor;
(c) The Mortgage, duly executed by the Debtor;
(d) The Security Agreement Questionnaire, duly executed by
the Debtor;
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(e) Such Uniform Commercial Code financing statements and
other documents as the Lender may reasonably require to be executed by the
Debtor;
(f) A certificate of the Secretary or an Assistant Secretary
of the Debtor dated the Closing Date including (i) resolutions duly adopted by
the Debtor authorizing the transactions under the Loan Documents to which it is
a party; (ii) a copy of the by-laws of the Debtor; (iii) evidence of the
incumbency and signature of the officers executing on the Debtor's behalf any of
the Loan Documents and any other document to be delivered pursuant to any such
documents, together with evidence of the incumbency of such Secretary or
Assistant Secretary; (iv) a copy, certified by the secretary of state of its
jurisdiction of incorporation, as of the most recent date practicable, of the
Debtor's Articles and Certificate of Incorporation, together with the
certification of the Secretary or Assistant Secretary of the Debtor as of the
Closing Date that such Articles and Certificate of Incorporation have not been
amended since the date of the aforesaid certification by the Secretary of State;
and (v) certificates of authority or good standing for the Debtor from its
jurisdiction of incorporation and Ohio;
(g) A copy of each and every authorization, permit, consent,
and approval of and other action by, and notice to and filing with, every
governmental authority and regulatory body which is required to be obtained or
made by the Debtor for the due execution, delivery and performance of this
Agreement and the other Loan Documents;
(h) The opinion of Xxxxx Swados Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxx, LLP dated as of Closing Date, in form and substance reasonably
satisfactory to the Lender and its counsel;
(i) The opinion of Xxxx, Xxxxxx & Parks dated as of the
Closing Date, in form and substance reasonably satisfactory to the Lender and
its counsel;
(j) A current survey of the Real Property, certified to the
Lender by registered professional surveyors not more than thirty (30) days prior
to the Closing Date as an urban survey in accordance with ALTA/ACSM standards
(the "Survey");
(k) A marked-up commitment of a title insurance company
satisfactory to the Lender to issue to the Lender a policy of title insurance
insuring the lien of the Mortgage as a first lien on the Real Property, subject
only to Permitted Encumbrances (as defined in the Mortgage) and without
exception for (i) any liens for labor or materials, actual or inchoate; or (ii)
discrepancies in boundary lines, unrecorded easements, encroachments or area
content, and shall include such endorsements as the Lender may require;
(l) A Phase I environmental audit of the Real Property, from
an environmental consultant acceptable to the Lender, satisfactory to the
Lender in its sole discretion;
(m) A written summary of all licenses, permits, exemptions,
certificates and regulatory approvals necessary for the ownership and operation
of the Ottawa Plant;
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(n) Such assignments of existing contracts, licenses, and
other property as the Lender may require;
(o) Evidence (including, without limitation, an insurance
certificate satisfactory to the Lender) of the Debtor's compliance with the
requirements relating to insurance set forth in Section 6.5 hereof;
(p) A true, correct and complete copy of that certain Second
Amended and Restated Credit and Security Agreement dated August 1, 1994 (the
"Revolving Credit Agreement"), between the Debtor and the Bank of New York;
(q) UCC-3 termination statements, releases and other
documents, all in form and substance satisfactory to the Lender, evidencing the
release and termination of any existing liens or Encumbrances on the Collateral;
and
(r) Such other documents as the Lender may reasonably request.
5.2 CONDITIONS PRECEDENT TO MAKING LOAN. The Lender shall not be
obligated to make the Loan hereunder unless:
(a) The Debtor shall have delivered to the Lender each of the
documents referenced in Section 5.1 hereof;
(b) As of the Closing Date, no Event of Default has occurred
(unless waived by the Lender in writing) and is continuing and no event has
occurred and is continuing which, with the giving of notice or lapse of time, or
both, would constitute an Event of Default;
(c) The representations and warranties contained in Article
IV are true and correct on the Closing Date;
(d) No material adverse change shall have occurred in the
business, financial condition, or operations of the Debtor since June 30, 1996;
(e) The Debtor shall have delivered to the Lender a
certificate executed by the chief executive officer of the Debtor confirming the
statements made in paragraphs (b), (c), and (d) above;
(f) The Lender shall have completed a satisfactory operational
review of the Ottawa Plant, consisting of, INTER ALIA, such measurements and
analyses of the Ottawa Plant, its production capacity, its machinery and
equipment, and such other features of its operation as are necessary to
ascertain whether the criteria set forth on SCHEDULE 5.2(f) hereto for such
operational review have been satisfied.
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ARTICLE VI
AFFIRMATIVE COVENANTS OF THE DEBTOR
-----------------------------------
The Debtor hereby covenants and agrees that from the date hereof and
until satisfaction in full of the Obligations, unless the Lender shall otherwise
consent in writing, the Debtor shall do the following:
6.1 USE OF PROCEEDS. Use the proceeds of the borrowings hereunder only
for the purposes specified in Section 2.1 of this Agreement.
6.2 FINANCIAL STATEMENTS. Furnish to the Lender:
(a) within one hundred and twenty (120) days after the end of
each fiscal year, the financial statements of the Debtor, including a balance
sheet, statement of income, statement of cash flows and such other consolidated
financial statements of the Debtor in such detail as the Lender may reasonably
request. Such financial statements shall present fairly the financial condition
of the Debtor as of the close of such fiscal year and the results of operations
and cash flows during such fiscal year, in accordance with GAAP, and shall be
audited and accompanied by the opinion, satisfactory in form and substance to
the Lender, of an independent public accountant selected by the Debtor and
reasonably acceptable to the Lender, together with a completed Covenant
Compliance Certificate for such period, duly executed by the chief financial
officer of the Debtor;
(b) within ninety (90) days after the end of each fiscal
quarter (other than the last fiscal quarter during the Debtor's fiscal year) and
within one hundred twenty (120) days after the end of the last fiscal quarter
during the Debtor's fiscal year, the financial statements of the Debtor,
including a balance sheet, statement of income and such other financial
statements of the Debtor in such detail as the Lender may reasonably request,
which shall present fairly the financial position of the Debtor as of the end of
such fiscal quarter and the results of operations and cash flows during such
fiscal quarter, in accordance with GAAP, certified by the chief financial
officer of the Debtor, together with a completed Covenant Compliance Certificate
for such period, duly executed by the chief financial officer of the Debtor;
(c) within thirty (30) days after the end of each fiscal
quarter (other than the last fiscal quarter during the Debtor's fiscal year) and
within one hundred twenty (120) days after the end of the last fiscal quarter
during the Debtor's fiscal year, management-prepared financial statements
including a balance sheet, statement of income, and statement of cash flows for
the Ottawa Plant, and such other financial statements related to the Ottawa
Plant in such detail as the Lender may reasonably request, which shall present
fairly the financial position of the Ottawa Plant as of the end of such quarter
and the results of its operations, in accordance with GAAP, certified by the
chief financial officer of the Debtor; and
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(d) such other financial information in the Debtor's possession as
the Lender shall reasonably request.
