CREDIT AGREEMENT Dated as of July 23, 1998 by and between P&F INDUSTRIES, INC., FLORIDA PNEUMATIC MANUFACTURING CORPORATION, EMBASSY INDUSTRIES, INC., as "Co- Borrowers" and EUROPEAN AMERICAN BANK, as "Bank"
QuickLinks -- Click here to rapidly navigate through this document
Dated as of July 23, 1998
by and between
P&F INDUSTRIES, INC.,
FLORIDA PNEUMATIC MANUFACTURING CORPORATION,
EMBASSY INDUSTRIES, INC., as "Co-Borrowers"
and
EUROPEAN AMERICAN BANK, as "Bank"
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS |
1 | |||
SECTION 1.01. | Definitions | 1 | ||
SECTION 1.02. | Accounting Terms | 9 | ||
ARTICLE II LOANS |
9 |
|||
SECTION 2.01. | Revolving Credit Loans | 9 | ||
SECTION 2.02. | Revolving Credit Note | 10 | ||
SECTION 2.03. | Equipment Loans | 10 | ||
SECTION 2.04. | Term Loans | 11 | ||
SECTION 2.05. | Term Notes | 11 | ||
SECTION 2.06 | Letters of Credit and Documentary Banker's Acceptances | 12 | ||
ARTICLE III INTEREST RATE; FEES AND PAYMENTS; USE OF PROCEEDS |
13 |
|||
SECTION 3.01. | Interest Rate | 13 | ||
SECTION 3.02. | Use of Proceeds | 15 | ||
SECTION 3.03. | Prepayments | 15 | ||
SECTION 3.04. | Fees and Discounting of Acceptances | 15 | ||
SECTION 3.05. | Inability to Determine Interest Rate | 16 | ||
SECTION 3.06. | Illegality | 16 | ||
SECTION 3.07. | Other Events | 16 | ||
SECTION 3.08. | Indemnity | 17 | ||
SECTION 3.09. | Funds; Manner of Payment | 17 | ||
ARTICLE IV REPRESENTATIONS AND WARRANTIES |
19 |
|||
SECTION 4.01. | Organization, Corporate Powers, etc | 19 | ||
SECTION 4.02. | Authorization of Borrowing, Enforceable Obligations | 19 | ||
SECTION 4.03. | Financial Condition | 19 | ||
SECTION 4.04. | Taxes | 20 | ||
SECTION 4.05. | Title to Properties | 20 | ||
SECTION 4.06. | Litigation | 20 | ||
SECTION 4.07. | Agreements | 20 | ||
SECTION 4.08. | Compliance with ERISA | 20 | ||
SECTION 4.09. | Federal Reserve Regulations; Use of Proceeds | 20 | ||
SECTION 4.10. | Approval | 20 | ||
SECTION 4.11. | Subsidiaries | 21 | ||
SECTION 4.12. | Hazardous Materials | 21 | ||
SECTION 4.13. | Investment Company Act | 21 | ||
SECTION 4.14. | Security Agreement | 21 | ||
SECTION 4.15. | No Default | 22 | ||
SECTION 4.16. | Permits and Licenses | 22 | ||
SECTION 4.17. | Compliance with Law | 22 | ||
SECTION 4.18. | Disclosure | 22 | ||
SECTION 4.19. | Year 2000 Compliance | 22 | ||
SECTION 4.20. | Pledge Agreement | 22 | ||
SECTION 4.21. | Inventory at Outside Locations | 22 | ||
ARTICLE V CONDITIONS OF LENDING |
23 |
|||
SECTION 5.01. | Conditions to the Initial Loan | 23 | ||
SECTION 5.02. | Conditions to all Loans | 25 | ||
SECTION 5.03. | Conditions to Each Term Loan | 25 | ||
SECTION 5.04. | Additional Condition with respect to each Equipment Loan | 26 | ||
ARTICLE VI AFFIRMATIVE COVENANTS |
26 |
|||
SECTION 6.01. | Corporate Existence, Properties, etc | 26 | ||
SECTION 6.02. | Payment of Indebtedness, Taxes, etc | 27 | ||
SECTION 6.03. | Financial Statements, Reports, etc | 27 | ||
SECTION 6.04. | Access to Premises and Records | 28 | ||
SECTION 6.05. | Notice of Adverse Change | 28 | ||
SECTION 6.06. | Notice of Default | 28 | ||
SECTION 6.07. | Notice of Litigation | 28 | ||
SECTION 6.08. | ERISA | 29 | ||
SECTION 6.09. | Compliance with Applicable Laws | 29 | ||
SECTION 6.10. | Subsidiaries | 29 | ||
SECTION 6.11. | Default in Other Agreements | 29 | ||
SECTION 6.12. | Environmental Laws | 30 | ||
SECTION 6.13. | Outside Inventory Locations | 30 | ||
ARTICLE VII NEGATIVE COVENANTS |
30 |
|||
SECTION 7.01. | Liens | 30 | ||
SECTION 7.02. | Indebtedness | 31 | ||
SECTION 7.03. | Guaranties | 31 | ||
SECTION 7.04. | Sale of Assets | 32 | ||
SECTION 7.05. | Sales of Notes | 32 | ||
SECTION 7.06. | Loans and Investments | 32 | ||
SECTION 7.07. | Nature of Business | 32 | ||
SECTION 7.08. | Sale and Leaseback | 32 | ||
SECTION 7.09. | Federal Reserve Regulations | 33 | ||
SECTION 7.10. | Change in Fiscal Year | 33 | ||
SECTION 7.11. | Limitations on Fundamental Changes | 33 | ||
SECTION 7.12. | Financial Condition Covenants | 33 | ||
SECTION 7.13. | Subordinated Debt | 33 | ||
SECTION 7.14. | Transactions with Affiliates | 33 | ||
SECTION 7.15. | Impairment of Security Interest | 33 | ||
ARTICLE VIII EVENTS OF DEFAULT |
34 |
|||
SECTION 8.01. | Events of Default | 34 | ||
ARTICLE IX MISCELLANEOUS |
36 |
|||
SECTION 9.01. | Notices | 36 | ||
SECTION 9.02. | Survival of Agreement | 36 | ||
SECTION 9.03. | Expenses of the Bank | 36 | ||
SECTION 9.04. | No Waiver of Rights by the Bank | 37 | ||
SECTION 9.05. | APPLICABLE LAW | 37 | ||
SECTION 9.06. | SUBMISSION TO JURISDICTION | 37 | ||
SECTION 9.07. | Extension of Maturity | 38 | ||
SECTION 9.08. | Modification of Agreement | 38 | ||
SECTION 9.09. | Severability | 38 | ||
SECTION 9.10. | Sale of Participations | 38 | ||
SECTION 9.11. | Reinstatement; Certain Payments | 38 | ||
SECTION 9.12. | Right of Setoff | 38 | ||
SECTION 9.13. | Joint and Several Obligations of the Co-Borrowers | 39 | ||
SECTION 9.14. | Counterparts | 39 | ||
SECTION 9.15. | Headings | 39 | ||
SCHEDULES |
||||
Schedule I—Subsidiaries and Affiliates |
||||
Schedule II—Liens | ||||
Schedule III—Existing Indebtedness | ||||
Schedule IV—Existing Guarantees | ||||
Schedule V—Outside Inventory Locations | ||||
Schedule VI—Permitted Investments | ||||
Schedule VII—Litigation | ||||
Schedule VIII—Environmental Matters | ||||
EXHIBITS |
||||
Exhibit A—Form of Revolving Credit Note |
||||
Exhibit B—Form of Equipment Loan Note | ||||
Exhibit C—Form of Term Note | ||||
Exhibit D—Form of Corporate Guaranty | ||||
Exhibit E-1—Form of Co-Borrower Security Agreement | ||||
Exhibit E-2—Form of Corporate Guarantor Security Agreement | ||||
Exhibit F—Form of Notice of Borrowing | ||||
Exhibit G—Form of Opinion of Counsel | ||||
Exhibit H—Form of Pledge Agreement |
CREDIT AGREEMENT dated as of July 23, 1998, by and among P&F INDUSTRIES, INC., a Delaware corporation ("P&F"), FLORIDA PNEUMATIC MANUFACTURING CORPORATION, a Florida corporation ("Florida Pneumatic") and EMBASSY INDUSTRIES, INC., a New York corporation ("Embassy", collectively with P&F and Florida Pneumatic, the "Co-Borrowers") and EUROPEAN AMERICAN BANK, a New York banking corporation (the "Bank").
The Co-Borrowers have requested the Bank to extend credit from time to time and the Bank is willing to extend credit to the Co-Borrowers, subject to the terms and conditions hereinafter set forth.
Accordingly, the Co-Borrowers and the Bank agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Definitions. As used herein, the following words and terms shall have the following meanings:
"Affiliate" shall mean with respect to any Person, any corporation, partnership, limited liability company, limited liability partnership, joint venture, trust or unincorporated organization which, directly or indirectly, controls or is controlled by or is under common control with such Person. For the purpose of this definition, "control" of a Person shall mean the power, direct or indirect, to direct or cause the direction of the management or policies of such Person whether through the ownership of voting securities, by contract or otherwise; provided that, in any event, any Person who owns directly or indirectly 10% or more of the securities having ordinary voting power for the election of directors or other governing body of a corporation or 10% or more of the partnership or other ownership interest of any Person (other than as a limited partner of such other Person) will be deemed to control such corporation or other Person.
"Aggregate Banker's Acceptances Outstanding" shall mean on the date of determination thereof, the aggregate principal balance of outstanding Documentary Banker's Acceptances created on behalf of or for the benefit of the Co-Borrowers, or any of them, hereunder.
"Aggregate Letters of Credit Outstanding" shall mean on the date of determination thereof, the sum of (a) the aggregate maximum amount which is available or available in the future to be drawn under all outstanding Letters of Credit under this Agreement plus (b) the aggregate amount of any payments made by the Bank under any Letter of Credit issued pursuant to this Agreement that has not been reimbursed by the Co-Borrowers.
"Aggregate Outstandings" shall mean on the date of determination thereof, the sum of (i) the Aggregate Letters of Credit Outstanding, plus (ii) the Aggregate Banker's Acceptances Outstanding, plus (iii) the aggregate outstanding principal amount of the Revolving Credit Loans plus (iv) the aggregate outstanding principal amount of the Equipment Loans at such time.
"Aggregate Term Loan Outstandings" shall mean, on the date of determination thereof, the aggregate outstanding principal amount of the Term Loans at such time.
