LOAN AND SECURITY AGREEMENT
This Agreement is between the undersigned Borrower and the
undersigned Lender concerning loans and other credit
accommodations to be made by Lender to Borrower.
SECTION 1. PARTIES
1.1 The "Borrower" is the person, firm, corporation or
other entity, identified as the Borrower in Section 10.6(c) and
its successors and assigns. If more than one Borrower is
specified in Section 10.6(c), all references to Borrower shall
mean each of them, jointly and severally, individually and
collectively, and the successors and assigns of each.
1.2 The "Lender" is The CIT Group/Credit Finance, Inc. and
its successors and assigns.
SECTION 2. LOANS AND OTHER CREDIT ACCOMMODATIONS
2.1 Revolving Loans. Lender shall, subject to the terms and
conditions contained herein, make revolving loans to Borrower
("Revolving Loans") in amounts requested by Borrower from time
to time, but not in excess of the Net Availability existing
immediately prior to the making of the requested loan and
provided the requested loan would not cause the outstanding
Obligations to exceed the Maximum Credit.
(a) The "Maximum Credit" is set forth in Section 10.1(a)
hereof.
(b) The "Gross Availability" to the extent applicable,
shall be calculated at any time as (i) the product obtained by
multiplying the outstanding amount of Eligible Accounts, net of
all taxes, discounts, allowances and credits given or claimed,
by the Eligible Accounts Percentage set forth in Section
10.1(b), plus: (ii) the product(s) obtained by multiplying the
applicable Eligible Inventory Percentage(s), if any, set forth
in Section 10.1(b) by the values (as determined by Lender based
on the lower of cost or market) of Eligible Inventory, but the
amount so added shall not exceed any sublimits set forth in
Section 10.1(c),
(c) The "Net Availability" to the extent applicable, shall
be calculated at any time as an amount equal to the Gross
Availability minus the aggregate amount of all then-outstanding
Obligations to Lender other than the then outstanding principal
balance of the Term Loan, if any.
(d) "Eligible Accounts" are accounts created by Borrower in
the ordinary course of its business which are and remain
acceptable to Lender for lending purposes. General criteria for
Eligible Accounts are set forth below but may be revised from time
to time by Lender, in its sole judgment, on fifteen (15) days'
prior written notice to Borrower. Lender shall, in general, deem
accounts to be Eligible Accounts if: (1) such accounts arise from
bona fide completed transactions and have not remained unpaid for
more than the number of days after the invoice date set forth in
Section 10.1(d); (2) the amounts of the accounts reported to
Lender are absolutely owing to Borrower and do not arise from
sales on consignment, guaranteed sale or other terms under which
payment by the account debtors may be conditional or contingent;
(3) the account debtor's chief executive office or principal place
of business is located in the United States; (4) such accounts do
not arise from progress xxxxxxxx retainages or xxxx and hold
sales; (5) there are no contra relationships, setoffs,
counterclaims or disputes existing with respect thereto and there
are no other facts existing or threatened which would impair or
delay the collectibility of all or any portion thereof; (6) the
goods giving rise thereto were not at the time of the sale subject
to any liens except those permitted in this Agreement; (7) such
accounts are not accounts with respect to which the account debtor
or any officer or employee thereof is an officer, employee or
agent of or is affiliated with Borrower, directly or indirectly,
whether by virtue of family membership, ownership, control,
management or otherwise; (8) such accounts are not accounts with
respect to which the account debtor is the United States or any
State or political subdivision thereof or any department, agency
or instrumentality of the United States, any State or political
subdivision, unless there has been compliance with the Assignment
of Claims Act or any similar State or local law, if applicable;
(9) Borrower has delivered to Lender or Lender's representative
such documents as Lender may have requested pursuant to Section
5.8 hereof in connection with such accounts and Lender shall have
received a verification of such account, satisfactory to it, if
sent to the account debtor or any other obligor or any bailee
pursuant to Section 5.4 hereof; (10) there are no facts existing
or threatened which might result in any adverse change in the
account debtor's financial condition; (11) such accounts owed by a
single account debtor or its affiliates do not represent more than
twenty percent (20%) of all otherwise Eligible Accounts (accounts
excluded from Eligible Accounts solely by reason of this
subsection (11) shall nevertheless be considered Eligible Accounts
to the extent of the amount of such accounts which does not exceed
twenty percent (20%) of all otherwise Eligible Accounts); (12)
such accounts are not owed by an account debtor who is or whose
affiliates are past due upon other accounts owed to Borrower
comprising more than fifty percent (50%) of the accounts of such
account debtor or its affiliates owed to Borrower; (13) such
accounts are owed by account debtors whose total indebtedness to
Borrower does not exceed the amount of any customer credit limits
as established, and changed, from time to time by Lender on notice
to Borrower (accounts excluded from Eligible Accounts solely by
reason of this subsection (13) shall nevertheless be considered
Eligible Accounts to the extent the amount of such accounts does
not exceed such customer credit limit); and (14) such accounts are
owed by account debtors deemed creditworthy at all times by
Lender.
(e) "Eligible Inventory" is inventory owned by Borrower which
is and remains acceptable to Lender for lending purposes and is
located at one of the addresses set forth in Section 10.6(e).
(f) Lender shall have a continuing right to deduct reserves
in determining the Gross Availability ("Reserves"), and to
increase and decrease such Reserves from time to time, if and to
the extent that, in Lender's sole judgment, such Reserves are
necessary to protect Lender against any state of facts which does,
or would, with notice or passage of time or both, constitute an
Event of Default or have an adverse effect on any Collateral.
Lender may, at its option, implement Reserves by designating as
ineligible a sufficient amount of equipment or inventory which
would otherwise be Eligible Inventory or Eligible Equipment so as
to reduce Gross Availability by the amount of the intended
Reserve. In particular, and not by way of limitation, Lender has
informed Borrower and Borrower has agreed, that Lender shall
establish Reserves in the amount of $75,000.00
(g) Subject to the terms and conditions hereof, including but
not limited to the existence of sufficient Gross and Net
Availability, Borrower agrees to borrow sufficient amounts from
time to time so that the outstanding Revolving Loan or the Term
Loan, shall at all times equal or exceed the principal amount set
forth in Section 10.1(d) as the Minimum Borrowing; provided, that
if Borrower fails to do so, interest shall nevertheless accrue on
the Obligations as if Borrower had all times borrowed such amounts
as would have been sufficient to maintain the outstanding
Revolving Loans and Term Loan at an amount equal to the Minimum
Borrowing (and Lender shall have the right to charge Borrower's
loan account for such additional interest), and provided further
that such accrual shall not impose upon Lender any obligation to
make loans to Borrower to increase the outstanding Revolving Loans
or Term Loan to such Minimum Borrowing. Borrower will maintain
Gross Net Availability at all times in amounts sufficient to
permit Borrower to comply with the Minimum Borrowing requirement.
2.2 Term Loan. Lender shall, subject to the terms and
conditions contained herein, make a $2,985,844.00 equipment loan
("Term Loan") to Borrower.
(a) Borrower shall repay $2,500,000.00 of the
principal of the Term Loan in thirty-four (34) consecutive equal
monthly installments of $34,750.00 each, commencing on May 1,
1997, provided that the final (35th) installment shall be in an
amount that will result in the full repayment of the Term Loan.