6.3 ORDINARY COURSE OF BUSINESS; RECORDS. Conduct its business only in
the ordinary course; and (i) keep proper books of record and account in which
full, true and correct entries will be made of all dealings or transactions of
or in relation to its business and affairs, (ii) set up on its books accruals
with respect to all taxes, assessments, charges, levies and claims; and (iii) on
a reasonably current basis set up on its books, from its earnings, allowances
against doubtful receivables, advances and investments and all other proper
accruals (including without limitation by reason of enumeration, accruals for
premiums, if any, due on required payments and accruals for depreciation,
obsolescence, or amortization of properties), which should be set aside from
such earnings in connection with its business. All determinations pursuant to
this subsection shall be made in accordance with, or as required by, GAAP
consistently applied in the opinion of such independent public accountant as
shall then be regularly engaged by the Debtor.
6.4 INFORMATION FOR THE LENDER. Make available during normal business
hours for inspection by the Lender or its designated representatives any of its
books, records, assets when reasonably requested to do so, and furnish the
Lender any information reasonably requested regarding its operations, business
affairs and financial condition within a reasonable time after the Lender gives
notice of its request therefor. In particular, and without limiting the
foregoing, the Debtor shall permit, during normal business hours,
representatives of the Lender's Audit Department to make such periodic
inspections of the Debtor's books, records, assets on a quarterly basis,
PROVIDED that upon the occurrence of an Event of Default, such inspections may
be performed as frequently as the Lender deems necessary and proper, and
PROVIDED FURTHER that the Lender shall be able to obtain and/or review on a
routine, continuous basis, all licenses, permits, exemptions, certificates and
regulatory approvals necessary for the ownership and operation of the Ottawa
Plant.
6.5 INSURANCE. Carry at all times in financially sound and reputable
insurers acceptable to the Lender: (a) all workers' compensation or similar
insurance as may be required under the laws of any jurisdiction; (b) commercial
general liability insurance against claims for personal injury, death or
property damage suffered upon, in or about any premises occupied by it or
occurring as a result of the ownership, maintenance or operation by it of any
automobile, truck or other vehicle or as a result of the use of products
manufactured, constructed or sold by it, or services rendered by it, in an
amount not less than $2,000,000 per occurrence; (c) business interruption
insurance covering risk of loss as a result of the cessation for all or any part
of one year of any substantial part of the business conducted by it; (d)
physical damage and hazard insurance against such other hazards as are usually
insured against by business entities of established reputation engaged in like
businesses and similarly situated, including, without limitation, fire (flood
and earthquake, if applicable) and extended coverage; and (e) such other
insurance as the Lender may from time to time reasonably require, and pay all
premiums on the policies for all such insurance when and as they become due and
take all other actions necessary to maintain such policies in full force and
effect at all times. For purposes of this section, as long as Bank of New York
is the Primary Lender, the insurers, insurance coverage amounts of insurance for
the business, properties and operations of Debtor other than at the Ottawa
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Plant, if acceptable to the Primary Lender, shall be deemed to be acceptable to
Lender. The insurance specified in Subsections (b), (c) and (d) shall be
maintained in an amount not less than $5,500,000, with no co-insurance or
deductibles in excess of $100,000, as such insurance is usually carried by
business entities of established reputation engaged in the same or similar
business and similarly situated, acceptable to the Lender. The Debtor shall from
time to time, upon request by the Lender, promptly furnish or cause to be
furnished to the Lender evidence, in form and substance satisfactory to the
Lender, of the maintenance of all insurance required to be maintained hereby,
including, without limitation, such originals or copies as the Lender may
request of policies, certificates of insurance, riders and endorsements relating
to such insurance and proof of premium payments. The Debtor shall cause each
property or liability insurance policy related to the Ottawa Plant and/or the
Equipment to provide, and the insurer issuing each such policy to certify to the
Lender, that (a) if such insurance be proposed to be canceled or materially
changed for any reason whatsoever, such insurer will promptly notify the Lender,
and such cancellation or change shall not be effective for 30 days after receipt
by the Lender of such notice, unless the effect of such change is to extend or
increase coverage under the policy; (b) the Lender shall be named as lender loss
payee with respect to property insurance; and (c) the Lender will have the
right, at its election, to remedy any default in the payment of premiums within
30 days of notice from the insurer of such default.
6.6 MAINTENANCE. Maintain its equipment (including, without limitation,
the Collateral), real property and other properties in good condition and repair
(normal wear and tear excepted) and pay and discharge the cost of repairs
thereto or maintenance thereof.
6.7 TAXES. Pay all taxes, assessments, charges and levies imposed upon
it or on any of its property, or which it is required to withhold and pay over,
and provide evidence of payment thereto to the Lender if the Lender so requests,
except where contested in good faith by lawful and appropriate proceedings and
where adequate reserves therefor have been set aside on its books; PROVIDED,
however, that the Debtor shall pay all such taxes, assessments, charges and
levies forthwith whenever foreclosure on any lien which attaches or security
therefor appears imminent.
6.8 LEASES. Pay all rent and other sums required by every lease to
which the Debtor is a party as the same become due and payable, perform all its
obligations as tenant or lessee thereunder, except where contested in good faith
by lawful and appropriate proceedings and where adequate reserves therefor have
been set aside; and keep all such leases at all times in full force and effect
during the terms thereof.
6.9 CORPORATE EXISTENCE; CERTAIN RIGHTS; LAWS. Do all things necessary
to preserve and keep in full force and effect in each jurisdiction in which it
conducts business the business existence, licenses, permits, exemptions,
regulatory approvals, rights, patents, trademarks, trade names, certificates and
franchises of the Debtor and comply with all present and future laws,
ordinances, rules, regulations judgments, orders and decrees which affect in any
material way the Debtor, its assets or the operation of its business.
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21
6.10 NOTICE OF LITIGATION OR OTHER PROCEEDINGS. Give notice as soon as
reasonably practicable, but in no event later than ten (10) Business Days after
the Debtor becomes aware thereof, to the Lender of (i) the existence of any
material dispute, (ii) the institution of any litigation, administrative
proceeding or governmental investigation involving the Debtor or (iii) the entry
of any judgment, decree or order against or involving the Debtor, any of which
might materially and adversely affect the financial condition, property,
business or operation of the Ottawa Plant of the Debtor or affect the
enforceability of this Agreement or any of the other Loan Documents.
