EXHIBIT 10.2
WORKOUT AGREEMENT
THIS WORKOUT AGREEMENT, dated September ____, 1996, among The Provident
Bank ("Bank"), and Quality Products, Inc., a Delaware corporation ("Parent"),
American Liberty Mining Corp., a Nevada corporation ("American Liberty"),
Quality Toys, Inc., a Nevada corporation ("Quality Toys"), QPI Multipress Inc.,
an Ohio corporation ("Multipress") and Technical Metals Company, a Michigan
corporation ("Technical Metals"), (collectively referred to herein as
"Borrowers").
WITNESSETH:
WHEREAS, Bank, Borrowers and Q.P.I. Consumer Products Corporation
("Consumer Products") entered into a Loan and Security Agreement dated April 26,
1994, which agreement was amended by a First Amendment to Loan and Security
Agreement dated March 3, 1995 and by a Second Amendment to Loan and Security
Agreement dated March 15, 1995 (collectively referred to herein as the "Loan
Agreement"); and
WHEREAS, Consumer Products filed a bankruptcy petition commencing a
Chapter 11 case pending in the Bankruptcy Court for the Middle District of
Florida, Tampa Division ("Bankruptcy Court"), known as In Re Q.P.I. Consumer
Products Corp., Case No. 95-8633-8C1 ("Bankruptcy Case") which filing
constitutes a default under the Loan Agreement; and
WHEREAS, on December 15, 1995, Bank and Borrowers entered into an
Agreement ("December Agreement") modifying the terms of the Loan Agreement with
respect to the Borrowers during the pendency of the Bankruptcy Case; and
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WHEREAS, the Borrowers are in default under the terms of the Loan
Agreement and the December Agreement; and
WHEREAS, Technical Metals has ceased operations and liquidated its
assets in an orderly manner pursuant to an agreement by and among Technical
Metals, National Steel Corporation and Bank, which governs the manner of
liquidation of its assets; and
WHEREAS, Parent, Multipress, Quality Toys and American Liberty have
requested certain concessions from Bank in order to allow them an opportunity to
restructure or reorganize without the necessity of a bankruptcy filing; and
WHEREAS, Bank is willing to modify the terms of the Loan Agreement and
the December Agreement as set forth herein;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which the parties hereby acknowledge, the parties agree as
follows:
1. Definitions. Capitalized terms not assigned definitions herein shall
have the meaning ascribed to them in the Loan Agreement, as modified by the
December Agreement. In addition, all terms defined in the Uniform Commercial
Code as adopted in Ohio shall have the meanings given therein unless otherwise
defined herein.
2. Obligations. For purposes of this Agreement, the term "Obligations"
shall mean, without limitation, all Loans (as defined in the December Agreement)
and all other debts, obligations, or liabilities of every kind and description
of all Borrowers to Bank, whether owed directly to Bank or assigned by Parent to
Bank, including Borrowers' obligations under this Workout Agreement, the Loan
Agreement and the December Agreement, including but not limited to the
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guaranty of the Consumer Products Obligations contained therein, now due or to
become due, direct or indirect, absolute or contingent, presently existing or
hereafter arising, joint or several, secured or unsecured, whether for payment
or performance, regardless of how the same arise or by what instrument,
agreement or book account they may be evidenced, or whether evidenced by any
instrument, agreement or book account, including, without limitation, all loans
(including any loan by renewal or extension), all overdrafts, all guarantees,
all bankers acceptances, all agreements, all letters of credit issued by Bank
for Borrowers and the applications relating thereto, all indebtedness of
Borrowers to Bank, all undertakings to take or refrain from taking any action
and all indebtedness, liabilities and obligations owing from Borrowers to
others, including Parent, which Bank has obtained or may obtain by purchase,
negotiation, discount, assignment or otherwise. Obligations shall also include
all interest and other charges chargeable to the Borrowers or due from the
Borrowers to the Bank from time to time and all costs and expenses referred to
in the December Agreement and herein.