(b) Upon the termination of this Agreement whether
for default, non-renewal after the expiration of the original term
hereunder, or for any other reason whatsoever, prior to the full
payment of the installments provided for in sub-section (a) above,
then the entire unpaid balance of the Term Loan shall be fully due
and payable upon such expiration, default or other termination.
(c) Interest on the Term Loan shall be the Prime
Rate (as hereinafter defined) plus 2.5% per annum.
2.3 Accommodations.
(a) Lender may, in its sole discretion, issue or cause to be
issued, from time to time at Borrower's request and on terms and
conditions and for purposes satisfactory to Lender, credit
accommodations consisting of letters of credit, bankers'
acceptances, merchandise purchase guaranties or other guaranties
or indemnities for Borrower's account ("Accommodations").
Borrower shall execute and perform additional agreements relating
to the Accommodations in form and substance acceptable to Lender
and the issuer of any Accommodations, all of which shall
supplement the rights and remedies granted herein. Any payments
made by Lender or any affiliate of Lender in connection with the
Accommodations shall constitute additional Revolving Loans to
Borrower.
(b) In addition to the fees and costs of any issuer in
connection with issuing or administering Accommodations, Borrower
shall pay monthly to Lender, on the first day of each month, a
charge on open Accommodations at the rate per annum set forth in
Section 10.3(a) (the "Accommodation Charges").
(c) No Accommodation will be issued unless the full amount of
the Accommodation requested, plus fees and costs for issuance, is
less than the Net Availability existing immediately prior to the
issuance of the requested Accommodation, or if the requested
Accommodation would cause the outstanding Obligations to exceed
the Maximum Credit, or cause the open amount of Accommodations to
exceed, at any time, the Accommodation sublimit set forth in
Section 10.3(b).
(d) All indebtedness, liabilities and obligations of any sort
whatsoever, however arising, whether present or future, fixed or
contingent, secured or unsecured, due or to become due, paid or
incurred, arising or incurred in connection with any Accommodation
shall be included in the term "Obligations", as defined herein,
and shall include, without limitation, (i) all amounts due or
which may become due under any Accommodation; (ii) all amounts
charged or chargeable to Borrower or to Lender by any bank, other
financial institution or correspondent bank which opens, issues or
is involved with such Accommodations; (iii) Lender's Accommodation
Charges and all fees, costs and other charges of any issuer of any
Accommodation; and (iv) all duties, freight, taxes, costs,
insurance and all such other charges and expenses which may
pertain directly or indirectly to any Obligations or
Accommodations or to the goods or documents relating thereto.
(e) Borrower unconditionally agrees to indemnify and hold
Lender harmless from any and all loss, claim or liability
(including reasonable attorneys' fees) arising from any
transactions or occurrences relating to any Accommodation
established or opened for Borrower's account, the Collateral
relating thereto and any drafts or acceptances thereunder,
including any such loss or claim due to any action taken by an
issuer of any Accommodation. Borrower further agrees to indemnify
and hold Lender harmless for any errors or omissions in connection
with the Accommodations, whether caused by Lender, by the issuer
of any Accommodation or otherwise. Borrower's unconditional
obligation to indemnify and hold Lender harmless under this
provision shall not be modified or diminished for any reason or in
any manner whatsoever, except for Lender's willful misconduct.
Borrower agrees that any charges made to Lender by any issuer of
any Accommodation shall be conclusive on Borrower and may be
charged to Borrower's account.
(f) Lender shall not be responsible for: the conformity of
any goods to the documents presented; the validity or genuineness
of any documents; delay, default, or fraud by the Borrower or
shipper and/or anyone else in connection with the Accommodations
or any underlying transaction.
(g) Borrower agrees that any action taken by Lender, if taken
in good faith, or any action taken by an issuer of any
Accommodation, under or in connection with any Accommodation,
shall be binding on Borrower and shall not create any resulting
liability to Lender. In furtherance thereof, Lender shall have
the full right and authority to clear and resolve any questions of
non-compliance of documents; to give any instructions as to
acceptance or rejection of any documents or goods; to execute for
Borrower's account any and all applications for steamship or
airway guarantees, indemnities or delivery orders; to grant any
extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances, or documents; and to
agree to any amendments, renewals, extensions, modifications,
changes or cancellations of any of the terms or conditions of any
of the applications or Accommodations. All of the foregoing
actions may be taken in Lender's sole name, and the issuer thereof
shall be entitled to comply with and honor any and all such
documents or instruments executed by or received solely from
Lender, all without any notice to or any consent from Borrower.
None of the foregoing actions described in this subsection (g) may
be taken by Borrower without Lender's express written consent.
2.4 Certain Amounts Due Without Demand. Lender may, in its
sole discretion, make or permit Revolving Loans, Accommodations or
other Obligations in excess of the Maximum Credit, Gross or Net
Availability or applicable formulas or sublimits. All or any
portion of such excess(es) shall be immediately due and payable
without Lender's demand.
SECTION 3. INTEREST AND FEES
3.1 Interest. (a) Interest on the Revolving Loans and Term Loans
shall be payable by Borrower on the first day of each month,
calculated upon the closing daily balances in the loan account of
Borrower for each day during the immediately preceding month, at
the per annum rate set forth as the Interest Rate in Section
10.4(a). The Interest Rate shall increase or decrease by an amount
equal to each increase or decrease, respectively, in the Prime
Rate (as defined below), effective as of the date of each such
change. On and after any Event of Default or termination or non-
renewal hereof, interest on all unpaid Obligations shall accrue at
a rate equal to two percent (2%) per annum in excess of the
Interest Rate otherwise payable until such time as all Obligations
are indefeasibly paid in full (notwithstanding entry of any
judgment against Borrower or the exercise of any other right or
remedy by Lender), and all such interest shall be payable on
demand. Interest shall, on a per annum basis, not be less than
the Interest Rate multiplied by the Minimum Loan. In no event
shall charges constituting interest exceed the rate permitted
under any applicable law or regulation, and if any provision of
this Agreement is in contravention of any such law or regulation,
such provision shall be deemed amended to conform thereto.
(b) The "Prime Rate" is the rate of interest publicly
announced by the Chase Manhattan Bank in New York, New York, or
its successors, and assigns from time to time as its prime rate
(the prime rate is not intended to be the lowest rate of interest
charged by Chase Manhattan Bank to its borrowers).
3.2 Facility Fee. Borrower shall pay Lender the Facility Fee
in the amounts and on the dates set forth in Section 10.4( c).
3.3 Account Servicing Collateral Handling Fee. If and when
applicable, Borrower shall pay Lender monthly, on the first day of
each month an Account Servicing Fee for the immediately preceding
month (or part thereof) in the amount set forth in Section
10.4(c).
3.4 Charges to Loan Account. At Lender's option, all
payments of principal, interest, fees, costs, expenses and other
charges provided for in this Agreement, or in any other agreement
now or hereafter existing between Lender and Borrower, may be
charged on the date when due, as principal to any loan account of
Borrower maintained by Lender. Interest, fees for Accommodations,
the Unused Line Fee and any other amounts payable by Borrower to
Lender based on a per annum rate shall be calculated on the basis
of actual days elapsed over a 360-day year.
