EXHIBIT 10.1
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LOAN AND SECURITY AGREEMENT
dated as of
March 7, 2000
between
ALLIED PRODUCTS CORPORATION,
as Borrower
and
LASALLE BANK NATIONAL ASSOCIATION,
as Lender
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TABLE OF CONTENTS
Page
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1. DEFINITIONS.................................................................1
1.1 General Terms......................................................1
1.2 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement.......................................7
1.3 Other Terms Defined in Illinois Uniform Commercial Code............7
1.4 Other Definitional Provisions......................................8
2. CREDIT......................................................................8
2.1 Term Loan Facility.................................................8
2.2 INTENTIONALLY OMITTED..............................................8
2.3 INTENTIONALLY OMITTED..............................................8
2.4 Voluntary Prepayments..............................................8
2.5 Borrower's Loan Account............................................9
2.6 Statements; Telephonic Notice......................................9
2.7 Interest and Fees..................................................9
2.8 Method of Payment.................................................10
2.9 Term of this Agreement............................................10
2.10 Survival..........................................................10
3. CONDITIONS OF ADVANCES.....................................................11
3.1 Conditions to Initial Loans.......................................11
3.2 Conditions to All Loans...........................................11
4. COLLATERAL.................................................................12
4.1 Security Interest.................................................12
4.2 Preservation of Collateral and Perfection of Security Interests
Therein...........................................................12
4.3 Loss of Value of Collateral.......................................12
4.4 Setoff............................................................12
5. REPRESENTATIONS AND WARRANTIES.............................................13
5.1 Existence.........................................................13
5.2 Corporate Authority...............................................13
5.3 Binding Effect....................................................13
5.4 Financial Data....................................................13
5.5 Collateral........................................................14
5.6 Solvency..........................................................14
5.7 Chief Place of Business...........................................15
5.8 Other Names.......................................................15
5.9 Tax Liabilities...................................................15
5.10 Loans.............................................................15
5.11 Margin Stock......................................................15
5.12 Litigation and Proceedings........................................15
5.13 Other Agreements..................................................16
5.14 Employee Controversies............................................16
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5.15 Compliance with Laws and Regulations; Environmental Matters.......16
5.16 Patents, Trademarks and Licenses..................................17
5.17 ERISA.............................................................17
5.18 Financial Condition...............................................18
5.19 Survival of Warranties............................................18
5.20 Bank Accounts.....................................................18
5.21 Subsidiaries......................................................18
5.22 Accuracy of Information...........................................18
5.23 Assets and Properties.............................................18
5.24 Insurance.........................................................18
5.25 Contingent Obligations............................................19
5.26 Account Warranties................................................19
5.27 Broker's Fees.....................................................19
6. AFFIRMATIVE COVENANTS......................................................19
6.1 Financial Statements and Other Reports............................19
6.2 Inspection........................................................21
6.3 Maintenance of Licenses, Etc......................................22
6.4 Claims and Taxes..................................................22
6.5 Lender's Closing Costs and Expenses...............................22
6.6 Borrower's Liability Insurance....................................22
6.7 Business Interruption Insurance...................................23
6.8 ERISA Reporting...................................................23
6.9 Notice of Suit or Adverse Change in Business......................24
6.10 Environmental Safety and Health Laws..............................24
6.11 Supplemental Disclosure...........................................24
6.12 Collateral Records................................................24
6.13 Endorsement.......................................................25
6.14 Maintenance of Properties.........................................25
6.15 Collateral Locations..............................................25
6.16 Use of Proceeds and Margin Security...............................25
6.17 Appraisals........................................................25
7. NEGATIVE COVENANTS.........................................................25
7.1 Encumbrances......................................................25
7.2 Restrictions on Distributions.....................................26
8. DEFAULT, RIGHTS AND REMEDIES OF LENDER.....................................26
8.1 Defaults..........................................................26
8.2 Rights and Remedies Generally.....................................27
8.3 Entry Upon Premises and Access to Information.....................27
8.4 Sale or Other Disposition of Collateral by Lender.................27
8.5 Waiver of Demand..................................................28
8.6 Waiver of Notice..................................................28
9. MISCELLANEOUS..............................................................28
9.1 Amendments and Waivers............................................28
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9.2 Costs and Attorneys' Fees.........................................28
9.3 Expenditures by Lender............................................29
9.4 Custody and Preservation of Collateral............................29
9.5 Reliance by Lender................................................29
9.6 Assignment; Parties...............................................29
9.7 CHOICE OF LAW.....................................................29
9.8 CONSENT TO JURISDICTION...........................................29
9.9 SERVICE OF PROCESS................................................30
9.10 WAIVER OF JURY TRIAL AND BOND.....................................30
9.11 ADVICE OF COUNSEL.................................................31
9.12 SEVERABILITY......................................................31
9.13 Application of Payments...........................................31
9.14 Marshaling; Payments Set Aside....................................31
9.15 Section Titles....................................................31
9.16 Continuing Effect.................................................31
9.17 Notices...........................................................32
9.18 Equitable Relief..................................................33
9.19 Indemnification...................................................33
9.20 Counterparts......................................................34
9.21 Entire Agreement..................................................34
9.22 Confidentiality...................................................34
9.23 Governmental Regulation...........................................34
9.24 Amendment of Loan Agreement.......................................34
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EXHIBITS
Exhibit A Form of Term Note
Exhibit B Form of Financial Statement Certificate
Exhibit C Form of Endorsement
Exhibit D Form of Notice of Borrowing
SCHEDULES
Schedule 3.1 Conditions to Initial Loans
Schedule 5.1 Jurisdiction of Incorporation; Qualification
Schedule 5.2 Governmental Consents and Restrictions
Schedule 5.4(A) Financials
Schedule 5.4(B) Projections
Schedule 5.4(C) Pro Forma
Schedule 5.5 Locations of Collateral
Schedule 5.7 Chief Place of Business
Schedule 5.8 Other Names
Schedule 5.9 Tax Audits
Schedule 5.12 Litigation and Proceedings
Schedule 5.14 Employee Controversies
Schedule 5.15(B) Environmental Matters
Schedule 5.16 Patents, trademarks and Licenses
Schedule 5.17 ERISA
Schedule 5.20 Bank Accounts
Schedule 5.21 Capitalization; Subsidiaries
Schedule 5.24 Insurance
Schedule 5.25 Contingent Obligations
Schedule 7.1 Liens
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), dated as of
March 7, 2000, is by and between ALLIED PRODUCTS CORPORATION., a Delaware
corporation, ("Borrower"), and LASALLE BANK NATIONAL ASSOCIATION, a national
banking association ("Lender"). All capitalized terms used herein are defined in
Section 1 of this Agreement.
W I T N E S S E T H:
WHEREAS, Borrower desires to borrow up to Eighteen Million Dollars
($18,000,000) from Lender; and
WHEREAS, Lender is willing to make certain loans and to extend
credit to Borrower of up to such amount upon the terms and conditions set forth
herein, the proceeds of which will be used by Borrower for the working capital
needs of Borrower and for general corporate purposes;
NOW, THEREFORE, in consideration of the terms and conditions
contained herein, and of any loans or extensions of credit heretofore, now or
hereafter made to or for the benefit of Borrower by Lender, the parties hereto
hereby agree as follows:
1. DEFINITIONS.
1.1 General Terms. When used herein, the following terms shall have
the following meanings:
"Account Debtor" shall mean the party who is obligated on or under
an Account.
"Accounts" shall mean all "accounts" (as defined in the Code) owed
to or owned or acquired by Borrower arising or resulting from the sale of
goods or the rendering of services.
"Affiliate" of any Person shall mean any other Person (a) that
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with such Person; (b) that
directly or beneficially owns or holds five percent (5%) or more of any
class of the voting stock or other equity interests of such Person, or (c)
five percent (5%) or more of the voting stock (or in the case of a Person
which is not a corporation, five percent (5%) or more of the equity
interest) of which is owned directly or beneficially or held by such
Person. Notwithstanding the foregoing, Lender shall not be deemed to be an
Affiliate of the Borrower.
"Authorized Officer" shall mean, at any time, any of the chief
executive officer, chief financial officer, controller, or any vice
president of Borrower, acting singly.
"Benefit Plan" shall mean, with respect to any Person, a defined
benefit plan as
defined in Section 3(35) of ERISA (other than a Multiemployer Plan) in
respect of which such Person or an ERISA Affiliate of such Person is, or
within the immediately preceding six (6) years was, an "employer" as
defined in Section 3(5) of ERISA.
"Xxxx Hog" shall mean Xxxx Hog, L.L.C., a Delaware limited liability
company, of which Borrower owns 19.9% of the membership interests.
"Business Day" means a day (other than a Saturday or Sunday) on
which LaSalle and other banks generally are open in Chicago for the
conduct of substantially all of their commercial lending activities.
"Capitalized Lease" shall mean, at any time, any lease which, in
accordance with GAAP, is required to be capitalized on the consolidated
balance sheet of Borrower and its Subsidiaries at such time, and
"Capitalized Lease Obligations" of Borrower and its Subsidiaries at any
time shall mean the aggregate amount which, in accordance with GAAP, is
required to be reported as a liability on the consolidated balance sheet
of Borrower and its Subsidiaries.
"Closing Date" shall mean the date of this Agreement.
"Closing Fee" shall have the meaning set forth in subsection 2.7(E).
"Code" shall have the meaning set forth in subsection 1.3 hereof.
"Collateral" shall have the meaning set forth in subsection 4.1
hereof.
"Commitment" shall mean the commitment of Lender to make the Loan as
set forth in subsection 2.1 hereof.
"Contingent Obligation" of a Person shall mean any agreement,
undertaking or arrangement by which such Person assumes, guarantees,
endorses, contingently agrees to purchase or provide funds for the payment
of, or otherwise becomes or is contingently liable upon, the obligation or
liability of any other Person, or agrees to maintain the net worth or
working capital or other financial condition of any other Person, or
otherwise assures any creditor of such other Person against loss,
including, without limitation, operating agreement or take_or_pay contract
or application for a letter of credit.
"Default" shall mean the occurrence or existence of any one or more
of the events described in subsection 8.1 hereof.
"DOL" shall have the meaning set forth in subsection 6.8 hereof.
"Dollars", "dollars" and "$" each mean lawful money of the United
States of America.
"Environmental Lien" shall mean a lien in favor of any governmental
entity for (a) any liability under federal or state environmental laws or
regulations or (b) damages
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arising from, or costs incurred by such governmental entity in response
to, a release or threatened release of a hazardous or toxic waste,
substance or constituent, or other substance into the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute.
"ERISA Affiliate" shall mean, with respect to any Person, any (i)
corporation which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Internal Revenue Code) as
such Person; (ii) partnership, trade or business under common control
(within the meaning of Section 414(c) of the Internal Revenue Code) with
such Person; and (iii) solely for purposes of liability under Section
412(c)(11) of the Internal Revenue Code, for the lien created under
Section 412(n) of the Internal Revenue Code or for a tax imposed for
failure to meet minimum funding standards under Section 4971 of the
Internal Revenue Code, member of the same affiliated service group (within
the meaning of Section 414(m) of the Internal Revenue Code) as such
Person, any corporation described in clause (i) above or any partnership,
trade or business described in clause (ii) above.
"Financials" shall have the meaning set forth in subsection 5.4
hereof.
"Financing Agreements" shall mean, collectively, that certain Put
and Call Agreement of even date herewith, by and among Lender, Borrower
and Xxxx Hog Investors, L.L.C., and acknowledged and consented to by Xxxx
Hog, L.L.C. and CC Industries, Inc., that certain Guaranty of even date
herewith, made by CC Industries, Inc. in favor of Lender, and all other
agreements, instruments and documents, including, without limitation, this
Agreement and any security agreements, loan agreements, notes, guarantees,
mortgages, deeds of trust, leasehold mortgages, leasehold deeds of trust,
subordination agreements, pledges, powers of attorney, consents,
assignments, intercreditor agreements, mortgagee waivers, landlord
estoppel statements, reimbursement agreements, contracts, notices, leases,
financing statements and all other written matter whether heretofore, now
or hereafter executed by or on behalf of Borrower or any of Borrower's
Subsidiaries and delivered to Lender, together with all agreements,
documents and instruments referred to therein or contemplated thereby.
"Fiscal Year" shall mean a twelve-month period ending on the last
day of December in each year.
"GAAP" means generally accepted accounting principles in the United
States of America as set forth in statements from Auditing Standards No.
