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Exhibit 4.4
CREDIT FACILITY AND SECURITY AGREEMENT
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THIS CREDIT FACILITY AND SECURITY AGREEMENT is made as of the 14th day
of September, 1992, by and among BANK ONE, CLEVELAND, NA, a national banking
association organized and existing under the laws of the United States of
America ("Lender"), with its principal place of business located at 000 Xxxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxx 00000; CONTINENTAL CONVEYOR & EQUIPMENT CO. L.P., a
limited partnership organized and existing under the laws of the State of
Delaware ("Continental"), with its principal place of business and executive
offices located at 000 Xxxx 0xx Xxxxxx, Xxxxx, X.X. Xxx 000, Xxxxxxxx, Xxxxxxx
00000 (the "Continental Principal Place of Business"); and XXXXXXX CONVEYOR CO.
L.P., a limited partnership organized and existing under the laws of the State
of Delaware ("Xxxxxxx"), with its principal place of business and executive
offices located at U.S. Route 178 South, X.X. Xxx 000, Xxxxxx, Xxxxx Xxxxxxxx
00000 (the "Xxxxxxx Principal Business Location") (each of "Continental" and
"Xxxxxxx" being sometimes referred to herein individually as a "Borrower" and
collectively as the "Borrowers").
WITNESSETH:
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WHEREAS, each Borrower desires, from time to time hereafter, to borrow
from Lender, and Lender is willing and may, from time to time hereafter, be
willing to make loans to each Borrower, subject to the terms and conditions set
forth herein,
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, and of any extension of credit heretofore, now or hereafter made by
Lender to either Borrower, the parties hereto hereby agree as follows:
1. GENERAL
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1.1 DEFINED TERMS. When used herein, the following terms shall have the
following meanings:
ACCOUNTS - All of each Borrower's respective accounts, contracts,
contract rights, notes, bills, drafts, acceptances, general intangibles, choses
in action, and all other debts, obligations and liabilities in whatever form,
owing to such Borrower from any Person, whether now existing or hereafter
arising, now or hereafter received by or belonging or owing to such Borrower,
for goods sold or leased or for services rendered, whether or not earned by
performance and whether or not evidenced by contracts, instruments or documents,
or however otherwise the same may have been established or created, all
guarantees and security therefor, all right, title and interest of such Borrower
in the merchandise or services which gave rise thereto, including the rights of
reclamation and stoppage in transit, and all rights of an unpaid seller of
merchandise or services.
ACCOUNT DEBTOR - Any Person who is or may become obligated to either
Borrower under, with respect to, or on account of an Account.
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ADJUSTED TANGIBLE NET WORTH - At any time, the aggregate total value of
the Borrowers' assets, plus Subordinated Debt of the Borrowers, less the
remaining value of the Borrowers' liabilities including deferred credits and/or
deferred income, specifically excluding the sum of:
(i) any surplus resulting from any write-up subsequent to
September 14, 1992 of assets of the Borrowers or assets acquired by the
Borrowers; and
(ii) good will, including any amounts, however designated on a
balance sheet of the Borrowers, representing the excess of the purchase
price paid for assets or stock acquired over the value assigned thereto
on the books of the Borrowers; and
(iii) proprietary rights of the Borrowers, including all
patents, trademarks, trade names and copyrights; and
(iv) any amount at which partnership units of the Borrowers
appear as assets on Borrowers' balance sheets; and
(v) loans and advances to Affiliates or to partners, officers
or employees of either Borrower or the partners, stockholders,
directors, officers or employees of either General Partner of either
Borrower or any Affiliate; and
(vi) Affiliate Accounts receivable.
AFFILIATE - The General Partner of each Borrower and each Subsidiary of
the General Partner of each Borrower, if any, or each Borrower or any other
Person:
(i) Which, directly or indirectly, through one or more
intermediaries controls, or is controlled by, or is under common
control with, either Borrower;
(ii) Which owns or controls, on an aggregate basis, including
all beneficial ownership and ownership or control as a trustee,
guardian or other fiduciary, at least ten percent (10%) or more of the
partnership units of either Borrower; or
(iii) Ten percent (10%) or more of the Voting Stock (or in the
case of a Person which is not a corporation, ten percent (10%) or more
of the equity interest) of which is beneficially owned or held by
either Borrower.
The term "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of Voting Stock, by contract or otherwise.
AGREEMENT - This Credit Facility and Security Agreement, as it may be
amended from time to time pursuant to Section 13.1 hereof.
BANKRUPTCY LAWS - All statutes, rules, regulations and other forms of
law, federal, state or otherwise, including, without limitation, the provisions
of Title 11 of the United States Code,
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in each instance as in effect from time to time, relating to the bankruptcy,
insolvency, liquidation or reorganization of debtors or the modification or
alteration of the rights of creditors.
BASE RATE - The Lender's Prime Rate for commercial loans, as in effect
from time to time, or such other designation announced by Lender in replacement
of such Prime Rate for commercial loans, which in either instance may not
necessarily be the most favorable or lowest or best rate offered by Lender.
CAPITAL EXPENDITURES - Amounts expended or which either Borrower
becomes obligated to expend, without regard to the manner in which such amounts
or the instrument pursuant to which they are made are characterized by any
Person, (i) for the acquisition, construction or installation of properties that
are to be included as fixed assets on either Borrower's books, (ii) for the
lease of any property that would be capitalized under GAAP, (iii) for the
incurrence of any other capitalized cost, or (iv) for any additions to or
replacements of any of the foregoing.
CASH COLLATERAL ACCOUNT - A commercial deposit account designated "cash
collateral account" maintained by each Borrower with Lender, without liability
by Lender to pay interest thereon, from which Cash Collateral Account Lender
shall have the exclusive right to withdraw funds until all Obligations are paid,
performed, satisfied, enforced and observed in full.
CODE - The Uniform Commercial Code as adopted and in force in the State
of Ohio or any other State where Collateral is located as from time to time in
effect.
COLLATERAL - The Fixed Collateral and Revolving Collateral,
collectively, together with all of the Property, and interests of Borrowers
therein, otherwise described in Section 4.1 of this Agreement and all other
Property of the Borrowers now or at any time or times hereafter subject to a
Lien in favor of Lender.
COLLATERAL LOCATION - The Continental Principal Business Location as to
Continental and the Xxxxxxx Principal Business Location as to Xxxxxxx and such
other locations as may be identified on EXHIBIT B attached hereto, if any,
together with such other locations at which any Collateral consisting of
tangible personal property may be located provided Lender has, in writing,
approved and designated such location as a Collateral Location hereunder,
subject to any conditions which Lender may reasonably designate and provided:
(i) Such location is a location as to which Borrowers give
Lender prior written notice at least forty-five (45) days prior to
using such location; and
(ii) Such location is located within the United States of
America; and
(iii) Each Borrower has executed and delivered to Lender
appropriate financing statements with respect to the Collateral located
at such location showing Borrowers as debtor and Lender as secured
party; and
(iv) A search of all filings made against Borrowers or such
Collateral in the jurisdiction in which the location is located, made
after the filing of the financing
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statements referred to in (iii) above, confirms that the Lender's
security interest in the Collateral at such location constitutes a
first priority Lien on such Collateral (subject to any Permitted
Liens); and
(v) Lender has obtained a written lien waiver in favor of
Lender from each lessor, mortgagee, bailee, warehouseman or similar
Person who may, by operation of law or otherwise, have any Lien in or
upon such Collateral at such location, in such form and containing such
assurances as may be requested by Lender.
COMMITMENT - Lender's letter to Borrower dated August 17, 1992, as
accepted by Borrowers on August 27, 1992.
COMMITMENT FEE - As defined in Section 2.9 of this Agreement.
CONTRACT RATE - A fluctuating rate equal to one and 50/100 percentage
points (1.50%) above the Base Rate.
CONTRACT YEAR - The twelve (12) month period which commences on each
anniversary of the execution of this Agreement.
CREDIT DOCUMENTS - This Agreement, the Notes, the Open-End Mortgage
Deeds and Security Agreements, the Environmental Inspection Easements, the
Environmental Indemnity Agreement, the Collateral Assignment of Security
Interest in Trademarks and Patents, the UCC-1 Financing Statements, the Lien
Waivers of Xxxxxx Wheel & Axle, Delta Rubber Company, Bookcliff Sales, Inc., Xxx
Xxxxxx Resources, Inc. and Fairmont Supply Company, the Agency Account
Agreements of Pittsburgh National Bank, Wachovia Bank & Trust Co. N.A. and NCNB
Texas National Bank, the Subordination Agreement of Nesco Holdings, Inc., the
Acknowledgment, Consent and Agreement of Dresser Industries, Inc. and all other
agreements, instruments and documents hereafter executed by Borrower or any
other Person and/or delivered to Lender in respect of the transactions
contemplated by this Agreement, in each instance as amended from time to time.
DEBT INSTRUMENTS - Any contract, agreement, instrument or other
document or arrangement under which either Borrower has (i) any indebtedness,
obligation or liability (including, without limitation, any contingent liability
under any Guaranty) for borrowed money or for the deferred portion of the
purchase price of any capital asset or for other capital financing or (ii) the
right or obligation to incur any such indebtedness, obligation or liability.
DEFAULT RATE - A fluctuating rate of interest equal to two percentage
points (2.0%) above (i) the rate of interest set forth in the applicable Note
for Obligations evidenced by a Note and (ii) above the Contract Rate for
Obligations not evidenced by a Note.
DEPOSITORY ACCOUNT - As defined in Section 5.2(A) of this Agreement.
DEPOSITORY AGREEMENT - As defined in Section 5.2(A) of this Agreement.
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DEPOSITORY BANK - As defined in Section 5.2(A) of this Agreement.
DISTRIBUTION - In respect of a Borrower means:
(i) The payment of any dividends or other distributions,
whether in cash, by transfer of property or otherwise, to the General
Partner of such Borrower or any limited partner of such Borrower
whether on partnership units of such Borrower or otherwise (except
distributions of such partnership units); and
(ii) The redemption or acquisition of any Securities of such
Borrower.
ELIGIBLE ACCOUNTS - Accounts of each Borrower to the extent arising out
of the completed bona fide sale or lease of goods or rendition of services by
such Borrower in the ordinary course of such Borrower's business and
substantially in accordance with the terms and conditions of all purchase
orders, contracts or other documents relating thereto, subject to Lender's
perfected security interest and no other Lien or security interest, and for a
liquidated amount maturing as stated in an invoice or other documentary evidence
relating thereto which has been provided, and is in form reasonably
satisfactory, to Lender, provided, that, unless Lender otherwise agrees, no such
Account shall be an Eligible Account if:
(i) It arises out of a sale made by such Borrower to an
Affiliate of such Borrower or to a Person controlled by an Affiliate of
such Borrower; or
(ii) It is due or unpaid more than ninety (90) days after the
invoice date thereof; or
(iii) Fifty percent (50%) or more of the aggregate Accounts
(determined on the basis of the aggregate dollar amount thereof)
payable by the Account Debtor thereof are at that time not otherwise
deemed Eligible Accounts hereunder; or
(iv) The Account Debtor claims any right of credit, allowance
or adjustment with respect to such Account by the Account Debtor,
except a discount allowed for prompt payment, or such Account is
otherwise disputed or contingent in any respect; or
(v) The Account Debtor has returned any of the goods from the
sale of which the Account arose; or
(vi) There exist any facts, events or circumstances which in
any way impair the validity, collectability or enforcement of such
Account or would tend to reduce the amount payable thereunder from the
face value of the invoice related thereto; or
(vii) The Account Debtor is also such Borrower's creditor or
supplier or the Account otherwise is or may become subject to any right
of offset by the Account Debtor; or
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(viii) The Account Debtor has commenced a voluntary case under
any Bankruptcy Laws, as now constituted or hereafter amended, or made
an assignment for the benefit of creditors, or a decree or order for
relief has been entered by a court having jurisdiction in the premises
in respect of the Account Debtor in an involuntary case under any
Bankruptcy Laws or any other petition or other application for relief
under any Bankruptcy Laws has been filed against the Account Debtor, or
the Account Debtor has failed, suspended business, ceased to be
solvent, or consented to or suffered a receiver, trustee, liquidator or
custodian to be appointed for it or for all or a significant portion of
its assets or affairs; or
(ix) The sale is to an Account Debtor outside the United
States unless the sale is on letter of credit, guaranty, or acceptance
terms, in each case acceptable to Lender in its reasonable judgment; or
(x) The sale to the Account Debtor is on a xxxx-and-hold,
guaranteed sale, sale-and-return, sale on approval, consignment or any
other repurchase or return basis or is evidenced by chattel paper; or
(xi) Lender reasonably believes that collection of such
Account is insecure or that such Account may not be paid by reason of
the Account Debtor's financial inability to pay; or
(xii) The Account Debtor is the United States of America or
any department, agency or instrumentality thereof, unless such Borrower
assigns its right to payment of such Account to Lender pursuant to the
Assignment of Claims Act of 1940, as amended; or
(xiii) The goods giving rise to such Account have not been
shipped and delivered to and received by the Account Debtor or the
services giving rise to such Account have not been fully performed by
such Borrower and received by the Account Debtor or the Account
otherwise does not represent a final sale; or
(xiv) The Account, when added to the aggregate balance of all
other Accounts of the Account Debtor, exceeds a credit limit determined
by Lender, in its reasonable discretion, to the extent such Account
exceeds such limit; or
(xv) Lender otherwise reasonably deems such Account to be
ineligible or that such Account or the Account Debtor is unsatisfactory
in any reasonable respect.
ELIGIBLE INVENTORY - Such Inventory, subject to Lender's perfected
security interest and no other Lien, consisting of raw materials and finished
goods owned by such Borrower and located at a Collateral Location which, in
Lender's reasonable opinion, is in good and saleable condition and not obsolete
or unmerchantable and which Lender, in its reasonable credit judgment, deems to
be Eligible Inventory, based on such credit and collateral considerations as
Lender may deem appropriate. Inventory shall not be Eligible Inventory to the
extent it consists of work-in-process, spare parts, property used in packaging
or shipping of Inventory, or
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Inventory of a like use or character to the foregoing or otherwise to the extent
such Inventory does not conform to all standards imposed by any governmental
agency, division or department thereof which has regulatory authority over such
goods or the use or sale thereof.
ERISA - The Employee Retirement Income Security Act of 1974, as amended
from time to time, and all rules and regulations from time to time promulgated
thereunder.
EVENT OF DEFAULT - As defined in Section 11.1 of this Agreement.
FINANCIAL STATEMENTS - The audited annual financial statements of each
of Continental and Xxxxxxx for their respective fiscal years ending December 31,
1991 and the balance sheet(s) of each of Continental and Xxxxxxx as of June 30,
1992 and the related statements of income for the fiscal period(s) then ended,
copies of which are attached hereto as EXHIBIT D-1.
FIXED COLLATERAL - All fixed assets of each Borrower including, without
limitation, all real property, machinery, equipment, furniture, furnishings,
fixtures, tools, dies, molds, parts, material handling equipment, supplies and
motor vehicles (titled and untitled) of every kind and description, now or
hereafter owned by either Borrower, or in which either Borrower may have or may
hereafter acquire any interest, wheresoever located, including, without
limitation, the items of Fixed Collateral described in EXHIBIT E attached to
this Agreement.
GAAP - Generally accepted accounting principles consistently applied.
GENERAL PARTNER - As to Continental, CC&E Corp., a corporation
organized and existing under the laws of the State of Delaware and the sole
general partner of Continental and as to Xxxxxxx, New Xxxxxxx Corp., a
corporation organized and existing under the laws of the State of Delaware and
the sole general partner of Xxxxxxx.
GUARANTY - All obligations of any Person (the "guarantor") which
guarantee, or in effect guarantee, or assure the payment of, or performance with
respect to, any indebtedness, liability, or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, including
but not limited to, obligations incurred by such guarantor through an agreement,
contingent or otherwise:
(i) To purchase such indebtedness, liability or obligation or
any Property or assets constituting security therefor; or
(ii) To advance or supply funds;
(a) For the purchase or payment of such indebtedness,
liability or obligation, or
(b) To maintain working capital or other balance
sheet condition or otherwise to advance or make available
funds for the purchase or payment of such indebtedness,
liability or obligations; or
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(iii) To lease Property or to purchase any Security or other
Property or services primarily for the purpose of assuring the owner of
such indebtedness, liability or obligation of the ability of the
primary obligor to make payment of the indebtedness, liability or
obligations; or
(iv) Otherwise to assure the owner of the indebtedness,
liability or obligation of the primary obligor against loss in respect
thereof.
INDEBTEDNESS - All of each Borrower's present and future obligations,
liabilities, debts, claims and indebtedness, contingent, fixed or otherwise,
however evidenced, created, incurred, acquired, owing or arising (whether under
written or oral agreement, by operation of law or otherwise), including, without
limitation, (i) the Obligations, (ii) any obligations or liabilities of any
Person which are secured by any Lien upon Property of either Borrower, even
though such Borrower has not assumed or otherwise become liable for the payment
thereof, (iii) any obligations or liabilities created or arising under any lease
(including capitalized leases) or under any conditional sales contract or other
title retention agreement with respect to Property used or acquired by either
Borrower, even though the rights and remedies of the lessor, seller or lender
are limited to repossession, (iv) any obligations or liabilities arising under
any lease or other contractual arrangement relating to security deposits,
advance payments or other prepaid funds in the hands of or held by either
Borrower subject to return or refund to any Person, (v) all unfunded pension
fund obligations and liabilities and (vi) deferred taxes of any nature.
INVENTORY - All inventory now owned or hereafter acquired by either
Borrower, including without limitation, all goods, merchandise, work in process,
raw materials, finished goods, and all other materials, supplies and tangible
personal property of any kind, nature or description held for sale or lease or
for display or demonstration, or furnished or to be furnished under contracts of
service or which are or which might be used or consumed in connection with the
manufacturing, packing, shipping, advertising, selling, leasing or furnishing of
such goods, merchandise or other personal property and all documents of title or
other documents pertaining thereto.
LENDER'S ACCOUNT - As defined in Section 5.2(C) of this Agreement.
LIEN - Any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, including, but not limited to,
the security interest or lien arising from a mortgage, encumbrance, pledge,
conditional sale, trust receipt or lease, consignment or bailment for security
purposes.
LOAN ACCOUNT - An account maintained by Lender on its books, which
shall evidence all advances under the Revolving Loan and Term Loan, interest
thereon, other amounts due Lender with respect to the Revolving Loan and Term
Loan, and all payments thereof by either Borrower.
LOCKBOX - As defined in Section 5.2(B) of this Agreement.
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MANAGEMENT FEES - Management fees and other similar type fees paid by a
Borrower to Nesco, Inc. paid at a rate not to exceed two percent (2%) of such
Borrower's gross sales and if an Event of Default has occurred and is continuing
at the time of payment of such fee or would occur by reason thereof or after
giving effect thereto, the same shall be paid at a rate not to exceed one
percent (1%) of such Borrower's gross sales.
MATERIAL ADVERSE EFFECT - As to any events, occurrences or conditions,
if the result thereof would, either singly or in the aggregate, have a material
and adverse effect on (i) either Borrower's Property, business, operations or
condition (financial or otherwise), (ii) either Borrower's ability to repay the
Obligations or (iii) Lender's Lien on the Collateral or the priority thereof.
MATERIAL AGREEMENTS - Those contracts, agreements, documents or other
arrangements required to be disclosed under the provisions of Section 7.1(C) of
this Agreement.
NET INCOME - The net income of each Borrower determined in accordance
with GAAP, provided, that in determining the same, there shall not be included
in gross revenues any earnings (i) properly attributable to the assets and
business of any Person acquired by said Borrower which were earned prior to the
date of such acquisition, (ii) relating to extraordinary accounting adjustments
or non-recurring items of income and, provided further, that the same shall be
net of all interest expenses, taxes, depreciation and amortization expenses and
any Tax Distributions made or Management Fees paid by said Borrower.
NOTES - The Revolving Note, Term Note and any other promissory note or
other instrument evidencing the Borrowers' obligation to repay any Obligations.
OBLIGATIONS - All debts, liabilities and obligations of either Borrower
to Lender under this Agreement and also any and all other debts, liabilities and
obligations of either Borrower to Lender of every kind and description, direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, including without limiting the generality of the foregoing,
any debt, liability or obligation of either Borrower to Lender under any
Guaranty, or of either Borrower to any other Person which Lender may have
obtained by assignment or otherwise and all interest, fees, charges and expenses
which at any time may be payable by either Borrower to Lender.
ORIGINATION FEE - As defined in Section 2.8 of this Agreement.
PENSION PLAN - Any pension plan, retirement payment plan,
profit-sharing plan, defined benefit or contribution plan or "employee pension
benefit plan" as defined in Section 3(2) of ERISA.
PERMITTED DISTRIBUTION - (i) Distributions by Continental for its
fiscal year ending December 31, 1992 to the partners of Continental pursuant to
its partnership agreement in the aggregate amount of Ten Million Dollars
($10,000,000), Eight Million Two Hundred and Seventy-five Thousand Dollars
($8,275,000) of which must be disbursed within sixty (60) days from the date
hereof and the remaining One Million Seven Hundred Twenty-five Thousand
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Dollars ($1,725,000) of which may not be disbursed until the remaining
$1,500,000 of the Term Loan is disbursed in accordance with Section 2.1 hereof,
but which, in any event, must be disbursed within sixty (60) days from the date
hereof and, (ii) commencing with calendar year 1994, so long as the Borrowers
are in compliance with the affirmative financial covenants contained in Sections
8.1(O), (P) and (Q) hereof and the negative financial covenant contained in
Section 8.2(K) hereof, aggregate annual Distributions by either Borrower to its
partners in an amount not to exceed fifty percent (50%) of such Borrower's Net
Income for the previous fiscal year beginning with each Borrower's fiscal year
ending December 31, 1993.
PERMITTED INDEBTEDNESS - As defined in Section 8.2(C) of this
Agreement.
PERMITTED LIENS - As defined in Section 8.2(G) of this Agreement.
PERSON - An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
PRIME RATE - The interest rate established from time to time by Lender
as the Lender's Prime Rate, whether or not publicly announced, which may not
necessarily be the most favorable or lowest or best rate offered by Lender.
PROPERTY - Any kind of property or asset, whether real, personal or
mixed, or tangible or intangible, or any interest, including, without
limitation, any leasehold interest, held in any such properties or assets.
PROJECTIONS - A proforma consolidated opening balance sheet of
Borrowers and proforma consolidated five (5) year projected balance sheet,
income statement and statement of cash flows for the Borrowers, copies of which
are attached hereto as EXHIBIT D-2.
RESERVE AMOUNT - A variable amount equal to Two Million Five Hundred
Thousand Dollars ($2,500,000) until June 30, 1993 and thereafter such amount
will be reduced by the aggregate amount of all principal payments made by
Borrowers on the Term Loan on or after July 1, 1993 as of the date of reference
thereto.
RESTRICTED INVESTMENT - As defined in Section 8.2(R) of this Agreement.
REVOLVING COLLATERAL - All of each Borrower's
(i) Inventory;
(ii) contract rights and general intangibles, including,
without limitation, goodwill, trademarks, trademark applications, trade
styles, trade names, patents, patent applications, and deposit accounts
whether now owned or hereafter created or acquired;
(iii) Accounts and other receivables, together with all
customer lists, original books and records, ledger and account cards,
computer tapes, discs, printouts and records, whether now in existence
or hereafter created; and
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(iv) documents, warehouse receipts, instruments and chattel
paper, whether now owned or hereafter created.
REVOLVING LOAN - As defined in Section 2.3 of this Agreement.
REVOLVING NOTE - The revolving promissory note to be executed by
Borrowers in the form attached as EXHIBIT C-3 to this Agreement (with such
changes or modifications, if any, to which Lender may agree) evidencing the
Revolving Loan made by Lender pursuant to Section 2.3 of this Agreement,
together with all amendments thereto and all promissory notes issued in
substitution therefor or replacement thereof.
SECURITY - As defined in Section 2(1) of the Securities Act of 1933 as
amended.
SUBORDINATED DEBT - Such Indebtedness which is subordinated and junior
in right of payment to the Obligations to the extent, in such manner, and
pursuant to an instrument evidencing such subordination, acceptable to Lender.
SUBSIDIARY - Any corporation of which more than 50% of the Voting Stock
is at any time, directly or indirectly, owned by either Borrower and/or one or
more Subsidiaries.
TAX DISTRIBUTIONS - Distributions made by a Borrower to its partners
for actual or estimated income tax liability relating to income of such Borrower
attributed to such partners, provided that the same shall at all times be
subject to certain letter agreements dated of even date herewith between each
Borrower and Lender relating to such Distributions and acknowledged by each
Borrower's respective partners.
TERM LOAN - As defined in Section 2.1 of this Agreement.
TERM NOTE - The term promissory note to be executed by Borrowers in the
form attached as EXHIBIT C-1 to this Agreement (with such changes or
modifications, if any, to which Lender may agree) evidencing the Term Loan made
by Lender pursuant to Section 2.1 of this Agreement, together with all
amendments thereto and all notes issued in substitution therefor or replacement
thereof.
VOTING STOCK - Securities of any class or classes of a corporation
which, at the time of reference thereto, entitle the holders to elect corporate
directors.
1.2 ACCOUNTING TERMS. Any accounting terms used in this Agreement which
are not otherwise specifically defined shall have the meanings customarily given
them in accordance with GAAP.
1.3 OTHER TERMS. All other terms contained in this Agreement shall
have, unless the context indicates to the contrary, the meanings provided for by
the Code as adopted in the State of Ohio to the extent the same are used or
defined therein.
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1.4 USE OF PLURAL FORM. All definitions shall be equally applicable to
both the singular and plural forms of the defined terms.
2. LOANS AND ADVANCES
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Subject to the terms and conditions of this Agreement and each of the
other Credit Documents, and otherwise provided that no loan advances need be
made by Lender if, at the date of any request for a loan advance hereunder by
either Borrower, an Event of Default, or event or condition which, with notice,
lapse of time or both, would constitute an Event of Default, then exists, Lender
will provide the credit facility described in this Section 2 for the account of
the Borrowers.
2.1 TERM LOAN. Lender will make a term loan (the "Term Loan") to
Borrowers in the principal amount of Eleven Million Dollars ($11,000,000). The
Term Loan shall be subject to repayment in accordance with, and bear interest as
provided in Section 2.2 of this Agreement and shall otherwise be evidenced by,
and repayable in accordance with the Term Note. $9,500,000 of the Term Loan
shall be disbursed at the time of closing of this credit facility and the
remaining $1,500,000 of the Term Loan shall be disbursed on or prior to November
1, 1992 upon the delivery by Borrowers to Lender of an ALTA Mortgagees' Policy
of Title Insurance covering six parcels of real property situated in Xxxxxx
County, Alabama and owned or to be acquired by Borrowers. Such Title Policy
shall (a) show Borrower(s) as the owner in fee simple of all six parcels, (b)
insure Lender as the holder of the first and best mortgage lien on each of such
parcels, free and clear of all liens, encumbrances and other title defects
unacceptable to Lender and (c) be otherwise reasonably acceptable in form and
substance to Lender.
