EXHIBIT 10.3(a)
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
BY AND BETWEEN
SUMMIT BANK
AS LENDER
AND
CYBEX INTERNATIONAL, INC.,
CYBEX FINANCIAL CORPORATION,
EAGLE PERFORMANCE SYSTEMS, INC.,
CYBEX FITNESS GERATE VERTRIEBS GMBH,
GENERAL MEDICAL EQUIPMENT LIMITED,
LUMEX BED SYSTEMS,
XXXXXXX, INC.,
AND
XXXXXXX HOLDING COMPANY
AS BORROWERS
DATED: JUNE 16, 1997
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS....................................... 2
SECTION 2. CREDIT FACILITIES................................. 9
2.1 Revolving Loan...................................... 9
2.2 Term Loan........................................... 10
2.3 Xxxxxxx Letter of Credit............................ 11
SECTION 3. NOTES, INTEREST AND FEES.......................... 11
3.1 Notes............................................... 11
3.2 Interest on Notes; Fees............................. 12
3.3 Fees................................................ 12
3.4 Prepayment of Loans................................. 13
SECTION 4. CONDITIONS PRECEDENT.............................. 13
4.1 Conditions Precedent to Loans....................... 13
SECTION 5. GRANT OF SECURITY INTEREST........................ 15
SECTION 6. COLLECTION AND ADMINISTRATION..................... 17
6.1 Borrowers' Loan Account............................. 17
6.2 Statements.......................................... 17
6.3 Payments............................................ 17
6.4 Authorization to Make Loans......................... 18
6.5 Use of Proceeds..................................... 18
SECTION 7. COLLATERAL REPORTING AND COVENANTS................ 19
7.1 Collateral Reporting................................ 19
7.2 Accounts Covenants.................................. 19
7.3 Inventory Covenants................................. 21
7.4 Equipment Covenants................................. 21
7.5 Power of Attorney................................... 22
7.6 Right to Cure....................................... 23
7.7 Access to Premises.................................. 23
7.8 Audit of Accounts Receivables....................... 23
7.9 Additional Collateral............................... 24
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SECTION 8. REPRESENTATIONS AND WARRANTIES..................... 24
8.1 Corporate Existence, Power and Authority:
Subsidiaries........................................ 24
8.2 Financial Statements; No Material Adverse Change.... 25
8.3 Chief Executive Office; Collateral Locations........ 25
8.4 Priority of Liens; Title to Properties.............. 25
8.5 Tax Returns......................................... 26
8.6 Litigation.......................................... 26
8.7 Compliance with Other Agreements and Applicable
Laws................................................ 26
8.8 Accuracy and Completeness of Information............ 27
8.9 Corporate Structure................................. 27
8.10 Environmental Matters............................... 27
8.11 Exclusion of Certain Subsidiaries................... 28
8.12 Survival of Warranties; Cumulative.................. 28
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS................ 28
9.1 Maintenance of Existence............................ 28
9.2 New Collateral Locations............................ 28
9.3 Compliance with Laws Relations, Etc................. 28
9.4 Payment of Taxes and Claims......................... 29
9.5 Insurance........................................... 29
9.6 Financial Statements and Other Information.......... 30
9.7 Sale of Assets, Consolidation Merger, Dissolution,
Etc................................................. 31
9.8 Encumbrances........................................ 32
9.9 Indebtedness........................................ 32
9.10 Loans, Investments, Guarantees, Etc................. 34
9.11 Dividends and Redemptions........................... 34
9.12 Minimum Adjusted Tangible Capital Funds.............. 35
9.13 Fixed Charge Coverage Ratio......................... 35
9.14 Maximum Total Liabilities to Adjusted Tangible
Capital Funds....................................... 35
9.15 Minimum Working Capital............................. 35
9.16 Interest Coverage Ratio............................. 35
9.17 Transactions with Affiliates........................ 36
9.18 Capital Expenditures................................ 36
9.19 Costs and Expenses.................................. 36
9.20 Environmental Laws.................................. 36
9.21 Change in Business.................................. 37
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9.22 Further Assurances.................................. 38
9.23 Amendment to Prior Agreement........................ 38
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default................................... 38
10.2 Remedies............................................ 40
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS;
GOVERNING LAW..................................... 42
11.1 Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver................................... 42
11.2 Waiver of Notices................................... 43
11.3 Amendments and Waivers.............................. 43
11.4 Waiver of Counterclaims............................. 43
11.5 Indemnification..................................... 44
SECTION 12. MISCELLANEOUS..................................... 44
12.1 Notices............................................. 44
12.2 Partial Invalidity.................................. 45
12.3 Successors.......................................... 45
12.4 Use of Loan Proceeds................................ 46
12.5 Entire Agreement.................................... 46
iii
INDEX TO
EXHIBITS AND SCHEDULES
----------------------
Schedule A Information Certificate
Schedule 8.4 Existing Liens
Schedule 8.7 Licenses and Permits
Schedule 8.10 Environmental Liabilities
iv
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
------------------------------------------------
This Amended and Restated Loan and Security Agreement dated June 16, 1997
(the "AGREEMENT"), is entered into by and between SUMMIT BANK, a New Jersey
banking corporation ("LENDER"), successor by merger to United Jersey Bank; CYBEX
INTERNATIONAL, INC., a New York corporation ("CYBEX"); CYBEX FINANCIAL
CORPORATION, a New York corporation, ("CYBEX FINANCIAL"); EAGLE PERFORMANCE
SYSTEMS, INC., a Minnesota corporation ("EAGLE PERFORMANCE"); CYBEX FITNESS
GERATE VERTRIEBS, GmbH, a German corporation ("CYBEX FITNESS"); GENERAL MEDICAL
EQUIPMENT LTD., a U.S. Virgin Island corporation ("GENERAL MEDICAL"), LUMEX BED
SYSTEMS, a Pennsylvania corporation ("LUMEX"); XXXXXXX, INC., a Delaware
corporation ("XXXXXXX"); and XXXXXXX HOLDING COMPANY, a Delaware corporation
("XXXXXXX HOLDING") (collectively, Cybex, Cybex Financial, Eagle Performance,
Cybex Fitness, General Medical, Lumex, Xxxxxxx and Xxxxxxx Holding are called
the "BORROWER" or "BORROWERS").
BACKGROUND
----------
On December 7, 1995, the Lender loaned to Xxxxxxx and Xxxxxxx Holding two
credit facilities consisting of a revolving loan of the principal sum of
$3,000,000 (the "XXXXXXX REVOLVING LOAN"), and a term loan in the original
principal amount of $9,000,000 (the "XXXXXXX TERM LOAN").
On February 28, 1996, the Lender provided to Xxxxxxx, Inc. a third credit
facility in the original principal amount of $3,579,000 as evidenced by a Letter
of Credit and Reimbursement Agreement dated February 1, 1996 (the "XXXXXXX
LETTER OF CREDIT"). Hereinafter, the Xxxxxxx Revolving Loan, Xxxxxxx Term Loan
and the Xxxxxxx Letter of Credit are collectively called the "XXXXXXX LOANS".
As of December 27, 1996, Cybex, Xxxxxxx and Cat's Tail, Inc., a Delaware
corporation (the "MERGER SUB") executed an Agreement and Plan of Merger pursuant
to which Merger Sub was merged on May 23, 1997 into Xxxxxxx and Xxxxxxx became a
wholly-owned subsidiary of Cybex. Xxxxxxx Holding continues to be a wholly-
owned subsidiary of Xxxxxxx.
The Borrowers have requested the Lender to make additional loans to the
Borrowers and to renew, extend and increase the Xxxxxxx Loans, but with the
1
Borrowers as the Obligors thereon; and the Lender, subject to and in accordance
with the terms and conditions herein, contained, has agreed to make available to
and lend to the Borrowers, the credit facilities described herein.
As of June 16, 1997 there was due and owing to the Lender by Xxxxxxx and
Xxxxxxx Holding for the Xxxxxxx Loans, the sum of $14,422,135.67 computed as
follows:
PRINCIPAL INTEREST TOTAL
-------------- ---------- --------------
Xxxxxxx Revolving
Loan: $ 3,000,000.00 $19,125.00 $ 3,019,125.00
Xxxxxxx Term
Loan: $ 7,800,000.00 $23,941.67 $ 7,823,941.67
Xxxxxxx Letter of
Credit: $ 3,579,069.00 0.00 $ 3,579,069.00
-------------- ---------- --------------
Total due as of
6/16/97: $14,379,069.00 $43,066.67 $14,422,135.67
============== ========== ==============
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
-----------
All terms used herein which are defined in Article 1 or Article 9 of the
Uniform Commercial Code shall have the meanings given therein unless otherwise
defined in this Agreement. All references to the plural herein shall also mean
the singular and to the singular shall also mean the plural. All references to
Borrowers and Lender pursuant to the definitions set forth in the recitals
hereto, or to any other person herein, shall include their respective successors
and assigns. The words "hereof," "herein," "hereunder," "this Agreement" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not any particular provision of this Agreement and as
this Agreement now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced. An Event of Default shall exist or
2
continue until such Event of Default is waived in accordance with Section 11.3.
Any accounting term used herein unless otherwise defined in this Agreement shall
have the meanings customarily given to such term in accordance with GAAP as
hereinafter defined. For purposes of this Agreement, the following terms shall
have the respective meanings given to them below:
1.1 "ACCOUNTS" shall mean all present and future rights of Borrowers to
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payment for goods sold or leased or for services rendered, which are not
evidenced by instruments or chattel paper, and whether or not earned by
performance.
1.2 "ADJUSTED TANGIBLE CAPITAL FUNDS" means Tangible Capital Funds less
---------------------------------
amounts reserved or paid by Cybex for settlement with Xxxxx, Inc. not to exceed
$6,000,000.
1.3 "AFFILIATE" means any Person which, directly or indirectly, is in
-----------
control of, is controlled by, or is under common control with, such Person. For
purposes of this definition, a Person shall be deemed to be "controlled by"
another Person if such Person possesses, directly or indirectly, power either to
(i) vote 10% or more of the securities having ordinary voting power for the
election of directors of such Person or (ii) direct or cause the direction of
the management and policies of such Person whether by contract or otherwise.
1.4 "AGREEMENT" means this Amended and Restated Loan and Security
-----------
Agreement, together with all modifications and amendments thereto.
1.5 "APPLICABLE LAW" means all provisions of statutes, rules, regulations
----------------
and orders of governmental bodies or regulatory agencies applicable to a Person,
and all orders and decrees of all courts and arbitrators in proceedings or
actions in which the Person in question is a party.
1.6 "BORROWING" means a borrowing of funds by Borrowers being either a
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Floating Rate or a LIBOR Based Rate Borrowing advanced by Lender hereunder on
any given day under the Revolving Loan Facility or the Term Loan Facility.
1.7 "BUSINESS DAY" means any day other than a Saturday, Sunday or other
--------------
day on which banks in the State of New Jersey are permitted to close; provided,
3
however, that when used in connection with a LIBOR Borrowing, the term Business
Day shall also exclude any day on which banks are not open for dealings in
dollar deposits on the London Interbank Market.
1.8 "CAPITAL EXPENDITURES" as applied to any Person means any expenditures
----------------------
by the Borrowers for assets which are required to be capitalized as depreciable
or amortizable assets in accordance with GAAP.
1.9 "CAPITAL LEASE" as applied to any Person, means any lease of any
---------------
property (whether real, personal or mixed) by that Person as lessee which, in
accordance with GAAP, is or should be accounted for as a capital lease on the
balance sheet of that Person.
1.10 "CHANGE OF CONTROL" means any of the following events: (i) the sale,
-------------------
lease, transfer, conveyance or other disposition of all or substantially all of
the assets of Cybex and its Subsidiaries; (ii) the liquidation or dissolution of
Cybex, and (iii) any event which would be deemed to be a "change in control" as
defined in the Securities and Exchange Commission's Current Report on Form 8K.
1.11 "CLOSING DATE" means the date on which the conditions precedent to the
--------------
making of the Loans as set forth in Section 4.1 have been satisfied or waived,
which shall in no event be later than June 16, 1997.
1.12 "CODE" means the Internal Revenue Code of 1986 and the rules and
------
regulations issued thereunder, as now and hereafter in effect, or any successor
provision thereto.
1.13 "COLLATERAL" shall have the meaning set forth in Section 5 hereof.
------------
1.14 "CPLTD" means current portion of long term debt as determined in
-------
accordance with GAAP.
1.15 "EBITDA" means, without duplication, for any period for which such
--------
amount is being determined, the sum of the amounts for such period of (i) net
income, (exclusive of (a) interest income, and (b) extraordinary items), (ii)
provision for income taxes, (iii) depreciation expense, (iv) Interest Expense,
4
(v) amortization expense, but each of the above (ii) through (v) only to the
extent reducing net income. All of the foregoing items (i) through (v) are
otherwise to be determined on a consolidated basis for Borrowers and their
consolidated subsidiaries in accordance with GAAP.
1.16 "ENVIRONMENTAL ACTIONS" refers to any complaint, summons, citation,
-----------------------
notice, directive, order, claim, litigation, investigation, proceeding,
judgment, letter or other communication from any federal, state, local, or
municipal agency, department, bureau, office or other authority, or any third
party involving a violation of any Environmental Laws or a Hazardous Discharge
(i) from or onto any of the real properties or assets owned or leased by the
Borrowers or any of their Subsidiaries or any tenant, subtenant, prior tenant or
prior subtenant of such real properties or (ii) from or onto any facilities
which received solid wastes or Hazardous Materials from the Borrowers, or any of
their Subsidiaries or any tenant, subtenant, prior tenant or prior subtenant of
the real properties.