"Agreement" shall mean this Credit Agreement dated as of July 23, 1998, as it may hereafter be amended, restated, supplemented or otherwise modified from time to time.
"Applicable Term Loan Margin" shall mean with respect to Term Loans that are Prime Rate Loans or LIBOR Loans hereunder, the percentage set forth below under the headings "Prime Rate Margin" and "LIBOR Margin", respectively, opposite the applicable ratio:
Consolidated Senior Debt to Consolidated EBITDA |
Prime Rate Margin |
LIBOR Margin |
|||
---|---|---|---|---|---|
Greater than 3.25:1.00 | 0.25 | % | 2.00 | % | |
Less than or equal to 3.25:1.00 | 0 | % | 1.75 | % |
The Applicable Term Loan Margins will be initially set with respect to each Term Loan on the date which is five (5) Business Days following the date of receipt by the Bank of the pro forma financial statements referred to in Section 5.03(f) on the basis of such financial statements and thereafter shall be reset on the date which is five (5) Business Days following the date of receipt by the Bank of the financial statements referred to in 6.03(a) and Section 6.03(b), together with a certificate of the Chief Financial Officer of the Co-Borrowers certifying the ratio of Consolidated Senior Debt to Consolidated EBITDA and setting forth the calculation thereof in detail; provided, however, that if any such financial statement and certificate are not received by the Bank within the time period required pursuant to Section 6.03(a) or Section 6.03(b), as the case may be, the Applicable Term Loan Margin will be established at the highest rates provided above from the date such financial statement and certificate were due until the date which is five (5) Business Days following the receipt by the Bank of such financial statements and certificate; and provided, further, that the Bank shall not in any way be deemed to have waived any Event of Default, or any rights or remedies hereunder or under any other Loan Document in connection with the foregoing proviso. During the occurrence and continuance of a Default or an Event of Default, no downward adjustment, and only upward adjustments, shall be made to the Applicable Term Loan Margin.
"Available Revolving Credit Commitment" shall mean at any time the Revolving Credit Commitment reduced by the aggregate principal amount of the Revolving Credit Loans and of the Equipment Loans then outstanding and by Aggregate Banker's Acceptances Outstanding and Aggregate Letters of Credit Outstanding.
"Available Term Loan Commitment" shall mean at any time the Term Loan Commitment reduced by the aggregate outstanding principal amount of the Term Loans.
"Availability Period" shall have the meaning specified in Section 2.04 hereof.
"Borrowing Date" shall mean, with respect to any Loan, the date on which such Loan is disbursed to a Co-Borrower.
"Business Day" shall mean any day not a Saturday, Sunday or legal holiday, on which banks in New York City are open for business; provided, however, that when used in connection with an LIBOR Loan the term "Business Day" shall exclude any day on which the Bank is not open for dealings in dollar deposits in the London interbank eurodollar market.
"Capital Expenditures" shall mean additions to property and equipment of P&F and its Subsidiaries, which, in conformity with GAAP, are included as "additions to property, plant or equipment" or similar items which would be reflected in the consolidated statement of cash flow of P&F and its Subsidiaries, including without limitation, property and equipment which are the subject of Capital Leases.
"Capital Lease" shall mean (a) any lease of property, real or personal, if the then present value of the minimum rental commitment thereunder should, in accordance with GAAP, be capitalized on the balance sheet of the lessee, and (b) any other such lease the obligations with respect to which are required to be capitalized on the balance sheet of the lessee.
"Chief Financial Officer" shall mean, with respect to any entity, the Chief Financial Officer of such entity or in the event no such officership exists, the Corporate Controller/Treasurer of such entity or the person performing comparable duties.
"Closing Date" shall mean July 23, 1998.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.
"Commitments" shall mean, collectively, the Revolving Credit Commitment and the Term Loan Commitment.
2
"Consolidated" shall mean, as applied to any financial or accounting term, such term determined on a consolidated basis in accordance with GAAP for P&F and its Subsidiaries.
"Consolidated Capital Base" shall mean on a Consolidated basis, the shareholders' equity of P&F and its Subsidiaries plus, Subordinated Debt, less all intangible assets, including without limitation, organization expenses, intellectual property, goodwill, loans or mortgages due from shareholders and/or employees and/or Affiliates, treasury stock or deferred charges.
"Consolidated Current Maturities on Long Term Debt" shall mean the portion of any Indebtedness which is classified as the current portion of long term debt on the Consolidated financial statements of P&F and its Subsidiaries, in accordance with GAAP.
"Consolidated EBITDA" shall mean for P&F and its Subsidiaries for any period, the Consolidated Net Income (or Consolidated net loss) of P&F and its Subsidiaries for such period, plus the sum, without duplication, of (a) gross interest expense, (b) depreciation and amortization expenses or charges, (c) all income taxes to any government or governmental instrumentality, expenses on P&F's or its Subsidiaries' books (whether paid or accrued) minus the sum of (a) all extraordinary gains, (b) all interest income and (c) all non-cash income or gain, in each case determined on a Consolidated basis for P&F and its Subsidiaries in accordance with GAAP.
"Consolidated Interest Expense" shall mean the Consolidated interest expense of P&F and its Subsidiaries, determined in accordance with GAAP.
"Consolidated Net Income" shall mean, for any period, the net income (or net loss) of P&F and its Subsidiaries on a Consolidated basis for such period determined in accordance with GAAP.
"Consolidated Net Worth" shall mean (a) total Consolidated assets of P&F and its Subsidiaries less (b) the total Consolidated liabilities of P&F and its Subsidiaries, in each case determined in accordance with GAAP.
"Consolidated Senior Debt" shall mean all Indebtedness of P&F and its Subsidiaries for borrowed money other than (i) Indebtedness described in clause "(i)", but only to the extent such Banker's acceptance do not constitute Documentary Banker's Acceptances, and clause "(j)" of the definition of the term "Indebtedness" and (ii) Subordinated Debt.
"Corporate Guarantors" shall mean, collectively, each Person listed on Schedule IV hereto and each Person who, from time to time, is required to execute a Corporate Guaranty in accordance with Section 5.01(b) or Section 6.10; provided such Person's status as a Corporate Guarantor shall be effective as of the date of such execution.
"Corporate Guaranty" means the Corporate Guaranty in the form attached hereto as Exhibit D to be executed and delivered by the Corporate Guarantors, as the same may hereafter be amended, restated, supplemented or otherwise modified from time to time.
"Default" shall mean any event or condition which upon notice, lapse of time or both, would constitute an Event of Default.
"Documentary Banker's Acceptances" shall mean banker's acceptances created by the Bank accepting a draft drawn on the Bank and which satisfy eligibility requirements established by the Board of Governors of the Federal Reserve System and the Bank's internal requirements as in effect from time-to-time.
"Environmental Law" shall mean any federal, state, local or foreign environmental law, ordinance, rule, regulation or policy relating to the pollution or the protection of the environment or to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. ss.ss.9601, et. seq.), the Hazardous
3
Materials Transportation Act, as amended (49 U.S.C. ss.ss.1801, et. seq.), the Resource Conservation and Recovery Act, as amended (42 U.S.C. ss.ss.6901, et. seq.) and the rules and regulations promulgated pursuant thereto.
"Equipment Loan" shall have the meaning given to such term in Section 2.03 hereof.
"Equipment Loan Maturity Date" means, with respect to each Equipment Loan, the date on which such Equipment Loan becomes due and payable in accordance with its terms, which date shall be the date determined as set forth in Section 2.03 but which shall not be more than five (5) years from the date such Equipment Loan is made.
"Equipment Loan Note" shall mean a promissory note of the Co-Borrower in the form attached as Exhibit B hereto as the same may be amended, supplemented or otherwise modified from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9) of ERISA) which together with the Co-Borrowers or any of them would be deemed to be a member of the same "controlled group" within the meaning of Section 414(b), (c), (m) and (o) of the Code.
"Eurocurrency Reserve Requirement" shall mean a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the applicable statutory reserve requirements (expressed as a decimal) for the Bank (without duplication, but including, without limitation, basic, supplemental, marginal and emergency reserves), from time to time in effect under Regulation D with respect to eurocurrency funding currently referred to as "Eurocurrency liabilities" in Regulation D. It is agreed that for purposes hereof each LIBOR Loan shall be deemed to constitute a "Eurocurrency liability" as defined in Regulation D, and to be subject to the reserve requirements of Regulation D without benefit of credit or proration, exemptions or offsets which might otherwise be available to the Bank from time to time under Regulation D.
"Event of Default" shall have the meaning set forth in Article VIII.
"Executive Officer" shall mean with respect to any entity, the Chairman, the President, the Chief Financial Officer or the Secretary of such entity, as applicable, and their respective successors, if any, designated by the board of directors.
"Existing Indebtedness" shall mean the aggregate Indebtedness of the Co-Borrowers to Hong Kong Shanghai Bank and to all other persons in respect of Loans made by such Persons, other than Indebtedness permitted pursuant to Section 7.02 and contingent obligations permitted pursuant to Section 7.03.
"Fixed Rate" shall mean a rate of interest per annum quoted to the Co-Borrowers by the Bank, from time to time at the request of the Co-Borrowers, as the "Fixed Rate". Such quoted rate shall be the fixed rate which would be applicable to a Fixed Rate Loan made by the Bank on the requested date for a proposed Fixed Rate Loan, in the specified amount and for the specified term thereof. Notwithstanding any other provision of this Agreement, the rate so quoted by the Bank shall be the rate, at the time of election, on United States Treasury Notes (as determined by the Bank) having maturities approximately equal to the maturity of such Fixed Rate Loan plus 175 basis points.
"Fixed Rate Loan" shall mean a Loan at such time as it is made or being maintained at the rate of interest based upon the Fixed Rate.
4
"Foreign Exchange Line" shall mean that credit line more particularly described in that certain Line Letter dated June 30, 1998 from Bank to Co-Borrowers.
"GAAP" shall mean generally accepted accounting principles and practices which are recognized as such by the American Institute of Certified Public Accountants acting through the financial Accounting Standards Board and which are consistently applied for all periods so as to properly reflect the consolidated financial condition and the consolidated results of operations and cash flows of P&F and its Subsidiaries.
"Green Acquisition" shall mean the acquisition by P&F of all of the issued and outstanding stock or substantially all of the assets of Green Manufacturing, Inc.
"Green Debt" shall mean the indebtedness assumed by a Co-Borrower in connection with the Green Acquisition, which indebtedness shall not exceed $1,095,000.