2.2 PAYMENT TERMS OF THE TERM LOAN.
(A) INTEREST. The Term Loan shall bear interest on the unpaid
principal balance until the date paid at a rate per annum equal to two
percent (2.0%) in excess of the Base Rate, such interest being payable
monthly on the 1st day of each month, and at maturity, commencing
October 1, 1992. Interest shall be computed on a 360-day year basis
based upon the actual number of days elapsed.
(B) FIXED PRINCIPAL INSTALLMENTS. Subject otherwise to the
terms and provisions of the Term Note, the principal balance of the
Term Loan shall be payable in eighty-three (83) consecutive equal
monthly installments of Ninety-One Thousand Six Hundred Sixty-Seven
Dollars ($91,667) each, commencing November 1, 1992, and continuing on
the 1st day of each month thereafter and a final installment of Three
Million Three Hundred Ninety-One Thousand Six Hundred Thirty-Nine
Dollars ($3,391,639) on October 1, 1999.
2.3 REVOLVING LOAN.
(A) REVOLVING LOAN. Subject at all times to the terms hereof,
the Lender will, until September 14, 1995 make such loans to each
Borrower as from time to time each Borrower requests (the "Revolving
Loan") consisting of advances made by Lender
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13
against the value of each Borrower's respective Eligible Inventory and
Eligible Accounts. Such advances are anticipated to be repaid by
Borrowers and thereafter readvanced by Lender without any premium or
penalty therefor. Subject to the provisions of Subsection (B) of this
Section 2.3, the aggregate unpaid principal of the Revolving Loan
outstanding at any one time shall not exceed the lesser of (a) the line
of credit approved for Borrowers, which is currently Eleven Million
Five Hundred Thousand Dollars ($11,500,000) or (b) the sum of (i)
eighty-five percent (85%) of the unpaid face amount of each Borrower's
respective Eligible Accounts (or such other percentages of each
Borrower's respective Eligible Accounts as may from time to time be
fixed by the Lender upon notice to the Borrowers) and (ii) the lesser
of (1) fifty percent (50%) of the cost or market value, whichever is
lower, determined on a first-in, first-out basis, of each Borrower's
respective Eligible Inventory located at the Continental Collateral
Location or Xxxxxxx Collateral Location, as applicable (or such other
percentages of each Borrower's respective Eligible Inventory as may
from time to time be fixed by the Lender upon notice to the Borrowers)
or (2) Four Million Five Hundred Thousand Dollars ($4,500,000) (or such
other dollar amount as may from time to time be fixed by the Lender
upon notice to the Borrowers).
(B) MAXIMUM BORROWINGS AVAILABLE UNDER THE REVOLVING LOAN.
Notwithstanding anything to the contrary contained in this Section 2.3,
at no time shall the aggregate loans outstanding to the Borrowers at
any time under the Revolving Loan exceed Eleven Million Five Hundred
Thousand Dollars ($11,500,000) LESS the Reserve Amount; provided
however, that advances under the Revolving Loan to either Borrower
shall not exceed that which is permitted on the basis of the advance
rate percentages set forth in Section 2.3(A)(b) above as the same are
applied to each respective Borrower.
(C) PAYMENT. The Revolving Loan shall be payable on September
14, 1995 and bear interest as provided in Section 2.4 of this Agreement
and shall otherwise be evidenced by, and repayable in accordance with,
the Revolving Note, but in the absence of such promissory note shall be
evidenced by the Lender's record of disbursements and repayments.
(D) LETTERS OF CREDIT. Lender may, in its sole discretion,
without any obligation to do so, issue for the account of either
Borrower commercial and/or standby letters of credit up to a maximum
aggregate face amount of One Million Five Hundred Thousand Dollars
($1,500,000). The face amount of each such letter of credit shall be
deemed an advance under the Revolving Loan and shall be subject to the
limitations set forth under Subsection 2.3(A) hereof pertaining to
Eligible Accounts and Eligible Inventory. In no event, however, shall
the aggregate total face amount of letters of credit issued by the
Lender for the account of the Borrowers outstanding at any time exceed
the sum of One Million Five Hundred Thousand Dollars ($1,500,000).
2.4 INTEREST ON THE REVOLVING LOAN. The Revolving Loan shall bear
interest on the unpaid principal balance from time to time outstanding until the
date paid at a rate per annum equal to the Contract Rate, such interest being
payable monthly on the 1st day of each month, and at maturity, commencing
October 1, 1992. Any increase or decrease in the interest rate
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14
resulting from a change in the Base Rate shall become effective on the date of
such change. Interest shall be computed on a 360-day year basis based upon the
actual number of days elapsed.
2.5 OPTIONAL CHARGE AGAINST THE REVOLVING LOAN. To the extent Borrowers
do not remit, when due, any payments of interest or, in the case of loans other
than the Revolving Loan, any payment of principal, or any other payment required
to be made by Borrowers to the Lender pursuant to the terms of any of the Credit
Documents, the Lender may, at its option, make such payment by increasing the
outstanding principal balance of the Revolving Loan in order to prevent such
amount from becoming past due, but it is expressly acknowledged and agreed that
Lender shall be under no obligation to do so.
2.6 LOAN ACCOUNT. Lender shall debit to the Loan Account the amount of
each advance under the Revolving Loan, all interest on the Revolving Loan and
the amount of all other compensation or fees payable to Lender in respect of the
Term Loan or the Revolving Loan and shall credit to the Loan Account the amount
of each payment of principal and interest on the Revolving Loan and the amount
of all payments of any other amounts payable under the Revolving Loan by
appropriate entries. Any accounting rendered by the Lender to the Borrowers
shall be deemed correct and conclusively binding upon the Borrowers, except for
manifest errors, unless the Borrowers notify the Lender by certified mail,
return receipt requested, within five (5) business days after the date when each
such accounting is delivered to the Borrowers.
2.7 ALL ADVANCES TO CONSTITUTE ONE LOAN. The Term Loan and the
Revolving Loan and all other sums owed by Borrowers to Lender under this
Agreement, whether or not evidenced by the Notes, shall constitute one
obligation of Borrowers, secured by Lender's lien on and security interest in
all of the Collateral. Borrowers shall jointly and severally be liable to Lender
for all Obligations hereunder, regardless of whether such Obligations arise as a
result of advances made directly to Borrowers, it being stipulated and agreed
that all monies advanced by Lender hereunder inure to the benefit of each
Borrower, and that Lender is relying on the liability of each Borrower in
extending credit and otherwise making advances hereunder.
2.8 ORIGINATION FEE. In order to compensate Lender for its services in
preparing and reviewing the Credit Documents and the documentation relating
thereto in connection with this Credit Facility, Borrower shall pay to Lender on
the date hereof an origination fee (the "Origination Fee") of One Hundred
Twenty-Five Thousand Dollars ($125,000).
2.9 COMMITMENT FEE. Borrowers shall pay to Lender on September 14, 1993
and annually thereafter, a commitment fee (the "Commitment Fee") of one-fourth
of one percentage point (0.25%) of the amount of the line of credit approved for
Borrowers under the Revolving Loan pursuant to Section 2.3(A) of this Agreement,
whether the Borrowers shall be entitled to request such amount pursuant to
Section 2.3(A) of this Agreement or not.
- 14 -
15
3. DEFAULT INTEREST
----------------
Upon and after the occurrence of an Event of Default, and during the
continuation thereof, unless Lender otherwise agrees, the Obligations shall bear
interest, calculated daily on the basis of a three hundred and sixty (360) day
year, for the actual days elapsed, at the Default Rate.
4. COLLATERAL; GENERAL TERMS
-------------------------
4.1 GRANT OF SECURITY INTEREST. To secure the prompt payment and
performance of the Obligations, and in addition to any other Collateral securing
the Obligations, each Borrower hereby grants to Lender a continuing security
interest in and to all of the following Property of such Borrower, whether now
owned or existing or hereafter acquired or arising and wheresoever located:
(A) all Fixed Collateral;
(B) all Revolving Collateral;
(C) any and all deposits or other sums at any time credited by
or due from Lender to such Borrower, whether in a Depository Account or other
account, together with any and all instruments, documents, policies and
certificates of insurance, securities, goods, Accounts, choses in action,
general intangibles, chattel paper, cash or other Property, and the proceeds of
each of the foregoing, to the extent owned by the Borrower or in which such
Borrower has an interest and which now or hereafter are at any time in the
possession or control of the Lender or in transit by mail or carrier to or from
Lender or in the possession of any Person acting on Lender's behalf, without
regard to whether Lender received the same in pledge, for safekeeping, as agent
for collection or transmission or otherwise or whether Lender had conditionally
released the same, and any and all balances, sums, proceeds and credits of such
Borrower with, and any claims of such Borrower against, Lender;
(D) All accessions to, substitutions for and all replacements,
products and proceeds of the Property described in Subsections (A), (B) and (C)
above, including, without limitation, proceeds of insurance policies insuring
such Property; and
(E) All books, records and other property (including without
limitation, credit files, programs, printouts and other materials and records)
of such Borrower pertaining to any of the Property described in Subsections (A),
(B), (C) or (D) above.
It is acknowledged and agreed that the Obligations shall be secured by
a first priority lien on and security interest in the Collateral.
4.2 REPRESENTATIONS, WARRANTIES AND COVENANTS -- COLLATERAL. Each
Borrower represents, warrants and covenants to Lender that, except as otherwise
permitted herein or in any of the other Credit Documents:
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(A) Borrower's present Collateral is now, and Borrower's
hereafter acquired Collateral at the time acquired will be, and so long as such
Borrower is obligated to Lender will continue to be, owned solely by such
Borrower and no other Person has or will have any right, title, interest, claim
or Lien therein, thereon, or thereto, whether by assignment or otherwise
pursuant to any Lien, encumbrance or security interest, other than pursuant to
Liens constituting Permitted Liens hereunder;
(B) Except as provided in Section 8.1(C) with regard to taxes,
levies and other charges being contested in good faith, the Borrower shall pay
and discharge when due all taxes, levies, and other charges upon the Collateral
and shall defend Lender against and save Lender and the Collateral harmless from
all claims of any Person with respect thereto; and
(C) The Borrower will at all times keep accurate and complete
records of all Collateral.
4.3 PERFECTION OF LENDER'S SECURITY INTEREST IN COLLATERAL. Each
Borrower agrees to execute such financing statements provided for by applicable
law, and to otherwise take such other action, and execute such assignments or
other instruments or documents, in each case as Lender may request, to evidence,
perfect or record Lender's security interest in the Collateral. Each Borrower
hereby authorizes Lender to execute and file any such financing statement or
continuation statement on such Borrower's behalf. The parties agree that a
carbon, photographic or other reproduction of this Agreement shall be sufficient
as a financing statement.
4.4 LOCATION OF COLLATERAL. Each Borrower warrants and covenants that,
except for Inventory in transit and as otherwise approved by Lender in writing,
all Collateral is, and will remain, at all times, at a Collateral Location.
4.5 INSURANCE. Each Borrower agrees to maintain and pay for insurance,
including, without limitation, insurance upon all tangible Collateral wherever
located, in storage or in transit in vehicles, including goods evidenced by
documents, covering casualty, hazards, public liability or such other risks in
such amounts and with such insurance companies as shall in each instance be
reasonably satisfactory to Lender. Each Borrower shall deliver such policies, or
copies of such policies and certificates evidencing such insurance, to Lender
with satisfactory loss payable endorsements naming Lender as its interest may
appear. Each policy of insurance or endorsement shall contain a provision
requiring thirty (30) days advance written notice to Lender in the event of
cancellation of the policy for any reason whatsoever or any modification thereto
and a clause that the interest of Lender shall not be impaired or invalidated by
any act or neglect of such Borrower or other owner of the Property nor by the
occupation of the premises for purposes more hazardous than are permitted by
said policy. Each Borrower agrees to deliver to Lender, promptly as rendered,
true copies of all reports made to insurance companies. Each Borrower
irrevocably makes, constitutes and appoints Lender (and all officers, employees
or agents designated by Lender) as such Borrower's true and lawful
attorney-in-fact and agent, with full power of substitution, to make and adjust
claims under such policies of insurance in excess of $100,000 (provided,
however, that Lender agrees to consult with such Borrower prior to finally
making, settling, or adjusting claims under such policies of insurance),
receive, and endorse the name of such Borrower on any check, draft, instrument
or other item
- 16 -
17
or payment for the proceeds of such policies of insurance and make all
determinations and decisions with respect to such policies of insurance or to
pay any premium in whole or in part relating thereto. Lender, without waiving or
releasing any obligation or default by such Borrower hereunder, may (but shall
be under no obligation to do so) at any time or times thereafter maintain such
action with respect thereto which Lender deems advisable. All sums disbursed by
Lender in connection therewith, including reasonable attorneys' fees, court
costs, expenses and other charges relating thereto, shall be payable, on demand,
and until paid by such Borrower to Lender, with interest thereon at the Contract
Rate, shall be additional Obligations hereunder secured by the Collateral.
4.6 PROTECTION OF COLLATERAL: REIMBURSEMENT. All insurance expenses and
all expenses of protecting, storing, warehousing, insuring, handling,
maintaining, and shipping any Collateral, any and all excise, property, sales,
use or other taxes imposed by any state, federal or local authority on any of
the Collateral, or in respect of the sale thereof, or otherwise in respect of
either Borrower's business operations which, if unpaid, could result in the
imposition of any Lien upon the Collateral, shall be borne and paid by
Borrowers. If any Borrower fails to promptly pay any portion thereof when due,
except as may otherwise be permitted hereunder or under any of the other Credit
Documents, Lender may, at its option, but shall not be required to, pay the
same. All sums so paid or incurred by Lender for any of the foregoing and any
and all other sums for which any Borrower may become liable hereunder and all
costs and expenses (including attorneys' fees, legal expenses, and court costs)
which Lender may incur in enforcing or protecting its Lien on or rights and
interest in the Collateral or any of its rights or remedies under this or any
other agreement between the parties hereto or in respect of any of the
transactions to be had hereunder shall be repayable on demand and, until paid by
such Borrower to Lender with interest thereon at the Contract Rate, shall be
additional Obligations hereunder secured by the Collateral. Lender shall not be
liable or responsible in any way for the safekeeping of any of the Collateral or
for any loss or damage thereto or for any diminution in the value thereof,
except gross negligence or wilful misconduct on the part of Lender while the
Collateral is in the possession of or under the control of Lender, or for any
act or default of any warehouseman, carrier, forwarding agency, or other Person
whomsoever.
4.7 INSPECTION. Lender (by any of its officers, employees, agents or
representatives) shall have the right to inspect the Collateral, the premises
upon which any of the Collateral is located, and any and all books, records,
journals, orders, receipts or other correspondence (and to make extracts or
copies thereof as Lender may desire) to verify the amount, quality, quantity,
value and condition of, or any other matter relating to, the Collateral or the
financial condition of either Borrower.
5. PROVISIONS RELATING TO ACCOUNTS
-------------------------------
5.1 CONDITIONS. With respect to each Borrower's Accounts, Lender may
rely, in determining which Accounts are Eligible Accounts, on all reports,
statements or representations made by each Borrower with respect to any such
Account or Accounts. In the event any Account is or becomes ineligible,
Borrowers shall promptly notify Lender upon obtaining knowledge of the same and,
in any event, if any such report, statement or representation by any Borrower is
breached or otherwise proves untrue, regardless of either Borrower's knowledge
- 17 -
18
thereof, Lender may deem such Accounts ineligible, but Lender shall retain its
security interest in all Accounts, eligible and ineligible, until all
Obligations are paid and satisfied in full.
5.2 COLLECTION OF ACCOUNTS.
----------------------
(A) All checks, drafts, cash and other proceeds realized from
the sale of any Inventory or otherwise from the sale or other disposition of any
of the other Collateral, including, without limitation, all proceeds realized
from the collection of the Accounts or otherwise pursuant to any contract right,
note, xxxx, draft, acceptance, chose in action and other like forms of general
intangibles, and all remittances received by either Borrower in respect to the
foregoing, shall, upon receipt by the Borrower, be held by such Borrower as
trustee of an express trust for Lender's sole benefit and subject to immediate
deposit (in their original form duly endorsed in blank) in the Cash Collateral
Account or in a special account over which Lender has the sole right and power
of withdrawal, maintained at a financial institution acceptable to Lender (such
financial institution and account being herein referred to as the "Depository
Bank" and "Depository Account" respectively). The Depository Account shall be
subject to the written agreement of the Depository Bank to waive any right of
setoff it might otherwise claim to have against any funds in the Depository
Account and to otherwise charge any costs relative to the Depository Account to
Borrowers or such other account(s) as either Borrower may maintain with the
Depository Bank, such agreement (the "Depository Agreement") to be in form and
substance acceptable to Lender. Lender assumes no responsibility for any claim
of accord and satisfaction or release with respect to funds which have been
deposited in the Depository Account.
(B) Upon the occurrence and during the continuance of an Event
of Default, if at any time requested by Lender, Continental shall instruct all
Account Debtors to mail their payments directly to a designated post office
lockbox (a "Lockbox") maintained at Continental's expense, with respect to which
only Lender or, should Lender so agree, a designated financial institution shall
have the right of access and all payments so received shall be subject to
immediate deposit into the Depository Account.
(C) All funds held in the Depository Account shall be subject
to transfer to the Cash Collateral Account, an account designated by the Lender
(the "Lender's Account") as set forth in the Depository Agreement or as
otherwise designated by Lender. The application of any funds to the payment of
the Obligations shall not occur until Lender's receipt of such funds in cleared
federal funds in the Cash Collateral Account or in Lender's Account. Lender
agrees that all funds received by Lender by wire transfer for either Borrower's
account prior to 10:00 a.m. on any business day of Lender shall be deemed
cleared federal funds in the Cash Collateral Account. Funds received by Lender
by wire transfer for either Borrower's account after 10:00 a.m. on any business
day of Lender shall be deemed cleared federal funds in the Cash Collateral
Account on the next business day of Lender. The order and method of application
of such payments shall be in the sole discretion of Lender.
(D) Lender reserves the right upon the occurrence and during
the continuance of an Event of Default to notify Account Debtors and other
Persons indebted to Borrowers of Lender's interest in any such amounts payable
to Borrowers and to instruct such Account
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19
Debtors and other Persons to remit the same directly to Lender and upon
collection of the same and deposit in the Cash Collateral Account, or in
Lender's Account of all funds arising therefrom (less any costs of collection
and other charges or expenses incurred in connection therewith as hereinafter
provided) in cleared federal funds, the same shall be subject to application to
the Obligations.
5.3 VERIFICATION OF ACCOUNTS. Any of Lender's officers, employees, or
agents shall have the right, at any time or times hereafter, in the name of
Lender, any designee of Lender or in the name of the Borrowers, to verify the
validity, amount or any other matter relating to any Accounts by mail,
telephone, telegraph, or otherwise.
5.4 ASSIGNMENTS, RECORDS AND SCHEDULES OF ACCOUNTS. Each Borrower shall
execute and deliver to Lender, on forms supplied by Lender and no less
frequently than once a week, written assignments of all of its Accounts after
shipment of the subject goods, together with copies of invoices and/or invoice
registers related thereto as Lender may from time to time request and, on or
before the last day of each month from and after the date hereof, each Borrower
shall deliver to Lender, in form and substance acceptable to Lender, a detailed
aged trial balance, dated as of the last day of the preceding month, of all then
existing Accounts specifying the names, face value and dates of invoices for
each Account Debtor obligated on an Account so listed. In addition, each
Borrower shall, upon Lender's request, furnish Lender with copies of proof of
delivery and the original copy of all documents relating to the Accounts,
including, without limitation, repayment histories and present status reports,
relating to the Accounts and such other matters and information relating to the
status of then existing Accounts as Lender shall reasonably request.
6. PROVISIONS RELATING TO INVENTORY
--------------------------------
6.1 INVENTORY REPRESENTATIONS AND WARRANTIES. In determining which
items of Inventory constitute Eligible Inventory, Lender may rely on all
reports, statements or representations made by either Borrower with respect to
any Inventory. In the event any Inventory is or becomes ineligible, Borrowers
shall promptly notify Lender upon obtaining knowledge of the same and, in any
event, if any such report, statement or representation by either Borrower is
breached or otherwise proves untrue, regardless of either Borrower's knowledge
thereof, Lender may deem such Inventory ineligible, but Lender shall retain its
security interest in all Inventory, eligible and ineligible, until all
Obligations are paid and satisfied in full and this Agreement is terminated.
6.2 RETURNED INVENTORY. Each Borrower shall execute and deliver to
Lender, on forms supplied by Lender and no less frequently than once a month, a
report of returns of any Inventory and as requested by Lender, provide to Lender
copies of any credit memorandums to the Account Debtor issued in respect
thereof. In all cases, Lender shall be promptly notified of returns of
Inventory, the reason for such return and the location of such returned
Inventory and, unless otherwise agreed by Lender, no such returned Inventory
shall be Eligible Inventory for purposes of this Agreement.
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20
6.3 INVENTORY REPORTS. Each Borrower shall furnish Lender with such
reports regarding Inventory as Lender may request at least once each month. Such
reports shall be on forms requested or provided by Lender and shall contain such
detailed information satisfactory to Lender. Each Borrower shall otherwise
conduct a physical count of its Inventory annually so long as no Event of
Default has occurred, supplying Lender with a copy of such counts accompanied by
a report of the value (at the lower of cost or market value) thereof. Upon the
occurrence and during the continuance of an Event of Default, each Borrower
shall conduct a physical count of its Inventory at such intervals as Lender may
request.
7. REPRESENTATIONS AND WARRANTIES
------------------------------
7.1 GENERAL REPRESENTATIONS AND WARRANTIES. As an inducement to Lender
to make advances hereunder, each Borrower warrants, represents and covenants to
Lender that:
(A) ORGANIZATION AND OUALIFICATION. Such Borrower is a limited
partnership duly formed, validly existing and in good standing under the laws of
the State of Delaware and has duly qualified and is authorized to do business
and is in good standing as a foreign partnership in each other state or
jurisdiction where the character of its Property or the nature of its activities
makes such qualification necessary, or in which the failure of such Borrower to
be so qualified would have a Material Adverse Effect.
(B) PARTNERSHIP POWERS. Such Borrower has the partnership
right and power and is duly authorized and empowered to enter into, execute,
deliver and perform this Agreement and each of the other Credit Documents to
which it is a party. This Agreement and each of the other Credit Documents to
which such Borrower is a party have each been duly authorized and approved by
the General Partner of such Borrower, and are the legal, valid and binding
obligations of such Borrower, enforceable against such Borrower in accordance
with their respective terms, except to the extent such enforceability is limited
by bankruptcy, reorganization, moratorium or similar laws affecting generally
the enforcement of creditors' rights and remedies from time to time in effect.
The execution, delivery and performance of this Agreement and each of the other
Credit Documents to which it is a party will not conflict with or result in any
breach of any of the provisions of, or constitute a default under, or result in
the creation of any Lien (other than Permitted Liens) upon any Property of such
Borrower under the provisions of, the Partnership Agreement of such Borrower or
any Material Agreement.
(C) MATERIAL AGREEMENTS. Except as disclosed on EXHIBIT F
hereto, such Borrower is not a party to nor is such Borrower or any of its
Property bound by (i) any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality which could have a Material
Adverse Effect, (ii) any Debt Instrument, (iii) any security agreement,
mortgage, deed of trust, pledge, assignment or other document or arrangement
whereby any Lien upon any of such Borrower's Property exists in favor of any
Person other than Lender except for Permitted Liens, (iv) any lease (capital,
operating or otherwise), whether as lessee or lessor thereunder where the amount
involved is in excess of the sum of $50,000 per annum, or extends for more than
one year, or both, which, if violated, could have a Material Adverse Effect, (v)
any contract, commitment, agreement or other arrangement involving the purchase
- 20 -
21
or sale of any Inventory by such Borrower, or the license of any right to or by
such Borrower, which, if terminated for any reason, could result in a Material
Adverse Effect, (vi) any contract, commitment, agreement or other arrangement
with any Affiliate which, if violated, could have a Material Adverse Effect,
(vii) any management or employment contract or contract for personal services
with any Person, not otherwise an Affiliate, which is not otherwise terminable
at will or on less than one (1) year's notice without liability which, if
violated, could have a Material Adverse Effect, (viii) any collective bargaining
agreement which, if violated, could have a Material Adverse Effect, (ix) any
Pension Plan which, if violated, could have a Material Adverse Effect or (x) any
other contract, agreement, understanding or arrangement which, if violated,
could have a Material Adverse Effect.
(D) GENERAL MATTERS. Except as disclosed on EXHIBIT G hereto,
such Borrower (i) has not, during the preceding five (5) years, been known as or
operated under or otherwise used any other corporate or fictitious name, trade
name or tradestyle, (ii) has not, during the preceding five (5) years, been the
surviving Person of any merger or consolidation and has no Affiliates, except
for its General Partner and its limited partners and any Affiliates of any of
them, (iii) has no lawsuits, actions, investigations or other proceedings
pending or to the best of its knowledge currently threatened against it of any
nature whatsoever in any court or before any governmental authority, arbitration
board or other tribunal, (iv) holds all material permits, certificates,
licenses, orders, registrations, franchises, authorizations and other approvals
from all federal, state, local and foreign governmental and regulatory bodies
necessary for the conduct of its business operations in compliance with
applicable law, (v) has to the best of its knowledge fully complied in all
material respects with all applicable statutes, rules, regulations and orders,
federal, state, local or foreign, including, without limitation, equal
employment practices, (vi) is not in violation of or in default with respect to
any material term or condition of any Material Agreement, (vii) has not received
any notice to the effect that it is not substantially in full compliance with
any of the requirements of ERISA or (viii) has no actual knowledge of material
grievances, disputes or controversies outstanding with any union or other
organization of its employees or threats of work stoppage, strike or pending
demands for collective bargaining which, if any of the foregoing representations
in (i) - (viii) hereof were breached, could have a Material Adverse Effect.
(E) USE OF PROCEEDS. Borrower's uses of the proceeds of the
Term Loan and Revolving Loan made by Lender to Borrowers pursuant to this
Agreement are, and will continue to be, legal and proper partnership uses, duly
authorized by the General Partner of such Borrower, and such uses are and will
continue to be consistent with the Commitment and all applicable laws and
statutes, as in effect from time to time. Such Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of any regulation of the Board of Governors of the
Federal Reserve System), and no part of the proceeds of the Term Loan and
Revolving Loan to Borrowers will be used to purchase or carry (or refinance any
borrowing, the proceeds of which were used to purchase or carry) any margin
stock, or to extend credit to others for the purpose of purchasing or carrying
margin stock.