69 entitled "The Meaning of 'Present Fairly in Conformance with Generally
Accepted Accounting Principles in the Independent Auditors Reports'"
issued by the Auditing Standards Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board that are applicable to the
circumstances as of the date of determination.
"Indebtedness" shall mean, with respect to any Person, as of the
date of determination thereof: (i) all of such Person's indebtedness for
borrowed money; (ii) all
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indebtedness of such Person or any other Person secured by any Lien with
respect to any property or asset owned or held by such Person, regardless
of whether the indebtedness secured thereby shall have been assumed by
such Person; (iii) all indebtedness of other Persons which such Person has
directly or indirectly guaranteed (whether by discount or otherwise),
endorsed (otherwise than for collection or deposit in the ordinary course
of business), discounted with recourse to such Person or with respect to
which such Person is otherwise directly or indirectly liable, including,
without limitation, indebtedness directly or indirectly guaranteed by such
Person through any agreement (contingent or otherwise) to (A) purchase,
repurchase or otherwise acquire such indebtedness or any security
therefor, (B) provide funds for the payment or discharge of such
indebtedness or any other liability of the obligor of such indebtedness
(whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), (C) maintain the solvency of any balance
sheet or other financial condition of the obligor of such indebtedness, or
(D) make payment for any products, materials or supplies or for any
transportation or services regardless of the nondelivery or nonfurnishing
thereof if in any such case the purpose or intent of such agreement is to
provide assurance that such indebtedness will be paid or discharged or
that any agreements relating thereto will be complied with or that the
holders of such indebtedness will be protected against loss in respect
thereof; (iv) all of such Person's Capitalized Lease Obligations; and (v)
all actual or contingent reimbursement obligations with respect to letters
of credit issued for such Person's account.
"Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended from time to time, and any successor statute.
"IRS" shall have the meaning set forth in subsection 6.8 hereof.
"Lender" or "Lenders" shall mean LaSalle together with its
successors and assigns pursuant to Section 10 hereof.
"Liabilities" shall mean all of Borrower's liabilities, obligations
and indebtedness to Lender of any and every kind and nature, whether
heretofore, now or hereafter owing, arising, due or payable and howsoever
evidenced, created, incurred, acquired or owing, whether primary,
secondary, direct, contingent, fixed or otherwise (including obligations
of performance) and whether arising or existing under written agreement,
oral agreement or operation of law, relating to any or all of Borrower's
indebtedness and obligations to Lender under this Agreement and the other
Financing Agreements.
"Lien" shall mean any lien (statutory or otherwise), mortgage,
pledge, hypothecation, assignment, deposit arrangement, option, warrant,
purchase agreement, shareholders' agreement, restriction, redemption
agreement or other charge, encumbrance, restriction or preference,
priority or other security agreement or preferential arrangement of any
kind or nature whatsoever.
"Loan Account" shall have the meaning set forth in subsection 2.5
hereof.
"Loan" shall mean the Term Loan.
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"Management Letter" shall have the meaning set forth in subsection
6.1(E) hereof.
"Material Adverse Change" shall mean a material adverse change,
which has not previously been disclosed to Lender, in the business,
properties, condition (financial or otherwise), performance, prospects or
results of operations of Borrower and its Subsidiaries
"Material Adverse Effect" shall mean a material adverse effect, the
probability of occurrence of which has not previously been disclosed to
Lender, on (a) the business, property, condition (financial or other),
results of operations or prospects of Borrower and its Subsidiaries taken
as a whole, (b) the ability of Borrower or any Subsidiary of Borrower to
perform its obligations under the Financing Agreements to which it is a
party, or (c) the validity or enforceability of any of the Financing
Agreements or the rights or remedies of Lender thereunder.
"Maturity Date" shall mean September 7, 2002.
"Multiemployer Plan" shall mean, with respect to any Person, an
employee benefit plan defined in Section 4001(a) (3) of ERISA which is, or
within the immediately preceding six (6) years was, contributed to by such
Person or an ERISA Affiliate of such Person.
"Notice of Borrowing" shall mean a notice given by the Borrower to
Lender pursuant to subsection 3.2(A), in substantially the form of Exhibit
D hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
Person succeeding to the functions thereof.
"Permitted Liens" shall mean the Liens permitted under subsection
7.1 hereof.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, limited liability company, corporation, institution, entity,
party or government (whether national, federal, state, provincial, county,
city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Plan" shall mean, with respect to any Person, any employee benefit
plan defined in Section 3(3) of ERISA in respect of which such Person or
any ERISA Affiliate of such Person is, or at any time within the
immediately preceding six (6) years was, an "employer" as defined in
Section 3(5) of ERISA.
"Prime Rate" shall mean a variable rate of interest per annum equal
to the highest of the "prime rate", "corporate base rate", "reference
rate" or similar benchmark rate announced or published from time to time
by LaSalle at its principal place of business in Chicago, Illinois, which
rate is not necessarily the lowest rate of interest charged by LaSalle
with respect to commercial loans. Any change in the Prime Rate shall be
effective
5
as of the effective date stated in the announcement by LaSalle of such
change.
"Pro Forma" shall mean the unaudited consolidated and consolidating
balance sheet of Borrower and its Subsidiaries as of the Closing Date
after giving effect to the transactions contemplated by this Agreement and
the other Financing Agreements.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor
thereto or other regulation or official interpretation of said Board of
Governors relating to reserve requirements applicable to member banks of
the Federal Reserve System.
"Regulation T" shall mean Regulation T of the Board of Governors of
the Federal Reserve System from time to time in effect and shall include
any successor or other regulation or official interpretation of said Board
of Governors relating to the extension of credit by and to brokers and
dealers of securities for the purpose of purchasing or carrying margin
stock.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors
relating to the extension of credit by banks for the purpose of purchasing
or carrying margin stock applicable to member banks of the Federal Reserve
System.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors
relating to the extension of credit by foreign lenders for the purpose of
purchasing or carrying margin stock.
"Subsidiary" shall mean, with respect to any Person, any corporation
of which more than fifty percent (50%) of the outstanding capital stock
having ordinary voting power to elect a majority of the board of directors
of such corporation (irrespective of whether at the time stock of any
other class or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the time,
directly or indirectly, owned by such Person. Unless otherwise expressly
provided, all references herein to a "Subsidiary" shall mean a Subsidiary
of Borrower.
"Term" shall have the meaning set forth in subsection 2.9 hereof.
"Term Loan" shall have the meaning set forth in subsection 2.1
hereof.
"Term Loan Commitment" shall mean the commitment of Lender to make
the Term Loan.
"Term Note" shall have the meaning set forth in subsection 2.1
hereof.
"Termination Event" shall mean (i) a reportable event described in
Section 4043 of ERISA or the regulations promulgated thereunder occurring
with respect to any Benefit
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Plan of Borrower or any ERISA Affiliate of Borrower for which the 30-day
notice requirement has not been waived by the PBGC, or (ii) the withdrawal
of Borrower or any ERISA Affiliate of Borrower from a Benefit Plan during
a plan year in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA or the cessation of operations which results in the
termination of employment of 20% of Benefit Plan participants who are
employees of Borrower or any ERISA Affiliate of Borrower, or (iii) the
occurrence of an obligation of Borrower or any ERISA Affiliate of Borrower
arising under Section 4041 of ERISA to provide affected parties with a
written notice of an intent to terminate a Benefit Plan in a distress
termination described in Section 4041(c) of ERISA, or (iv) PBGC's
institution of proceedings to terminate a Benefit Plan of Borrower or any
ERISA Affiliate of Borrower, or (v) any event or condition which might
constitute grounds under Section 4041A or 4042 of ERISA for the
termination of, or the appointment of a trustee to administer any Benefit
Plan or Multiemployer Plan of Borrower or any ERISA Affiliate of Borrower,
or (vi) the partial or complete withdrawal (as defined in Section 4203 and
4205 of ERISA) of Borrower or any ERISA Affiliate of Borrower from a
Multiemployer Plan, or (vii) the existence in a Multiemployer Plan of a
potential withdrawal liability of Borrower or any ERISA Affiliate of
Borrower, or (viii) the occurrence of any nonexempt "prohibited
transaction" with respect to any plan under Section 406 of ERISA or
Section 4975 of the Internal Revenue Code or (ix) as of the last day of
any plan year, the present value of the benefits of any Benefit Plan of
Borrower or any ERISA Affiliate of Borrower, as determined by the plan's
independent actuaries, exceeds the aggregate value as of such date, as
determined by such actuaries, of all assets of such plan by an amount
sufficient that, in the event a distress termination within the meaning of
Section 4041(c) of ERISA were to occur as of such date, Borrower would be
subject to liability in excess of $100,000.
"UFCA" shall have the meaning set forth in subsection 5.6 hereof.
"UFTA" shall have the meaning set forth in subsection 5.6 hereof.
"Unmatured" shall mean any event which, through the passage of time
or the giving of notice or both, would mature into a Default.
"Working Capital Credit Facility" shall mean that certain working
capital credit facility provided, or to be provided, to Borrower by
_______________________, in an amount not to exceed $50,000, 000, the
terms, conditions and documentation of which, shall not conflict with or
violate the terms and conditions of this Agreement or any other Financing
Agreement.
1.2 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement. For purposes of this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to such
terms in conformity with GAAP. Financial statements and other financial
information furnished to Lender pursuant to this Agreement shall be prepared in
accordance with GAAP as in effect at the time of such preparation. No
"Accounting Changes" (as defined below) shall effect the determination or
interpretation of any financial covenants, standards or terms in this Agreement;
provided, that Borrower shall prepare footnotes to each compliance certificate
and the financial statements
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required to be delivered hereunder that show the differences between the
financial statements delivered (which reflect such Accounting Changes) and the
basis for calculating financial covenant compliance (without reflecting such
Accounting Changes). "Accounting Changes" means: (a) changes in the accounting
principles applied in the preparation of the Financials required by GAAP and
implemented by Borrower; (b) changes in the accounting principles applied in the
preparation of the Financials recommended by Borrower's independent public
accountants and implemented by Borrower; and (c) changes in the carrying values
of Borrower's or any of its Subsidiaries assets, liabilities or equity accounts
reflected on the Financials resulting from any adjustments that, in each case
were applicable to, but not included in, the Pro Forma.
1.3 Other Terms Defined in Illinois Uniform Commercial Code. All
other terms contained in this Agreement (and which are not otherwise
specifically defined herein) shall have the meanings provided in Article 9 of
the Uniform Commercial Code, as in effect in the State of Illinois or, with
respect to Collateral not located in the State of Illinois, as in effect in the
jurisdiction where such Collateral is located, as appropriate (the "Code"), in
either case to the extent the same are used or defined therein.
1.4 Other Definitional Provisions. Whenever the context so requires,
the neuter gender includes the masculine and feminine, the singular number
includes the plural, and vice versa. References to "Sections", "subsections",
"Exhibits" and "Schedules" shall be to Sections, subsections, Exhibits and
Schedules, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in Section 1 may, unless the context
otherwise requires, be used in the singular or the plural depending on the
reference. In this Agreement, "hereof," "herein," "hereto," "hereunder" and the
like mean and refer to this Agreement as a whole and not merely to the specific
section, paragraph or clause in which the respective word appears; words
importing any gender include the other gender; references to "writing" include
printing, typing, lithography and other means of reproducing words in a tangible
visible form; the words "including," "includes" and "include" shall be deemed to
be followed by the words "without limitation"; references to agreements,
documents, instruments and other contractual arrangements shall be deemed to
include subsequent amendments, restatements, assignments, and other
modifications thereto, but only to the extent such amendments, restatements,
assignments and other modifications are not prohibited by the terms of this
Agreement or any other Financing Agreements; references to Persons include their
respective permitted successors and assigns or, in the case of governmental
Persons, Persons succeeding to the relevant functions of such Persons; and all
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations.
2. CREDIT.
2.1 Term Loan Facility. Subject to the provisions of Section 3
below, Lender agrees, immediately following the execution of this Agreement, to
lend to Borrower a term loan in the aggregate principal amount of up to Eighteen
Million and No/100 Dollars ($18,000,000), or such lesser amount as Borrower may
request (the "Term Loan"), provided that Borrower shall be entitled to request
advances on the Term Loan (i) only in increments of $3,000,000, and (ii) only
until June 7, 2000. After June 7, 2000, Borrower shall not be entitled to
request any more advances on the Term Loan. No amount of the Term Loan which is
repaid or
8
prepaid by Borrower may be reborrowed hereunder. The Term Loan shall be
evidenced, in part, by a term note (the "Term Note") in the form attached hereto
as Exhibit A with the blanks appropriately filled. The provisions of the Term
Note notwithstanding, the Liabilities evidenced by the Term Note shall become
immediately due and payable as provided in subsection 8.1 hereof, and, without
notice or demand, upon the termination of this Agreement pursuant to subsection
2.9 hereof.