3. Interest and Fees.
3.1 As of the date of this Agreement, all of Borrowers'
Obligations to Bank shall bear interest at a rate equal to the Prime Rate plus
three percent (3%) per annum, computed on the basis of a year of 360 days for
the actual number of days elapsed until repaid. On the first day of each month
commencing on October 1, 1996, Borrowers shall pay to Bank monthly interest
payments in the amount of the Prime Rate plus one percent (1%) on the
outstanding balance of the Obligations. Interest accrued but not paid pursuant
to this Section ("Deferred Interest") shall be deferred until October 31, 1996.
If no Acceleration Event has occurred and all Obligations to Bank
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have been paid in full by October 31, 1996, the Deferred Interest shall be
waived by Bank. Upon the occurrence of an Acceleration Event or upon October 31,
1996, whichever occurs first, interest shall accrue at a rate of four (4)
percentage points greater than the stated rate. "Prime Rate" as used herein is
that annual percentage rate of interest which is established by Bank from time
to time as its prime rate, whether or not such rate is publicly announced, and
which provides a base to which loan rates may be referenced; it is not
necessarily the lowest lending rate of Bank.
3.2 Monthly service charges payable under Section 13 of the
December Agreement and Section 12 of this Agreement and accruing after the date
of this Agreement shall be deferred until October 31, 1996. If no Acceleration
Event has occurred and all Obligations to Bank have been paid in full on or
before October 31, 1996, the deferred service charges shall be waived by Bank.
4. Forbearance. Bank agrees to forbear from demanding full payment of
all Obligations due from Borrowers until October 31, 1996 ("Forbearance
Period"), provided that (a) Technical Metals continues to comply with the terms
of the Forbearance and Collateral Liquidation Agreement among Technical Metals,
Bank and National Steel Corporation ("Technical Metals Agreement"), (b)
Borrowers diligently pursue financing or other sources of capital to allow
Borrowers to pay all Obligations to Bank in full and (c) an Acceleration Event
has not occurred. Notwithstanding anything contained herein to the contrary, all
Obligations of Borrowers to Bank shall be due and payable no later than October
31, 1996.
5. Outstanding Loans and Short Term Advance.
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5.1 The parties acknowledge that as of the date of this
Agreement Borrowers are indebted to Bank under the Loan Agreement and the
December Agreement in the amount of $1,427,032.68, and that none of Borrowers'
Obligations are subject to any defenses, offsets, or counterclaims as to Bank or
Parent. Bank shall have no obligation to make any loans or advances to Borrowers
during the Forbearance Period. All proceeds of the liquidation of Technical
Metals and Consumer Products net of expenses approved by Bank and all amounts
approved and ordered paid by the Bankruptcy Court ("Liquidation Proceeds") shall
be applied to the Obligations in permanent reduction of those Obligations. Bank
shall have no obligation to readvance the Liquidation Proceeds to any Borrower.
Proceeds from the collection of Borrowers' assets other than the Liquidation
Proceeds shall be held by Bank in a cash collateral account ("Cash Collateral
Account"). Borrowers shall be permitted to use funds in the Cash Collateral
Account to pay Borrowers' ordinary operating expenses.
5.2 Subject to the terms of this Agreement, Bank agrees to
lend to Borrowers the amount of $50,000 ("Short Term Advance"). This Short Term
Advance shall bear interest at the rate of the Prime Rate plus one percent (1%)
and shall be due and payable on October 31, 1996. Borrowers shall execute a
promissory note in a form satisfactory to Bank to evidence the Short Term
Advance.