SECTION 4. GRANT OF SECURITY INTEREST
4.1 Grant of Security Interest. To secure the payment and
performance in full of all Obligations, Borrower hereby grants to
Lender a continuing security interest in and lien upon, and a
right of setoff against, and Borrower hereby assigns and pledges
to Lender, all of the Collateral, including any Collateral not
deemed eligible for lending purposes.
4.2 "Obligations" shall mean any and all Revolving Loans,
Term Loans, Accommodations and all other indebtedness, liabilities
and obligations (including amounts owed by one, some or all of the
entities designated as "Borrower") of every kind, nature and
description owing by Borrower to Lender and/or its affiliates,
including principal, interest, charges, fees and expenses, however
evidenced, whether as principal, surety, endorser, guarantor or
otherwise, whether arising under this Agreement or otherwise,
whether now existing or hereafter arising, whether arising before,
during or after the initial or any renewal Term or after the
commencement of any case with respect to Borrower under the United
States Bankruptcy Code or any similar statute, whether direct or
indirect, absolute or contingent, joint or several, due or not
due, primary or secondary, liquidated or unliquidated, secured or
unsecured, original, renewed or extended and whether arising
directly or howsoever acquired by Lender including from any other
entity outright, conditionally or as collateral security, by
assignment, merger with any other entity, participations or
interests of Lender in the obligations of Borrower to others,
assumption, operation of law, subrogation or otherwise and shall
also include all amounts chargeable to Borrower under this
Agreement or in connection with any of the foregoing. Each entity
defined as "Borrower" hereby waives all notices and suretyship
defenses with respect to all other entities defined as "Borrower",
and Lender may grant extensions and other indulgences, may release
Collateral or the liability of another Borrower or of any
guarantor for Borrower without releasing any Borrower or impairing
Lender's rights against Borrower hereunder or under law.
4.3 "Collateral" shall mean all of the following property of
Borrower:
All now owned and hereafter acquired right, title and interest of
Borrower in, to and in respect of all: accounts, interests in
goods represented by accounts, returned, reclaimed or repossessed
goods with respect thereto and rights as an unpaid vendor;
contract rights; chattel paper; investment property; general
intangibles (including, but not limited to, tax and duty refunds,
registered and unregistered patents, trademarks, service marks,
copyrights, trade names, applications for the foregoing, trade
secrets, goodwill, processes, drawings, blueprints, customer
lists, licenses, whether as licensor or licensee, choses in action
and other claims, and existing and future leasehold interests in
equipment and fixtures); documents; instruments; letters of
credit, bankers' acceptances or guaranties; cash monies, deposits,
securities, bank accounts, deposit accounts, credits and other
property now or hereafter held in any capacity by Lender, its
affiliates or any entity which, at any time, participates in
Lender's financing of Borrower or at any other depository or other
institution; agreements or property securing or relating to any of
the items referred to above;
All now owned and hereafter acquired right, title and interest of
Borrower in, to and in respect of goods, including, but not
limited to:
All inventory, wherever located, whether now owned or hereafter
acquired, of whatever kind, nature or description, including all
raw materials, work-in-process, finished goods, and materials to
be used or consumed in Borrower's business; and all names or marks
affixed to or to be affixed thereto for purposes of selling same
by the seller, manufacturer, lessor or licensor thereof;
All equipment and fixtures, wherever located, whether now owned or
hereafter acquired, including, without limitation, all machinery,
equipment, motor vehicles, furniture and fixtures, the equipment
described on Schedule A, attached hereto and incorporated herein,
and any and all additions, substitutions, replacements (including
spare parts), and accessions thereof and thereto;
All consumer goods, farm products, crops, timber, minerals or the
like (including oil and gas), wherever located, whether now owned
or hereafter acquired, of whatever kind, nature or description;
All now owned and hereafter acquired right, title and interests of
Borrower in, to and in respect of any personal property in or upon
which Lender has or may hereafter have a security interest, lien
or right of setoff;
All present and future books and records relating to any of the
above including, without limitation, all computer programs,
printed output and computer readable data in the possession or
control of the Borrower, any computer service bureau or other
third party;
All products and proceeds of the foregoing in whatever form and
wherever located, including, without limitation, all insurance
proceeds and all claims against third parties for loss or
destruction of or damage to any of the foregoing;
SECTION 5. COLLECTION AND ADMINISTRATION
5.1 Collections. Upon the occurrence of an Event of Default,
Borrower shall, at Borrower's expense and in the manner requested
by Lender from time to time, direct that remittances and all other
proceeds of accounts and other Collateral shall be sent to a
blocked or Lender bank account designated by and/or maintained in
the name of Lender, and deposited into a bank account now or
hereafter selected by Lender and maintained in the name of Lender
under arrangements with the depository bank under which all funds
deposited to such bank account are required to be transferred
solely to Lender. Borrower shall bear all risk of loss of any
funds deposited into such account. In connection therewith,
Borrower shall execute such bank account agreements as Lender
shall specify. Any collections or other proceeds received by
Borrower shall be held in trust for Lender and immediately
remitted to Lender in kind.
5.2 Payments. All Obligations shall be payable at Lender's
office set forth below or at Lender's bank designated in Section
10.6(b) or at such other bank or place as Lender may expressly
designate from time to time for purposes of this Section. Lender
shall apply all proceeds of accounts or other Collateral received
by Lender and all other payments in respect of the Obligations to
the Revolving Loans whether or not then due or to any other
Obligations then due, in whatever order or manner Lender shall
determine. For purposes of determining Gross and Net Availability
and for the calculation of Minimum Borrowings, remittances and
other payments with respect to the Collateral and Obligations will
be treated as credited to the loan account of Borrower maintained
by Lender and Collateral balances to which they relate, upon the
date of Lender's receipt of advice from Lender's bank that such
remittances or other payments have been credited to Lender's
account or in the case of remittances or other payments received
directly in kind by Lender, upon the date of Lender's deposit
thereof at Lender's bank, subject to final payment and collection.
In computing interest charges, the loan account of Borrower
maintained by Lender will be credited with remittances and other
payments three (3) Business Days after the day Lender has received
advice of receipt of remittances in Lender's account at Lender's
Bank. For purposes of this Agreement, "Business Day" shall mean
any day other than a Saturday, Sunday or any other day on which
banks located in states where Lender has its offices, are
authorized to close.
5.3 Loan Account Statements. Lender shall render to Borrower
monthly a loan account statement. Each statement shall be
considered correct and binding upon Borrower as an account stated,
except to the extent that Lender receives, within sixty (60) days
after the mailing of such statement, written notice from Borrower
of any specific exceptions by Borrower to that statement.
5.4 Direct Collections. Lender may, without notice to or
assent of Borrower, (a) after an Event of Default has occurred,
notify any account debtor that the accounts and other Collateral
which includes a monetary obligation have been assigned to Lender
by Borrower and that payment thereof is to be made to the order of
and directly to Lender, (b) send, or cause to be sent by its
designee, requests (which may identify the sender by a pseudonym)
for verification of accounts and other Collateral directly to any
account debtor or any other obligor or any bailee with respect
thereto, and (c) after an Event of Default has occurred, demand,
collect or enforce payment of any accounts or such other
Collateral, but without any duty to do so, and Lender shall not be
liable for any failure to collect or enforce payment thereof.