2.2 INTENTIONALLY OMITTED.
2.3 INTENTIONALLY OMITTED.
2.4 Voluntary Prepayments. Borrower may prepay the Liabilities in
full or in part during the "Term" (as defined in subsection 2.9 hereof), upon
five (5) Business Days' prior irrevocable written notice to Lender.
2.5 Borrower's Loan Account. Lender shall maintain a loan account
(the "Loan Account") on its internal data control systems in which shall be
recorded (i) all loans and advances made by Lender to Borrower pursuant to this
Agreement, (ii) all payments made by Borrower on all such loans and advances and
(iii) all other appropriate debits and credits as provided in this Agreement,
including, without limitation, all fees, charges, expenses and interest. All
entries in Borrower's Loan Account shall be made in accordance with Lender's
customary accounting practices as in effect from time to time. Borrower promises
to pay the amount reflected as owing by it under its Loan Account (subject to
the last sentence of subsection 2.6 hereof), and all of its other obligations
hereunder and under any of the other Financing Agreements as such amounts become
due or are declared due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) pursuant to the terms of this Agreement and
the other Financing Agreements.
2.6 Statements; Telephonic Notice. (A) All advances and other
financial accommodations to Borrower, and all other debits and credits provided
for in this Agreement, may be evidenced by entries made by Lender in its
internal data control systems showing the date, amount and reason for each such
debit or credit. Until such time as Lender shall have rendered to Borrower
written statements of account as provided herein, the balance in Borrower's Loan
Account, as set forth on Lender's most recent printout, shall be rebuttably
presumptive evidence of the amounts due and owing to Lender by Borrower.
(B) Borrower hereby authorizes Lender to extend advances under the
Loan and to transfer funds based on telephonic notices Lender in good faith
believes to have been made by any Person authorized to act on behalf of
Borrower. Borrower agrees to deliver promptly to Lender a written confirmation,
if such confirmation is requested by Lender, of each telephonic notice. If the
written confirmation differs in any material respect from the action taken by
Lender, the records of Lender shall govern absent manifest error.
2.7 Interest and Fees.
(A) Subject to subsection 2.7(C), each Term Loan advance shall bear
interest on the outstanding principal amount thereof from the date when made at
a rate per annum
9
equal to the Prime Rate - 1.00%.
(B) Interest on each Loan shall be paid in arrears on the first
Business Day of each month beginning April 1, 2000 and continuing thereafter,
including, without limitation, on the Maturity Date and on the date of any
prepayment of the Loan in full pursuant to Section 2.3. During the existence of
any Unmatured Default interest shall be payable on demand of the Lender.
Interest shall be computed on the basis of a 360-day year for the actual number
of days elapsed. The date of funding the Loan shall be included in the
calculation of interest. The date of payment of the Loan shall be excluded from
the calculation of interest. If the Loan is repaid on the same day it is made,
one (1) day's interest shall be charged.
(C) While any Unmatured Default exists and is continuing and/or
after maturity of the Loan (whether by acceleration or otherwise), Borrower
shall pay interest (after as well as before entry of judgment thereon to the
extent permitted by law) on the principal amount of all Liabilities due and
unpaid, at a rate per annum which is determined by adding three percent (3%) per
annum to the rate then in effect for such Loan.
(D) This Agreement and the Term Note are hereby limited by this
subsection 2.7(D). In no contingency, whether by reason of acceleration of the
maturity of the amounts due hereunder or otherwise, shall interest and fees
contracted for, charged, received, paid or agreed to be paid to Lender exceed
the maximum amount permissible under applicable law. If, from any circumstance
whatsoever, interest and fees would otherwise be payable to Lender in excess of
the maximum amount permissible under applicable law, the interest and fees shall
be reduced to the maximum amount permitted under applicable law. If from any
circumstance, Lender shall have received anything of value deemed interest by
applicable law in excess of the maximum lawful amount, an amount equal to any
excess of interest shall be applied to the reduction of the principal amount of
the Liabilities and not to the payment of fees or interest, or if such excessive
interest exceeds the unpaid balance of the principal amount of Liabilities, such
excess shall be refunded to Borrower.
(E) Concurrently with the execution of this Agreement, Borrower
shall pay Lender a closing fee of $180,000 (the "Closing Fee").
2.8 Method of Payment. All payments of the Liabilities hereunder
shall be made, without setoff, deduction or counterclaim, in immediately
available funds to Lender at Lender's address specified pursuant to subsection
9.17 hereof, or at any other address of Lender specified in writing by Lender to
Borrower, by noon (Chicago time) on the date when due. Lender is hereby
authorized to charge Borrower's Loan Account by debiting the Loan for each
payment of principal, interest, fees, and other Liabilities as it becomes due
hereunder. Whenever any payment to be made hereunder shall be stated to be due
on a day which is not a Business Day, the due date thereof shall be extended to
the next succeeding Business Day.
2.9 Term of this Agreement. This Agreement shall be effective until,
and including, the Maturity Date and shall terminate at 11:59 P.M. Chicago time
on the Maturity Date; provided, however, that Lender shall retain the right to
terminate this Agreement at any time upon the occurrence and during the
continuance of a Default. Notwithstanding the foregoing, Borrower may terminate
this Agreement (and such termination shall constitute a
10
prepayment hereunder) at any time other than as provided above upon satisfaction
of the conditions set forth in subsections 2.4(A) and 2.7 hereof and the payment
by Borrower to Lender of the then outstanding principal and accrued interest and
payment and performance of all other Liabilities (including without limitation
any fees due under subsection 2.7 hereof and any other fees owed to Lender).
Upon the effective date of termination of this Agreement, all of the Liabilities
shall become immediately due and payable without notice or demand.
Notwithstanding any termination, whether prior to, on or after the Maturity
Date, until all of the Liabilities (other than indemnification Liabilities
pursuant to subsection 9.19 hereof to the extent no claims giving rise thereto
have been asserted) shall have been fully paid and satisfied and all financing
arrangements between Borrower and Lender shall have been terminated, all of
Lender's rights and remedies under this Agreement and the other Financing
Agreements shall survive, Lender shall retain its security interests in and to
all existing and future Collateral, and Borrower shall continue to remit
collections of Accounts and proceeds as provided herein.
2.10 Survival. The agreements and obligations of the Borrower in
this Section 2 shall survive the payment of all Liabilities.
3. CONDITIONS OF ADVANCES.
3.1 Conditions to Initial Loans. The obligations of Lender to make
the initial Loans on the Closing Date are, in addition to the conditions
precedent specified in Section 3.2 hereof, subject to the delivery of all
documents, and prior or concurrent satisfaction of all conditions, listed on
Schedule 3.1, all in form and substance reasonably satisfactory to Lender, and
are subject to the following:
(A) Repayment of Indebtedness. Borrower shall fully and indefeasibly
repay all other outstanding indebtedness of Borrower to Lender on or prior to
the Closing Date.
(B) Payment of Closing Fee. Lender shall have received payment in
full of the Closing Fee.
(C) Sale of Assets. Borrower shall have sold to Xxxx Hog,
substantially all of the operating assets of Borrower's "Xxxx Hog division" and
"Great Bend Manufacturing division".
3.2 Conditions to All Loans. Lender shall not be required to make
any Term Loan advance on any date unless on the applicable borrowing date:
(A) Borrower's Written Request. Lender shall have received a Notice
of Borrowing from an Authorized Officer of Borrower, no later than 11:00 A.M.,
Chicago time, on the Business Day an advance is to be made, for an advance in a
specific amount. In addition, prior to making any advance, Lender shall have
received copies of all other documents required to be delivered to Lender under
subsection 6.1 hereof.
(B) Financial Condition. No Material Adverse Effect, as determined
by Lender in its reasonable discretion, shall have occurred (a) at any time or
times subsequent to the most recent annual financial statements provided
pursuant to subsection 6.1(B) hereof, and (b)
11
prior to the receipt of the first of such statements, at any time subsequent to
December 31, 1998.
(C) No Default. There shall not have occurred any Default or
Unmatured Default which is then continuing, nor shall any such Default or
Unmatured Default occur after giving effect to the advance.
(D) Representations and Warranties True and Correct. The
representations and warranties of Borrower contained in this Agreement shall be
true and correct in all material respects on and as of the date of any advance
as though made on and as of such date.
(E) Security Interest. Lender shall have a first priority perfected
security interest in, and Lien on, the Collateral, subject to Permitted Liens.
(F) Working Capital Credit Facility. Borrower shall have provided to
Lender certified copies of the closing documents for the Working Capital Credit
Facility, once such closing documents have been fully-executed and delivered by
the parties thereto.
(G) Other Requirements. Lender shall have received, in form and
substance satisfactory to Lender, all certificates, orders, authorities,
consents, legal opinions, consultant's reports, affidavits, applications,
schedules, instruments, security agreements, financing statements, mortgages and
other documents which are provided for hereunder or under the other Financing
Agreements, or which Lender may at any time reasonably request and all legal
matters incident to the making of such advances shall be satisfactory to Lender
and its counsel.
4. COLLATERAL.
4.1 Security Interest. To secure payment and performance of the
Liabilities, Borrower hereby grants to Lender a continuing security interest in
and to all right, title and interest of Borrower in and to membership interests
in Xxxx Hog, as determined under the laws of the State of Delaware and the
Articles of Organization and Limited Liability Company Agreement of Xxxx Hog,
including, without limitation, Borrower's interest in the capital, income,
profits , and all other property hereafter delivered to Borrower in substitution
for, as proceeds of, or in addition to any of the foregoing, all certificates,
instruments and documents representing or evidencing such property, and all
cash, securities, interest, dividends, rights and other property at any time and
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all thereof, all of the foregoing whether now owned or
hereafter acquired by Borrower and wheresoever located, being herein referred to
as the "Collateral".
4.2 Preservation of Collateral and Perfection of Security Interests
Therein. Borrower shall (i) execute and deliver to Lender, concurrently with the
execution of this Agreement, and at any time or times hereafter at the request
of Lender, all financing statements, instruments or other documents (and pay the
cost of filing or recording the same in all public offices reasonably deemed
necessary by Lender), as Lender may request, in a form reasonably satisfactory
to Lender, and (ii) to the extent any of the Collateral consists of certificated
membership interests or other securities, deliver all such certificates with
appropriate powers or documents of transfer executed in blank, to perfect and
keep perfected the security
12
interest and liens in the Collateral granted by Borrower to Lender, or to
otherwise protect and preserve the Collateral and Lender's security interest and
liens therein or to enforce Lender's security interests and liens in the
Collateral. Should Borrower fail to do so, Lender is authorized to sign any such
financing statements as Borrower's agent. Borrower further agrees that a carbon,
photographic, photostatic or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement.
4.3 Loss of Value of Collateral. Borrower shall immediately notify
Lender of any material loss or depreciation, in the value of the Collateral,
taken as a whole.
4.4 Setoff. Borrower agrees that Lender have all rights of setoff
and banker's lien provided by applicable law and, in addition thereto, Borrower
agrees that (in addition to Lender's rights with respect to proceeds of
Collateral) at any time any Default exists and is continuing, Lender may apply
to the payment of the Liabilities, any and all balances, credits, deposits,
accounts or moneys of Borrower then or thereafter with Lender. Without
limitation of the foregoing and in addition to Lender's rights with respect to
the proceeds of the Collateral, Borrower agrees that upon and after the
occurrence of a Default, Lender and each of its branches and offices are hereby
authorized, at any time and from time to time, without notice, (i) to setoff
against, and to appropriate and apply to the payment of, the Liabilities
(whether matured or unmatured, fixed or contingent or liquidated or
unliquidated) any and all amounts owing by Lender or any such office or branch
to Borrower (whether matured or unmatured, and, in the case of deposits, whether
general or special, time or demand and however evidenced) and (ii) pending any
such action, to the extent necessary, to hold such amounts as collateral to
secure such Liabilities and to return as unpaid for insufficient funds any and
all checks and other items drawn against any deposits so held as Lender may
elect in its sole discretion.
5. REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants that as of the date of the
execution of this Agreement, and continuing so long as any Liabilities remain
outstanding, and (even if there shall be no Liabilities outstanding) so long as
this Agreement remains in effect:
5.1 Existence. (A) Borrower and each of Borrower's Subsidiaries is a
corporation duly organized and validly existing and in good standing under the
laws of the state of its incorporation and is duly qualified as a foreign
corporation and in good standing in the states set forth on Schedule 5.1 hereto
which are all of the states where the nature and extent of the business
transacted by it or the ownership of its assets makes such qualification
necessary, except for those jurisdictions in which the failure so to qualify
would not, in the aggregate, have a Material Adverse Effect.
5.2 Corporate Authority. The execution and delivery by Borrower or
any of Borrower's Subsidiaries of the Financing Agreements to which it is a
party, and the performance of each such Person's obligations thereunder: (i) are
within such Person's corporate powers; (ii) are duly authorized by all necessary
partnership or corporate action; (iii) are not in contravention of the terms of
such Person's Certificate or Articles of Incorporation or By-Laws, or of any
indenture, or other agreement or undertaking to which such Person is a party or
by which such Person or any of its property is bound or any judgment, decree or
order applicable to
13
such Person; (iv) do not, as of the execution hereof, require any governmental
consent, registration or approval except for approvals or consents which will be
obtained on or before the Closing Date and are described on Schedule 5.2 hereto;
(v) except as described on Schedule 5.2 hereto, do not contravene any
contractual or governmental restriction binding upon such Person; and (vi) will
not, except as contemplated herein, result in the imposition of any lien,
charge, security interest or encumbrance upon any property of such Person under
any existing indenture, mortgage, deed of trust, loan or credit agreement or
other material agreement or instrument to which such Person is a party or by
which it or any of its property may be bound or affected.
5.3 Binding Effect. The Financing Agreements to which Borrower or
any of Borrower's Subsidiaries are parties have been duly executed and delivered
by such Persons and constitute the legal, valid and binding obligations of such
Persons enforceable against such Persons in accordance with their terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws of general application
affecting enforcement of creditors' rights generally.
5.4 Financial Data. (A) Borrower has furnished to Lender the audited
financial statements of Borrower for the 1998 fiscal year and the unaudited
financial statements of Borrower for the 1999 fiscal year (collectively, the
"Financials") which are attached as Schedule 5.4(A). The Financials are in
accordance with the books and records of Borrower and fairly present the
financial condition of Borrower at the dates thereof and the results of
operations for the periods indicated and the Financials have been prepared in
accordance with GAAP (except, with respect to the unaudited financial statements
for Borrower's 1999 fiscal year, for the absence of footnotes and subject to
normal year-end adjustments). The historical financial statements to be
furnished to Lender in accordance with subsection 6.1 hereof will be in
accordance with the books and records of Borrower and will fairly present the
financial condition of Borrower at the dates thereof and the results of
operations for the periods indicated (subject, in the case of unaudited
financial statements, to normal year-end adjustments) and such financial
statements will be prepared in conformity with GAAP throughout the periods
involved. Since the date of the Financials, there have been no changes in the
condition, financial or otherwise, of Borrower as shown on the Financials,
except (a) as contemplated herein, and (b) for changes in the ordinary course of
business (none of which individually or in the aggregate has had or could
reasonably be expected to have a Material Adverse Effect).
(B) Borrower has also furnished to Lender its projections for the
period through December 31, 2000 (the "Projections") which are attached hereto
as Schedule 5.4(B). The Projections have been prepared by Borrower in good faith
and based on estimates and assumptions believed by Borrower and Borrower's
Subsidiaries and their management to be reasonable as of the date such
Projections were prepared, and it is Borrower's good faith belief that, subject
to such assumptions and estimates, such Projections are achievable by Borrower
and its Subsidiaries. All information, reports and other papers and data
furnished to Lender are or will be, at the time the same are so furnished,
accurate and correct in all material respects and complete insofar as
completeness may be necessary to give a true and accurate knowledge of the
subject matter thereof.
(C) The Pro Forma attached as Schedule 5.4(C) hereto was prepared by
Borrower based on the unaudited balance sheets of Borrower dated February [28],
2000 and was prepared
14
in accordance with GAAP.
5.5 Collateral. Except as permitted pursuant to subsection 7.1
hereof, all of the Collateral is owned by Borrower, has been duly authorized,
validly issued, fully paid for, is nonassessable and is free and clear of all
Liens, other than the lien of Xxxx Hog Investors, L.L.C., which is subordinated
to Lender's Lien. The books and records relating to the Collateral are located
at the locations set forth on Schedule 5.5 attached hereto.
5.6 Solvency. After giving effect to the funding of the initial
Loans hereunder, neither Borrower nor any of its Subsidiaries (i) is or will
thereby be rendered "insolvent" as that term is defined in Section 101(32) of
the Federal Bankruptcy Code (the "Bankruptcy Code") (11 U.S.C. ss. 101(32)),
Section 2 of the Uniform Fraudulent Transfer Act ("UFTA") or Section 2 of the
Uniform Fraudulent Conveyance Act ("UFCA"), (ii) has or will have "unreasonably
small capital," as that term is used in Section 548(a)(2)(B)(ii) of the
Bankruptcy Code or Section 5 of the UFCA, (iii) is or will be engaged or about
to engage in a business or a transaction for which its remaining property is
"unreasonably small" in relation to the business or transaction as that term is
used in Section 4 of the UFTA, (iv) is or will thereby be rendered unable to pay
its debts as they mature or become due, within the meaning of Section
548(a)(2)(B) (iii) of the Bankruptcy Code, Section 4 of the UFTA and Section 6
of the UFCA, and (v) owns or will as a result thereof own assets having a value,
either at "fair valuation" or at "present fair salable value", less than the
amount required to pay such Person's "debts" as such terms are used in Section 2
of the UFTA and Section 2 of the UFCA.
5.7 Chief Place of Business. As of the execution hereof, the
principal place of business and the chief executive office of Borrower and each
Subsidiary of Borrower is located at the location set forth in Schedule 5.7
hereto. If any change in any such location occurs, Borrower promptly shall
notify Lender thereof. As of the execution hereof, the books and records of
Borrower of each such Person, all records of account and all chattel paper (to
the extent the same have not been delivered to Lender) of each such Person are
located at the principal place of business and chief executive office of such
Person, and if any change in such location occurs, Borrower promptly shall
notify Lender thereof.
5.8 Other Names. Except as disclosed on Schedule 5.8 hereto, neither
Borrower nor any of its Subsidiaries is using any corporate or fictitious name
other than the corporate name shown on such Person's Articles of Incorporation.
5.9 Tax Liabilities. Borrower and each of Borrower's Subsidiaries
have filed all federal, state and local tax reports and returns required by any
law or regulation to be filed by it except for extensions duly obtained, and
have either duly paid all taxes, duties and charges indicated due on the basis
of such returns and reports, or have made adequate provision for the payment
thereof, and the assessment of any material amount of additional taxes in excess
of those paid and reported is not reasonably expected. Except as disclosed on
Schedule 5.9 hereto, no federal income tax returns of Borrower or any of
Borrower's Subsidiaries have been audited by the Internal Revenue Service. The
reserves for taxes reflected on the balance sheets included in the Financials
are, and the reserves for taxes reflected on the balance sheets of Borrower
submitted to Lender in accordance with the terms of subsection 6.1 hereof will
be, adequate in amount for the payment of all liabilities for all federal, state
and local taxes (whether
15
or not disputed) of Borrower and its Subsidiaries accrued through the date of
such balance sheets. Except as disclosed on Schedule 5.9 hereto, there are no
material unresolved questions or claims concerning any tax liability of Borrower
or any of Borrower's Subsidiaries.
5.10 Loans. Except as disclosed in the Pro Forma, and for trade
payables and normal accruals arising in the ordinary course of Borrower's and
its Subsidiaries' business since September 30, 1999, none of Borrower or any of
Borrower's subsidiaries currently has or is obligated in respect of any loans,
other indebtedness for borrowed money or any guaranties, except for the Working
Capital Credit Facility and except in favor of Lender.
5.11 Margin Stock. Neither Borrower nor any of its Subsidiaries owns
any margin security and none of the loans advanced or other credit provided to
Borrower hereunder will be used for the purpose of purchasing or carrying any
margin security or for the purpose of reducing or retiring any indebtedness
which was originally incurred to purchase any margin security or for any other
purpose not permitted by Regulation U, Regulation T or Regulation X or any other
regulation of the Board of Governors of the Federal Reserve System.
5.12 Litigation and Proceedings. Except as set forth on Schedule
5.12 attached hereto, there are no judgments outstanding against Borrower or any
of its Subsidiaries nor is there now pending or, to the best of Borrower's
knowledge after diligent inquiry, threatened, any litigation, investigations,
contested claim, or governmental proceeding by or against Borrower or any of its
Subsidiaries except judgments and pending or threatened litigation,
investigations, contested claims and governmental proceedings which are not, in
the aggregate, material to Borrower's or any of its Subsidiaries' business,
operations, condition (financial or otherwise) or prospects. Except as otherwise
described in Schedule 5.12, none of the matters listed in Schedule 5.12 could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.
5.13 Other Agreements. Neither Borrower nor any of its Subsidiaries
is in default in any material respect under any material contract, lease, or
commitment to which it is a party or by which it is bound. Borrower knows of no
material dispute regarding any contract, lease, or commitment which is material
to the continued financial success and well-being of Borrower or any of its
Subsidiaries.
5.14 Employee Controversies. Except as disclosed on Schedule 5.14
hereto, there are no controversies pending or, to the best of Borrower's
knowledge after diligent inquiry, threatened or anticipated, between Borrower or
any of its Subsidiaries, on the one hand and any of their respective employees,
or any collective bargaining units representing any of its employees on the
other hand, other than employee grievances arising in the ordinary course of
business which are not, in the aggregate, material to the continued financial
success and well-being of Borrower or any Subsidiary of Borrower or the business
of Borrower. Neither Borrower nor any of its Subsidiaries has any accrued and
unpaid liability to any of its employees arising under the Federal Fair Labor
Standards Act, as amended.
5.15 Compliance with Laws and Regulations; Environmental Matters.
(A) General Compliance. The execution and delivery by Borrower and
16
any Subsidiaries of Borrower of the Financing Agreements to which they are
parties and the performance of any such Person's obligations thereunder are not
in contravention of any law or laws. Borrower and its Subsidiaries are in
compliance with all laws, orders, regulations and ordinances of all federal,
foreign, state and local governmental authorities relating to their business,
operations and assets, except for laws, orders, regulations and ordinances the
violation of which would not, individually or in the aggregate, have a Material
Adverse Effect.
(B) Environmental, Health and Safety Compliance. Except as described
on Schedule 5.15(B) attached hereto: (i) the operations of Borrower and its
Subsidiaries comply in all material respects with all applicable federal, state
or local environmental, health and safety statutes and regulations; (ii) none of
the operations of Borrower or any of its Subsidiaries is subject to any judicial
or administrative proceeding alleging the violation in any material respect of
any federal, state or local environmental, health or safety statute or
regulation or is the subject of any federal or state investigation evaluating
whether any remedial action is needed to respond to a release of any hazardous
or toxic waste, substance or constituent, or other substance into the
environment or to remedy any occupational safety or health condition; (iii) none
of Borrower nor any of its Subsidiaries has filed any notice under any federal
or state law or regulation indicating past or present treatment, storage or
disposal of a hazardous waste or reporting a spill or release of a hazardous or
toxic waste, substance or constituent, or other substance into the environment;
and (iv) neither Borrower nor any of its Subsidiaries has any contingent
liability of which Borrower has knowledge or reasonably should have knowledge in
connection with any release of any hazardous or toxic waste, substance or
constituent, or any other substance into the environment. Except as otherwise
described on Schedule 5.15(B), the items disclosed on Schedule 5.15(B) would not
reasonably be expected to have a Material Adverse Effect.
5.16 Patents, Trademarks and Licenses. Borrower and its Subsidiaries
possess adequate assets, licenses, permits, patents, patent applications,
copyrights, service marks, trademarks, trademark applications, trade styles and
trade names, governmental approvals or other authorizations and other rights
that are necessary for each such Person to conduct its business as heretofore
conducted by Borrower and its Subsidiaries or as contemplated to be conducted by
Borrower and its Subsidiaries and all such licenses, permits, patents, patent
applications, copyrights, service marks, trademarks, trademark applications,
trade styles, trade names, governmental approvals or authorizations and other
rights are listed on Schedule 5.16 attached hereto.