6. Allocation of Liability.
6.1 Notwithstanding anything herein to the contrary, the
Obligations of each Borrower (other than Parent) to Provident under the Loan
Agreement, the December Agreement, this Agreement and all documents executed in
connection therewith and herewith shall be limited
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to the Maximum Credit Liability (as defined below) for each Borrower as
determined at the earlier of the date of commencement of a case under Title 11
of the United States Code (or any successor provision) in which such Borrower is
a debtor or the date enforcement is sought under such agreements; provided,
however, that each Borrower shall be jointly and severally liable for all
advances, charges, costs and expenses, including reasonable attorneys' fees
incurred or paid by Bank in exercising any right, power or remedy conferred by
this Agreement or any enforcement thereof.
6.2 Each Borrower agrees that in the event of (i) the
dissolution or insolvency of any Borrower, other than Technical Metals or
Quality Toys, (ii) the inability of any Borrower, other than Technical Metals or
Quality Toys, to pay its debts as they become due, (iii) an assignment by any
Borrower for the benefit of its creditors other than Technical Metals or Quality
Toys, or (iv) the institution of any bankruptcy or other proceeding by or
against any Borrower alleging that such Borrower is insolvent or unable to pay
its debts as they become due, the other Borrowers shall pay the Obligations
promptly upon demand. Each Borrower agrees that upon the filing by or against
any other Borrower of any proceeding under any present or future provision of
the United States Bankruptcy Code, or any other similar federal or state
statute, other Borrowers shall have no right to contribution, indemnification,
or any recourse whatsoever against the bankrupt Borrower for any liability
incurred by the other Borrowers under the terms of this Agreement or the Loan
Agreement. Each Borrower agrees that this provision shall continue to be
effective or be reinstated, as the case may be, if at any time any payment, or
any part thereof, of principal, interest or any other amount with respect to the
Obligations is rescinded or must otherwise be restored by Agent or the Banks
upon the bankruptcy or reorganization of any Borrower, any other Person or
otherwise.
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Each Borrower further agrees that, to the extent that any
Borrower makes a payment to Bank, which payment or payments or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or otherwise required to be repaid to another Borrower, its estate,
trustee, receiver or any other party, including without limitation, under any
bankruptcy law, state or federal law, common law or equitable cause, then to the
extent of such payment or repayment, the Obligation or part thereof which has
been paid, reduced or satisfied by such amount shall be reinstated and continued
in full force and effect as of the date such initial payment, reduction or
satisfaction occurred.
6.3 For purposes of this Agreement the following terms
shall have the following definitions:
(a) "Maximum Credit Liability" for any Borrower,
other than Parent, shall mean, as of any date of determination thereof,
the sum of (i) with respect to each Loan, the proceeds of which are
used to make or the issuance of which constitutes a Valuable Transfer
to such Borrower, the amount of such Loan plus (ii) with respect to
each Loan, the proceeds of which are not used to make or the issuance
of which does not constitute a Valuable Transfer to such Borrower, the
lesser of (A) the outstanding amount of such Loan as of such date or
(B) the greater of (I) ninety-five percent (95%) of the Subsidiary Net
Worth at the time of such Loan, or (II) ninety-five percent (95%) of
the Subsidiary Net Worth of such Borrower at the earliest of (x) such
date, (y) the date of the commencement of a case under Title 11 of the
United States Code (or any successor provision) in which such Borrower
is a debtor, or (z) the date enforcement hereunder is sought.
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(b) "Subsidiary Net Worth" of any Borrower, other
than Parent, shall mean, as of any date of determination thereof, the
excess of (i) the amount of the "present fair saleable value" of the
assets of such Borrower as of the date of such determination, over (ii)
the amount of all "liabilities of such Borrower, contingent or
otherwise," as of the date of such determination, as such quoted terms
are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors.
(c) "Valuable Transfers" shall mean, in respect of
any Borrower, (i) all loans, advances or capital contributions made to
or for the benefit of such Borrower with the proceeds of Loans, (ii)
all debt securities or other obligations of such Borrower acquired by
such Borrower or retired by such Borrower with proceeds of, (iii) the
fair market value of all property acquired with the proceeds of Loans,
and transferred, absolutely and not as collateral, to such Borrower,
and (iv) all equity securities of such Borrower acquired by such
Borrower with proceeds of Loans.