6.11 INDEBTEDNESS. Pay or cause to be paid when due (or within
applicable grace periods) all Indebtedness of the Debtor, except when the amount
or validity thereof is contested in good faith and Debtor shall have established
adequate reserves therefor.
6.12 NOTICE OF EVENTS OF DEFAULT. Give immediate notice to the Lender
if the Debtor becomes aware of the occurrence of any Event of Default, or of any
fact, condition or event which with the giving of notice or lapse of time, or
both, would be an Event of Default, or of the failure of the Debtor to observe
or perform any of the conditions or covenants to be observed or performed by it
under this Agreement or any of the other Loan Documents.
6.13 ERISA. Maintain each Plan in compliance with all applicable
requirements of ERISA and of the Code and with all applicable rulings and
regulations issued under the provisions of ERISA and of the Code. As promptly as
practicable (but in any event not later than ten (10) days) after the Debtor
receives from the PBGC a notice of intent to terminate any Plan or to appoint a
trustee to administer any Plan, after the Debtor has notified the PBGC that any
reportable event, as defined in Section 4043 of ERISA, with respect to any Plan
has occurred, or after the Debtor has provided a notice of intent to terminate
to each affected party, as defined for purposes of Section 4041(a)(2) of ERISA,
with respect to any Plan, a certificate of the chief executive officer of the
Debtor shall be furnished to the Lender setting forth the details with respect
to the events resulting in such reportable event, as the case may be, and the
action which the Debtor proposes to take with respect thereto, together with a
copy of the notice of intent to terminate or to appoint a trustee from the PBGC,
of the notice of such reportable event or of the Debtor's notice of intent to
terminate, as the case may be.
6.14 COMPLIANCE WITH ENVIRONMENTAL LAWS. Comply fully with all
Environmental Laws and not use any property which it owns or occupies to
generate, treat, store, transport, transfer, dispose of, release or otherwise
handle any Hazardous Material, except in compliance with all Environmental Laws.
6.15 PERFECTION AND CONFIRMATION OF SECURITY INTERESTS. The Debtor
shall take all action that may be necessary or desirable, or that Lender may
request, so as at all time to maintain the validity, perfection, enforceability
and priority of Lender's security interest in the Collateral or to enable Lender
to protect, exercise or enforce its rights hereunder and in the Collateral,
including, but not limited to (i) immediately discharging all liens other than
those in favor of the Lender with respect to the Collateral, (ii) entering into
warehousing, lockbox and other custodial arrangements
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satisfactory to Lender, and (iii) executing and delivering financing statements,
instruments of pledge, mortgages, notices and assignments, in each case in form
and substance satisfactory to Lender, relating to the creation, validity,
perfection, maintenance or continuation of Lender's security interest in the
Collateral under the Uniform Commercial Code or other applicable law. All
charges, expenses and fees the Lender may incur in doing any of the foregoing,
and any local taxes relating thereto, shall be charged to the Debtor's account
and added to the Obligations, or at the Lender's option, shall be paid to the
Lender immediately upon demand. The Debtor shall permit the Lender, at the
Debtor's expense, to perform appropriate searches under the Uniform Commercial
Code, as the Lender shall deem necessary to confirm that the Debtor owns the
Collateral free and clear of all Encumbrances, except in favor of the Lender and
Permitted Encumbrances (as defined in the Mortgage).
6.16 FURTHER ACTIONS. Cooperate and join with the Lender, at its own
expense, in taking all such further actions as the Lender, in its reasonable
sole judgment, shall deem necessary to effectuate the provisions of the Loan
Documents.
6.17 NOTICES. Notify the Lender as soon as is reasonably practicable,
but in any event within two (2) Business Days, upon the occurrence of any event
which is reasonably likely to have a material adverse effect on the business,
operations or financial condition of the Debtor, including, without limitation,
the receipt of any order or notice of any governmental investigation, or of any
violation or claim of violation of any law, Environmental Law, regulation,
judgment, decree, order, agreement or other governmental requirement which is
reasonably likely to have a material adverse effect on the business, operations
or financial condition of the Debtor.
6.18 DISPOSITION OF COLLATERAL. The Debtor will safeguard and protect
all Collateral for the Lender's general account and make no disposition thereof
whether by sale, lease or otherwise except the disposition or transfer of
obsolete and worn-out Equipment in the ordinary course of business during any
fiscal year having an aggregate fair market value of not more than $500,000 and
only to the extent that the proceeds for any such dispositions, to the extent
that the aggregate amount of the proceeds for such dispositions occurring on or
after the date hereof through the date on which the Obligations are paid in full
are in excess of $500,000, are used to acquire replacement Equipment which is
subject to Lender's first priority security interest.
6.19 PRESERVATION OF COLLATERAL. Following the occurrence of an Event
of Default, in addition to the rights and remedies set forth in Article IX
hereof, the Lender: (a) may at any time take such steps as the Lender deems
necessary to protect the Lender's interest in and to preserve the Collateral,
including the hiring of such security guards for the placing of such security
protection measures as the Lender may deem appropriate; (b) may employ and
maintain at any of the Debtor's premises a custodian who shall have full
authority to do all acts necessary to protect the Lender's interests in the
Collateral; (c) may lease warehouse facilities to which the Lender may move all
or part of the Collateral; (d) may use any of the Debtor's owned or leased
lifts, hoists, trucks and other facilities or equipment for handling or removing
the Collateral; and (e) shall have, and is hereby granted, a right of ingress
and egress to the places where the Collateral is located, and may proceed over
and through any of the Debtor's owned or leased property. The Debtor shall
cooperate fully
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with all of the Lender's efforts to preserve the Collateral and will take such
actions to preserve the Collateral as the Lender may direct. All of the Lender's
expenses of preserving the Collateral, including any expenses relating to the
bonding of a custodian, shall be charged to the Debtor's account and added to
the Obligations.
6.20 OWNERSHIP OF COLLATERAL. With respect to the Collateral, at the
time the Collateral becomes subject to the Lender's security interest: (a) the
Debtor shall be the sole owner of and fully authorized and able to sell,
transfer, pledge and/or grant a first security interest in each and every item
of the Collateral to the Lender, and the Collateral shall be free and clear of
all liens, claims, charges and Encumbrances whatsoever; (b) each document and
agreement executed by the Debtor or delivered to Lender in connection with this
Agreement shall be true and correct in all respects; (c) all signatures and
endorsements of the Debtor that appear on such documents and agreements shall be
genuine and the Debtor shall have full capacity to execute same; and (d) the
Equipment shall be located as set forth on SCHEDULE 4.17 and shall not be
removed from such location(s) without the prior written consent of the Lender
except with respect to Equipment to the extent permitted in Section 6.18 hereof.