5.17 ERISA. Neither Borrower nor any ERISA Affiliate of Borrower
maintains or contributes to any Plan other than a Plan listed on Schedule 5.17
attached hereto. Except as otherwise disclosed on Schedule 5.17 attached hereto,
neither Borrower nor any ERISA Affiliate of Borrower maintains or contributes to
any employee welfare benefit plan within the meaning of Subsection 3(1) of ERISA
which provides lifetime medical benefits to retirees. Neither Borrower nor any
ERISA Affiliate of Borrower has breached any of the responsibilities,
obligations or duties imposed on it by ERISA or regulations promulgated
thereunder with respect to any Plan such that Borrower would be subject to
liability for losses, penalties or excise taxes in an aggregate amount in excess
of $100,000. No accumulated funding deficiency (as defined in Section 302(a)(2)
of ERISA and Section 412(a) of the Internal Revenue Code) exists in respect to
any Benefit Plan. Neither Borrower nor any ERISA Affiliate of Borrower nor any
fiduciary of any Plan which is not a Multiemployer Plan (i) has engaged in a
nonexempt "prohibited
17
transaction" described in Section 406 of ERISA or Section 4975 of the Internal
Revenue Code, or (ii) has taken any action which would constitute or result in a
Termination Event with respect to any Plan, in each case which could result in
liability to Borrower or an ERISA Affiliate of Borrower in excess of $100,000.
Schedule B to the most recent annual report filed with the Internal Revenue
Service with respect to each Benefit Plan has been furnished to Lender and is
complete and accurate; since the date of each such Schedule B, there has been no
material adverse change in the funding status or financial condition of the
Benefit Plan relating to such Schedule B. Neither Borrower nor any ERISA
Affiliate of Borrower has incurred any liability to the PBGC which remains
outstanding other than for insurance premiums under Sections 4006 and 4007 of
ERISA. Neither Borrower nor any ERISA Affiliate of Borrower has (i) failed to
make a required contribution or payment to a Multiemployer Plan, or (ii) made or
expects to make a complete or partial withdrawal under Sections 4203 or 4205 of
ERISA from a Multiemployer Plan for which Borrower or any ERISA Affiliate of
Borrower has any liability. Neither Borrower nor any ERISA Affiliate of Borrower
has failed to make a required installment under Subsection (m) of Section 412 of
the Internal Revenue Code or any other payment required under Section 412 of the
Internal Revenue Code on or before the due date for such installment or other
payment. Neither Borrower nor any ERISA Affiliate of Borrower is required to
provide security to a Plan under Section 401(a) (29) of the Internal Revenue
Code due to a Plan amendment that results in an increase in current liability
for the plan year. The present value of the benefits of each Benefit Plan of
Borrower and each ERISA Affiliate of Borrower as of the last day of the year for
such plan, as determined by such Benefit Plan's independent actuaries, does not
exceed the aggregate value, as determined by such actuaries, of all assets under
such Benefit Plan by an aggregate amount in excess of $100,000 for all such
Plans. Borrower is not required to contribute to any Multiemployer Plan except
the Multiemployer Plans specifically identified on Schedule 5.17. Borrower has
given to Lender all of the following: a listing of all of the Multiemployer
Plans with the aggregate amount of the most recent annual contributions required
to be made by Borrower and all ERISA Affiliates of Borrower to each such
Multiemployer Plan; copies of any information which has been provided to
Borrower or any ERISA Affiliate of Borrower regarding withdrawal liability under
any Multiemployer Plan and all collective bargaining agreements pursuant to
which such contributions are required to be made; and copies of each employee
welfare benefit plan within the meaning of Subsection 3(1) of ERISA which
provides lifetime medical benefits to employees, the most recent summary plan
description for such plan and the aggregate amount of the most recent annual
payments made to terminated employees under each such plan. Each of the
foregoing statements will still be true and correct on the Closing Date and the
date of each advance hereunder.
5.18 Financial Condition. Since September 30, 1999, there has been
no Material Adverse Change.
5.19 Survival of Warranties. All representations and warranties
contained in this Agreement or any of the other Financing Agreements shall
survive the execution and delivery of this Agreement.
5.20 Bank Accounts. Schedule 5.20 sets forth the account numbers and
locations of all bank accounts of Borrower and its Subsidiaries which will be in
effect as of the Closing Date.
18
5.21 Subsidiaries. Schedule 5.21 to this Agreement (i) contains a
description of the corporate structure of Borrower and Borrower's Subsidiaries;
and (ii) accurately sets forth the authorized, issued and outstanding shares of
each class of capital stock and other outstanding equity interests of each such
Person and the owners of such shares and other equity interests.
5.22 Accuracy of Information. The written information, exhibits and
reports furnished by or on behalf of Borrower or any of its Subsidiaries to
Lender in connection with the Financing Agreements, and all certificates and
documents delivered to Lender pursuant to the terms thereof do not contain as of
the date furnished any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading.
5.23 Assets and Properties. Borrower and each of its Subsidiaries
has good and marketable title to all of its assets and properties (tangible and
intangible, real or personal) owned by it or a valid leasehold interest in all
of its leased assets and all such assets and property are free and clear of all
Liens, except Liens securing the Liabilities and Liens permitted under Section
7.1. Substantially all of the assets and properties owned by, leased to or used
by Borrower and/or each such Subsidiary of Borrower are in good operating
condition and repair, ordinary wear and tear excepted. Except for Liens granted
to Lender, neither this Agreement nor any other Financing Agreement, nor any
transaction contemplated under any such agreement, will affect any right, title
or interest of the Borrower or such Subsidiary in and to any of such assets in a
manner that would have or is reasonably likely to have a Material Adverse
Effect.
5.24 Insurance. Schedule 5.24 to this Agreement accurately sets
forth as of the Closing Date all insurance policies and programs which will be
in effect with respect to the respective properties and assets and business of
Borrower and its Subsidiaries, specifying for each such policy and program, (i)
the amount thereof, (ii) the risks insured against thereby, (iii) the name of
the insurer and each insured party thereunder, (iv) the expiration date thereof,
(v) the annual premium with respect thereto and (vi) a description of any
reserves relating to any self-insurance program that is in effect. Such
insurance policies and programs reflect coverage that is reasonably consistent
with prudent industry practice.
5.25 Contingent Obligations. Except as set forth on Schedule 5.25 to
this Agreement, neither the Borrower nor any of its Subsidiaries has, as of the
date of this Agreement, or will on the Closing Date become obligated in respect
of, any Contingent Obligation not reflected in the financial statements
delivered to Lender on or prior to the Closing Date or otherwise disclosed to
Lender in the other Schedules to this Agreement.
5.26 Account Warranties. As to each Account of Borrower (a) at the
time of its creation, such Account is and will be a valid, bona fide account,
representing an undisputed indebtedness incurred by the named Account Debtor for
goods actually sold and delivered or services actually performed; (b) to the
best of Borrower's knowledge there are not setoffs, offsets or counterclaims,
genuine or otherwise, against such Account; (c) such Account does not represent
a sale to an Affiliate or a consignment, sale or return or a xxxx and hold
transaction; (d) no agreement exists permitting any deduction or discount (other
than the discount stated on the invoice); (e) Borrower is the lawful owner of
such Account and has the right to
19
assign the same to Lender; (f) such Account is free of all security interests,
liens and encumbrances; (g) such Account is due and payable in accordance with
its terms; and (h) Borrower holds indefeasible title to such Account.
5.27 Broker's Fees. No broker's, finder's, due diligence,
structuring, commitment, closing or debt or equity placement fees, commissions
or similar compensation will be payable by Borrower with respect to any of the
transactions contemplated hereby except as disclosed in Schedule 3.1, all of
which will be paid by Borrower on the Closing Date.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that so long as any Commitments remain
in effect and until payment in full of all Liabilities (other than
indemnification Liabilities pursuant to subsection 9.19 hereof to the extent no
claims giving rise thereto have then been asserted) and termination of this
Agreement:
6.1 Financial Statements and Other Reports. Borrower and its
Subsidiaries shall keep proper books of record and account in which full and
true entries will be made of all dealings or transactions of or in relation to
the business and affairs of Borrower and its Subsidiaries, in accordance with
GAAP, and Borrower shall cause to be furnished to Lender:
(A) Monthly. As soon as practicable, and in any event within thirty
(30) days after the end of each fiscal month (including each fiscal month
occurring during the 90-day delivery period applicable to the delivery of annual
financial statements of Borrower and its Subsidiaries furnished to Lender
pursuant to subsection 6.1(B) hereof):
(i) unaudited consolidated and consolidating statements of income,
retained earnings and cash flow of Borrower and its Subsidiaries for such
fiscal month and for the period from the beginning of the then current
Fiscal Year to the end of such fiscal month and the consolidated and
consolidating balance sheets of Borrower and its Subsidiaries as of the
end of such fiscal month, setting forth in each case, in comparative form,
figures (1) in the case of statements, for the corresponding periods in
the preceding Fiscal Year and (2) in the case of balance sheets, as of a
date one year earlier, all in reasonable detail and certified by the chief
financial officer of Borrower, as having been prepared in accordance with
GAAP (except for the absence of footnotes) and fairly presenting (subject
to normal year-end audit adjustments) the financial condition and results
of operations of Borrower and each of its Subsidiaries at the dates and
for the periods indicated therein, such certification to be in the form of
Exhibit B hereto; and
(ii) statements in which the actual cash flow and income for such
fiscal month and for the period from the start of the then current Fiscal
Year to the end of such fiscal month, and the actual balance sheets at the
end of such fiscal month (in each case as required to be delivered
pursuant to subsection 6.1(A)(i) hereof) are compared with the
corresponding projected statements of income and cash flow and balance
sheets for such periods and time furnished to Lender pursuant to
subsection 6.1(C) below, in each case in the same format as the audited
statements of income and cash flow and the audited
20
balance sheet; and
(iii) a management report commenting on the financial performance of
the Borrower for such fiscal month and for the period from the start of
the then current Fiscal Year to the end of such fiscal month and on any
deviations in results from those for the same periods in the prior Fiscal
Year and from the budget for the current Fiscal Year period.
(B) Annual. As soon as practicable and in any event within ninety
(90) days after the end of each Fiscal Year of Borrower, consolidated and
consolidating statements of income, retained earnings and cash flow of Borrower
and its Subsidiaries for such Fiscal Year, and the consolidated and
consolidating balance sheets of Borrower and its Subsidiaries as of the end of
such Fiscal Year, setting forth in each case, in comparative form, corresponding
figures for the period covered by the preceding annual audit (in the case of
statements) and as of the end of the preceding Fiscal Year (in the case of
balance sheets), all in reasonable detail and satisfactory in scope to Lender
and audited by independent certified public accountants selected by Borrower and
reasonably satisfactory to Lender, whose opinion shall be prepared in accordance
with Statement of Auditing Standards No. 58 (the "Statement") entitled "Reports
on Audited Financial Statements" and shall be "Unqualified" (as such term is
defined in such Statement), and Borrower shall use its best efforts to cause
such opinion to be the subject of a reliance letter from such accountants
permitting Lender to rely on the contents thereof;
(C) Projections. As soon as practicable and in any event within
thirty (30) days before the start of each Fiscal Year of Borrower, annual
projections of Borrower and its Subsidiaries for the succeeding Fiscal Year in
detail (on a fiscal month basis), including statements of anticipated income and
cash flow and balance sheets of Borrower and its Subsidiaries for the succeeding
Fiscal Year (on a fiscal month basis) in detail;
(D) All financial statements delivered to Lender pursuant to the
requirements of subsections 6.1(A)-(C) (except where otherwise expressly
indicated) shall be prepared in accordance with GAAP, consistently applied
(subject in the case of interim financial statements to the lack of footnotes
and normal year-end adjustments). Together with each delivery of financial
statements required by subsection 6.1(B) hereof, Borrower shall deliver to
Lender a certificate of the independent certified public accountants who
performed the audit in connection with such statements stating that in making
the audit necessary to the issuance of a report on such financial statements,
they have obtained no knowledge of any Default or Unmatured Default, or, if such
accountants have obtained knowledge of a Default or Unmatured Default,
specifying the nature and period of existence thereof. Such accountants shall
not be liable by reason of any failure to obtain knowledge of any Default or
Unmatured Default which would not be disclosed in the ordinary course of an
audit;
(E) Letters from Accountants and Consultants. As soon as practicable
and in any event within ten (10) days of delivery to Borrower, a copy of (i)
each "Management Letter" prepared by Borrower's independent certified public
accountants in connection with the financial statements referred to in
subsection 6.1(B) hereof and (ii) to the extent that such letters may from time
to time be issued by Borrower's independent certified public accountants or
other management consultants, any letter issued by Borrower's independent
certified public accountants
21
or other management consultants with respect to recommendations relating to
Borrower's financial or accounting systems or controls;
(F) Default Notices. As soon as practicable (but in any event not
more than five (5) days after any Authorized Officer of Borrower obtains
knowledge of the occurrence of an event or the existence of a circumstance
giving rise to an Unmatured Default or a Default), notice of any and all
Unmatured Defaults or Defaults hereunder;
(G) Indebtedness Notices. Borrower shall promptly deliver copies of
all notices given or received by Borrower or any of its Subsidiaries with
respect to noncompliance with any term or condition related to any Indebtedness
in excess of $1,000,000 either individually or in the aggregate, and shall
promptly notify Lender of any potential or actual event of default with respect
to any such Indebtedness; and
(H) Other Information. With reasonable promptness, such other
business or financial data as Lender may reasonably request.
