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LOAN, PLEDGE AND SECURITY AGREEMENT
between
NORTEX HOLDINGS, INC.
as Borrower
and
FLEET NATIONAL BANK
as Lender
Dated as of April 9, 2002
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LOAN, PLEDGE AND SECURITY AGREEMENT dated as of April 9, 2002, (this
"Agreement") between Nortex Holdings, Inc., with an address at 0000 Xxxxx
Xxxxxx, Xxxx Xxxxx, Xxxxxxxxxxxxx 00000, (the "Borrower"), and FLEET NATIONAL
BANK, a national banking association, having a place of business at 000 Xxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (the "Lender)
WITNESSETH:
WHEREAS, the Borrower has requested that Lender provide it with a line of
credit in the amount of $2,300,000 (the "Revolving Facility"), such that the
Lender shall, subject to the terms hereof, from time to time make revolving
credit loans (the "Revolving Loans") available to the Borrower to be repaid as
provided herein and in that certain Revolving Credit Note (the "Note") of the
Borrower dated as of even date;
WHEREAS, the Borrower's obligations under this Agreement and under the Note
shall be secured by the pledge of certain stock as provided herein;
WHEREAS, Lender is willing, on the terms and subject to the conditions of
this Agreement, including but not limited to the execution and delivery to
Lender of the other Loan Documents (as defined herein), to make the Revolving
Facility and the Revolving Loans available to the Borrower;
NOW, THEREFORE, in consideration of the mutual promises contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Lender and Borrower agree as follows:
ARTICLE I - DEFINITIONS
Defined Terms. Unless otherwise defined herein, the capitalized terms, as
used in this Agreement that are not otherwise specifically defined, shall have
the meanings as set forth on Schedule I hereto.
ARTICLE II - THE REVOLVING FACILITY
2.1 Revolving Loans. Subject to the terms and conditions hereof, Borrower
may request that Lender make Revolving Loans to Borrower from time to time
hereafter until the earlier of acceleration in accordance with Article VIII
hereof or the Expiration Date (as defined herein), and Lender shall make such
Revolving Loans, provided, however, that the aggregate principal amount of all
Revolving Loans at any one time outstanding, shall not exceed the Revolving
Credit Limit and shall not exceed the Collateral advance value requirements set
forth in Section 4.9 hereof.
2.2 Revolving Credit Limit. For purposes of this Agreement, the Revolving
Credit Limit shall be Two Million Three Hundred Thousand Dollars ($2,300,000).
2.3 Procedure for Revolving Loans. Subject to the terms and conditions
hereof, including but not limited to those set forth in Section 2.1, and of the
Note, Borrower may request, and Lender shall make, Revolving Loans on any
Business Day provided that any such borrowing, together with the aggregate
principal amount of the Revolving Loans then outstanding shall not exceed the
Revolving Credit Limit or result in the occurrence of a Default or an Event of
Default. Borrower may request Revolving Loans, from time to time, by submitting
irrevocable requests in writing or in such other form or manner as Lender may
require or permit, specifying the amount to be borrowed, whether the Revolving
Loan shall be a Prime Rate or a LIBOR Rate Advance (and if the latter, the LIBOR
Rate Interest Period and the requested date for such borrowing), and the manner
in which Borrower would like the proceeds of such Revolving Loans disbursed.
Each such request shall also include such information as may be required under
the Note and shall conform to the other requirements provided in the Note.
Lender may require telephone requests to be confirmed promptly in writing. Each
Revolving Loan must be in a minimum amount of $1,000. Each Revolving Loan made
as a LIBOR Rate Advance shall be in a minimum amount of $100,000.00. The other
provisions of this Agreement notwithstanding, Borrower shall not be entitled to
have more than three Revolving Loans outstanding at any one time, inclusive of
Revolving Loans at the Prime Rate and at a LIBOR Rate.
2.4 Maturity: Principal Payment. Subject to earlier acceleration pursuant
to the provisions of Section 8.2 hereof, all outstanding principal of the
Revolving Loans, together with all accrued interest, fees and other charges
thereon, shall be due and payable in full on April 8, 2005 (the "Expiration
Date").
2.5 Interest on Revolving Loans. The unpaid principal amount of the
Revolving Loans from time to time outstanding shall bear interest and such
interest shall be due and payable as provided in the Note.
2.6 The Note. The Revolving Loans shall be evidenced by the Note. Lender is
hereby authorized to record the date and amount of each Revolving Loan and each
payment of principal on a schedule annexed to the Note, or on related records
maintained by Lender with respect to the Revolving Loans, and any information so
recorded shall constitute prima facie evidence of the accuracy of the
information so recorded. The Lender shall submit monthly reports to the Borrower
of all such recorded information and in the event that Borrower fails to object
within thirty (30) days of receipt of such reports, the information so recorded
shall be conclusive and binding as against Borrower absent manifest error;
provided, however, that any failure by Lender to record any information on such
schedule or such related records shall not affect the Obligations of Borrower
under the Note or this Agreement.
2.7 Use of Proceeds. Borrower shall use the proceeds of the Loan Facility
(i) to provide funds for the purchase by Xxxxx X. Xxxxxxxx and Xxxxxx Xxxxxxxxx
of the 12% interest (1,550,000 shares of common stock) of Xxxxxxx Xxxxxxx in
Borrower pursuant to the terms of a purchase and sale agreement among Xx.
Xxxxxxx and the Guarantors (as defined below) and (ii) interest, fees and
expenses on the facility.
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2.8 Guaranties. The Obligations are guarantied pursuant to the terms of an
Unlimited Guaranty of Xxxxx X. Xxxxxxxx and a Limited Guaranty of
Xxxxxx Xxxxxxxxx ("Guarantors").
ARTICLE III - CERTAIN GENERAL REVOLVING LOAN PROVISIONS
3.1 Calculation of Interest. Interest and fees on the Revolving Loans shall
be calculated on the basis of a 360-day year for the actual days elapsed, from
and including the date of each Loan to but excluding the date of any repayment.
3.2 Limitation. All agreements between Borrower and Lender are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration of maturity of the indebtedness evidenced hereby or
otherwise, shall the amount paid or agreed to be paid to Lender for the use or
the forbearance of the indebtedness evidenced hereby exceed the maximum
permissible under applicable law. As used herein, the term "applicable law"
shall mean the law in effect as of the date hereof provided, however, that in
the event there is a change in the law which results in a higher permissible
rate of interest, then the Note shall be governed by such new law as of its
effective date. In this regard, it is expressly agreed that it is the intent of
Borrower and Lender in the execution, delivery and acceptance of the Note to
contract in strict compliance with the laws of The Commonwealth of Massachusetts
from time to time in effect. If, under or from any circumstances whatsoever,
fulfillment of any provision hereof or of any of the Loan Documents at the time
of performance of such provision shall be due, shall involve transcending the
limit of such validity prescribed by applicable law, then the obligation to be
fulfilled shall automatically be reduced to the limits of such validity, and if
under or from any circumstances whatsoever Lender should ever receive as
interest an amount which would exceed the highest lawful rate, such amount which
would be excessive interest shall be applied to the reduction of the principal
balance evidenced hereby and not to the payment of interest. This provision
shall control every other provision of all agreements between Borrower and
Lender.
3.3 Default Rate and Late Fee. The Lender shall have the option of
imposing, and the Borrower shall pay upon demand, an interest rate which is five
percent (5%) per annum above the Prime Rate ("Default Rate"): (a) while any
monetary Default exists and is continuing, during that period between the due
date and the date of payment; (b) following any Event of Default, unless the
Event of Default is waived by Lender; and (c) after the Expiration Date. In the
event that the entire amount of principal and/or interest is not paid in full
within ten (10) days after the same is due, the Borrower shall pay to the Lender
a late fee equal to five percent (5%) of the required payment, provided that
such late fee shall be reduced to three percent (3%) of any required principal
and interest payment that is not paid within fifteen (15) days of the date it is
due if the Note is secured by a mortgage on an owner-occupied residence, 1-4
units.