1.17 "ENVIRONMENTAL LAW" means any and all applicable federal, state, local
-------------------
or municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees or requirements of any Governmental Authority regulating, relating to or
imposing liability or standards of conduct concerning any Hazardous Material or
environmental protection or health and safety, as now or may at any time
hereafter be in effect, including without limitation, the Clean Water Act also
known as the Federal Water Pollution Control Act ("FWPCA"), 33 U.S.C. (S) 1251
et seq , the Clean Air Act ("CAA"), 42 U.S.C. (S) 7401 et seq, the Federal
-- --- -- ---
Insecticide, Fungicide and Rodenticide Act ("FIFRA"), 7 U.S.C. (S)(S) 300f et
--
seq, the Surface Mining Control and Reclamation Act (S)(S) 1201 et seq,
--- -- ---
("SMCRA"), 30 U.S.C. (S)(S) 1201 et seq, the Comprehensive Environmental
-- ---
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. (S) 9601 et seq
-- ---
as amended by the Superfund Amendment and Reauthorization Act of 1986 ("XXXX"),
the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. (S) 6901 et seq,
-- ---
the Occupational Safety and Health Act as amended ("OSHA"), 29 U.S.C. (S) 655
and (S) 657, relevant state laws, together, in each case, with any amendment
thereto, and the regulations adopted thereunder and all substitutions thereof.
1.18 "EQUIPMENT" shall mean all of Borrowers' now owned and hereafter
-----------
acquired equipment, machinery, computers and computer hardware and software
5
(whether owned or licensed), tools, furniture, fixtures, all attachments,
accessions and property now or hereafter affixed thereto or used in connection
therewith, and substitutions and replacements thereof, wherever located.
1.19 "EVENT OF DEFAULT" have the meaning given such term in Section 10
------------------
hereof.
1.20 "FINANCING AGREEMENTS" shall mean, collectively, this Agreement, and
----------------------
all notes, guarantees, security agreements mortgages, assignments, and other
agreements, documents and instruments now or at any time hereafter executed
and/or delivered by Borrowers or any Obligor in connection with this Agreement
as the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.21 "FIXED CHARGE COVERAGE RATIO" means, for any period, the ratio of
-----------------------------
EBITDA for such period to the sum of the following: (a) the CPLTD for such
period, plus (b) Interest Expense for such period plus (c) the current portion
of amounts payable under Capital Leases for such period plus (d) taxes plus (e)
Capital Expenditures which have not been financed through borrowing and (f)
dividends paid or declared for such period.
1.22 "FLOATING BASE RATE" shall mean the rate from time to time publicly
--------------------
announced by Lender or its successors, as its Floating Base Rate, whether or not
such announced rate is the best rate available at Lender.
1.23 "FLOATING RATE BORROWING" means a Borrowing as to which Borrowers have
-------------------------
elected the Floating Rate Option.
1.24 "FLOATING RATE OPTION" means Borrowers' option, as applicable, to pay
----------------------
interest on Borrowings at the Floating Base Rate pursuant.
1.25 "GAAP" shall mean generally accepted accounting principles in the
------
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Boards which are applicable to the
circumstances as of the date of determination consistently applied.
6
1.26 "GOVERNMENTAL AUTHORITY" means any federal, state, municipal or other
------------------------
governmental department, commission, board, bureau, agency or instrumentality,
or any court, in each case whether of the United States or foreign.
1.26 "INDEBTEDNESS" as used in this Agreement means, as to any given
--------------
Borrower, all items of indebtedness, obligations, or liabilities, whether
matured or unmatured, liquidated or unliquidated, direct or contingent, joint or
several, owed by the said Borrower, including (without implied limitation):
(a) All indebtedness guaranteed, directly or indirectly, in any
manner, or endorsed (other than for collection or deposit in the ordinary course
of business) or discounted with recourse;
(b) All indebtedness guaranteed, directly or indirectly, through
agreements, contingent or otherwise: (i) to purchase such indebtedness; or (ii)
to purchase, sell, or lease (as lessee or lessor) property, products, materials,
or supplies or to purchase or sell services, primarily for the purpose of
enabling the Account Debtor to make payment of such indebtedness or to insure
the owner of the indebtedness against loss; or (iii) to supply funds to, or in
any other manner invest in, the debtor;
(c) All indebtedness secured by (or for which the holder of such
indebtedness has a right, contingent or otherwise, to be secured by) any
mortgage, deed of trust, pledge, lien, security interest, or other lien, charge
or encumbrance upon property owned or acquired subject thereto, whether or not
the liabilities secured thereby have been assumed;
(d) All Obligations due the Lender; and
(e) All indebtedness incurred as the lessee of goods or services under
leases that, in accordance with GAAP, should not be reflected on the lessee's
balance sheet.
1.27 "INFORMATION CERTIFICATE" shall mean the Information Certificate of
-------------------------
Borrowers constituting Schedule "A" hereto containing material information with
respect to each of the Borrowers, their businesses and assets provided by or on
behalf of Borrowers to Lender in connection with the preparation of this
7
Agreement and the other Financing Agreements and the financing arrangements
provided for herein.
1.28 "INTEREST COVERAGE RATIO" means for any period for which such amount
-------------------------
is being determined, EBITDA divided by all interest expense of the Borrowers.
1.29 "INTEREST EXPENSE" means for any period for which such amount is being
------------------
determined, gross interest expense (including that properly attributable to
Capital Leases in accordance with GAAP) of the Borrowers and their subsidiaries
on a consolidated basis.
1.30 "INTEREST PERIOD" means as to any LIBOR Rate Borrowing, the period
-----------------
commencing on the date of such Borrowing and ending on the numerically
corresponding day (or if there is no corresponding day, the last day) in the
calendar month that is one (1), two (2), or three (3) months thereafter as
Borrowers may elect; provided, however, that (i) if any Interest Period would
end on a day which shall not be a Business Day, such interest period shall be
extended to the next succeeding Business Day, and (ii) no interest period with
respect to a LIBOR Rate Borrowing may be selected which would end later than the
date such principal would mature hereunder.
1.31 "INVENTORY" shall mean all of Borrowers' now owned and hereafter
-----------
existing or acquired raw materials, work in process, finished goods and all
other inventory of whatsoever kind or nature, wherever located.
1.32 "LIBOR BASED RATE" means the interest rate payable on LIBOR Rate
------------------
Borrowings and as elected by Borrowers on the Revolving Note and the Term Note,
being the sum of the Adjusted LIBOR Rate as defined in the Notes plus (a) 225
basis points (2.25%) when Borrowers' ratio of Total Liabilities to Adjusted
Tangible Capital Funds ("TL/ATCF") as of the last day of the previous full
fiscal quarter of the Borrowers is equal to or greater than 2.50:1; (b) 200
basis points (2.00%) when Borrowers' Tl/ATCF as of the last day of the previous
full fiscal quarter of Borrowers is greater than 2.0:1.0; (c) 175 basis points
(1.75%) when the Borrowers' TL/ATCF for such previous quarter is equal to or
greater than 1.75:1.0; (d) 150 basis points (1.50%) when the Borrowers' TL/ATCF
for such previous quarter is equal to or greater than 1.50:1.0; and (e) 125
basis points (1.25%) when the Borrowers' TL/ATCF for such previous quarter is
8
equal to or greater than 1.25:1.0; except that the applicable LIBOR Based Rate
shall not change by reason of a change in the TL/ATCF until the end of an
Interest Period.
1.33 "LIBOR RATE BORROWING" means a Borrowing under the Revolving Loan
----------------------
Facility as to which Borrowers have elected the LIBOR Based Rate.
1.34 "LOANS" shall mean the Revolving Loans, and the Term Loan and the
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Xxxxxxx Letter of Credit.
1.35 "MERGER SUB" means Cat's Tail, Inc., a Delaware corporation.
------------
1.36 "NOTES" OR "NOTES" means the Revolving Note and the Term Note executed
------------------
and delivered by the Borrowers to the Lender to evidence the Loans.
1.37 "OBLIGATIONS" shall mean any and all Revolving Loans, the Term Loan,
-------------
the Xxxxxxx Letter of Credit and all other obligations, liabilities and
indebtedness of every kind, nature and description owing by Borrowers to Lender
and/or their affiliates, including principal, interest charges, fees, costs and
expenses, however evidenced, whether as principal, surety, endorser, guarantor
or otherwise, whether arising under this Agreement or otherwise, whether now
existing or hereafter arising, whether arising before, during or after the
initial or any renewal term of this Agreement or after the commencement of any
case with respect to Borrowers under the United States Bankruptcy Code or any
similar statute (including, without limitation, the payment of interest and
other amounts which would accrue and become due but for the commencement of such
case), whether direct or indirect, absolute or contingent, joint or several, due
or not due, primary or secondary, liquidated or unliquidated, secured or
unsecured, and however acquired by Lender.
1.38 "OBLIGOR" shall mean the Borrowers as co-borrowers, any guarantor,
---------
endorser, acceptor, surety or other person liable on or with respect to the
Obligations or who is the owner of any property which is security for the
Obligations, other than Borrowers.
1.39 "PERSON" shall mean any individual, sole proprietorship, partnership,
--------
corporation (including, without limitation, any corporation which elects
subchapter S status under the Internal Revenue Code of 1986, as amended),
9
business trust, unincorporated association, joint stock corporation, trust,
joint venture or other entity or any government or any agency or instrumentality
or political subdivision thereof.
1.40 "RECORDS" shall mean all of Borrowers' present and future books of
---------
account of every kind or nature, purchase and sale agreements, invoices, ledger
cards, bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Collateral or any account
debtor, together with the tapes, disks, diskettes and other data and software
storage media and devices, file cabinets or containers in or on which the
foregoing are stored (including any rights of Borrowers with respect to the
foregoing maintained with or by any other person).
1.41 "REVOLVING LOANS" shall mean the loans now or hereafter made by Lender
-----------------
to or for the benefit of Borrowers on a revolving basis (involving advances,
repayments and readvances) as set forth in Section 2.1 hereof.
1.42 "REVOLVING LOAN FACILITY" means the Revolving Loan Facility provided
-------------------------
pursuant to Section 2.1 below.
1.43 "REVOLVING NOTE" means the Note referred to in Section 3.1(a).
----------------
1.44 "TANGIBLE CAPITAL FUNDS" means for any period for which such amount
------------------------
is being determined, total stockholders' equity plus any subordinated
indebtedness less intangible assets of the Borrowers, or each of them.
1.45 "TERM LOAN" shall mean the term loan made by Lender to Borrowers as
-----------
provided for in Section 2.2 hereof.
1.46 "TERM NOTE" means the Note referred to in Section 3.1(b).
-----------
1.47 "TOTAL LIABILITIES" of any Person means, all Indebtedness that, in
-------------------
accordance with GAAP should be classified as liabilities on a balance sheet.
1.48 "XXXXXXX LETTER OF CREDIT" means the Irrevocable Letter of Credit
--------------------------
issued by the Bank February 28, 1996, Credit No. 20961100 in favor of PNC Bank,
10
National Association, Trustee for the benefit of the bondholders of the
$4,300,000 Massachusetts Industrial Finance Agency Industrial Development Bonds
(United Medical Corporation Issue, Series 1992).
SECTION 2. CREDIT FACILITIES
-----------------
2.1 REVOLVING LOAN.
--------------
(a) Subject to, and upon the terms and conditions contained herein,
Lender agrees to make advances to Borrowers from time to time in amounts
requested by Borrowers up to the amount of Twelve Million Dollars ($12,000,000).
The Revolving Loan is intended, in part, to be a renewal of the existing Xxxxxxx
Revolving Loan, the liability for which has been assumed hereby all Borrowers.
The Revolving Loan is to be repaid together with interest and other amounts in
accordance with this Agreement, the Revolving Note and the other Financing
Agreements and is secured by all of the Collateral.
(b) Each Borrowing under the Revolving Loan Facility shall be a
Floating Rate Borrowing or a LIBOR Rate Borrowing as the Borrowers may request
subject to and in accordance with this Section and the Revolving Note. Subject
to the other provisions of this Section, Borrowings of more than one type may be
outstanding at the same time.
(c) Borrowers shall give Lender at least three Business Days' prior
written, telecopier, facsimile or telephonic (promptly, confirmed in writing)
notice of each LIBOR Rate Borrowing and at least one Business Day's prior
written, telecopier, facsimile or telephonic (promptly confirmed in writing)
notice of each Floating Rate Borrowing. Each such notice in order to be
effective must be received by Lender not later than 2:00 p.m. Each such notice
shall be irrevocable and shall specify whether the Borrowing then being
requested is a LIBOR Rate or a Floating Rate Borrowing and in the case of LIBOR
Rate Borrowings, the Interest Period or Interest Periods with respect thereto.
If no election of Interest Period is specified in such notice in the case of
LIBOR Rate Borrowings, such notice shall be deemed to be a request for an
Interest Period of one month. If no election is made as to the type of
Borrowing, such notice shall be deemed a request for a Floating Rate Borrowing.
11
(d) The aggregate amount of any Borrowing of new funds shall be in an
aggregate principal amount of (x) with respect to LIBOR Rate Borrowings,
$100,000 (or such lesser amount as shall equal the available but unused portion
of the Revolving Credit Facility) or such greater amount which is an integral
multiple of $100,000, and (y) with respect to Floating Rate Borrowings, $100,000
(or such lesser amount as shall equal the available unused portion of the
Revolving Credit Facility) or such greater amount which is an integral multiple
of $100,000.
(e) The Borrowers may at any time, on not less than ten (10) days
written notice permanently reduce the Revolving Loan, provided that any
reduction shall be in the amount of $1,000,000 or a multiple thereof. In the
event the Revolving Loan Facility is reduced, the Borrowers shall,
simultaneously with such reduction, make a prepayment of principal and interest
of the Revolving Loans in such amount as is necessary to assure that the
aggregate principal amount of all Revolving Loans outstanding immediately after
such reduction will not exceed the Revolving Loan Facility, as reduced.
(f) Subject to, and upon the terms and conditions contained herein, as
part of the Revolving Loan, the Lender has agreed to make available at
Borrowers' request, from time to time until December 31, 2000, two additional
types of credit facilities in the sublimit amounts set forth as follows:
(i) Standby/Documentary Letters of Credit - the Lender agrees to issue
standby or documentary letters of credit for and on behalf of the Borrowers with
maturity date(s) not extending beyond December 31, 2000. Any standby or
documentary letters of credit issued by Lender, as aforesaid, shall not, at any
given time, exceed in the aggregate the principal sum of Three Million Dollars
($3,000,000) and shall reduce dollar for dollar the amount available to be
loaned by the Lender to the Borrowers under the Revolving Loan.