Lender acknowledges that as of the date hereof, Borrower has one Subsidiary
located in Germany, and that Borrower does not create consolidated financial
statements for it and such Borrower.
6.2 Inspection. Lender, or any Person designated by Lender in
writing, shall have the right, from time to time hereafter following reasonable
prior notice to Borrower (provided that no prior notice shall be required during
the pendency of a Default), to call at Borrower's or any of its Subsidiaries'
place or places of business (or any other place where the Collateral or other
assets of such Persons or any information relating thereto are kept or located)
during reasonable business hours, and, without hindrance or delay, (i) to
inspect, audit, check and make copies of and extracts from Borrower's or any of
its Subsidiaries' books and records relating to, and to make any verification
concerning, the Collateral as Lender may consider reasonable under the
circumstances, and (ii) to discuss the affairs, finances and business of
Borrower or any of its Subsidiaries with any officers, employees or directors of
Borrower or any of its Subsidiaries; provided, however, that such inspections
shall be limited to one (1) time during each calendar year (except that such
inspections shall not be so limited during the pendency of a Default). Borrower
shall pay on demand all photocopying expenses incurred by Lender under this
subsection 6.2.
6.3 Maintenance of Licenses, Etc. Borrower shall, and shall cause
each of its Subsidiaries to, maintain its corporate existence and maintain in
full force and effect all material licenses, bonds, franchises, leases, patents,
permits, contracts and other rights necessary to the profitable conduct of its
business conducted by it. Borrower shall, and shall cause each of its
Subsidiaries to, comply in all material respects with all material laws, orders,
regulations and ordinances of any federal, foreign, state or local governmental
authority. Borrower shall, and shall cause each of its Subsidiaries to, pay
promptly all liabilities to all of its employees arising under the minimum wage
and maximum hour provisions of the Fair Labor Standards Act, as the same may be
amended from time to time.
6.4 Claims and Taxes. Borrower shall, and shall cause each of its
22
Subsidiaries to, pay or cause to be paid all license fees, bonding premiums and
related taxes and charges, and shall, and shall cause each of its Subsidiaries
to, pay or cause to be paid all of such Persons' real and personal property
taxes, assessments and charges and all of such Persons' franchise, income,
unemployment, use, excise, old age benefit, withholding, sales and other taxes
and other governmental charges assessed against such Persons, or payable by such
Persons, at such times and in such manner as to prevent any penalty from
accruing or any lien or charge from attaching to its property, provided that
Borrower and its Subsidiaries shall have the right to contest in good faith, by
an appropriate proceeding promptly initiated and diligently conducted, the
validity, amount or imposition of any such tax, assessment or charge, and during
the pendency of such good faith contest to delay or refuse payment thereof, if
(i) Borrower and its Subsidiaries establish adequate reserves to cover such
contested taxes, assessments or charges and (ii) such contest does not have a
Material Adverse Effect or otherwise result in an Unmatured Default or a
Default.
6.5 Lender's Closing Costs and Expenses. Borrower shall reimburse
Lender in accordance with subsection 9.2 hereof for all reasonable expenses and
fees paid or incurred in connection with the underwriting, documentation,
negotiation and closing of the Loans and other extensions of credit described
herein, including, without limitation, lien search, filing and recording fees
and taxes and the reasonable fees and expenses of Lender's attorneys and
paralegals (whether such attorneys and paralegals are employees of Lender or are
separately engaged by Lender), whether such expenses and fees are incurred prior
to or after the Closing Date. All reasonable costs and expenses incurred by
Lender with respect to the negotiation, documentation and closing of the Loans
and other extensions of credit described herein and the enforcement, collection
and protection of Lender's interest in the Collateral shall be additional
Liabilities of Borrower to Lender, payable in accordance with subsection 9.2,
repaid as provided in subsection 2.7 hereof, and secured by the Collateral.
6.6 Borrower's Liability Insurance. In addition to insurance
required by subsection 6.7 hereof, Borrower shall, and shall cause its
Subsidiaries to, maintain, at their expense, such public liability, third party
property damage and other insurance, in such amounts and with such deductibles
as is ordinarily carried by other businesses engaged in the same or similar
business and as is reasonably acceptable to Lender.
6.7 Business Interruption Insurance. Borrower shall, and shall cause
its Subsidiaries to, at their expense, keep and maintain their respective assets
insured against loss or damage by fire, theft, burglary, pilferage, loss in
transit, explosion, spoilage and all other hazards and risks ordinarily insured
against by other owners or users of such properties in similar businesses, and
shall maintain business interruption insurance in each case in an amount at
least equal to the lesser of (i) the outstanding principal balance of the
Liabilities and (ii) the replacement value of all such property. All such
policies of insurance shall be in form and substance reasonably satisfactory to
Lender. Borrower shall deliver to Lender a certificate of insurance for each of
its policies of insurance and evidence of payment of all premiums therefor. Such
policies of insurance shall contain an endorsement, substantially in the form
attached hereto as Exhibit C. If Borrower at any time or times hereafter shall
fail to obtain or maintain any of the policies of insurance required above or to
pay any premium in whole or in part relating thereto, then Lender, without
waiving or releasing any obligation or Default by Borrower hereunder, may at any
time or times thereafter (but shall be under no obligation to do so) obtain and
maintain such policies of
23
insurance and pay such premiums and take any other action with respect thereto
which Lender deems advisable.
6.8 ERISA Reporting.Borrower shall deliver to Lender, at Borrower's
expense, the following information, if applicable, as and when provided below:
(i) as soon as possible, and in any event within ten (10) days after
Borrower or an ERISA Affiliate of Borrower knows or has reason to know
that a Termination Event has occurred, a written statement of an
Authorized Officer of Borrower describing such Termination Event and the
action, if any, which Borrower or such ERISA Affiliate of Borrower has
taken, is taking or proposes to take with respect thereto, and when known,
any action taken or threatened by the Internal Revenue Service ("IRS"),
the Department of Labor ("DOL") or PBGC with respect thereto;
(ii) as soon as possible, and in any event within thirty (30) days,
after Borrower or an ERISA Affiliate of Borrower knows or has reason to
know that a prohibited transaction (defined in Section 406 of ERISA and
Section 4975 of the Internal Revenue Code) has occurred, a statement of an
Authorized Officer of Borrower describing such transaction;
(iii) promptly after the filing thereof with the IRS, a copy of each
funding waiver request filed with respect to any Benefit Plan and all
communications received by Borrower or any ERISA Affiliate of Borrower
with respect to such request;
(iv) promptly upon, and in any event within four (4) Business Days
after, receipt by Borrower or an ERISA Affiliate of Borrower of the PBGC's
intention to terminate a Benefit Plan or to have a trustee appointed to
administer a Benefit Plan, copies of each such notice;
(v) promptly upon, and in any event within four (4) Business Days
after, receipt by Borrower or an ERISA Affiliate of Borrower of a notice
from a Multiemployer Plan regarding the imposition of withdrawal
liability, copies of such notice; and
(vi) promptly upon, and in any event within ten (10) Business Days
after, either Borrower or an ERISA Affiliate of Borrower fails to make a
required installment under Subsection (m) of Section 412 of the Code or
any other payment required under Section 412 on or before the due date for
such installment or payment, a notification of such failure.
6.9 Notice of Suit or Adverse Change in Business. Borrower shall, as
soon as possible, and in any event within five (5) Business Days after any
Authorized Officer of Borrower learns of the following, give written notice to
Lender of (i) any material proceeding(s) (including, without limitation,
litigation, investigations, arbitration or governmental proceedings) being
instituted or threatened to be instituted by or against Borrower or any of its
Subsidiaries in any federal, state, local or foreign court or before any
commission or other regulatory body (federal, state, local or foreign), (ii)
notice that Borrower's or any of its Subsidiaries' operations
24
are not in full compliance with all requirements of applicable federal, state or
local environmental, health and safety statutes and regulations, except for
notices as to matters which, either individually or in the aggregate, could not
have a Material Adverse Effect, (iii) notice that Borrower or any of its
Subsidiaries is subject to a federal or state investigation evaluating whether
any remedial action is needed to respond to the release of any hazardous or
toxic waste, substance or constituent, or other substance into the environment,
(iv) notice that any properties or assets of Borrower or any of its Subsidiaries
are subject to an Environmental Lien, and (v) any Material Adverse Change.
6.10 Environmental Safety and Health Laws. If Borrower or any of its
Subsidiaries shall (a) receive any notice that any violation of any federal,
state or local environmental law or regulation may have been committed or is
about to be committed by Borrower or any of its Subsidiaries, (b) receive any
notice that any administrative or judicial complaint or order has been filed or
is about to be filed against Borrower or any of its Subsidiaries for a violation
of any federal, state or local environmental law or regulation or requiring
Borrower or any of its Subsidiaries to take any action in connection with the
release of toxic or hazardous substances into the environment, or (c) receive
any notice from a federal, state, or local governmental agency or private party
alleging that Borrower or any of its Subsidiaries may be liable or potentially
responsible for costs associated with a response to or cleanup of a release of a
toxic or hazardous substance into the environment or any damages caused thereby,
Borrower shall provide Lender with a copy of such notice or, in the event of any
such verbal notice, a written description of such communication within fifteen
(15) days of Borrower's receipt thereof.
6.11 Supplemental Disclosure. At any time that Borrower shall
determine or at the request of Lender (in the event that such information is not
otherwise delivered by Borrower to Lender, but not more frequently than every
fiscal quarter), Borrower shall supplement each Schedule herein with respect to
any matter hereafter arising which, if existing or occurring at the date of this
Agreement, would have been required to be set forth or described in such
schedule or as an exception to such representation or which is necessary to
correct any information in such schedule or representation which has been
rendered inaccurate in any material respect thereby; provided, however, that
such supplement shall not be or be deemed a waiver of any Default or Unmatured
Default disclosed therein or of any misrepresentation made prior to such time.
6.12 Collateral Records. Borrower shall keep proper books and
records relating to the Collateral and shall, upon request of Lender, xxxx such
material books and records to indicate Lender's security interests in the
Collateral, for the benefit of Lender.
6.13 Endorsement. Borrower hereby constitutes and appoints Lender
and all Persons designated by Lender for that purpose as Borrower's true and
lawful attorney-in-fact, with power to endorse Borrower's name to any and all
proceeds of Collateral that come into Lender's possession or under Lender's
control. Both the appointment of Lender as Borrower's attorney and Lender's
rights and powers are coupled with an interest and are irrevocable until payment
in full and complete performance of all of the Liabilities.
6.14 Maintenance of Properties. Borrower will, and will cause each
of
25
its Subsidiaries to, maintain or cause to be maintained in good repair, working
order and condition (ordinary wear and tear excepted) all material properties
necessary to the conduct of the business of any such Person and will make or
cause to be made all appropriate repairs, renewals and/or replacements thereof.
6.15 Collateral Locations. Borrower will keep the Collateral at the
locations specified on Schedule 5.5. With respect to any new location (which in
any event shall be within the continental United States), Borrower will execute
such documents and take such actions as Lender deems necessary to perfect and
protect the security interests of Lender in the Collateral prior to the transfer
or removal of any Collateral to such new location.
6.16 Use of Proceeds and Margin Security. Borrower shall use the
proceeds of all Loans for proper business purposes (as described in the recitals
to this Agreement) consistent with all applicable laws, statutes, rules and
regulations. No portion of the proceeds of any Loan shall be used by Borrower or
any of its Subsidiaries for the purpose of purchasing or carrying margin stock
within the meaning of Regulation U, or in any manner that might cause the
borrowing, the application of such proceeds, or the transactions contemplated
hereby or by the other Financing Agreements to violate Regulation T or
Regulation X or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Securities Exchange Act of 1934 or the rules
and regulations thereunder.