7. Grant of Security Interest. To secure the payment and performance
of all of the Obligations, as herein defined, the Borrowers (other than Parent)
hereby grant to Parent a continuing security interest in and assign to Parent
all of Borrowers' respective Collateral (as that term is defined in the Loan
Agreement). Parent hereby grants to Bank a continuing security interest in all
of Parent's Collateral and assigns to Bank the Restated Notes and the security
interests granted to Parent by the Borrowers hereunder. These continuing
security interests are not in substitution for or novation of the grant of
security interests granted in connection with the Loan Agreement and the
December Agreement, which security interests are specifically ratified,
confirmed and preserved.
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8. Representations and Warranties. Each Borrower hereby represents
and warrants to the Bank that:
8.1 Organization and Authority. (a) Each Borrower is a
corporation duly organized, validly existing and in good standing under the laws
of the State of its incorporation and has the corporate power and authority to
conduct its business as now conducted and as proposed to be conducted while this
Agreement is in effect; (b) the execution and delivery of this Agreement and the
performance of the transactions contemplated hereby and thereby are within the
corporate authority of each Borrower and has been duly authorized by all proper
and necessary corporate action; (c) the execution and delivery of this Agreement
and the performance of the transactions contemplated hereby and thereby will not
violate or contravene any provisions of law or the articles of incorporation or
bylaws of any Borrower, or result in a breach or default in respect of the terms
of any other agreement to which the Borrower is a party or by which it is bound,
which breach or default would result in the creation, imposition or enforcement
of any lien against any of the Collateral, or would have a material adverse
affect on the conduct of the Borrowers' business as it is now being conducted
and proposed to be conducted while this Agreement is in effect, or would
otherwise impair the value of the security interest granted to the Parent and
assigned to the Bank hereunder; and (d) each Borrower is duly qualified as a
foreign corporation and is in good standing and duly authorized to do business
in every jurisdiction where the nature of its properties or the conduct of its
business requires such qualification and authorization.
8.2 Binding Effect of Documents. This Agreement is the legal
and binding obligation of each Borrower enforceable in accordance with its
terms.
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8.3 Government Consent. The execution and delivery of
this Agreement and the performance of the transactions contemplated hereby and
thereby do not require any approval or consent of any governmental agency or
authority, or of any other party.
8.4 No Other Liabilities. Except to the extent listed on
Schedule 8.4 hereto or reflected in the Borrowers' financial statements for the
year or other period ending September 30, 1995, which have been provided to
Bank, no Borrower, as of the date of this Agreement, knows or has reasonable
grounds to know of any basis for the assertion against it of any liabilities or
obligations of any nature, direct or indirect, accrued, absolute or contingent,
including, without limitation, liabilities for taxes then due or to become due
whether incurred in respect of or measured by the income of such Borrower for
any period prior to the date of this Agreement or arising out of transactions
entered into, or any state of facts existing prior thereto.
8.5 Taxes. Each Borrower has filed all federal, state, local
and other tax returns and reports required to be filed by it, except for those
listed on Schedule 8.5 hereto, and such returns and reports are true and
correct. Each Borrower has paid all taxes, assessments and other governmental
charges lawfully levied or imposed on or against it or its properties, other
than those presently payable without penalty or interest.
8.6 No Litigation. Except as listed on Schedule 8.6 hereto,
there is no litigation or proceeding or governmental investigation pending or,
to the knowledge of any Borrower, threatened against or relating to Borrowers,
their properties or business which is not reflected in the financial statements
described in Section 8.4 hereof.
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8.7 Compliance with Laws. Borrowers are not, to their
respective knowledge, in violation of or default under any statute, regulation,
license, permit, order, writ, injunction or decree of any government,
governmental department, commission, board, bureau, agency, instrumentality or
court, which violation or default would have a material adverse effect on the
business, properties or condition, financial or otherwise, of any Borrower.