(ii) Foreign exchange transactions - the Lender agrees to make
available to the Borrowers a Revolving Loan sublimit not to exceed at any given
time in the aggregate the principal sum of One Million Dollars ($1,000,000).
The foreign exchange sublimit loan(s) shall reduce dollar for dollar the amount
available to be loaned by the Lender to the Borrowers under the Revolving Loan.
12
2.2 TERM LOAN. The Xxxxxxx Term Loan to Borrowers in the original
---------
principal amount of Nine Million Dollars ($9,000,000) with a present principal
balance of Seven Million Eight Hundred Thousand Dollars ($7,800,000) shall be
repaid by the Borrowers, together with interest and other amounts, in accordance
with this Agreement, the Term Note, and the other Financing Agreements and is
secured by all of the Collateral. The Term Loan is intended, to be a renewal of
the existing Xxxxxxx Term Loan, the liability for which is hereby assumed by all
Borrowers.
2.3 XXXXXXX LETTER OF CREDIT.
------------------------
The Lender will continue to make available to the Borrowers its
Xxxxxxx Letter of Credit in the principal amount of up to $3,579,000. This
credit facility is intended to be a renewal of the existing Xxxxxxx Letter of
Credit, the liability for which has been assumed by all Borrowers pursuant to
the terms hereof and the Instrument of Assumption of even date herewith. The
Xxxxxxx Letter of Credit shall be evidenced by the Lender's Letter of Credit
Agreement(s), amendments thereto, the Instrument of Assumption and related
documents executed on even date herewith by the Borrowers and is secured by all
of the Collateral.
SECTION 3. NOTES, INTEREST AND FEES.
------------------------
3.1 NOTES.
-----
(a) The Revolving Credit Loans shall be evidenced by a promissory note
in the face amount of Twelve Million Dollars ($12,000,000) (the "Revolving
Note") payable to the order of Lender, duly executed on behalf of Borrowers and
dated the Closing Date. Interest shall be payable monthly in arrears except
that interest calculated at the Libor Based Rate shall be due on the last day of
the Interest Period. The outstanding principal balance of the Revolving Note
shall be payable on December 31, 2000.
(b) The Term Loan shall be evidenced by a promissory note in the face
amount of $7,800,000 (the "Term Note"), payable to the order of Lender, duly
executed on behalf of Borrowers and dated the Closing Date. Interest shall be
payable quarterly in arrears, except that interest calculated at the LIBOR Based
Rate shall be due on the last day of the Interest Period. Principal shall be
repaid in eight (8) semi-annual payments as follows:
13
June 30, 1997 $ 600,000
December 31, 1997 $ 600,000
June 30, 1998 $ 800,000
December 31,1998 $ 800,000
June 30, 1999 $1,000,000
December 31,1999 $1,000,000
June 30, 2000 $1,500,000
December 31,2000 $1,500,000
3.2 INTEREST ON NOTES; FEES.
-----------------------
(a) In the case of a LIBOR Rate Borrowing under the Revolving Loan
Facility, interest shall be payable at a rate per annum (computed on the basis
of the actual number of days elapsed over a year of 360 days) equal to the LIBOR
Based Rate, which interest shall be payable as set forth in the Revolving Note.
(b) In the case of a Floating Rate Borrowing under the Revolving Loan
Facility, interest shall be payable at a rate per annum (computed on the basis
of the actual number of days elapsed over a year of 360 days) equal to the
Floating Base Rate. Interest shall be payable on each Floating Rate Borrowing
as set forth in the Revolving Note.
(c) Interest on the Term Loan shall accrue at Borrower's option from
time to time either (i) at the Floating Base Rate or (ii) the LIBOR Based Rate.
In order for a LIBOR Based Rate to apply, Borrowers must have given Lender at
least three Business Days' prior written, telecopier, facsimile or telephonic
(promptly confirmed in writing) notice thereof (herein, a "LIBOR Notice") which
notice shall specify the Interest Period or Interest Periods elected by
Borrowers and the principal amount or amounts to which such LIBOR Notice shall
apply. Unless a new LIBOR Notice hereunder is given, upon expiration of an
Interest Period with respect to principal under the Term Loan, such principal
amount shall bear interest at the Floating Rate. The Floating Rate shall apply
at all times to any principal [or portion thereof] not covered by a LIBOR
Notice. A LIBOR Notice as to less than all the principal shall cover at least
$1,000,000. No LIBOR Notice may be given if the principal covered thereby would
be due prior to expiration of the applicable Interest Period. Interest shall be
payable
14
quarterly as set forth in the Term Note, except for interest at the
LIBOR Based Rate, which shall be due upon expiration of the applicable Interest
Period.
(d) Anything in this Agreement or the Notes to the contrary
notwithstanding, the interest rate on the Loans shall in no event be in excess
of the maximum permitted by Applicable Law.
3.3 FEES.
----
(a) Borrowers agree to pay to Lender an origination fee of $70,000.
(b) Borrowers agree to pay to Lender on the last Business Day of each
March, June, September and December in each year (commencing on the last
Business Day of June, 1997) a commitment fee of one-fourth of one percent
(0.25%) per annum, computed on the basis of the actual number of days elapsed
over a year of 360 days, on the average daily unused amount of the
Lender's commitment under the Revolving Loan Facility. Such commitment fee
shall accrue from the Closing Date.
(c) Borrowers agree to pay to Lender on the last business day of each
March, June, September and December in each year (commencing on the last
Business Day of June, 1997) a letter of credit fee of one and one-half percent
(1 1/2%) per annum, computed on the basis of the actual number of days elapsed
over a year of 360 days, on the principal amount of the Xxxxxxx Letter of
Credit. Such fee has continued to accrue from April 1, 1997.
3.4 PREPAYMENT OF LOANS.
-------------------
In the event that Borrowers intend to prepay the Loans in whole,
whether by refinance or payment through cash reserves, the Borrowers shall give
Lender not less than thirty (30) days' prior written notice of Borrowers'
intention to prepay (which notice shall be irrevocable) and (unless the
refinance of the Loans is accomplished through the Lender) pay to Lender an
additional sum (the "PREPAYMENT CONSIDERATION") equal to:
(i) $75,000 if the Loan is prepaid during the year 1997;
and
(ii) $50,000 if the Loan is prepaid during the year 1998;
15
Any prepayment will also be accompanied by payment of all accrued and
unpaid interest due to the date of prepayment on the principal amount prepaid
and all other fees, expenses and other sums due and owing under the Loan
Documents. Any partial prepayment will be applied to installments of principal
due in their inverse order of maturity. The Prepayment Consideration shall
apply to a voluntary or involuntary prepayment, whether by acceleration of the
Loans upon a default or otherwise.
SECTION 4. CONDITIONS PRECEDENT
--------------------
4.1 CONDITIONS PRECEDENT TO LOANS. Each of the following is a condition
-----------------------------
precedent to Lender making the Loans hereunder:
(a) Except for encumbrances listed on Schedule 8.4 or permitted under
Section 9.8, Lender shall have received, in form and substance satisfactory to
Lender, all releases, terminations and such other documents as Lender may
request to evidence and effectuate the termination by the existing lender or
lenders to Borrowers of its or their, as the case may be, respective financing
arrangements with Borrowers and the termination and release by it or them, as
the case may be, of any interest in and to any assets and properties of
Borrowers and each Obligor, duly authorized, executed and delivered by it or
each of them, including, but not limited to, (i) UCC termination statements for
all UCC financing statements previously filed by it or any of them or their
predecessors, as secured party and Borrowers or any Obligor, as debtor and (ii)
satisfactions and discharges of any mortgages, deeds of trust or deeds to secure
debt by Borrowers or any Obligor in favor of such existing lender or lenders, in
form acceptable for recording in the appropriate government office;
(b) Lender shall have received evidence, in form and substance
satisfactory to Lender, that Lender has valid perfected and first priority
security interests in and liens upon the Collateral and any other property which
is intended to be security for the Obligations or the liability of any Obligor
in respect thereof, subject only to the security interests and liens permitted
herein or in the other Financing Agreements. Notwithstanding the foregoing,
unless Lender otherwise requests, Borrowers will not be required to perfect the
liens on property owned by Lumex, Cybex Fitness or General Medical, provided,
however, that in the event that the Loans remain outstanding for a period of six
(6) months
16
from the date of execution any and all documents necessary to grant a
perfected first lien security interest on the property owned by Lumex, Cybex
Fitness or General Medical, if such company is still in existence;
(c) all requisite corporate action and proceedings in connection with
this Agreement and the other Financing Agreements shall be satisfactory in form
and substance to Lender, and Lender shall have received all information and
copies of all documents, including, without limitation, records of requisite
corporate action and proceedings which Lender may have requested in connection
therewith, such documents where requested by Lender or its counsel to be
certified by appropriate corporate officers or governmental authorities;
(d) no material adverse change shall have occurred in the assets,
business or prospects of Borrowers since the date of Lender's latest field
examination (or if none, Borrowers' latest audited financial statements) and no
change or event shall have occurred which would impair the ability of Borrowers
or any Obligor to perform its Obligations hereunder or under any of the other
Financing Agreements to which it is a party or of Lender to enforce the
Obligations or realize upon the Collateral, except as described on Schedule
4.1(d);
(e) Lender shall have received, in form and substance satisfactory to
Lender, all consents, waivers, acknowledgments and other agreements from third
persons which Lender may deem necessary or desirable in order to permit, protect
and perfect its security interests in and liens upon the Collateral or to
effectuate the provisions or purposes of this Agreement and the other Financing
Agreements, including, without limitation, acknowledgements by lessors,
mortgagees and warehousemen of Lender's security interests in the Collateral,
waivers by such persons of any security interests, liens or other claims by such
persons to the Collateral and agreements permitting Lender access to, and the
right to remain on, the premises to exercise its rights and remedies and
otherwise deal with the Collateral;
(f) Lender shall have received evidence of insurance and loss payee
endorsements required hereunder and under the other Financing Agreements, in
form and substance satisfactory to Lender,
17
and certificates of insurance policies and/or endorsements naming Lender as loss
payee;
(g) Lender shall have received, in form and substance satisfactory to
Lender, such opinion letters of counsel to Borrowers with respect to the
Financing Agreements and such other matters as Lender may request; and
(h) the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to Lender,
in form and substance satisfactory to Lender.
(i) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material respects
with the same effect as though such representations and warranties had been made
on and as of the date of the making of each such Loan and after giving effect
thereto;
(j) no Event of Default and no event or condition which, with notice
or passage of time or both, would constitute an Event of Default, shall exist or
have occurred and be continuing on and as of the date of the making of such Loan
and after giving effect thereto; and
(k) Lender shall have received a "compliance certificate" to such
effect executed by the chief financial officer of each of the Borrowers.
SECTION 5. GRANT OF SECURITY INTEREST
--------------------------
To secure payment and performance of all Obligations, Borrowers hereby
grant to Lender a continuing security interest in, a lien upon, a right of set
off against, or a mortgage upon, and hereby assign to Lender as security, the
following property and interests in property, whether now owned or hereafter
acquired or existing, and wherever located (collectively, the "COLLATERAL");
provided, however, that the Collateral specifically excludes (1) any lease of
equipment which is sold or assigned to a third party or financed with a third
party (in each case other than the Lender), (2) all Accounts and Receivables
arising out of any such lease and (3) the Equipment covered by any such lease:
18
5.1 ACCOUNTS;
---------
5.2 All present and future contract rights, general intangibles
(including, but not limited to, tax and duty refunds), registered and
unregistered patents, trademarks, service marks, copyrights, trade names,
applications for the foregoing, trade secrets, goodwill, processes, drawings,
blueprints, customer lists, licenses, whether as licensor or licensee,
(including, without limitation, licenses issued by any governmental agency),
permits, choses in action and other claims and existing and future leasehold
interests in equipment, real estate and fixtures), chattel paper, documents,
instruments, letters of credit, bankers' acceptances and guaranties;
5.3 All present liens, security interests, rights, remedies, title and
interest in, to and in respect of Accounts and other Collateral, including,
without limitation, (a) rights and remedies under or relating to guaranties,
contracts of suretyship, letters of credit and credit and other insurance
related to the Collateral, (b) rights of stoppage in transit, replevin,
repossession, reclamation and other rights and remedies of an unpaid vendor,
lienor or secured party, (c) goods described in invoices, documents, contracts
or instruments with respect to, or otherwise representing or evidencing,
Accounts or other Collateral, including, without limitation, returned,
repossessed and reclaimed goods, and (d) deposits by and property of account
debtors or other persons securing the obligations of account debtors;
5.4 INVENTORY AND GOODS;
--------------------
5.5 MACHINERY AND EQUIPMENT;
------------------------
5.6 Mortgage(s) on the real property of the Borrowers, or each of them as
follows:
(a) Mortgages of Xxxxxxx, Inc., (the "XXXXXXX MORTGAGE") on real
property located at 00 Xxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx, which mortgages
were dated February 2, 1996 in the amount of $3,779,069 and a second mortgage of
even date (the "SECOND MORTGAGE") in the amount of $12,000,000. The Second
Mortgage in the amount of $12,000,000 shall be modified to reflect a total
principal sum of $19,800,000 and shall secure all of the obligations of the
Borrowers to the Lenders; and
19
5.7 RECORDS; and
--------
5.8 All products and proceeds of the foregoing, in any form, including,
without limitation, dividends and insurance proceeds and all claims against
third parties for loss or damage to or destruction of any or all of the
foregoing.
5.9 REAFFIRMATION BY BORROWERS OF EXISTING COLLATERAL. This Agreement
-------------------------------------------------
evidences in part the assumption by all Borrowers of the Xxxxxxx Loans due the
Lender by Xxxxxxx and Xxxxxxx Holding. It is the intention of the Borrowers that
all existing Collateral pledged or hypothecated to the Lender by Xxxxxxx and
Xxxxxxx Holding continue to serve as collateral security for the Obligations of
the Borrowers assumed or created pursuant to this Agreement. Accordingly, the
Borrowers hereby represent, warrant and reaffirm to the Lender that it is the
intention that all existing collateral security held by the Lender shall
continue to serve as Collateral for the Loans and any other liabilities due the
Lender by the Borrowers and until the Loans are paid in full, the security
interests and mortgages held by the Lender shall otherwise continue in full
force and legal effect.