"Hazardous Materials" shall mean any explosives, radioactive materials, or other materials, wastes, chemicals or substances regulated as toxic, hazardous, or as a pollutant, contaminant, or waste under any Environmental Law.
"Indebtedness" shall mean, without duplication, as to any Person or Persons (a) indebtedness for borrowed money; (b) indebtedness for the deferred purchase price of property or services; (c) indebtedness evidenced by bonds, debentures, term notes or other similar instruments; (d) obligations and liabilities secured by a Lien upon property owned by such Person, whether or not owing by such Person and even though such Person has not assumed or become liable for the payment thereof; (e) Indebtedness of others directly or indirectly guaranteed by such Person; (f) obligations or liabilities created or arising under any conditional sales contract or other title retention agreement with respect to property used and/or acquired by such Person; (g) obligations of such Person as lessee under Capital Leases; (h) all obligations of such Person under hedging agreements and foreign currency exchange agreements, as calculated on a basis satisfactory to the Bank and in accordance with accepted practice; (i) all obligations of such Person in respect of bankers acceptances; and (j) all obligations, contingent or otherwise of such Person as an account party in respect of letters of credit.
"Interest Payment Date" means, (i) with respect to Prime Rate Loans or LIBOR Loans, the first business day of each calendar month during the term of such Loan commencing with the month following the month in which such Loan is made and the date such Loan is required to be repaid in full; and (ii) with respect to Fixed Rate Loans the monthly or quarterly interest payment dates established by the Bank at the time such Fixed Rate Loan is made.
"Interest Period" shall mean with respect to any LIBOR Loan:
(a) initially, the period commencing on the date such LIBOR Loan is made and ending one, three or six months thereafter, as selected by the Co-Borrowers in their Notice of Borrowing, or in their notice of conversion from a Prime Rate Loan as provided in Section 3.01(e); and
(b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such LIBOR Loan and ending one, three or six months thereafter, as selected by the Co-Borrowers by irrevocable written notice to the Bank not later than 11:00 a.m. three Business Days prior to the last day of the then current Interest Period with respect to such LIBOR Loan; provided, however, that all of the foregoing provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period pertaining to a LIBOR Loan would otherwise end on a day which is not a Business Day, the Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such
5
Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;
(ii) if the Co-Borrowers shall fail to give notice as provided in clause (b) above, the Co-Borrowers shall be deemed to have requested conversion of the affected LIBOR Loan to a Prime Rate Loan on the last day of the then current Interest Period with respect thereto;
(iii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month;
(iv) no Interest Period may be selected with respect to (a) a Revolving Credit Loan which ends later than the Revolving Credit Termination Date, and (b) the Term Loan which ends later than the Term Loan Maturity Date; and
(v) no more than twelve (12) Interest Periods may exist at any one time.
"Letter of Credit" shall mean any Sight Letter of Credit or Standby Letter of Credit issued by the Bank for the account of the Co-Borrowers, or any of them, pursuant to the terms of this Agreement. Letters of Credit issued by the Bank hereunder shall be for the account of the Co-Borrowers for the purpose of providing the primary payment mechanism in connection with the purchase of any materials, goods or service by the Co-Borrowers in the ordinary course of their business and to support repayment of the Green Debt.
"LIBOR Loan" shall mean any Loan at such time as it is made and/or being maintained at a rate of interest based upon Reserve Adjusted Libor.
"Liens" shall mean any lien (statutory or otherwise) security interest, mortgage, deed of trust, pledge, charge, conditional sale, title retention agreement, Capital Lease or other encumbrance or similar right of others, or any agreement to give any of the foregoing.
"Loans" shall mean, collectively, the Revolving Credit Loans, the Term Loans and the Equipment Loans and shall refer to a Prime Rate Loan, a LIBOR Loan or a Fixed Rate Loan, each of which shall be a "Type" of Loan.
"Loan Documents" shall mean, collectively, this Agreement, the Notes, the Security Agreements, the Corporate Guaranties, the Pledge Agreement and each other agreement executed in connection with the transactions contemplated hereby or thereby, as each of the same may hereafter or thereafter be amended, supplemented or otherwise modified from time to time.
"Material Adverse Effect" shall mean a material adverse effect on (i) the business, operations, properties or condition, financial or otherwise, of the Co-Borrowers taken as a whole or of the Co-Borrowers and their Subsidiaries, taken as a whole, or (ii) the ability of the Co-Borrowers, their Subsidiaries or any of them to perform their obligations hereunder or under the Loan Documents.
"Notice of Borrowing" shall mean the Notice of Borrowing substantially in the form attached hereto as Exhibit F.
"Obligations" shall mean all obligations, liabilities and indebtedness of the Co-Borrowers to the Bank, whether now existing or hereafter created, absolute or contingent, direct or indirect, due or not, whether created directly or acquired by assignment or otherwise, including, without limitation, all obligations, liabilities and indebtedness of the Co-Borrowers with respect to the principal of and interest on the Loans and the payment and performance of all other obligations, liabilities, and indebtedness of the Co-Borrowers to the Bank hereunder, under the Notes or any
6
other Loan Document or with respect to the Loans, including without limitation all fees, costs, expenses and indemnity obligations hereunder.
"Payment Office" shall mean the Bank's office located at 000 Xxxxxxxx Xxxxxxxx Xxxxxxx, Xxxxxxxxx, Xxx Xxxx 00000.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Acquisition" shall mean any acquisition by a Co-Borrower of more than 50% of the outstanding capital stock, membership interest, partnership interest or other similar ownership interest of a Person organized under the laws of the United States or any state thereof which is engaged in a line of business similar to the business of P&F or any of its Subsidiaries or the purchase of all or substantially all of the assets used by such Person or a division of such Person; provided (a) the acquisition complies with the terms and conditions of Section 5.03 (regardless of whether the Co-Borrowers have requested the Bank to finance the acquisition with the proceeds of a Term Loan); (b) no Default or Event of Default shall have occurred and be continuing immediately prior to or would occur after giving effect to the acquisition, and (c) the acquisition has either (i) been approved by the Board of Directors or other governing body of the Person which is the subject of the acquisition or (ii) been recommended for approval by the Board of Directors or other governing body of such Person to the shareholders or other members of such Person and subsequently approved by all of the shareholders or all of such members if shareholder or such member approval is required under applicable law or by the by-laws, certificate of incorporation or other governing instruments of such Person.
"Permitted Investments" shall mean (a) direct obligations of the United States of America or any governmental agency thereof, provided that such obligations mature within one year from the date of acquisition thereof; (b) dollar denominated certificates of time deposit maturing within eighteen months issued by the Bank or any commercial bank organized and existing under the laws of the United States or any state thereof and having aggregate capital and surplus in excess of $1,000,000,000; (c) money market mutual funds having assets in excess of $2,500,000,000; (d) commercial paper rated not less than P-1 or A-1 or their equivalent by Xxxxx'x Investor Services, Inc. or Standard & Poor's Corporation, respectively; or (e) tax exempt securities of a U.S. issuer rated A or better by Standard and Poor's Corporation or Xxxxx'x Investors Service, Inc.
"Person" shall mean any natural person, corporation, limited liability company, limited liability partnership, business trust, joint venture, association, company, partnership or government, or any agency or political subdivision thereof.
"Plan" shall mean any multi-employer or single-employer plan defined in Section 4001 of ERISA, which is maintained, or at any time during the five calendar years preceding the date of this Agreement was maintained, by any Co-Borrower or an ERISA Affiliate for employees of any Co-Borrower or an ERISA Affiliate.
"Pledge Agreement" shall mean the Pledge Agreement in the form annexed hereto as Exhibit I.
7
"Prime Rate" shall mean the rate per annum publicly announced by the Bank from time to time as its prime rate in effect at its principal office, each change in the Prime Rate to be effective on the date such change is announced to become effective.
"Prime Rate Loan" shall mean the portion of a Loan at such time as it is bearing interest at the Prime Rate.
"Regulation D" shall mean Regulation D of the Board of Governors of the Federal Reserve System as the same may be amended or supplemented from time to time.
"Reportable Event" shall mean an event described in Section 4043(c) of ERISA as to which the 30 day notice requirement has not been waived by the PBGC and which event occurs with respect to a Plan.
"Reserve Adjusted Libor" shall mean with respect to the Interest Period pertaining to a LIBOR Loan, the rate per annum equal to the product (rounded upwards to the next higher 1/100 of one percent) of (a) the annual rate of the interest determined by the Bank at which dollar deposits of an amount comparable to the amount of such Loan and for a period equal to the Interest Period applicable thereto are offered to leading banks in immediately available funds in the London interbank market for eurodollars at approximately 11:00 A.M. (London time) on the second Business Day prior to the commencement of such Interest Period, multiplied by (b) the Eurocurrency Reserve Requirement.
"Revolving Credit Commitment" shall mean the Bank's obligation to make Revolving Credit Loans to the Co-Borrowers pursuant to Section 2.01 hereof in an aggregate principal amount not to exceed $12,000,000.
"Revolving Credit Loan" shall have the meaning specified in Section 2.01.
"Revolving Credit Note" shall mean the promissory note of the Co-Borrowers in the form attached as Exhibit A hereto evidencing the Revolving Credit Loans, as the same may be amended, supplemented or otherwise modified from time to time.
"Revolving Credit Termination Date" shall mean the earlier of (i) July 22, 1999 or (ii) the date on which the Revolving Credit Commitment shall have been terminated hereunder.
"Security Agreements" shall mean the Security Agreements in the form annexed hereto as Exhibit E-1 in the case of those Security Agreements to be executed and delivered by each Co-Borrower and as Exhibit E-2 in the case of those Security Agreements to be executed by each Corporate Guarantor.
"Sight Letter of Credit" shall mean a Letter of Credit wherein the draft is drawn at sight (i.e., drawn payable upon presentment).
"Solvent" shall mean with respect to any Person as of the date of determination thereof that (a) the amount of the "present fair saleable value" of the assets of such Person will, as of such date, exceed the amount of all "liabilities of such Person, contingent or otherwise," as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) the present fair saleable value of the assets of such Person will, as of such date, be greater than the amount that will be required on its debts as such debts become absolute and matured, (c) such Person will not have as of such date, an unreasonably small amount of capital with which to conduct its business, and (d) such Person will be able to pay its debts as they mature.
"Standby Letter of Credit" shall mean any letter of credit issued to support an obligation of a Person and which may only be drawn upon the failure of such Person to perform such obligation or another contingency.
8
"Subordinated Debt or Subordinated Indebtedness" shall mean all debt which is subordinated in right of payment to the prior indefeasible payment in full of the obligations of any Co-Borrower and/or any of their Subsidiaries to the Bank on terms satisfactory to and approved in writing by the Bank.