6.17 Appraisals. Borrower shall, at the request of Lender, at any
time after the occurrence of a Default, provide Lender, at Borrower's expense,
with valuations or appraisals or updates thereof of any or all of the Collateral
from an appraiser satisfactory to Lender.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that so long as any of the Commitments
remain in effect and until payment in full of all Liabilities (other than
indemnification Liabilities pursuant to subsection 9.19 hereof to the extent no
claims giving rise thereto have then been asserted) and termination of this
Agreement:
7.1 Encumbrances. Neither Borrower nor any of its Subsidiaries will
create, incur, assume or suffer to exist any Liens on the Collateral, other than
(collectively, "Permitted Liens"): (i) Liens securing the payment of taxes,
either not yet due or the validity of which is being contested in good faith by
appropriate proceedings, and as to which Borrower shall, if appropriate under
GAAP, have set aside on its books and records adequate reserves, (ii) deposits
under workmen's compensation, unemployment insurance, social security and other
similar laws, or to secure the performance of bids, tenders or contracts (other
than for the repayment of borrowed money) or to secure indemnity, performance or
other similar bonds for the performance of bids, tenders or contracts (other
than for the repayment of borrowed money) or to secure statutory obligations or
surety or appeal bonds, or to secure indemnity, performance or other similar
bonds in the ordinary course of business, (iii) Liens in favor of Lender, (iv)
Liens which arise by operation of law, other than Environmental Liens, (v) Liens
on the Collateral securing Borrower's indebtedness under the Working Capital
Credit Facility, so long as such
26
Liens are perfected second in time and are subordinate to Lender's Liens on the
Collateral; and (vi) other Liens (excluding Liens securing Indebtedness), which
do not, in Lender's sole good faith determination, materially lessen the value
of the Collateral or the value of Lender's Liens therein, or prohibit Lender's
ability to foreclose on the Collateral. All such Liens existing on the Closing
Date are identified on Schedule 7.1. Neither Borrower nor any of its
Subsidiaries shall permit the filing of any financing statement covering the
Collateral, except for financing statements filed with respect to Liens
expressly permitted by this Agreement.
7.2 Restrictions on Distributions. Borrower will not, and will not
permit any of its Subsidiaries to, create or otherwise become effective any
consensual encumbrance or restriction of any kind on the ability of any such
Subsidiary to make distributions or make any other distribution on its stock,
pay any Indebtedness or other obligation owed to Borrower, make loans or
advances or other investments in Borrower, or sell, transfer or otherwise convey
any of its property to Borrower, except as set forth in this Agreement.
8. DEFAULT, RIGHTS AND REMEDIES OF LENDER.
8.1 Defaults. If any of the following events ("Defaults") shall
occur:
(A) Borrower (i) fails to pay when due or declared due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) any
of the Liabilities consisting of principal or interest with respect to the Loans
or (ii) fails to pay within three (3) Business Days of the date when due or
declared due (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise) any of the other Liabilities;
(B) (i) a proceeding under any bankruptcy, reorganization,
arrangement of debt, insolvency, readjustment of debt or receivership law or
statute is filed (a) against Borrower or any of Borrower's Subsidiaries and such
proceeding remains undismissed for a period in excess of sixty (60) days, or an
order for relief is entered, or (b) by Borrower or any of Borrower's
Subsidiaries or (ii) Borrower or any of Borrower's Subsidiaries shall make an
assignment for the benefit of creditors; or Borrower or any of Borrower's
Subsidiaries shall take any corporate action to authorize any of the foregoing
in this clause (G);
(C) Borrower or any of Borrower's Subsidiaries shall become
insolvent or shall fail generally to pay its debts as they become due;
(D) A default, as defined under the documents evidencing the Working
Capital Credit Facility, shall occur thereunder, which default shall give the
lender thereunder the right to accelerate the indebtedness evidenced thereby.
then Lender may, upon notice to Borrower (i) terminate Lender's obligation to
make advances to Borrower pursuant to subsection 2.1 hereof, and/or (ii) declare
all or any portion of the Liabilities to be immediately due and payable,
whereupon all or such portion of the Liabilities shall become immediately due
and payable and Lender shall not be obligated to make any further advances to
Borrower, except that in the event a Default described in subsection 8.1(B)
hereof shall exist or occur, all of the Liabilities shall automatically, without
notice of any kind, be immediately due and
27
payable and Lender shall not be obligated to make any further advances to
Borrower.
8.2 Rights and Remedies Generally. In the event of a Default, Lender
shall have, in addition to any other rights and remedies contained in this
Agreement or in any of the other Financing Agreements, all of the rights and
remedies of a secured party under the Code or other applicable laws, all of
which rights and remedies shall be cumulative, and non-exclusive, to the extent
permitted by law. In addition to all such rights and remedies, the sale, lease
or other disposition of the Collateral, or any part thereof, by Lender after
Default may be for cash, credit or any combination thereof, and Lender may
purchase all or any part of the Collateral at public or, if permitted by law,
private sale, and in lieu of actual payment of such purchase price, may setoff
the amount of such purchase price against the Liabilities then owing. Any sales
of the Collateral may be adjourned from time to time with or without notice.
Lender may, in its sole discretion, cause the Collateral to remain on Borrower's
premises, at Borrower's expense, pending sale or other disposition of the
Collateral. Lender shall have the right to conduct such sales on Borrower's
premises, at Borrower's expense, or elsewhere, on such occasion or occasions as
Lender may see fit.
8.3 Entry Upon Premises and Access to Information. In the event of a
Default, Lender shall have the right to enter upon the premises of Borrower or
any of its Subsidiaries where the Collateral is, or books and records relating
to the Collateral are, located (or is/are believed to be located) without any
obligation to pay rent to Borrower or any of its Subsidiaries, or any other
place or places where the Collateral or books and records are believed to be
located and kept, and remove the Collateral therefrom to the premises of Lender
or any agent of Lender, for such time as Lender may desire, in order effectively
to collect or liquidate the Collateral, and/or Lender may require Borrower to
assemble the Collateral and make it available to Lender at a place or places to
be designated by Lender.
8.4 Sale or Other Disposition of Collateral by Lender. Any notice
required to be given by Lender of a sale, lease or other disposition or other
intended action by Lender with respect to any of the Collateral which is
delivered to Borrower in accordance with subsection 9.17 hereof, at least ten
(10) Business Days prior to such proposed action, shall constitute fair and
reasonable notice to Borrower of any such action. The net proceeds realized by
Lender upon any such sale or other disposition, after deduction for the expense
of retaking, holding, preparing for sale, selling or the like and the reasonable
attorneys' fees and legal expenses incurred by Lender in connection therewith,
shall be applied as provided herein toward satisfaction of the Liabilities,
including, without limitation, the Liabilities described in subsections 6.5 and
9.2 hereof. Lender shall account to Borrower for any surplus realized upon such
sale or other disposition, and Borrower shall remain liable for any deficiency.
The commencement of any action, legal or equitable, or the rendering of any
judgment or decree for any deficiency shall not affect Lender's security
interest in the Collateral until the Liabilities are fully paid. Borrower agrees
that Lender has no obligation to preserve rights to the Collateral against any
other parties.
8.5 Waiver of Demand. Demand, presentment, protest and notice of
nonpayment are hereby waived by Borrower. Borrower also waives the benefit of
all valuation, appraisal and exemption laws.
8.6 Waiver of Notice. UPON THE OCCURRENCE AND DURING
28
THE CONTINUANCE OF A DEFAULT, BORROWER HEREBY WAIVES ALL RIGHTS TO NOTICE AND
HEARING OF ANY KIND PRIOR TO THE EXERCISE BY LENDER OF ITS RIGHTS TO REPOSSESS
THE COLLATERAL WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE
COLLATERAL WITHOUT PRIOR NOTICE OR HEARING. BORROWER ACKNOWLEDGES THAT IT HAS
BEEN ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO THIS TRANSACTION AND THIS
AGREEMENT.
9. MISCELLANEOUS.
9.1 Amendments and Waivers.
(A) Except as otherwise provided herein, no amendment, modification,
termination or waiver of any provision of this Agreement, the Term Note or any
other Financing Agreement, or consent to any departure by Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by Lender.
(B) Each amendment, modification, termination or waiver shall be
effective only in the specific instance and for the specific purpose for which
it was given. No amendment, modification, termination or waiver shall be
required for Lender to take additional Collateral pursuant to any Financing
Agreement.
9.2 Costs and Attorneys' Fees. If at any time or times Lender
employs counsel in connection with protecting or perfecting Lender's security
interest in the Collateral or if at any time Lender employs counsel in
connection with any matters contemplated by or arising out of this Agreement or
any of the other Financing Agreements, whether (a) to prepare, negotiate or
execute (i) this Agreement, the other Financing Agreements or any amendment to
or modification or extension of this Agreement, any other Financing Agreements
or any instrument, document or agreement executed by any Person in connection
with the transactions contemplated by this Agreement, (ii) any new or
supplemental Financing Agreements, or any instrument, document or agreement to
be executed by any Person in connection with the transactions contemplated by
this Agreement, or (iii) any instrument, document or agreement in connection
with any sale or attempted sale of any interest herein to any participant or
Lender, (b) to commence, defend, or intervene in any litigation or to file a
petition, complaint, answer, motion or other pleadings, (c) to take any other
action in or with respect to any suit or proceeding (bankruptcy or otherwise),
(d) to consult with officers of Lender to advise Lender, (e) to protect,
collect, sell, take possession of, release or liquidate any of the Collateral,
or (f) to attempt to enforce or to enforce any security interest in any of the
Collateral, or to enforce any rights of Lender, including, without limitation,
Lender's rights to collect any of the Liabilities, then in any of such events,
all of the attorneys' fees arising from such services, and any expenses, costs
and charges relating thereto, including, without limitation, all reasonable fees
of all paralegals and other staff employed by such attorneys, together with
interest following demand for payment thereof at the rate from time to time
prescribed in subsection 2.7(A) hereof, shall be part of the Liabilities and
secured by the Collateral. All of the foregoing costs and expenses shall be
payable on demand.
9.3 Expenditures by Lender. In the event Borrower shall fail to pay
29
taxes, insurance, assessments, costs or expenses which Borrower is, under any of
the terms hereof, required to pay, or fails to keep the Collateral free from
other security interests, liens or encumbrances, except as permitted herein,
Lender may, in its sole discretion exercised in good faith, make expenditures
for any or all of such purposes, and the amount so expended, together with
interest thereon at the rate prescribed in subsection 2.7(A) hereof, shall be
part of the Liabilities, payable on demand and secured by the Collateral.
9.4 Custody and Preservation of Collateral. Lender shall be deemed
to have exercised reasonable care in the custody and preservation of any of the
Collateral in its possession if it takes such action for that purpose as
Borrower shall request in writing, but failure by Lender to comply with any such
request shall not of itself be deemed a failure to exercise reasonable care, and
no failure by Lender to preserve or protect any right with respect to such
Collateral against prior parties, or to do any act with respect to the
preservation of such Collateral not so requested by Borrower shall of itself be
deemed a failure to exercise reasonable care in the custody or preservation of
such Collateral.
9.5 Reliance by Lender. All covenants, agreements, representations
and warranties made herein by Borrower shall, notwithstanding any investigation
by Lender, be deemed to be material to and to have been relied upon by Lender.
9.6 Assignment; Parties. Whenever in this Agreement there is
reference made to any of the parties hereto, such reference shall be deemed to
include, wherever applicable, a reference to the successors and assigns of
Borrower and the successors and assigns of Lender, and the provisions of this
Agreement shall be binding upon and shall inure to the benefit of said
successors and assigns. Notwithstanding anything herein to the contrary,
Borrower may not assign or otherwise transfer its rights or obligations under
this Agreement without the prior written consent of Lender.
9.7 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS AND NOT THE CONFLICT
OF LAW PROVISIONS OF THE STATE OF ILLINOIS. ANY DISPUTE BETWEEN THE PARTIES
HERETO ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, AND
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN
ACCORDANCE WITH THE INTERNAL LAWS AND NOT THE CONFLICTS OF LAW PROVISIONS OF THE
STATE OF ILLINOIS.
9.8 CONSENT TO JURISDICTION.
(A) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION 9.8(B)
HEREOF LENDER AND BORROWER AGREE THAT ALL DISPUTES BETWEEN THEM ARISING OUT OF,
CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN
THEM IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT,
EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR FEDERAL COURTS LOCATED
IN XXXX COUNTY, ILLINOIS, BUT LENDER AND
30
BORROWER ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY
A COURT LOCATED OUTSIDE OF XXXX COUNTY, ILLINOIS. BORROWER WAIVES IN ALL
DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING
THE DISPUTE.