SECTION 6. COLLECTION AND ADMINISTRATION
-----------------------------
6.1 BORROWERS' LOAN ACCOUNT. Lender shall maintain one or more loan
-----------------------
account(s) on its books in which shall be recorded (a) all Loans and other
Obligations and the Collateral, (b) all payments made by or on behalf of
Borrowers and (c) all other appropriate debits and credits as provided in this
Agreement, including, without limitation, fees, charges, costs, expenses and
interest. All entries in the loan account(s) shall be made in accordance with
Lender's customary practices as in effect from time to time.
6.2 STATEMENTS. Lender shall render to Borrowers each month a statement
----------
setting forth the balance in the Borrowers' loan account(s) maintained by Lender
for Borrowers pursuant to the provisions of this Agreement, including principal,
interest, fees, costs and expenses. Each such statement shall be subject to
subsequent adjustment by Lender but shall, absent manifest errors or omissions,
be considered correct and deemed accepted by Borrowers and conclusively binding
upon Borrowers as an account stated except to the extent that Lender receives a
written notice
20
from Borrowers of any specific exceptions of Borrowers thereto within thirty
(30) days after the date such statement has been mailed by Lender. Until such
time as Lender shall have rendered to Borrowers a written statement as provided
above, the balance in Borrowers' loan account(s) shall be presumptive evidence
of the amounts due and owing to Lender by Borrowers.
6.3 PAYMENTS. All Obligations shall be payable at Lender's office or as
--------
Lender may designate from time to time. Lender may apply payments received or
collected from Borrowers or for the account of Borrowers (including, without
limitation, the monetary proceeds of collections or of realization upon any
Collateral) to such of the Obligations, whether or not then due, in such order
and manner as Lender determines. At Lender's option, all principal, interest,
fees, costs, expenses and other charges provided for in this Agreement or the
other Financing Agreements may be charged directly to the loan account(s) of
Borrowers. Borrowers shall make all payments to Lender on the Obligations free
and clear of, and without deduction or withholding for or on account of, any
set-off, counterclaim, defense, duties, taxes, levies, posts, fees, deductions,
withholding, restrictions or conditions of any kind. If after receipt of any
payment of, or proceeds of Collateral applied to the payment of, any of the
Obligations, Lender is required to surrender or return such payment or proceeds
to any Person for any reason, then the Obligations intended to be satisfied by
such payment or proceeds shall be reinstated and continue and this Agreement
shall continue in full force and effect as if such payment or proceeds had not
been received by Lender. Borrowers shall be liable to pay to Lender, and do
hereby indemnify and hold Lender harmless for the amount of any payments or
proceeds surrendered or returned. This Section 6.3 shall remain effective
notwithstanding any contrary action which may be taken by Lender in reliance
upon such payment or proceeds. This Section 6.3 shall survive the payment of the
Obligations and the termination or nonrenewal of this Agreement.
6.4 AUTHORIZATION TO MAKE LOANS. Lender is authorized to make the Loans
---------------------------
based upon telephonic or other instructions received from anyone purporting to
be an officer of Borrowers or other authorized person who is listed on a list of
authorized officers provided to Lender, provided that the Borrower shall confirm
any telephonic messages by a writing signed by an authorized officer of the
Borrower. All requests for Loans hereunder shall specify the
21
date on which the requested advance is to be made (which day shall be a business
day) and the amount of the requested Loan. Requests received after 11:00 a.m.
Eastern time on any day shall be deemed to have been made as of the opening of
business on the immediately following business day. All Loans under this
Agreement shall be conclusively presumed to have been made to, and at the
request of and for the benefit of, Borrowers when deposited to the credit of
Borrowers or otherwise disbursed or established in accordance with the
instructions of Borrowers or in accordance with the terms and conditions of this
Agreement.
6.5 USE OF PROCEEDS. Borrowers shall use the proceeds of the Loans
---------------
provided by Lender to Borrowers hereunder only for the following purposes: (a)
merger costs incurred in the merger of Merger Sub with Xxxxxxx, severance
payments to employees of the Borrowers, closing of industrial facilities and/or
office locations, and movement of manufacturing facilities; (b) working capital
and general corporate purposes; (c) to refinance or repay the Norwest Mortgage
loan due by Cybex and the mortgage loan on the Ronkonkoma real estate; and (d)
costs, expenses and fees in connection with the preparation, negotiation,
execution and delivery of this Agreement and the other Financing Agreements.
None of the proceeds will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security or for the purposes of reducing or
retiring any indebtedness which was originally incurred to purchase or carry any
margin security or for any other purpose which might cause any of the Loans to
be considered a "purpose credit" within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System, as amended.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
----------------------------------
7.1 COLLATERAL REPORTING. Borrowers shall provide Lender with the
--------------------
following documents in a form satisfactory to Lender:
(a) as required by Lender, a schedule of Accounts;
(b) as required by Lender a certification by Borrowers' Chief
Financial Officer certifying the amount of finished goods, raw materials, and
inventory of Borrowers;
(c) upon Lender's request, (i) copies of customer statements and
credit memos, remittance advises and reports, and
22
copies of deposit orders, invoices and delivery documents for Inventory and
Equipment acquired by Borrowers; deposit slips and bank statements; (ii) copies
of shipping and delivery documents; and (iii) copies of purchase orders,
invoices and delivery documents for Inventory and Equipment acquired by
Borrowers;
(d) such other reports as to the Collateral as Lender shall request
from time to time.
If any of Borrowers' records or reports of the Collateral are prepared or
maintained by an accounting service, contractor shipper or other agent,
Borrowers hereby irrevocably authorize such service, contractor, shipper or
agent to deliver such records, reports, and related documents to Lender and to
follow Lender's instructions with respect to further services at any time that
an Event of Default exists or has occurred and is continuing.
7.2 ACCOUNTS COVENANTS.
------------------
(a) If requested by the Lender, Borrowers shall notify Lender promptly
of: (i) any material delay in Borrowers' performance of any of their obligations
to any account debtor or the assertion of any claims, offsets, defenses or
counterclaims by any account debtor, or any disputes with account debtors, or
any settlement, adjustment or compromise thereof and (ii) all material adverse
information relating to the financial condition of any account debtor. No
credit, discount, allowance or extension or agreement for any of the foregoing
shall be granted to any account debtor without Lender's consent, except in the
ordinary course of Borrower's business in accordance with practices and policies
previously disclosed in writing to Lender. So long as no Event of Default
exists or has occurred and is continuing, Borrowers shall settle, adjust or
compromise any claim, offset, counterclaim or dispute with any account debtor.
At any time that an Event of Default exists or has occurred and is continuing,
Lender shall, at its option, have the exclusive right to settle, adjust or
compromise any claim, offset, counterclaim or dispute with account debtors or
grant any credits, discounts or allowances.
(b) With respect to each Account: (i) the amounts shown on any invoice
delivered to Lender or schedule thereof delivered to Lender shall be true and
complete, (ii) no credit, discount, allowance or extension or agreement for any
of the foregoing shall
23
be granted to any account debtor except as reported to Lender in accordance with
this Agreement and except for credits, discounts, allowances or extensions made
or given in the ordinary course of Borrowers' business in accordance with
practices and policies previously disclosed to Lender, (iii) there shall be no
set-offs, deductions, contracts, defenses, counterclaims or disputes existing or
asserted with respect thereto except as reported to Lender in accordance with
the terms of this Agreement, (iv) none of the transactions giving rise thereto
will violate any applicable State or Federal laws or regulations, all
documentation relating thereto will be legally sufficient under such laws and
regulations and all such documentation will be legally enforceable in accordance
with its terms.
(c) Lender shall have the right at any time or times, in Lender's name
or in the name of a nominee of Lender, to verify the validity, amount or any
other matter relating to any Account or other Collateral, by mail, telephone,
facsimile transmission or otherwise.
(d) Borrowers shall deliver or cause to be delivered to Lender, with
appropriate endorsement and assignment, with full recourse to Borrowers, all
chattel paper and instruments which Borrowers now owns or may at any time
acquire immediately upon Borrowers' receipt thereof, except as Lender may
otherwise agree.
(e) Lender may, at any time that an Event of Default exists or has
occurred and is continuing, (i) notify any or all account debtors that the
Accounts have been assigned to Lender and that Lender has a security interest
therein and Lender may direct any or all accounts debtors to make payment of
Accounts directly to Lender, (ii) extend the time of payment of, compromise,
settle or adjust for cash credit, return of merchandise or otherwise, and upon
any terms or. conditions, any and all Accounts or other obligations included in
the Collateral and thereby discharge or release the account debtor or any other
party or parties in any way liable for payment thereof without affecting any of
the Obligations, (iii) demand, collect or enforce payment of any Accounts or
such other obligations, but without any duty to do so, and Lender shall not be
liable for its failure to collect or enforce the payment thereof nor for the
negligence of its agents or attorneys with respect thereto and (iv) take
whatever other action Lender may deem necessary or desirable for the protection
of its
24
interests. At any time that an Event of Default exists or has occurred and is
continuing, at Lender's request, all invoices and statements sent to any account
debtor shall state that the Accounts and such other obligations have been
assigned to Lender and are payable directly and only to Lender and Borrowers
shall deliver to Lender such originals of documents evidencing the sale and
delivery of goods or the performance of services giving rise to any Accounts as
Lender may require.
7.3 INVENTORY COVENANTS. With respect to the Inventory: (a) Borrowers
-------------------
shall at all times maintain inventory records reasonably satisfactory to Lender,
keeping correct and accurate records itemizing and describing the kind, type,
quality and quantity of Inventory, Borrowers' cost therefor and withdrawals
therefrom and additions thereto; (b) only in the event of default, the Bank may
request and the Borrowers shall conduct a physical count of the Inventory at
least once each year, but at any time or times as Lender may request on or after
an Event of Default, and promptly following such physical inventory shall supply
Lender with a report in the form and with such specificity as may be reasonably
satisfactory to Lender concerning, such physical count; (c) except for
demonstration and show equipment in the ordinary course of business, Borrowers
shall not remove any Inventory from the locations set forth or permitted herein,
without the prior written consent of Lender, except for sales of Inventory in
the ordinary course of Borrowers' business and except to move Inventory directly
from one location set forth or permitted herein to another such location; (d)
Borrowers shall, at their expense, at any time as Lender may request on or after
an Event of Default, deliver or cause to be delivered to Lender written reports
or appraisals as to the Inventory in form, scope and methodology acceptable to
Lender and by an appraiser acceptable to Lender, addressed to Lender or upon
which Lender is expressly permitted to rely; (e) Borrowers shall produce, use,
store and maintain the Inventory, with all reasonable care and caution and in
accordance with applicable standards of any insurance and in conformity with
applicable laws (including, but not limited to, the requirements of the Federal
Fair Labor Standards Act of 1938, as amended and all rules, regulations and
orders related thereto); (f) Borrowers assume all responsibility and liability
arising from or relating to the production, use, sale or other disposition of
the Inventory; (g) except for demonstration and show equipment in the ordinary
course of business, Borrowers shall not sell Inventory to any customer on
25
approval, or any other basis which entitles the customer to return or may
obligate Borrowers to repurchase such Inventory; (h) Borrowers shall keep the
Inventory in good and marketable condition; and (i) Borrowers shall not, without
prior written notice to Lender, acquire or accept any Inventory on consignment
or approval.
7.4 EQUIPMENT COVENANTS. With respect to the Equipment: (a) upon Lender's
-------------------
request, Borrowers shall, at their expense, at any time as Lender may request on
or after an Event of Default, deliver or cause to be delivered to Lender written
reports or appraisals as to the Equipment in form, scope and methodology
acceptable to Lender and by an appraiser acceptable to Lender; (b) Borrowers
shall keep the Equipment in good order, repair, and marketable condition
(ordinary wear and tear excepted); (c) Borrowers shall use the Equipment with
all reasonable care and caution and in accordance with applicable standards of
any insurance and in conformity with all applicable laws; (d) the Equipment is
and shall be used in Borrowers' business and not for personal, family, household
or farming use; (e) Borrowers shall not remove any Equipment from the locations
set forth or permitted herein, except to the extent necessary to have any
Equipment repaired or maintained in the ordinary course of the business of
Borrowers or to move Equipment directly from one location set forth or permitted
herein to another such location and except for the movement of motor vehicles
used by or for the benefit of Borrowers in the ordinary course of business; (f)
the Equipment is now and shall remain personal property and Borrowers shall not
permit any of the Equipment to be or become a part of or affixed to real
property; and (g) Borrowers assume all responsibility and liability arising from
the use of the Equipment.
7.5 POWER OF ATTORNEY. Borrowers hereby irrevocably designate and appoint
-----------------
Lender (and all persons designated by Lender) as Borrowers' true and lawful
attorney-in-fact, and authorize Lender, in Borrowers' or Lender's name, to: (a)
at any time an Event of Default or event which with notice or passage of time or
both would constitute an Event of Default exists or has occurred and is
continuing (i) demand payment on Accounts or other proceeds of Inventory or
other Collateral, (ii) enforce payment of Accounts by legal proceedings or
otherwise, (iii) exercise all of Borrowers' rights and remedies to collect any
Account or other Collateral, (iv) sell or assign any Account upon such terms,
for such amount
26
and at such time or times as the Lender deems advisable, (v) settle, adjust,
compromise, extend or renew an Account, (vi) discharge and release any Account,
(vii) prepare, file and sign Borrowers' name on any proof of claim in bankruptcy
or other similar document against an account debtor, (viii) notify the post
office authorities to change the address for delivery of Borrower's mail to an
address designated by Lender, and open and dispose of all mail addressed to
Borrowers, (ix) take control in any manner of any item of payment or proceeds
thereof, (x) have access to any lockbox or postal box into which Borrowers' mail
is deposited,and (xi) do all acts and things which are necessary, in Lender's
determination, to fulfill Borrowers' obligations under this Agreement and the
other Financing Agreements and (b) at any time to (i) endorse Borrowers' name
upon any items of payment or proceeds thereof and deposit the same in the
Lender's account for application to the Obligations, (ii) endorse Borrowers'
name upon any chattel paper, document, instrument, invoice, or similar document
or agreement relating to any Account or any goods pertaining thereto or any
other Collateral, (iii) sign Borrowers' name on any verification of Accounts and
notices thereof to account debtors and (iv) execute in Borrowers' name and file
any UCC financing statements or amendments thereto. Borrowers hereby release
Lender and its officers, employees and designees from any liabilities arising
from any act or acts under this power of attorney and in furtherance thereof,
whether of omission or commission, except as a result of Lender's own gross
negligence or wilful misconduct as determined pursuant to a final non-appealable
order of a court of competent jurisdiction.