5.5 Attorney-in-Fact. Borrower hereby appoints Lender and
any designee of Lender as Borrower's attorney-in-fact and
authorizes Lender or such designee, at Borrower's sole expense, to
exercise at any times in Lender's or such designee's discretion
all or any of the following powers, which powers of attorney,
being coupled with an interest, shall be irrevocable until all
Obligations have been paid in full: (a) receive, take, endorse,
assign, deliver, accept and deposit, in the name of Lender or
Borrower, any and all cash, checks, commercial paper, drafts,
remittances and other instruments and documents relating to the
Collateral or the proceeds thereof, (b) transmit to account
debtors, other obligors or any bailees notice of the interest of
Lender in the Collateral or request from account debtors or such
other obligors or bailees at any time, in the name of Borrower or
Lender or any designee of Lender, information concerning the
Collateral and any amounts owing with respect thereto, (c) after
an Event of Default notify account debtors or other obligors to
make payment directly to Lender, or notify bailees as to the
disposition of Collateral, (d) take or bring, in the name of
Lender or Borrower, all steps, actions, suits or proceedings
deemed by Lender necessary or desirable to effect collection of or
other realization upon the accounts and other Collateral, (e)
after an Event of Default, change the address for delivery of mail
to Borrower and to receive and open mail addressed to Borrower,
(f) after an Event of Default, extend the time of payment of,
compromise or settle for cash, credit, return of merchandise, and
upon any terms or conditions, any and all accounts or other
Collateral which includes a monetary obligation and discharge or
release the account debtor or other obligor, without affecting any
of the Obligations, and (g) execute in the name of Borrower and
file against Borrower in favor of Lender financing statements or
amendments with respect to the Collateral.
5.6 Liability. Borrower hereby releases and exculpates
Lender, its officers, employees and designees, from any liability
arising from any acts under this Agreement or in furtherance
thereof, whether as attorney-in-fact or otherwise, whether of
omission or commission, and whether based upon any error of
judgment or mistake of law or fact, except for willful misconduct.
In no event will Lender have any liability to Borrower for lost
profits or other special or consequential damages.
5.7 Administration of Accounts. After an Event of Default,
Borrower shall not, without the prior written consent of Lender in
each instance, (a) grant any extension of time of payment of any
of the accounts or any other Collateral which includes a monetary
obligation, (b) compromise or settle any of the accounts or any
such other Collateral for less than the full amount thereof, (c)
release in whole or in part any account debtor or other person
liable for the payment of any of the accounts or any such other
Collateral, or (d) grant any credits, discounts, allowances,
deductions, return authorizations or the like with respect to any
of the accounts or any such other Collateral.
5.8 Documents. At such times as Lender may request and in
the manner specified by Lender, Borrower shall deliver to Lender
or Lender's representative, as Lender shall designate, copies or
original invoices, agreements, proofs of rendition of services and
delivery of goods and other documents evidencing or relating to
the transactions which gave rise to accounts or other Collateral,
together with customer statements, schedules describing the
accounts or other Collateral and/or statements of account and
confirmatory assignments to Lender of the accounts or other
Collateral, in form and substance satisfactory to Lender and duly
executed by Borrower. Without limiting the provisions of Section
5.7, Borrower's granting of credits, discounts, allowances,
deductions, return authorizations or the like will be promptly
reported to Lender in writing. In no event shall any such schedule
or confirmatory assignment (or the absence thereof or omission of
any of the accounts or other Collateral therefrom) limit or in any
way be construed as a waiver, limitation or modification of the
security interests or rights of Lender or the warranties,
representations and covenants of Borrower under this Agreement.
Any documents, schedules, invoices or other paper delivered to
Lender by Borrower may be destroyed or otherwise disposed of by
Lender six (6) months after receipt by Lender, unless Borrower
requests their return in writing in advance and makes prior
arrangements for their return at Borrower's expense.
5.9 Access. From time to time as requested by Lender, at the
sole expense of Borrower, Lender or its designee shall have
access, prior to an Event of Default during reasonable business
hours and on or after an Event of Default at any time, to all of
the premises where Collateral is located for the purposes of
inspecting the Collateral, and all Borrower's books and records,
and Borrower shall permit Lender or its designee to make such
copies of such books and records or extracts therefrom as Lender
may request. Without expense to Lender, Lender may use such of
Borrower's personnel, equipment, including computer equipment,
programs, printed output and computer readable media, supplies and
premises for the collection of accounts and realization on other
Collateral as Lender, in its sole discretion, deems appropriate.
To the extent permitted by law and in compliance therewith,
Borrower hereby irrevocably authorizes all accountants and third
parties to disclose and deliver to Lender at Borrower's expense
all financial information, books and records, work papers,
management reports and other information in their possession
regarding Borrower.
5.10 Environmental Audits. From time to time, as requested by
Lender, at the sole expense of Borrower, Borrower shall provide
Lender, or its designee, complete access to all of Borrower's
facilities for the purpose of conducting an environmental audit of
such facilities as Lender or its designees may deem necessary.
Borrower agrees to cooperate with Lender with respect to any
environmental audit conducted by Lender or its designee pursuant
to this Section 5.10.
SECTION 6. ADDITIONAL REPRESENTATIONS, WARRANTIES AND
COVENANTS
Borrower hereby represents, warrants and covenants to Lender the
following, the truth and accuracy of which, and compliance with
which, shall be continuing conditions of the making of loans or
other credit accommodations by Lender to Borrower:
6.1 Financial and Other Reports. Borrower shall keep and
maintain its books and records in accordance with generally
accepted accounting principles, consistently applied. Borrower
shall, at its expense, deliver to Lender: (a) on or before the
fifteenth (15th) day of each month (i) true and complete monthly
agings of its accounts receivable, accounts payable and notes
payable and (ii) inventory reports; (b) on or before the twenty-
fifth (25th) day of each month, monthly internally prepared
interim financial statements; and (c) on or before the thirtieth
(30th) day following each fiscal quarter, consolidated and
consolidating financial statements of all Borrowers and Guarantor
certified by an officer of Borrower, and; (d) audited financial
statements of Borrower accompanied by the report and opinion
thereon of independent certified public accountants acceptable to
Lender, as soon as available, but in no event later than ninety
(90) days after the end of Borrower's fiscal year. All of the
foregoing shall be in such form and together with such information
with respect to the business of Borrower or any Guarantor, as
Lender may in each case request.
6.2 Trade Names. Borrower may from time to time render
invoices to account debtors under its trade names set forth in
Section 10.6(g) after Lender has received prior written notice
from Borrower of the use of such trade names and as to which,
Borrower agrees that: (a) each trade name does not refer to
another corporation or other legal entity, (b) all accounts and
proceeds thereof (including any returned merchandise) invoiced
under any such trade names are owned exclusively by Borrower and
are subject to the security interest of Lender and the other terms
of this Agreement, and (c) all schedules of accounts and
confirmatory assignments including any sales made or services
rendered using the trade name shall show Borrower's name as
assignor and Lender is authorized to receive, endorse and deposit
to any loan account of Borrower maintained by Lender all checks or
other remittances made payable to any trade name of Borrower
representing payment with respect to such sales or services.