8.8 Location of Collateral. Each Borrower maintains a place of
business and owns collateral only at the address set forth in Schedule 8.9
attached hereto and maintains its books of account and records, including all
records concerning Collateral, only at the foregoing addresses. The Parent
maintains its chief executive office at Suite 201, 0000 Xxxx Xxxxxxx Xxxxxx,
Xxxxx, Xxxxxxx 00000 and each Subsidiary maintains its Chief Executive Office at
the locations set forth in Schedule 8.9 attached hereto.
8.9 Title to Collateral. With respect to the Collateral, at
the time the Collateral becomes subject to the Bank's or Parent's security
interest, the Borrower is and at all times will be the sole owner of and have
good and marketable title to the Collateral, free from all liens, encumbrances
and security interests in favor of any person other than the Bank or Parent
except Permitted Liens (as defined in the Loan Agreement) and that certain
security interest granted to National Steel Corp. by Technical Metals Company
that is subject to a Subordination Agreement dated August 21, 1995 in favor of
Bank (the "National Steel Lien"), and has full right and power to grant the Bank
a security interest therein. All information furnished to Bank concerning the
Collateral is and will be complete, accurate and correct in all material
respects when furnished.
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Without limiting the foregoing, Parent further represents and warrants to Bank
that it holds title to all assets used in the operation of the QPI Multipress
business.
8.10 Rights of Borrower to Accounts. As to each and every
Account (a) it is a bona fide existing obligation, valid and enforceable against
the respective Debtor for a sum certain for sales of goods shipped or delivered,
or goods leased, or services rendered in the ordinary course of business; (b)
all supporting documents, instruments, chattel paper and other evidence of
indebtedness, if any, delivered to the Bank are complete and correct and valid
and enforceable in accordance with their terms, and all signatures and
endorsements that appear thereon are genuine, and all signatories and endorsers
have full capacity to contract; (c) the Debtor is liable for and will make
payment of the amount expressed in such Account according to its terms; (d) it
will be subject to no discount, allowance or special terms of payment without
the prior approval of the Bank; (e) it is subject to no dispute, defense or
offset, real or claimed; (f) it is not subject to any prohibition or limitation
upon assignment; (f) the Borrower has full right and power to grant the Bank a
security interest therein and the security interest granted in such Account to
the Bank in this Agreement, when perfected, will be a valid first security
interest which will inure to the benefit of the Bank without further action. The
warranties set out herein shall be deemed to have been made with respect to each
and every Account now owned or hereafter acquired by each Borrower.
8.11 Rights of Borrower in Inventory. The Inventory (a) is and
will be of good and merchantable quality, free from defects and (b) none of the
inventory is or will be stored with a bailee without the prior written consent
of Bank.
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8.12 Accuracy of Representations. No representation or
warranty by or with respect to Borrowers contained herein or in any certificate
or other document furnished by Borrowers pursuant hereto or contained in the
Loan Agreement or December Agreement contains any untrue statement of a material
fact or omits to state a material fact necessary to make such representation or
warranty not misleading in light of the circumstances under which it was made.
8.13 Patents and Trademarks. Attached hereto as Schedule 8.13
is a complete and accurate list of all trademarks, patents and patent
applications owned, held or used by Borrowers.
8.14 Representations as Inducement to Bank. The foregoing
representations and warranties are made by Borrowers with the knowledge and
intention that the Bank will rely thereon, and shall survive the execution and
delivery of this Agreement.
9. Affirmative Covenants. Each Borrower covenants and agrees that
until all of the Obligations have been paid in full, unless the Bank shall
otherwise consent in writing:
9.1 Refinancing. Borrowers shall diligently pursue financing
or other sources of capital that will allow Borrowers to repay all of Borrowers'
Obligations to Bank in full. Borrowers shall on the last of each month provide a
written report to the Bank disclosing all financial institutions to whom
Borrowers submitted an application or applications for such refinancing other
sources of capital during the previous month.