7.6 RIGHT TO CURE. Lender may, at its option, (a) cure any default by
-------------
Borrowers under any agreement with a third party or pay or bond on appeal any
judgment entered against a Borrower (b) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with respect
to the Collateral and (c) pay any amount, incur any expense or perform any act
which, in Lender's judgment, is necessary or appropriate to preserve, protect,
insure or maintain the Collateral and the rights of Lender with respect thereto.
Lender may add any amounts so expended to the Obligations and charge Borrowers'
account therefor, such amounts to be repayable by Borrowers on demand. Lender
shall be under no obligation to effect such cure, payment or bonding and shall
not, by doing so, be deemed to have assumed any obligation or liability of
Borrowers. Any payment made or other action taken by Lender
27
under this Section shall be without prejudice to any right to assert an Event of
Default hereunder and to proceed accordingly.
7.7 ACCESS TO PREMISES. From time to time as requested by Lender, at the
------------------
cost and expense of Borrowers after an Event of Default, (a) Lender or its
designee shall have complete access to all of Borrowers' premises during normal
business hours and after notice to Borrowers, or at any time and without notice
to Borrowers if an Event of Default exists or has occurred and is continuing,
for the purposes of inspecting, verifying and auditing the Collateral and all of
Borrowers' books and records, including, without limitation, the Records, and
(b) Borrowers shall promptly furnish to Lender such copies of such books and
records or extracts therefrom as Lender may request, and (c) Lender shall have
use free of charge during normal business hours of such of Borrowers' personnel,
equipment, supplies and premises as may be reasonably necessary for the
foregoing and if an Event of Default exists or has occurred and is continuing
for the collection of Accounts and realization of other Collateral.
7.8 AUDIT OF ACCOUNTS RECEIVABLES. The Lender or its designee shall have
-----------------------------
reasonable access to books and receivables of the Borrowers and the Borrowers
shall comply with all reasonable requests of the Lender to supply information
including but not limited to a review and/or audit of the accounts receivable by
the Lender or its designee. All reasonable costs and expenses incurred by the
Lender in inspecting and reviewing the financial information of the Borrowers
including, if required by the Lender, an audit of the accounts receivable, shall
be paid by the Borrowers.
7.9 ADDITIONAL COLLATERAL. Borrowers and the Guarantors agree to pledge
----------------------
as additional collateral for the repayment of the Loans the following real and
personal property:
1. A mortgage in the amount of $3,000,000 on the real and
personal property located at the Borrower's facility in Ronkonkoma, New York.
It is specifically agreed by the Borrowers that the Borrowers shall execute the
Mortgage on the above-referenced property on the date hereof. However, said
Mortgage shall not be recorded with the appropriate recording office in the
County of Suffolk for a period of six (6) months from the date of this
Agreement. The purpose of this delay in recording said Mortgage is to permit
the Borrowers to complete the sale of the
28
Ronkonkoma facility. In the event that the facility is not sold within six (6)
months, the aforesaid Mortgage may be recorded with the appropriate recording
officer in the County of Suffolk, New York. The Borrowers represent and warrant
that subsequent to the date of this Agreement and prior to the expiration of six
(6) months from same, the Borrowers shall not mortgage, pledge or otherwise
encumber the real and personal property owned by the Borrowers and located in
Ronkonkoma, New York.
2. The Borrowers and the Lender acknowledge that the lien of
the Lender on all personal property, fixtures, furniture, equipment, inventory,
account receivable and chattel paper owned by the Borrowers and located in the
Borrowers' facility in Owatonna, Minnesota ("OWATONNA COLLATERAL") is subject to
a prior lien by Norwest Bank Minnesota South N.A. The Borrowers represent and
warrant that Norwest Bank Minnesota South N.A. has agreed to limit the lien of
the prior filing to personal property, fixtures and equipment located on the
premises as of the date of the execution of this Agreement and said lien shall
not attach to any additions or substitutions of the Owatonna Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
------------------------------
Borrowers hereby represent and warrant to Lender the following (which
shall survive the execution and delivery of this Agreement), the truth and
accuracy of which are a continuing condition of the making of Loans by Lender to
Borrowers:
8.1 CORPORATE EXISTENCE, POWER AND AUTHORITY: SUBSIDIARIES. Each Borrower
------------------------------------------------------
is a corporation duly organized and in good standing under the laws of its state
of incorporation and is duly qualified as a foreign corporation and in good
standing in all states or other jurisdictions where the nature and extent of the
business transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify
would not have a material adverse effect on each Borrower's financial condition,
results of operation or business or the rights of Lender in or to any of the
Collateral. The execution, delivery and performance of this Agreement, the other
Financing Agreements and the transactions contemplated hereunder and thereunder
are all within Borrowers' corporate powers, have been duly authorized and are
not in contravention of
29
law or the terms of each Borrower's certificate of incorporation, bylaws, or
other organizational documentation, or any indenture, agreement or undertaking
to which each Borrower is a party or by which each Borrower or its property are
bound. This Agreement and the other Financing Agreements constitute legal, valid
and binding obligations of each Borrower enforceable in accordance with their
respective terms. Xxxxxxx does not have any subsidiaries except for Xxxxxxx
Holding, and Xxxxxxx Holding owns no assets except for the trademarks and/or
tradenames listed on the attached information sheet.
8.2 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE. All financial
------------------------------------------------
statements relating to Borrowers which have been or may hereafter be delivered
by Borrowers to Lender have been prepared in accordance with GAAP and fairly
present the financial condition and the results of operation of Borrowers as at
the dates and for the periods set forth therein. Except as disclosed in any
interim financial statements furnished by Borrowers to Lender prior to the date
of this Agreement, there has been no material adverse change in the assets,
liabilities, properties and condition, financial or otherwise, of Borrowers
since the date of the most recent audited financial statements furnished by
Borrowers to Lender prior to the date of this Agreement.
8.3 CHIEF EXECUTIVE OFFICE; COLLATERAL LOCATIONS. The chief executive
--------------------------------------------
office of Borrowers and Borrowers' Records concerning Accounts are located only
at 00 Xxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx and its other places of business and
the only other locations of Collateral, if any, are the addresses set forth in
the Information Certificate, subject to the right of Borrowers to establish new
locations in accordance with Section 9.2 below. The Information Certificate
correctly identifies any of such locations which are not owned by Borrowers and
sets forth the owners and/or operators thereof and, to the best of Borrowers'
knowledge, the holders of any mortgages on such locations.
8.4 PRIORITY OF LIENS; TITLE TO PROPERTIES. The security interests,
--------------------------------------
mortgages and liens granted to Lender under this Agreement and the other
Financing Agreements constitute valid and perfected first priority liens and
security interests in and upon the Collateral subject only to the liens
indicated on Schedule 8.4 hereto and the other liens permitted under Section 9.8
hereof (it being understood that unless Lender otherwise requests, Borrowers
30
will not be required to perfect the liens on property owned by Lumex, Cybex
Fitness or General Medical, provided, however, that in the event that the Loans
remain outstanding for a period of six (6) months from the date of execution any
and all documents necessary to grant a perfected first lien security interest on
the property owned by Lumex, Cybex Fitness or General Medical, if such company
is still in existence. Borrowers have good and marketable title to all of their
properties and assets subject to no liens, mortgages, pledges, security
interests, encumbrances or charges of any kind, except those granted to Lender
and such others as are specifically listed on Schedule 8.4 hereto or permitted
under Section 9.8 hereof.
8.5 TAX RETURNS. Each Borrower has filed, or caused to be filed, in a
-----------
timely manner all tax returns, reports and declarations which are required to be
filed by it (without requests for extension, except as previously disclosed in
writing to Lender) the failure of which to file would result in material adverse
consequences to the Borrowers as a whole or would jeopardize or result in a lien
on any of the Collateral. All information in such tax returns, reports and
declarations is complete and accurate in all material respects. Each Borrower
has paid or caused to be paid all taxes due and payable or claimed due and
payable in any assessment received by it, except taxes the validity of which are
being contested in good faith by appropriate proceedings diligently pursued and
available to each Borrower and with respect to which adequate reserves have been
set aside on its books. Adequate provision has been made for the payment of all
accrued and unpaid Federal, State, county, local, foreign and other taxes
whether or not yet due and payable and whether or not disputed.
8.6 LITIGATION. Except as set forth on the Information Certificate, there
----------
is no present investigation by any governmental agency pending, or to the best
of Borrowers' knowledge threatened, against or affecting any Borrower, its
assets or business and there is no action, suit, proceeding or claim by any
Person pending, or to the best of Borrowers' knowledge threatened, against
Borrowers or their assets or goodwill, or against or affecting any transactions
contemplated by this Agreement, which if adversely determined against such
Borrowers would result in any material adverse change in the assets, business or
prospects of Borrowers or would impair the ability of Borrowers to perform their
obligations hereunder or under any of the other Financing Agreements to which
31
it is a party or of Lender's ability to enforce any Obligations or realize upon
any Collateral.
8.7 COMPLIANCE WITH OTHER AGREEMENTS AND APPLICABLE LAWS. Borrowers are
----------------------------------------------------
not in default in any material respect under, or in violation in any material
respect of any of the terms of, any material agreement, contract, instrument,
lease or other commitment to which it is or they are a party or by which it is
or they are or any of its or their assets are bound and Borrowers are in
compliance in all material respects with all applicable provisions of laws,
rules, regulations, licenses, permits, approvals and orders of any foreign,
Federal, State or local governmental authority. Schedule 8.7 hereto is a
complete and accurate list of all governmental licenses and permits issued to
Borrowers and that are necessary or useful in the operation of their business.
8.8 ACCURACY AND COMPLETENESS OF INFORMATION. All information furnished
----------------------------------------
by or on behalf of Borrowers in writing to Lender in connection with this
Agreement or any of the other Financing Agreements or any transact ion
contemplated hereby or thereby, including without limitation, all information on
the Information Certificate is true and correct in all material respects on the
date as of which such information is dated or certified and does not omit any
material fact necessary in order to make such information not misleading. No
event or circumstance has occurred which has had or could reasonably be expected
to have a material adverse affect on the business, assets or prospects of
Borrowers, which has not been fully and accurately disclosed to Lender in
writing.
8.9 CORPORATE STRUCTURE. Cybex, Cybex Financial, Eagle Performance, Cybex
-------------------
Fitness, General Medical, Lumex and Xxxxxxx are wholly-owned subsidiaries of
Cybex. Xxxxxxx Holding is a wholly owned subsidiary of Xxxxxxx.
8.10 ENVIRONMENTAL MATTERS.
---------------------
(a) To the knowledge of Borrowers, none of the Borrowers or any of its
subsidiaries has used, stored, treated, transported, manufactured, refined,
generated, handled, produced or disposed of any Hazardous Materials on, under,
at, from, or in any way affecting any of their properties or assets, or
otherwise, in any manner in violation of any Environmental Law, except in each
32
instance such violations as in the aggregate would not have a material adverse
effect upon the Borrowers and their subsidiaries taken as a whole.
(b) To the knowledge of Borrowers, and except as set forth in Schedule
8.10, none of the Borrowers or their subsidiaries has any obligations or
liabilities, known or unknown, matured or not matured, absolute or contingent,
assessed or unassessed, where such would reasonably be expected to have a
materially adverse effect on Borrowers or its subsidiaries taken as a whole, and
no Environmental Actions have been filed against Borrowers or their subsidiaries
or any of their respective employees, agents, representatives or predecessors in
interest in connection with or in any way arising from or relating to Borrowers
or their subsidiaries or any of their respective properties, or relating to or
arising from or attributable, in whole or in part, to the manufacturing,
processing, distributing, using, treating, storing, disposing, transporting or
handling of any Hazardous Materials, by any other Person at or on or under any
of the real properties owned or used by Borrowers or their subsidiaries or any
other location where any of the foregoing could reasonably be expected to have a
materially adverse effect.
8.11 EXCLUSION OF CERTAIN SUBSIDIARIES. The Borrowers represent and
----------------------------------
warrant that the Borrowers' financial condition as of June 30, 1997 will comply
with the covenants contained in paragraphs 9.12, 9.14 and 9.15 of this Agreement
without any consideration of the assets and liabilities of the following
subsidiaries: Lumex, Cybex Fitness and General Medical.
8.12 SURVIVAL OF WARRANTIES; CUMULATIVE. All representations and
----------------------------------
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Lender on the date of each additional borrowing or
other credit accommodation hereunder and shall be conclusively presumed to have
been relied on by Lender regardless of any investigation made or information
possessed by Lender. The representations and warranties set forth herein shall
be cumulative and in addition to any other representations or warranties which
Borrowers shall now or hereafter give, or cause to be given, to Lender.
33
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
----------------------------------
9.1 MAINTENANCE OF EXISTENCE. Except for mergers among the Borrowers,
------------------------
each Borrower shall at all times preserve, renew and keep in full force and
effect its corporate existence and rights and franchises with respect thereto
and maintain in full force and effect all permits, licenses, trademarks,
tradenames, approvals, authorizations, leases and contracts necessary to carry
on the business as presently or proposed to be conducted. Lender hereby
consents to the dissolution of Cybex Fitness and Lumex. Each Borrower shall
give Lender thirty (30) days' prior written notice of any proposed change in its
corporate name, which notice shall set forth its new name and Borrowers shall
deliver to Lender a copy of the amendment to the certificate of incorporation of
such Borrower providing for the name change certified by the Secretary of State
of the jurisdiction of incorporation of such Borrower as soon as it is
available.