6.3 Losses. Borrower shall promptly notify Lender in writing
of any loss, damage, investigation, action, suit, proceeding or
claim relating to a material portion of the Collateral or which
may result in any material adverse change in Borrower's business,
assets, liabilities or condition, financial or otherwise.
6.4 Books and Records. Borrower's books and records
concerning accounts and its chief executive office are and shall
be maintained only at the address set forth in Section 10.6(d).
Borrower's only other places of business and the only other
locations of Collateral, if any, are and shall be the addresses
set forth in Section 10.6 hereof, except Borrower may change such
locations or open a new place of business after thirty (30) days
prior written notice to Lender. Prior to any change in location or
opening of any new place of business, Borrower shall execute and
deliver or cause to be executed and delivered to Lender such
financing statements, financing documents and security and other
agreements as Lender may reasonably require, including, without
limitation, those described in Section 6.14.
6.5 Title. Borrower has and at all times will continue to
have good and marketable title to all of the Collateral, free and
clear of all liens, security interests, claims or encumbrances of
any kind except in favor of Lender and except, if any, those set
forth on Schedule B hereto.
6.6 Disposition of Assets. Borrower shall not, outside of
the ordinary course of Borrower's business and without the prior
written consent of Lender, which consent may be withheld in
Lender's sole discretion, directly or indirectly: (a) sell, lease,
transfer, assign, abandon or otherwise dispose of any part of the
Collateral or any material portion of its other assets (other than
equipment rental or sales of inventory to buyers in the ordinary
course of business) or (b) consolidate with or merge with or into
any other entity, or permit any other entity to consolidate with
or merge with or into Borrower or (c) form or acquire any interest
in any firm, corporation or other entity. The proceeds of any
such dispositions or sale shall go to the Lender.
6.7 Insurance. Borrower shall at all times maintain, with
financially sound and reputable insurers, insurance with respect
to the Collateral and other assets. All such insurance policies
shall be in such form, substance, amounts and coverage as may be
satisfactory to Lender and shall provide for thirty (30) days'
prior written notice to Lender of cancellation or reduction of
coverage. Borrower hereby irrevocably appoints Lender and any
designee of Lender as attorney-in-fact for Borrower to obtain at
Borrower's expense, any such insurance should Borrower fail to do
so and, after an Event of Default, to adjust or settle any claim
or other matter under or arising pursuant to such insurance or to
amend or cancel such insurance. Borrower shall deliver to Lender
evidence of such insurance and a lender's loss payable endorsement
satisfactory to Lender as to all existing and future insurance
policies with respect to the Collateral. Borrower shall deliver to
Lender, in kind, all instruments representing proceeds of
insurance received by Borrower. Lender may apply any insurance
proceeds received at any time to the cost of repairs to or
replacement of any portion of the Collateral and/or, at Lender's
option, to payment of or as security for any of the Obligations,
whether or not due, in any order or manner as Lender determines.
6.8 Compliance With Laws. Borrower is and at all times will
continue to be in compliance with the requirements of all material
laws, rules, regulations and orders of any governmental authority
relating to its business (including laws, rules, regulations and
orders relating to taxes, payment and withholding of payroll
taxes, employer and employee contributions and similar items,
securities, employee retirement and welfare benefits, employee
health and safety, or environmental matters) and all material
agreements or other instruments binding on Borrower or its
property. All of Borrower's inventory shall be produced in
accordance with the requirements of the Federal Fair Labor
Standards Act of 1938, as amended and all rules, regulations and
orders related thereto. Borrower shall pay and discharge all
taxes, assessments and governmental charges against Borrower or
any Collateral prior to the date on which penalties are imposed or
liens attach with respect thereto, unless the same are being
contested in good faith and, at Lender's option, Reserves are
established for the amount contested and penalties which may
accrue thereon.
6.9 Accounts. With respect to each account deemed an Eligible
Account, except as reported in writing to Lender, Borrower has no
knowledge that any of the criteria for eligibility are not or are
no longer satisfied. As to each account, except as disclosed in
writing to Lender at the time such account arises, (a) each is
valid and legally enforceable and represents and undisputed bona
fide indebtedness incurred by the account debtor for the sum
reported to Lender, (b) each arises from an absolute and
unconditional sale of goods, without any right of return or
consignment, or from a completed rendition of services, (c) each
is not, at the time such account arises, subject to any defense,
offset, dispute, contra relationship, counterclaim, or any given
or claimed credit, allowance or discount, and (d) all statements
made and all unpaid balances and other information appearing in
the invoices, agreements, proofs of rendition of services and
delivery of goods and other documentation relating to the
accounts, and all confirmatory assignments, schedules, statements
of account and books and records with respect thereto, are true
and correct and in all respects what they purport to be.
6.10 Equipment. With respect to Borrower's equipment, Borrower
shall keep the equipment in good order and repair, and in running
and marketable condition, ordinary wear and tear excepted.
Borrower shall provide Lender, on a monthly basis or more
frequently upon request of Lender, reports advising Lender as to
the present use and location of all equipment. Said reports shall
include, but not be limited to the name and address of the owner
of any site other than Borrower's where said equipment may be
located and the name and address of any subcontractor using said
equipment. With respect to leases of equipment which are for a
term of thirty (30) days or longer, Borrower must obtain Lender's
prior written consent to same. Each said subcontractor and
property owner or lessor shall be required to waive any right to
lien Borrower's equipment and acknowledge Lender's first perfected
security interest therein. Borrower may sell an item of equipment
provided that the following conditions are met: (i) There are no
existing Events of Default hereunder; (ii) Borrower has not
sustained a loss in excess of $500,000.00 cumulative from closing;
(iii) an event of default would not occur from the sale and (iv)
Lender consents in writing to the release of its security interest
in the item of equipment, and to the sale price of the item of
equipment before the sale of the item of equipment. If the
foregoing conditions are satisfied and sale price is in excess of
Lender's original advance against such equipment (based on 75% of
auction value), Lender shall be repaid its advance against such
equipment and any excess moneys shall be remitted back to
Borrower.
6.11 Financial Covenants. Borrower shall at all times maintain
working capital and net worth (each as determined in accordance
with generally accepted accounting principles, in effect on the
date hereof, consistently applied) in the amounts set forth in
Section 10.5(a) and (b) and Borrower shall not, directly or
indirectly, expend or commit to expend, for fixed or capital
assets (including capital lease obligations) an amount in excess
of the capital expenditure limit set forth in Section 10.5(c) in
any fiscal year of Borrower.
6.12 Payments Under Subordinated Debt. Borrower may not make any
advances (including any loans, dividends or other accommodations)
except that Borrower shall be permitted to repay its existing debt
during the term of the financing provided that, (i) there are no
outstanding events of default under the financing agreements; (ii)
Net Availability is at least $450,000 after the payment to the
affiliate; and (iii) The payments are to the extent of the
Borrower's positive cash flow agreed by Lender and Borrower to be
defined as Net Income (Loss) plus Depreciation and Amortization
plus Capital Contributions less Debt Service less Capital
Expenditures.