(F) PATENTS AND TRADEMARKS. Such Borrower owns or possesses
all the patents, trademarks, service marks, copyrights, licenses, and rights
with respect to the foregoing
- 21 -
22
necessary for the conduct of its business as now conducted without any known
conflict with the rights of others. All such patents, trademarks, service marks,
trade names, copyrights, licenses and other similar intellectual property rights
are listed on EXHIBIT H attached hereto.
(G) SOLVENT FINANCIAL CONDITION. As of the date hereof, and
after giving effect to the transactions contemplated by this Agreement, to the
best of such Borrower's knowledge and belief (i) the fair saleable value of such
Borrower's assets is greater than the amount required to pay its total
liabilities, (ii) such Borrower is able to pay its debts as they mature in the
ordinary course of business and is not otherwise insolvent in any respect and
(iii) such Borrower's capital is sufficient and not unreasonably small for the
business and transactions in which such Borrower is engaged or about to engage.
(H) TITLE TO PROPERTIES. Such Borrower has good, indefeasible
and marketable title to and ownership of all Property it purports to own, which,
in the case of the Collateral, is free and clear of all Liens, except those in
favor of Lender and any Permitted Liens.
(I) FINANCIAL STATEMENTS AND PROJECTIONS.
(i) The Financial Statements have each been prepared in accordance with
GAAP, consistently applied, and present fairly in all material respects the
financial position of such Borrower at such date and the results of such
Borrower's operations for such period. There has been no change in the
condition, financial or otherwise, of such Borrower as shown on the Financial
Statements and no change in the aggregate value of machinery and equipment owned
by such Borrower, except changes in the ordinary course of business, none of
which individually or in the aggregate will have a Material Adverse Effect.
(ii) The Projections have been prepared by an officer, or agent, of
Borrowers in good faith, substantially in accordance with GAAP on a pro-forma
basis, after giving effect to the consummation of the transactions contemplated
by this Agreement and the Projections are arithmetically accurate.
(J) FULL DISCLOSURE. Neither this Agreement, nor any written
statement made by such Borrower in connection herewith, contains any untrue
statement of a material fact. To the best knowledge of such Borrower, there is
no fact which such Borrower has not disclosed to Lender which has, or will have,
a Material Adverse Effect.
(K) TAX RETURNS. Such Borrower has filed all federal, state
and local tax returns and other reports it is required by law to file and has,
except as otherwise permitted herein, paid all taxes, assessments, fees and
other governmental charges that are due and payable. The provision for taxes on
the books of such Borrower is adequate for all years not closed by applicable
statutes and for its current fiscal year.
(L) SECURITIES LAWS. Such Borrower's execution and delivery of
this Agreement and each of the other Credit Documents to which it is a party
will not directly or indirectly violate or result in a violation of Section 7 of
the Securities Exchange Act of 1934, as amended, or any regulations issued
pursuant thereto.
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23
(M) O.S.H.A. AND ENVIRONMENTAL MATTERS. Such Borrower has duly
complied with, and its facilities, business, assets, property, leaseholds and
equipment are in compliance in all material respects with, the provisions of the
Federal Occupational Safety and Health Act as amended, the Environmental
Protection Act as amended, the Resource Conservation and Recovery Act as amended
and all rules and regulations thereunder and all similar federal, state and
local laws, rules and regulations and there have been no outstanding citations,
notices or orders of non-compliance issued to such Borrower or relating to its
respective facilities, business, assets, property, leaseholds or equipment under
any such laws, rules or regulations. Such Borrower has been issued all required
federal, state and local licenses, certificates or permits relating to such
Borrower's business and facilities, and such Borrower and its facilities,
business, assets, property, leaseholds and equipment are in compliance in all
material respects with, all applicable federal, state and local laws, rules and
regulations relating to air emissions, water discharge, noise emissions, solid
or liquid waste disposal, hazardous waste or materials, or other environmental,
health or safety matters.
(N) TRADE RELATIONS. To the best of such Borrower's knowledge,
there exists no actual or threatened termination, cancellation or limitation of,
or any modification or change in, the business relationship of such Borrower and
any customer or any group of customers whose purchases individually or in the
aggregate are material to the business of such Borrower, or with any material
supplier, and there exists no present condition or state of facts or
circumstances known to such Borrower which would have a Material Adverse Effect
on such Borrower in any respect or prevent such Borrower from conducting such
business after the consummation of the transactions contemplated by this
Agreement in substantially the same manner which it has heretofore been
conducted except for economic conditions and such other factors not within the
reasonable control of such Borrower.
(O) FIXED COLLATERAL. To the best of such Borrower's
knowledge, all Fixed Collateral is in good operating condition and repair and
all necessary replacements of and repairs to the same have been made so that the
value and operating efficiency thereof has been maintained and preserved,
reasonable wear and tear excepted and where a breach hereof would have a
Material Adverse Effect.
7.2 REAFFIRMATION. Each request for an advance made by each Borrower
pursuant to this Agreement shall, unless Lender is otherwise notified in writing
prior to the time of such advance, constitute (i) an automatic representation
and warranty by such Borrower to Lender that there does not then exist an Event
of Default or any event or condition which, with notice, lapse of time and/or
the making of such advance, would constitute an Event of Default, and (ii) a
reaffirmation as of the date of said request of all of the representations and
warranties of such Borrower contained in this Agreement or any of the other
Credit Documents.
7.3 SURVIVAL OF REPRESENTATION AND WARRANTIES. Each Borrower covenants,
warrants and represents to Lender that all representations and warranties of
such Borrower contained in this Agreement and each of the other Credit Documents
shall be true at the time of such Borrower's execution of this Agreement and
such other Credit Documents, and shall survive the execution, delivery and
acceptance thereof by Lender and the parties thereto and the closing of the
transactions described therein or related thereto.
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8. COVENANTS AND CONTINUING AGREEMENTS
-----------------------------------
8.1 AFFIRMATIVE COVENANTS. So long as any Obligations remain
unsatisfied, each Borrower covenants that, unless otherwise consented to by
Lender in writing, it will:
(A) Pay to Lender, on demand, any and all fees, costs or
expenses which Lender pays to a bank or other similar institution arising out of
or in connection with (i) the forwarding by Lender to any Borrower or any other
Person on behalf of any Borrower of any proceeds of loans made by Lender
pursuant to this Agreement or, (ii) the depositing for collection, by Lender, of
any check or item of payment received and/or delivered to Lender on account of
the Obligations.
(B) Preserve and maintain its separate partnership existence
and all rights, privileges, and franchises in connection therewith, and maintain
its qualification and good standing in all states in which such qualification is
necessary in order for such Borrower to conduct its business in such states or
in which the failure to so qualify would have a Material Adverse Effect.
(C) File all federal, state and local tax returns and other
reports such Borrower is required by law to file, maintain adequate reserves for
the payment of all taxes, assessments, governmental charges, and levies imposed
upon it, its income, or its profits, or upon any Property belonging to it, and
pay and discharge all such taxes, assessments, governmental charges and levies
prior to the date on which penalties attach thereto, except where the same are
being contested in good faith by appropriate proceedings and adequate book
reserves have been established with respect to each such claim being contested.
(D) Maintain its Property in good condition and make all
necessary renewals, repairs, replacements, additions and improvements thereto so
as to maintain the value and operating efficiency thereof, reasonable wear and
tear excepted.
(E) Comply with all laws, ordinances, governmental rules and
regulations to which it is subject and obtain all licenses, permits, franchises,
or other governmental authorizations necessary to the ownership of its
Properties or to the conduct of its business and which, if violated, would
result in a Material Adverse Effect.
(F) If applicable, at all times make prompt payment of any and
all contributions required to meet the minimum funding standards set forth in
Sections 302 and 305 of ERISA with respect to each Pension Plan, if any,
maintained by such Borrower and otherwise in regard thereto (i) furnish Lender
with any annual report required to be filed pursuant to Section 103 of ERISA in
connection with each Pension Plan and any other employee benefit plan of such
Borrower or its Affiliates subject to said Section; (ii) notify Lender as soon
as practicable of any "Reportable Event" (as defined under ERISA) and of any
additional act or condition arising in connection with any Pension Plan which
might constitute grounds for the termination thereof by the Pension Benefit
Guaranty Corporation or for the appointment by the appropriate United States
District Court of a trustee to administer the Pension Plan; and (iii) furnish to
Lender, promptly upon Lender's request therefor, such additional information
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25
concerning any such Pension Plan or any other such employee benefit plan as may
be reasonably requested.
(G) Promptly upon, but in no event later than three (3)
business days after acquiring actual knowledge thereof, (i) inform Lender, in
writing, of the assertion of any claims, offsets or counterclaims by any Account
Debtor and of any allowances, credits and/or other monies granted by it to any
Account Debtor not otherwise disclosed to Lender; and (ii) furnish to and inform
Lender of all material adverse information relating to the financial condition
of any Account Debtor.
(H) Keep adequate records and books of account with respect to
its business activities in which proper entries are made in accordance with GAAP
reflecting all its financial transactions and permit the Lender, in its
discretion, to conduct quarterly audits, at such Borrower's expense.
(I) Cause to be prepared and furnished to Lender the following
(which in the case of any financial statements shall consist of a balance sheet,
income statement and statement of cash flow kept and prepared in accordance with
GAAP, unless such Borrower's certified public accountants concur in any changes
therein and such changes are disclosed to Lender and are consistent with then
generally accepted accounting principles):
(i) As soon as possible, but not later than ninety (90) days
after the close of each fiscal year of such Borrower, audited annual
financial statements of such Borrower as of the end of each such fiscal
year, prepared by a firm of independent certified public accountants of
recognized standing, selected by such Borrower and reasonably
acceptable to Lender;
(ii) As soon as possible, but not later than thirty (30) days
after the end of each month hereafter, unaudited interim financial
statements of such Borrower as of the end of such month and of the
portion of such Borrower's fiscal year then elapsed certified by the
chief financial officer or controller of such Borrower or of such
Borrower's General Partner as prepared in accordance with GAAP (without
footnotes) and fairly presenting in all material respects the financial
position and results of operations of such Borrower for such month and
period;
(iii) Concurrently with the delivery of the financial
statements described in Subsections (i) and (ii) above, and quarterly
at the request of Lender, certificates from the chief financial officer
or controller of such Borrower or of such Borrower's General Partner
certifying to Lender that to the best of his knowledge, such Borrower
has kept, observed, performed and fulfilled in all material respects
each and every covenant, obligation and agreement binding upon such
Borrower contained in this Agreement or the Credit Documents, and that
no Event of Default, or any event which with the giving of notice or
lapse of time or both, would constitute an Event of Default, has
occurred or specifying any such Event of Default, together with a
Compliance Certificate, including a financial covenant compliance
worksheet, in the forms of EXHIBIT K attached hereto,
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26
reflecting the computation of the financial covenants set forth in
Sections 8.1 and 8.2 hereof as of the end of the period covered by such
financial statements;
(iv) If applicable, concurrently with the sending or filing
thereof, as the case may be, copies of any definitive financial
statements or reports which such Borrower has made available to its
General Partner or limited partners and copies of any regular periodic
or special reports, schedules, registration statements or other
documents (including, without limitation, all forms 8-K, 10-Q or 10-K)
which such Borrower files with the Securities and Exchange Commission
or any governmental authority which may be substituted therefor, or any
national securities exchange or self-regulatory securities
organization, including the National Association of Securities Dealers,
Inc.;
(v) Concurrently with each request for an advance under the
Revolving Loan, and monthly on the last day of each month, a
certificate prepared by the chief financial officer or controller of
such Borrower or of such Borrower's General Partner in the form
attached hereto as EXHIBIT A;
(vi) Such other data and information (financial and otherwise)
as Lender, from time to time, may reasonably request, bearing upon or
related to the Collateral or such Borrower's financial condition and/or
results of operations.
(J) Notify Lender in writing:
(i) Promptly upon such Borrower's learning thereof, of the
institution of any suit, action or administrative proceeding against
such Borrower or relating to any of its Property in an amount exceeding
$100,000, whether or not the claim is considered by such Borrower to be
covered by insurance;
(ii) At least ten (10) days prior thereto, of such Borrower's
opening of any new office or place of business or such Borrower's
closing of any existing office or place of business resulting in the
relocation of Collateral or business records;
(iii) Promptly upon such Borrower's learning thereof, of any
material labor dispute to which such Borrower may become a party, any
strikes or walkouts relating to any of its plants or other facilities,
and the expiration of any labor contract to which such Borrower is a
party or by which such Borrower is bound;
(iv) Within three (3) business days after the occurrence
thereof, of such Borrower's default under any Material Agreement; and
(v) Promptly upon the occurrence thereof, of any default by
any obligor under any note or other evidence of debt payable to such
Borrower.
(K) Provide Lender with all warehouse receipts respecting any
Inventory and copies of all agreements between such Borrower and any bailee,
warehousemen or similar party with whom Inventory may from time to time be
stored.
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27
(L) If any of the Accounts arise out of a contract with the
United States of America, or any department, agency, subdivision or
instrumentality thereof, promptly notify Lender thereof in writing and execute
any instruments and take any other action required or requested by Lender to
perfect Lender's security interest in such Accounts under the provisions of the
Assignment of Claims Act of 1940.
(M) Deliver to Lender, upon demand, any and all evidence of
ownership of Fixed Collateral, inclusive of any certificates of title or
applications therefor, and maintain accurate, itemized records describing the
kind, type, quantity and value of all Fixed Collateral, a summary of which shall
be provided to Lender on at least an annual basis and more frequently if
requested by Lender.
(N) In the event any Account is or becomes evidenced by any
note, trade acceptance or other instrument, promptly notify Lender of such fact
and, upon Lender's request, deliver the same to Lender, appropriately endorsed
to Lender's order and, regardless of the form of such endorsement, such Borrower
hereby waives presentment, demand, notice of dishonor, protest and notice of
protest and all other notices with respect thereto.
(O) Maintain at all times a consolidated Adjusted Tangible Net
Worth equal to or greater than Three Million Seven Hundred Fifty Thousand
Dollars ($3,750,000) for Borrowers' fiscal years ending December 31, 1992; Six
Million Five Hundred Thousand Dollars ($6,500,000) for Borrowers' fiscal years
ending December 31, 1993; and Nine Million Seven Hundred Fifty Thousand Dollars
($9,750,000) for Borrowers' fiscal years ending December 31, 1994 and thereafter
calculated quarterly based upon each Borrower's fiscal quarter end direct
financial statements prepared in accordance with GAAP.
(P) Maintain a ratio of consolidated total unsubordinated
liabilities (including deferred liabilities and/or deferred income), computed in
accordance with GAAP, to consolidated Adjusted Tangible Net Worth equal to or
less than 5.0 to 1.0 at Borrowers' fiscal years ending December 31, 1992; 4.0 to
1.0 at Borrowers' fiscal years ending December 31, 1993 and 3.0 to 1.0 at
Borrowers' fiscal years ending December 31, 1994 calculated annually based upon
each Borrower's fiscal year end audited financial statements prepared in
accordance with GAAP.
(Q) Maintain Debt Coverage (as defined herein) not less than
2.5 to 1.0 on or prior to the date of any Permitted Distribution, and not less
than 1.5 to 1.0 after the date of any Permitted Distribution. "Debt Coverage" as
used in this Section 8.1(Q) means the ratio of Borrowers' consolidated net
income, plus consolidated depreciation, consolidated amortization and
consolidated interest paid to Lender, to the amount of all principal and
interest payable to Lender and the holder of Subordinated Debt and the
consolidated net amount of all Capital Expenditures at the date of calculation
thereof calculated quarterly based upon each Borrower's fiscal quarter end
direct financial statements prepared in accordance with GAAP.
8.2 NEGATIVE COVENANTS. So long as either Borrower shall have any
Obligations to Lender under this Agreement, each Borrower covenants that, unless
Lender has first consented thereto in writing (each Borrower's request for
Lender's consent to be in writing and to be provided to Lender at least ten (10)
days prior to the date on which Lender must decide whether
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28
to give its consent), which consent will not be unreasonably withheld by Lender
as to (A) and (C) below only, provided as to (C) only as (C) relates to
Indebtedness secured only by real property of such Borrower, it will not:
(A) Merge or consolidate with or acquire all or any
substantial portion of the assets or capital stock of any Person.
(B) Make any loans or other advances of money, or grant
extensions of credit (other than normal extensions of trade credit in the
ordinary course of business and reasonable salary, travel or relocation
advances, advances against commissions and other similar advances in the
ordinary course of business) to any Person.
(C) Create, incur, assume, or suffer to exist any
Indebtedness, except the Obligations and the following (herein referred to as
"Permitted Indebtedness"):
(i) Trade payables and other current liabilities incurred in
the ordinary course of business;
(ii) Subordinated Debt;
(iii) Such other Indebtedness not to exceed $50,000 in the
aggregate annually as to both Borrowers or as described on EXHIBIT I
hereto or as hereafter approved by Lender in writing.
(D) Enter into, or be a party to, any transaction with any
Affiliate of either Borrower, except in the ordinary course of, and pursuant to
the reasonable requirements of, such Borrower's business and upon fair and
reasonable terms which are fully disclosed to Lender and which are no less
favorable to such Borrower than such Borrower would obtain in a comparable arm's
length transaction with a Person not an Affiliate of any Borrower.
(E) Permit or agree to any material extension or modification
with respect to, or compromise or settle any Account, other than as reflected in
the schedules of accounts submitted to Lender pursuant to Section 5.4 hereof.
(F) Become or be liable in respect of any Guaranty except by
endorsement of instruments or items of payment in the ordinary course of
business for deposit or collection.
(G) Permit or suffer to exist any Lien in or upon any of the
Collateral, except the following (herein referred to as "Permitted Liens"):
(i) Those security interests granted in favor of Lender
pursuant to this Agreement and the other Credit Documents; and
(ii) Such other Liens as described on EXHIBIT J hereto or as
hereafter approved by Lender in writing.
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29
(H) Make any Distributions, except Permitted Distributions,
Tax Distributions and Management Fees.
(I) Divest itself of any material assets or business
theretofore conducted by transferring the same to any Affiliate or any
partnership, joint venture, or similar arrangement.
(J) Subcontract any material operations to any Affiliate,
except with the written consent of Lender.
(K) Make Capital Expenditures during any fiscal years of such
Borrower which, in the aggregate when consolidated with all Capital Expenditures
of both Borrowers, exceed One Million Dollars ($1,000,000) during Borrowers'
fiscal years ending December 31, 1992 and December 31, 1993, or which exceed
Seven Hundred Fifty Thousand Dollars ($750,000) thereafter calculated annually
based upon each Borrower's fiscal year end audited financial statements prepared
in accordance with GAAP.
(L) Without ten (10) days prior notice to Lender, transfer its
executive offices, or maintain records with respect to Accounts at any locations
other than its Principal Business Location.
(M) Except with respect to transactions otherwise permitted
hereunder, make deposits to or withdrawals from any of such Borrower's deposit
accounts for the benefit of any of its Affiliates.
(N) Sell, lease, transfer or otherwise dispose of any of its
Property where the net book value exceeds in the aggregate $50,000 during any
fiscal year of such Borrower, other than Inventory sold in the ordinary course
of business.
(O) Use any name (other than its own) or any fictitious name,
trade name, tradestyle or "d/b/a" except for the names disclosed on EXHIBIT G
attached hereto and made a part hereof.
(P) Make a sale to any customer on approval, consignment,
xxxx-and-hold, guaranteed sale, sale and return or any other repurchase basis,
unless such sale is specifically identified on the written assignments of
Accounts delivered to Lender pursuant to Section 5.4 hereof.
(Q) Own, purchase or acquire (or enter into any contract to
purchase or acquire) any "margin security" as defined by any regulation of the
Federal Reserve Board as now in effect or as the same may hereafter be in effect
unless, prior to any such purchase or acquisition or entering into any such
contract, Lender shall have received an opinion of counsel satisfactory to
Lender to the effect that such purchase or acquisition will not cause this
Agreement or the Notes to violate Regulation G or any other regulation of the
Federal Reserve Board then in effect.
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30
(R) Make or have any Restricted Investment, which for purposes
of this Agreement shall mean any investment in cash or by delivery of Property
to any Person, whether by acquisition of stock, indebtedness or other obligation
or Security, or by loan, advance or capital contribution, or otherwise, in any
Property except the following:
(i) Property to be used in the ordinary course of business;
(ii) Current assets arising from the sale of goods and
services in the ordinary course of business of such Borrower;
(iii) Investments in direct obligations of the United States
of America, or any agency thereof or obligations guaranteed by the
United States of America, provided that such obligations mature within
one (1) year from the date of acquisition thereof;
(iv) Investments in certificates of deposit maturing within
one (1) year from the date of acquisition issued by a bank or trust
company organized under the laws of the United States or any state
thereof having capital surplus and undivided profits aggregating at
least One Hundred Million Dollars ($100,000,000.00); and
(v) Investments in commercial paper given the highest rating
by a national credit rating agency and maturing not more than two
hundred seventy (270) days from the date of creation thereof.
(S) Enter into any arrangement with any Person providing for
the leasing by such Borrower of Property which has been or is to be sold or
transferred by such Borrower to such person if funds have been or are to be
advanced by such Person on the security of such Property or rental obligations
of such Borrower.
(T) Make any prepayment of principal on any Indebtedness,
excepting the Obligations.
9. SURVIVAL OF OBLIGATIONS UPON TERMINATION OF AGREEMENT
-----------------------------------------------------
Except as otherwise expressly provided for in this Agreement and in any
of the other Credit Documents, no termination or cancellation (regardless of
cause or procedure) of this Agreement or any of the other Credit Documents shall
in any way affect or impair the powers, obligations, duties, rights, and
liabilities of the Borrowers or Lender in any way or respect relating to (i) any
transaction or event occurring prior to such termination or cancellation or (ii)
any of the undertakings, agreements, covenants, warranties and representations
of the Borrowers or Lender contained in this Agreement or the other Credit
Documents. All such undertakings, agreements, covenants, warranties and
representations shall survive such termination or cancellation and Lender shall
retain its Lien on the Collateral and all of its rights and remedies under this
Agreement, notwithstanding such termination or cancellation, until all
Obligations of the Borrowers to Lender have been fully paid and satisfied and
this Agreement is terminated.
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31
10. CONDITIONS PRECEDENT
--------------------
Notwithstanding any other provision of this Agreement or any of the
other Credit Documents, and without affecting in any manner the rights of Lender
under the other Sections of this Agreement, it is understood and agreed that
Lender shall have no obligation at any time under Section 2 of this Agreement
unless and until the following conditions are satisfied, all in form and
substance satisfactory to Lender and its counsel:
10.1 CONDITIONS. The following conditions shall have been and shall
continue to be satisfied, in the sole discretion of Lender:
(A) No legal action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain, or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement or any of the other Credit Documents or the consummation of the
transactions contemplated hereby or thereby, or which, in Lender's reasonable
opinion would make it inadvisable to consummate the transactions contemplated by
this Agreement.
(B) The representations and warranties of the Borrowers herein
are true and correct in all respects and no Event of Default or condition which,
with notice, lapse of time or both would constitute an Event of Default then
exists.
(C) No event, occurrence or condition shall then exist which
might have a Material Adverse Effect.
10.2 DOCUMENTATION. Lender shall have received the following documents,
each to be in form and substance satisfactory to Lender and its counsel:
(A) Copies of each Borrower's casualty insurance policies
evidencing the existence of the insurance coverage required pursuant to this
Agreement and certificates evidencing such insurance, together with loss payable
endorsements thereto naming Lender as a loss payee or additional insured in form
and substance satisfactory to Lender.
(B) Copies of all filing receipts or acknowledgments issued by
any governmental authority to evidence any filing or recordation necessary to
perfect the Liens of Lender in the Collateral and evidence, in a form acceptable
to Lender, that such Liens constitute valid and first priority perfected Liens,
subject only to any Permitted Liens.
(C) Certificates of each Borrower dated as of the date Lender
makes its initial advance of loan proceeds pursuant hereto, certifying (i) that
attached thereto is a true and complete copy of its Partnership Agreement, as in
effect on the date of such certification, (ii) that attached thereto is a true
and complete copy of resolutions, in form satisfactory to Lender, adopted by
such Borrower, authorizing the execution, delivery and performance of this
Agreement and each of the other Credit Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby, and (iii) as
to the incumbency and
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32
genuineness of the signature of each officer of such Borrower executing this
Agreement or any of the other Credit Documents to which such Borrower is a
party.
(D) A Certificate of the General Partner of such Borrower,
dated as of the date Lender makes its initial advance of loan proceeds pursuant
hereto, certifying (a) that attached thereto are true and complete copies of its
Certificate of Incorporation and By-laws, as in effect on the date of such
certification, (b) that attached thereto is a true and complete copy of
resolutions, in form satisfactory to Lender, adopted by the board of directors
of the General Partner of such Borrower, authorizing on behalf of such Borrower
the execution, delivery and performance of this Agreement and each of the other
Credit Documents to which such Borrower is a party and the consummation of the
transactions contemplated hereby and thereby, and (c) as to the incumbency and
genuineness of the signature of each officer of the General Partner of such
Borrower executing on behalf of such Borrower this Agreement or any of the other
Credit Documents to which such Borrower is a party.
(E) Copies of the Certificate of Limited Partnership of such
Borrower, and all amendments thereto, certified by the Secretary of State of
such Borrower's state of formation.
(F) Good standing certificates for such Borrower and General
Partner of such Borrower issued by the Secretary of State of Delaware and the
Secretary of State of each other jurisdiction in which such Borrower's or
General Partner's qualification is required hereunder.
(G) A certificate signed by an officer of such Borrower or of
such Borrower's General Partner and dated as of the date Lender makes its
initial advance of loan proceeds pursuant hereto, stating that (i) the
representations and warranties set forth in Section 7 hereof are true and
correct on and as of such date, (ii) such Borrower is on such date in compliance
with all the terms and provisions set forth in this Agreement, and (iii) on such
date no event or condition has occurred or is continuing which, with the giving
of notice, the lapse of time, or both, would constitute an Event of Default.
(H) Duly executed written lien waivers in favor of Lender from
each lessor, bailee, warehouseman, mortgagee or similarly situated Person who
may, with respect to any location at which any of the Collateral is to be
located or stored, by operation of law or otherwise, have any Lien in or upon
such Collateral.
(I) Duly executed subordination agreements in respect of all
Subordinated Debt, including, but not limited to N.E.S. Investment Co. L.P. and
Dresser Industries, Inc., evidencing the agreement of the holder of such
Subordinated Debt to subordinate the same in right of payment to the Obligations
to the extent and in such manner acceptable to Lender.
(J) Duly executed Depository Agreements with the Depository
Banks at which all Depository Accounts are to be established and, such other
agreements, in form and substance acceptable to Lender as to the collection
and/or servicing of Accounts and the operation of any lockbox required by
Lender, all in form satisfactory to the Lender.