9.2 NEW COLLATERAL LOCATIONS. Borrowers may open any new location within
------------------------
the continental United States provided Borrowers (a) give Lender thirty (30)
days prior written notice of the intended opening of any such new location and
(b) execute and deliver, or cause to be executed and delivered, to Lender such
agreements, documents, and instruments as Lender may deem reasonably necessary
or desirable to protect their interests in the Collateral at such location,
including, without limitation, UCC financing statements.
9.3 COMPLIANCE WITH LAWS RELATIONS, ETC. Each Borrower shall, at all
-----------------------------------
times, comply in all material respects with all laws, rules, regulations,
licenses, permits, approvals and orders of any Federal, State or local
governmental authority applicable to it.
9.4 PAYMENT OF TAXES AND CLAIMS. Each Borrower shall duly pay and
---------------------------
discharge all taxes, assessments, contributions and governmental charges upon or
against it or its properties or assets the failure of which to pay shall result
in material adverse consequences to the Borrowers as a whole or would jeopardize
or result in a lien on any of the Collateral, except for taxes the validity of
which are being contested in good faith by appropriate proceedings diligently
pursued and available to Borrowers and with respect to which adequate reserves
have been set aside on its books. Borrowers shall be liable for any tax or
penalties imposed
34
on Lender as a result of the financing arrangements provided for herein
and Borrowers agree to indemnify and hold Lender harmless with respect
to the foregoing, and to repay to Lender on demand the amount thereof,
and until paid by Borrowers such amount shall be added and deemed part of the
Loans, provided, that, nothing contained herein shall be construed to require
-------- ----
Borrowers to pay any income or franchise taxes attributable to the income of
Lender from any amounts charged or paid hereunder to Lender. The foregoing
indemnity shall survive the payment of the Obligations and the termination or
non-renewal of this Agreement.
9.5 INSURANCE. Borrowers shall, at all times, maintain with financially
---------
sound and reputable insurers insurance with respect to the Collateral against
loss or damage and all other insurance of the kinds and in the amounts
customarily insured against or carried by corporations of established reputation
engaged in the same or similar businesses and similarly situated. Said policies
of insurance shall be satisfactory to Lender as to form, amount and insurer.
Borrowers shall furnish certificates, policies or endorsements to Lender as
Lender shall require as proof of such insurance, and, if Borrowers fail to do
so, Lender is authorized, but not required, to obtain such insurance at the
expense of Borrowers. All policies shall provide for at least thirty (30) days'
prior written notice to Lender of any cancellation or reduction of coverage and
that Lender may act as attorney for Borrowers in obtaining, and at any time an
Event of Default exists or has occurred and is continuing, adjusting, settling,
amending and canceling such insurance. Borrowers shall cause Lender to be named
as a loss payee and an additional insured (but without any liability for any
premiums) under such insurance policies and Borrowers shall obtain non-
contributory lender's loss payable endorsements to all insurance policies in
form and substance satisfactory to Lender. Such lender's loss payable
endorsements shall specify that the proceeds of such insurance shall be payable
to Lender as its interests may appear and further specify that Lender shall be
paid regardless of any act or omission by Borrowers or any of its affiliates.
At its option, Lender may apply any insurance proceeds received by Lender at any
time to the cost of repairs or replacement of Collateral and/or to payment of
the Obligations, whether or not then due, in any order and in such manner as
Lender may determine or hold such proceeds as cash collateral for the
Obligations.
35
9.6 FINANCIAL STATEMENTS AND OTHER INFORMATION
------------------------------------------
(a) Borrowers shall keep proper books and records in which true and
complete entries shall be made of all dealings or transactions of or in relation
to the Collateral and the businesses of Borrowers and their subsidiaries (if
any) in accordance with GAAP and Borrowers shall furnish or cause to be
furnished to Lender: (i) within one hundred twenty (120) days after the end of
each fiscal year, annual audited consolidated financial statements of Borrowers
and their Subsidiaries (including in each case balance sheets, statements of
income and loss, statements of cash flow and statements of shareholders'
equity), and the accompanying notes thereto, all in reasonable detail, fairly
presenting the financial position and the results of the operations of Borrowers
and their Subsidiaries as of the end of and for such fiscal year, together with
the opinion of independent certified public accountants, which accountants shall
be an independent accounting firm selected by Borrowers and reasonably
acceptable to Lender, that such financial statements have been prepared in
accordance with GAAP, and present fairly the results of operations and financial
condition of Borrowers and their Subsidiaries as of the end of and for the
fiscal year then ended; (ii) within one hundred twenty (120) days after the end
of each fiscal year, management or accountant prepared consolidating financial
statements of Cybex and its subsidiaries along with a copy of the management
letter from Cybex auditors, in form, substance and on the terms set forth in (i)
above; (iii) within one hundred twenty (120) days after the end of each fiscal
year, the Securities and Exchange Commission ("SEC") Annual Report (Form 10-k)
of Cybex; (iv) Within forty-five (45) days after the end of each fiscal quarter
other than the fourth quarter, SEC quarterly Report (Form 10Q) of Cybex, all in
reasonable detail, fairly presenting the financial position and the results of
the operations of Borrowers and their Subsidiaries as of the end of and through,
respectively, such fiscal quarter, accompanied by a "COMPLIANCE CERTIFICATE"
executed by the Chief Financial Officer of Cybex, certifying the accuracy of all
representations and warranties of Borrowers hereunder and the absence of an
Event of Default or an event which, with the passage of time or giving of notice
or both, would constitute an Event of Default.
(b) Borrowers shall promptly notify Lender in writing of the details
of (i) any loss, damage, investigation, action, suit,
36
proceeding or claim in excess of $250,000 relating to the Collateral or any
other property which is security for the Loans or which would result in any
material adverse change in Borrowers' business, properties, assets, goodwill or
condition, financial or otherwise and (ii) the occurrence of any Event of
Default or event which, with the passage of time or giving of notice or both,
would constitute an Event of Default.
(c) Borrowers shall promptly, after the sending or filing thereof,
furnish or cause to be furnished to Lender copies of all reports of Cybex sent
to its stockholders generally and copies of all reports and registration
statements which Cybex files with the Securities and Exchange Commission, any
national securities exchange or the National Association of Securities Dealers,
Inc.
(d) Prior to the start of each fiscal year, Borrowers shall provide
Lender annual budget and financial projections of the Borrowers and Borrowers
shall distribute or cause to be distributed to Lender such budgets, forecasts,
projections and other information respecting the Collateral and the businesses
of Borrowers, as Lender may, from time to time, reasonably request. Lender is
hereby authorized to deliver a copy of any financial statement or any other
information relating to the businesses of Borrowers to any court or other
government agency or to any participant or assignee or prospective participant
or assignee. Borrowers hereby irrevocably authorize and direct all accountants
or auditors to deliver to Lender, at Borrowers' expense, copies of the financial
statements of Borrowers and any reports or management letters prepared by such
accountants or auditors on behalf of Borrowers and to disclose to Lender such
information they may have regarding the business of Borrowers. Any documents,
schedules, invoices or other papers delivered to Lender may be destroyed or
otherwise disposed of by Lender one (1) year after the same are delivered to
Lender, except as otherwise designated by Borrowers to Lender in writing.
9.7 SALE OF ASSETS, CONSOLIDATION MERGER, DISSOLUTION, ETC. No Borrowers
-------------- ---------------------------------------
shall, directly or indirectly, (a) except for mergers among Borrowers, merge
into or with or consolidate with any other Person or permit any other Person to
merge into or with or consolidate with it, or (b) sell, assign, lease, transfer,
abandon or otherwise dispose of any stock or indebtedness to any other
37
Person or any of its assets to any other Person (except for (i) sale or
assignment by any Borrower of leases of equipment and the equipment leased,
chattel paper in the ordinary course of its business; (ii) sales of Inventory in
the ordinary course of business and (iii) the disposition of worn-out or
obsolete Equipment or Equipment no longer used in the business of such Borrower
so long as (A) if an Event of Default exists or has occurred and is continuing,
any proceeds of a sale or disposition of chattel paper, inventory or Equipment
no longer used in the business of such Borrower, are paid to Lender and (B) such
sales do not involve Equipment having an aggregate fair market value in excess
of $250,000 for all such Equipment disposed of in any fiscal year of said
Borrower), or (c) form or acquire any subsidiaries, or (d) wind up, liquidate or
dissolve (the Lender consenting to the dissolution of Cybex Fitness and Lumex);
or (e) agree to do any of the foregoing. Notwithstanding the foregoing, (a)
Borrowers may issue stock pursuant to Cybex's Stock Option Plans or Employee
Stock Ownership Plan, (b) sell Equipment, provided that the proceeds of sale are
utilized solely to purchase replacement Equipment, (c) sell the Real Property
owned by the Borrower in Ronkonkoma, New York, and (d) sell the isokenetic
product line of Cybex.
9.8 ENCUMBRANCES. No Borrower shall create, incur, assume or suffer to
------------
exist any security interest, mortgage, pledge, lien, charge or other encumbrance
of any nature whatsoever on any of its assets or properties, including, without
limitation, the Collateral, except: (a)(i) any lease of equipment which is sold
-------
or assigned to a third party or financed with a third party (in each case other
than the Lender), (ii) all Accounts and Receivables arising out of any such
lease and (iii) the Equipment covered by any such lease; (b) liens and security
interests of Lender; (c) liens securing the payment of taxes, either not yet
overdue or the validity of which are being contested in good faith by
appropriate proceedings diligently pursued and available to Borrowers and with
respect to which adequate reserves have been set aide on their books; (d) non-
consensual statutory liens (other than liens securing the payment of taxes)
arising in the ordinary course of Borrowers' businesses to the extent: (i) such
liens secure indebtedness which is not overdue or (ii) such liens secure
indebtedness relating to claims or liabilities which are fully insured and being
defended at the sole cost and expense and at the sole risk of the insurer or
being contested in good faith by
38
appropriate proceedings diligently pursued and available to Borrower, in each
case prior to the commencement of foreclosure or other similar proceedings and
with respect to which adequate reserves have been set aide on their books; (e)
zoning restrictions, easements, licenses, covenants and other restrictions
affecting the use of real property which do not interfere in any material
respect with the use of such real property or ordinary conduct of the businesses
of Borrowers as presently conducted thereon or materially impair the value of
the real property which may be subject thereto, (f) purchase money security
interests in Equipment (including capital leases) and purchase money mortgages
on real estate not to exceed amounts provided in Paragraph 9.9 below, so long as
any security interests and mortgages do not apply to any property of Borrowers
other than Equipment or real estate so acquired, and the indebtedness secured
thereby does not exceed the cost of the Equipment or real estate so acquired, as
the case may be; and (g) the security interests and liens set forth on Schedule
8.4 hereto.
9.9 INDEBTEDNESS. Borrowers shall not incur, create, assume, become or be
------------
liable in any manner with respect to, or permit to exist, any obligations or
indebtedness, except the following:
(a) refinance the Owatonna Facility or pay or satisfy any mortgage or
indebtedness thereon;
(b) the Obligations;
(c) trade obligations and normal accruals in the ordinary course of
business not yet due and payable, or with respect to which the Borrowers are
contesting in good faith the amount or validity thereof by appropriate
proceedings diligently pursued and available to Borrowers, and with respect to
which adequate reserves have been set aside on its books;
(d) purchase money indebtedness, including Capital Leases, not to
exceed at any time $2,500,000.00 in the aggregate in each fiscal year, provided
no Event of Default, or event which with notice or passage of time or both would
constitute an Event of Default, shall exist or have occurred and be continuing
or result from such indebtedness; provided, further, Borrowers' aggregate
increase in purchase money indebtedness in any given fiscal year shall not
exceed $500,000 over the amount of purchase money
39
indebtedness outstanding as of the end of the immediately preceding fiscal year;
(e) obligations or indebtedness set forth on the Information
Certificate, Provided, that, (i) Borrowers may only make regularly scheduled
---------------
payments of principal and interest, but not any prepayments or other non-
mandatory payments, in accordance with the terms of the instruments and
agreements related thereto as in effect on the date hereof; (ii) Borrowers shall
not, directly or indirectly, (A) amend, modify, alter or change the terms of
such indebtedness or any agreement, document, or instrument related thereto in
effect on the date hereof, or (B) redeem, retire, defease, purchase or otherwise
acquire such indebtedness, or set aside or otherwise deposit or invest any sums
for such purpose, and (iii) Borrowers shall furnish to Lender all notices or
demands in connection with such indebtedness either received by Borrowers or on
their behalf, promptly after the receipt thereof, or sent by Borrower or on its
behalf, concurrently with the sending thereof, as the case may be; and
(f) obligations to any shareholder, director or officer of Borrowers
for advances of funds, provided such debt is subordinated to the Obligations
pursuant to a subordination agreement acceptable to Lender and pledged to
Lender;
(g) repurchase obligations of Borrowers referred to in Section 9.10(c)
below; and
(h) Indebtedness of Cybex and its Subsidiaries in respect of the sale
to any third party by Cybex or its Subsidiaries of receivables due under leases
of Cybex' or a Subsidiary's equipment; provided the portion of such Indebtedness
(i) which is recourse to Cybex or any Subsidiary or (ii) in respect of which
Cybex or Subsidiary has issued any guaranty or otherwise has any contingent
obligation; does not exceed, in the aggregate, $12,000,000.
(i) Indebtedness of Cybex and its Subsidiaries in respect of any
equipment leases either funded or financed by third party sources (not
subsidiaries of Borrowers) to a maximum amount of $6,000,000 or leases of
equipment held by the Borrowers and not funded or financed by third parties
which leases will not exceed in the aggregate, $4,000,000.