3.4 Payments. All payments (including prepayments) made by Borrower
hereunder or under the Note shall be made in lawful money of the United States
in immediately available funds not later than 2:00 P.M., (Eastern time), on the
due date by wire
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transfer to Lender or by check payable to Lender and delivered to Lender at its
office located at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (or at such
other office as Lender may specify to Borrower in writing). If any payment
becomes due and payable on a day other than a Business Day (as defined below),
such payment shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest thereon shall be payable at the
applicable rate during such extension. All payments shall be made without setoff
or counterclaim and free and clear of, and without deduction or withholding for,
any taxes, charge or other payments of any kind. All payments received by Lender
after 2:00 P.M. on any Business Day shall not be deemed received until the next
Business Day. Lender may, but shall not be obligated to, charge any amount due
under the Revolving Loans to Borrower's other deposit accounts at the Lender.
Payments which are by check or which are not in the form of immediately
available funds shall not be credited to the Revolving Loans until such funds
become immediately available to the Lender, and, with respect to payments by
check, such credit shall be provisional until the item is finally paid by the
payor bank. All payments shall be applied first to the payment of all fees,
expenses and other amounts due to the Lender (excluding principal and interest),
then to accrued interest, and the balance on account of outstanding principal;
provided, however, that after default, payments will be applied to the
obligations of Borrower to Lender as Lender determines in its sole discretion.
As used herein, "Business Day" shall mean any day other than a Saturday, Sunday
or day which shall be in the Commonwealth of Massachusetts a legal holiday or
day on which banking institutions are required or authorized to close.
3.5 Xxxxxxxx. On or about ten (10) Business Days prior to the first day of
each month, Lender may submit monthly xxxxxxxx reflecting payments due on such
first day. Neither the failure of Lender to submit a billing nor any error in
any such billing shall excuse the Borrower from the obligation to make full
payment of all Borrower's payment obligations when due; provided, however, that
the Default Rate shall not apply if and to the extent the Default or Event of
Default giving rise to the application of the Default Rate resulted from such
failure to submit a billing or any error in billing relating to the computation
of the amounts then due.
3.6 Prepayment. The outstanding principal amount of Revolving Loans made as
Prime Rate Advances under the Note may be prepaid in full or in part at any time
and from time to time without premium or penalty. Any repayment of the
outstanding principal amount of Revolving Loans made as LIBOR Rate Advances
under the Note shall be subject to the penalties described in the Note.
ARTICLE IV - PLEDGE AND SECURITY INTEREST
4.1 Pledge and Grant of Security Interest. As collateral security for the
prompt and complete payment and performance when due (whether after the
Expiration Date, or maturity by acceleration or otherwise) of all the
Obligations of the Borrower and in order to induce the Lender to enter into this
Agreement and make Revolving Loans hereunder, the Borrower hereby: (a) pledges,
hypothecates, collaterally assigns and transfers to the Lender and grants to
Lender a lien on and security interest in 1,550,000 shares of the common stock
(the "Shares") of Quaker Fabric Corporation, a Delaware corporation ("Quaker")
and such
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Additional Securities (as defined in Section 4.9 below) as are from time to time
hereafter accepted as Collateral by the Lender (which shall be a first priority
Lien); (b) grants to the Lender a lien on, and security interest in, all
financial assets and/or securities entitlements relating to the Shares or
relating to or arising out of the securities described in 4.1(a) and any
securities accounts to which the securities may be credited (which shall be a
first priority Lien): and (c) grants to the Lender a lien on, and a security
interest in, all Proceeds of any or all of the foregoing (which shall be a first
priority Lien) (collectively, the "Pledged Securities"). All property at any
time pledged to the Lender (or in which the Lender is granted a security
interest) hereunder (whether described herein or not) and all income therefrom
and Proceeds thereof are herein sometimes collectively called the "Collateral".
Borrower agrees to deliver or cause to be delivered to lender any certificates
evidencing the Shares and any other Pledged Securities, together with
appropriate undated instruments of exercise and transfer duly executed in blank
(or accompanied by executed Stock Powers), with Borrower's signature medallion
guaranteed.
4.2 Dividends, Distributions, etc.
(a) Subject to the provisions of paragraph (b) of this Section 4.2, if,
while this Agreement is in effect, the Borrower becomes entitled to receive or
receives any stock or other certificate (including, without limitation, any
certificate representing a stock dividend or a distribution in connection with
any reclassification, increase or reduction of capital or issued in connection
with any reorganization), option or rights, whether as an addition to, in
substitution of, or in exchange for, any instruments issued under or in respect
of the Pledged Securities or any options or rights in respect of the Pledged
Securities (which shall also be deemed to be included in the Pledged
Securities), the Borrower shall accept the same as agent for the Lender, shall
hold the same in trust on behalf of and for the benefit of the Lender and shall
deliver the same forthwith to the Lender in the exact form received, with the
endorsement of the Borrower, as may be requested by the Lender, and when
necessary and/or appropriate, undated stock or other assignments or powers duly
executed in blank, with all signatures medallion guaranteed, to be held by the
Lender, subject to the terms hereof, as additional collateral security for the
Obligations. Any sums paid on or in respect of the Pledged Securities on the
liquidation or dissolution of any other issuer thereof shall be paid over to the
Lender, to be held by the Lender, subject to the terms and conditions hereof, as
additional collateral security for the Obligations. If any cash dividends or any
other distribution is made on or in respect of the Pledged Securities or any
property is distributed on or with respect to the Pledged Securities, the cash
or other property so distributed shall be delivered to the Lender, to be held by
the Lender, subject to the terms and conditions hereof, as additional collateral
security for the Obligations. All sums of money and property so paid or
distributed in respect of the Pledged Securities that are received by the
Borrower shall, until paid or delivered to the Lender, be held in trust as
additional collateral security for the Obligations.
(b) Notwithstanding any provision herein to the contrary, the Borrower
shall have the revocable right to receive, collect, retain, use and enjoy any
cash dividends (but not distributions upon any liquidation, merger or
acquisition or of additional shares of Common Stock or other property or
securities) made on or in respect of the Pledged Securities. Upon
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the occurrence of and during the continuance of an Event of Default, such right
shall automatically be revoked without further action by the Lender and without
any further notice to the Borrower.
4.3 Voting Rights. Subject to the limitations set forth herein, the
Borrower shall be entitled to exercise voting rights as to the Pledged
Securities and to give consents, waivers and ratifications in respect of the
Pledged Securities; provided, however, that if an Event of Default has occurred
and is continuing, the Lender, by written notice to the issuer of the Pledged
Securities, may terminate the Borrower's rights to exercise such voting rights
and to give such consents, waivers and ratifications in respect thereof.