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33
(K) Written instructions from such Borrower directing the
disbursement of the loan proceeds made pursuant to this Agreement.
(L) The written opinion of counsel to such Borrower as to the
transactions contemplated by this Agreement, in form and substance satisfactory
to Lender.
(M) The Term Note and the Revolving Note, duly executed by
such Borrower, and such other agreements, instruments and documents, including,
without limitation, assignments, security agreements, mortgages, deeds of trust,
pledges, guaranties and consents, which Lender may require to be executed in
connection herewith, including, but not limited to, the following:
(i) Evidence that Borrowers have paid off their existing
indebtedness to Lender and all appropriate lien releases, terminations
and satisfactions have been recorded.
(ii) Environmental Assessments, Appraisals of Real Property
and Fixed Collateral, ALTA Lender Title Policies and Surveys of the
Continental Principal Business Location and Xxxxxxx Principal Business
Location and each Collateral Location, in form and substance acceptable
to Lender and its counsel.
(iii) Duly executed Mortgages and Environmental Inspection
Easements from each Borrower, in form and substance acceptable to
Lender and its counsel, for the Continental Principal Business Location
and Xxxxxxx Principal Business Location and each Collateral Location.
(iv) Duly executed Collateral Assignments of Security
Interests in Trademarks from each Borrower, in form and substance
acceptable to Lender and its counsel.
(v) Duly executed UCC-1 Financing Statements from each
Borrower, in recordable form, in form and substance acceptable to
Lender and its counsel.
(vi) Duly executed Environmental Indemnity Agreements from
each Borrower, in form and substance acceptable to Lender and its
counsel.
10.3 WAIVER OF CONDITIONS PRECEDENT. If Lender makes an initial advance
of loan proceeds hereunder prior to the fulfillment of any of the conditions
precedent set forth in Sections 10.1 and 10.2 hereof, the making of such initial
advance of loan proceeds shall constitute only an extension of time for the
fulfillment of such condition and not a waiver thereof, and each Borrower shall
thereafter use its best efforts to fulfill each such condition promptly.
11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
-------------------------------------------------
11.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
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34
(A) Failure by either Borrower to make payment of principal,
interest or any other sum on any Note on the due date thereof, or failure to pay
any other Obligation on the due date thereof or failure by either Borrower to
remit or deposit funds as required by the terms of this Agreement.
(B) Any warranty, representation, or other statement made or
furnished to Lender by or on behalf of either Borrower, either General Partner
of either Borrower, or any guarantor of the Obligations, if any, in this
Agreement or in any of the other Credit Documents or in any instrument furnished
in compliance with or in reference to this Agreement proves to have been false
or inaccurate in any material respect when made or furnished.
(C) Either Borrower, either General Partner of either
Borrower, or any guarantor of the Obligations, if any, fails or neglects to
perform, keep or observe in any material respect any other term, provision,
condition, covenant, warranty or representation contained in this Agreement or
in any of the other Credit Documents, which is required to be performed, kept or
observed by either Borrower, either General Partner of either Borrower, or any
such guarantor, if any, and such failure continues for a period of ten (10) days
beyond the earlier of such Borrower, such General Partner of either Borrower, or
such guarantor, if any, having actual knowledge thereof or Lender giving such
Borrower, such General Partner of either Borrower, or such guarantor, if any,
written notice hereof in the manner set forth in Section 13.10 hereof.
(D) The occurrence of any default or event of default on the
part of either Borrower (including specifically, but not limited to, due to
nonpayment) under any Debt Instrument and the expiration of any applicable grace
period.
(E) To the actual knowledge of either Borrower, any statement,
report, financial statement, or certificate made or delivered by either
Borrower, either General Partner of either Borrower, or any of their officers,
employees or agents, to Lender is not true and correct in any material respect.
(F) The loss, theft, substantial damage or destruction of any
material portion of the Collateral to the extent not fully covered by insurance
(as required by this Agreement and subject to such deductibles as Lender shall
have agreed to in writing), or the sale, lease, encumbrance or other disposition
of any of the Collateral, except in all cases as may be specifically permitted
by other provisions of this Agreement.
(G) Any material adverse change in the value of the Collateral
or the financial condition or operating results of either Borrower or any
guarantor of the Obligations, if any, which has a Material Adverse Effect or
otherwise in the event the Lender deems itself insecure.
(H) The dissolution, termination of existence, insolvency
(failure to pay its debts as they mature in the ordinary course of business or
where the fair saleable value of its assets is not in excess of its liabilities)
or business failure of either Borrower, either General Partner of either
Borrower, or any guarantor of the Obligations, if any, or the appointment of a
receiver, trustee, custodian or similar fiduciary for either Borrower, either
General Partner of
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35
either Borrower, or any guarantor of the Obligations, if any, or any of their
respective assets, or the assignment for the benefit of the creditors of either
Borrower, either General Partner of either Borrower, or any such guarantor, if
any, or the making by either Borrower, either General Partner of either
Borrower, or any such guarantor, if any, of any offer of settlement, extension
or composition to its unsecured creditors generally.
(I) The commencement of any proceedings under any Bankruptcy
Laws by either Borrower, either General Partner of either Borrower, or any
guarantor of the Obligations, if any.
(J) The commencement of any proceedings under any Bankruptcy
Laws against either Borrower, either General Partner of either Borrower, or any
guarantor of the Obligations, if any, to the extent such proceedings are not
dismissed within sixty (60) days after the filing thereof.
(K) Either Borrower, or either General Partner of either
Borrower, ceases to conduct all or any material part of its business or is
enjoined, restrained or in any way prevented by court, governmental or
administrative order from conducting all or any material part of its business
affairs.
(L) The entry by a court of any judgment in excess of
$50,000.00 requiring the payment of money against either Borrower, which
judgment is not paid, discharged, stayed, vacated or set aside within thirty
(30) days of its entry.
(M) Other than Permitted Liens, a notice of any Lien, levy,
attachment or assessment is filed of record with respect to all or any of the
Collateral by any Person, including, without limitation, the United States, any
department, agency or instrumentality thereof, or by any state, county,
municipal or other governmental agency, or if any taxes or assessments owing at
any time or times hereafter becomes a Lien upon the Collateral or any other of
either Borrower's assets and, except as otherwise permitted by Lender, the same
is not effectively stayed, bonded or released within thirty (30) days after the
same becomes a Lien, or in the case of ad valorem taxes, prior to the last date
when payment may be made without penalty.
(N) The revocation of any Guaranty, if any, of the
Obligations.
(O) The failure of Borrowers to deliver, on or prior to
November 1, 1992, an ALTA Mortgagee's Policy of Title Insurance satisfying the
requirements set forth in clauses (a)-(c) of Section 2.1 above covering the six
parcels of real property situated in Xxxxxx County, Alabama which are owned or
to be acquired by Borrowers.
11.2 ACCELERATION OF THE OBLIGATIONS. In addition to any of the
remedies otherwise available to Lender (a) upon and after an Event of Default
specified in Sections 11.1(I), (J) and (O) hereof, and without notice by Lender
to either Borrower, and (b) upon the occurrence and during the continuance of an
Event of Default (other than an Event of Default specified in Sections 11.1(I),
(J) and (O) hereof), upon notice by Lender to Borrowers in the manner set
- 35 -
36
forth in Section 13.10 hereof, the Revolving Loan shall be terminated and all of
the Obligations due or to become due from Borrowers to Lender, whether under
this Agreement, any Note or otherwise, shall, at the option of Lender become at
once due and payable, anything in the Notes or other evidence of the Obligations
or in any of the other Credit Documents to the contrary notwithstanding.
11.3 REMEDIES. Upon the occurrence and during the continuance of an
Event of Default, Lender shall have, to the extent permitted by applicable law,
and in addition to any other right or remedy provided for in this Agreement or
the other Credit Documents, the following rights and remedies:
(A) All of the rights and remedies of a secured party under
the Code or under other applicable law, and all other legal and equitable rights
to which Lender may be entitled, all of which rights and remedies shall be
cumulative, and none of which shall be exclusive, to the extent permitted by
law, in addition to any other rights or remedies contained in this Agreement or
in any of the other Credit Documents.
(B) The right to take immediate possession of the Collateral,
and (i) require each Borrower to assemble the Collateral, at such Borrower's
expense, and make it available to Lender at a place to be designated by Lender
which is reasonably convenient to both parties, and (ii) enter any of the
premises of either Borrower or wherever any Collateral shall be located and to
keep and store the same on said premises until sold (and if said premises be the
property of such Borrower, such Borrower agrees not to charge Lender for storage
thereof for a period of at least ninety (90) days after sale or disposition of
the Collateral). Lender is hereby granted a non-exclusive license or other right
to use, without charge, such Borrower's labels, patents, copyrights, rights of
use of any name, trade secrets, trade names, trademarks and advertising matter,
or any property of a similar nature, as it pertains to the Collateral, in
advertising for sale and selling any Collateral and such Borrower's rights under
all licenses and all franchise agreements shall inure to Lender's benefit.
(C) The right to foreclose the Liens created under this
Agreement and each of the other Credit Documents or under any other agreement
relating to the Collateral.
(D) The right to sell or to otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, wholesale dispositions,
or sales pursuant to one or more contracts, with such notice as may be required
by law, in lots or in bulk, for cash or on credit, all as Lender, in its sole
discretion, may deem advisable. Each Borrower agrees that ten (10) days written
notice to such Borrower of the date any public sale will take place or the date
after which any private sale or other disposition of Collateral will take place
shall be reasonable notice thereof, and such sale may be at such location(s) as
Lender shall designate in said notice. Lender shall have the right to conduct
such sales on either Borrower's premises, without charge therefor, and such
sales may be adjourned from time to time in accordance with applicable law
without further requirement of notice to either Borrower. Lender shall have the
right to bid or credit bid at any such sale on its own behalf.
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37
(E) The right to sell, lease or otherwise dispose of the
Collateral, or any part thereof, for cash, credit or any combination thereof,
and Lender may purchase all or any part of the Collateral at public or private
sale and, in lieu of actual payment of such purchase price, may set off the
amount of such price against the Obligations. Subject to the rights of the
holders of any Permitted Lien having priority over the Liens of Lender, if any,
the proceeds realized from the sale of any Collateral shall be applied first to
the reasonable costs, expenses and attorneys' fees and expenses incurred by
Lender for collection and for acquisition, completion, protection, removal,
storage, sale and delivery of the Collateral; second, to interest due upon any
of the Obligations; and third, to the principal of the Obligations. If any
deficiency shall arise, Borrowers shall jointly and severally remain liable to
Lender therefor, subject in all respects to the provisions of Section 13.13
hereof.
11.4 APPLICATION OF COLLATERAL; TERMINATION OF FINANCING. Upon the
occurrence and during the continuance of any Event of Default, Lender may also,
with or without proceeding with sale or foreclosure or demanding payment of the
Obligations, without notice, terminate Lender's further performance under this
Agreement, or any other agreement or agreements between Lender and either
Borrower, without further liability or obligation by Lender, and may also, at
any time, appropriate and apply on any Obligations any and all Collateral in the
possession of Lender. No such termination shall absolve, release or otherwise
affect the liability of such Borrower in respect of transactions had prior to
such termination, nor affect any of the Liens, rights, powers, and remedies of
Lender, but they shall, in all events, continue until all Obligations of both
Borrowers to Lender are satisfied.
11.5 REMEDIES CUMULATIVE. All covenants, conditions, provisions,
warranties, guaranties, indemnities, and other undertakings of the Borrowers
contained in this Agreement, each of the other Credit Documents or in any
document referred to herein or therein or contained in any agreement
supplementary hereto or thereto or in any schedule or report given to Lender, or
contained in any other agreement between Lender and either Borrower, heretofore,
concurrently, or hereafter entered into or delivered, shall be deemed cumulative
and not in derogation or substitution of any of the terms, covenants,
conditions, or agreements of the Borrowers herein contained.
12. APPOINTMENT OF LENDER AS BORROWER'S LAWFUL ATTORNEY
---------------------------------------------------
Each Borrower hereby irrevocably designates, makes, constitutes and
appoints Lender (and all persons designated by Lender) as such Borrower's true
and lawful attorney (and agent-in-fact) and Lender, or Lender's agent, may, at
such time or times as Lender or said agent, in its sole discretion, may
determine, upon the occurrence of an Event of Default hereunder, in such
Borrower's or Lender's name: (i) demand payment of the Accounts; (ii) enforce
payment of the Accounts, by legal proceedings or otherwise; (iii) exercise all
of such Borrower's rights and remedies with respect to the collection of the
Accounts and any other Collateral; (iv) settle, adjust, compromise, extend or
renew the Accounts; (v) settle, adjust or compromise any legal proceedings
brought to collect the Accounts; (vi) if permitted by applicable law, sell or
assign the Accounts and other Collateral upon such terms, for such amounts and
at such time or times as Lender deems advisable; (vii) discharge and release the
Accounts and any other Collateral; (viii) take control, in any manner, of any
item of payment
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38
or proceeds relating to any Collateral; (ix) prepare, file and sign such
Borrower's name on a proof of claim in bankruptcy or similar document against
any Account Debtor; (x) prepare, file and sign such Borrower's name on any
notice of Lien, assignment or satisfaction of Lien or similar document in
connection with the Accounts; (xi) do all acts and things necessary, in Lender's
sole discretion, to fulfill such Borrower's obligations under this Agreement;
(xii) endorse the name of such Borrower upon any of the items of payment or
proceeds relating to any Collateral and deposit the same to the account of
Lender on account of the Obligations; (xiii) endorse the name of such Borrower
upon any chattel paper, document, instrument, invoice, freight xxxx, xxxx of
lading or similar document or agreement relating to the Accounts, Inventory and
any other Collateral; (xiv) use such Borrower's stationery and sign the name of
such Borrower to verifications of the Accounts and notices thereof to Account
Debtors; (xv) use the information recorded on or contained in any data
processing equipment and computer hardware and software relating to the
Accounts, Inventory and any other Collateral to which such Borrower has access;
and (xvi) notify post office authorities to change the address for delivery of
such Borrower's mail to an address designated by Lender and receive and open all
mail addressed to such Borrower, and after removing all remittances and other
proceeds of Collateral, forwarding the mail to such Borrower.
13. MISCELLANEOUS
-------------
13.1 MODIFICATION OF AGREEMENT; SALE OF INTEREST. This Agreement, the
Notes and each of the other Credit Documents may not be modified, altered or
amended, except by an agreement in writing signed by both Borrowers and Lender.
Neither Borrower may sell, assign or transfer this Agreement, or any of the
other Credit Documents or any portion thereof, including, without limitation,
either Borrower's rights, title, interests, remedies, powers, and/or duties
hereunder or thereunder. Each Borrower hereby consents to Lender's
participation, sale, assignment, transfer or other disposition, at any time or
times hereafter, of this Agreement, or any of the other Credit Documents, or of
any portion hereof or thereof, including, without limitation, Lender's rights,
title, interests, remedies, powers, and/or duties hereunder or thereunder to any
financial institution.
13.2 ATTORNEYS' FEES AND EXPENSES. If, at any time or times, whether
prior or subsequent to the date hereof, regardless of the existence of an Event
of Default, Lender employs counsel for advice or other representation or incurs
legal and/or other costs and expenses in connection with:
(A) The preparation of this Agreement and all of the other
Credit Documents or any amendment of or modification of this Agreement, the
Notes or any of the other Credit Documents.
(B) The administration of this Agreement, the Notes and each
of the other Credit Documents and the transactions contemplated hereby and
thereby.
(C) Any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Lender, either Borrower or any other Person) in
any way relating to the Collateral, this Agreement, the Notes, any of the other
Credit Documents or either Borrower's affairs, but
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39
excluding any litigation between either Borrower and Lender as adverse parties
unless otherwise permitted by law in connection with any judgment awarded in
favor of the prevailing party.
(D) Any attempt to enforce any rights of Lender against any
Person, other than the Borrowers, which may be obligated to Lender by virtue of
this Agreement, the Notes or any of the other Credit Documents, including,
without limitation, any guarantor of the Obligations and any Account Debtors.
(E) Any attempt to inspect, verify, protect, collect, sell,
liquidate or otherwise dispose of the Collateral.
(F) The filing and recording of all documents required by
Lender to perfect Lender's Liens in the Collateral, including without
limitation, any documentary stamp tax or any other taxes incurred because of
such filing or recording;
Then, in any such event, the reasonable attorneys' fees arising from such
services and all reasonably incurred expenses, costs, charges and other fees of
such counsel or of Lender or relating to any of the events or actions described
in this Section 13.2 shall be payable, on demand, by Borrowers to Lender and
shall be additional Obligations hereunder secured by the Collateral. Without
limiting the generality of the foregoing, such expenses, costs, charges and fees
may include accountants' fees, costs and expenses; court costs and expenses;
photocopying and duplicating expenses; court reporter fees, costs and expenses;
long distance telephone charges; air express charges, telegraph charges;
secretarial overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal services.
Additionally, if any taxes shall be payable on account of the execution or
delivery of this Agreement, the Notes or the execution, delivery, issuance or
recording of any of the other Credit Documents, or the creation of any of the
Obligations hereunder, by reason of any existing or hereafter enacted federal or
state statute, Borrowers will pay all such taxes, including, but not limited to,
any interest and/or penalty thereon, and will indemnify and hold Lender harmless
from and against liability in connection therewith.
13.3 WAIVER BY LENDER. Lender's failure, at any time or times
hereafter, to require strict performance by either Borrower of any provision of
this Agreement, the Notes or any of the other Credit Documents shall not waive,
affect or diminish any right of Lender thereafter to demand strict compliance
and performance therewith. Any suspension or waiver by Lender of an Event of
Default by either Borrower under this Agreement, the Notes or any of the other
Credit Documents shall not suspend, waive or affect any other Event of Default
by either Borrower under this Agreement, the Notes or any of the other Credit
Documents, whether the same is prior or subsequent thereto and whether of the
same or of a different type. None of the undertakings, agreements, warranties,
covenants and representations of Borrowers contained in this Agreement, the
Notes or any of the other Credit Documents and no Event of Default by Borrowers
under this Agreement, the Notes or any of the other Credit Documents shall be
deemed to have been suspended or waived by Lender, unless such suspension or
waiver is by an instrument in writing specifying such suspension or waiver and
is signed by a duly authorized representative of Lender and directed to
Borrowers.
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40
13.4 SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
13.5 PARTIES. This Agreement and the other Credit Documents shall be
binding upon and inure to the benefit of the successors and assigns of Borrowers
and Lender. This provision, however, shall not be deemed to modify Section 13.1
hereof.
13.6 CONFLICT OF TERMS. The provisions of the Commitment, the Notes and
each of the other Credit Documents and any exhibit or schedule hereto are
incorporated in this Agreement by this reference thereto. Except as otherwise
provided in this Agreement, and except as otherwise provided in the Commitment,
the Notes and any of the other Credit Documents by specific reference to the
applicable provision of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision in the
Commitment, the Notes and any of the other Credit Documents, the provision
contained in this Agreement shall govern and control.
13.7 WAIVERS BY BORROWERS (INCLUDING RIGHT TO JURY TRIAL). EXCEPT AS
OTHERWISE PROVIDED FOR IN THIS AGREEMENT OR AS REQUIRED BY APPLICABLE LAW, EACH
BORROWER WAIVES (i) PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF PRESENTMENT,
PROTEST, DEFAULT, NONPAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT,
EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS,
DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY LENDER
ON WHICH BORROWERS MAY IN ANY WAY BE LIABLE, (ii) NOTICE PRIOR TO TAKING
POSSESSION OR CONTROL OF THE COLLATERAL WHICH MIGHT BE REQUIRED BY ANY COURT
PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF LENDER'S REMEDIES AND (iii) ITS
RIGHT TO A JURY TRIAL IN THE EVENT OF ANY LITIGATION INSTITUTED IN RESPECT OF
THIS AGREEMENT, THE NOTES OR ANY OF THE OTHER CREDIT DOCUMENTS. EACH BORROWER
ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO
THIS AGREEMENT AND THE TRANSACTIONS EVIDENCED BY THIS AGREEMENT.
13.8 AUTHORIZATION. Lender is authorized to make loans in the name of
either Borrower under the terms of this Agreement upon the request, either
written or oral, of the Controller or Chief Financial Officer of either Borrower
or of either Borrower's General Partner, or such other persons, from time to
time, holding the offices or positions with each Borrower as designated in any
separate borrowing or banking resolutions delivered by such Borrower to Lender
and all loans made by Lender to such Borrower or for its account under this
Agreement shall be conclusively deemed to have been authorized by such Borrower
and to have been made pursuant to duly authorized requests therefor.
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41
13.9 GOVERNING LAW. This Agreement has been accepted by Lender at and
shall be deemed to have been made at Cleveland, Ohio. The loans provided for
herein are to be funded and repaid at Cleveland, Ohio and this Agreement shall
be interpreted, and the rights and liabilities of the parties hereto determined,
in accordance with the laws of the State of Ohio. As part of the consideration
for new value received, each Borrower hereby consents to the jurisdiction of any
state or federal court located within the State of Ohio and consents that all
such service of process be made by registered or certified mail directed to such
Borrower at the address stated in Section 13.10(B) below and service so made
shall be deemed to be completed upon actual receipt thereof. Each Borrower
waives any objection to jurisdiction and venue of any action instituted
hereunder and agrees not to assert any defense based on lack of jurisdiction or
venue. Nothing contained herein shall affect the right of Lender to serve legal
process in any other manner permitted by law or affect the right of Lender to
bring any action or proceeding against such Borrower or its property in the
courts of any other jurisdiction.
13.10 NOTICES. Except as otherwise provided herein, any notice required
hereunder shall be in writing, and shall be deemed to have been validly served,
given or delivered upon deposit in the United States mails, with proper postage
prepaid, and addressed to the party to be notified as follows:
(A) If to Lender, at: Bank One, Cleveland, NA
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: Xxxxxxxxx X. Xxxxxxx
Assistant Vice President
Asset-Based Lending
With a copy to: Xxxxx & Xxxxxx
0000 Xxxxxxxxxx Xxxxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
(B) If to Borrowers, at: Continental Conveyor & Equipment Co. L.P.,
or Xxxxxxx Conveyor Co. L.P.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxxxxx, Xxxx 00000
Attn: X.X. Xxxxxxxx,
Vice President/Finance
With copies to: Continental Conveyor & Equipment Co. L.P.,
or Xxxxxxx Conveyor Co. L.P.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxxxxx, Xxxx 00000
and
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42
Xxxxx & Xxxxxxxxx
3200 National City Center
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
or to such other address as each party may designate for itself by like notice
given in accordance with this Section 13.10.
13.11 SECTION TITLES. The section titles contained in this Agreement
are and shall be without substantive meaning and content of any kind whatsoever
and are not a part of the agreement between the parties hereto.
13.12 EFFECTIVENESS OF AGREEMENT. This Agreement shall be effective
only upon Lender's acceptance hereof.
13.13 NONRECOURSE NATURE OF INDEBTEDNESS. Notwithstanding any other
provision of this Agreement or any ancillary agreement executed in connection
herewith to the contrary, all Indebtedness of Borrowers to Lender under this
Agreement shall be on a non recourse basis as to the General Partner of each
Borrower and the limited partners of the Borrowers and upon the occurrence of an
Event of Default hereunder or otherwise, no deficiency or other personal
judgment shall be sought or enforced against any General Partner of each
Borrower or limited partner of the Borrowers and the Lender shall look solely to
each Borrower and its assets for satisfaction of any such deficiency or any
judgment against the Borrowers.
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43
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year specified at the beginning hereof.
CONTINENTAL CONVEYOR & EQUIPMENT CO. L.P.
("Borrower")
By CC&E Corp., its General Partner
By /s/ Xxxxx X. Xxxxxx
------------------------------
Name: Xxxxx X. Xxxxxx
Title: X. X.
XXXXXXX CONVEYOR CO. L.P.
("Borrower")
By New Xxxxxxx Corp., its General Partner
By /s/ X. X. Xxxxxxxx
------------------------------
Name: X. X. Xxxxxxxx
Title: V. P.
Accepted at Cleveland, Ohio
as of the date first above written.
BANK ONE, CLEVELAND, NA ("LENDER")
By /s/ Xxxxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxxxx X. Xxxxxxx
Title: Asst. Vice President
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CONSOLIDATED AMENDMENT NO. 1
----------------------------
TO
--
CREDIT FACILITY AND SECURITY AGREEMENT
--------------------------------------
THIS CONSOLIDATED AMENDMENT NO. 1 TO CREDIT FACILITY AND SECURITY
AGREEMENT (this "Consolidated Amendment No. 1"), dated as of July 28, 1995, is
entered into by and among BANK ONE, CLEVELAND, NA, a national banking
association organized and existing under the laws of the United States of
America ("Lender"), with its principal place of business located at 000 Xxxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxx 00000; CONTINENTAL CONVEYOR & EQUIPMENT CO., L.P., a
limited partnership organized and existing under the laws of the State of
Delaware ("Continental"), with its principal place of business and executive
offices located at 000 Xxxx 0xx Xxxxxx, Xxxxx, P. O. Xxx 000, Xxxxxxxx, Xxxxxxx
00000 (the "Continental Principal Place of Business"); and XXXXXXX CONVEYOR CO.,
L.P., a limited partnership organized and existing under the laws of the State
of Delaware ("Xxxxxxx"), with its principal place of business and executive
offices located at U.S. Route 178 South, P. X. Xxx 000, Xxxxxx, Xxxxx Xxxxxxxx
00000 (the "Xxxxxxx Principal Business Location") (each of Continental and
Xxxxxxx being sometimes referred to herein individually as a "Borrower" and
collectively as the "Borrowers").