40
9.10 LOANS, INVESTMENTS, GUARANTEES, ETC. Except with the prior written
-----------------------------------
consent of Lender, no Borrower shall, directly or indirectly, make any loans or
advance money or property to any person, or invest in (by capital contribution,
dividend or otherwise) or purchase or repurchase the stock or indebtedness or
all or a substantial part of the assets or property of any person, or guarantee,
assume, endorse, or otherwise become responsible for (directly or indirectly)
the indebtedness, performance, obligations or dividends of any Person or agree
to do any of the foregoing, except (a) the endorsement of instruments for
------
collection or deposit in the ordinary course of business; (b) investments in:
(i) short-term direct obligations of the United States Government, (ii)
negotiable certificates of deposit issued by any bank satisfactory to Lender,
payable to the order of Borrowers or to bearer and delivered to Lender, and
(iii) commercial paper or other money market instruments rated Al or PI; and (c)
up to an aggregate of $100,000 in addition to the lease obligations set forth in
paragraphs 9.9(h) and (i), at any time in potential liability under repurchase
obligations owed by Borrower to certain equipment lessors in connection with
leases covering products sold by Borrower; provided, that, as to any of the
-------- ----
foregoing which constitute investments, unless waived in writing by Lender,
Borrowers shall take such actions as are deemed necessary by Lender to perfect
the security interest of Lender in such investments.
9.11 DIVIDENDS AND REDEMPTIONS. Provided the payment of dividends on
-------------------------
account of any shares of class of capital stock does not result in the
occurrence of an Event of Default, Cybex shall be permitted to pay dividends or
buy back stock in an amount not to exceed 50% of its net income (and determined
in accordance with GAAP). Except as provided in the immediately preceding
sentence, Cybex shall not, directly or indirectly, declare or pay any dividends
on account of any shares of class of capital stock of Cybex now or hereafter
outstanding, or set aide or otherwise deposit or invest any sums for such
purpose, or redeem, retire, defease, purchase or otherwise acquire any shares of
any class of capital stock (or set aside or otherwise deposit or invest any sums
for such purpose) for any consideration other than common stock or apply or set
apart any sum, or make any other distribution (by reduction of capital or
otherwise) in respect of any such shares or dilute in any manner its capital
stock or agree to do any of the foregoing.
41
9.12 MINIMUM ADJUSTED TANGIBLE CAPITAL FUNDS. Borrowers shall not permit
----------------------------------------
their Adjusted Tangible Capital Funds to be (a) less than $29,000,000 as of June
30, 1997 and September 30, 1997; (b) less than $30,000,000 as of December 31,
1997 and quarterly thereafter; (c) less than $37,000,000 as of December 31, 1998
and quarterly thereafter; and (d) less than $42,000,000 as of December 31, 1999
and quarterly thereafter.
9.13 FIXED CHARGE COVERAGE RATIO. Borrowers shall not permit their Fixed
---------------------------
Charge Ratio to be less than 1.25:1 as of December 31, 1997 and measured
quarterly thereafter on a rolling four quarter basis (provided, however, that
the cost of the Sharpsville plant closure technical research and development
costs and other merger-related costs (in the case of merger-related costs, as
agreed to by Lender) expensed in fiscal 1997 will not be calculated in the Fixed
Charge Ratio for the appropriate four quarters); less than 1.50:1 as of December
31, 1998 and measured quarterly thereafter on a rolling four quarter basis; and
less than 1.75:1 as of December 31, 1999 and measured quarterly thereafter on a
rolling four quarter basis and annually thereafter.
9.14 MAXIMUM TOTAL LIABILITIES TO ADJUSTED TANGIBLE CAPITAL FUNDS.
-------------------------------------------------------------
Borrowers' ratio of Total Liabilities to Adjusted Tangible Capital Funds shall
not at any time during the following periods of time exceed:
6/30/97 to 9/30/97: 3.0:1
12/31/97 to 9/30/98: 2.5:1
12/30/98 to 9/30/99: 2.25:1
12/31/99 to 12/31/2000: 2.00:1
The foregoing covenants being measured for at the end of the fiscal
quarters ending March 31, June 30, September 30 and December 31 of each year,
commencing June 30, 1997.
9.15 MINIMUM WORKING CAPITAL. Borrowers' current assets minus current
------------------------
liabilities, as determined in accordance with GAAP, shall not be (a) less than
$14,100,000 after the year ending December 31, 1997; (b) less than $22,000,000
after the year ending December 31, 1998; and (c) less than $28,000,000 after the
year ending December 31, 1999; the foregoing covenants being measured for any
four consecutive fiscal quarters ending March 30, June 30, September 30 and
December 31 of each year, commencing as of December 31, 1997.
42
9.16 INTEREST COVERAGE RATIO. Borrowers' Interest Coverage Ratio shall not
------------------------
at any time during the term of any Obligations due Lender by Borrowers be less
than 3.0:1, commencing December 31, 1997; provided, however, that the cost of
the Sharpsville plant closure, technical research and development costs, and
other merger-related costs (in the case of merger-related costs, as agreed to by
Lender) expensed in fiscal 1997 will not be calculated in the interest coverage
ratio.
9.17 TRANSACTIONS WITH AFFILIATES. Borrowers shall not enter into any
----------------------------
transaction for the purchase, sale or exchange of property or the rendering of
any service to or by any Affiliate, except in the ordinary course of and
pursuant to the reasonable requirements of Borrowers' businesses and upon fair
and reasonable terms no less favorable to the Borrowers than Borrowers would
obtain in a comparable arm's length transaction with an unaffiliated person.
9.18 CAPITAL EXPENDITURES. Borrowers shall limit Capital Expenditures to
--------------------
(a) $3,500,000.00 in 1997 (b) $4,500,000.00 in 1998 and (c) $3,500,000 annually
thereafter.
9.19 COSTS AND EXPENSES. Borrowers shall pay to Lender on demand all costs,
------------------
expenses, filing fees and taxes paid or payable in connection with the
preparation, negotiation, execution, delivery, recording, administration,
collection, liquidation, enforcement and defense of the Obligations, Lender's
rights in the Collateral, this Agreement, the other Financing Agreements and all
other documents related hereto or thereto, including any amendments, supplements
or consents which may hereafter be contemplated (whether or not executed) or
entered into in respect hereof and thereof, including, but not limited to: (a)
all costs and expenses of filing or recording (including Uniform Commercial Code
financing statement filing taxes and fees, documentary taxes, intangibles taxes
and mortgage recording taxes and fees, if applicable); (b) all title insurance
and other insurance premiums, appraisal fees and search fees; (c) costs and
expenses of remitting loan proceeds, collecting checks and other items of
payment, together with Lender's customary charges and fees with respect thereto;
(d) costs and expenses of preserving and protecting the Collateral; (e) costs
and expenses paid or incurred in connection with obtaining payment of the
Obligations, enforcing the security interests and liens of Lender, selling or
otherwise realizing upon the Collateral, and otherwise enforcing the provisions
of this
43
Agreement and the other Financing Agreements or defending any claims
made or threatened against Lender arising out of the transactions contemplated
hereby and thereby (including, without limitation, preparations for and
consultations concerning any such matters); (f) subject to the limits stated in
Section 7.7, all out-of -pocket expenses and costs heretofore and from time to
time hereafter incurred by Lender during the course of periodic field
examinations of the Collateral and Borrowers' operations; and (g) the fees and
disbursements of counsel (including legal assistants) to Lender in connection
with any of the foregoing.
9.20 ENVIRONMENTAL LAWS.
------------------
(a) Borrowers shall promptly notify Lender following receipt by an
officer of Borrowers or any Subsidiary thereof of any actual or threatened
Environmental Action or any violation or potential violation of or non-
compliance with, or liability or potential liability under any Environmental
Laws which, when taken together with all other pending violations could
reasonably be expected to have a material adverse effect on Borrowers and its
Subsidiaries taken as a whole, and promptly furnish to Lender all material
notices of any nature which Borrowers or any Subsidiary thereof may receive from
the Governmental Authority or other Person with respect to any Environmental
Action, violation, or potential violation of or non-compliance with, or
liability or potential liability under any Environmental Laws which, in any case
or when taken together with all such other notices, could reasonably be expected
to have a material adverse effect on Borrower and its Subsidiaries taken as a
whole.
(b) Borrowers shall comply in all material respects with and use
reasonable efforts to ensure compliance by all tenants and subtenants with all
Environmental Laws, and obtain and comply in all material respects with and
maintain and use reasonable best efforts to ensure that all tenants and
subtenants obtain and comply with all licenses, approvals, registrations or
permits required by Environmental Laws.
(c) Borrowers shall conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal, reporting and other actions
required under all Environmental Laws and promptly comply in all material
respects with all lawful orders and directives of all Governmental
44
Authorities subject to the Borrowers' or any Subsidiary's right to contest or
negotiate any such order or directive in good faith and in compliance with
Environmental Laws provided such contest or negotiation is promptly commenced.
(d) Defend, indemnify and hold harmless Lender and its respective
employees, agents, officers and directors, from and against any claims, demands,
penalties, fines, liabilities (including strict liability), settlements,
damages, costs and expenses of whatever kind or nature, known or unknown,
contingent or otherwise, arising out of, or in any way related to the violation
of or non-compliance with any Environmental Laws, or any orders, requirements or
demands of Governmental Authorities by the Borrowers or any Subsidiary thereof,
including, without limitation, any cleanup or remediation costs, reasonable
attorney and consultant fees, investigation and laboratory fees, court costs and
litigation expenses.
9.21 CHANGE IN BUSINESS. So long as any amount shall remain outstanding
------------------
under any Note or unpaid under this Agreement, unless Lender shall otherwise
consent in writing, Borrowers agree that they will not, nor will they permit any
subsidiary thereof to, directly or indirectly to engage, to any material extent,
as determined by Lender in the reasonable exercise of its discretion, in any
business other than the manufacturing, leasing, sale and wholesale distribution
of fitness equipment and supplies.
9.22 FURTHER ASSURANCES. At the request of Lender at any time and
------------------
from time to time, Borrowers shall, at their expense, duly execute and deliver,
or cause to be duly executed and delivered, such further agreements, documents
and instruments, and do or cause to be done such further acts as may be
necessary or proper to evidence, perfect, maintain and enforce the security
interests and the priority thereof in the Collateral and to otherwise effectuate
the provisions or purposes of this Agreement or any of the other Financing
Agreements. Lender may at any time and from time to time request a certificate
from an officer of Borrower representing that all conditions precedent to the
making of Loans contained herein are satisfied. In the event of such request by
Lender, Lender may, at its option, cease to make any other Loans or provide any
further Letter of Credit Accommodations until Lender has received such
certificate and, in addition, Lender has determined that such conditions are
satisfied. Where permitted by law, Borrowers hereby
45
authorize Lender to execute and file one or more UCC financing statements signed
only by Lender.
9.23 AMENDMENT OF PRIOR AGREEMENT. Borrowers and the Lender hereby
----------------------------
specifically acknowledge and agree that the covenants contained in this
paragraph and this Agreement replace and amend the covenants contained in
Article 7 of the Letter of Credit and Reimbursement Agreement dated February 1,
1996 between United Jersey Bank, Bank of Nova Scotia and Xxxxxxx, Inc.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
------------------------------
10.1 EVENTS OF DEFAULT. The occurrence or existence of any one or more of
-----------------
the following events are referred to herein individually as an "Event of
Default," and collectively as "Events of Default:"
(a) Borrowers fail to pay when due or within ten days after the due
date any of the Obligations or within 30 days after notice from Lender fail to
perform any of the terms, covenants, conditions or provisions contained in this
Agreement or any of the other Financing Agreements;
(b) any representation, warranty or statement of fact made by a
Borrower to Lender in this Agreement, the other Financing Agreements or any
other agreement, schedule, confirmatory assignment or otherwise shall when made
or deemed made be false or misleading in any material respect;
(c) any Obligor revokes, terminates or fails to perform, beyond any
grace or cure period and subject to Notice provisions, any of the terms,
covenants, conditions or provisions of any guarantee, endorsement or other
agreement of such party in favor of Lender;
(d) any judgment for the payment of money is rendered against any
Borrower or any Obligor in excess of $100,000 in any one case or in excess of
$200,000 in the aggregate and shall remain undischarged or unvacated for a
period in excess of sixty (60) days or execution shall at any time not be
effectively stayed, or any judgment other than for the payment of money, or
injunction which would have a material adverse effect on said Borrower, or an
attachment, garnishment or execution is rendered in excess of the
46
above amount against said Borrower or any Obligor or any of their assets, which
event would have a material adverse effect on said Borrower, its business or the
Collateral;
(e) except as permitted in the Loan Documents, any Obligor (being a
natural person or a general partner of an Obligor which is a partnership) dies
or a Borrower or any Obligor, which is a partnership or corporation, dissolves
or suspends or discontinues doing business;
(f) Any Borrower or any Obligor becomes insolvent (however defined or
evidenced), makes an assignment for the benefit of creditors, makes or sends
notice of a bulk transfer or calls a meeting of its creditors or principal
creditors;
(g) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed against any Borrower, any Obligor or all or any part of its
properties and such petition or application is not dismissed within sixty (60)
days after the date of its filing or any Borrower, any such Obligor shall file
any answer admitting or not contesting such petition or application or indicates
its consent to, acquiescence in or approval of, any such action or proceeding or
the relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by any Borrower for all or any part of its property; or
(i) any default by a Borrower or any Obligor under any agreement,
document or instrument relating to any indebtedness for borrowed money owing to
any person other than Lender, or any capitalized lease obligations, contingent
indebtedness in connection with any guarantee, letter of credit, indemnity or
sent in favor of any person other than Lender, in any case in an amount in
excess of $100,000, which default continues for more than the applicable cure
period, if any, with respect thereto, or default by
47
Borrower or any Obligor under any material contract, lease, license or other
obligation to any person other than Lender, which default continues for more
than the applicable cure period, if any, with respect thereto;
(j) any substantial change in management of Cybex, whether by reason
of death, resignation, protractive illness, change of ownership or employment or
management policies or for any other reason, Cybex shall give prompt written
notice thereof to the Lender and Lender, whether or not so notified upon being
informed of such change may, if not reasonably satisfied with the new
management, require that same be revised or reformed in the manner satisfactory
to the Lender;
(k) the indictment of a Borrower or any Obligor under any criminal
statute, or commencement of criminal or civil proceedings against a Borrower or
any Obligor, pursuant to which statute or proceedings the penalties or remedies
sought or available include forfeiture of any material property of a Borrower or
such Obligor; or
(l) there shall be an event of default under any of the other
Financing Agreements.