4.4 Irrevocable Appointment and Direction.
(a) Borrower hereby appoints and constitutes the Lender, so long as this
Agreement remains in force and effect, with full power of substitution, the true
and lawful attorney-in-fact of the Borrower, and in its name, place and stead,
to demand and enforce compliance with all the terms and conditions of the
Pledged Securities and other Collateral or otherwise for the purpose of carrying
out the provisions of this Agreement, and all benefits accrued thereunder or
hereunder, and taking any action and executing any instruments, in the name of
the Borrower or otherwise, that the Lender may deem necessary or advisable to
accomplish the purposes hereof, whether before or after an Event of Default,
which appointment as attorney-in-fact is irrevocable and coupled with an
interest. Lender may transfer Collateral into its name or that of its nominee
and may receive the income and any distributions thereon and hold the same as
Collateral for the Obligations, or apply the same to any Obligation, whether or
not a default or an Event of Default has occurred. Without limiting the
generality of the foregoing, the Lender shall, to the extent permitted under
this Agreement, have the right and power, upon the Lender's good faith
determination in its sole discretion that such action is necessary or desirable
to preserve and protect its interest in the Collateral, to do the following:
(i) to ask, demand, collect, receive and give acquittances and
receipts for any and all moneys due and to become due to the Borrower in respect
of the Pledged Securities and other Collateral, including without limitation all
proceeds from the sale of Pledged Securities or otherwise, and, in the name of
Borrower or its own name or otherwise, to take possession of and endorse and
collect any checks, drafts, notes, acceptances or other instruments for the
payment of moneys due to Borrower and to file any claim or to take any other
action or proceeding in any court of law or equity or otherwise deemed
appropriate by the Lender for the purposes of collecting any and all such moneys
due whenever payable;
(ii) to pay or discharge taxes or Liens levied or placed on or
threatened against the Collateral; and
(iii) (A) to direct any party liable for any payment to Borrower in
respect of the Collateral, or otherwise, to make payment of any and all moneys
due and to become due thereunder directly to the Lender or as the Lender shall
direct; (B) to receive payment of and receipt for any and all moneys, claims and
other amounts due and to become due at any
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time in respect of or arising out of any Collateral; (C) to sign and endorse any
invoices, drafts against debtors, assignments, verifications and notices in
connection with or relating to the Collateral; (D) to commence and prosecute any
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part thereof and to enforce any
other right in respect of any Collateral; (E) to defend any suit, action or
proceeding brought against Borrower with respect to any Collateral; (F) to
settle, compromise or adjust any suit, action or proceeding described above and,
in connection therewith, to give such discharges or releases as the Lender may
deem appropriate; and (G) upon the occurrence of an Event of Default and during
its continuance, otherwise to sell, transfer or pledge to a third party, make
any agreement with respect to or otherwise deal with any of the Collateral as
fully and completely as though the Lender were the absolute owner thereof for
all purposes, and to do, at the Lender's option and Borrower's expense, at any
time or from time to time, all acts and things that the Lender deems necessary
to protect, preserve or realize upon the Collateral and the Lender's security
interests therein, in order to effect the intent of this Agreement, all as fully
and effectively as Borrower might do.
The Borrower hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. Any Person dealing with the Lender shall be
entitled to rely conclusively on any written statement of Lender that the power
and rights granted under this Section 4.4(a) are in effect.
(b) Borrower hereby irrevocably directs any contracting party to, or
obligor or issuer of, any Collateral, to the extent not prohibited by applicable
law, whether before or after the occurrence of an Event of Default under any of
the Loan Documents, to recognize and accept Lender as the holder of such
Collateral for any and all purposes as fully as it would recognize and accept
Borrower and the performance of Borrower thereunder.
4.5 Lender Not Obligated.
(a) The Lender shall not be liable for the failure to collect or realize
upon the Obligations or any collateral security or guaranty thereof, or any part
thereof, or for any delay in so doing, nor shall Lender be under any obligation
to take any action whatsoever with regard thereto.
(b) The powers conferred on the Lender hereunder are solely to protect the
interests of the Lender in the Collateral and shall not impose any duty upon the
Lender to exercise any such powers. The Lender shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither it nor any of its officers, directors, employees or agents shall be
responsible to Borrower for any act or failure to act, except for its own
willful misconduct taken or omitted in bad faith.
(c) Beyond the safe custody of any Collateral in its possession or control,
the Lender shall not have any obligation to protect, secure, or insure any such
Collateral at any time held as security for the Obligations and Lender shall
specifically have no obligation to enforce any rights against any contracting
party, obligor or issuer.
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4.6 Further Collateral Covenants.
(a) Borrower will defend the Lender's right, title and first priority
security interest in and to the Collateral and the proceeds thereof against the
claims and demands of all Persons whomsoever.
(b) Borrower will have or obtain promptly good title (subject to no Lien
whatsoever, except the Liens created by this Agreement) to and right to pledge
the Collateral and any other property at any time hereafter pledged to the
Lender as collateral security hereunder.
(c) At such time as the Collateral is registered in the name of Lender or
its nominee, the Lender or its nominee may at any time thereafter, without
notice, exercise all voting and corporate rights of any issuer of any and all
rights of conversion, exchange, subscription or any other rights, privileges or
options pertaining to any of the Collateral as if the Lender were the absolute
or "beneficial" (as defined for purposes of Rule 13d-3 (or any successor rule of
similar import) under the Exchange Act) owner thereof, including (without
limitation) the right to exchange, at the sole discretion of the Lender, any and
all of the Collateral upon the merger, consolidation, reorganization,
recapitalization or other readjustment of any issuer of any such Collateral or
upon the exercise by any issuer or the Lender of any right, privilege or option
pertaining to any of the Collateral and, in connection therewith, to deposit and
deliver any and all of the Collateral with any committee, depository, transfer
agent, warrant agent, registrar or other designated agency on such terms and
conditions as the Lender may reasonably determine, but the Lender shall have no
duty to exercise any of the aforesaid rights, privileges or options and shall
not be responsible for any failure to do so or delay in so doing.
(d) Borrower agrees to execute and deliver to Lender, at any time or times
during which this Agreement shall be in effect, such further instruments as
Lender in good faith may deem reasonably necessary to make effective this
Agreement, the security interests created hereby and the covenants of Borrower
herein contained. To evidence such security interest, at the request of Lender,
Borrower shall, in a form reasonably satisfactory to Lender, execute and deliver
one or more financing statements, and any continuation thereof, pursuant to the
provisions of the UCC and in such other jurisdictions as designated by Lender,
and shall pay the cost for filing thereof.
(e) Borrower hereby agrees to indemnify and to defend and hold Lender
harmless against and from all liability loss, damage and expense, including
reasonable attorney's fees, which it may or shall incur by reason of this
Agreement, or by reason of any commercially reasonable action taken in good
faith by Lender hereunder or with respect to the Collateral, and against and
from any and all claims and demands whatsoever which may be asserted against
Lender by reason of any alleged obligation or undertaking on its part to perform
or discharge any of the terms, covenants and conditions contained in the
Collateral or under any agreement or document in respect thereof. Should Lender
incur any such liability, loss, damage or expense, the amount thereof, together
with interest thereon at the Default Rate of interest under the Note, shall be
payable by Borrower to Lender as
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Obligations hereunder immediately upon demand, or at the option of Lender,
Lender may reimburse itself therefor out of any receipts or amounts collected by
Lender before the application of such receipts or amounts to any other
Obligations;
(f) Nothing contained herein or elsewhere shall operate to obligate, or be
construed to obligate, Lender to perform any of the terms, covenants or
conditions contained in the Collateral or under any agreement or document in
respect thereof or otherwise to impose any obligation upon Lender with respect
to the Collateral. Prior to written notice from Lender of such election, this
Agreement shall not operate to place upon Lender any responsibility for the
payment, performance or observance of any obligation, requirement or condition
under or in respect of the Collateral, or under any agreement or document in
respect thereof, and the execution of this Agreement by Borrower shall
constitute conclusive evidence that all responsibility for the payment,
performance or observance of any obligation, requirement or condition under or
in respect of the Collateral or under any agreement or document in respect
thereof is and shall be that of Borrower. Even if Lender does exercise its
rights, and at all times Borrower retain the obligation to reimburse Lender
promptly upon demand or otherwise pay when due all obligations incurred in
connection with the Collateral or under any agreement or document in respect
thereof;
(g) Borrower agrees that upon any sale or transfer by Lender of the Loan
Documents and the indebtedness evidenced thereby, Lender may deliver to the
purchaser or transferee the Collateral and may assign to such purchaser or
transferee the rights of Lender hereunder, who shall thereupon become vested
with all powers and rights given to Lender in respect thereto (and subject to
Lender's obligations hereunder), and Lender shall be forever relieved and fully
discharged from any liability or responsibility thereafter accruing in
connection therewith. In no event shall Lender be liable with respect to, or on
account of, the Collateral, except for the safekeeping of any instruments
delivered to Lender pursuant hereto;
(h) Upon the full and indefeasible payment and performance of the
Obligations and liabilities set forth or contained in this Agreement and the
Note, , Lender covenants to execute and deliver to Borrower, in due course,
instruments as necessary to evidence the reassignment (without recourse) of the
Collateral and the rights, title, interest, power and authority assigned herein;
and
(i) Borrower agrees to provide Lender promptly, but in any event within ten
(10) Business Days after receipt or knowledge thereof by Borrower, with copies
of any and all notices received by Borrower which allege, either directly or
indirectly, that Borrower is in default of, any agreement or document in respect
of the Collateral or that any fact or circumstance exists which could reasonably
lead to the termination, suspension, revocation or loss of any Collateral.