The Debtor agrees to provide the Lender with landlord's waivers, in form and
substance satisfactory to the Lender, by each landlord of real property leased
to the Debtor where any Collateral is or may be located. The Debtor further
agrees to give the Lender or its designated representatives access to any such
locations and to permit, during normal business hours, representatives of the
Lender's audit department to make such periodic inspections of the Collateral as
such representatives deem necessary and proper.
6.21 DEFENSE OF LENDER'S INTERESTS. Until (a) payment and performance
in full of all of the Obligations and (b) termination of this Agreement, the
Lender's interests in the Collateral hereby granted to the Lender shall continue
in full force and effect. During such period the Debtor shall not, without the
Lender's prior written consent, pledge, sell (except Equipment to the extent
permitted in Section 6.18 hereof), assign or transfer any part of the
Collateral. The Debtor shall defend the Lender's interests in the Collateral
against any and all persons whatsoever. At any time following demand by Lender
for payment of all Obligations, the Lender shall have the right to take
possession of the indicia of the Collateral and the Collateral in whatever
physical form contained, including without limitation: labels, stationery,
documents, instruments and advertising materials. If the Lender exercises this
right to take possession of the Collateral, the Debtor shall, upon demand,
assemble it in the best manner possible and make it available to the Lender at a
place reasonably convenient to the Lender. In addition, with respect to all
Collateral, the Lender shall be entitled to all of the rights and remedies set
forth herein and further provided by the Uniform Commercial Code or other
applicable law. The Debtor shall, and the Lender may, at its option, instruct
all suppliers, carriers, forwarders, warehouses or others receiving or holding
cash, checks, inventory, documents or instruments in which the Lender holds a
security interest to deliver same to the Lender and/or subject to the Lender's
order and if they shall come into the Debtor's possession, they, and each of
them, shall be held by the Debtor in trust as the Lender's trustee, and will
immediately deliver them to the Lender in their original form together with any
necessary endorsement.
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6.22 COST OVERRUNS. The Debtor shall complete the plant expansion at
the Ottawa Plant in accordance with the plans and specifications previously
delivered to the Lender, and shall pay all cost overruns associated with such
plant expansion in excess of $21,800,000.
ARTICLE VII
NEGATIVE COVENANTS
------------------
The Debtor hereby covenants and agrees that from the Closing Date until
satisfaction in full of the Obligations, it will not do any one or more of the
following without first obtaining the written consent of the Lender, which
consent shall not be unreasonably withheld:
7.1 FUNDAMENTAL CORPORATE CHANGES.
------------------------------
(a) Enter into any Prohibited Transaction, except as provided
in Section 2.7 hereof, and except for the acquisition of all or a substantial
portion of the assets or the stock of any person or consolidation of any person
with or merger with the Debtor if the aggregate amount of all such transactions
during the term of the Loan does not exceed Twenty-Five Million Dollars
($25,000,000) and no other default or Event of Default would be in existence
after giving effect thereto;
(b) Without thirty (30) days prior written notice to Lender,
change its name or the location of its chief executive office; or
(c) Form any Subsidiary other than those identified on
Schedule 7.1(c).
7.2 INDEBTEDNESS. Incur, create, assume or have any Indebtedness,
except the Loan and the Indebtedness described on SCHEDULE 7.2 hereto and other
Indebtedness the aggregate outstanding amount of which at any one time shall not
exceed (A) Twenty-Five Million Dollars ($25,000,000) less (B) any Indebtedness
secured by a Guaranty permitted under Section 7.7 below.
7.3 ENCUMBRANCES. Create or allow any Encumbrances to be on or
otherwise affect any of its property or assets except Encumbrances in favor of
the Lender, and except Encumbrances securing Indebtedness permitted under
Section 7.2 above, except as described on SCHEDULE 7.3 hereto.
7.4 Intentionally Deleted.
7.5 CHANGE IN BUSINESS. Discontinue any substantial part, or
substantially change the nature of, the business of the Debtor, or enter into
any new business unrelated to the present business conducted by the Debtor.
7.6 Intentionally Deleted.
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25
7.7 GUARANTIES. Directly or indirectly make any Guaranty other than a
Guaranty which secures Indebtedness the aggregate outstanding amount of which
shall not exceed (A) Twenty-Five Million Dollars ($25,000,000) less (B) any
Indebtedness permitted under Section 7.2 above.
7.8 ERISA.
(a) Terminate any Plan maintained by the Debtor to which
Section 4021 of ERISA applies.
(b) With respect to all Plans subject to Title IV of ERISA,
allow, in the aggregate, the value of the benefits guaranteed under Title IV of
ERISA to exceed the value of assets allocable to the benefits by more than an
amount which, if incurred in the case of termination of the Plans, would have a
material adverse effect on the financial condition of the Debtor.
(c) Incur a withdrawal liability within the meaning of
Section 4201 of ERISA.
7.9 RESTRICTED PAYMENTS. Declare, pay or make any dividend or
distribution on any shares of the common stock or preferred stock of Debtor
(other than dividends or distributions payable in its stock, or split-ups or
reclassification of its stock) or apply any of its funds, property or assets to
the purchase, redemption or retirement of any common or preferred stock, or of
any options to purchase or acquire any such shares of common or preferred stock
of the Debtor, except as may be permitted under the Primary Credit Facility ,
provided that the Debtor delivers to the Lender a copy of the writing required
as a condition thereto under the Primary Credit Facility at the same time the
Debtor delivers such writing to the Primary Lender.
7.10 SALES AND LEASE-BACKS. Sell, transfer or otherwise dispose of any
property, real or personal, now owned or hereafter acquired, with the intention
of directly or indirectly taking back a lease on such property, other than such
dispositions of property which property has an aggregate value of not greater
than Twenty-Five Million Dollars ($25,000,000).
7.11 COMPLIANCE WITH FEDERAL RESERVE BOARD REGULATIONS. (i) Use any of
the proceeds of the Loan, directly or indirectly, for the purposes of purchasing
or carrying any "margin security" within the meaning of Regulations G or U of
the Board of Governors of the Federal Reserve System (12 X.X.X. Xxxxxxxx 000,
000), (xx) use any of the proceeds of the Loan, directly or indirectly, for the
purpose of purchasing, carrying or trading in any securities under such
circumstances as to involve the Debtor in a violation of Regulation X of such
Board (12 C.F.R. Section 224), or (iii) take or permit to be taken any other
action which would result in the Loan or the consummation of any of the other
transactions contemplated hereby being violative of such regulations or any
other regulation of such Board.