6.13 Affiliated Transactions. Except as noted below, Borrower
will not, directly or indirectly: (a) lend or advance money or
property to, guarantee or assume indebtedness of, or invest (by
capital contribution or otherwise) in any person, firm,
corporation or other entity; or (b) make any redemption or other
distribution on account of any shares of any class of stock of
Borrower now or hereafter outstanding; or (c) make any payment of
the principal amount of or interest on any indebtedness owing to
any officer, director, shareholder, or affiliate of Borrower; or
(d) make any loans or advances to any officer, director, employee,
shareholder or affiliate of Borrower, (e) enter into any sale,
lease or other transaction with any officer, director, employee,
shareholder or affiliate of Borrower on terms that are less
favorable to Borrower than those which might be obtained at the
time from persons who are not an officer, director, employee,
shareholder or affiliate of Borrower. Despite the foregoing
language, Borrower may make payments under current obligations as
set forth on Schedule B hereto provided there is no Event of
Default and same are in the ordinary course of Borrowers' business
and do not exceed on a monthly basis $150,000,00 in the aggregate.
6.14 Fees and Expenses. Borrower shall pay, on Lender's demand,
all costs, expenses, filing fees and taxes payable in connection
with the preparation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense
of the Obligations, Lender's rights in the Collateral, this
Agreement and all other existing and future agreements or
documents contemplated herein or related hereto, including any
amendments, waivers, supplements or consents which may hereafter
be made or entered into in respect hereof, or in any way involving
claims or defense asserted by Lender or claims or defense against
Lender asserted by Borrower, any guarantor or any third party
directly or indirectly arising out of or related to the
relationship between Borrower and Lender or any guarantor and
Lender, including, but not limited to the following, whether
incurred before, during or after the initial or any renewal Term
or after the commencement of any case with respect to Borrower or
any guarantor under the United States Bankruptcy Code or any
similar statute: (a) all costs and expenses of filing or recording
(including Uniform Commercial Code financing statement filing
taxes and fees, documentary taxes, intangibles taxes and mortgage
recording taxes and fees, if applicable); (b) all title insurance
and other insurance premiums, appraisal fees, fees incurred in
connection with any environmental report, audit or survey and
search fees; (c) all fees as then in effect relating to the wire
transfer of loan proceeds and other funds and fees then in effect
for returned checks and credit reports; (d) all expenses and costs
heretofore and from time to time hereafter incurred by Lender
during the course of periodic field examinations of the Collateral
and Borrower's operations, plus a per diem charge at the rate set
forth in Section 10.4(g) for Lender's examiners in the field and
office; and (e) the costs, fees and disbursements of in-house and
outside counsel to Lender, including but not limited to such fees
and disbursements incurred as a result of: (i ) documenting and
closing the transaction contemplated hereby; and (ii) any
subsequent litigation between the parties hereto, any third party
and in any appeals arising therefrom.
6.15 Further Assurances. At the request of Lender, at any time
and from time to time, at Borrower's sole expense, Borrower shall
execute and deliver or cause to be executed and delivered to
Lender, such agreements, documents and instruments, including
waivers, consents and subordination agreements from mortgagees or
other holders of security interests or liens, landlords or
bailees, and do or cause to be done such further acts as Lender,
in its discretion, deems necessary or desirable to create,
preserve, perfect or validate any security interest of Lender or
the priority thereof in the Collateral and otherwise to effectuate
the provisions and purposes of this Agreement. Borrower hereby
authorizes Lender to file financing statements or amendments
against Borrower in favor of Lender with respect to the
Collateral, without Borrower's signature and to file as financing
statements any carbon, photographic or other reproductions of this
Agreement or any financing statements signed by Borrower.
6.16 Revolving Loan. The Revolving Loan will not at any time
exceed the Net Availability unless Lender has consented.
6.17 Environmental Condition. None of Borrower's properties or
assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a hazardous
waste or hazardous substance disposal site, or a candidate for
closure pursuant to any environmental protection statute. No lien
arising under any environmental protection statute has attached to
any revenues or to any real or personal property owned by
Borrower. Borrower has not received a summons, citation, notice,
or directive from the Environmental Protection Agency or any other
federal or state governmental agency any action or omission by
Borrower resulting in the releasing, or otherwise exposing of
hazardous waste or hazardous substances into the environment.
Borrower is in compliance (in all material respects) with all
statutes, regulations, ordinances and other legal requirements
pertaining to the production, storage, handling, treatment,
release, transportation or disposal of any hazardous waste or
hazardous substance.
SECTION 7. EVENTS OF DEFAULT AND REMEDIES
7.1 Events of Default. All Obligations shall be immediately due
and payable, without notice or demand, and any provisions of this
Agreement as to future loans and credit accommodations by Lender
shall terminate automatically, upon the termination or non-renewal
of this Agreement or, at Lender's option, upon or at any time
after the occurrence or existence of any one or more of the
following "Events of Default":
(a) Borrower fails to pay when due any of the Obligations (or
any portion thereof) or fails to perform any of the terms of this
Agreement or any other existing or future financing, security or
other agreement between Borrower and Lender or any affiliate of
Lender;
(b) Any representation, warranty or statement of fact made by
Borrower to Lender in this Agreement or any other agreement,
schedule, confirmatory assignment or otherwise, or to any
affiliate of Lender, shall prove inaccurate or misleading;
(c) Any guarantor revokes, terminates, attempts to revoke or
terminate, or fails to perform any of the terms of any guaranty,
endorsement or other agreement of such party in favor of Lender or
any affiliate of Lender;
(d) Any judgment or judgments aggregating in excess of
$25,000 or any injunction or attachment is obtained against
Borrower or any guarantor which remains unstayed for a period of
ten (10) days or is enforced;
(e) Borrower or any guarantor or a general partner of a
guarantor or Borrower (which is a partnership), being a natural
person, dies, or Borrower or any guarantor which is a partnership
or corporation, is dissolved, or Borrower or any guarantor which
is a corporation fails to maintain its corporate existence in good
standing, or the usual business of Borrower or any guarantor
ceases or is suspended;
(f) Any change in the chief executive officer or chief
operating officer, chief financial officer of Guarantor or
controlling ownership of Borrower;
(g) Borrower or any guarantor becomes insolvent, makes an
assignment for the benefit of creditors, makes or sends notice of
a bulk transfer or calls a general meeting of its creditors or
principal creditors;
(h) Any petition or application for any relief under the
bankruptcy laws of the United States now or hereafter in effect or
under any insolvency, reorganization, receivership, readjustment
of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at law or in
equity) is filed by or against Borrower or any guarantor;
(i) The indictment or threatened indictment of Borrower or
any guarantor under any criminal statute, or commencement or
threatened commencement of criminal or civil proceedings against
Borrower or any guarantor, pursuant to which statute or
proceedings the penalties or remedies sought or available include
forfeiture of any of the property of Borrower or such guarantor;
(j) Any default or event of default occurs on the part of
Borrower under any agreement, document or instrument to which
Borrower is a party or by which Borrower or any of its property is
bound, creating or relating to any indebtedness of Borrower to any
person or entity other than Lender in an amount exceeding
$25,000.00, if the effect of such default is to accelerate, or to
permit the acceleration of, the maturity of all or any part of
such indebtedness, or all or any part of any such indebtedness
shall be declared to be due and payable or required to be prepaid
or any other reason, in either event prior to the stated maturity
thereof;
(k) Lender in good faith believes that either (i) the
prospect of payment or performance of the Obligations is impaired
or (ii) the Collateral is not sufficient to secure fully the
Obligations;
(l) Any material change occurs in the nature or conduct of
Borrower's business;
(m) Borrower's losses, cumulative from the date hereof through
termination of the Revolving and Term Loans established hereunder,
exceed Five Hundred Thousand Dollars ($500,000.00). Lender shall
not, in calculating said loss, include a loss attributable to a
change in LIFO reserves; or
(n) Borrower fails to provide Lender with any notice or waiver
required by Section 6.10 hereof.