4.7 Unconditional Obligations. The obligations and liabilities of the
Borrower hereunder shall not be conditioned or contingent upon the exercise by
the Lender or any other Person at any time of any right or remedy against any
other Person that may be or become liable in respect of all or any part of the
Obligations or against any collateral
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security or guaranty therefor or right of offset with respect thereto. This
Agreement shall remain in full force and effect and be binding in accordance
with and to the extent of its terms upon the Borrower until all of the
Obligations have been fully satisfied.
4.8 Performance by Lender of a Borrower's Obligations. If Borrower fails to
perform or comply with any of Borrower's obligations, covenants or agreements
contained herein and the Lender, as provided for by the terms of this Agreement,
itself performs or complies, or otherwise causes performance or compliance, with
such obligation, covenant or agreement, the reasonable expenses of the Lender
incurred in connection with such performance or compliance shall be borne and
paid by Borrower on demand and until so paid shall be added to the principal
amount of the Obligations and shall bear interest (calculated on the basis of a
360-day year for the actual days elapsed) from the date incurred until paid at
the highest rate applicable to such Obligations.
4.9 Advance Value Requirements and Pledge of Additional Securities. The
advance rate for the Shares and any other shares of Quaker pledged to Lender
hereafter is fifty percent (50%). Borrower may from time to time upon written
notice and the consent of the Lender substitute for the Shares other Qualified
Securities that are satisfactory in all respects to the Lender ("Additional
Securities"). "Qualified Securities" shall refer to any investment securities
deemed by the Lender to be acceptable, and shall include any investment
securities listed on the New York Stock Exchange or NASDAQ-AMEX, securities
traded on other major exchanges acceptable to the Lender, investment grade
bonds, U.S. Obligations, and margin stock, as defined under Regulation U of the
Board of Governors of the Federal Reserve System. The advance rate shall not
exceed 70% of NYSE, NASDAQ and AMEX listed stocks and bonds, 50% of stocks
traded on other major exchanges acceptable to the Lender, 80% of the value of
investment grade municipal bonds, and 90% of the value of U.S. Obligations. Any
shares of common stock of Quaker, including the Shares, traded at less than
$5.00 per share, other stocks traded at less than $10.00 per share, securities
of FleetBoston Financial Corporation (its successors and assigns) and securities
determined by the Lender (whether or not pledged to Lender) in its sole
discretion to be highly volatile with regard to frequency and extent of price
fluctuation ("Highly Volatile Securities") shall not be considered Qualified
Securities. If at any time the Fair Market Value (as defined below) of the
collateral pledged herein does not meet the above-mentioned loan to value
requirements, then additional liquid collateral, acceptable to the Lender in the
Lender's sole and absolute discretion, shall be pledged to meet the requisite
loan to value guidelines. Failure to do so within two (2) Business Days shall
constitute an immediate and automatic event of default under the terms and
conditions of this Agreement.
ARTICLE V - REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement, and to make the
Revolving Loans, Borrower represents and warrants to Lender, that:
5.1 Organization and Qualification. The Borrower (i) is a corporation duly
organized, validly existing and in good standing under the laws of Delaware;
(ii) has all
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requisite power to own its property and conduct its business as now conducted
and as presently contemplated, and (iii) as appropriate, is duly qualified and
in good standing and is duly authorized to do business in each jurisdiction
wherein the nature of its properties or business requires such qualification.
The Guarantors are stockholders of Borrower.
5.2 Authority. The execution, delivery and performance of this Agreement
and the Note and the transactions contemplated hereby and thereby are within the
authority of the Borrower, and have been authorized by proper proceedings and do
not and will not contravene any provision of law, or the charter documents and
bylaws of the Borrower or contravene any provision of, or constitute an event of
default under, or an event which with the lapse of time or the giving of notice,
or both, would constitute an event of default under any other agreement,
instrument or undertaking binding upon the Borrower or its assets.
5.3 Financial Condition. Any financial statements of Borrower previously
delivered to Lender and all financial statements delivered in the future shall
be true and correct in all material respects and present fairly the financial
condition of Borrower, as of the dates thereof. Such financial statements do not
and shall not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements contained therein not
misleading.
5.4 No Material Change. Other than as set forth in the Disclosure Schedule
attached hereto, there has been no Material Change since the date of the most
recent financial statements furnished to Lender.
5.5 Due Execution. Each of the Loan Documents to which the Borrower is a
party has been duly executed and delivered by the Borrower.
5.6 Legal, Valid, Binding Obligation. Each of the Loan Documents and each
agreement, certificate, document, instrument or other paper delivered pursuant
thereto constitutes the legal, valid, and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its terms.
5.7 Consents and Approvals. No consent, permit, license, approval or
authorization of, or registration, declaration or filing with or notice to, any
governmental authority, bureau or agency or any other Person including, without
limitation, any creditor of the Borrower or any trustee or fiduciary of any
other indenture, instruments or agreement, is required in connection with the
execution, delivery or performance by the Borrower or the validity or
enforceability against the Borrower of any Loan Document to which the Borrower
is a party.
5.8 No Legal Bar. The execution, delivery and performance by the Borrower
of the Loan Documents, and each agreement, certificate, document, instrument or
other paper delivered pursuant thereto, to which the Borrower is a party, does
not and will not violate any provision of any existing law, rule or regulation,
order, judgment, award or decree of any court, arbitrator or governmental
authority, bureau or agency, or of any material mortgage, deed or trust,
indenture, lease, contract or other agreement or undertaking to
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which the Borrower is a party or by which any of the Borrower's properties may
be bound, and will not result in the creation or imposition of any Lien (other
than in favor of Lender) on any of the Borrower's properties.
5.9 No Litigation. No litigation, investigation or other proceeding of or
before any court, arbitrator or governmental authority is currently pending nor,
to the knowledge of the Borrower, threatened against the Borrower, or Borrower's
properties which, if adversely determined, would have a material adverse effect
on Borrower's ability to duly and punctually satisfy the Obligations.
5.10 No Default. Other than as set forth on the Disclosure Schedule
attached hereto, the Borrower is not in default in any material respect in the
payment or performance of any of Borrower's obligations for monies borrowed or
under any material mortgage, deed of trust, indenture, lease, contract,
agreement or other agreement or undertaking to which the Borrower is a party or
by which Borrower or Borrower's property may be bound or affected and no Default
or Event of Default has occurred and is continuing. Borrower is not in default
under any order, award or decree of any court, arbitrator or governmental
authority binding upon or affecting Borrower or by which any of Borrower's
properties may be bound or affected, and no such order, award or decree
adversely affects the ability of the Borrower to perform Borrower's obligations
under any Loan Documents. The execution and delivery of, and the performance by
the Borrower of Borrower's obligations hereunder and under the other Loan
Documents, do not breach or result in a default under any material provision of
any instrument, contract or agreement to which Borrower is a party or by which
Borrower or Borrower's property and assets are bound or affected.
5.11 Taxes. All applicable tax reports and returns which are required to be
filed by the Borrower have been filed, except where extensions have been
properly obtained, and the Borrower has paid or made adequate provision for all
taxes, interest and penalties shown to be due and payable on such returns or on
any assessments made against Borrower or his property and all other taxes, fees
or other charges imposed on Borrower or any of his property by any governmental
authority have been paid and no tax liens have been filed and no claims are
being asserted with respect to any such taxes, fees or other charges.