"Subsidiaries" shall mean with respect to any Person any corporation, association or other business entity more than 50% of the voting stock or other ownership interest of which is at the time owned or controlled, directly or indirectly, by such Person or one or more of its Subsidiaries or a combination thereof.
"Term Loan Commitment" shall mean the Bank's obligation to make Term Loans to the Co-Borrowers pursuant to Section 2.04 hereof in an aggregate principal amount of $15,000,000.
"Term Loan Commitment Termination Date" shall mean July 22, 1999.
"Term Loan" shall have the meaning specified in Section 2.04.
"Term Loan Maturity Date" shall mean, with respect to any Term Loan, the date on which such Term Loan becomes due and payable in accordance with its terms, which date shall be the date determined as set forth in Section 2.04 but which shall not be more than seven (7) years from the date such Term Loan was made.
"Term Loan Note" shall mean the promissory note of the Co-Borrowers in the form attached as Exhibit C hereto evidencing the Term Loans, as the same may be amended, supplemented or otherwise modified from time to time.
"Type" shall have the meaning set forth in the definition of "Loans".
"Unfunded Current Liability" of any Plan shall mean the amount, if any, by which the present value of the accrued benefits under the Plan as of the close of its most recent plan year exceeds the fair market value of the assets allocable thereto, determined in accordance with Section 412 of the Code.
(b) The initial Revolving Credit Loan made by the Bank shall be made against delivery to the Bank of the Revolving Credit Note, payable to the order of the Bank, as referred to in Section 2.02 hereof. The Bank will make available each requested Revolving Credit Loan to the Co-Borrowers by crediting the proceeds thereof into an account of the Co-Borrowers at the Payment Office on the date and in the amount set forth in the applicable Notice of Borrowing.
(c) The Co-Borrowers shall give the Bank a completed irrevocable Notice of Borrowing, no later than 11:00 a.m., New York City time, three Business Days prior to the date of each proposed LIBOR Loan under this Section 2.01 or no later than 11:00 a.m. on the date of each proposed Prime Rate
9
Loan under this Section 2.01. Each borrowing pursuant to the Revolving Credit Commitment shall be in an aggregate principal amount of (A) the lesser of (x) $50,000 or whole multiples of $25,000 in excess thereof and (y) the Available Revolving Credit Commitment, with respect to Prime Rate Loans, and (B) $250,000 or whole multiples of $50,000 in excess thereof, with respect to LIBOR Loans.
(d) The Co-Borrowers shall have the right, upon not less than three Business Days' prior written notice to the Bank, to terminate the Revolving Credit Commitment or, from time to time, to permanently reduce the amount of the Revolving Credit Commitment; provided, however, that no such termination or reduction shall be permitted if, after giving effect thereto and to any prepayments of the Revolving Credit Loans made on the effective date thereof, Aggregate Outstandings would exceed the Revolving Credit Commitment, as then reduced; and provided, further, that any such terminations or reduction of LIBOR Loans shall be made only on the last day of the Interest Period with respect thereto or on the date of payment in full of all amounts owing to the Bank pursuant to Section 3.08 as a result of such termination or reduction. Any such reduction shall be in the amount of $1,000,000 or an amount in excess thereof, and shall reduce permanently the amount of the Revolving Credit Commitment then in effect.
(e) The Revolving Credit Commitment shall automatically terminate on the Revolving Credit Termination Date. Upon such termination, the Co-Borrowers shall immediately repay in full the principal amount of the Revolving Credit Loans then outstanding, together with all accrued interest thereon and all other amounts due and payable hereunder with respect to the Revolving Credit Loans.
(b) Each Equipment Loan made by the Bank to the Co-Borrowers shall be made against delivery to the Bank of an Equipment Loan Note, appropriately completed, duly executed on behalf of the Co-Borrowers and payable to the order of the Bank. Each Equipment Loan shall be a Prime Rate Loan or a Fixed Rate Loan and shall have a term designated by the Co-Borrower in the Notice of Borrowing but which shall not exceed five (5) years from the date of the borrowing and, in the absence of any such designation shall be five (5) years. Each Equipment Loan shall be payable in monthly or quarterly (as determined by the Bank) installments of interest and principal. The date and amount of
10
each Equipment Loan and the date and amount of each payment or prepayment of principal of such Equipment Loan shall be recorded on a schedule annexed to such Equipment Loan Note, and the Co-Borrowers authorize the Bank to make such recordation; provided, however, that the failure of the Bank to set forth payments and other information in such grid shall not in any manner affect the obligation of the Co-Borrowers to repay any Equipment Loan made by the Bank in accordance with the terms of this Agreement. Each Equipment Loan Note, the grid schedule and the books and records of the Bank shall be prima facie evidence of the information so recorded absent manifest error.
(c) The Co-Borrowers shall deliver to the Bank a completed Notice of Borrowing for each Prime Rate Loan no later than 11:00 a.m., New York City time, on the date of each proposed borrowing of a Prime Rate Loan pursuant to this Section 2.03, and for each Fixed Rate Loan, no later than 11:00 a.m., New York City time, two days prior to the date of each proposed borrowing of a Fixed Rate Loan pursuant to this Section 2.03. The Bank will make available each requested Equipment Loan to the Co-Borrowers by crediting the proceeds thereof into an account of the Co-Borrower specified in the Notice of Borrowing at the Payment Office.
(b) The initial Term Loan by the Bank shall be made against delivery to the Bank of a Term Note, payable to the order of the Bank, as referred to in Section 2.05. Each Term Loan shall be a Prime Rate Loan or a LIBOR Loan. The Co-Borrowers shall deliver to the Bank a completed Notice of Borrowing for each Prime Rate Loan no later than 11:00 a.m., New York City time, on the date of each proposed borrowing of a Prime Rate Loan under this Section 2.04, and for each LIBOR Loan, no later than 11:00 a.m. three (3) Business Day prior to the date of each proposed borrowing of a LIBOR Loan under this Section 2.04. The Bank will make available each requested Term Loan to the Co-Borrowers by crediting the proceeds thereof into an account of the Co-Borrowers specified in the Notice of Borrowing at the Payment Office. Each borrowing pursuant to the Term Loan Commitment shall be in an aggregate principal amount of (A) the lesser of (x) $50,000 or whole multiples thereof, and (y) the Available Term Loan Commitment, with respect to Prime Rate Loans, and (B) at least $250,000 with respect to LIBOR Loans. Such notice shall be irrevocable and shall specify the amount and Type of Term Loan, and if applicable, the requested Interest Period with respect thereto.
11
Note, the grid schedule and the books and records of the Bank shall be prima facie evidence of the information so recorded absent manifest error.
SECTION 2.06 Letters of Credit and Documentary Banker's Acceptances. (a) Subject to the terms and conditions set forth in this Agreement, upon the written request of the Co-Borrowers in accordance herewith, the Bank shall issue Letters of Credit and create Documentary Banker's Acceptances, at any time from the date hereof through the Revolving Credit Termination Date. Notwithstanding the foregoing, no Letter of Credit or Documentary Banker's Acceptance shall be issued or created if, after giving effect to the same, the Aggregate Outstandings would exceed the Revolving Credit Commitment. Furthermore, in no event shall the Aggregate Bankers Acceptances Outstanding exceed $8,000,000 at any time and in no event shall the Aggregate Letters of Credit Outstanding exceed $8,000,000 at any time. Notwithstanding anything contained herein to the contrary, the Bank shall be under no obligation to issue a Letter of Credit or create a Documentary Banker's Acceptance, if any order, judgment or decree of any court, arbitrator or governmental authority shall purport by its terms to enjoin, restrict or restrain the Bank in any respect relating to the issuance of such Letter of Credit or creation of such Documentary Banker's Acceptance or a similar letter of credit or documentary banker's acceptance, or any law, rule, regulation, policy, guideline or directive (whether or not having the force of law) from any governmental authority with jurisdiction over the Bank shall prohibit or direct the Bank in any respect relating to the issuance of such Letter of Credit or the creation of such Documentary Banker's Acceptance or similar letter of credit or documentary banker's acceptance, or shall impose upon the Bank with respect to any Letter of Credit or Documentary Banker's Acceptance any restrictions, any reserve or capital requirement or any loss, cost or expense not reimbursed by the Co-Borrowers to the Bank. Each request for issuance of a Letter of Credit shall be in writing and shall be received by the Bank by no later than 12:00 p.m. on the day which is at least one Business Day prior to the proposed date of issuance. Such issuance shall occur by no later than 5:00 p.m. on the proposed date of issuance (assuming proper prior notice as aforesaid). Subject to the terms and conditions contained herein, the expiry dates, the type of Letter of Credit, the purpose, the amounts and the beneficiaries of the Letters of Credit will be as designated by the Co-Borrowers. Each Letter of Credit issued by the Bank hereunder shall identify: (i) the dates of issuance and expiry of such Letter of Credit, (ii) the amount of such Letter of Credit (which shall be a sum certain, although partial drawings shall be permitted), (iii) the beneficiary and account party of such Letter of Credit, and (iv) the drafts and other documents necessary to be presented to the Bank upon drawing thereunder. No Sight Letter of Credit issued hereunder shall expire more than 180 days from the date of issuance, no Standby Letter of Credit issued hereunder shall expire more than one year from the date of issuance and no Documentary Banker's Acceptance shall mature more than 180 days from the date of creation thereof, and in no event shall any Letter of Credit expire or any Documentary Banker's Acceptance mature, after the Business Day which is immediately prior to the Revolving Credit Termination Date. The Co-Borrowers agree to execute and deliver to the Bank such further documents and instruments in connection with any Letter of Credit issued or Documentary Banker's Acceptance created hereunder (including, without limitation, applications therefor and the Bank's Master Letter of Credit Agreement and Standard Acceptance Credit Agreement) as the Bank in accordance with its customary practices may request. To the extent of any inconsistency between those documents and this Agreement, the provisions of this Agreement shall control and such other documents shall not impose any operating restrictions, financial covenants, or payment obligations or require Co-Borrowers to provide any collateral in addition to or different from those imposed under this Agreement.