10.2 REMEDIES.
--------
(a) At any time an Event of Default exists or has occurred and is
continuing, Lender shall have all rights and remedies provided in this
Agreement, the other Financing Agreements, the Uniform Commercial Code and other
applicable law, all of which rights and remedies may be exercised without notice
to or consent by Borrowers or any Obligor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Lender hereunder, under any of the other
Financing Agreements, the Uniform Commercial Code or other applicable law, are
cumulative, not exclusive and enforceable, in Lender's discretion,
alternatively, successively, or concurrently on any one or more occasions, and
shall include, without limitation, the right to apply to a court of equity for
an injunction to restrain a breach or threatened breach by a Borrower of this
Agreement or any of the other Financing Agreements. Lender may, at any time or
times, proceed directly
48
against Borrowers or any Obligor to collect the Obligations without prior
recourse to the Collateral.
Without limiting the foregoing, at any time an Event of Default exists or
has occurred and is continuing, Lender may, in its discretion and without
limitation, (i) accelerate the payment of all Obligations and demand immediate
payment thereof to Lender (provided, that, upon the occurrence of any Event of
----------------
Default described in Sections 10.1(g) and 10.1(h), all Obligations shall
automatically become immediately due and payable), (ii) with or without judicial
process or the aid or assistance of others, enter upon any premises on or in
which any of the Collateral may be located and take possession of the Collateral
or complete processing, manufacturing and repair of all or any portion of the
Collateral, (iii) require Borrowers, at Borrowers' expense, to assemble and make
available to Lender any part or all of the Collateral at any place and time
designated by Lender, (iv) collect, foreclose, receive, appropriate, set-off and
realize upon any and all Collateral, (v) remove any or all of the Collateral
from any premises on or in which the same may be located for the purpose of
effecting the sale, foreclosure or other disposition thereof or for any other
purpose, (vi) sell, lease, transfer, assign, deliver or otherwise dispose of any
and all Collateral (including, without limitation, entering into contracts with
respect thereto, public or private sales at any exchange, broker's board, at any
office of Lender or elsewhere) at such prices or terms as Lender may deem
reasonable, for cash, upon credit or for future delivery, with the Lender having
the right to purchase the whole or any part of the Collateral at any such public
sale, all of the foregoing being free from any right or equity of redemption of
Borrowers, which right or equity of redemption is hereby expressly waived and
released by Borrowers and/or (vii) terminate this Agreement. If any of the
Collateral is sold or leased by Lender upon credit terms or for future delivery,
the Obligations shall not be reduced as a result thereof until payment therefor
is finally collected by Lender. If notice of disposition of Collateral is
required by law, five (5) days' prior notice by Lender to Borrowers designating
the time and place of any public sale or the time after which any private sale
or other intended disposition of Collateral is to be made, shall be deemed to be
reasonable notice thereof and Borrowers waive any other notice. In the event
Lender institutes an action to recover any Collateral or seeks recovery of any
49
Collateral by way of prejudgment remedy, Borrowers waive the posting of any bond
which might otherwise be require.
(b) Lender may apply the cash proceeds of Collateral actually received
by Lender from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such order
as Lender may elect, whether or not then due. Borrowers shall remain liable to
Lender for the payment of any deficiency with interest at the highest rate
provided for herein and all costs and expenses of collection or enforcement,
including attorneys' fees and legal expenses.
(c) Without limiting the foregoing, upon the occurrence of an Event of
Default or an event which with notice or passage of time or both would
constitute an Event of Default, Lender may, at its option, without notice, (i)
cease making Loans or reduce the lending formulas or amounts of Revolving Loans
available to Borrower and/or (ii) terminate any provision of this Agreement
providing for any future Loans to be made by Lender to Borrowers.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS;
GOVERNING LAW
---------------------------------------------
11.1 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY TRIAL WAIVER.
----------------------------------------------------------------------
(a) The validity, interpretation and enforcement of this Agreement and
the other Financing Agreements and any dispute arising out of the relationship
between the parties hereto, whether in contract, tort, equity or otherwise,
shall be governed by the internal laws of the State of New Jersey (without
giving effect to principles of conflicts of law).
(b) Borrowers and Lender irrevocably consent and submit to the non-
exclusive jurisdiction of the Superior Court of the State of New Jersey and the
United States District Court for the District of New Jersey and waive any
objection based on venue or forum non conveniens with respect to any action
--------------------
instituted therein arising under this Agreement or any of the other Financing
Agreements or in any way connected with or related or incidental to the dealings
of the parties hereto in respect of this Agreement or any of the other Financing
Agreements or the transactions related hereto or thereto, in each case whether
now existing or hereafter
50
arising, and whether in contract, tort, equity or otherwise, and agree that any
dispute with respect to any such matters shall be heard only in the courts
described above (except that Lender shall have the right to bring any action or
proceeding against a Borrower or its property in the courts of any other
jurisdiction which Lender deems necessary or appropriate in order to realize on
the Collateral or to otherwise enforce its rights against a Borrower or its
property).
(c) Each Borrower hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth on
the signature pages hereof and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails, or,
at Lender's option, by service upon Borrower in any other manner provided under
the rules of any such courts. Within thirty (30) days after such service,
Borrower shall appear in answer to such process, failing which Borrower shall be
deemed in default and judgment may be entered by Lender against Borrower for the
amount of the claim and other relief requested.
(d) BORROWERS AND LENDER EACH HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY
OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT
OR ANY OF THE OTHER FINANCING AGREEMENTS OR (II) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED
HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWERS AND LENDER EACH HEREBY
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT BORROWERS OR LENDER MAY FILE
AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
(e) Lender shall not have any liability to a Borrower (whether in
tort, contract, equity or otherwise) for losses suffered by a Borrower in
connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Agreement, or any act, omission or event
occurring in connection herewith, unless it is determined by a final and
51
nonappealable judgment or court order binding on Lender, that the losses were
the result of acts or omissions constituting gross negligence or willful
misconduct. In any such litigation, Lender shall be entitled to the benefit of
the rebuttable presumption that it acted in good faith and with the exercise of
ordinary care in the performance by it of the terms of this Agreement.
11.2 WAIVER OF NOTICES. Borrowers hereby expressly waive demand,
-----------------
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations or the Collateral, and any and all other demands and notices
of any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or demand on a Borrower which Lender may elect to give shall entitle a
Borrower to any other or further notice or demand in the same, similar or other
circumstances.
11.3 AMENDMENTS AND WAIVERS. Neither this Agreement nor any provision
----------------------
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Lender. Lender shall not, by any act, delay, omission or otherwise be deemed to
have expressly or impliedly waived any of its rights, powers and/or remedies
unless such waiver shall be in writing and signed by an authorized officer of
Lender. Any such waiver shall be enforceable only to the extent specifically set
forth therein. A waiver by Lender of any right, power and/or remedy on any one
occasion shall not be construed as a bar to or waiver of any such right, power
and/or remedy which Lender would otherwise have on any future occasion, whether
similar in kind or otherwise.
11.4 WAIVER OF COUNTERCLAIMS. Each Borrower waives all rights to interpose
-----------------------
any claims, deductions, set-offs or counterclaims of any nature (other then
compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
11.5 INDEMNIFICATION. Borrowers shall indemnify and hold Lender, and its
---------------
directors, agents, employees and counsel, harmless from and against any and all
losses, claims, damages, liabilities,
52
costs or expenses imposed on, incurred by or asserted against any of them in
connection with any litigation, investigation, claim or proceeding commenced or
threatened related to the negotiation, preparation, execution, delivery,
enforcement, performance or administration of this Agreement, any other
Financing Agreements, or any undertaking or proceeding related to any of the
actions contemplated hereby or any act, omission, event or transaction related
or attendant thereto, including, without limitation, amounts paid in settlement,
court costs, and the fees and expenses of counsel. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in this Section may be
unenforceable because it violates any law or public policy, Borrower shall pay
the maximum portion which it is permitted to pay under applicable law to Lender
in satisfaction of indemnified matters under this Section. The foregoing
indemnity shall survive the payment of the Obligations and the termination or
nonrenewal of this Agreement.
SECTION 12. MISCELLANEOUS
-------------
12.1 NOTICES. All notices, requests and demands hereunder shall be in
-------
writing and (a) made to Lender and to Borrowers at the addresses set forth below
or to such other address as either party may designate by written notice to the
other in accordance with this provision, and (b) deemed to have been given or
made: if delivered in person, immediately upon delivery; if by telex, telegram
or facsimile transmission, immediately upon sending and upon confirmation of
receipt; if by nationally recognized overnight courier service with instructions
to deliver the next business day, one (I) business day after sending; and if by
certified mail, return receipt requested, five (5) days after mailing.
If to Lender:
Summit Bank
0000 Xxxxxx Xxxxxx Xxxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000
ATTN: Xxxxxx X. Xxxxxxx, Vice President
FAX No.: (000) 000-0000
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With copy to:
Dilworth, Paxson, Xxxxxx & Xxxxxxxx
X.X. Xxx 0000
Xxxxxx Xxxx, Xxx Xxxxxx 00000
ATTN: Xxxxx X. Xxxxxxx, Esquire
FAX NO.: (000) 000-0000
If to Borrower:
Cybex International, Inc.
00 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
ATTN: Xxxxxxx X. Xxxxxx, Vice President and Chief
Financial Officer
FAX NO.: (000) 000-0000
and
Xxxxxx X. Xxxxx, Xx., Vice President
Xxxxxxx, Inc.
00 Xxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
With copy to:
Xxxxxx & Xxxxxxx
Xxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxx Xxxxxx 00000
ATTN: Xxxxx X. Xxxxx, Esquire
FAX NO.: (000) 000-0000
12.2 PARTIAL INVALIDITY. If any provision of this Agreement is held to be
------------------
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
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12.3 SUCCESSORS. This Agreement, the other Financing Agreements and any
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other document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Lender, Borrowers and their respective
successors and assigns, except that Borrowers may not assign their rights under
this Agreement, the other Financing Agreements and any other document referred
to herein or therein without the prior written consent of Lender. Lender may,
after notice to Borrowers, assign its rights and delegate its obligations under
this Agreement and the other Financing Agreements and further may assign, or
sell participations in, all or any part of the Loans, or any other interest
herein to another financial institution or other person, in which event, the
assignee or participant shall have, to the extent of such assignment or
participation, the same rights and benefits as it would have if it were the
Lender hereunder, except as otherwise provided by the terms of such assignment
or participation.
12.4 USE OF LOAN PROCEEDS. The Co-Borrowers by execution of this Agreement
---------------------
acknowledge and certify that the credit facilities provided by the Lender to the
Borrowers constitute a direct financial benefit to the Borrowers individually
and as a whole.
12.5 ENTIRE AGREEMENT. This Agreement, the other Financing Agreements, any
----------------
supplements thereto, and any instruments or documents delivered or to be
delivered in connection herewith or therewith represent the entire agreement and
understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written.
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IN WITNESS WHEREOF, Lender and Borrowers have caused these presents to be
duly executed as of the day and year first above written.
CO-BORROWER
-----------
CYBEX INTERNATIONAL, INC.
Attest:
/s/ Xxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxx
------------------------------- -------------------------------
Xxxxx X. Xxxxx, Asst. Secretary Xxxxxxx X. Xxxxxx
Title: Vice President and
Chief Financial Officer
CO-BORROWER
-----------
CYBEX FINANCIAL CORPORATION
Attest:
/s/ Xxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxx
------------------------------- -------------------------------
Xxxxx X. Xxxxx, Asst. Secretary Xxxxxxx X. Xxxxxx
Title: Vice President and
Chief Financial Officer
CO-BORROWER
-----------
EAGLE PERFORMANCE SYSTEMS, INC.
Attest:
/s/ Xxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxx
------------------------------- -------------------------------
Xxxxx X. Xxxxx, Asst. Secretary Xxxxxxx X. Xxxxxx
Title: Vice President and
Chief Financial Officer
CO-BORROWER
-----------
CYBEX FITNESS GERATE VERTRIEBS Attest:
GmbH
Attest:
/s/ Xxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxx
------------------------------- -------------------------------
Xxxxx X. Xxxxx, Asst. Secretary Xxxxxxx X. Xxxxxx
Title: Vice President and
Chief Financial Officer
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CO-BORROWER
-----------
GENERAL MEDICAL EQUIPMENT
LIMITED
Attest:
/s/ Xxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxx
------------------------------- -------------------------------
Xxxxx X. Xxxxx, Asst. Secretary Xxxxxxx X. Xxxxxx
Title: Vice President and
Chief Financial Officer
CO-BORROWER
-----------
LUMEX BED SYSTEMS
Attest:
/s/ Xxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxx
------------------------------- -------------------------------
Xxxxx X. Xxxxx, Asst. Secretary Xxxxxxx X. Xxxxxx
Title: Vice President and
Chief Financial Officer
CO-BORROWER
-----------
XXXXXXX, INC.
Attest:
/s/ Xxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxx
------------------------------- -------------------------------
Xxxxx X. Xxxxx, Asst. Secretary Xxxxxxx X. Xxxxxx
Title: Vice President and
Chief Financial Officer
CO-BORROWER
-----------
XXXXXXX HOLDING COMPANY
Attest:
/s/ Xxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxx, Xx.
------------------------------- -------------------------------
Xxxxx X. Xxxxx, Asst. Secretary Xxxxxx X. Xxxxx, Xx.
Title: Vice President
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LENDER
------
SUMMIT BANK, successor by
merger to UNITED JERSEY BANK
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Xxxxxx X. Xxxxxxx
Title: Vice President
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