5.12 Record and Beneficial Ownership; No Liens. Borrower is the record and
beneficial owner of, and has good and valid legal title to, all of the
Collateral including, without limitation, the Shares. There are no Liens of any
kind or nature on any of the Collateral. Borrower has (a) owned the Shares and
(b) fully paid for the Shares, for a period exceeding two years.
5.13 Valid Lien and Security Interest. The pledge, assignment and delivery
of the Collateral creates, and the delivery of any Collateral described in
Article IV hereof will create, a valid lien on, and perfected security interest
in, such Collateral and the proceeds thereof, subject to no prior Lien or option
or any agreement purporting to grant to any third party a prior lien on the
Borrower's property or assets that would include such Collateral.
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ARTICLE VI - COVENANTS
Borrower covenants and agrees that so long as the Revolving Facility
remains in effect, the Note remains outstanding and unpaid, in whole or in part,
or any other amount is owing to Lender hereunder:
6.1 Financial Information. Borrower shall furnish or cause to be furnished
to Lender :
(a) Tax Returns. Within 15 days of filing, but in no event later than April
20th of each year, federal tax returns together with all attachments and
schedules prepared and signed by an independent certified public accountant
reasonably satisfactory to Lender, provided, however that Borrower may file for
an extension of time within which to file its federal tax returns and, in such
event, shall deliver a copy of such extension as filed to the Lender within 15
days of filing; provided further, however, in no event shall the Borrower's
federal tax return be filed later than October 1st of each year; and
(b) Other Information. Such financial and other information concerning the
Borrower and Guarantor as Lender may reasonably request.
6.2 Compliance with Laws, Etc. Borrower shall pay taxes and comply with all
applicable laws and duly observe all valid requirements of applicable
governmental authorities.
6.3 Notice of Material Events. Borrower shall promptly give notice to
Lender of (i) any Default or Event of Default, (ii) any Material Change, and
(iii) any litigation, investigation or other proceeding against or involving the
Borrower or either Guarantor, the result of which might constitute a Material
Change.
6.4 Rights of Inspection. Borrower shall keep all statements of dealings
and transactions in relation to the Collateral and shall provide the Lender with
copies of same upon request.
6.5 Maintenance of Liens. Borrower shall at all times maintain this
Agreement in full force and effect and ensure that the Liens granted hereby in
the Collateral shall be first priority perfected Liens.
6.6 Negative Pledge and Sale Restrictions. Borrower shall not, directly or
indirectly, Transfer any Pledged Securities or other Collateral or any part
thereof or any interest therein, or permit or suffer to be created or to remain,
and shall discharge, or promptly cause to be discharged, any Lien on the Pledged
Securities or other Collateral (except for the Liens in favor of Lender).
Borrower shall not grant restrictions similar to those set forth in this Section
6.6 to any other creditor. Borrower shall not pledge or otherwise encumber any
securities of Quaker owned by it. Borrower agrees not to Transfer any securities
of Quaker if an Event of Default shall occur.
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6.7 Limitation on Pledge. Borrower shall not pledge to the Lender shares of
stock such that the total number of shares subject to pledge to Lender by any
Person will exceed 9.9% of the issued and outstanding stock of any issuer.
6.8 Limitation on Indebtedness. Borrower shall incur no Indebtedness other
than the Revolving Loans, the loans under the Guidance Facility and ordinary
course of business charges.
6.9 Status of Shares. Borrower shall immediately notify Lender of any
change in the restricted status of the Shares.
ARTICLE VII - CONDITIONS PRECEDENT
7.1 Conditions. Lender shall make Revolving Loans subject to the
satisfaction of the following conditions precedent: (a) Lender shall have
received on or before the date hereof, the items set forth in Schedule II hereto
in form and substance reasonably satisfactory to Lender and its counsel duly
executed, as appropriate; (b) all representations and warranties of Borrower and
Guarantors set forth in any Loan Document or in any certificate or other
document delivered to Lender by Borrower or a Guarantor, as the case may be
shall be true and correct on such date (except to the extent they specifically
relate to an earlier date) and each request for a Revolving Loan shall
constitute a representation and warranty by Borrower or such Guarantor that as
of the date of such request they are true and correct; (c) no Default or Event
of Default shall have occurred and be continuing; and (d) all proceedings in
connection with the transactions contemplated hereby shall be in form and
substance reasonably satisfactory to Lender and its counsel, and Lender shall
have received all information and documents as it may have reasonably requested;
(e) there shall have occurred in the Lender's judgment no Material Change; and
(f) the aggregate unpaid principal amount of the Revolving Loans outstanding on
any borrowing date as of such date shall not exceed the Revolving Credit Limit
on such date or otherwise violate the provisions of Section 2.1.
ARTICLE VIII - EVENTS OF DEFAULT
8.1 Events of Default. If any of the Defaults or Events of Default set
forth below shall occur and be continuing, Lender may, but shall not be
obligated to, make demand or withhold Revolving Loans (or suspend interest rate
options) or both:
(a) Failure of Payment. If the Borrower fails to pay any principal,
interest or other amount due under this Agreement or with respect to the
Revolving Loans on the date due (whether by acceleration, after default or
otherwise) and in the manner provided herein;
(b) Misstatements. If any representation, warranty or other statement made
herein or in any other Loan Document or otherwise in writing by or on behalf of
the Borrower or any pledgor or any guarantor or endorser of the Obligations in
connection
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herewith proves to be or to have been incorrect or misleading in any material
respect as of the date at which it is made or deemed to be made;
(c) Performance of Certain Covenants. If Borrower or any pledgor or any
guarantor or endorser of the Obligations shall fail to observe or perform any of
the covenants, conditions or provisions to be performed or observed by it, him
or her hereunder or under any other Loan Document, including but not limited to
the requirements of Section 4.9 hereof;
(d) Voluntary Bankruptcy. If the Borrower or any pledgor or any guarantor
or endorser of Borrower's Obligations (i) commences a voluntary case under the
Bankruptcy Code; or (ii) files a petition or commences any case, proceeding, or
action in bankruptcy or seeking reorganization, liquidation, dissolution,
winding-up, arrangement, composition, readjustment of debts or any other relief
under any other bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement, composition, readjustment of debt or similar act or
law of any jurisdiction, now or hereafter existing; or (iii) takes any action
indicating its, his or her consent to, approval of, or acquiescence in, any such
case, proceeding or other action; or (iv) applies for a receiver, trustee or
custodian of it, him or her for all or a substantial part of its, his or her
property; or (v) makes an assignment for the benefit of creditors; or (vi) is
unable to pay its, his or her debts as they mature or admits in writing such
inability; or (vii) is adjudicated insolvent or bankrupt;
(e) Involuntary Bankruptcy. (i) If there is commenced against the Borrower
or any pledgor or any guarantor or endorser of Borrower's Obligations (A) an
involuntary case under the Bankruptcy Code; or (B) any case or proceeding or any
other action in bankruptcy or seeking reorganization, liquidation, dissolution,
winding-up, arrangement, composition, readjustment of debts or any other relief
under any other bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement, composition, readjustment of debt or similar act or
law of any jurisdiction, now or hereafter existing, or seeking appointment of a
receiver, trustee or custodian of the Borrower or any pledgor or any guarantor
or endorser of Borrower's Obligations, or for all or a substantial part of its,
his or her property, and any of the foregoing cases, proceedings, or actions is
not dismissed within ninety (90) days; or (ii) if an order, judgment or decree
approving any of the foregoing is entered or a warrant of attachment, execution
or similar process against any substantial part of the property of the Borrower
or any pledgor or any guarantor or endorser of Borrower's Obligations is issued,
and such order, judgment, decree, warrant, execution or similar process is not
vacated or stayed within ninety (90) days; or (c) if an order for relief under
the Bankruptcy Code is entered against the Borrower or any pledgor or any
guarantor or endorser of Borrower's Obligations;
(f) Other Obligations. If the Borrower or either Guarantor defaults in any
payment of principal of or interest on any other obligation or indebtedness,
including but not limited to the Guidance Facility (as defined below), when such
obligation or indebtedness becomes due and payable or is required to be prepaid
prior to the maturity thereof, or any such obligation or indebtedness is
accelerated or required to be paid before its stated maturity or before any
regularly scheduled date of prepayment;
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(g) Attachment or Garnishment. If service is made upon Lender of a writ
naming Lender as trustee for the Borrower or any guarantor or endorser of
Borrower's Obligations;
(h) Judgments. If the Borrower, any pledgor or any guarantor or endorser of
Borrower's Obligations permits any judgment against it, him or her in excess of
Twenty-Five Thousand Dollars ($25,000) to remain undischarged for a period of
more than thirty (30) days unless during such period such judgment is
effectively stayed or bonded, on appeal or otherwise;
(i) Material Change. If the Lender believes a Material Change shall have
occurred;
(j) Revocation, Liquidation or Dissolution. The revocation, liquidation or
dissolution of Quaker or any action taken by Quaker to commence same;
(k) Death or Incapacity. The death or permanent incapacity of Borrower or
any pledgor or guarantor of the Obligations;
(l) Transfer of Pledged Securities. If Borrower, without the Lender's prior
written consent, Transfers any Pledged Securities;
(m) Pledge. If Article IV of this Agreement ceases at any time to be in
full force and effect or to create in favor of Lender valid and enforceable
Liens in the Collateral having priority over all other Liens;
(n) Default Under Other Loan Documents. If Borrower or either Guarantor
defaults under any other Loan Document; or
(o) Guarantors. Should either of the Guarantors leave the employ of Quaker.