7.12 LOANS, INVESTMENTS. Purchase, invest in, or make any loan in
the nature of an investment in the stocks, bonds, notes or other securities or
evidence of Indebtedness of any person, or make any loan or advance to or for
the benefit of any Person except for (i) obligations issued or
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26
guaranteed by the United States of America or any agency thereof; (ii)
commercial paper with maturities at the time of issuance thereof of not more
than 180 days and which have, at the time of such purchase, investment or other
acquisition, a published rating of not less than A-1 or P-1 (or the equivalent
rating), (iii) certificates of time deposit and banker's acceptances having
maturities of not more than 180 days and purchase agreements backed by United
States government securities of a commercial bank if (A) such bank has a
combined surplus of at least $500,000,000 or (B) its debt obligations, or those
of a holding company of which it is a subsidiary, are rated not less than A (or
the equivalent rating) by a nationally recognized rating agency, U.S. money
market funds that invest solely in obligations issued or guaranteed by the
United States of America or an agency thereof and (iv) purchases, investments in
and loans to Direct Steel, Inc., a corporation incorporated under the laws of
the Province of Ontario, Canada the outstanding aggregate principal amount of
which do not exceed $300,000 at any one time.
ARTICLE VIII
EVENTS OF DEFAULT
-----------------
An event of default ("Event of Default") under this Agreement shall be
deemed to exist if any one or more of the following events occurs and is
continuing, whatever the reason therefor:
8.1 DEBTOR'S FAILURE TO PAY. The Debtor fails to pay any amount of
principal, interest or fees on the date such payment was due under this
Agreement, or any of the Loan Documents, whether upon stated maturity,
acceleration or otherwise; provided that if (A) the Debtor fails to make any
such payment as and when due under this Agreement and (B) no default under this
Section 8.1 has occurred during the immediately preceding twelve (12)
consecutive months, then no Event of Default shall be deemed to have occurred,
but only with respect to such failure to pay, if the Debtor cures such failure
within one (1) day of the date on which such payment was due as provided herein.
8.2 BREACH OF COVENANTS OR CONDITIONS. The Debtor (i) fails to perform
or observe any term, covenant, agreement or condition set forth in Article VI or
VII of this Agreement, or (ii) fails to perform or observe any other term,
covenant, agreement or condition set forth in this Agreement or any of the other
Loan Documents or is in violation of or non-compliance with any provision of
this Agreement or any of the Loan Documents, and, with respect only to clause
(ii) above, has not remedied and fully cured such non-performance,
non-observance, violation of or non-compliance within thirty days after the
Lender has given written notice thereof to the Debtor.
8.3 DEFAULTS IN OTHER AGREEMENTS.
----------------------------
(a) The Debtor shall fail to perform or observe any term,
covenant, agreement or condition contained in, or there shall occur any default
under or as defined in, any other agreement (i) to which the Lender or any of
its Affiliates is a party, and (ii) which is applicable to the Debtor or by
which the Debtor is bound, which shall not be remedied within the period of time
(if any) within
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27
which such other agreement permits such default to be remedied, unless such
default is waived by the other party thereto or excused as a matter of law.
(b) The Debtor shall fail to pay when due and payable (after
giving effect to all applicable grace periods and subject to all applicable
waivers), the principal of or interest on any Indebtedness (other than
Indebtedness to the Lender or any of its Affiliates) in excess of One Million
Dollars ($1,000,000), or the maturity of such Indebtedness shall, in whole or in
part, have been accelerated or any such Indebtedness shall, in whole or in part,
have been required to be prepaid prior to the stated maturity thereof. In
accordance with the provisions of any contract evidencing, providing for the
creation of, or concerning such Indebtedness, any event shall have occurred and
be continuing which would permit any holder or holders of such Indebtedness, any
trustee or agent acting on behalf of such holder or holders, or any other Person
to accelerate such maturity or require any such prepayment and such event has
not been cured or waived within thirty (30) days following the Debtor's receipt
of notice thereof.
8.4 AGREEMENTS INVALID. The validity, binding nature of, or
enforceability of any material term or provision of any of the Loan Documents is
disputed by, on behalf of, or in the right or name of the Debtor or any material
term or provision of any such Loan Document is found or declared to be invalid,
avoidable, or non-enforceable by any court of competent jurisdiction.
8.5 FALSE WARRANTIES; BREACH OF REPRESENTATIONS. Any warranty or
representation made by the Debtor in this Agreement or any other Loan Document
or in any certificate or other writing delivered under or pursuant to this
Agreement or any other Loan Document, or in connection with any provision of
this Agreement or related to the transactions contemplated hereby shall prove to
have been false or incorrect or breached in any material respect on the date as
of which made.
8.6 JUDGMENTS. A final judgment or judgments is entered, or an order or
orders of any judicial authority or governmental entity is issued against the
Debtor (such judgment(s) and order(s) hereinafter collectively referred to as
"Judgment") (i) for payment of money, which Judgment, in the aggregate, exceeds
Five Hundred Thousand Dollars ($500,000) outstanding at any one time; or (ii)
for injunctive or declaratory relief which would have a material adverse effect
on the ability of the Debtor to conduct its business, and such Judgment is not
discharged or execution thereon or enforcement thereof stayed pending appeal,
within thirty (30) days after entry or issuance thereof, or, in the event of
such a stay, such Judgment is not discharged within thirty (30) days after such
stay expires.
8.7 BANKRUPTCY OR INSOLVENCY OF THE DEBTOR.
--------------------------------------
(a) The Debtor becomes insolvent, or generally fails to pay,
or is generally unable to pay, or admits in writing its inability to pay, its
debts as they become due or applies for, consents to, or acquiesces in, the
appointment of a trustee, receiver or other custodian for the Debtor, as the
case may be, or a substantial part of its property, or makes a general
assignment for the benefit of creditors.
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(b) The Debtor commences any bankruptcy, reorganization, debt
arrangement, or other case or proceeding under any state or federal bankruptcy
or insolvency law, or any dissolution or liquidation proceeding.
(c) Any bankruptcy, reorganization, debt arrangement, or other
case or proceeding under any state or federal bankruptcy or insolvency law, or
any dissolution or liquidation proceeding, is involuntarily commenced against or
in respect of the Debtor that has not been dismissed within thirty (30) days, or
an order for relief is entered in any such proceeding.
(d) A trustee, receiver, or other custodian is appointed for
the Debtor or a substantial part of the Debtor's property and the appointment
has not been dismissed within thirty (30) days.
8.8 OTHER ENCUMBRANCES. Any Encumbrances shall be on or otherwise
materially affect the Collateral or proceeds thereof, except Encumbrances in
favor of the Lender.
8.9 MATERIAL CHANGE. If, in the sole judgment of the Lender, there has
been a material adverse change in the financial condition, business or
operations of Debtor from the Closing Date, including, without limitation, any
material adverse change which has occurred as the result of a violation of any
Environmental Law.