7.2 Remedies. Upon the occurrence of an Event of Default and
at any time thereafter, Lender shall have all rights and remedies
provided in this Agreement, any other agreements between Borrower
and Lender, the Uniform Commercial Code or other applicable law,
all of which rights and remedies may be exercised without notice
to Borrower, all such notices being hereby waived, except such
notice as is expressly provided for hereunder or is not waivable
under applicable law. All rights and remedies of Lender are
cumulative and not exclusive and are enforceable, in Lender's
discretion, alternatively, successively, or concurrently on any
one or more occasions and in any order Lender may determine.
Without limiting the foregoing, Lender may (a) accelerate the
payment of all Obligations and demand immediate payment thereof to
Lender, (b) with or without judicial process or the aid or
assistance of others, enter upon any premises on or in which any
of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all
or any portion of the Collateral, (c) require Borrower, at
Borrower's expense, to assemble and make available to Lender any
part or all of the Collateral at any place and time designated by
Lender, (d) collect, foreclose, receive, appropriate, setoff and
realize upon any and all Collateral, (e) extend the time of
payment of, compromise or settle for cash, credit, return of
merchandise, and upon any terms or conditions, any and all
accounts or other Collateral which includes a monetary obligation
and discharge or release the account debtor or other obligor,
without affecting any of the Obligations, including, but in no way
limited by, reducing, in the Lender's sole and absolute
discretion, the Gross Availability Formulas set forth in Section
10.1(b) hereof (f) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including, without
limitation, entering into contracts with respect thereto, by
public or private sales at any exchange, broker's board, any
office of Lender or elsewhere) at such prices or terms as Lender
may deem reasonable, for cash, upon credit or for future delivery,
with the Lender having the right to purchase the whole or any part
of the Collateral at any such public sale, all of the foregoing
being free from any right or equity of redemption of Borrower,
which right or equity of redemption is hereby expressly waived and
released by Borrower. If any of the Collateral is sold or leased
by Lender upon credit terms or for future delivery, the
Obligations shall not be reduced as a result thereof until payment
therefor is finally collected by Lender. If notice of disposition
of Collateral is required by law, seven (7) days prior notice by
Lender to Borrower designating the time and place of any public
sale or the time after which any private sale or other intended
disposition of Collateral is to be made, shall be deemed to be
reasonable notice thereof and Borrower waives any other notice. In
the event Lender institutes an action to recover any Collateral or
seeks recovery of any Collateral by way of prejudgment remedy,
Borrower waives the posting of any bond which might otherwise be
required.
7.3 Application of Proceeds. Lender may apply the cash
proceeds of Collateral actually received by Lender from any sale,
lease, foreclosure or other disposition of the Collateral to
payment of any of the Obligations, in whole or in part (including
reasonable attorneys' fees and legal expenses incurred by Lender
with respect thereto or otherwise chargeable to Borrower) and in
such order as Lender may elect, whether or not then due. Borrower
shall remain liable to Lender for the payment of any deficiency
together with interest at the highest rate provided for herein and
all costs and expenses of collection or enforcement, including
reasonable attorneys' fees and legal expenses.
7.4 Lender's Cure of Third Party Agreement Default. Lender
may, at its option, cure any default by Borrower under any
agreement with a third party or pay or bond on appeal any judgment
entered against Borrower, discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing
with respect to the Collateral and pay any amount, incur any
expense or perform any act which, in Lender's sole judgment, is
necessary or appropriate to preserve, protect, insure, maintain,
or realize upon the Collateral. Lender may charge Borrower's loan
account for any amounts so expended, such amounts to be repayable
by Borrower on demand. Lender shall be under no obligation to
effect such cure, payment, bonding or discharge, and shall not, by
doing so, be deemed to have assumed any obligation or liability of
Borrower.
SECTION 8. JURY TRIAL WAIVER; CERTAIN OTHER WAIVERS AND
CONSENTS
8.1 JURY TRIAL WAIVER. BORROWER AND LENDER EACH WAIVE ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INSTITUTED BY
EITHER OF THEM AGAINST THE OTHER WHICH PERTAINS DIRECTLY OR
INDIRECTLY TO THIS AGREEMENT, THE OBLIGATIONS, THE COLLATERAL, ANY
ALLEGED TORTUOUS CONDUCT BY BORROWER OR LENDER, OR, IN ANY WAY,
DIRECTLY OR INDIRECTLY, ARISES OUT OF OR RELATES TO THE
RELATIONSHIP BETWEEN BORROWER AND LENDER. IN NO EVENT WILL LENDER
BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL OR CONSEQUENTIAL
DAMAGES.
8.2 Counterclaims. Borrower waives all rights to interpose any
claims, deductions, setoffs or counterclaims of any kind, nature
or description in any action or proceeding instituted by Lender
with respect to this Agreement, the Obligations, the Collateral or
any matter arising therefrom or relating thereto, except
compulsory counterclaims.
8.3 Jurisdiction. Borrower hereby irrevocably submits and
consents to the nonexclusive jurisdiction of the State and Federal
Courts located in the State in which the office of Lender
designated in Section 10.6(a) is located and any other State where
any Collateral is located with respect to any action or proceeding
arising out of this Agreement, the Obligations, the Collateral or
any matter arising therefrom or relating thereto. In any such
action or proceeding, Borrower waives personal service of the
summons and complaint or other process and papers therein and
agrees that the service thereof may be made by mail directed to
Borrower at its chief executive office set forth herein or other
address thereof of which Lender has received notice as provided
herein, service to be deemed complete five (5) days after mailing,
or as permitted under the rules of either of said Courts. Any such
action or proceeding commenced by Borrower against Lender will be
litigated only in a Federal Court located in the district, or a
State Court in the State and County, in which the office of Lender
designated in Section 10.6(a) is located and Borrower waives any
objection based on forum non conveniens and any objection to venue
in connection therewith.
8.4 No Waiver by Lender. Lender shall not, by any act,
delay, omission or otherwise be deemed to have expressly or
impliedly waived any of its rights or remedies unless such waiver
shall be in writing and signed by an authorized officer of Lender.
A waiver by Lender of any right or remedy on any one occasion
shall not be construed as a bar to or waiver of any such right or
remedy which Lender would otherwise have on any future occasion,
whether similar in kind or otherwise.
SECTION 9. TERM OF AGREEMENT; MISCELLANEOUS
9.1 Term. This Agreement shall only become effective upon
execution and delivery by Borrower and Lender and shall continue
in full force and effect for a term of three (3) years from the
date hereof.