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8.2 Lender's Remedies.
(a) Upon the occurrence of any such Event of Default, Lender may, at
Lender's option, immediately exercise one or more of the following rights: (i)
declare all Obligations of Borrower to Lender including, without limitation, the
Revolving Loans, and all other amounts owing under this Agreement and the Note
to be immediately due and payable, whereupon they shall immediately become due
and payable without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived; and (ii) exercise the rights and remedies
provided herein and under any other Loan Document; provided, however, that upon
the occurrence of any such Event of Default specified in Sections 7.1(d) or (e),
(x) all obligations of the Borrower to Lender, including, without limitation,
the Revolving Loans and all other amounts owing under this Agreement, and the
Note shall immediately become due and payable without presentment, further
demand, protest or notice of any kind, all of which are hereby expressly waived,
and (y) Lender may immediately exercise the rights and remedies provided herein
and under any other Loan Document.
(b) If a default or an Event of Default has occurred and is continuing,
then, and in any such event, the Lender may exercise, all other rights and
remedies granted to it in this Agreement and in any other instrument or
agreement securing, evidencing or relating to the Obligations, all rights and
remedies of a secured party under the UCC or under any other applicable law.
Without limiting the generality of the foregoing, the Borrower expressly agrees
that upon any Event of Default, the Lender, without demand of performance or
other demand, advertisement or notice of any kind (except any notice specified
below of time and place of public or private sale) to or on the Borrower or any
other Person (all and each of which demands, advertisements and/or notices are
hereby expressly waived), shall be entitled forthwith to collect, receive,
appropriate and realize on the Collateral, or any part thereof, and forthwith to
sell, assign, give option or options to purchase, contract to sell or otherwise
dispose of and deliver the Collateral, or any part thereof, in one or more
units, parcels, or lots at one or more public or private sales, at any exchange
or broker's board or at any of the Lender's offices or elsewhere, on such terms
and conditions and at such prices as may be commercially reasonable under then
existing circumstances, for cash or on credit or for future delivery without
assumption of any credit risk, with the right to the Lender upon any such sale
or sales, public or private, to purchase the whole or any part of said
Collateral so sold. Any purchaser at any such sale or sales shall acquire the
property sold absolutely free from any claim or right on the part of Borrower,
and Borrower hereby waives (to the extent permitted by applicable law) all
rights, redemptions, stays and appraisal rights which Borrower now has, or may
at any time in the future have, under any rule of law or statute now existing or
hereafter enacted. The net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care, safekeeping
or otherwise of any and all of the Collateral or in any way relating to the
rights of the Lender hereunder, including reasonable attorneys' fees and legal
expenses, shall be applied to the payment of the Obligations in such order as
the Lender may determine, and, after all of the Obligations have been paid in
full and after payment of any other amount required by any provision of law,
including (without limitation) Section 9-504(1)(c) of the Uniform Commercial
Code, the balance (if any) of such proceeds shall be remitted to the Borrower or
as otherwise required
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by a court of competent jurisdiction. To the extent permitted by applicable law,
the Borrower each waive all claims, damages and demands against the Lender
arising out of the retention or sale of the Collateral unless resulting from
such Lender's willful misconduct. The Borrower agrees that the Lender need not
give more than ten (10) days' notice (which notice shall be deemed given on the
earlier of mailing or receipt) of the time and place of any public sale or of
the time after which a private sale or other intended disposition is to take
place and that such notice is reasonable notification of such matters (unless
the Collateral is of type customarily sold on a recognized market, in which case
no such notice shall be required). In addition, no notification need be given to
the Borrower, if Borrower has signed after an Event of Default has occurred and
is continuing a statement renouncing or modifying any right to notification of
sale or other intended disposition. The Lender may, without notice or
publication, adjourn any public or private sale, or cause such sale to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which such sale is so adjourned.
8.3 Cross-Default. It is agreed by Borrower that any Event of Default under
this Agreement will constitute an event of default under all other Loan
Documents and under the Guidance Facility, and all other agreements and
evidences of indebtedness between Borrower and Lender, whether now existing or
hereafter executed and whether or not such is an event of default as defined
therein.
8.4 Setoff. Borrower hereby grants to Lender, a continuing lien, security
interest and right of setoff as security for all liabilities and obligations to
Lender whether now existing or hereafter arising, upon and against all deposits,
credits, collateral and property, now or hereafter in the possession, custody,
safekeeping or control of lender or any entity under the control of FleetBoston
Financial Corporation and its successors and assigns, or in transit to any of
them. At any time, without demand or notice, Lender may setoff the same or any
part thereof and apply the same to any liability or obligation of Borrower and
any guarantor even though unmatured and regardless of the adequacy of any other
collateral securing the Loan. Any and all rights to require Lender to exercise
its rights or remedies with respect to any other collateral which secures the
Revolving Loans, prior to exercising its right of setoff with respect to such
deposits, credits or other property of the Borrower or any guarantor, are hereby
knowingly, voluntarily and irrevocably waived.
8.5 Further Assurances. The Borrower shall at any time and from time to
time, on the written request of the Lender, execute and deliver such further
documents and do such further acts and things as the Lender may reasonably
request in order to effectuate the purposes of this Agreement.
ARTICLE IX - MISCELLANEOUS
9.1 Notices. Except as otherwise specified herein, all notices to or upon
the parties hereto shall be in writing (including teletransmissions), shall be
given or made to the party to which such notice is required or permitted to be
given or made under this Agreement at the address set forth below or at such
other address as any party hereto may
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hereafter specify to the other in writing, and (unless otherwise specified
herein) shall be deemed delivered on receipt, if teletransmitted or delivered by
hand, or five (5) Business Days after mailing, and all mailed notices shall be
by registered or certified mail, postage prepaid:
If to the Borrower to: with a copy to:
Nortex Holdings, Inc. Xxxx Xxxxxxx
0000 Xxxxx Xxxxxx Three Park Avenue
Box 2139 15th Floor
Fall River, Massachusetts 02721 New York, New York
FAX: (000) 000-0000
If to Lender to: with a copy to:
Fleet National Bank Xxxxxxxx Xxxxxxxx, Esquire
100 Federal Street Xxxxxx Xxxxxx LLP
Xxxxxx, XX 00000 000 Xxxxxxxx Xxxxxx
Attn: Xxxxxx X. Xxxxx, Vice President Xxxxxx, XX 00000
FAX: (617) 434- FAX: (000) 000-0000
9.2 No Waiver of Rights. No failure to exercise nor any delay in
exercising, on the part of Lender, any right, remedy, power or privilege under
the Loan Documents shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power, or privilege operate as a waiver
of any further or complete exercise thereof. No waiver shall be effective unless
in writing. No waiver or condonation of any breach on one occasion shall be
deemed a waiver or condonation on any other occasion.