(b) Drawings Under Letters of Credit and Payments of Documentary Banker's Acceptances. The Co-Borrowers hereby absolutely and unconditionally promise to pay to the Bank on the date of any drawing under a Letter of Credit or the maturity of a Documentary Banker's Acceptance, in immediately available funds from its accounts, the amount of such drawing under such Letter of Credit or Documentary Banker's Acceptance. If the Co-Borrowers so request by a Notice of Borrowing delivered to the Bank not later than 12:30 p.m. (New York City time) on the date of the drawing under
12
a Letter of Credit or the maturity of a Documentary Banker's Acceptance in accordance with the terms hereof and if each of the conditions precedent to the making of a Loan set forth in Article V of this Agreement has been satisfied, on the Business Day on which a drawing under a Letter of Credit or the maturity of a Documentary Banker's Acceptance occurs, the amount of such drawing, plus interest thereon, or the amount of such Documentary Banker's Acceptance, for which the Bank has not been reimbursed by the Co-Borrowers, shall become a Prime Rate Loan made by the Bank to the Co-Borrowers on such day.
(c) Letter of Credit and Documentary Banker's Acceptance Obligations Absolute. (i) The obligations of the Co-Borrowers to reimburse the Bank as provided hereunder in respect of drawings or payments under Letters of Credit and Documentary Banker's Acceptances shall rank pari passu with the obligations of the Co-Borrowers to repay the Loans hereunder, shall be absolute and unconditional under any and all circumstances and shall be secured pro rata with the other Obligations (if any) pursuant to the Security Agreements in accordance with the provisions of the Security Agreements. Without limiting the generality of the foregoing, the obligation of the Co-Borrowers to reimburse the Bank in respect of drawings under Letters of Credit and upon the maturity of Documentary Banker's Acceptances shall not be subject to any defense based on the non-application or misapplication by the beneficiary of the proceeds of any such payment or the legality, validity, regularity or enforceability of the Letters of Credit or Documentary Banker's Acceptances or any related document or any dispute between or among the Co-Borrowers, or any of them, the beneficiary of any Letter of Credit or any financing institution or other party to which any Letter of Credit or Documentary Banker's Acceptances may be transferred. The Bank may accept or pay any draft presented to it under any Letter of Credit regardless of when drawn or made and whether or not negotiated, if such draft, accompanying certificate or documents and any transmittal advice are presented or negotiated on or before the expiry date of the Letter of Credit or any renewal or extension thereof then in effect, and conforms to the terms and conditions of such Letter of Credit. Furthermore, neither the Bank nor any of its correspondents shall be responsible, as to any document presented under a Letter of Credit which appears to be regular on its face, and appears on its face to conform to the terms of the Letter of Credit, for the validity or sufficiency of any signature or endorsement, for delay in giving any notice or failure of any instrument to bear adequate reference to the Letter of Credit, or for failure of any Person to note the amount of any draft on the reverse of the Letter of Credit.
(ii) Any action, inaction or omission on the part of the Bank or any of its correspondents under or in connection with any Letter of Credit or the related instruments, documents or property, if in good faith and in conformity with such laws, regulations or customs as are applicable, shall be binding upon the Co-Borrowers and shall not place the Bank or any of its correspondents under any liability to the Co-Borrowers, or any of them, in the absence of (i) gross negligence or willful misconduct by the Bank or its correspondents or (ii) the failure by the Bank to pay under a Letter of Credit after presentation of a draft and documents strictly complying with such Letter of Credit. The Bank's rights, powers, privileges and immunities specified in or arising under this Agreement are in addition to any heretofore or at any time hereafter otherwise created or arising, whether by statute or rule of law or contract. All Letters of Credit issued hereunder will, except to the extent otherwise expressly provided hereunder, be governed by the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce, Publication No. 500, and any subsequent revisions thereof.
ARTICLE III
INTEREST RATE; FEES AND PAYMENTS; USE OF PROCEEDS
13
the case of Term Loans, the applicable Prime Rate Margin as provided in the definition of the term "Applicable Term Loan Margin".
(b) Each LIBOR Loan shall bear interest for the Interest Period applicable thereto on the unpaid principal amount thereof at a rate per annum equal to the Reserve Adjusted Libor determined for each Interest Period thereof in accordance with the terms hereof plus, in the case of Revolving Credit Loans, a margin of 1.60% per annum and, in the case of Term Loans, the applicable LIBOR Margin as provided in the definition of the term "Applicable Term Loan Margin".
(c) Each Fixed Rate Loan shall bear interest on the unpaid principal amount thereof at a rate per annum equal to the Fixed Rate established by the Bank for such Loan in accordance with the terms hereof.
(d) If the Co-Borrowers shall default in the payment of the principal of or interest on any portion of any Loan or any other amount becoming due hereunder, including, without limitation, fees, the Co-Borrowers shall on demand from time to time pay interest on such defaulted amount accruing from the date of such default (without reference to any period of grace) up to and including the date of actual payment (after as well as before judgment) at a rate per annum equal to the Prime Rate plus a margin of 2% per annum.
(e) Upon the occurrence and during the continuance of an Event of Default, the outstanding principal amount of the Loans (excluding any defaulted payment accruing interest in accordance with clause (c) above), shall, in the Bank's sole and absolute discretion, bear interest payable on demand at a rate of interest equal to 2% above the rate otherwise in effect with respect to such Loans.
(f) The Co-Borrowers may elect from time to time to convert outstanding Revolving Credit Loans and Term Loans from LIBOR Loans to Prime Rate Loans by giving the Bank at least three Business Days' prior irrevocable notice of such election, provided that any such conversion of LIBOR Loans shall only be made on the last day of an Interest Period with respect thereto or upon the date of payment in full of any amounts owing pursuant to Section 3.08 as a result of such conversion. The Co-Borrowers may elect from time to time to convert outstanding Revolving Credit Loans and Term Loans from Prime Rate Loans to LIBOR Loans by giving the Bank irrevocable written notice of such election not later than 11:00 a.m. three Business Days prior to the date of the proposed conversion. All or any part of outstanding Prime Rate Loans may be converted as provided herein, provided that each conversion shall be in the principal amount of $50,000 or whole multiples of $25,000 in excess thereof. Any conversion to or from LIBOR Loans hereunder shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, the aggregate principal amount of all LIBOR Loans having the same Interest Period shall not be less than $250,000.
(g) Any LIBOR Loans may be continued as such upon the expiration of an Interest Period with respect thereto by compliance by the Co-Borrowers with the notice provisions contained in the definition of Interest Period.
(h) No Revolving Credit Loan may be funded, converted to or continued as a LIBOR Loan if the Interest Period would extend beyond the Revolving Credit Termination Date. No Term Loan may be funded, converted to, or continued as a LIBOR Loan if the Interest Period would extend beyond the Term Loan Maturity Date.
(i) Notwithstanding any other provision of this Agreement, during the occurrence and continuance of a Default hereunder, the Co-Borrowers may not select Interest Periods longer than one month.
(j) Anything in this Agreement or in any Note to the contrary notwithstanding, the obligation of the Co-Borrowers to make payments of interest shall be subject to the limitation that payments of interest shall not be required to be paid to the Bank to the extent that the charging or receipt thereof
14
would not be permissible under the law or laws applicable to the Bank limiting the rates of interest that may be charged or collected by the Bank. If the provisions of this Agreement or any Note would at any time otherwise require payment by the Co-Borrowers to the Bank of any amount of interest in excess of the maximum amount permitted by applicable law the interest payments shall be reduced to the extent necessary so that the Bank shall not receive interest in excess of such maximum amount. To the extent that, pursuant to the foregoing sentence, the Bank shall receive interest payments hereunder or under any Note in an amount less than the amount otherwise provided herein or in any Note, such deficit (hereinafter called the "Interest Deficit") will accumulate and will be carried forward (without interest) until the termination of this Agreement. Interest otherwise payable to the Bank hereunder and under such Note for any subsequent period shall be increased by such maximum amount of the Interest Deficit that may be so added without causing the Bank to receive interest in excess of the maximum amount then permitted by applicable law. The amount of the Interest Deficit relating to any Note at the time of complete payment of such Note and termination of the Commitment shall be cancelled and not paid.
(k) Interest on each Loan shall be payable to the Bank in arrears on each Interest Payment Date for such Loan and shall be calculated on a year of 360 days for the actual days elapsed.
15
discount such Documentary Banker's Acceptance at the acceptance rate, as determined by the Bank, plus 11/2% per annum, by making available to the Co-Borrowers an amount in immediately available funds equal to the face amount of such Documentary Acceptance less such discount.
(i) shall subject the Bank to any tax of any kind whatsoever with respect to this Agreement, any Note, the Loans, or change the basis of taxation of payments to the Bank of principal, interest, fees or any other amount payable hereunder (other than any tax that is measured with respect to the overall net income of the Bank or of a lending office of the Bank and that is imposed by the United States of America, or any political subdivision or taxing authority thereof or therein, or by the jurisdiction in which the Bank is making or maintaining any Loan hereunder, or by any jurisdiction in which the Bank is organized, has its principal office or is managed and controlled); or
16
(ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement (whether or not having the force of law but excluding any of the foregoing including in the computation of Reserve Adjusted LIBOR) against assets held by, or deposits or other liabilities in or for the account of, advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of the Bank; or
(iii) shall impose on the Bank any other condition, or change therein;
and the result of any of the foregoing is to increase the cost to the Bank of making, renewing or maintaining advances or extensions of credit or to reduce any amount receivable hereunder, in each case by an amount which the Bank deems material, then, in any such case, the Co-Borrowers, shall pay the Bank, upon demand, such additional amount or amounts as the Bank shall have determined will compensate the Bank for such increased costs or reduction. The Bank's determination of such additional amounts shall be conclusive absent manifest error. This Section 3.07 shall survive the termination of this Agreement and payment of the Notes.
(b) No failure on the part of the Bank to demand compensation under clause (a) above on one occasion shall constitute a waiver of its right to demand compensation on any other occasion and no failure on the part of the Bank to promptly notify the Co-Borrowers shall in any way reduce any obligations of the Co-Borrowers to the Bank under this Section 3.07, except that no compensation shall be payable with respect to any event giving rise to a request for compensation unless such request is made within 180 days after the Bank has actual knowledge of such event.
(b) The Co-Borrowers agree that all prepayments of Fixed Rate Loans hereunder shall be accompanied by interest accrued on the amount prepaid through the date of prepayment together with a prepayment charge as liquidated damages and not as a penalty equal to the net present value (as determined by the Bank) of (a)(i) the difference (if positive) between the relevant Fixed Rate (less 175 basis points) and the then current yield on U.S. Treasury Securities with maturities approximately equal to the remaining time between the date of prepayment and the maturity date of such Fixed Rate Loan (expressed as a percentage), multiplied by (ii) the total amount of principal prepaid, divided by (iii) 360 multiplied by (b) the actual number of days remaining until the maturity date of such Fixed Rate Loan.