9.2 Continuing Obligations. Borrowers hereby ratify and
confirm and shall continue to comply with all terms and provisions of the Loan
Agreement, the December Agreement
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and all documents executed in connection therewith except to the extent that
those terms and provisions are directly amended or modified by this Agreement.
9.3 Ongoing Liquidations. Borrowers shall cooperate in the
orderly liquidation of Consumer Products and Technical Metals and shall take
such acts and execute and deliver such documents as may reasonably be requested
by Bank to facilitate the liquidation of the assets of those entities.
9.4 Books and Records. Borrowers shall maintain complete and
accurate books of account and records pertaining to the Collateral and the
operations of the Borrower, and all such books of account and records shall be
kept and maintained at the location specified in Section 8.9. The Borrowers
shall not move such books of account and records or change its respective chief
executive office without giving the Bank at least 30 days prior written notice.
Prior to moving any of such books of account and records or changing the
location of its respective chief executive office, the Borrowers shall execute
and deliver to the Bank financing statements satisfactory to the Bank. All such
books of account and records and all financial statements and reports furnished
to the Bank shall be maintained and prepared in accordance with generally
accepted accounting principles applied on a basis consistent with prior periods.
9.5 Access to Information. Borrowers shall grant the Bank, or
its representatives, full and complete access to the Collateral and to all books
of account, records, correspondence and other papers relating to the Collateral
during normal business hours and the right to inspect, examine, verify and make
abstracts from the copies of such books of account, records,
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correspondence and other papers, and to investigate such other records,
activities and business of the Borrowers as they may deem necessary or
appropriate at the time.
9.6 Evidence of Accounts. Borrowers shall, upon the creation
of Accounts, or from time to time as the Bank may require, deliver to the Bank
schedules of all outstanding Accounts. Such schedules shall be in form
satisfactory to the Bank and shall show the age of such Accounts in intervals of
not more than 30 days, and contain such other information and be accompanied by
such supporting documents as the Bank may from time to time request. Each
Borrower shall also deliver to the Bank copies of Debtor's invoices, evidences
of shipment or delivery and such other schedules and information as the Bank may
reasonably request. The items to be provided under this Section are to be
prepared and delivered to the Bank from time to time solely for its convenience
in maintaining records of the Collateral and the failure of any Borrower to give
any of such items to the Bank shall not affect, terminate, modify or otherwise
limit the Bank's security interest granted herein.
9.7 Financial Information. Borrowers shall deliver to the Bank
such periodic financial information as Bank may require, including without
limitation (a) not more than 20 days after the end of each month, financial
statements for the immediately preceding month, including a balance sheet and
profit and loss statement prepared in accordance with generally accepted
accounting principles, and (b) not more than 90 days after the date of this
Agreement, or within such further time as the Bank may permit, consolidated and
consolidating financial statements for Borrowers for the fiscal year ended
September 30, 1995, including a balance sheet and related profit
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and loss statement, prepared in accordance with generally accepted accounting
principles by independent certified public accountants acceptable to the Bank.
9.8 Records of Advances. Borrowers shall maintain an
accurate record of loan advances to and payments from each Borrower.
9.9 Other Information. Borrowers shall furnish to the
Bank such other financial and business information and reports in form and
substance satisfactory to the Bank as and when the Bank may from time to time
request.
9.10 Maintenance of Existence and Licenses. While this
Agreement remains in effect and until the Obligations have been paid in full,
each Borrower shall (a) maintain its corporate existence in good standing; (b)
make no change in the nature or character of its business or engage in any
business in which it was not engaged on the date of this Agreement; (c) maintain
and keep in full force and effect all licenses and permits necessary to the
proper conduct of its business and (d) at the request of the Bank, qualify as a
foreign corporation and obtain all requisite licenses and permits in each state
(other than the state of its incorporation) where the Borrower does business.