9.3 Cumulative Remedies. Each of the Loan Documents and the obligations of
Borrower thereunder are in addition to and not in substitution for any other
obligations or security interests now or hereafter held by Lender and shall not
operate as a merger of any contract or debt or suspend the fulfillment of or
affect the rights, remedies, powers, or privileges of Lender in respect of any
obligation or other security interest held by it for the fulfillment thereof.
The rights and remedies provided in the Loan Documents are cumulative and not
exclusive of any other rights or remedies provided by law.
9.4 Successors. This Agreement shall be binding upon and inure to the
benefit of Borrower, Lender and all future holders of the Note, and their
respective successors and assigns, except that Borrower may not assign or
transfer his rights or obligations hereunder without the prior written consent
of Lender.
9.5 Governing Law. This Agreement and the Note and other Loan Documents and
the rights and obligations of the parties hereunder and thereunder shall be
governed by, and construed and interpreted in accordance with, the laws of The
Commonwealth of Massachusetts (excluding the laws applicable to conflicts or
choice of law).
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9.6 Submission to Jurisdiction; Waiver of Trial by Jury.
(a) BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH
OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT
BEING MADE UPON BORROWER BY MAIL AT THE ADDRESS SET FORTH IN THIS AGREEMENT.
BORROWER HEREBY WAIVES ANY OBJECTION THAT BORROWER MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN ANY
INCONVENIENT FORUM.
(b) BORROWER AND LENDER (BY ACCEPTANCE OF THIS AGREEMENT) MUTUALLY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY CLAIM BASED HEREIN, ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN
CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT
LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF
LENDER RELATING TO THE ADMINISTRATION OF THE LOAN OR ENFORCEMENT OF THE LOAN
DOCUMENTS, AND AGREE THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION
WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.
EXCEPT AS PROHIBITED BY LAW, BORROWER HEREBY WAIVES ANY RIGHT HE MAY HAVE TO
CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF LENDER
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT LENDER WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS WAIVER CONSTITUTES A
MATERIAL INDUCEMENT FOR LENDER TO ACCEPT THIS AGREEMENT AND MAKE THE REVOLVING
LOANS.
9.7 Complete Agreement; Amendments. This Agreement, together with the Note
and other Loan Documents contain the entire agreement between the parties with
respect to the transactions contemplated hereby, and supersede all negotiations,
presentations, warranties, commitments, offers, contracts and writings prior to
the date hereof relating to the subject matter. This Agreement together with the
Note and the other Loan Documents may only be amended, modified, waived,
discharged or terminated by a writing signed by the party to be charged with
such amendment, modification, waiver, discharge or termination.
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9.8 Expenses. The Borrower shall pay on demand all expenses of Lender in
connection with the preparation, administration, default, collection, waiver or
amendment of loan terms, or in connection with Lender's exercise, preservation
or enforcement of any of its rights, remedies or options under the Loan
Documents, including, without limitations, fees of consulting, brokerage or
other similar professional fees or expenses, and any fees or expenses associated
with travel or other costs relating to any appraisals or examinations conducted
in connection with the Revolving Facility or any Collateral therefor, and the
amount of all such expenses shall, until paid, bear interest at the rate
applicable to principal hereunder (including any default rate) and be an
Obligation secured by any Collateral. This covenant shall survive payment of the
Revolving Loans, and termination of this Agreement.
9.9 Survival of Agreements. All covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall
survive the making of the Revolving Loans, the execution and delivery to Lender
of the Note and shall continue in full force and effect so long as any portion
of the Loans are outstanding and unpaid, or this Agreement remains in effect.
9.10 Severability. Any provision hereof that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
9.11 Descriptive Headings. The captions in this Agreement are for
convenience of reference only and shall not define or limit the provisions
hereof.
9.12 Counterparts. This Agreement may be executed by one or more of the
parties on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
9.13 Replacement Documents. Upon receipt of an affidavit of an officer of
Lender as of the loss, theft, destruction or mutilation of the Note or any other
security document which is not of public record, and, in the case of any such
loss, theft, destruction or mutilation, upon cancellation of such Note or other
security document, Borrower will issue, in lieu thereof, a replacement note or
other security document in the same principal amount thereof and otherwise of
like tenor.
9.14 Pledge, Assignment, etc.
(a) Lender may at any time pledge all or any portion of its rights under
the Loan Documents including any portion of the Note to any of the twelve (12)
Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12
U.S.C. Section 341. No such pledge or enforcement thereof shall release Lender
from its obligations under any of the Loan Documents.
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(b) Lender shall have the unrestricted right at any time or from time to
time, and without Borrower's consent, to assign all or any portion of its rights
and obligations hereunder to one or more lenders or other financial institutions
(each, an "Assignee") and Borrower agrees that it shall execute, or cause to be
executed, such documents, including without limitation, amendments to this
Agreement and to any other documents, instruments and agreements executed in
connection herewith as Lender shall deem necessary to effect the foregoing. In
addition, at the request of Lender and any such Assignee, Borrower shall issue
one or more new promissory notes, as applicable, to any such Assignee and, if
Lender has retained any of its rights and obligations hereunder following such
assignment, to Lender, which new promissory notes shall be issued in replacement
of, but not in discharge of, the liability evidenced by the promissory note held
by Lender prior to such assignment and shall reflect the amount of the
respective commitments and loans held by such Assignee and Lender after giving
effect to such assignment. Upon the execution and delivery of appropriate
assignment documentation, amendments and any other documentation required by
Lender in connection with such assignment, and the payment by Assignee of the
purchase price agreed to by Lender, and such Assignee, such Assignee shall be a
party to this Agreement and shall have all of the rights and obligations of
Lender hereunder (and under any and all other guaranties, documents, instruments
and agreements executed in connection herewith) to the extent that such rights
and obligations have been assigned by Lender pursuant to the assignment
documentation between Lender and such Assignee, and Lender shall be released
from its obligations hereunder and thereunder to a corresponding extent. Lender
may furnish any information concerning Borrower in its possession from time to
time to prospective Assignees, provided that Lender shall require any such
prospective Assignees to agree in writing to maintain the confidentiality of
such information.
(c) Lender shall have the unrestricted right at any time and from time to
time, and without the consent of or notice to Borrower, to grant to one or more
Lenders or other financial instructions (each, a "Participant") participating
interests in Lender's obligation to lend hereunder and/or any or all of the
loans held by Lender hereunder. In the event of any such grant by Lender of a
participating interest to a Participant, whether or not upon notice to Borrower,
Lender shall remain responsible for the performance of its obligations hereunder
and Borrower shall continue to deal solely and directly with Lender in
connection with Lender's rights and obligations hereunder. Lender may furnish
any information concerning Borrower in its possession from time to time to
prospective Participants, provided that Lender shall require any such
prospective Participant to agree in writing to maintain the confidentiality of
such information.
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IN WITNESS WHEREOF, the Borrower and the Lender, by its duly authorized
representative, have executed this Agreement under seal as of the date first
written above.
NORTEX HOLDINGS, INC.
By:
--------------------------------
Its:
-------------------------------
FLEET NATIONAL BANK
By:
--------------------------------
Xxxxxx X. Xxxxx, Vice President
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List of Schedules and Exhibits
Schedule 1 - Definitions
Schedule 2 - Closing Agenda
Exhibit A - Revolving Credit Note
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SCHEDULE I
Definitions
"Agreement" -- this Loan Agreement including all schedules and exhibits as
the same may be amended, supplemented or otherwise modified, from time to time.