W I T N E S S E T H:
--------------------
WHEREAS, the Borrowers and the Lender are parties to that certain
Credit Facility and Security Agreement dated as of September 14, 1992, as
amended by a certain First Amendment to Credit Facility and Security Agreement
executed on August 27, 1993 and as further amended by a certain Second
Amendatory Agreement dated as of October 5, 1994 (collectively, herein the "Loan
Agreement," all terms defined in said Loan Agreement being used herein with the
same meaning), pursuant to which the Lender loaned the Borrowers $11,000,000 on
a term loan basis; and agreed to loan to the Borrowers up to an additional
maximum aggregate sum of $11,500,000 on a revolving loan basis (which amount
heretofore has been increased to $12,500,000); which Term Loan is evidenced by a
Note dated September 14, 1992; and which Revolving Loan is evidenced by a Note
dated September 14, 1992, as replaced by Note dated October 5, 1994, each such
Note being executed and delivered by the Borrowers to the Lender; and
WHEREAS, the Borrowers and the Lender have agreed to amend the Loan
Agreement to (i) increase the Revolving Loan to $25,000,000 and extend the
maturity date of the Revolving Loan from September 14, 1995 to July 28, 1998,
(ii) increase the Term Loan to $15,600,000, to be repayable in 84 installments,
and (iii) modify and replace certain financial covenants and definitions
contained in the Loan Agreement and add certain additional financial covenants
and definitions to the Loan Agreement; and
WHEREAS, the Borrowers and the Lender wish to provide for payment by
the Borrowers of an origination fee of $300,000 and the expenses of Lender in
connection with the matters contemplated hereby; and
45
WHEREAS, in light of the fact that certain previous amendments will be
affected by the terms of this Amendment and for ease of reference, the Borrowers
and the Lender also desire to restate and consolidate in this Amendment all
amendments to the Loan Agreement that are effective on and as of the date
hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Borrowers and the Lender agree as follows:
SECTION I. AMENDMENT OF LOAN AGREEMENT
---------------------------
A. The definitions "Commitment," "Contract Rate," "Permitted
Distribution," "Reserve Amount," "Revolving Note" and "Term Note" in Section 1.1
of the Loan Agreement are, effective the date hereof, hereby amended and
restated to read in their entirety as follows:
"COMMITMENT - Lender's letter to Borrowers dated August 17, 1992, as
accepted by Borrowers on August 27, 1992, Lender's letter to Borrowers
dated September 28, 1994, as accepted by Borrowers on October 3, 1994
and Lender's letter to Borrowers dated July 14, 1995, as accepted by
Borrowers on July 28, 1995."
"CONTRACT RATE - A fluctuating rate equal to One Hundred (100) basis
points above the Base Rate."
"PERMITTED DISTRIBUTION - (i) A Distribution by Borrowers to the
partners of Borrowers pursuant to Borrowers' partnership agreements in
the aggregate amount of Twenty Million Dollars ($20,000,000), all of
which must be disbursed within ten (10) days of the date of
Consolidated Amendment No. 1 to this Loan Agreement, and (ii)
commencing with calendar year 1997, so long as (a) no Event of Default
has occurred and is continuing or will occur as a result thereof, and
(b) Term Loan B is Fully Conforming, aggregate annual Distributions by
either Borrower to its partners in an amount not to exceed fifty
percent (50%) of such Borrower's Net Income for the previous fiscal
year beginning with each Borrower's fiscal year ending December 31,
1996."
"RESERVE AMOUNT - Until Term Loan B is Fully Conforming and the
Borrowers' consolidated Adjusted Tangible Net Worth is equal to or
greater than One Million Dollars ($1,000,000), on a fair market value
basis, a variable amount equal to Two Million Dollars ($2,000,000)
until December 31, 1995, Three Million Dollars ($3,000,000) until
December 31, 1996 and Four Million Dollars $4,000,000) until December
31, 1997. For purposes hereof, Adjusted Net Worth shall be calculated
and tested on a quarterly basis, as of the fifteenth day of each
September, December, March and June utilizing the Borrowers Certificate
Accounts Receivable and Inventory, in the form attached as Exhibit A to
the Loan Agreement."
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46
"REVOLVING NOTE - The Amended and Restated Replacement Promissory Note
(Revolving Loan) to be executed by Borrowers in form attached as
EXHIBIT C-5 to this Agreement (with such changes or modifications, if
any, to which Lender may agree) evidencing the Revolving Loan made by
Lender pursuant to Section 2.3 of this Agreement, together with all
amendments thereto and all promissory notes issued in substitution
therefor or replacement thereof."
"TERM NOTE - The Amended and Restated Replacement Promissory Note (Term
Loan) to be executed by Borrowers in form attached as EXHIBIT C-4 to
this Agreement (with such changes or modifications, if any, to which
Lender may agree) evidencing the Term Loan made by Lender pursuant to
Section 2.1 of this Agreement, together with all amendments thereto and
all notes issued in substitution therefore or replacement thereof."
B. New definitions of "Fully Conforming," "Appraisals," "Excess Cash
Flow" and "Working Capital" are, effective the date hereof, hereby added to
Section 1.1 of the Loan Agreement as follows:
"FULLY CONFORMING - The time at which the outstanding principal balance
of Term Loan B is equal to or less than eighty percent (80%) of the
aggregate fair market value of the machinery, equipment and real estate
of Borrowers as determined under the Appraisals."
"APPRAISALS - Collectively, the appraisal to be provided by L&B
Liquidation Corp. relating to the machinery and equipment of Borrowers
and the appraisal to be provided by Realty One Appraisal relating to
the real estate of Borrowers."
"EXCESS CASH FLOW - With respect to each fiscal year of Borrowers,
commencing with the fiscal year ending December 31, 1995, an amount
equal to (i) Borrowers' consolidated net income, plus consolidated
depreciation, consolidated amortization and consolidated interest paid
to Lender, less (ii) the aggregate of all principal and interest
payable to Lender plus Permitted Distributions (other than the
Permitted Distribution made during the fiscal year ending December 31,
1995) plus (minus) increases (decreases) in Working Capital, plus the
amount of all non-bank funded Capital Expenditures calculated annually
based upon Borrowers' annual audited financial statements."
"WORKING CAPITAL - The excess of Borrowers' aggregate current assets
over aggregate current liabilities, each as determined in accordance
with GAAP, but excluding from the calculation thereof all cash and cash
equivalents of Borrowers, the current portion of all of Borrowers'
outstanding long-term Indebtedness, the outstanding principal balance
of the Revolving Loan and any and all amounts due to or due from
Affiliates."
C. Section 2.1 of the Loan Agreement is, effective the date hereof,
hereby amended and restated to read in its entirety as follows:
-3-
47
"2.1 TERM LOAN.
----------
Lender will make an increased term loan to Borrower in the
principal amount of Fifteen Million Six Hundred Thousand
Dollars ($15,600,000) ("Term Loan B"). Term Loan B shall be
subject to repayment in accordance with, and bear interest as
provided in, Section 2.2 of this Agreement and shall otherwise
be evidenced by, and repayable in accordance with, the Term
Note.
D. Section 2.2 of the Loan Agreement is, effective the date hereof,
hereby amended and restated to read in its entirety as follows:
"2.2 PAYMENT TERMS OF TERM LOAN B.
----------------------------
(A) INTEREST. Term Loan B shall bear interest on the unpaid
principal balance until the date paid at a fixed rate per annum equal
to ten percent (10%), such interest being payable monthly on the 1st
day of each month, and at maturity, commencing September 1, 1995. On
the third anniversary of the execution of Consolidated Amendment No. 1
to this Loan Agreement, and so long as an Event of Default does not
then exist, Borrowers shall have the option to convert the above
interest rate to a fluctuating rate per annum equal to the Contract
Rate upon prior written notice to Lender delivered on or before July 1,
1998. Interest on the Term Loan shall be computed on a 360-day year
basis based upon the actual number of days elapsed.
(B) FIXED PRINCIPAL INSTALLMENTS. Subject otherwise to the
terms and provisions of the Term Note, the principal balance of Term
Loan B shall be payable in eighty-three (83) consecutive equal monthly
principal installments of One Hundred Eighty-Five Thousand Seven
Hundred Fourteen Dollars ($185,714) each, commencing September 1, 1995,
and continuing on the 1st day of each month thereafter and a final
principal installment of One Hundred Eighty-Five Thousand Seven Hundred
Thirty-Eight Dollars ($185,738) on August 1, 2002.
(C) PREPAYMENT FEE. In the event that Term Loan B is paid in
full (other than as a result of scheduled reductions by way of payments
in accordance with the Term Note), Borrowers will pay to Lender a
prepayment fee of (a) 2% of the outstanding principal balance then
outstanding on Term Loan B, if the same occurs during the first year
following the execution of Consolidated Amendment No. 1 to this Loan
Agreement, and (b) 1% of the outstanding principal balance then
outstanding on Term Loan B, if the same occurs during the second year
following the execution of Consolidated Amendment No. 1 to this Loan
Agreement, in order to compensate Lender for its reliance expenses and
loss of anticipated profits. It is acknowledged that this fee shall be
deemed to be liquidated damages for loss of a bargain and not a penalty
and the same is acknowledged to be an integral part of the
consideration for Lender to execute Consolidated Amendment No. 1 to
this Loan Agreement; provided, however, that such fee will not be due
and payable in the event that the Borrowers make the
-4-
48
foregoing prepayments exclusively from funds generated from a sale of
substantially all of the assets of the Borrowers or a sale of the
controlling interest in the voting securities in the Borrowers.
(D) MANDATORY PRINCIPAL PREPAYMENTS OF TERM LOAN B. In
addition to the principal payments described in Section 2.2(B) above,
until Term Loan B is Fully Conforming, the Borrowers agree to make
annual payments to be applied to pay the principal balance of Term Loan
B within one hundred five (105) days of each fiscal year end of the
Borrowers, beginning with respect to the fiscal year ending December
31, 1995, in an amount equal to fifty percent (50%) of Borrowers'
Excess Cash Flow calculated for the fiscal year just ended. Borrowers
further agree that any such principal payments required under this
Section 2.2(D) shall be (i) made by Lender increasing the outstanding
principal balance of the Revolving Loan, and (ii) applied against
principal installments on Term Loan B in their inverse order of
maturity."
E. Subsections (A), (B) and (C) of Section 2.3 of the Loan Agreement
are, effective the date hereof, hereby amended and restated to read in their
entirety as follows:
"2.3 REVOLVING LOAN.
--------------
(A) REVOLVING LOAN. Subject at all times to the terms hereof,
the Lender will, until July 28, 1998, make such loans to each Borrower
as from time to time such Borrower requests (the "Revolving Loan")
consisting of advances made by Lender against the value of each
Borrower's respective Eligible Inventory and Eligible Accounts. Such
advances are anticipated to be repaid by Borrowers and thereafter
re-advanced by Lender without any premiums or penalty therefor. Subject
to the provisions of Subsection (B) of this Section 2.3, the aggregate
unpaid principal of the Revolving Loan outstanding at any one time
shall not exceed the lesser of (a) the line of credit approved for
Borrowers, which is currently Twenty-Five Million and no/100 Dollars
($25,000,000) or (b) the sum of (i) eighty-five percent (85%) of the
unpaid face amount of each Borrower's respective Eligible Accounts (or
such other percentages of each Borrower's Eligible Accounts as may from
time to time be fixed by the Lender upon notice to the Borrowers) and
(ii) the lesser of (1) fifty-five percent (55%) of the cost or market
value, whichever is lower, determined on a first-in, first-out basis,
of each Borrower's respective Eligible Inventory located at the
Continental Collateral Location or Xxxxxxx Collateral Location (or such
other percentages of each Borrower's respective Eligible Inventory as
may from time to time be fixed by the Lender upon notice to the
Borrowers) or (2) Twelve Million Dollars ($12,000,000) (or such other
dollar amount as may from time to time be fixed by the Lender upon
notice to the Borrowers).
(B) MAXIMUM BORROWINGS AVAILABLE UNDER REVOLVING LOAN.
Notwithstanding anything to the contrary contained in this Section 2.3,
at no time shall the aggregate loans outstanding to the Borrowers at
any time under the Revolving Loan exceed Twenty-Five Million and no/100
Dollars ($25,000,000)
-5-
49
LESS the Reserve Amount; nor shall advances under the Revolving Loan to
either Borrower exceed that which is permitted on the basis of the
advance rate percentages set forth in Section 2.3(A)(b) above as the
same are applied to each respective Borrower.
(C) PAYMENT. The Revolving Loan shall be payable on July 28,
1998, and bear interest as provided in Section 2.4 of this Agreement
and shall otherwise be evidenced by, and repayable in accordance with,
the Revolving Note, but in the absence of such revolving promissory
note shall be evidenced by the Lender's record of disbursements and
repayments."
F. Section 2.8 of the Loan Agreement is, effective the date hereof,
hereby amended and restated to read in its entirety as follows:
"2.8 ORIGINATION FEE. In order to compensate Lender for its services in
preparing and reviewing Consolidated Amendment No. 1 to this Loan
Agreement and related documents in connection with the amendment to
Credit Facility, Borrowers shall pay to Lender on the date of
Consolidated Amendment No. 1 to this Loan Agreement, an origination fee
(the "Origination Fee") of Three Hundred Thousand Dollars ($300,000).
G. Section 2.9 of the Loan Agreement is, effective the date hereof,
hereby amended and restated to read in its entirety as follows:
"2.9 COMMITMENT FEE. Borrowers shall pay to Lender on the date of
Consolidated Amendment No. 1 to this Loan Agreement and on each
succeeding anniversary of such date annually thereafter, a commitment
fee (the "Commitment Fee") of Twenty-Five (25) basis points on the
amount of the line of credit approved for Borrowers under the Revolving
Loan pursuant to Section 2.3(A) of this Agreement, whether the
Borrowers shall be entitled to request such amount pursuant to Section
2.3(A) of this Agreement or not.
H. A new Section 2.10 of the Loan Agreement is, effective the date
hereof, hereby added to read in its entirety as follows:
"2.10 EARLY TERMINATION FEE. In the event that the Revolving Loan and
Term Loan B are paid in full (other than as a result of payment of Term
Loan B at maturity or scheduled reduction of the Term Loan B by way of
payments in accordance with the Term Note or the expiration of the
Revolving Loan at maturity), or in the event of any intentional
non-compliance by either Borrower with any provisions of this Agreement
which results in a termination of the Credit Facility by Lender
pursuant to Section 11.2 or 11.4 hereof, Borrowers will pay to Lender
an early termination fee of (a) 3% of the line of credit approved for
Borrowers under the Revolving Loan pursuant to Section 2.3(A) hereof
plus the outstanding principal balance then outstanding on Term Loan B,
if the same occurs during the first year following the execution of
Consolidated Amendment No. 1 to this Loan Agreement, (b) 2% of the line
of credit approved for
-6-
50
Borrowers under the Revolving Loan pursuant to Section 2.3(A) hereof
plus the outstanding principal balance then outstanding on Term Loan B,
if the same occurs during the second year following the execution of
Consolidated Amendment No. 1 to this Loan Agreement, and (c) 1% of the
line of credit approved for Borrowers under the Revolving Loan pursuant
to Section 2.3(A) hereof plus the outstanding principal balance then
outstanding on Term Loan B, if the same occurs during the third year
following the execution of Consolidated Amendment No. 1 to this Loan
Agreement, in order to compensate Lender for its reliance expenses and
loss of anticipated profits. It is acknowledged that this fee shall be
deemed to be liquidated damages for loss of a bargain and not a penalty
and the same is acknowledged to be an integral part of the
consideration for Lender to execute Consolidated Amendment No. 1 to
this Loan Agreement; provided, however, that such fee will not be due
and payable in the event that the Borrowers make the foregoing
prepayments exclusively from funds generated from a sale of
substantially all of the assets of the Borrowers or a sale of the
controlling interest in the voting securities in the Borrowers."
I. Section 8.1(O) of the Loan Agreement is, effective the date hereof,
hereby amended and restated to read in its entirety as follows:
"(O) Maintain (i) a consolidated Adjusted Tangible Net Worth
equal to or greater than negative Eight Million Dollars (-$8,000,000)
on the date of Consolidated Amendment No. 1 to this Loan Agreement and
increasing by Seven Hundred Fifty Thousand Dollars ($750,000) each
fiscal quarter end thereafter, commencing December 31, 1995, and
calculated based upon each Borrower's fiscal quarter end direct
financial statements prepared in accordance with GAAP, and (ii) a
consolidated Adjusted Tangible Net Worth (exclusive of that portion of
Borrowers' net worth attributable to Borrowers' Australian joint
venture) equal to or greater than negative Six Million Dollars
(-$6,000,000) for Borrowers' fiscal years ending December 31, 1995; One
Million Dollars ($1,000,000) for Borrowers' fiscal years ending
December 31, 1996; and Six Million Dollars ($6,000,000) for Borrowers'
fiscal years ending December 31, 1997 and thereafter calculated
annually based upon each Borrower's audited annual financial
statements."
J. Section 8.1(Q) of the Loan Agreement is, effective the date hereof,
hereby amended and restated in its entirety to read as follows:
"(Q) Maintain Debt Coverage (as defined herein) not less than
1.20 to 1.00 on or prior to the date of any payment of Management Fees
and non-Bank funded Capital Expenditures and not less than 1.00 to 1.00
after the date of any payment of Management Fees and non-Bank funded
Capital Expenditures. "Debt Coverage" as used in this Section 8.1(Q)
means the ratio of Borrowers' consolidated net income, plus
consolidated depreciation, consolidated amortization and consolidated
interest paid to Lender, to the amount of all principal and interest
payable to Lender and the amount of all Permitted Distributions (after
1995) at the
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51
date of calculation thereof calculated quarterly based upon each
Borrower's fiscal quarter end direct financial statements prepared in
accordance with GAAP."
K. Section 8.2(H) of the Loan Agreement is, effective the date hereof,
hereby amended and restated to read in its entirety as follows:
"(H) Make any Distributions, except Permitted Distributions,
Tax Distributions and, so long as Term Loan B is Fully Conforming,
Management Fees."
L. Section 8.2(K) of the Loan Agreement is, effective the date hereof,
hereby amended and restated to read in its entirety as follows:
"(K) CAPITAL EXPENDITURES. Make Capital Expenditures (without
Lender's prior consent) during any fiscal year of such Borrower which,
when combined with the Capital Expenditures of the other Borrower,
cause the aggregate Capital Expenditures of both Borrowers to exceed
One Million Dollars ($1,000,000) during Borrowers' fiscal year ending
December 31, 1995 and during each fiscal year of Borrowers thereafter."
SECTION II. CONDITIONS PRECEDENT
--------------------
Each Borrower understands and hereby agrees that the effectiveness of
this Consolidated Amendment No. 1 is subject to receipt by the Lender, on or
prior to the date hereof, in form and substance satisfactory to the Lender and
its counsel, of the following:
(A) A Certificate, dated as of the date hereof, signed by an officer of
each Borrower or of such Borrower's General Partner and to the effect that:
(1) As of said date, no Event of Default has occurred and
is continuing and no event has occurred and is
continuing that, with the giving of notice or passage
of time or both, would be an Event of Default;
(2) The representations and warranties set forth in
Section 7 of the Loan Agreement are true and correct
as of such date; and
(3) Borrower is in compliance with all of the terms and
provisions set forth in the Loan Agreement on and as
of said date.
(B) A Certificate, dated as of the date hereof, of the secretary of the
General Partner of each Borrower certifying (1) that such General Partner's
Articles of Incorporation and Code of Regulations have not been amended since
the execution of the Loan Agreement (or certifying that true, correct and
complete copies of any amendments are attached), (2) that copies of resolutions
of the Board of Directors of such General Partner are attached with respect to
the approval of this Consolidated Amendment No. 1 and of the matters
contemplated hereby and authorizing the execution, delivery and performance by
such General Partner and Borrower of
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52
this Consolidated Amendment No. 1 and each other document to be delivered
pursuant hereto, (3) as to the incumbency and signatures of the officers of such
General Partner signing this Consolidated Amendment No. 1 and each other
document to be delivered pursuant hereto; and (4) that the Certificate of
Limited Partnership of each Borrower has not been amended since the execution of
this Loan Agreement.
(C) This Consolidated Amendment No. 1, an Amended and Restated
Replacement Promissory Note ("Revolving Loan"), substantially in the form of
EXHIBIT C-5 attached hereto, with all blanks completed; an Amended and Restated
Replacement Promissory Note (Term Loan), substantially in the form of EXHIBIT
C-4 attached hereto, with all blanks completed, all duly executed by each
Borrower and Amendments to Open-End Mortgages, each duly executed by the
applicable Borrower.
(D) An Acknowledgement of Receipt of a copy of, and Consent and
Agreement to the terms of, this Consolidated Amendment No. 1 and the above
referenced promissory notes and mortgage amendments from Nesco Holdings, Inc.
with respect to that certain Subordination Agreement, executed and delivered to
the Lender by it and dated September 14, 1992.
(E) An Origination Fee of Three Hundred Thousand Dollars ($300,000).
(F) Such other documents as the Lender may request to implement this
Consolidated Amendment No. 1 and the transactions contemplated hereby including,
without limitation, such legal opinion or opinions as Lender shall request.
If Lender shall consummate the transactions contemplated hereby prior
to the fulfillment of any of the conditions precedent set forth above, the
consummation of such transactions shall constitute only an extension of time for
the fulfillment of such conditions and not a waiver thereof.
SECTION III. ACKNOWLEDGEMENTS CONCERNING OUTSTANDING LOANS
---------------------------------------------
Borrowers hereby acknowledge and agree that as of July 28, 1995 the
principal balance of the Term Loan was the sum of $7,974,989, and that such loan
is outstanding and unpaid and payable to Lender in accordance with the terms of
the Loan Agreement (as amended by this Consolidated Amendment No. 1) and the
Term Note. Said balance, as well as the current outstanding balance of the
Revolving Loan ($4,620,603.24) and amounts owed pursuant to letters of credit
and/or existing equipment leases, are owed to Lender without any offset,
deduction, defense or counterclaim of any nature whatsoever.
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53
SECTION IV. FEES AND EXPENSES
------------------
Borrowers shall pay all out-of-pocket fees and expenses incurred by the
Lender in connection with the preparation, negotiation, execution and delivery
of this Consolidated Amendment No. 1, the Promissory Notes and all the other
agreements, documents or certificates required or contemplated hereby,
including, without limitation, legal fees and expenses of the Lender up to, but
not in excess of, Five Thousand Dollars ($5,000).
SECTION V. REFERENCES
----------
On and after the effective date of this Consolidated Amendment No. 1,
each reference in the Loan Agreement to "this Agreement", "hereunder", "hereof",
or words of like import referring to the Loan Agreement, and in the Notes to the
"Loan Agreement", "thereof", or words of like import referring to the Loan
Agreement shall mean and refer to the Loan Agreement as amended hereby. The Loan
Agreement, as amended by this Consolidated Amendment No. 1, is and shall
continue to be in full force and effect and is hereby and in all respects
ratified and confirmed. To the extent any amendment set forth in any prior
amendment is omitted from or revised in this Consolidated Amendment No. 1, the
same shall be deemed eliminated or revised, as the case may be, as between
Borrowers and Lender as of the date hereof. The execution, delivery and
effectiveness of this Consolidated Amendment No. 1 shall not operate as a waiver
of any right, power or remedy of Lender under the Loan Agreement or constitute a
waiver of any provision of the Loan Agreement except as specifically set forth
herein. All references in the Loan Agreement to any definitions modified or
replaced herein shall be deemed references to such definitions as so modified or
replaced. References in the Loan Agreement to EXHIBIT C-5 in the definition of
"Revolving Note" and to EXHIBIT C-4 in the definition of "Term Note" shall be
deemed to refer to the Note executed in connection herewith.
SECTION VI. APPLICABLE LAW
--------------
This Consolidated Amendment No. 1 shall be deemed to be a contract
under the laws of the State of Ohio, and for all purposes shall be construed in
accordance with the laws of the State of Ohio.
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54
SECTION VII. COUNTERPARTS
------------
This Consolidated Amendment No. 1 may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any one of the parties hereto may execute this Consolidated
Amendment No. 1 by signing any such counterpart.
IN WITNESS WHEREOF, the Borrowers and the Lender have caused this
Consolidated Amendment No. 1 to be executed by their duly authorized officers as
of the date and year first above written.
CONTINENTAL CONVEYOR & EQUIPMENT
CO., L.P.
("Borrower")
By CC&E Corp., its General Partner
By /s/ Xxxxx X. Xxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxx
Title: X.X.
XXXXXXX CONVEYOR CO., L.P.
("Borrower")
By New Xxxxxxx Corp.,
its General Partner
By /s/ Xxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxxx
Title: V. P.
BANK ONE, CLEVELAND, NA ("Lender")
By /s/ Xxxxxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxxxxx X. Xxxxxxx
Title: Vice President
Asset-Based Lending
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CONSOLIDATED AMENDMENT NO. 2
----------------------------
TO
--
CREDIT FACILITY AND SECURITY AGREEMENT
--------------------------------------
THIS CONSOLIDATED AMENDMENT NO. 2 TO CREDIT FACILITY AND SECURITY
AGREEMENT (this "Consolidated Amendment No. 2"), dated as of December 13, 1996,
is entered into by and among BANK ONE, CLEVELAND, NA, a national banking
association organized and existing under the laws of the United States of
America ("Lender"), with its principal place of business located at 000 Xxxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxx 00000; CONTINENTAL CONVEYOR & EQUIPMENT CO. L.P., a
limited partnership organized and existing under the laws of the State of
Delaware ("Continental"), with its principal place of business and executive
offices located at 000 Xxxx 0xx Xxxxxx, Xxxxx, P. O. Xxx 000, Xxxxxxxx, Xxxxxxx
00000 (the "Continental Principal Place of Business"); and XXXXXXX CONVEYOR CO.
L.P., a limited partnership organized and existing under the laws of the State
of Delaware ("Xxxxxxx"), with its principal place of business and executive
offices located at U.S. Route 178 South, P. X. Xxx 000, Xxxxxx, Xxxxx Xxxxxxxx
00000 (the "Xxxxxxx Principal Business Location") (each of Continental and
Xxxxxxx being sometimes referred to herein individually as a "Borrower" and
collectively as the "Borrowers").
W I T N E S S E T H:
--------------------
WHEREAS, the Borrowers and the Lender are parties to that certain
Credit Facility and Security Agreement dated as of September 14, 1992, as
amended by a certain First Amendment to Credit Facility and Security Agreement
executed on August 27, 1993, as further amended by a certain Second Amendatory
Agreement dated as of October 5, 1994 and as further amended by a certain
Consolidated Amendment No. 1 to Credit Facility and Security Agreement dated as
of July 28, 1995 (collectively, herein the "Loan Agreement," all terms defined
in said Loan Agreement being used herein with the same meaning), pursuant to
which the Lender loaned the Borrowers $15,600,000 on a term loan basis; and
agreed to loan to the Borrowers up to an additional maximum aggregate sum of
$25,000,000 on a revolving loan basis; which Term Loan is known as Term Loan B
and is evidenced by a Note dated July 28, 1995; and which Revolving Loan is
evidenced by a Note dated July 28, 1995, each such Note being executed and
delivered by the Borrowers to the Lender; and
WHEREAS, the Borrowers and the Lender have agreed to amend the Loan
Agreement to (i) increase Term Loan B to its original principal amount of
$15,600,000 (Term Loan C), to be repayable in 68 installments, (ii) make an
additional Term Loan in the principal amount of $1,500,000 to be repayable in 36
installments (Term Loan D), (iii) change the Rate of Interest on the Revolving
Loan and the Term Loan; and (iv) modify and replace certain financial covenants
and definitions contained in the Loan Agreement and add certain additional
financial covenants and definitions to the Loan Agreement; and
56
WHEREAS, the Borrowers and the Lender wish to provide for payment by
the Borrowers of an origination fee of $125,000 and the expenses of Lender in
connection with the matters contemplated hereby; and
WHEREAS, in light of the fact that certain previous amendments will be
affected by the terms of this Amendment and for ease of reference, the Borrowers
and the Lender also desire to restate and consolidate in this Amendment all
amendments to the Loan Agreement that are effective on and as of the date
hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Borrowers and the Lender agree as follows:
SECTION I. AMENDMENT OF LOAN AGREEMENT
---------------------------
A. New definitions "Acquisition" and "Permitted Investment" are hereby
added as follows and the definitions "Commitment," "Contract Rate," "Management
Fees," "Permitted Distribution," " "Revolving Note" and "Term Note" in Section
1.1 of the Loan Agreement are, effective the date hereof, hereby amended and
restated to read in their entirety as follows:
"ACQUISITION - The Acquisition by Continental Conveyor & Equipment Pty
Limited ("CC&E Pty Limited"), a wholly-owned subsidiary of Continental
of all of the shares of BCE Holdings Pty Limited ("BCE"), a corporation
registered under the Corporation Law of Australia, which is a holding
company whose subsidiaries (listed hereinafter) carry on the business
of the manufacture of conveyors, conveyor componentry and associated
equipment in New South Wales, Victoria and Queensland and their
distribution and installation in Australia and elsewhere; the
aforementioned subsidiaries are Australian Conveyor Engineering Pty
Limited, Ace Conveyor Services Pty Limited, Ace Conveyor Components Pty
Limited, X. Xxxxx Pty Limited and Ringway Pty Limited (collectively
with BCE, the "ACE Conveyor Group")."