(c) This Section 3.08 shall survive termination of this Agreement and payment of the Notes.
SECTION 3.09. Funds; Manner of Payment. (a) Unless otherwise specified herein each payment and prepayment of principal of and interest on each Loan shall be made by the Co-Borrowers not later than 12:00 noon, New York City time, on the date on which it is payable.
(b) All payments made by the Co-Borrowers hereunder or under any Note will be made without setoff, counterclaim, deductions or other defense. All such payments will be made free and clear of, and without deduction or withholding for, any present or future taxes, levies, imposts, duties, fees,
17
assessments or other charges of whatever nature now or hereafter imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein (but excluding any tax imposed on or measured by the net income of the Bank) and all interest, penalties or similar liabilities with respect thereto (such non-excluded items being hereinafter collectively referred to as "Taxes"). If any Taxes are so levied or imposed, the Co-Borrowers will pay the full amount of such Taxes and such additional amounts as may be necessary so that every payment of all amounts due hereunder or under any Note, after withholding or deduction for or on account of any Taxes, will not be less than the amount provided for herein or in such Note. The Co-Borrowers will furnish to the Bank within 30 days after the date the payment of any Taxes is due pursuant to applicable law certified copies of tax receipts evidencing such payment by the Co-Borrowers. The Co-Borrowers will indemnify and hold harmless the Bank, and reimburse the Bank upon its written request, for the amount of any Taxes so levied or imposed and paid by the Bank, which indemnity shall survive termination of this Agreement and payment of the Notes. All payments under this Agreement shall be made in lawful money of the United States of America in immediately available funds at the Payment Office of the Bank.
(c) In the event that the Bank assigns all or a portion of its obligations hereunder to a bank that is organized outside of the United States, such bank shall deliver to the Co-Borrowers on the date of the assignment and from time to time as required for renewal under applicable law duly completed copies of United States Internal Revenue Service Form 1001 or 4224 (or any successor or additional forms), as appropriate, indicating in each case that such bank is entitled to receive payments under this Agreement without any deduction or withholding of any United States federal income taxes. Any bank that is organized outside the United States that becomes a party to this Agreement shall promptly notify the Co-Borrowers and each other bank of any change in its Lending Office and upon written request of the Co-Borrowers such bank shall, prior to the immediately following due date of any payment by the Co-Borrowers or any Guarantor hereunder or under any other Loan Document, deliver to the Co-Borrowers or such Guarantor, as the case may be, such certificates, documents or other evidence, as required by the Code or Treasury Regulations issued pursuant thereto, including without limitation Internal Revenue Service Form 4224, Form 1001 and any other certificate or statement of exemption required by Treasury Regulation Section 1.1441-4(a) or Section 1.1441-6(c) or any subsequent version thereof, properly completed and duly executed by such bank establishing that such payment is (i) not subject to withholding under the Code because such payment is effectively connected with the conduct by such bank of a trade or business in the United States or (ii) totally exempt from United States tax under a provision of an applicable tax treaty. The Co-Borrowers shall be entitled to rely on such forms in their possession until receipt of any revised or successor form pursuant to this Section 3.09(c). If a bank fails to provide a certificate, document or other evidence required pursuant to this Section 3.09(c), then, unless it is no longer entitled to such exemption due to a change in law, upon notice by the Co-Borrowers to such bank (i) the Co-Borrowers shall be entitled to deduct or withhold on payments to such bank as a result of such failure, as required by law, and (ii) the Co-Borrowers shall not be required to make payments of additional amounts with respect to such withheld Taxes pursuant to this Section 3.09(c) to the extent such withholding is required solely by reason of the failure of such bank to provide the necessary certificate, document or other evidence.
(d) The Bank shall directly charge all interest and principal payments due in respect of the Loans and all fees payable hereunder to one or more of the accounts of the Co-Borrowers at the Payment Office or other office of the Bank.
18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement and to make the Loans the Co-Borrowers represent and warrant to the Bank that:
19
reflected or disclosed on such audited statements other than obligations arising in the ordinary course of business since March 31, 1998.
(b) Each of the Co-Borrowers and the Corporate Guarantors is Solvent (taking into account contribution rights).
20
Code in excess of $250,000 in the aggregate; and no lien imposed under the Code or ERISA on the assets of any Co-Borrower or any of their ERISA Affiliates exists or, to the knowledge of the Co-Borrowers, is likely to arise on account of any Plan.
SECTION 4.09. Federal Reserve Regulations; Use of Proceeds. (a) None of the Co-Borrowers nor any of their Subsidiaries is engaged principally in, nor has as one of its important activities, the business of extending credit for the purpose of purchasing or carrying any "margin stock" (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System of the United States, as amended from time to time). If requested by the Bank, the Co-Borrowers will, and will cause each of their Subsidiaries to, furnish to the Bank such a statement on Federal Reserve Form U- 1.
(b) No part of the proceeds of any Loan will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, (i) to purchase or to carry margin stock or to extend credit to others for the purpose of purchasing or carrying margin stock, or to refund indebtedness originally incurred for such purposes, or (ii) for any purpose which violates or is inconsistent with the provisions of the Regulations T, U, or X of the Board of Governors of The Federal Reserve System.
(c) The proceeds of the each Loan shall be used solely for the purposes permitted under Section 3.02.
21
SECTION 4.21. Inventory at Outside Locations. The Co-Borrowers' inventory is located at the addresses set forth Schedule V hereto or at another Acceptable Locations. The net present value of the inventory of (i) Florida Pneumatic held at the locations set forth in Schedule V hereto, will not be greater than $1,100,000, in the aggregate and (ii) Embassy held at the locations set forth in Schedule V hereto, will not be greater than $50,000, in the aggregate. A location is an "Acceptable Location" if (a) the Bank has been given at least 30 days prior written notice of such location and (b) all action deemed necessary or desireable by the Bank (including, without limitation, notice to bailees, landlord waivers, access agreements, and filing of Uniform Commercial Code financing statements) has been taken to create and maintain a first priority perfected security interest in favor of the Bank securing the Obligations in the inventory located at such location.
22
ARTICLE V
CONDITIONS OF LENDING
(a) Revolving Credit Note. On or prior to the Closing Date, the Bank shall have received the Revolving Credit Note duly executed by the Co-Borrowers.
(h) Assets Free from Encumbrances. The Bank shall have received on or prior to the Closing Date evidence satisfactory to the Bank that the accounts receivable, inventory, equipment and all other assets of each Co-Borrower and each Corporate Guarantor are free and clear of all Liens, except those Liens permitted pursuant to Section 7.01.
(i) No Material Adverse Changes. There shall not have occurred any event which could reasonably be expected to cause a Material Adverse Effect.
23
preparation and execution of the Loan Documents and the creation and perfection of the Liens granted pursuant to the Security Agreements.
(n) Financial Statements of the Co-Borrowers and their Subsidiaries. The Bank shall have received prior to the Closing Date the management prepared consolidated and consolidating financial statements of the Co-Borrowers and their Subsidiaries for the three month interim period ended March 31, 1998, all of the foregoing statements in form, substance and detail satisfactory to the Bank.
24
SECTION 5.02. Conditions to all Loans. The obligation of the Bank to make each Loan hereunder is subject to the conditions precedent set forth in Section 5.01, 5.03 and 5.04, to the extent applicable, and the following conditions precedent:
Each Notice of Borrowing and the acceptance by the Co-Borrowers of the proceeds of each Loan shall constitute a representation and warranty that the statements contained in Sections 5.02(a) and 5.02(b) above are true and correct as of the date of such Loan.
(a) Term Loan Note. The Co-Borrowers shall have delivered to the Bank a fully executed Term Loan Note, which shall be dated the date of such Term Loan, be stated to mature in consecutive quarterly installments of principal, have a term not to exceed seven (7) years and shall bear interest for a period from the date such Loan is made on the unpaid principal amount thereof at the applicable rates per annum specified herein.
(d) Receipts of Consents. The Bank shall have been reasonably satisfied that all material third party and governmental consents and approvals, necessary in connection with the consummation of the Permitted Acquisition shall have been obtained.
25
Permitted Acquisition, the Co-Borrowers will be in compliance with the financial condition covenants contained in Section 7.12 hereof.
SECTION 5.04. Additional Condition with respect to each Equipment Loan. The obligation of the Bank to make each Equipment Loan hereunder is subject to the conditions precedent set forth in Section 5.01 and 5.02 and to the following conditions precedent.
(a) Equipment Loan Note. The Co-Borrowers shall have delivered to the Bank an Equipment Loan Note which shall be dated the date of such Equipment Loan, be stated to mature in consecutive monthly or quarterly installments of principal, have a term not to exceed five (5) years and shall bear interest for a period from the date such Loan is made on the unpaid principal amount thereof at the applicable rates per annum specified herein.
(b) Equipment Free from Encumbrances. The Bank shall have been provided a description of the equipment to be acquired with the proceeds of such Equipment Loan and shall be satisfied that such equipment is being acquired free and clear of all Liens, other than Liens permitted pursuant to Section 7.01.
(c) Security Interest of Bank. The Bank shall be satisfied that the equipment to be acquired with the proceeds of such Equipment Loan shall be subject to the Lien granted to the Bank pursuant to the Security Agreements and the Co-Borrowers shall take all steps determined by the Bank to be necessary or desirable to perfect the Bank's Liens on such equipment.
ARTICLE VI
AFFIRMATIVE COVENANTS
Each Co-Borrower covenants and agrees with the Bank that so long as the Revolving Credit Commitment or the Term Loan Commitment shall remain in effect or any of the principal of or interest on any Note or any other Obligations shall be unpaid it will, and will cause each of its Subsidiaries to:
26
required by applicable law, (c) public liability insurance, which shall include product liability insurance, in the amount customary with companies in the same or similar business against claims for personal injury or death or properties owned, occupied or controlled by it, and (d) such other insurance as may be required by law or as may be reasonably required in writing by the Bank. Each Co-Borrower shall provide to the Bank promptly upon receipt of written request therefor, evidence of the annual renewal of each such policy.