8.10 FINANCIAL COVENANTS. The Debtor shall fail to maintain the
following financial covenants:
(a) TANGIBLE NET WORTH--A Tangible Net Worth of greater than
$24,000,000, for the fiscal quarter ending September 30, 1996 and for each
fiscal quarter end thereafter;
(b) RATIO OF LIABILITIES TO TANGIBLE NET WORTH--A ratio of
Liabilities to Tangible Net Worth of less than the following:
(i) 6.00:1.00 from the Closing Date through March 31, 1997;
(ii) 5.75:1.00 from April 1, 1997 through March 31, 1998;
(iii) 5.50:1.00 from April 1, 1998 through March 31, 1999;
(iv) 5.25:1.00 from April 1, 1999 through March 31, 2000;
(v) 5.00:1.00 from April 1, 2000 through March 31, 2001; and
(vi) 4.50:1.00 for each fiscal quarter ending thereafter; and
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(c) CASH FLOW COVERAGE RATIO. A Cash Flow Coverage Ratio at
the end of each fiscal quarter on a rolling four quarter basis of equal to or
greater than: (i) 1.25:1.00 for each fiscal quarter during the period from the
Closing Date through March 31, 1997, and (ii) 1.50:1.00 at the end of each
fiscal quarter thereafter.
ARTICLE IX
REMEDIES
--------
9.1 ACCELERATION; SETOFF.
---------------------
(a) Automatically upon the occurrence of any Event of Default
described in Section 8.7 of this Agreement, and in the sole discretion of the
Lender upon the occurrence of any other Event of Default, the unpaid principal
balance of the Loan, all interest and fees accrued and unpaid thereon, and all
other amounts and Obligations payable by the Debtor under this Agreement and the
other Loan Documents shall immediately become due and payable in full, all
without protest, presentment, demand, or further notice of any kind to the
Debtor, all of which are expressly waived by the Debtor, provided that if (A)
the Event of Default occurred as a result of a payment default under Section 8.1
hereof and (B) no Event of Default has occurred as a result of a payment default
under Section 8.1 hereof during the immediately preceding twelve (12)
consecutive months, then with respect to such Event of Default only, the Lender
shall give the Debtor two (2) days prior notice of the Lender's intention to
exercise its rights under this Section 9.1;
(b) If any of the Obligations shall be due and payable or any
one or more Events of Default shall have occurred, the Lender shall have the
right, in addition to all other rights and remedies available to it, without
notice to the Debtor, to apply toward and set-off against and apply to the then
unpaid balance of the Note and the other Obligations any items or funds held by
the Lender, any and all deposits (whether general or special, time or demand,
matured or unmatured, fixed or contingent, liquidated or unliquidated) now or
hereafter maintained by the Debtor for its own account with the Lender, and any
other indebtedness at any time held or owing by the Lender to or for the credit
or the account of the Debtor. For such purpose the Lender shall have, and the
Debtor hereby grants to the Lender, a first lien on all such deposits. The
Lender is hereby authorized to charge any such account or indebtedness for any
amounts due to the Lender. Such right of set-off shall exist whether or not the
Lender shall have made any demand under this Agreement, the Note or any other
Loan Document and whether or not the Note and the other Obligations are matured
or unmatured. The Debtor hereby confirms the Lender's lien on such accounts and
right of set-off, and nothing in this Agreement shall be deemed any waiver or
prohibition of such lien and right of set-off.
(c) Upon the occurrence of any one or more Events of Default,
the Lender may proceed to protect and enforce its rights under this Agreement
and the other Loan Documents by exercising such remedies as are available to the
Lender in respect thereof under applicable law, either by suit in equity or by
action at law, or both, whether for specific performance of any provision
contained in this Agreement or any of the other Loan Documents or in aid of the
exercise of any
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power granted in this Agreement or any of the other Loan Documents. In addition,
upon the occurrence of any one or more Events of Default, without limiting the
generality of the foregoing, the Debtor agrees that in any such event, the
Lender, without demand of performance or other demand, advertisement or notice
of any kind (except the notice specified below of time and place of public or
private sale) to or upon the Debtor or any other Person (all and each of which
demands, advertisements and notices are hereby expressly waived), may forthwith
do any one or more of the following: collect, receive, appropriate and realize
upon the Collateral or any part thereof, and sell, lease, assign, give an option
or options to purchase or otherwise dispose of and deliver, the Collateral (or
contract to do so), or any part thereof, in one or more parcels at public or
private sale or sales at such places and at such prices as it may deem best, for
cash or on credit or for future delivery without the assumption of any credit
risk. The Lender shall have the right upon any such public sale or sales, and,
to the extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or equity of
redemption of the Debtor, which right or equity is hereby expressly released.
The Debtor further agrees, at the Lender's request, to assemble (at the Debtor's
expense) the Collateral and make it available to the Lender at such places which
the Lender shall select, whether at the Debtor's premises or elsewhere, which
Collateral shall, at the Lender's request, be assembled and/or disassembled by
representatives of the applicable manufacturer(s). At such time, each item of
Collateral shall be in the good condition and repair, shall be capable of
passing performance tests according to each applicable manufacturer's
specifications and its peripherals and additional systems shall be intact and
correctly operational. The Lender shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale (after
deducting all reasonable costs and expenses of every kind incurred therein or
incidental to the care, safekeeping or otherwise of any or all of the Collateral
or in any way relating to the rights of the Lender hereunder, including
reasonable attorney's fees and legal expenses) to the payment in whole or in
part of the Obligations, in such order as the Lender may elect. The Debtor
agrees that the Lender need not give more than ten (10) days notice of the time
and place of any public sale or of the time after which a private sale may take
place and that such notice is reasonable notification of such matters. The
Debtor shall be liable for any deficiency if the proceeds of any sale or
disposition of the Collateral are insufficient to pay all amounts to which the
Lender is entitled. The Debtor agrees to pay all costs of the Lender, including
reasonable attorneys' fees, incurred with respect to collection of any of the
Obligations and enforcement of any of the Lender's rights hereunder. To the
extent permitted by law, the Debtor hereby waives presentment, demand, protest
or any notice of any kind in connection with this Agreement or any Collateral.