"COMMITMENT - Lender's letter to Borrowers dated August 17, 1992, as
accepted by Borrowers on August 27, 1992, Lender's letter to Borrowers
dated September 28, 1994, as accepted by Borrowers on October 3, 1994,
Lender's letter to Borrowers dated July 14, 1995, as accepted by
Borrowers on July 28, 1995, and Lenders' letter to Borrowers dated
December 10, 1996, as accepted by Borrowers on December 10, 1996."
"CONTRACT RATE - A fluctuating rate equal to One Hundred Twenty Five
(125) basis points above the Base Rate."
"MANAGEMENT FEES - Management fees and other similar type fees paid by
a Borrower to Nesco, Inc. or an affiliate of Nesco, Inc. paid at a rate
not to exceed two percent (2%) of such Borrower's gross sales and if an
Event of Default has occurred and is continuing at the time of payment
of such fee or would occur by
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reason thereof or after giving effect thereto, the same shall be paid
at a rate not to exceed one percent (1%) of such Borrower's gross
sales. For purposes of this definition, gross sales shall not include
sales of any of Continental's foreign subsidiaries."
"PERMITTED INVESTMENT - Commencing with calendar year 1998 so long as
no Event of Default has occurred and is continuing or will occur as a
result thereof, aggregate annual Distributions by either Borrower to
its partners in an amount not to exceed fifty percent (50%) of such
Borrower's Net Income for the previous fiscal year beginning with each
Borrower's fiscal year ending December 31, 1997. For purposes of this
definition, Net Income shall not include income of any foreign
subsidiary of Continental."
"PERMITTED DISTRIBUTION - An advance of funds by Borrowers to
Continental Conveyor & Equipment Pty Limited (in the form of equity,
debt or a combination of both) to be used to consummate the Acquisition
in an amount not to exceed Eleven Million Three Hundred Thousand
Dollars ($11,300,000), all of which must be disbursed within twenty
(20) days of the date of Consolidated Amendment No.
2 to this Loan Agreement.
"TERM NOTE - The Amended and Restated Replacement Promissory Note (Term
Loan C) to be executed by Borrowers in form attached as EXHIBIT C-6 to
this Agreement (with such changes or modifications, if any, to which
Lender may agree) evidencing the Term Loan made by Lender pursuant to
Section 2.1.1 of this Agreement, together with all amendments thereto
and all notes issued in substitution therefore or replacement thereof
and the Promissory Note (Term Loan D) to be executed by Borrowers in
the form attached as EXHIBIT C-7 to this Agreement (which such changes
or modifications, if any, to which Lender by agree) evidencing the Term
Loan made by Lender pursuant to Section 2.1.2 of this Agreement,
together with all amendments thereto and all notes issued in
substitution therefor or replacement thereof."
B. New definitions of "Excess Cash Flow," "Revolving Note" and "Working
Capital" are, effective the date hereof, added to Section 1.1 of the Loan
Agreement as follows:
"EXCESS CASH FLOW - With respect to each fiscal year of Borrowers,
commencing with the fiscal year ending December 31, 1997, an amount
equal to (i) Borrowers' consolidated net income, PLUS consolidated
depreciation, consolidated amortization and consolidated interest paid
to Lender, less (ii) the aggregate of all principal and interest
payable to Lender (other than prepayment of principal, including
mandatory prepayments of Term Loan D) PLUS Permitted Distributions PLUS
(minus) increases (decreases) in Working Capital, PLUS the amount of
all non- Lender funded Capital Expenditures calculated annually based
upon Borrowers' annual audited financial statements but not including
the results and financial position of any foreign based subsidiary of
either Borrower."
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58
"REVOLVING NOTE - The Amended and Restated Replacement Promissory Note
(Revolving Loan) to be executed by Borrowers in form attached as
EXHIBIT C-5 to this Agreement (with such changes or modifications, if
any, to which Lender may agree) evidencing the Revolving Loan made by
Lender pursuant to Section 2.3 of this Agreement, together with all
amendments thereto and all promissory notes issued in substitution
therefor or replacement thereof."
"WORKING CAPITAL - The excess of Borrowers' aggregate current assets
over aggregate current liabilities, each as determined in accordance
with GAAP but not including the results and financial position of any
foreign based subsidiary of either Borrower, and excluding from the
calculation thereof all cash and cash equivalents of Borrowers, the
current portion of all of Borrowers' outstanding long-term
Indebtedness, the outstanding principal balance of the Revolving Loan
and any and all amounts due to or due from Affiliates."
C. Section 2.1 of the Loan Agreement is, effective the date hereof,
hereby amended and restated to read in its entirety as follows:
"2.1.1 TERM LOAN C.
-----------
Lender will make a term loan to Borrowers in the principal
amount of Fifteen Million Six Hundred Thousand Dollars
($15,600,000) ("Term Loan C"). Term Loan C shall be subject to
repayment in accordance with, and bear interest as provided
in, Section 2.2.1 of this Agreement and shall otherwise be
evidenced by, and repayable in accordance with, the applicable
Term Note."
"2.1.2 TERM LOAN D
-----------
Lender will make a term loan to Borrowers in the principal
amount of One Million Five Hundred Thousand Dollars
($1,500,000) ("Term Loan D"). Term Loan D shall be subject to
repayment in accordance with, and bear interest as provided
in, Section 2.2.2 of this Agreement and shall otherwise be
evidenced by, and repayable in accordance with, the applicable
Term Note."
D. Section 2.2 of the Loan Agreement is, effective the date hereof,
hereby amended and restated to read in its entirety as follows:
"2.2.1 PAYMENT TERMS OF TERM LOAN C.
----------------------------
(A) INTEREST. Term Loan C shall bear interest on the unpaid
principal balance until the date paid at a fixed rate per annum equal
to ten percent (10%), such interest being payable monthly on the 1st
day of each month, and at maturity, commencing January 1, 1997. On July
28, 1998, and so long as an Event of Default does not then exist,
Borrowers shall have the option to convert the above interest rate to
either (i) a fixed rate per annum equal to Three Hundred (300)
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59
basis points over the asked-for yield of U.S. Treasury securities of a
similar term and maturity, as published in the July 27, 1998 edition of
the WALL STREET JOURNAL or (ii) a fluctuating rate per annum rate equal
to One Hundred Fifty (150) basis points above the Base Rate upon prior
written notice to Lender delivered on or before July 21, 1998. In the
event Borrowers do not for any reason deliver notice of which option is
elected within the prescribed period, they shall be deemed to have
selected option (i) above. Interest on Term Loan C shall be computed on
a 360-day year basis based upon the actual number of days elapsed.
(B) FIXED PRINCIPAL INSTALLMENTS. Subject otherwise to the
terms and provisions of the applicable Term Note, the principal balance
of Term Loan C shall be payable in sixty-seven (67) consecutive equal
monthly principal installments of One Hundred Eighty-Five Thousand
Seven Hundred Fourteen Dollars ($185,714) each, commencing January 1,
1997, and continuing on the 1st day of each month thereafter and a
final principal installment of Three Million One Hundred Fifty-Seven
Thousand One Hundred Sixty-Two Dollars ($3,157,162) on August 1, 2002.
(C) PREPAYMENT FEE. In the event that Term Loan C is paid in
full (other than as a result of scheduled reductions by way of payments
in accordance with the Term Note), Borrowers will pay to Lender a
prepayment fee of (a) 1% of the outstanding principal balance then
outstanding on Term Loan C, if the same occurs at any time prior to
July 28, 1997, provided, however, that so long as there are loans
outstanding pursuant to the Revolving Loan provided in Section 2.3
hereof and the same shall not have been refinanced and retired, the
repayment fee prior to July 28, 1997 shall be the sum of $25,000, (b)
in the event that the Borrowers select the fixed rate interest option,
in accordance with Section 2.2.1(A)(i), 3% of the outstanding principal
balance then outstanding on Term Loan C if the same occurs during the
first full year following July 28, 1998, (c) 2% of the outstanding
principal balance then outstanding on Term Loan C, if the same occurs
during the second year following July 28, 1998, and (d) 1% of the
outstanding principal balance then outstanding on Term Loan C, if the
same occurs during the third year following July 28, 1998, in order to
compensate Lender for its reliance expenses and loss of anticipated
profits. It is acknowledged that this fee shall be deemed to be
liquidated damages for loss of a bargain and not a penalty and the same
is acknowledged to be an integral part of the consideration for Lender
to execute Consolidated Amendment No. 2 to this Loan Agreement;
provided, however, that such fee will not be due and payable in the
event that the Borrowers make the foregoing prepayments exclusively
from funds generated from a sale of substantially all of the assets of
the Borrowers or a sale of the controlling interest in the voting
securities in the Borrowers."
"2.2.2 PAYMENT TERMS OF TERM LOAN D.
----------------------------
(A) INTEREST. Term Loan D shall bear interest on the unpaid
principal balance until the date paid at a fixed rate per annum of
twelve percent (12%), such interest being payable monthly on the 1st
day of each month, and at maturity,
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60
commencing January 1, 1997. Interest on Term Loan D shall be computed
on a Three Hundred Sixty (360)-day year basis based upon the actual
number of days elapsed.
(B) FIXED PRINCIPAL INSTALLMENTS. Subject otherwise to the
terms and provisions of the applicable Term Note, the principal balance
of Term Loan D shall be repayable in thirty-five (35) consecutive equal
monthly principal installments of Forty-One Thousand Six Hundred
Sixty-Seven Dollars ($41,667) each, commencing January 1, 1997, and
continuing on the first day of each month thereafter and a final
principal installment of Forty-One Thousand Six Hundred Fifty-Five
Dollars ($41,655) on December 1, 1999.
(C) MANDATORY PRINCIPAL PREPAYMENT OF TERM LOAN D. In addition
to the principal payments described in Section 2.2.2.(B) above, the
Borrowers agree to make annual payments to be applied to pay the
principal balance of Term Loan D within One Hundred Five (105) days of
each fiscal year end of the Borrowers beginning with respect to the
fiscal year ending December 31, 1997, in an amount equal to Twenty-Five
Percent (25%) of Borrowers' Excess Cash Flow calculated for the fiscal
year just ended. Borrowers further agree that any such principal
payments required under this Section 2.2.2(C) shall be (i) made by
Lender increasing the outstanding principal balance of the Revolving
Loan, and (ii) applied against principal installments on Term Loan D in
their inverse order of maturity."
E. Subsections (A), (B) and (C) of Section 2.3 of the Loan Agreement
are, effective the date hereof, hereby amended and restated to read in their
entirety as follows:
"2.3 REVOLVING LOAN.
--------------
(A) REVOLVING LOAN. Subject at all times to the terms hereof,
the Lender will, until July 28, 1998, make such loans to each Borrower
as from time to time such Borrower requests (the "Revolving Loan")
consisting of advances made by Lender against the value of each
Borrower's respective Eligible Inventory and Eligible Accounts. Such
advances are anticipated to be repaid by Borrowers and thereafter
re-advanced by Lender without any premiums or penalty therefor. Subject
to the provisions of Subsection (B) of this Section 2.3, the aggregate
unpaid principal of the Revolving Loan outstanding at any one time
shall not exceed the lesser of (a) the line of credit approved for
Borrowers, which is currently Twenty-Five Million and no/100 Dollars
($25,000,000) or (b) the sum of (i) Eighty-Five percent (85%) of the
unpaid face amount of each Borrower's respective Eligible Accounts (or
such other percentages of each Borrower's Eligible Accounts as may from
time to time be fixed by the Lender upon notice to the Borrowers) and
(ii) the lesser of (1) Fifty-Five percent (55%) of the cost or market
value, whichever is lower, determined on a first-in, first-out basis,
of each Borrower's respective Eligible Inventory located at the
Continental Collateral Location or Xxxxxxx Collateral Location (or such
other percentages of each Borrower's respective Eligible Inventory as
may from time to time be fixed by the
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Lender upon notice to the Borrowers) or (2) Twelve Million Dollars
($12,000,000) (or such other dollar amount as may from time to time be
fixed by the Lender upon notice to the Borrowers).
(B) MAXIMUM BORROWINGS AVAILABLE UNDER REVOLVING LOAN.
Notwithstanding anything to the contrary contained in this Section 2.3,
at no time shall the aggregate loans outstanding to the Borrowers at
any time under the Revolving Loan exceed Twenty-Five Million and no/100
Dollars ($25,000,000), nor shall advances under the Revolving Loan to
either Borrower exceed that which is permitted on the basis of the
advance rate percentages set forth in Section 2.3(A)(b) above as the
same are applied to each respective Borrower.
(C) PAYMENT. The Revolving Loan shall be payable on July 28,
1998, and bear interest as provided in Section 2.4 of this Agreement
and shall otherwise be evidenced by, and repayable in accordance with,
the Revolving Note, but in the absence of such revolving promissory
note shall be evidenced by the Lender's record of disbursements and
repayments."
F. Section 2.8 of the Loan Agreement is, effective the date hereof,
hereby amended and restated to read in its entirety as follows:
"2.8 ORIGINATION FEE. In order to compensate Lender for its services in
preparing and reviewing Consolidated Amendment No. 2 to this Loan
Agreement and related documents in connection with the amendment to
Credit Facility, Borrowers shall pay to Lender not later than the date
of Consolidated Amendment No. 2 to this Loan Agreement, an origination
fee (the "Origination Fee") of One Hundred Twenty-Five Thousand Dollars
($125,000)."
G. Section 2.9 of the Loan Agreement is, effective the date hereof,
amended and restated to read in its entirety as follows:
"2.9 COMMITMENT FEE. Borrowers shall pay to Lender on July 28, 1997 and
on each succeeding anniversary of such date annually thereafter, a
commitment fee (the "Commitment Fee") of Twenty-Five (25) basis points
on the amount of the line of credit approved for Borrowers under the
Revolving Loan pursuant to Section 2.3(A) of this Agreement, whether
the Borrowers shall be entitled to request such amount pursuant to
Section 2.3(A) of this Agreement or not."
H. Section 2.10 of the Loan Agreement is, effective the date hereof,
hereby amended and restated to read in its entirety as follows:
"2.10 EARLY TERMINATION FEE. In the event that the Revolving
Loan and Term Loan C and Term Loan D are paid in full (other than as a
result of payment of Term Loan C or Term Loan D at maturity or by
reason of mandatory prepayments from Excess Cash Flow or scheduled
reduction of the Term Loans C or Term Loan D by way of payments in
accordance with the applicable Term Note or the expiration of the
Revolving Loan at maturity), or in the event of any
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62
intentional non-compliance by either Borrower with any provisions of
this Agreement which results in a termination of the Credit Facility by
Lender pursuant to Section 11.2 or 11.4 hereof, Borrowers will pay to
Lender an early termination fee of (a) 3% of the line of credit
approved for Borrowers under the Revolving Loan pursuant to Section
2.3(A) hereof plus the outstanding principal balance then outstanding
on Term Loan C and Term Loan D, if the same occurs during the first
year following the execution of Consolidated Amendment No. 2 to this
Loan Agreement, (b) 2% of the line of credit approved for Borrowers
under the Revolving Loan pursuant to Section 2.3(A) hereof plus the
outstanding principal balance then outstanding on Term Loan C and Term
Loan D, if the same occurs during the second year following the
execution of Consolidated Amendment No. 2 to this Loan Agreement, and
(c) 1% of the line of credit approved for Borrowers under the Revolving
Loan pursuant to Section 2.3(A) hereof plus the outstanding principal
balance then outstanding on Term Loan C and Term Loan D, if the same
occurs during the third year following the execution of Consolidated
Amendment No. 2 to this Loan Agreement, in order to compensate Lender
for its reliance expenses and loss of anticipated profits. It is
acknowledged that this fee shall be deemed to be liquidated damages for
loss of a bargain and not a penalty and the same is acknowledged to be
an integral part of the consideration for Lender to execute
Consolidated Amendment No. 2 to this Loan Agreement; provided, however,
that such fee will not be due and payable in the event that the
Borrowers make the foregoing prepayments exclusively from funds
generated from a sale of substantially all of the assets of the
Borrowers or a sale of the controlling interest in the voting
securities in the Borrowers or if the outstanding borrowings under this
Agreement are replaced by borrowings under a new credit facility
granted by Lender to a borrower who is affiliated with either Borrower
or the General Partner of either Borrower."
I. Section 8.1(O) of the Loan Agreement is, effective the date hereof,
hereby amended and restated to read in its entirety as follows:
"(O) Maintain (i) a consolidated Adjusted Tangible Net Worth
equal to or greater than negative Four Million Two Hundred Fifty
Thousand Dollars (-$4,250,000) as of the year ending December 31, 1996
and increasing by Nine Hundred Thousand Dollars ($900,000) by each
fiscal quarter-end thereafter commencing March 31, 1997, and calculated
based upon the Borrower's combined consolidated audited year-end
financial statements or upon each Borrower's unaudited fiscal
quarter-end financial statements prepared in accordance with GAAP. For
purposes hereof, the interim financial statements shall include a
consolidation with the financial position of CC&E Pty Limited and BCE."
Debt Coverage shall be calculated quarterly based on each Borrower's
fiscal quarter and direct financial statements for the four preceding fiscal
quarters prepared in accordance with GAAP but exclusive of the results of any
foreign subsidiary of Continental."
J. Section 8.1(Q) of the Loan Agreement is, effective the date hereof,
hereby amended and restated in its entirety to read as follows:
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63
"(Q). Maintain Debt Coverage (as defined herein) of not less
than 1.40 to 1.00 without regard to any payment of Management Fees and
non-Lender funded Capital Expenditures and not less than 1.20 to 1.00
without regard to any payment of Management Fees and non-Lender funded
Capital Expenditures. "Debt Coverage" as used in this Section 8.1(Q)
means the ratio of Borrowers' combined consolidated net income PLUS,
with respect to calculation of the 1.4 to 1.00 ratio only, Management
Fees PLUS, with respect to both 1.40 to 1.00 and the 1.20 to 1.00
ratio, consolidated depreciation, consolidated amortization and
consolidated interest paid to Lender, to the amount of all principal
and interest payable to Lender (except for any mandatory prepayments of
principal on Term Loan D) and the amount of all Permitted Distributions
PLUS, with respect to calculation of the 1.20 to 1.0 ratio only,
non-Lender funded Capital Expenditures at the date of calculation
thereof. Debt Coverage shall be calculated quarterly based upon each
Borrower's fiscal quarter-end financial statements for the four
preceding fiscal quarters prepared in accordance with GAAP but
exclusive of the results of any foreign subsidiary of Continental."
(K) Section 8.1 of the Loan Agreement is, effective the date hereof,
hereby amended by the addition of the following Section 8.1(R):
"(R) PAYDOWN OF TERM LOANS. In addition to, and not in
limitation of the requirements to make mandatory prepayments of
principal, each Borrower agrees that it shall use any upstream
dividends from its subsidiaries, inter-company debt repayments,
distributions, management fees or any similar type of payment received
from CC&E Pty Limited and/or any member of the ACE Group or any
affiliate thereof by Continental or any affiliate of Continental
including, but not limited to, partners of Continental, to pay the Term
Loan C or Term Loan D, as the Lender shall specify, unless Lender shall
specifically otherwise consent in writing. Payments received from CC&E
Pty Limited or any member of the ACE Conveyor Group for services or
goods furnished by Continental or Xxxxxxx shall not be subject to this
provision."
L. Section 8.2(H) of the Loan Agreement is, effective the date hereof,
hereby amended and restated to read in its entirety as follows:
"(H) Make any Distributions, except Permitted Distributions,
Tax Distributions and Management Fees."
M. Section 8.2(K) of the Loan Agreement is, effective the date hereof,
amended and restated to read in its entirety as follows:
"(K) CAPITAL EXPENDITURES. Make Capital Expenditures (without
Lender's prior consent) during any fiscal year of such Borrower which,
when combined with the Capital Expenditures of the other Borrower,
cause the aggregate Capital Expenditures of both Borrowers to exceed
One Million Dollars ($1,000,000) during Borrowers' fiscal year ending
December 31, 1995 and during each fiscal year of Borrowers thereafter."
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N. Section 11.1 of the Loan Agreement is, effective the date hereof,
hereby amended by addition of the following new subsection 11.1(P):
"(P) The default by CC&E Pty Limited on any loan agreement to
which it is a party, including without limitation, its agreement to
repay certain subordinated indebtedness in connection with the
Acquisition and any attempt by sellers to invoke or attempt to invoke
any of their rights under a certain guaranty agreement executed by
Continental in conjunction with the Acquisition."
O. Section 8.1 of the Loan Agreement is, effective the date hereof,
hereby amended by addition of the following new subsection 8.1(S):
(S) AVAILABILITY UNDER REVOLVING LOAN. Borrowers shall have a
minimum aggregate unused availability under the Revolving Loan of Two
Million Dollars ($2,000,000) on the 15th day of March, June, September
and December, 1997 and Three Million Dollars ($3,000,000) on the 15th
day of March and June, 1998 utilizing the Borrowers' Certificate of
Accounts Receivable and Inventory in the form attached as EXHIBIT A to
the Loan Agreement."
SECTION II. CONDITIONS PRECEDENT
--------------------
Each Borrower understands and hereby agrees that the effectiveness of
this Consolidated Amendment No. 2 is subject to receipt by the Lender, on or
prior to the date hereof, in form and substance satisfactory to the Lender and
its counsel, of the following:
(A) A Certificate, dated as of the date hereof, signed by an officer of
each Borrower or of such Borrower's General Partner and to the effect that:
(1) As of said date, no Event of Default has occurred and
is continuing and no event has occurred and is
continuing that, with the giving of notice or passage
of time or both, would be an Event of Default;
(2) The representations and warranties set forth in
Section 7 of the Loan Agreement are true and correct
as of such date; and
(3) Borrower is in compliance with all of the terms and
provisions set forth in the Loan Agreement on and as
of said date.
(B) A Certificate, dated as of the date hereof, of the secretary of the
General Partner of each Borrower certifying (1) that such General Partner's
Articles of Incorporation and Code of Regulations have not been amended since
the execution of the Loan Agreement (or certifying that true, correct and
complete copies of any amendments are attached), (2) that copies of resolutions
of the Board of Directors of such General Partner are attached with respect to
the approval of this Consolidated Amendment No. 2 and of the matters
contemplated hereby and authorizing the execution, delivery and performance by
such General Partner and Borrower of this Consolidated Amendment No. 2 and each
other document to be delivered pursuant hereto, (3) as to the incumbency and
signatures of the officers of such General Partner signing this
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Consolidated Amendment No. 2 and each other document to be delivered pursuant
hereto; and (4) that the Certificate of Limited Partnership of each Borrower has
not been amended since the execution of this Loan Agreement.
(C) This Consolidated Amendment No. 2; an Amended and Restated
Replacement Promissory Note (Term Loan C), substantially in the form of EXHIBIT
C-6 attached hereto, with all blanks completed; Promissory Note (Term Loan D)
substantially in the form of EXHIBIT C-7 attached hereto, with all blanks
completed, all duly executed by each Borrower; and Amendments to Open-End
Mortgages, each duly executed by the applicable Borrower.
(D) An Acknowledgment of Receipt of a copy of, and Consent and
Agreement to the terms of, this Consolidated Amendment No. 2 and the above
referenced promissory notes and mortgage amendments from N.E.S. Investment Co.,
L.P. with respect to that certain Subordination Agreement, executed and
delivered to the Lender by it and dated September 14, 1992.
(E) An Origination Fee of One Hundred Twenty-Five Thousand Dollars
($125,000).
(F) A Certificate, dated as of the date hereof, signed by an officer of
each Borrower or of such Borrowers' General Partner and to the effect that:
1. CC&E Pty Limited and the companies in the ACE Conveyor
Group have not incurred any term indebtedness other than certain loans
provided to CC&E Pty Limited by the selling shareholders in the
Acquisition; and
2. Following (i) repayment and refunding of Term Loan B by the
execution and funding of Term Loan C, (ii) the funding of Continental's
investment required to consummate the Acquisition and (iii) the payment
of all costs, fees and expenses incurred in closing Consolidated
Amendment No. 2 and the transactions related thereto and closing the
Acquisition, no more than Twenty Million Dollars ($20,000,000) will
have been drawn down on the Revolving Loan.
(G) Copies of all material transactional and closing documents relevant
to the Acquisition certified to Lender's reasonable satisfaction.
(H) The written opinion of counsel to Borrowers as to the transactions
contemplated by Consolidated Amendment No. 2 and as to the Acquisition, in form
and substance satisfactory to Lender.
(I) Such other documents as the Lender may request to implement this
Consolidated Amendment No. 2 and the transactions contemplated hereby.
If Lender shall consummate the transactions contemplated hereby prior
to the fulfillment of any of the conditions precedent set forth above, the
consummation of such transactions shall constitute only an extension of time for
the fulfillment of such conditions and not a waiver thereof.
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SECTION III. ACKNOWLEDGMENTS CONCERNING OUTSTANDING LOANS
--------------------------------------------
Borrowers hereby acknowledge and agree that as of December 13, 1996 the
principal balance of the Term Loan B was the sum of $12,628,576 and that such
loan is outstanding and unpaid and payable to Lender in accordance with the
terms of the Loan Agreement (as amended by this Consolidated Amendment No. 2)
and the Term Note, and that Term Loan B will be repaid by use, in part, of the
proceeds of Term Loan C. Said balance, as well as the current outstanding
balance of the Revolving Loan ($12,545,646.38) and amounts owed pursuant to
letters of credit and/or existing equipment leases, are owed to Lender without
any offset, deduction, defense or counterclaim of any nature whatsoever.