"Bankruptcy Code" -- The Bankruptcy Reform Act of 1978, as heretofore and
hereafter amended, and codified as 11 U.S.C. sections 101, et seq.
"Borrower" -- shall have the meaning set forth in the Preamble.
"Business Day" -- shall have the meaning set forth in the Section 3.4.
"Default" -- any event specified in Article VII, whether or not any
requirement for the giving of notice or lapse of time or any other condition has
been satisfied.
"Default Rate" -- shall have the meaning set forth in Section 3.3.
"Dollars" and "$" -- lawful money of the United States. Any reference to
payment means payment in immediately available Dollar funds.
"Event of Default" -- any event specified in Article VIII, provided that
any requirement for the giving of notice or lapse of time or any other condition
has been satisfied.
"Exchange Act" -- shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Expiration Date" -- shall have the meaning set forth in Section 2.4.
"Fair Market Value" -- the Market Price at any date if the Pledged
Securities are traded on any national securities exchange or are NASDAQ National
Market System Securities or quoted on the NASDAQ System or any similar
organization and if the Pledged Securities are not traded on any national
securities exchange or are not NASDAQ National Market System Securities or
quoted on the NASDAQ System or any similar organization, the value as determined
in good faith by the Lender, based on the information available to it.
"Guaranties" -- the Unlimited Guaranty of Xxxxxxxx Xxxxxxxx and the Limited
Guaranty of Xxxxxx Xxxxxxxxx in favor of Lender delivered to Lender as of the
date of the Agreement.
"Guarantors" -- shall have the meaning set forth in Section 2.8.
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"Guidance Facility" -- the loan facility established by Lender for Borrower
as of the dated hereof (as amended, restated, supplemented or modified from time
to time), providing for a $70,000 line of credit for certain specific purposes.
"Indebtedness" -- means all indebtedness, obligations and liabilities which
in accordance with generally accepted accounting principles would be reflected
on the balance sheet of a Person as a liability, except for liabilities for
taxes, assessments, governmental charges, liens or claims to the extent that
payment thereof is not due and taxes being contested in good faith in
appropriate proceedings; all indebtedness, obligations and liabilities, whether
or not assumed by such Person, secured by any Lien existing on property owned by
such Person; all indebtedness of others which such Person has directly or
indirectly guaranteed or otherwise has become directly or indirectly liable for;
and all amounts representing rental payments which, in accordance with generally
accepted accounting principles, would be classified as a liability on such
Person's balance sheet.
"Lender" -- shall have the meaning set forth in the Preamble.
"Lien" -- any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance of every nature
whatsoever (including, without limitation, any easement, right-of-way, zoning or
similar restriction or title defect), lien (statutory or other) or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, any conditional sale or other
title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing and the filing of any financing
statement under the UCC or comparable law of any jurisdiction).
"Loan Documents" -- this Loan Agreement, the Note, the Guaranties and all
other instruments and documents executed in connection with the indebtedness
covered thereby, and as the same may be amended, restated or modified from time
to time hereunder.
"Market Price" -- at any date, the last reported sale price on such day,
or, in the case no such reported sale takes place on such day, the average of
the last reported sales prices for the last three trading days, in either case
as officially reported by the principal securities exchange or the NASDAQ System
on which the Common Stock, or other securities, as the case may be, is listed or
admitted to trading, or, if the Common Stock or other securities, as the case
may be, is not listed or admitted to trading on any national securities exchange
or the NASDAQ System, the average of the closing bid and asked prices on such
day in the over-the-counter market as furnished by NASDAQ or any similar
organization.
"Material Change" -- a material adverse change as determined by the Lender,
in its sole discretion, in the income condition (financial or otherwise),
businesses or properties of the Borrower, or either Guarantor or in the Pledged
Securities which affects the Borrower's, or Guarantor's ability to pay the
Revolving Loans as required and meet its or his other obligations under the Loan
Documents.
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"Maturity" -- shall mean the earlier of the Expiration Date or acceleration
of Obligations by Lender hereunder.
"NASDAQ System" -- the electronic inter-dealer quotation system operated by
NASDAQ, Inc., a subsidiary of the National Association of Securities Dealers,
Inc.
"Note" -- the Revolving Credit Note of Borrower made to evidence the
Revolving Loans, in the form of Exhibit A, as it may be amended, supplemented or
otherwise modified, from time to time.
"Obligations" -- all obligations, liabilities and indebtedness of every
kind, nature and description owing by Borrower to Lender, including principal,
interest, charges, fees and expenses, howsoever evidenced, arising hereunder or
under the Loan Documents, whether now existing or hereafter arising, whether
direct or indirect, absolute or contingent, joint or several, due or not due,
secured or unsecured, original renewed or extended.
"Person" -- an individual, partnership, corporation, business trust, joint
stock company, trust, unincorporated association, joint venture, governmental
authority or other entity of whatever nature.
"Pledged Securities" -- shall have the meaning set forth in Section 4.1
hereof.
"Prime Rate" -- for any day, the variable per annum rate of interest so
designated from time to time by Lender as its prime rate, such rate to be
adjusted automatically, without notice, on the effective date of any change in
such rate. The Prime Rate is a reference rate and does not necessarily represent
the lowest or best rate charged to any customer.
"Regulation U" -- the regulations relating to Credit by Banks for the
Purpose of Purchasing or Carrying Margin Stock issued by the Federal Reserve
Board pursuant to the Exchange Act, and its interpretations thereof, as such
regulations and interpretations are amended or revised from time to time.
"Revolving Credit Limit" -- shall have the meaning set forth in Section
2.2.
"Revolving Facility" -- shall have the meaning set forth in the recitals to
this Agreement.
"Revolving Loans" -- the revolving loans made to the Borrower under Section
2.1.
"Transfer" -- to sell, assign, transfer, convey, exchange, pledge,
hypothecate, grant a security interest in or to, give, donate or attempt to
dispose of, directly or indirectly, by operation of law or otherwise,
voluntarily or involuntarily, by intestacy or inter vivos action, or grant any
option or other right to acquire any asset or item of property.
"UCC" -- the Uniform Commercial Code as it may from time to time be in
effect in the Commonwealth of Massachusetts.
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"U.S. Obligations" -- marketable direct and guarantied obligations of the
United States of America with a maturity of 1 year or less.
All terms not otherwise defined herein which are defined in the UCC shall
have the meanings given in the UCC.
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SCHEDULE II
Closing Agenda
LOAN DOCUMENTS:
1. Loan Agreement. This Loan, Pledge and Security Agreement, including the
attached Schedules and Exhibits.
2. Note. The Revolving Credit Note in the aggregate principal amount of
$2,300,000.
3. Guaranties. The Unlimited Guaranty of Xxxxx X. Xxxxxxxx and the Limited
Guaranty of Xxxxxx Xxxxxxxxx.
4. Stock Certificates. Stock certificates evidencing 1,550,000 shares of
common stock of Quaker issued to Borrower together with separate stock powers
executed in blank and medallion guaranteed.
5. Federal Reserve Form U-1. A Federal Reserve Form U-1 executed by
Borrower and the Lender.
MISCELLANEOUS:
1. Payment of Lender's Legal Fees. Borrower shall pay Lender's legal fees
and disbursements.
2. Legal Opinion. Borrower shall deliver to Lender and its counsel, a legal
opinion from its counsel, supplemented by an attached representation letter from
a qualified officer of Quaker, satisfactory in substance and form to Lender and
its counsel as to corporate matters and as to the status of the Shares,
including holding period, method of acquisition, restrictive legend, etc.
3. Secretary's Certificate. Certificate of Borrower's Secretary as to
corporate action and incumbency and attaching true copies of Borrower's votes
authorizing transactions, Certificate of Incorporation (certified by the
Secretary of State), Bylaws and purchase and sale agreement relative to the
Shares.
4. Legal Existence and Good Standing Certificate. Certificate as to legal
existence and good standing from the Secretary of State of Delaware.
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