9.2 CONFESSION OF JUDGMENT. THE DEBTOR HEREBY IRREVOCABLY
AUTHORIZES AND EMPOWERS THE LENDER, BY ITS ATTORNEY, OR BY THE PROTHONOTARY OR
CLERK OF ANY COURT OF RECORD IN THE STATE OF NEW YORK OR IN ANY JURISDICTION
WHERE PERMITTED BY LAW, UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, OR AT ANY
TIME THEREAFTER, TO APPEAR FOR THE DEBTOR AND CONFESS AND ENTER JUDGMENT AGAINST
IT IN FAVOR OF THE LENDER IN ANY JURISDICTION IN WHICH THE DEBTOR OR ANY OF ITS
PROPERTY IS LOCATED FOR THE AMOUNT OF ALL OBLIGATIONS, TOGETHER WITH COSTS OF
SUIT AND WITH ACTUAL COLLECTION COSTS (INCLUDING
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31
REASONABLE ATTORNEYS' FEES), WITH OR WITHOUT DECLARATION, WITHOUT STAY OF
EXECUTION AND WITH RELEASE OF ALL ERRORS AND THE RIGHT TO ISSUE EXECUTION
FORTHWITH, AND FOR DOING SO THIS AGREEMENT OR A COPY VERIFIED BY AFFIDAVIT SHALL
BE A SUFFICIENT WARRANT. THE DEBTOR HEREBY WAIVES AND RELEASES ALL RELIEF FROM
ANY AND ALL APPRAISEMENT, STAY OR EXEMPTION LAW OF ANY STATE NOW IN FORCE OR
HEREAFTER ENACTED. THIS AUTHORITY AND POWER SHALL NOT BE EXHAUSTED BY THE
EXERCISE THEREOF, AND SHALL CONTINUE UNTIL THE OBLIGATIONS ARE FULLY PAID,
PERFORMED, DISCHARGED AND SATISFIED.
BEING FULLY AWARE OF ITS RIGHTS TO PRIOR NOTICE AND
HEARING ON THE VALIDITY OF ANY CLAIMS THAT MAY BE ASSERTED AGAINST IT BY THE
LENDER UNDER THIS AGREEMENT BEFORE JUDGMENT CAN BE ENTERED AND BEFORE ASSETS OF
THE DEBTOR CAN BE GARNISHED AND ATTACHED, THE DEBTOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES THESE RIGHTS AND EXPRESSLY AGREES AND
CONSENTS TO THE LENDER, UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, OR AT ANY
TIME THEREAFTER, ENTERING JUDGMENT AGAINST THE DEBTOR BY CONFESSION AND
ATTACHING AND GARNISHING THE BANK ACCOUNTS AND OTHER ASSETS OF THE DEBTOR,
WITHOUT PRIOR NOTICE OR OPPORTUNITY FOR A HEARING. THE DEBTOR ACKNOWLEDGES THAT
IT HAS HAD THE ASSISTANCE OF LEGAL COUNSEL IN THE REVIEW AND EXECUTION OF THIS
AGREEMENT AND FURTHER ACKNOWLEDGES THAT THE MEANING AND EFFECT OF THE FOREGOING
PROVISIONS CONCERNING CONFESSION OF JUDGMENT HAVE BEEN FULLY EXPLAINED TO THE
DEBTOR BY SUCH COUNSEL.
ARTICLE X
MISCELLANEOUS
-------------
10.1 REMEDIES CUMULATIVE; NO WAIVER. The rights, powers and remedies of
the Lender provided in this Agreement and the other Loan Documents are
cumulative and not exclusive of any right, power or remedy provided by law or
equity, and no failure or delay on the part of the Lender in the exercise of any
right, power, or remedy shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power, or remedy preclude other or further
exercise thereof, or the exercise of any other right, power or remedy.
10.2 NOTICES. Every notice and communication under this Agreement or
any of the other Loan Documents shall be in writing and shall be given by either
(i) hand delivery, (ii) first class mail (postage prepaid), (iii) reliable
overnight commercial courier (charges prepaid), or (iv) telecopy or other means
of electronic transmission, if confirmed promptly by any of the methods
specified in clauses (i), (ii) and (iii) of this sentence, to the following
addresses:
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If to the Debtor:
Cold Metal Products Inc.
0000 Xxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxxx, President and Chief
Executive Officer
Fax: (000) 000-0000
With a copy to:
Xxxxx Swados Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxx, LLP
00 Xxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx, Esquire
Fax: (000) 000-0000
If to the Lender:
The CIT Group/Equipment Financing, Inc.
1211 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Senior Vice President/Credit
Fax: (000) 000-0000
With a copy to:
Duane, Morris & Heckscher
Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx, Esquire
Fax: (000) 000-0000
Notice given by telecopy or other means of electronic
transmission shall be deemed to have been given and received when sent. Notice
by overnight courier shall be deemed to have been given and received on the date
scheduled for delivery. Notice by mail shall be deemed to have been given and
received three (3) calendar days after the date first deposited in the United
States Mail. Notice by hand delivery shall be deemed to have been given and
received upon delivery. A party may change its address by giving written notice
to the other party as specified herein.
10.3 COSTS, EXPENSES AND ATTORNEYS' FEES. Whether or not
the transactions contemplated by this Agreement and the other Loan Documents are
fully consummated, the Debtor
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shall promptly pay (or reimburse, as the Lender may elect) all costs and
expenses which the Lender has incurred or may hereafter incur in connection with
the negotiation, preparation, reproduction, interpretation and enforcement of
this Agreement and the other Loan Documents, the collection of all amounts due
hereunder and thereunder, and any amendment, modification, consent or waiver
which may be hereafter requested by the Debtor or otherwise required. Such costs
and expenses shall include, without limitation, the fees and disbursements of
counsel to the Lender (up to a maximum of $20,000), the costs of appraisal fees,
searches of public records, costs of filing and recording documents with public
offices, and similar costs and expenses incurred by the Lender. Upon the
occurrence of an Event of Default, such costs shall also include the fees of any
accountants, consultants or other professionals retained by the Lender. The
Debtor's reimbursement obligations under this Section shall survive any
termination of this Agreement. Lender acknowledges receipt of Fifty Thousand
Dollars ($50,000) from the Debtor which shall be applied toward costs and
expenses under this paragraph, including costs of counsel and other closing
costs.
10.4 SURVIVAL OF COVENANTS. This Agreement and all covenants,
agreements, representations and warranties made herein and in any certificates
delivered pursuant hereto shall survive the making of the Loan and the execution
and delivery of the Note and, subject to the provisions of 10.14 hereof, shall
continue in full force and effect until all of the Obligations have been fully
paid, performed, satisfied and discharged.
10.5 COUNTERPARTS; EFFECTIVENESS. This Agreement may be
executed in any number of counterparts and by the different parties on separate
counterparts. Each such counterpart shall be deemed to be an original, but all
such counterparts shall together constitute one and the same Agreement. This
Agreement shall be deemed to have been executed and delivered when the Lender
has received counterparts hereof executed by all parties listed on the signature
page(s) hereto.
10.6 HEADINGS. The headings of sections have been included
herein for convenience only and shall not be considered in interpreting this
Agreement.
10.7 PAYMENT DUE ON A DAY OTHER THAN A BUSINESS DAY. If any
payment due or action to be taken under this Agreement or any Loan Document
falls due or is required to be taken on a day which is not a Business Day, such
payment or action shall be made or taken on the next succeeding Business Day and
such extended time shall be included in the computation of interest.