SECTION IV. FEES AND EXPENSES
-----------------
Borrowers shall pay all out-of-pocket fees and expenses incurred by the
Lender in connection with the preparation, negotiation, execution and delivery
of this Consolidated Amendment No. 2, the Term Notes and all the other
agreements, documents or certificates required or contemplated hereby,
including, without limitation, legal fees and expenses of the Lender.
SECTION V. REFERENCES
----------
On and after the effective date of this Consolidated Amendment No. 2,
each reference in the Loan Agreement to "this Agreement", "hereunder", "hereof",
or words of like import referring to the Loan Agreement, and in the Notes to the
"Loan Agreement", "thereof", or words of like import referring to the Loan
Agreement shall mean and refer to the Loan Agreement as amended hereby. The Loan
Agreement, as amended by this Consolidated Amendment No. 2, is and shall
continue to be in full force and effect and is hereby and in all respects
ratified and confirmed. To the extent any amendment set forth in any prior
amendment is omitted from or revised in this Consolidated Amendment No. 2, the
same shall be deemed eliminated or revised, as the case may be, as between
Borrowers and Lender as of the date hereof. The execution, delivery and
effectiveness of this Consolidated Amendment No. 2 shall not operate as a waiver
of any right, power or remedy of Lender under the Loan Agreement or constitute a
waiver of any provision of the Loan Agreement except as specifically set forth
herein. All references in the Loan Agreement to any definitions modified or
replaced herein shall be deemed references to such definitions as so modified or
replaced. References in the Loan Agreement to EXHIBIT C-6 in the definition of
"Term Note" and to EXHIBIT C-7 in the definition of "Term Note" shall be deemed
to refer to the respective Notes executed in connection herewith.
SECTION VI. APPLICABLE LAW
--------------
This Consolidated Amendment No. 2 shall be deemed to be a contract
under the laws of the State of Ohio, and for all purposes shall be construed in
accordance with the laws of the State of Ohio.
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67
SECTION VII. COUNTERPARTS
------------
This Consolidated Amendment No. 2 may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any one of the parties hereto may execute this Consolidated
Amendment No. 2 by signing any such counterpart.
IN WITNESS WHEREOF, the Borrowers and the Lender have caused this
Consolidated Amendment No. 2 to be executed by their duly authorized officers as
of the date and year first above written.
CONTINENTAL CONVEYOR & EQUIPMENT
CO. L.P.
("Borrower")
By CC&E Corp., its General Partner
By /s/ Xxxxx X. Xxxxxx
--------------------------
Name: Xxxxx Xxxxxx
Title: X. X.
XXXXXXX CONVEYOR CO. L.P.
("Borrower")
By New Xxxxxxx Corp.,
its General Partner
By /s/ Xxxxx X. Xxxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxxx
Title: V. Pres.
BANK ONE, CLEVELAND, NA ("Lender")
By /s/ Xxxxx X. Xxxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President and Manager
Special Industries
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68
THIRD AMENDATORY AGREEMENT
--------------------------
TO
--
CREDIT FACILITY AND SECURITY AGREEMENT
--------------------------------------
THIS THIRD AMENDATORY AGREEMENT TO CREDIT FACILITY AND SECURITY
AGREEMENT (this "Third Amendatory Agreement"), dated as of March 28, 1997, is
entered into by and among BANK ONE, CLEVELAND, NA, a national baking association
organized and existing under the laws of the United States of America
("Lender"), with its principal place of business located at 000 Xxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxx 00000; CONTINENTAL CONVEYOR & EQUIPMENT COMPANY, a Delaware
corporation ("Continental"), with its principal place of business and executive
offices located at 000 Xxxx 0xx Xxxxxx, Xxxxx, X.X. Xxx 000, Xxxxxxxx, Xxxxxxx
00000 (the "Continental Principal Place of Business"); and XXXXXXX CONVEYOR
COMPANY, a Delaware corporation ("Xxxxxxx"), with its principal place of
business and executive offices located at U.S. Route 178 South, X.X. Xxx 000,
Xxxxxx, Xxxxx Xxxxxxxx 00000 (the "Xxxxxxx Principal Business Location") (each
of Continental and Xxxxxxx being sometimes referred to herein individually as a
"Borrower" and collectively as the "Borrowers").
W I T N E S S E T H:
--------------------
WHEREAS, pursuant to the terms of that certain Assumption and
Modification Agreement by and between Borrowers and Lender dated as of March 7,
1997, the Borrowers assumed all of the Obligations of CONTINENTAL CONVEYOR &
EQUIPMENT CO. L.P., a limited partnership organized and formerly existing under
the laws of the State of Delaware, and XXXXXXX CONVEYOR CO. L.P., a limited
partnership organized and formerly existing under the laws of the State of
Delaware (the "Original Borrowers"),under that certain Credit Facility and
Security Agreement by and between the Original Borrowers and Lender dated as of
September 14, 1992, as amended by a certain First Amendment to Credit Facility
and Security Agreement executed on August 27, 1993, as further amended by a
certain Second Amendatory Agreement dated as of October 5, 1994, as further
amended by a certain Consolidated Amendment No. 1 to Credit Facility and
Security Agreement dated as of July 28, 1995 and as further amended by a certain
Consolidated Amendment No. 2 to Credit Facility and Security Agreement dated as
of December 13, 1996 (collectively, herein the "Loan Agreement," all terms
defined in said Loan Agreement being used herein with the same meaning),
pursuant to which the Lender loaned the Original Borrowers $15,600,000 on a term
loan basis; and made an additional term loan in the principal amount of
$1,500,000; and agreed to loan to the Original Borrowers up to an additional
maximum aggregate sum of $25,000,000 on a revolving loan basis; which term loans
are known, respectively, as Term Loan C, evidenced by a Note dated December 13,
1996, and Term Loan D, evidenced by a Note dated December 13, 1996, and which
Revolving Loan is evidenced by a Note dated July 28, 1995, each such Note being
executed and delivered by the Original Borrowers to the Lender; and
WHEREAS, the Borrowers and the Lender have agreed to amend the Loan
Agreement to (i) increase the maximum aggregate sum available under the
Revolving Loan from $25,000,000 to $30,000,000, (ii) discharge Borrowers from
their obligations under the promissory notes evidencing Term Loan C and Term
Loan D upon full payment of all amounts due and owing thereunder (collectively,
the "Term Loans") and (iii) modify and replace certain financial covenants and
definitions contained in the Loan Agreement and add certain additional financial
covenants and definitions to the Loan Agreement; and
WHEREAS, the Borrowers and the Lender wish to provide for payment by
the Borrowers of a documentation and restructure fee of $50,000 and the expenses
of Lender in connection with the matters contemplated hereby.
69
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Borrowers and the Lender agree as follows:
SECTION I. AMENDMENT OF LOAN AGREEMENT
---------------------------
A. The definitions "Commitment," "Management Fees," "Revolving Note"
and "Working Capital" in Section 1.1 of the Loan Agreement are, effective the
date hereof, hereby amended and restated to read in their entirety as follows:
"COMMITMENT - Lender's letter to the Original Borrowers dated
August 17, 1992, as accepted by the Original Borrowers on August 27,
1992, Lender's letter to the Original Borrowers dated September 28,
1994, as accepted by the Original Borrowers on October 3, 1994,
Lender's letter to the Original Borrowers dated July 14, 1995, as
accepted by the Original Borrowers on July 28, 1995, Lenders' letter to
the Original Borrowers dated December 10, 1996, as accepted by the
Original Borrowers on December 10, 1996 and Lender's Letter to Original
Borrowers dated February 26, 1997, as accepted by Borrowers on March 7,
1997."
"MANAGEMENT FEES - Management fees and other similar type fees
paid by a Borrower to Nesco, Inc. or an affiliate of Nesco, Inc."
"REVOLVING NOTE - The Amended and Rested Replacement
Promissory Note (Revolving Loan) to be executed by Borrowers in form
attached as EXHIBIT C-8 to this Agreement (with such changes or
modifications, if any, to which Lender may agree) evidencing the
Revolving Loan made by Lender pursuant to Section 2.3 of this
Agreement, together with all amendments thereto and all promissory
notes issued in substitution therefor or replacement thereof."
"WORKING CAPITAL - The excess of Borrowers' consolidated
combined aggregate current assets over aggregate current liabilities,
each as determined in accordance with GAAP, and excluding from the
calculation thereof the outstanding principal balance of the Revolving
Loan to the extent reflected as a current liability."
B. Subsections (A), (B) and (C) of Section 2.3 of the Loan Agreement
are, effective the date hereof, hereby amended and restated to read in their
entirety as follows:
"2.3 REVOLVING LOAN.
--------------
(A) REVOLVING LOAN. Subject at all times to the terms hereof,
the Lender will, until March 28, 2000, make such loans to each Borrower
as from time to time such Borrower requests (the "Revolving Loan")
consisting of advances made by Lender against the value of each
Borrower's respective Eligible Inventory and Eligible Accounts. Such
advances are anticipated to be repaid by Borrowers and thereafter
re-advanced by Lender without any premiums or penalty therefor. Subject
to the provisions of Subsection (B) of this Section 2.3, the aggregate
unpaid principal of the Revolving Loan outstanding at any one time
shall not exceed the lesser of (a) the line of credit approved for
Borrowers, which is currently Thirty Million and no/100 Dollars
($30,000,000) or (b) the sum of (i) Eighty-Five percent (85%) of the
unpaid face amount of each Borrower's respective Eligible Accounts (or
such other percentages of each Borrower's Eligible Accounts as may from
time to time be fixed by the Lender upon notice
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70
to the Borrowers) and (ii) the lesser of (1) Fifty-Five percent (55%)
of the cost or market value, whichever is lower, determined on a
first-in, first-out basis, of each Borrower's respective Eligible
Inventory located at the Continental Collateral Location or Xxxxxxx
Collateral Location (or such other percentages of each Borrower's
respective Eligible Inventory as may from time to time be fixed by the
Lender upon notice to the Borrowers) or (2) Twelve Million Dollars
($12,000,000) (or such other dollar amount as may from time to time be
fixed by the Lender upon notice to the Borrowers).
(B) MAXIMUM BORROWINGS AVAILABLE UNDER REVOLVING LOAN.
Notwithstanding anything to the contrary contained in this Section 2.3,
at no time shall the aggregate loans outstanding to the Borrowers at
any time under the Revolving Loan exceed Thirty Million and no/100
Dollars ($30,000,000), nor shall advances under the Revolving Loan to
either Borrower exceed that which is permitted on the basis of the
advance rate percentages set forth in Section 2.3(A)(b) above as the
same are applied to each respective Borrower.
(C) PAYMENT. The Revolving Loan shall be payable on March 28,
2000, and bear interest as provided in Section 2.4 of this Agreement
and shall otherwise be evidenced by, and repayable in accordance with,
the Revolving Note, but in the absence of such revolving promissory
note shall be evidenced by the Lender's record of disbursements and
repayments."
C. Section 2.8 of the Loan Agreement is, effective the date hereof,
hereby amended and restated to read in its entirety as follows:
"2.8 DOCUMENTATION AND RESTRUCTURE FEE. In order to compensate Lender
for its services in preparing and reviewing the Third Amendatory
Agreement to this Loan Agreement and related documents in connection
with the amendment to Credit Facility, Borrowers shall pay to Lender
not later than the date of the Third Amendatory Agreement to this Loan
Agreement, a documentation and restructure fee (the "Documentation and
Restructure Fee") of Fifty Thousand Dollars ($50,000)."
D. Section 2.9 of the Loan Agreement is, effective the date hereof,
hereby amended and restated to read in its entirety as follows:
"2.9 COMMITMENT FEE. Borrowers shall pay to Lender on March 28, 1997
and on each succeeding anniversary of such date annually thereat
(provided no such fee shall be taken on March 28, 2000 unless the
maturity of the Revolving Loan is extended beyond said date), a
commitment fee (the "Committment Fee") of Twenty-Five (25) basis points
on the amount of the line of credit approved for Borrowers under the
Revolving Loan pursuant to Section 2.3(A) of this Agreement, whether
the Borrowers shall be entitled to request such amount pursuant to
Section 2.3(A) of this Agreement or not."
E. Section 5.2 of the Loan Agreement is, effective the date hereof,
hereby amended and restated to read in its entirety as follows:
"Lender reserves the right upon the occurrence and during the
continuance of an Event of Default to notify Account Debtors and other
Persons indebted to Borrowers of Lender's interest in any such amounts
payable to Borrowers and to instruct such Account Debtors and other
Persons to remit the same directly to Lender and all such funds (less
any costs of collection and other charges or
-3-
71
expenses incurred in connection therewith as hereinafter provided)
shall be subject to application to the Obligations."
F. Section 8.1(Q) of the Loan Agreement is, effective the date hereof,
hereby amended and restated in its entirety to read as follows:
"(Q) Maintain Debt Coverage (as defined herein) of not less
than 1.50 to 1.00. "Debt Coverage" as used in this Section 8.1(Q)
means, on a combined consolidated basis, the ratio of Borrowers'
operating income (which shall be after deduction for any Management
Fees) plus depreciation and amortization less Distributions (which for
purposes of this Section 8.1(Q) shall include all interest on the
Senior Notes and all income taxes paid or payable by the Borrowers or
Global (as defined below)) to the amount of all principal and interest
paid or payable by the Borrowers to Lenders plus all Capital
Expenditures not funded on a term basis at the date of calculation
thereof. Debt Coverage shall be initially calculated for the Borrowers'
fiscal year ending December 31, 1997, based upon the Borrowers' and
Global's year end audited consolidated financial statements prepared in
accordance with GAAP; thereafter, Debt Coverage shall be calculated
quarterly based upon each Borrower's fiscal quarter-end financial
statements for the preceding fiscal quarters prepared in accordance
with GAAP.
G. Section 8.1 of the Loan Agreement is, effective the date hereof,
hereby amended by the addition of the following Sections 8.1(T) and 8.1(U):
"(T) Beginning with Global's (as defined below) fiscal year
ending December 31, 1997, Global's consolidated operating income (which
shall be after deduction for any Management Fees) shall be an amount
equal to or greater than the sum of $10,950,000 plus any interest paid
or payable by Borrowers under the Line of Credit, based upon Global's
fiscal quarter-end financial statements for the three preceding fiscal
quarters prepared in accordance with GAAP. Beginning with Global's
quarter ending March 31, 1998, Global's consolidated operating income
(which shall be after deduction for any Management Fees) shall be an
amount equal to or greater than the sum of $14,600,000 plus any
interest paid or payable by Borrowers under the Line of Credit, based
upon Global's fiscal quarter-end financial statements for the four
preceding fiscal quarters prepared in accordance with GAAP."
"(U) The Borrowers shall maintain Working Capital at a minimum
of $15,000,000, calculated quarterly based on each Borrower's fiscal
quarter end financial statements."
H. Sections 8.1(S), 8.2(H) and 8.2(K) of the Loan Agreement are,
effective the date hereof, hereby deleted.
I. Section 11.1 of the Loan Agreement is, effective the date hereof,
hereby amended by the deletion in its entirety of Section 11.1(G) and the
addition of the following new subsections 11.1(P) and 11.1(Q):
"(P) The default by CC&E Pty Limited on any loan agreement to
which it is a party, including without limitation, its agreement to
repay certain subordinated indebtedness in connection with the
Acquisition and any attempt by sellers to invoke or attempt to invoke
any of their rights under a certain guaranty agreement executed by
Continental in conjunction with the Acquisition; provided, however,
that no default shall be deemed to exist under this Section 11.1(P) so
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72
long as Continental is contesting in good faith any default or alleged
default under the guaranty agreement and no judgment or lien attaches
which is not vacated in sixty days."
"(Q) The default by Continental Global Group, Inc. ("Global")
in the payment of principal or interest on its Series A Senior Notes,
due 2007 (the "Senior Notes") or on any other obligation under the
Senior Notes or under the Senior Note Indenture pursuant to which the
Notes were issued (the "Senior Note Obligations")."
SECTION II. REPRESENTATIONS AND WARRANTIES
------------------------------
Each Borrower hereby represents and warrants that the dissolution of
the Original Borrowers occurred and was effective on March 1, 1997 and that each
Borrower owns and holds all of the assets, respectively, of the Original
Borrowers of which it was a general partner and that each Borrower has assumed
all of the respective Obligations and liabilities of each of the Original
Borrowers of which it was a General Partner. The Lender, in reliance on the
foregoing representations, enters into this Third Amendatory Agreement and
consents to such dissolution and consents to the guaranty by Borrowers of the
Senior Notes.
SECTION III. CONDITIONS PRECEDENT
--------------------
Each Borrower understands and hereby agrees that the effectiveness of
this Third Amendatory Agreement is subject to receipt by the Lender, on or prior
to the date hereof, in form and substance satisfactory to the Lender and its
counsel, of the following:
(A) A Certificate, dated as of the date hereof, signed by an officer of
each Borrower to the effect that:
(1) As of said date, no Event of Default has occurred and
is continuing and no event has occurred and is
continuing that, with the giving of notice or passage
of time or both, would be an Event of Default;
(2) The representations and warranties set forth in
Section 7 of the Loan Agreement are true and correct
as of such date; and
(3) Borrower is in compliance with all of the terms and
provisions set forth in the Loan Agreement on and as
of said date.
(B) A Certificate, dated as of the date hereof, of the secretary of
each Borrower certifying (1) that Borrower's Articles of Incorporation and
By-Laws have not been amended since the execution of the Loan Agreement (or
certifying that true, correct and complete copies of any amendments are
attached),(2) that copies of resolutions of the Board of Directors of such
Borrower are attached with respect to the approval of this Third Amendatory
Agreement and of the matters contemplated hereby and authorizing the execution,
delivery and performance by such Borrower of this Third Amendatory Agreement and
each other document to be delivered pursuant hereto, (3) as to the incumbency
and signatures of the officers of such Borrower signing this Third Amendatory
Agreement and each other document to be delivered pursuant hereto.
(C) A Certificate, dated as of the date hereof, of the secretary of
Global certifying (1) that copies of resolutions of the Board of Directors of
Global are attached with respect to the Guaranty by Global of each Borrower's
obligations under this Third Amendatory Agreement and authorizing the execution,
delivery and performance by Global of such Guaranty and each other
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73
document to be delivered pursuant thereto, (2) as to the incumbency and
signatures of the officers of Global signing the Guaranty and each other
document to be delivered pursuant thereto.
(D) This Third Amendatory Agreement; an Amended and Restated
Replacement Promissory Note (Revolving Loan), substantially in the form of
EXHIBIT C-8 attached hereto, with all blanks completed; all duly executed by
each Borrower, and Amendments to Open-End Mortgages, each duly executed by the
applicable Borrower.
(E) A Restructure Fee of Fifty Thousand Dollars ($50,000).
(F) The corporate Guaranty of Global, guaranteeing Borrowers'
Obligations under the Loan Agreement.
(G) The payment in full by Borrowers of all their Obligations and other
liabilities under Term Loan C and Term Loan D.
(H) The written opinion of counsel to Borrowers as to the transactions
contemplated by this Third Amendatory Agreement, in form and substance
satisfactory to Lender.
(I) The written opinion of counsel to Global as to the transactions
contemplated by this Third Amendatory Agreement and the Guaranty given by Global
of Borrowers' Obligations under the Loan Agreement.
(J) Landlord waivers for new Collateral Locations.
(K) UCC-1s executed by Borrowers.
(L) UCC-3s executed by Borrowers as the successors in interest of
Original Borrowers.
(M) Such other documents as the Lender may request to implement this
Third Amendatory Agreement and the transactions contemplated hereby.
If Lender shall consummate the transactions contemplated hereby prior
to the fulfillment of any of the conditions precedent set forth above, the
consummation of such transactions shall constitute only an extension of time for
the fulfillment of such conditions and not a waiver thereof.
SECTION IV. ADDITIONAL CLOSING DOCUMENTS
----------------------------
(A) Termination of NESCO Subordination Agreement.
SECTION V. ACKNOWLEDGMENTS CONCERNING OUTSTANDING LOANS
--------------------------------------------
Borrowers hereby acknowledge and agree that as of March 28, 1997 the
current outstanding balance of the Revolving Loan ($16,826,417.27) and amounts
owed pursuant to letters of credit and/or existing equipment leases, are owed to
Lender without any offset, deduction, defense or counterclaim of any nature
whatsoever.
SECTION VI. FEES AND EXPENSES
-----------------
Borrowers shall pay all out-of-pocket fees and expenses incurred by the
Lender in connection with the preparation, negotiation, execution and delivery
of this Third Amendatory
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74
Agreement, the Revolving Note and all the other agreements, documents or
certificates required or contemplated hereby, including, without limitation,
legal fees and expenses of the Lender.
SECTION VII. REFERENCES
----------
On and after the effective date of this Third Amendatory Agreement,
each reference in the Loan Agreement to "this Agreement", "hereunder", "hereof",
or words of like import referring to the Loan Agreement, and in the Notes to the
"Loan Agreement", "thereof", or words of like import referring to the Loan
Agreement shall mean and refer to the Loan Agreement as amended hereby. On and
after the effective date of this Third Amendatory Agreement, each reference in
the Loan Agreement to "Partner", "General Partner", or "Limited Partner", shall,
to the extent required by the context thereof, be deemed to refer to
"stockholder". The Loan Agreement, as amended by this Third Amendatory
Agreement, is and shall continue to be in full force and effect and is hereby
and in all respects ratified and confirmed. The execution, delivery and
effectiveness of this Third Amendatory Agreement shall not operate as a waiver
of any right, power or remedy of Lender under the Loan Agreement or constitute a
waiver of any provision of the Loan Agreement except as specifically set forth
herein. All references in the Loan Agreement to any definitions modified or
replaced herein shall be deemed references to such definitions as so modified or
replaced. References in the Loan Agreement to EXHIBIT C-8 in the definition of
"Revolving Note" shall be deemed to refer to the Note executed in connection
herewith.
SECTION VIII. APPLICABLE LAW
--------------
This Third Amendatory Agreement shall be deemed to be a contract under
the laws of the State of Ohio, and for all purposes shall be construed in
accordance with the laws of the State of Ohio.
SECTION IX. COUNTERPARTS
------------
This Third Amendatory Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any one of the parties hereto may execute this Third Amendatory
Agreement by signing any such counterpart.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Borrowers and the Lender have caused this Third
Amendatory Agreement to be executed by their duly authorized officers as of the
date and year first above written.
CONTINENTAL CONVEYOR &
EQUIPMENT COMPANY
("Borrower")
By /s/ Xxxxx X. Xxxxxx
--------------------------
Name: Xxxxx X. Xxxxxx
---------------------
Title:
---------------------
XXXXXXX CONVEYOR COMPANY
("Borrower")
By /s/ Xxxxx X. Xxxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxxx
---------------------
Title: Vice Pres.
---------------------
BANK ONE, CLEVELAND, NA ("Lender")
By /s/ Xxxx X. Xxxxxx
--------------------------
Name: Xxxx X. Xxxxxx
---------------------
Title: V. P.
---------------------
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76
AMENDED AND RESTATED REPLACEMENT PROMISSORY NOTE
------------------------------------------------
(REVOLVING LOAN)
$30,000,000.00 Cleveland, Ohio
March 28, 1997
FOR VALUE RECEIVED, CONTINENTAL CONVEYOR & EQUIPMENT COMPANY, a
Delaware corporation, and XXXXXXX CONVEYOR COMPANY, a Delaware corporation
(hereinafter each referred to as a "Company" and collectively as the
"Companies"), jointly and severally promise to pay to the order of BANK ONE,
CLEVELAND, NA (hereinafter referred to as the "Bank"), the principal amount of
Thirty Million and No/100 Dollars ($30,000,000.00), or such lesser amount as
shall have from time to time been borrowed by the Companies, on March 28, 2000,
or sooner as hereinafter provided, with interest on the unpaid balance of said
principal amount from the date hereof at the Contract Rate, as defined in the
Agreement hereinafter referred to, which definition is hereby accepted by each
Company,
as the same may from time to time be established. If any installment of
principal, interest or other amounts due and payable hereunder are not paid when
due, or within any applicable grace periods, the Companies shall pay interest
thereon at the rate per annum of three and one-half percent (3 1/2%) in excess
of the Contract Rate, as the same may from time to time be established.
The Companies jointly and severally agree to pay interest on the unpaid
principal amount outstanding of this Note in monthly installments commencing on
the 1st day of April, 1997, and continuing on the 1st day of each month
thereafter. The unpaid balance of the principal amount outstanding and all
accrued interest thereon shall be due and payable on March 28, 2000.
Payments of both principal of and interest on this Note shall be made
in lawful money of the United States of America, at 000 Xxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxx 00000, or at such other place as the Bank or any subsequent
holder hereof shall have designated to each Company in writing. Interest payable
on this Note shall be computed on a three hundred sixty (360) day per year basis
counting the actual number of days elapsed.
This Note is issued pursuant to and is entitled to the benefits of a
Credit Facility and Security Agreement dated as of September 14, 1992 by and
between CONTINENTAL CONVEYOR & EQUIPMENT CO. L.P., a limited partnership
organized and formerly existing under the laws of the State of Delaware, and
XXXXXXX CONVEYOR CO. L.P., a limited partnership organized and formerly existing
under the laws of the State of Delaware (such partnerships hereinafter referred
to as the "Original Borrowers") and the Bank, as amended by that certain First
Amendment to Credit Facility and Security Agreement executed on August 27, 1993,
by that certain Second Amendatory Agreement dated as of October 5, 1994, by that
certain Consolidated Amendment No. 1 to Credit Facility and Security Agreement
dated as of July 28, 1995, and by that certain Consolidated Amendment No. 2 to
Credit Facility and Security Agreement dated as of December 13, 1996, all by and
among the Original Borrowers and the Bank, and as further amended by that
Certain Third Amendatory Agreement by and among the Companies and the Bank dated
March 28, 1997 (collectively, the "Agreement"), to which reference is hereby
made for a statement of the rights and obligations of the Bank and the
77
duties and obligations of each Company in relation thereto; but neither this
reference to said Agreement nor any provisions thereof shall affect or impair
the absolute and unconditional obligation of each Company to pay the principal
of or interest on this Note when due. This Note has been issued pursuant to the
Agreement in substitution for a certain existing Amended and Restated
Replacement Promissory Note (Revolving Loan) dated July 28, 1995, which was
issued in Substitution for a certain Amended and Restated Promissory Note
(Revolving Loan) dated October 5, 1994, which was issued in substitution for a
certain Promissory Note (Revolving Loan) dated September 14, 1992 (collectively,
the "Old Notes"). It is understood and acknowledged by each Company that this
Note is not intended as a novation of the obligations of the Original Borrowers
and two Companies under the Old Notes but is merely a restatement of the
obligations thereunder and under the Agreements, after giving effect to the most
recent amendatory agreement thereto.
The Companies may prepay all or any portion of this Note at any time or
times and in any amount without penalty or premium, except as otherwise provided
in the Agreement.