SECTION 6.03. Financial Statements, Reports, etc. Furnish to the Bank:
(a) (i) as soon as available, but in any event within 90 days after the end of each fiscal year of the Co-Borrowers, a copy of the audited consolidated balance sheet of P&F and its Subsidiaries as of the end of such year and the related audited consolidated statements of income, shareholders equity and cash flow for such year, setting forth in each case in comparative form the respective figures for the previous fiscal year end, and accompanied by a report thereon of BDO Xxxxxxx, LLP or other independent certified public accountants of recognized standing selected by the Co-Borrowers and reasonably satisfactory to the Bank (the "Auditor"), which report shall be unqualified; and (ii) as soon as available, but in any event within 90 days after the end of each fiscal year of P&F and each of its Subsidiaries, a copy of the management prepared consolidating financial statements of the Co-Borrowers setting forth in comparative form the respective figures for the previous fiscal year end and which support the financial statements delivered pursuant to clause (i), in each case of (i) and (ii) prepared in accordance with GAAP, applied on a consistent basis and with respect to the statements referred to in clause (ii) accompanied by a certificate to that effect executed by the Chief Financial Officer;
(b) as soon as available, but in any event not later than 60 days after the end of each quarterly period of each fiscal year of the Co-Borrowers, a copy of the unaudited interim consolidated and consolidating balance sheet of P&F and its Subsidiaries as of the end of each such quarter and the related unaudited interim consolidated and consolidating statements of income, shareholders equity and cash flow for such quarter and the portion of the fiscal year through such date and setting forth in each case in comparative form the respective figures for the corresponding date and period in the previous fiscal year, in each case prepared by the Chief Financial Officer in accordance with GAAP, applied on a consistent basis and accompanied by a certificate to that effect executed by the Chief Financial Officer;
(c) a certificate prepared and signed by the Chief Financial Officer with each delivery required by (a) and (b), as to whether or not, as of the close of such preceding period and at all
27
times during such preceding period, the Co-Borrowers were in compliance with all the provisions in this Agreement, showing computation of financial covenants and quantitative negative covenants, and if the Auditor or Chief Financial Officer, as the case may be, shall have obtained knowledge of any default in such compliance or notice of such default, it shall disclose in such certificate such default or defaults or notice thereof and the nature thereof, whether or not the same shall constitute an Event of Default hereunder;
(d) at all times indicated in (a) above, a copy of the management letter, if any, prepared by the Auditor;
(e) promptly after filing thereof, copies of all regular and periodic financial information, proxy materials and other information and reports which P&F or any of its Subsidiaries shall file with the Securities and Exchange Commission;
(f) simultaneously with the delivery of the financial statements referred to in clauses (a) and (b) above, quarterly accounts receivable aging reports for the Co-Borrowers, in form satisfactory to the Bank;
(g) promptly after submission to any government or regulatory agency, all documents and information furnished to such government or regulatory agency other than such documents and information prepared in the normal course of business and which could not reasonably be expected to result in any materially adverse action to be taken by such agency; and
(h) promptly, from time to time, such other information regarding the operations, business affairs and condition, financial or otherwise, of the Co-Borrowers, or any of them, or any of their Subsidiaries as the Bank may reasonably request.
28
Co-Borrowers, or any of them, or any of their Subsidiaries to carry on their business substantially as now conducted or (b) have a Material Adverse Effect.
29
ARTICLE VII
NEGATIVE COVENANTS
Each Co-Borrower covenants and agrees with the Bank that so long as the Revolving Credit Commitment or the Term Loan Commitment shall remain in effect or any of the principal of or interest on any Note or any other Obligations shall be unpaid, it will not, and will not cause or permit any of its Subsidiaries, directly or indirectly, to:
SECTION 7.01. Liens. Incur, create, assume or suffer to exist any Lien on any of their respective assets now or hereafter owned, other than:
(a) Liens existing on the date hereof as set forth on Schedule II attached hereto including any renewals or extensions thereof, or, with respect to the liens of Xxxxxxx Bank of Palm Beach County or MetLife Capital Financial Corporation on the real property of Florida Pneumatic and Embassy, respectively, any refinancings of such debt with the same or new lenders; provided that no such Lien is extended to cover any additional property and that the amount of Indebtedness secured thereby is not increased;
(b) Liens for taxes, assessments or other governmental charges or levies not yet delinquent or which are being contested in good faith by appropriate proceedings, provided, however, that adequate reserves with respect thereto are maintained on the books of the relevant Co-Borrower or Subsidiary in accordance with GAAP;
(c) carriers', warehousemans', mechanics', suppliers, or other like Liens arising in the ordinary course of business and not overdue for a period of more than 45 days or which are being contested in good faith by appropriate proceedings in a manner which will not jeopardize or diminish in any material respect the interest of the Bank in any of the collateral subject to the Security Agreements;
(d) Liens incurred or deposits to secure the performance of tenders, bids, trade contracts, leases, statutory obligations, surety, performance and appeal bonds, and other obligations of a similar nature incurred in the ordinary course of business;
30
(e) any attachment, judgment or similar Lien arising in connection with any court or governmental proceeding provided that the execution or other enforcement of such Lien is effectively stayed;
(f) easements, rights of way, restrictions and other similar charges or encumbrances which in the aggregate do not materially interfere with the occupation, use and enjoyment by the Co-Borrowers, or any of them, or any of their Subsidiaries of the property or assets encumbered thereby in the normal course of their respective business or materially impair the value of the property subject thereto;
(g) deposits under workmen's compensation, unemployment insurance and social security laws;
(h) purchase money Liens for fixed or capital assets, including obligations under any Capital Lease; provided, in each case, (x) no Event of Default or event which, upon notice or lapse of time or both, would constitute an Event of Default shall have occurred and be continuing or shall occur after the grant of the proposed Lien, and (y) such purchase money Lien does not exceed 100% of the purchase price and encumbers only the property being acquired and such other property that may have been previously acquired from such Person or an affiliate of such Person, so long as such Lien does not, at any time, extend to any items of collateral not so acquired from such Person;
(i) Liens on assets acquired in a Permitted Acquisition or in the Green Acquisition;
(j) Liens on assets acquired in the Green Acquisition, provided, that such Liens only cover assets acquired thereunder;
(k) Liens granted to the Bank.
SECTION 7.02. Indebtedness. Incur, create, assume or suffer to exist or otherwise become liable in respect of any Indebtedness, other than:
(a) Indebtedness incurred prior to the date hereof as described in Schedule III attached hereto including any renewals or extensions thereof; provided such renewal or extension does not result in an increase in the aggregate principal amount of such Indebtedness;
(b) Indebtedness to the Bank;
(c) Indebtedness for trade payables incurred in the ordinary course of business which are not overdue;
(d) Indebtedness consisting of guarantees permitted pursuant to Section 7.03;
(e) Subordinated Indebtedness approved in writing by the Bank;
(f) Indebtedness secured by purchase money liens as permitted under Section 7.01(h) for Capital Expenditures permitted hereunder; provided no Default or Event of Default shall have occurred and be continuing or would occur after giving effect to the incurrence of such Indebtedness;
(g) Indebtedness under the Foreign Exchange Line;
(h) the Green Debt; and
(i) Additional Indebtedness not otherwise permitted by this Section 7.01 in an amount not to exceed $1,000,000, in the aggregate, at any time.
31
working capital or equity capital or otherwise to maintain the net worth or solvency of any Person or by agreement to purchase the Indebtedness of any other Person, or agreement for the furnishing of funds, directly or indirectly, through the purchase of goods, supplies or services for the purpose of discharging the Indebtedness of any other Person or otherwise, or enter into or be a party to any contract for the purchase of merchandise, materials, supplies or other property if such contract provides that payment for such merchandise, materials, supplies or other property shall be made regardless of whether delivery of such merchandise, supplies or other property is ever made or tendered except:
(a) guaranties executed prior to the date hereof as described on Schedule IV attached hereto but not including any renewals or extension thereof;
(b) endorsements of negotiable instruments for collection or deposit in the ordinary course of business;
(c) guaranties of any Indebtedness under this Agreement or any other Indebtedness owing to the Bank; and
(d) guarantees of Indebtedness permitted under Section 7.02, provided, that, any guarantee of Subordinated Indebtedness shall be subordinated in the same manner and to the same extent as the Subordinated Indebtedness.
SECTION 7.08. Sale and Leaseback. Enter into any arrangement, directly or indirectly, with any Person whereby it shall sell or transfer any property, whether real or personal, used or useful in its business, whether now owned or hereafter acquired, if at the time of such sale or disposition it intends to lease or otherwise acquire the right to use or possess (except by purchase) such property or like property for a substantially similar purpose.
32
SECTION 7.09. Federal Reserve Regulations. Permit any Loan or the proceeds of any Loan to be used for any purpose which violates or is inconsistent with the provisions of Regulations T, U or X of the Board of Governors of the Federal Reserve System.
SECTION 7.10. Change in Fiscal Year. Permit a change in the fiscal year of the Co-Borrowers, or any of them.
SECTION 7.12. Financial Condition Covenants.
(b) Minimum Capital Base. Maintain a Consolidated Capital Base of at least (i) $16,000,000 at all times prior to the closing of the Green Acquisition, and (ii) $10,000,000 at all times following the closing of the Green Acquisition.
(d) Consolidated Capital Expenditures. Permit Consolidated Capital Expenditures to exceed $3,000,000 for any fiscal year, provided, that up to $1,500,000 of an unexpended amount in any fiscal year may be carried forward for use in the immediately following fiscal year only.
All financial condition covenants included in this Section 7.12 shall be tested on a "rolling four quarters" basis. If any Permitted Acquisition is consummated, then for purposes of calculating compliance with this Section 7.12, for each of the first three quarters following consummation of such Permitted Acquisition, Consolidated EBITDA shall be determined on the basis of such quarters and shall be annualized. For purposes of calculating compliance with the provisions of Section 7.12(a) and (c) above, Consolidated EBITDA at any time shall mean Consolidated EBITDA as determined on the basis of the financial statements most recently delivered to the Bank pursuant to Section 6.03.
SECTION 7.13. Subordinated Debt. Directly or indirectly prepay, defease, purchase, redeem, or otherwise acquire any Subordinated Debt.
SECTION 7.14. Transactions with Affiliates. Enter into any transaction, including, without limitation, the purchase, sale, or exchange of property or the rendering of any service, with any Affiliate, except in the ordinary course of and pursuant to the reasonable requirements of the business of such Co-Borrower or of its Subsidiary and upon fair and reasonable terms no less favorable to the such entity than it would obtain in a comparable arms-length transaction with a Person not an Affiliate.