10.8 JUDICIAL PROCEEDINGS. THIS AGREEMENT AND THE NOTE SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK. THE DEBTOR HEREBY IRREVOCABLY CONSENTS AND
AGREES THAT ANY LEGAL ACTION IN CONNECTION WITH THIS AGREEMENT MAY BE
INSTITUTED IN THE COURTS OF THE STATE OF NEW YORK, THE COUNTY OF NEW YORK, NEW
YORK OR THE UNITED STATES COURTS FOR THE SOUTHERN DISTRICT OF NEW YORK, AS
LENDER MAY ELECT, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE DEBTOR
HEREBY IRREVOCABLY ACCEPTS AND SUBMITS TO, FOR ITSELF AND IN RESPECT OF ITS
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PROPERTY, THE NON-EXCLUSIVE JURISDICTION OF ANY SUCH COURT, AND TO ALL
PROCEEDINGS IN SUCH COURTS. THE DEBTOR AND THE LENDER ACKNOWLEDGE THAT JURY
TRIALS OFTEN ENTAIL ADDITIONAL EXPENSES AND DELAYS NOT OCCASIONED BY NONJURY
TRIALS. THE DEBTOR AND THE LENDER AGREE AND STIPULATE THAT A FAIR TRIAL MAY BE
HAD BEFORE A STATE OR FEDERAL JUDGE BY MEANS OF A BENCH TRIAL WITHOUT A JURY. IN
VIEW OF THE FOREGOING, AND AS A SPECIFICALLY NEGOTIATED PROVISION OF THIS
AGREEMENT, THE DEBTOR AND THE LENDER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING UNDER THIS AGREEMENT, OR THE TRANSACTIONS RELATED
HERETO, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE; AND THE DEBTOR AND THE LENDER HEREBY AGREE AND
CONSENT THAT THE DEBTOR OR THE LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY
OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. FURTHER, THE DEBTOR AND
THE LENDER EACH WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
SUIT, ACTION OR PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE DEBTOR
ACKNOWLEDGES AND AGREES THAT THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF
THIS AGREEMENT AND THAT THE LENDER WOULD NOT EXTEND CREDIT TO THE DEBTOR IF THE
WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF THIS AGREEMENT.
10.9 INTEGRATION. This Agreement and the other Loan Documents
constitute the sole agreement of the parties with respect to the subject matter
hereof and thereof and supersede all oral negotiations and prior writings with
respect to the subject matter hereof and thereof.
10.10 AMENDMENT AND WAIVER. The Lender and the Debtor may from
time to time enter into written agreements amending or changing any provision of
this Agreement or any other Loan Document or the rights of the Lender or the
Debtor hereunder or thereunder, or may grant written waivers or consents to a
departure from the due performance of the obligations of the Debtor hereunder or
thereunder.
10.11 SUCCESSORS AND ASSIGNS.
-----------------------
(a) GENERALLY. This Agreement (i) shall be binding
upon the Debtor, and the Lender and their respective successors and assigns,
and (ii) shall inure to the benefit of the Debtor, and the Lender and their
respective successors and assigns, PROVIDED, however, that the Debtor may not
assign its rights hereunder or any interest herein without the prior written
consent of the Lender, and any such assignment or attempted assignment by the
Debtor shall be void and of no effect with respect to the Lender, and PROVIDED
FURTHER that the Lender may assign its rights hereunder or any
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interest herein subject to the consent of the Debtor which shall not be
unreasonably withheld or delayed.
(b) PARTICIPATIONS. Subject to the consent of the
Debtor, which consent shall not be unreasonably withheld, the Lender may from
time to time sell or otherwise grant participations in the Loan and the Note,
in whole or in part, and the holder of any such participation, if the
participation agreement so provides, (i) shall, with respect to its
participation, be entitled to all of the rights of the Lender and (ii) may
exercise any and all rights of setoff or banker's lien with respect thereto, in
each case as fully as though the Debtor were directly indebted to the holder of
such participation in the amount of such participation. The Lender may disclose
to prospective participants such information regarding the Debtor's affairs as
the Lender possess.
10.12 SEVERABILITY OF PROVISIONS. Any provision in this
Agreement that is held to be inoperative, unenforceable, voidable, or invalid in
any jurisdiction shall, as to that jurisdiction, be ineffective, unenforceable,
void or invalid without affecting the remaining provisions, and to this end the
provisions of this Agreement are declared to be severable.
10.13 SERVICE OF PROCESS. The Debtor irrevocably appoints each
and every officer of the Debtor as its attorneys upon whom may be served, by
regular or certified mail at the address set forth in Section 10.2 hereof, any
notice, process or pleading in any action or proceeding against it arising out
of or in connection with this Agreement or any of the other Loan Documents.
10.14 INDEMNIFICATION
---------------
(a) If, after receipt of any payment of all or any
part of the Obligations, the Lender is compelled to surrender such payment to
any Person or entity for any reason (including, without limitation, a
determination that such payment is void or voidable as a preference or
fraudulent conveyance, an impermissible setoff, or a diversion of trust funds),
then this Agreement and the other Loan Documents shall continue in full force
and effect, and the Debtor shall be liable for, and shall indemnify, defend and
hold harmless the Lender with respect to the full amount so surrendered.
(b) The Debtor shall indemnify, defend and hold
harmless the Lender with respect to any and all claims, expenses, demands,
losses, costs, fines or liabilities of any kind, including reasonable attorneys'
fees and costs, arising from or in any way related to (i) acts or conduct of the
Debtor under, pursuant to or related to this Agreement and the other Loan
Documents, (ii) Debtor's breach or violation of any representation, warranty,
covenant or undertaking contained in this Agreement or the other Loan Documents,
and (iii) Debtor's failure to comply with any or all laws, statutes, ordinances,
governmental rules, regulations or standards, whether federal, state, or local,
or court or administrative orders or decrees, including without limitation those
resulting from any Hazardous Materials or dangerous environmental condition
within, on, from, related to or affecting any real property owned or occupied by
the Debtor, unless resulting from the acts or conduct of the Lender constituting
gross negligence or willful misconduct.
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(c) The provisions of this section shall survive the
termination of this Agreement and the other Loan Documents and shall be and
remain effective notwithstanding the payment of the Obligations, the
cancellation of the Note, the release of any Encumbrance securing the
Obligations or any other action which the Lender may have taken in reliance
upon its receipt of such payment. Any cancellation of any of the Note, release
of any Encumbrance or other such action shall be deemed to have been
conditioned upon any payment of the Obligations having become final and
irrevocable.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be executed by their duly authorized officers on the date first above
written.
Attest: COLD METAL PRODUCTS, INC.
By: /s/ XXXX X. XXXXXXX By: /s/ A.R. XXXXXX
--------------------------- --------------------------
Title: Assistant Secretary Title: Vice President
THE CIT GROUP/EQUIPMENT
FINANCING, INC.
By: /s/ X. X. XXXXXXXXX
--------------------------
Title: Vice President
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