In case an Event of Default, as defined in said Agreement, shall occur
and be continuing beyond any applicable grace period, the principal of this Note
may be declared immediately due and payable at the option of the Bank.
Each Company hereby authorizes any attorney-at-law to appear in any
court of record in the State of Ohio, or in any other state or territory of the
United States, at any time or times after the above sum becomes due, and waive
the issuance and service of process and confess judgment against it, in favor of
any holder of this Note, for the amount then appearing due, together with the
costs of suit, and thereupon to release all errors and waive all rights of
appeal and stay of execution. The foregoing warrant of attorney shall survive
any judgment, it being understood that should any judgment be vacated for any
reason, the foregoing warrant of attorney nevertheless may thereafter be used
for obtaining an additional judgment or judgments.
No delay on the part of any holder hereof in exercising any power or
rights hereunder shall operate as a waiver of any power or rights. Any demand or
notice hereunder to either Company may be made by delivering the same to the
address last known to the Bank, or by mailing the same to such address, with the
same effect as if delivered to such Company in person.
This Note is executed in Cleveland, Cuyahoga County, Ohio.
"WARNING. BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE
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78
POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU
MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE
ON HIS PART TO COMPLY WITH THE AGREEMENT OR ANY OTHER CAUSE."
CONTINENTAL CONVEYOR & EQUIPMENT XXXXXXX CONVEYOR COMPANY
COMPANY a Delaware Corporation
a Delaware Corporation
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxxx
------------------------------ ----------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxxxx
--------------------------- -------------------------
Title: V. P. Title: V. Pres.
------------------------- ------------------------
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79
SUBORDINATION AGREEMENT
-----------------------
THIS SUBORDINATION AGREEMENT (the "Agreement") is entered into as of
September 14, 1992 by and among N.E.S. INVESTMENT CO. L.P., a Delaware limited
partnership ("Creditor"), XXXXXXX CONVEYOR CO. L.P. ("Borrower"), and BANK ONE,
CLEVELAND, NA ("Bank").
Capitalized terms used herein but not otherwise defined shall have the
meanings given in the Loan Agreement (as hereafter defined).
WHEREAS, to induce Bank to enter into a Credit Facility and Security
Agreement dated as of September 14, 1992, by and among Borrower, Continental
Conveyor & Equipment Co. L.P. and Bank (the "Loan Agreement"), Creditor agrees
that all obligations of Borrower to Creditor, however arising, shall be
subordinated to all obligations of Borrower to Bank, however arising, in
accordance with the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Bank, Borrower and Creditor agree as follows:
SECTION 1. THE SUBORDINATED OBLIGATIONS. Creditor hereby subordinates
all obligations of Borrower to Creditor, however arising (the "Subordinated
Obligations") including, without limitation, all rights to receive any payments,
whether in cash, property or otherwise, from Borrower to any and all obligations
of Borrower to Bank, however arising, including, without limitation, all
Indebtedness of Borrower to Bank under the Loan Agreement and any extensions,
renewals, modifications or conversions thereof.
SECTION 2. PAYMENTS HELD IN TRUST. If any payment, whether in cash,
property or otherwise, is made by Borrower in violation of this Agreement, such
payment will be held in trust by Creditor for Bank and upon demand be paid over
to Bank. Creditor agrees that in the event any payment, whether in cash,
property or otherwise, or distribution of the assets of
80
Borrower is made among creditors of Borrower, however effected and whether
voluntary or involuntary or in bankruptcy, insolvency, receivership or other
proceedings, then any such payments or distributions of cash, property or
securities of Borrower payable to Creditor shall be paid or delivered directly
to Bank for application to any Indebtedness of Borrower to Bank, including but
not limited to, all Indebtedness of Borrower to Bank under the Loan Agreement
and any extensions, renewals, modifications or conversions thereof, until the
same is paid in full. Creditor shall deliver to Bank and hold in trust for Bank
until such delivery, any such payments or distributions made to it.
SECTION 3. ASSIGNMENT OF SUBORDINATED OBLIGATIONS. Creditor shall not
assign or transfer any of the Subordinated Obligations to any third party unless
such transfer or assignment is made subject to this Agreement and with the prior
written consent of Bank. Creditor shall assign and transfer to Bank any and all
promissory notes issued by Borrower to Creditor evidencing the Subordinated
Obligations as additional collateral security for repayment of the Indebtedness
of Borrower to Bank under the Loan Agreement. In furtherance thereof, Creditor
agrees to deliver to Bank, contemporaneously with the execution and delivery of
this Agreement, the originals of all such promissory notes.
SECTION 4. PAYMENT SUBORDINATION. Borrower shall not make any payments
to Creditor, whether in cash, property or otherwise, with respect to the
Subordinated Obligations so long as Borrower is indebted to Bank in any way for
the period from the date hereof to and including September 14, 1995, and
thereafter so long as an Event of Default shall have occurred and be continuing
under the Loan Agreement or such payment will result in the occurrence of an
Event of Default with passage of time or service of notice or both; PROVIDED,
HOWEVER, notwithstanding the foregoing Borrower may make Tax Distributions and
pay Management Fees (in each case, as defined in the Loan Agreement) and, so
long as no Event of Default shall have occurred and be continuing under the Loan
Agreement and so long as such payment will not result in the occurrence of an
Event of Default, Borrower may make payments of interest to
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81
Creditor in accordance with the terms of the promissory note evidencing the
Subordinated Obligations, a copy of which promissory note is attached hereto as
EXHIBIT A.
SECTION 5. NO ACTION BY CREDITOR. Except as provided in Section 4
hereof, Creditor agrees not to demand, xxx for, take or receive, by set-off or
otherwise, any payment, whether in cash, property or otherwise, with respect to
the Subordinated Obligations. Creditor hereby agrees that it will not proceed
against Borrower if Borrower fails to make any payments of the Subordinated
Obligations, and that Creditor will take no action to levy, execute, seize, or
otherwise acquire any assets or property of Borrower until permitted to do so by
Bank, or as otherwise provided under the terms and conditions of this
Subordination Agreement. Creditor specifically covenants and agrees that the
security interest of Bank with respect to all assets or property of Borrower,
including, but not limited to, cash, inventory, equipment, and accounts
receivable, shall remain in all situations prior and superior to any rights of
Creditor in such assets or property.
SECTION 6. TERMINATION. This is a continuing agreement of
subordination. Bank may continue to make loans or otherwise accept the
obligations of Borrower on the faith of this Agreement without notice to
Creditor, and this Agreement may not be terminated until all Indebtedness,
however arising, of Borrower to Bank is paid in full. Bank may make any
renewals, extensions, amendments or other modifications of any kind relating to
any Obligations of Borrower to Bank, including, without limitation, the
Indebtedness, the Loan Agreement, or relating to the terms and conditions of
such Obligations and Bank may release or exchange or otherwise deal with any
collateral or may release any balance of funds held by Bank without notice to
Creditor and without impairing or affecting this Agreement or the rights and
obligations of Creditor under this Agreement.
SECTION 7. NOTICES. All notices required or permitted to be provided
under this Agreement shall be in writing and delivered by hand, certified or
registered mail, or by telex
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or electronic facsimile transmission and shall be deemed to have been given or
made when delivered or transmitted as follows:
If to Bank:
Bank One, Cleveland, NA
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxx,
Assistant Vice President
With a copy to:
Xxxxx & Xxxxxx
0000 Xxxxxxxxxx Xxxxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
If to Creditor:
N.E.S. Investment Co. L.P.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxxxxx, Xxxx 00000
Attention: X.X. Xxxxxxxx,
Vice President/Finance
If to Borrower:
Xxxxxxx Conveyor Co. L.P.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxxxxx, Xxxx 00000
Attention: X.X. Xxxxxxxx,
Vice President/Finance
SECTION 8. LEGEND ON INSTRUMENTS. Creditor and Borrower agree to place
a legend, in form and substance acceptable to Bank, referencing the
subordination provided under this Agreement on the promissory notes and any
paper, document or instrument evidencing any of the Subordinated Obligations.
SECTION 9. CHANGES IN THE SUBORDINATED OBLIGATIONS. Creditor and
Borrower agree that they shall not amend or in any way modify or permit any
amendment or modification of any of the Subordinated Obligations without first
obtaining the prior written consent of Bank.
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83
SECTION 10. EXPENSES. Should it be necessary for Bank to initiate legal
action in order to enforce and protect its rights under this Agreement, Bank
shall be entitled to reimbursement from Creditor and Borrower for all costs and
expenses incurred in respect to such action, including, but not limited to,
reasonable attorney's fees.
SECTION 11. SUCCESSORS AND ASSIGNS. This Agreement and the respective
rights and obligations of Bank, Creditor and Borrower under this Agreement shall
be binding on the successors and assigns thereof.
SECTION 12. GOVERNING LAW. This Agreement shall be governed by, and be
construed in accordance with, the laws of the State of Ohio, without giving
effect to the principles of conflicts of laws thereof.
SECTION 13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts all of which shall be read together as but one and the same
Agreement.
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IN WITNESS WHEREOF, Borrower, Creditor, and Bank, by their duly
authorized officers, have executed and delivered this Agreement on the day and
year first written above.
N.E.S. INVESTMENT CO. L.P.
By /s/ X. X. Xxxxxxxx
--------------------------------
Name: X. X. Xxxxxxxx
Title: X. X.
XXXXXXX CONVEYOR CO. L.P.,
A Delaware Limited Partnership
By New Xxxxxxx Corp.,
Its General Partner
By /s/ X. X. Xxxxxxxx
--------------------------------
Name: X. X. Xxxxxxxx
Title: V. P.
BANK ONE, CLEVELAND, NA
By /s/ Xxxxxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxxxxx X. Xxxxxxx
Title: Asst. Vice President
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TERMINATION OF SUBORDINATION AGREEMENT
This termination of Subordination Agreement (the "Termination
Agreement") is entered into as of March 28, 1997 by and among N.E.S. Investment
Co. L.P., a Delaware Limited Partnership, ("Creditor"), Xxxxxxx Conveyor
Company, a Delaware Corporation, and successor in interest to Xxxxxxx Conveyor
Co. L.P. ("Borrower"), and BANK ONE, CLEVELAND, NA ("Bank").
In consideration of the premises and other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Bank, Borrower, and
Creditor agree as follows:
1. The Subordination Agreement entered into as of September 14, 1992 by
and among Bank, Borrower, and Creditor shall be, and it is hereby, terminated
and canceled and henceforth shall have no further force and effect.
2. This Termination Agreement and the respective rights and obligations
of Bank, Creditor, and Borrower under this Termination Agreement shall be
binding on each of their respective successors and assigns.
3. This Termination Agreement may be executed in one or more
counterparts, all of which shall be read together as but one and the same
agreement.
86
IN WITNESS WHEREOF, Borrower, Creditor, and Bank, by their duly
authorized officers, have executed and delivered this Termination Agreement as
of the day and the year first written above.
N.E.S. Investment Co. L.P.
By: [ILLEGIBLE], its General Partner
-----------
Name: /s/ Xxxxx X. Xxxxxx
--------------------------
Title: V. P. of General Partner
--------------------------
XXXXXXX CONVEYOR COMPANY,
as successor in interest to
Xxxxxxx Conveyor Co. L.P.
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------
Name: Xxxxx X. Xxxxxxxx
--------------------------
Title: V. Pres.
--------------------------
BANK ONE, CLEVELAND, NA
By: /s/ Xxxx X. Xxxxxx
----------------------------
Name: Xxxx X. Xxxxxx
--------------------------
Title: V. P.
--------------------------
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87
ASSUMPTION AND MODIFICATION AGREEMENT
THIS ASSUMPTION AND MODIFICATION AGREEMENT ("Agreement") is executed
this 28th day of March, 1997, to be effective as of March 7, 1997, by and among
CONTINENTAL CONVEYOR & EQUIPMENT COMPANY, a Delaware Corporation,
("Continental"), and XXXXXXX CONVEYOR COMPANY, a Delaware Corporation,
("Xxxxxxx"), and BANK ONE, CLEVELAND, NA, a national banking association
("Lender"), and is entered into in connection with that certain Credit Facility
and Security Agreement by and among Continental Conveyor & Equipment Co. L.P., a
limited partnership organized and formerly existing under the laws of the State
of Delaware ("Continental L.P."), and Xxxxxxx Conveyor Co. L.P., a limited
partnership organized and formerly existing under the laws of the State of
Delaware, ("Xxxxxxx X.X."), (Continental L.P. and Xxxxxxx X.X., collectively,
"Original Borrowers"), dated as of September 14, 1992 (which agreement, together
with all amendments thereto, the most recent amendment being dated as of
December 13, 1996, is referred to herein as the "Loan Agreement"). Capitalized
terms used herein which are defined in the Loan Agreement shall, unless
otherwise defined herein, have the meaning set forth in the Loan Agreement.
W I T N E S S E T H:
WHEREAS, Lender has made certain loans and other financial
accommodations to Original Borrowers pursuant to the Loan Agreement;
WHEREAS, to secure the Obligations of the Original Borrowers to Lender,
the Original Borrowers have granted to Lender security interests in and liens
upon substantially all of the Original Borrowers' assets pursuant to the Loan
Agreement;
WHEREAS, pursuant to the Loan Agreement, the Original Borrowers have
made certain representations and warranties to Lender (the "Loan Representations
and Warranties") and have agreed to be bound by certain affirmative and negative
covenants (the "Loan Covenants");
WHEREAS, Continental L.P. and Xxxxxxx X.X. have been dissolved and all
of their assets and liabilities have been transferred to, and assumed by,
Continental and Xxxxxxx respectively;
WHEREAS, each of Xxxxxxx and Continental have assumed, by operation of
law, and are willing expressly to assume hereby all of the rights, interests and
liabilities of the Original Borrowers under the Loan Agreement and each desires
to become a borrower under the Loan Agreement;
WHEREAS, Lender has requested that Continental and Xxxxxxx enter into
this Agreement in order to (i) expressly assume all of the Obligations, (ii)
reaffirm all of the Loan Representations and Warranties and Loan Covenants, and
(iii) acknowledge and confirm Lender's security interest in or lien on the
Collateral, including, without limitation, substantially all of the assets of
Continental and Xxxxxxx; and
88
WHEREAS, Lender agrees to consent to the dissolution of Continental
L.P. and Xxxxxxx X.X., but on the express condition that the assumption of all
of their respective liabilities and Obligations under the Loan Agreement be
expressly assumed by Continental and Xxxxxxx;
NOW THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Continental, Xxxxxxx, and Lender hereby agree as follows:
1. The premises set forth above are acknowledged and agreed to by
Continental, Xxxxxxx and Lender and are incorporated herein by this reference.
2. Continental and Xxxxxxx hereby agree to assume and to perform the
Obligations with the same effect and to the same extent as if Continental and
Xxxxxxx had been the original obligors thereof. Continental and Xxxxxxx further
agree that the Collateral (i) shall continue to be subject to all liens and
security interests in favor of Lender which existed against the Collateral prior
to the dissolution of Continental L.P. and Xxxxxxx X.X. and the execution of
this Agreement, and (ii) shall continue to secure the Obligations. Continental
and Xxxxxxx hereby grant and confirm a continuing security interest to Lender in
and to all Collateral, including, without limitation, all Fixed Collateral and
all Revolving Collateral now owned, acquired from Continental L.P. or Xxxxxxx
X.X., or hereafter acquired, and owned legally or beneficially by either
Continental or Xxxxxxx. Continental and Xxxxxxx hereby jointly and severally
make and affirm the representations, warranties and covenants as to such
collateral set forth in Section 4.2 of the Loan Agreement.
3. Continental and Xxxxxxx shall, from and after the date hereof, be
deemed to be a "Borrower" under the Loan Agreement and all references therein to
"Borrower" shall hereafter refer to Continental and Xxxxxxx to the same extent
as to an Original Borrower and any reference therein to "Borrowers" shall
hereafter refer to both Continental and Xxxxxxx and the Original Borrowers as
the context may require. Continental and Xxxxxxx hereby reaffirm, as of the date
hereof, all of the Loan Representations and Warranties, including, without
limitation, all Loan Representations and Warranties made by Original Borrowers
prior to the date hereof.
4. The execution, delivery and performance by Continental and Xxxxxxx
of this Agreement has not or will not, by the lapse of time, the giving of
notice or otherwise, constitute a violation of any applicable law or a breach of
any provision contained in the Certificate of Incorporation or Bylaws of
Continental and Xxxxxxx or contained in any agreement, instrument or document to
which Continental and Xxxxxxx is a party or by which Continental and Xxxxxxx is
bound.
5. Continental and Xxxxxxx agree to be bound and to abide by all of the
Loan Covenants.
6. Continental and Xxxxxxx shall, at their expense, promptly execute
and deliver to Lender such instruments, documents and agreements, and perform or
take such acts or actions, as Lender may, from time to time, request in order to
further evidence or carry out the
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89
terms of this Agreement and the Loan Agreement or otherwise to perfect,
maintain, protect and enforce Lender's security interests in and liens on the
Collateral, including, without limitation, executing, delivering and/or filing
any acknowledgments, amendments, assignments, assumption instruments, financing
or continuation statements or mortgages or other instruments of security, each
in form and substance satisfactory to the Lender.
7. This Agreement has been executed and delivered at and shall be
deemed to have been made at Cleveland, Ohio and shall be interpreted and the
rights and liabilities of the parties hereto determined, in accordance with the
internal laws (as opposed to conflicts of law provisions) of the State of Ohio.
Wherever possible each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or be invalid under applicable law,
such provision shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or the remaining
provisions of this Agreement.
8. The provisions of this Agreement shall be binding upon and shall
inure to the benefit of the successors and assigns of the parties hereto.
Whenever in this Agreement reference is made to any of the parties hereto, such
reference shall be deemed to include, wherever applicable, a reference to the
successors and assigns of such party.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the day and year first above written.
Attest: CONTINENTAL CONVEYOR &
EQUIPMENT COMPANY
/s/ [ILLEGIBLE] By: /s/ Xxxxx X. Xxxxxx, V. P.
------------------- ------------------------------------
/s/ [ILLEGIBLE]
-------------------
XXXXXXX CONVEYOR COMPANY
/s/ [ILLEGIBLE] By: /s/ Xxxxx X. Xxxxxxxx, V. P.
------------------- ------------------------------------
/s/ [ILLEGIBLE]
-------------------
BANK ONE, CLEVELAND, NA
/s/ [ILLEGIBLE] By: /s/ Xxxx X. Xxxxxx
------------------- ------------------------------------
/s/ [ILLEGIBLE]
-------------------
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90
CONTRACT OF GUARANTY
--------------------
1. To induce BANK ONE, CLEVELAND, NA (the "Bank"), to make direct loans
to CONTINENTAL CONVEYOR & EQUIPMENT COMPANY, a Delaware corporation
("Continental"), and XXXXXXX CONVEYOR COMPANY, a Delaware corporation
("Xxxxxxx") (each of Continental and Xxxxxxx being sometimes referred to herein
individually as a "Borrower " and collectively as the "Borrowers"), CONTINENTAL
GLOBAL GROUP, INC. (the "Guarantor"), hereby unconditionally guarantees to Bank
the prompt performance of each and every obligation and payment of each and
every liability of the Borrowers to the Bank, including but not limited to,
payment of all principal, interest and other sums due, whether by acceleration
or otherwise, pursuant to that certain Credit Facility and Security Agreement
dated as of September 14, 1992 by and among CONTINENTAL CONVEYOR & EQUIPMENT CO.
L.P., a limited partnership organized and formerly existing under the laws of
the State of Delaware, and XXXXXXX CONVEYOR CO. L.P., a limited partnership
organized and formerly existing under the laws of the State of Delaware (such
partnerships hereinafter referred to as the "Original Borrowers") and the Bank,
as amended by that certain First Amendment to Credit Facility and Security
Agreement executed on August 27, 1993, by that certain Second Amendatory
Agreement dated as of October 5, 1994, by that certain Consolidated Amendment
No. 1 to Credit Facility and Security Agreement dated as of July 28, 1995, and
by that certain Consolidated Amendment No. 2 to Credit Facility and Security
Agreement dated as of December 13, 1996, all by and among the Original Borrowers
and the Bank, and as further amended by that Certain Third Amendatory Agreement
by and among the Borrowers and the Bank dated March 28, 1997 (collectively, the
"Credit Agreement"), together with all late charges, fees, disbursements,
expenses and deficiencies.
2. This is a continuing Guaranty and shall remain in full force and
effect until revoked by the Guarantor in writing and a signed copy thereof is
duly served upon the Bank, but revocation shall not affect any outstanding
obligation or liability hereunder, or any unpaid portion thereof which may be
renewed or extended. This Guaranty shall be construed as an absolute and
unconditional guaranty of performance and the Guarantor's liability shall be
direct, immediate and not conditional or contingent upon the pursuit by the Bank
of any remedies it may have or the requirement to resort first to any collateral
or security. Subject to the prior indefeasible payment in full of all
obligations guaranteed hereunder, Guarantor shall have and may exercise all
rights that Guarantor may have at law or in equity (including, without
limitation, any law subrogating the Guarantor to the rights of the Bank) to seek
contribution, indemnification, or any other form of reimbursement from the
Borrower, any other guarantor, or any other person now or hereafter primarily or
secondarily liable for any obligations of the Borrowers to the Bank, for any
disbursement made by the Guarantor under or in connection with the Guaranty or
otherwise. The obligations of the Guarantor hereunder shall not be released,
discharged or in any way affected, nor shall the Guarantor have any rights
against the Bank by reason of: (a) the fact that any collateral or security
securing any obligation of the Borrowers or of the Guarantor hereunder may be
subject to equitable claims or defenses in favor of others or may be invalid or
defective in any way; (b) the failure to convey, perfect or create a valid lien
in any such collateral or security; (c) the invalidity or unenforceability for
any reason of any obligation or liability of the Borrowers; (d) the change,
loss, or deterioration in value of any collateral or of the financial condition
of the Borrowers, whether due to incorrect estimates of such value or financial
condition, failure to protect or insure, or because of any other reason; (e) the
exchange, sale, release or surrender of any such collateral or security; or (f)
any other defense at law or in equity to which the Guarantor may be entitled.
This Guaranty shall continue to be effective, or be revived and reinstated, as
the case may be, if at any time any payment of all or part of the obligations or
liabilities covered hereunder is rescinded, or must otherwise be returned by the
Bank, upon the insolvency, bankruptcy, receivership or liquidation of the
Borrowers or the Guarantor, or otherwise, all as though such payment had never
been made.
91
3. The Guarantor hereby waives any notice of acceptance of this
Guaranty, or any notice of the incurring by the Borrowers at any time of any
obligation or liability covered hereunder. The Guarantor also waives any and all
presentment, demand of payment, protest or notice of protest, notice of
nonpayment or other default with respect to any obligation or liability covered
hereunder, and all defenses at law or in equity. Except for distributions to the
Guarantor not prohibited by the Credit Agreement, any and all present and future
debts and obligations of the Borrowers to the Guarantor are hereby postponed in
favor of and subordinated to the full payment and performance of all present and
future obligations and liabilities of the Borrowers to the Bank. The Guarantor
hereby grants to the Bank full power, in its absolute discretion and without
notice to the Guarantor, to: (a) modify, accelerate, or otherwise change the
terms of any obligation or liability guaranteed hereunder in accordance with its
provisions (but not to increase the aggregate liability as stated in the
Guaranty); (b) renew or extend at one or more times any such obligation or
guaranty; (c) release, compromise, or settle any such obligation or liability in
settlement, liquidation, adjustment, bankruptcy proceedings or otherwise as the
Bank deems advisable; (d) delay or forbear to act in respect to any obligation,
liability or collateral, or the enforcement thereof whether such delay or
forbearance is deliberate or by omission; (e) consent to the substitution,
exchange or release of any collateral or security for such obligations and
liabilities or forbear from calling for additional security; or (f) take an
additional guaranty or guaranties, or settle, compromise or release one or more
other guaranties. All sums at any time to the credit of the Guarantor and any
property of the Guarantor at any time in the Bank's possession may be held by
the Bank as security for all obligations of the Guarantor to the Bank arising
out of this Guaranty.
4. Upon the happening of any Event of Default under the Credit
Agreement, the Bank may declare all of the obligations to be immediately due and
payable and shall then have all remedies under the laws of the State of Ohio,
including, without limitation thereto, the right to setoff and apply any
deposits, balances, money, proceeds, credits or property of the Guarantor in
possession of the Bank to the balance due under this Guaranty. The Bank may
pursue all or any of its remedies at one or at different times. The Bank's books
and records showing the account between the Bank and the Borrower shall be
admissible in any action or proceeding, shall be binding upon the Guarantor for
the purpose of establishing the items therein set forth, and shall constitute
prima facie proof thereof.
5. Guarantor hereby agrees that it shall cause to be prepared and
furnished to Bank the following:
(i) As soon as possible, but not later than ninety (90) days after
the close of each fiscal year of Guarantor, audited annual
consolidated financial statements of Guarantor as of the end
of each such fiscal year, together with unaudited
supplementary consolidating information of Guarantor as of the
end of each such fiscal year, prepared by a firm of
independent certified public accountants of recognized
standing, selected by Guarantor and reasonably acceptable to
Bank;
(ii) As soon as possible, but not later than thirty (30) days after
the end of each fiscal quarter hereafter, quarterly
consolidated financial statements of Guarantor as of the end
of such quarter and of the portion of Guarantor's fiscal year
then elapsed, together with unaudited supplementary
consolidating information of Guarantor, certified by the Chief
Financial Officer or controller of Guarantor as prepared in
accordance with GAAP (without footnotes) and fairly presenting
in all material respects the financial position and results of
operations of Guarantor for such quarter and period.
6. The words "Guarantor," "Bank," and "Borrower," as used herein, shall
indicate the plural as well as the singular, if appropriate. The obligations and
liabilities hereunder are
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92
joint and several and shall be binding upon the heirs, executors,
administrators, successors, and assigns of the parties hereto.
7. The Guarantor hereby authorizes any attorney-at-law on the
Guarantor's behalf or on behalf of the Guarantor's successors or survivors, to
appear in an action on this Guaranty at any time after the Guaranty becomes due
in any court of record in Ohio or elsewhere; to waive the issuing and service of
process and to confess judgment in favor of the holder hereof for the amount due
plus interest and costs and to release and waive all errors and appeals in the
actions and judgments. No such judgment against the Guarantor based upon one or
more mutual obligations shall be a bar to a subsequent judgment or judgments
pursuant to this warrant of attorney against the Guarantor based upon
subsequently matured obligations.
This Contract of Guaranty is executed at Cleveland, Cuyahoga County,
Ohio this 28th day of March, 1997.
"WARNING--BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND
COURT TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST
YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO
COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR
WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE
AGREEMENT OR ANY OTHER CAUSE."
CONTINENTAL GLOBAL GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------
Its: Vice President
------------------------------
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