33
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. Events of Default. In the case of the happening of any of the following events (each an "Event of Default"):
(a) failure by the Co-Borrowers to (i) pay the principal or interest on any Loan when due and payable, (ii) pay any fees or other amounts payable under any Loan Document when due or payable and, with respect to clause (ii), such failure shall continue unremedied for a period of three (3) Business Days;
(b) default shall be made in (i) the due observance or performance of any covenant, condition or agreement of the Co-Borrowers, or any of them, or any of their Subsidiaries to be performed pursuant to Section 6.03, 6.04, 6.05, 6.06 or 6.07 or Article VII of this Agreement, or (ii) the due observance or performance of any other covenant, condition or agreement of the Co-Borrowers, or any of them, or any of their Subsidiaries to be performed pursuant to this Agreement or any other Loan Document (other than those specified in clause (a) of this Section 8.01) and such failure shall continue unremedied for a period of ten (10) days after written notice thereof from the Bank;
(c) any representation or warranty made in this Agreement or any other Loan Document or in any report, certificate, financial statement or other instrument furnished in connection with this Agreement or any other Loan Document, shall prove to be false or misleading in any material respect when made or given or when deemed made or given;
(d) default in the performance or compliance in respect of any agreement or condition relating to any Indebtedness (other than any Note and unsecured trade payables) of the Co-Borrowers or any of their Subsidiaries in excess of $500,000, individually or in the aggregate, if the effect of such default is to accelerate the maturity of such Indebtedness or to permit the holder or obligee thereof (or a trustee on behalf of such holder or obligee) to cause such Indebtedness to become due prior to the stated maturity thereof, or any Indebtedness (other than unsecured trade payables) in excess of $500,000, individually or in the aggregate, shall not be paid when due;
(e) the Co-Borrowers, or any of them, or any of their Subsidiaries shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code or any other federal or state bankruptcy, insolvency or similar law, (ii) consent to the institution of, or fail to controvert in a timely and appropriate manner, any such proceeding or the filing of any such petition, (iii) apply for or consent to the employment of a receiver, trustee, custodian, sequestrator or similar official for the Co-Borrowers, or any of them, or any of their Subsidiaries or for a substantial part of its property; (iv) file an answer admitting the material allegations of a petition filed against it in such proceeding, (v) make a general assignment for the benefit of creditors, (vi) take corporate action for the purpose of effecting any of the foregoing, or (vii) the Co-Borrowers, or any of them, or any of their Subsidiaries shall become unable or admit in writing its inability or fail generally to pay its debts as they become due;
(f) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the Co-Borrowers, or any of them, or any of their Subsidiaries or of a substantial part of their respective property, under Title 11 of the United States Code or any other federal or state bankruptcy, insolvency or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator or similar official for the Co-Borrowers, or any of them, or any of their Subsidiaries or for a substantial part of their property, or (iii) the winding-up or liquidation of the Co-Borrowers, or any of them, or any of their Subsidiaries and
34
such proceeding or petition shall continue undismissed for 30 days or an order or decree approving or ordering any of the foregoing shall continue unstayed and in effect for 30 days;
(g) One or more orders, judgments or decrees for the payment of money in excess of $250,000 in the aggregate shall be rendered against the Co-Borrowers, or any of them, or any of their Subsidiaries and the same shall not have been paid in accordance with such judgment, order or decree and either (i) an enforcement proceeding shall have been commenced by any creditor upon such judgment, order or decree which is not stayed, or (ii) there shall have been a period of sixty (60) days during which a stay of enforcement of such judgment order or decree, by reason of pending appeal or otherwise, was not in effect;
(h) any Plan which is a single employer Plan shall fail to comply in any material respect with the minimum funding standard required under Section 412 of the Code for any Plan year or part thereof or a waiver of such standard is applied for or granted under Section 412 of the Code, any Plan is terminated by the Co-Borrowers, or any of them, or any ERISA Affiliate or the subject of termination proceedings by the PBGC under ERISA, any Plan shall have an Unfunded Current Liability, a Reportable Event shall have occurred with respect to a Plan or the Co-Borrowers, or any of them, or any ERISA Affiliate shall have incurred a liability to or on account of a Plan under Section 515, 4062, 4063, 4063, 4201 or 4204 of ERISA, and there shall result from any such event or events the imposition of a lien upon the assets of the Co-Borrowers, or any of them, or any ERISA Affiliate, the granting of a security interest on such assets, or a liability to the PBGC or a Plan or a trustee appointed under ERISA or a penalty under Section 4971 of the Code, and in each case, such event or condition, together with all such events or conditions, if any, could reasonably be expected to result in liability of the Co-Borrowers, or any of them, or any of their Subsidiaries in an aggregate amount exceeding $250,000;
(i) any material provision of any Loan Document shall for any reason cease to be in full force and effect in accordance with its terms or the Co-Borrowers, or any of them, or any Corporate Guarantor shall so assert in writing; or
(j) any of the Liens purposed to be granted pursuant to any Security Agreement shall cease for any reason to be legal, valid and enforceable Liens on the collateral purported to be covered thereby or shall cease to have the priority purported to be created thereby,
then, at any time thereafter during the continuance of any such event, the Bank may, without notice to the Co-Borrowers, or any of them, or any Corporate Guarantor, (A) terminate the Commitments and declare (i) the Notes, both as to principal and interest, (ii) an amount equal to the Aggregate Letters of Credit Outstanding, and (iii) an amount equal to the Aggregate Banker's Acceptances Outstanding, to be forthwith due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the Notes to the contrary notwithstanding; provided, however, that if an event specified in Section 8.01 (e) and (f) shall have occurred, the Commitments shall automatically terminate and the Notes and an amount equal to the Aggregate Letters of Credit Outstanding and to the Aggregate Banker's Acceptances Outstanding, shall be immediately due and payable; and (B) exercise any or all of the rights and remedies afforded to the Bank in the Security Agreements, by the Uniform Commercial Code or otherwise possessed by the Bank and, realize upon, dispose of, or sell, all or any part of the collateral given by the Co-Borrowers and the Corporate Guarantors to the Bank, and the Bank may apply the net proceeds of such realization, disposal or sale to the payment of any liabilities of the Co-Borrowers under the Notes or this Agreement as set forth in the Security Agreements. With respect to all Letters of Credit that shall not have matured or presentment for honor shall not have occurred, and with respect to Documentary Banker's Acceptances the maturity date of which has not occurred, the amounts in respect thereof as described in the preceding sentence shall be deposited in an account under the sole domain and
35
control of the Bank, as cash collateral for the obligation of the Co-Borrowers to reimburse the Bank in the event of any drawing or payment in respect thereof.
- (a)
- if to the Bank, at
- (b)
- if to the Co-Borrowers at
European
American Bank
000 Xxxxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Mr. Xxxxxxx Xxxxxx
Telecopy: (000) 000-0000
- (c)
- as to each such party at such other address as such party shall have designated to the other in a written notice complying as to delivery with the provisions of this Section 9.01.
P &
F Industries, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxx, Xx.
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx
Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
- and -
36
person") from and against any and all losses, claims, damages, liabilities or judgments to which any such indemnified person may be subject and arising out of or in connection with the Loan Documents, the financings contemplated hereby, the use of any proceeds of such financings or any related transaction or any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any of such indemnified person is a party thereto, and to reimburse each of such indemnified persons upon demand for any reasonable legal or other expenses incurred in connection with the investigation or defending of any of the foregoing; provided that the foregoing indemnity will not, as to any indemnified person, apply to losses, claims, damages, liabilities, judgments or related expenses to the extent arising from the wilful misconduct or gross negligence of such indemnified person; and (b) to reimburse the Bank from time to time, upon demand, all out-of-pocket expenses (including reasonable expenses of its due diligence investigation, and fees and disbursements of counsel and the allocated costs of internal counsel) incurred in connection with the financings contemplated under this Agreement, the preparation, execution and delivery of this Agreement and the other Loan Documents, any amendments and waivers hereof or thereof, the security arrangements contemplated thereby and the enforcement thereof. The provisions of this Section 9.03 shall survive termination of this Agreement.
SECTION 9.05. APPLICABLE LAW. THIS AGREEMENT AND EACH NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
37
AUTHORIZED BY THE LAWS OF NEW YORK. EACH CO-BORROWER AND THE BANK HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, ANY NOTE OR ANY OTHER LOAN DOCUMENT.
SECTION 9.10. Sale of Participations. The Bank reserves the right to sell participations in or to sell and assign its rights, duties or obligations with respect to the Loans or the Commitment to such banks, lending institutions or other parties as it may choose and without the consent of the Co-Borrowers except (a) the Bank shall not assign its rights or obligations under the Loan Documents without the prior written consent of the Co-Borrowers (which consent shall not be unreasonably withheld) and (b) the Bank shall not sell participations to any competitor of the Co-Borrowers. In the event that the Bank shall sell a participation interest in the Loans, the Bank shall, nevertheless, remain liable to perform all obligations of the Bank hereunder as if such participation had not been sold and shall not restrict its right to grant waivers, amendments and consents to the Loan Documents except with respect to the default in any payment of principal or interest on the Loans beyond any applicable grace period, any acceleration of the maturity of the Loan, any material amendment of the Credit Agreement or any change in the accrual status of the Loans. The Bank may furnish any information concerning the Co-Borrowers or any of their Subsidiaries in its possession from time to time to any assignee or participant (or proposed assignee or participant).
38
deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Bank to or for the credit or the account of the Co-Borrowers or any of them, against any and all the Obligations. The rights of the Bank under this Section 9.12 are in addition to the other rights and remedies (including, without limitation, other rights of setoff) which the Bank may have.
SECTION 9.13. Joint and Several Obligations of the Co-Borrowers. The obligations of the Co-Borrowers hereunder constitute joint and several obligations of the Co-Borrowers and may be enforced against any of the Co-Borrowers to the full extent thereof without proceeding against the others.
THE CO-BORROWERS: | |||
P&F INDUSTRIES, INC. |
|||
By: |
/s/ XXXXXX X. XXXXXX |
||
Name: Xxxxxx X. Xxxxxx Title: Vice President |
|||
FLORIDA PNEUMATIC MANUFACTURING CORPORATION |
|||
By: |
/s/ XXXXXX X. XXXXXX |
||
Name: Xxxxxx X. Xxxxxx Title: Vice President |
|||
EMBASSY INDUSTRIES, INC. |
|||
By: |
/s/ XXXXXX X. XXXXXX |
||
Name: Xxxxxx X. Xxxxxx Title: Vice President |
|||
THE BANK: |
|||
EUROPEAN AMERICAN BANK |
|||
By: |
/s/ XXXXXXX XXXXXX |
||
Name: Xxxxxxx Xxxxxx Title: Vice President |
39
P & F INDUSTRIES, INC.
CREDIT AGREEMENT