9.2 Early Termination. Borrower may also terminate this
Agreement by giving Lender at least thirty (30) days prior written
notice at any time upon payment in full of all of the Obligations
as provided herein, including the early termination fee provided
below. Lender shall also have the right to terminate this
Agreement at any time upon or after the occurrence of an Event of
Default. If Lender terminates this Agreement upon or after the
occurrence of an Event of Default, or if Borrower shall terminate
this Agreement as permitted herein effective prior to the end of
the then-current Term, in addition to all other Obligations,
Borrower shall pay to Lender, upon the effective date of
termination, in view of the impracticality and extreme difficulty
of ascertaining actual damages and by mutual agreement of the
parties as to a reasonable calculation of Lender's lost profits,
an early termination fee equal to:
(a) five percent (5%) of the Maximum Credit, if the
Termination Date occurs during the first year of the initial Term
of this Agreement, or
(b) two percent (2%) of the Maximum Credit if the Termination
Date occurs during the second year of the initial Term of this
Agreement or at any time thereafter including during any renewal
Term; provided, however, so long as there exists no Event of
Default hereunder, Borrower may pay the Obligations in full during
the final sixty (60) days of the original or any renewal Term
without incurring any early termination fee.
9.3 Additional Cash Collateral. Upon termination of this
Agreement by Borrower, as permitted herein, in addition to payment
of all Obligations which are not contingent, Borrower shall
deposit such amount of cash collateral as Lender determines is
necessary to secure Lender from loss, cost, damage or expense,
including reasonable attorneys' fees, in connection with any open
Accommodations or remittance items or other payments provisionally
credited to the Obligations and/or to which Lender has not yet
received final and indefeasible payment.
9.4 Notices. Except as otherwise provided, all notices,
requests and demands hereunder shall be (a) made to Lender at its
address set forth in Section 10.6(a) and to Borrower at its chief
executive office set forth in Section 10.6(d), or to such other
address as either party may designate by written notice to the
other in accordance with this provision, and (b) deemed to have
been given or made: if by hand, immediately upon delivery; if by
telex, telegram or telecopy (fax), immediately upon receipt; if by
overnight delivery service, one day after dispatch; and if by
first class or certified mail, three (3) days after mailing.
9.5 Severability. If any provision of this Agreement is held
to be invalid or unenforceable, such provision shall not affect
this Agreement as a whole, but this Agreement shall be construed
as though it did not contain the particular provision held to be
invalid or unenforceable.
9.6 Entire Agreement; Amendments; Assignments. This
Agreement contains the entire agreement of the parties as to the
subject matter hereof, all prior commitments, proposals and
negotiations concerning the subject matter hereof being merged
herein. Neither this Agreement nor any provision hereof shall be
amended, modified or discharged orally or by course of conduct,
but only by a written agreement signed by an authorized officer of
Lender. This Agreement shall be binding upon and inure to the
benefit of each of the parties hereto and their respective
successors and assigns, except that any obligation of Lender under
this Agreement shall not be assignable nor inure to the successors
and assigns of Borrower.
9.7 Discharge of Borrower. No termination of this Agreement
shall relieve or discharge Borrower of its Obligations, grants of
Collateral, duties and covenants hereunder or otherwise until such
time as all Obligations to Lender have been indefeasibly paid and
satisfied in full, including, without limitation, the continuation
and survival in full force and effect of all security interests
and liens of Lender in and upon all then existing and thereafter-
arising or acquired Collateral and all warranties and waivers of
Borrower.
9.8 Usage. All terms used herein which are defined in the
Uniform Commercial Code shall have the meanings given therein
unless otherwise defined in this Agreement and all references to
the singular or plural herein shall also mean the plural or
singular, respectively.
9.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State in which the
office of Lender set forth in Section 10.6(a) below is located.
Section 10. Additional Definitions and Terms
10.1 (a) Maximum Credit: $3,000,000.00
(b) Gross Availability Formulas:
Eligible Accounts Percentage: Not Applicable
(c) Sublimits:
(i) Inventory: Not applicable.
(d) Minimum Annual Borrowing:
$2,000,000.00 minimum annual loan balance. If the average annual
loan balance is less than this amount, Borrower shall pay to
Lender an amount calculated pursuant to Section 2.1(g) on the
anniversary date hereof and each anniversary date thereafter.
10.2 Term Loan: $2,985,844.00
10.3 Accommodations: None.
(a) Lender's Charge for
Accommodations: Not Applicable.
(b) Sublimit for
Accommodations: Not Applicable.
10.4 Fees:
(a) Interest Rate: Prime Rate plus 2.50% per annum
(b) Intentionally Omitted.
(c) Facility Fee:
(i) Initial Term. In consideration of Lender's
establishment of the credit facility described herein, Borrower
shall pay to Lender a Facility Fee in the amount of $142,500.00,
all of which is fully earned at the execution hereof, of which
$37,500.00, shall be paid at the execution hereof, $52,500.00
shall be paid on the first anniversary of the execution hereof and
the balance of $52,500.00 shall be paid on the second anniversary
of the execution hereof.
(ii) Renewal Terms. If the Maximum Credit is renewed after
the Initial Term, then Borrower shall pay to Lender an additional
Facility Fee of $105,000.00 for each Renewal Term, which shall be
fully earned on the first day of each such Renewal Term and shall
be payable as follows:
A) A portion of the fee equal to $52,500.00 shall be
payable on the first day of each such Renewal Term; and
B) The remaining portion of the fee equal to $52,500.00
shall be payable on the first anniversary of each such
Renewal Term.
(d) Intentionally Omitted
(e) Appraisal Fee: As incurred.
(f) Lender's Counsel Fee: As incurred.
(g) Field Exams: $650.00 per day.
10.5 Financial Covenants:
(a) Working Capital: Not applicable.
(b) Net Worth: Not applicable.
(c) Capital Expenditures: Borrowers' aggregate
cash capital expenditures shall not exceed
$100,000.00 during any fiscal year.
10.6 (a) Lender's Office:
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
Telecopier: (312) XXX-XXXX
(b) Lender's Bank:
Bank of America, Illinois
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
(c) Borrower: Greenway Corporation
Xxxxxxxx Bridge Company
Piedmont Metal Products, Inc.
Xxxxxxxx Equipment Corporation
Xxxxxxxx Steel Erection Company, Inc.
(d) Borrowers' Chief Executive Office:
0000 Xxxxxx Xxxx Xxxx
Xxxxx Xxxxxx, Xxxxxxxx 00000
(e) Locations of Eligible Collateral:
0000 X.X. Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
0000 Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
000 X. Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
(f) Borrower's Other Offices and Locations of
Collateral: None.
(g) Borrower's Trade Names for
Invoicing: None.
IN WITNESS WHEREOF, Borrower and Lender have duly executed
this Agreement this 31st day of March, 1997.
Lender: Borrower:
The CIT Group/Credit Finance, Inc. Greenway Corporation
By: ____________________ By:_____________________
Xxxxxx X. Xxxxxxx,
Vice President
Xxxxxxxx Bridge Company
By:_____________________
Piedmont Metal Products, Inc.
By:_____________________
Xxxxxxxx Equipment Corporation
By:_____________________
Xxxxxxxx Steel Erection
Company, Inc.
By:_____________________