(B) OTHER JURISDICTIONS. BORROWER AGREES THAT LENDER SHALL HAVE THE
RIGHT TO PROCEED AGAINST BORROWER OR THE COLLATERAL IN A COURT IN ANY LOCATION
TO ENABLE LENDER TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
LIABILITIES, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
LENDER. BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE
COURT IN WHICH LENDER HAS COMMENCED A PROCEEDING DESCRIBED IN THIS SUBSECTION
9.8(B).
9.9 SERVICE OF PROCESS. BORROWER IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS OUT OF THE COURTS REFERRED TO IN SUBSECTION 9.8 HEREOF IN ANY ACTION
OR PROCEEDING BY MAILING COPIES OF SUCH SERVICE BY REGISTERED MAIL, POSTAGE
PREPAID TO BORROWER AT ITS ADDRESS SET FORTH IN SUBSECTION 9.17 HEREOF. BORROWER
HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID. NOTHING IN THIS AGREEMENT
SHALL AFFECT THE RIGHT OF AGENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW.
9.10 WAIVER OF JURY TRIAL AND BOND.
(A) WAIVER OF JURY TRIAL. BORROWER AND LENDER WAIVE ANY RIGHT TO
HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE, BETWEEN LENDER AND BORROWER ARISING OUT OF, CONNECTED WITH,
RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION THEREWITH OR THE TRANSACTIONS RELATED
THERETO. BORROWER AND LENDER HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY
AND THAT ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR 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.
(B) WAIVER OF BOND. BORROWER WAIVES THE POSTING OF ANY BOND
OTHERWISE REQUIRED OF LENDER IN CONNECTION WITH ANY JUDICIAL PROCESS OR
PROCEEDING TO OBTAIN POSSESSION OF, REPLEVY, ATTACH OR LEVY UPON COLLATERAL OR
ANY OTHER SECURITY FOR THE LIABILITIES, TO ENFORCE ANY JUDGMENT OR OTHER COURT
ORDER ENTERED IN FAVOR OF LENDER, OR TO ENFORCE BY SPECIFIC PERFORMANCE,
TEMPORARY RESTRAINING ORDER, PRELIMINARY OR PERMANENT INJUNCTION, THIS
AGREEMENT, OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN
31
LENDER AND BORROWER.
9.11 ADVICE OF COUNSEL. BORROWER ACKNOWLEDGES AND REPRESENTS TO
LENDER THAT IT HAS DISCUSSED THIS AGREEMENT WITH ITS LAWYERS.
9.12 SEVERABILITY. WHEREVER POSSIBLE, EACH PROVISION OF THIS
AGREEMENT SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER
APPLICABLE LAW, BUT IF ANY PROVISION OF THIS AGREEMENT SHALL BE PROHIBITED BY OR
INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE INEFFECTIVE ONLY TO THE
EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF
SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS AGREEMENT.
9.13 Application of Payments. Notwithstanding any contrary provision
contained in this Agreement or in any of the other Financing Agreements,
Borrower irrevocably waives upon the occurrence and during the continuance of a
Default the right to direct the application of any and all payments at any time
or times hereafter received by Lender from Borrower or with respect to any of
the Collateral to the Liabilities then due and owing and Borrower does hereby
irrevocably agree that Lender shall have the exclusive right to apply such
payments against the Liabilities then due and owing in such manner as Lender may
deem advisable. Borrower does hereby irrevocably agree that Lender shall have
the continuing exclusive right to apply and reapply any and all payments
received at any time or times after the occurrence and during the continuance of
a Default, whether with respect to the Collateral or otherwise, against the
Liabilities in such manner as Lender may deem advisable, notwithstanding any
entry by Lender upon any of its books and records.
9.14 Marshaling; Payments Set Aside. Lender shall not be under any
obligation to xxxxxxxx any assets in favor of Borrower or any other party or
against or in payment of any or all of the Liabilities. To the extent that
Borrower makes a payment or payments to Lender or Lender enforces its security
interests or exercises its rights of setoff, and such payment or payments or the
proceeds of such enforcement or setoff or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such recovery, the obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such enforcement or setoff had not occurred.
9.15 Section Titles. The section titles contained in this Agreement
shall be without substantive meaning or content of any kind whatsoever and are
not a part of the agreement between the parties.
9.16 Continuing Effect. This Agreement, Lender's security interests
in the Collateral, and all of the other Financing Agreements shall continue in
full force and effect so long as any Liabilities shall be owed to Lender, and
(even if there shall be no Liabilities outstanding) so long as this Agreement
has not been terminated as provided in subsection 2.9
32
hereof.
9.17 Notices. Except as otherwise expressly provided herein, any
notice required or desired to be served, given or delivered hereunder shall be
in writing, and shall be deemed to have been validly served, given or delivered
(i) three (3) days after deposit in the United States mails, with proper first
class postage prepaid (and by certified or registered mail, return receipt
requested), (ii) when sent after receipt of confirmation or answerback if sent
by telecopy, or other similar facsimile transmission, (iii) one (1) Business Day
after deposited with a reputable overnight courier with all charges prepaid, or
(iv) when delivered, if hand-delivered by messenger, all of which shall be
properly addressed to the party to be notified and sent to the address or number
indicated as follows:
(i) If to Lender at:
LaSalle Bank National Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxx Xxx Xxxxxxxx
Telecopy: (000) 000-0000
Confirmation: (000) 000-0000
With a copy to:
Schwartz, Cooper, Xxxxxxxxxxx & Xxxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telecopy: (000)000-0000
Confirmation:(000)000-0000
(ii) If to Borrower at:
Allied Products Corporation
0000 Xxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxxxx Xxxxxxx
Telecopy: (___) ___-____
Confirmation: (__) ___-____
With a copy to:
Xxxx X. Xxxxxxxxx, Esq.
Allied Products Corporation
00 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (___) ___-____
33
Confirmation: (000)000-0000
And to:
Xxxxx X. Xxxxxxxxxx, Esq.
Xxxxxxx, Carton & Xxxxxxx
Quaker Tower
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Telecopy: (000)000-0000
Confirmation: (000)000-0000
or to such other address or number as each party designates to the other in the
manner herein prescribed.
9.18 Equitable Relief. Borrower recognizes that, in the event
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to Lender; therefore, Borrower agrees that Lender, if Lender so requests,
shall be entitled to temporary and permanent injunctive relief in any such case
and the granting of any such relief shall not preclude Lender from pursuing any
other relief or remedies for such breach.
9.19 Indemnification.(A) Borrower agrees to defend, protect,
indemnify and hold harmless Lender, and its officers, directors, employees,
Affiliates, attorneys, consultants and agents (collectively, the "Indemnitees")
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including, without limitation, the reasonable
fees and disbursements of counsel for and consultants of such Indemnitees in
connection with any investigative, administrative or judicial proceeding,
whether or not such Indemnitees shall be designated a party thereto), which may
be imposed on, incurred by, or asserted against such Indemnitees (whether
direct, indirect, or consequential) arising out of or by reason of any
litigation, investigation, claims or proceedings (whether based on any federal
or state laws or other statutory regulations, including, without limitation,
securities, environmental and commercial laws and regulations, under common law
or at equitable cause or on contract or otherwise) commenced or threatened,
which are in any manner relating to or arising out of this Agreement or the
other Financing Agreements, or any act, event or transaction related or
attendant thereto, the agreements of Lender contained herein, the making of any
Loans or advances, the management of such Loans or advances or the Collateral
(including any liability under federal, state or local environmental laws or
regulations) or the use or intended use of the proceeds of such Loans or
advances (collectively, the "Indemnified Matters"); provided that Borrower shall
have no obligation to any Indemnitee hereunder with respect to Indemnified
Matters caused by or resulting from the wilful misconduct or gross negligence of
such Indemnitee. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this subsection 9.19 may be unenforceable because it is
violative of any law or public policy, Borrower shall contribute the maximum
portion which it is permitted to pay and satisfy under applicable law, to the
payment and satisfaction of all Indemnified Matters incurred by the Indemnitees.
34
(B) Borrower further agrees to assert no claim against any of the
Indemnitees on any theory of liability for consequential, special, indirect,
exemplary or punitive damages. No settlement shall be entered into by Borrower
or any of its Subsidiaries with respect to any claim, litigation, arbitration or
other proceeding relating to or arising out of the transaction evidenced by this
Agreement or the other Financing Agreements (whether or not Lender or any
Indemnitee is a party thereto) unless such settlement releases all Indemnitees
from any and all liability with respect thereto.
9.20 Counterparts. This Agreement may be executed and accepted in
any number of counterparts, each of which shall be an original with the same
effect as if the signatures were on the same instrument. The delivery of an
executed counterpart of a signature page to this Agreement by telecopier shall
be effective as delivery of a manually executed counterpart of this Agreement.
9.21 Entire Agreement. This Agreement, including the Financing
Agreements and all exhibits and other documents attached hereto or incorporated
by reference herein, constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all other understandings,
oral or written, with respect to the subject matter hereof.
9.22 Confidentiality. Lender shall hold all nonpublic information
obtained pursuant to the requirements hereof in accordance with such Person's
customary procedures for handling confidential information of this nature and in
accordance with safe and sound business practices and in any event may make
disclosure reasonably required by a bona fide offeree or assignee (or
participant), or as required or requested by any governmental authority or
representative thereof, or pursuant to legal process, or in connection with the
exercise of rights and remedies, or enforcement of obligations, under this
Agreement and the other Financing Agreements or to its accountants, lawyers and
other advisors, and shall require any such offeree or assignee (or participant)
to agree (and require any of its offerees, assignees or participants to agree)
to comply with this subsection 9.22. In no event shall Lender be obligated or
required to return any materials furnished by Borrower, provided, however, each
proposed offeree, assignee and participant shall be required to agree that if it
does not become an assignee (or participant) it shall return all materials
furnished to it by Borrower in connection herewith. The provisions of this
subsection 9.22 shall survive the termination of this Agreement.
9.23 Governmental Regulation. Anything contained in this Agreement
to the contrary notwithstanding, no Lender shall be obligated to extend credit
to Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
9.24 Amendment of Loan Agreement. Lender hereby agrees with Xxxx Hog
Investors, L.L.C. and CC Industries, Inc. that, without the prior written
consent of Xxxx Hog Investors, L.L.C. and CC Industries, Inc., Lender will not
amend, modify or otherwise change in any way this Agreement or the Term Note (i)
to increase the principal amount of the Term Loan, (ii) to increase the rate of
interest applicable thereunder (except as provided therein with respect to a
default rate of interest), (iii) to shorten the maturity of the Term Loan or any
installment thereof, (iv) to change the amortization of the Term Loan, or (v) to
make the provisions thereof more restrictive as to Borrower, or (vi) in any
other manner which is materially
35
adverse to Borrower, Xxxx Hog Investors, L.L.C. or CC Industries, Inc.
[Balance of page intentionally left blank; signature page follows.]
36
IN WITNESS WHEREOF, this Loan and Security Agreement has been duly
executed as of the day and year first above written.
ALLIED PRODUCTS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman, President and Chief
Executive Officer
LASALLE BANK NATIONAL ASSOCIATION
By: /s/ Xxxx Xxx Xxxxxxxx
-------------------------------------
Name: Xxxx Xxx Xxxxxxxx
Title: Vice President
37
SCHEDULE 3.1
Conditions to Initial Loans
38
SCHEDULE 5.1
Jurisdiction of Incorporation; Qualification
SCHEDULE 5.2
Governmental Consents and Restrictions
SCHEDULE 5.4(A)
Financials
SCHEDULE 5.4(B)
Projections
SCHEDULE 5.4(C)
Pro Forma
SCHEDULE 5.5
Locations of Collateral
SCHEDULE 5.7
Chief Place of Business
SCHEDULE 5.8
Other Names
SCHEDULE 5.9
Tax Audits
SCHEDULE 5.12
Litigation and Proceedings
SCHEDULE 5.14
Employee Controversies
SCHEDULE 5.15(B)
Environmental Matters
SCHEDULE 5.16
Patents, Trademarks and Licenses
SCHEDULE 5.17
ERISA
SCHEDULE 5.20
Bank Accounts
SCHEDULE 5.21
Capitalization; Subsidiaries
SCHEDULE 5.24
Insurance
SCHEDULE 5.25
Contingent Obligations
SCHEDULE 7.1
Liens