9.11 Maintenance and Insurance of Properties. Borrowers shall
maintain and keep all of their respective properties, real and personal, in good
working order, condition and repair and insure and keep insured all such
properties at all times against loss of damage by fire, theft, and such other
risks and hazards as are customarily insured against by corporations in similar
circumstances, or as the Bank may specify from time to time, with insurers and
in amounts acceptable to the Bank. If Borrowers fail to do so, the Bank may
obtain such insurance and charge the cost thereof to the Borrowers' account and
add it to the Obligations. Borrowers agree that, if any
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loss should occur, the proceeds of all such insurance policies may be applied to
the payment of all or any part of the Obligations, as the Bank may direct. Bank
shall be named loss payee on such insurance policies to the extent that such
policies insure the Collateral. All policies shall provide for at least 30 days
prior written notice of cancellation to the Bank. Borrowers shall deliver at
least annually to Bank, or sooner if requested by Bank, certificates of
insurance evidencing Borrowers' compliance herewith. Bank or Bank's designated
agent is hereby irrevocably constituted and appointed Borrowers'
attorney-in-fact to (either in the name of Borrowers or in the name of Bank)
make adjustments of all insurance losses, sign all applications, releases and
other papers necessary for the collection of any such loss, make settlements and
endorse and collect all instruments payable to Borrowers or issued in connection
therewith.
9.12 Liability Insurance. At all times, Borrowers shall
maintain in full force and effect such liability insurance with respect to its
activities and business interruption and other insurance as may be reasonably
required by Bank, such insurance to be provided by insurer(s) acceptable to
Bank, and if requested by Bank, such insurance shall name Bank as an additional
insured. Borrowers shall deliver at least annually to Bank, or sooner if
requested by Bank, certificates of insurance evidencing Borrowers' compliance
herewith.
9.13 Notice of Certain Events. Borrowers shall give prompt
notice in writing to the Bank of any Acceleration Event hereunder, or of any
condition which, with the passage of time or the giving of notice or both, would
give rise to an Acceleration Event, and of any development, financial or
otherwise, which would materially adversely affect its business, properties or
affairs or
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the ability of any Borrower to perform its obligations under this Agreement, the
Loan Agreement or the December Agreement.
9.14 Payment of Taxes. Borrowers shall pay all taxes,
assessments or governmental charges lawfully levied or imposed on or against its
respective properties prior to the date when such taxes, assessments or charges
shall become delinquent, unless the Borrower shall contest the validity thereof
in good faith and shall post any bond or other security required by applicable
law or by the Bank against the payment thereof.
9.15 Dealings in Inventory. With respect to the Inventory,
Borrowers shall (a) sell or dispose of the Inventory only to buyers in the
ordinary course of business, (b) immediately notify the Bank of any change in
location of any of the Inventory and, prior to any such change, execute and
deliver to the Bank such financing statements satisfactory to the Bank as the
Bank may request and (c) report, in form satisfactory to the Bank and with such
frequency as determined by the Bank, such information as the Bank may request
regarding the Inventory.
9.16 Claims Against Borrower. Immediately upon learning
thereof, Borrowers shall report to the Bank any reclamation, return or
repossession of goods, any claim or dispute asserted by any debtor or other
obligor in which the amount in dispute exceeds $10,000, and any other matters
affecting the value and enforceability or collectibility of any of the
Collateral. In addition, the Borrower shall, at its sole cost and expense
(including attorneys' fees), settle any and all such claims and disputes and
indemnify and protect the Bank against any liability, loss or expense arising
therefrom or out of any such reclamation, return or repossession of goods,
provided, however, if the Bank shall so elect, it shall have the right at all
times to settle, compromise, adjust
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or litigate all claims or disputes directly with the Debtor or other obligor
upon such terms and conditions as it deems advisable and charge all costs and
expenses thereof (including attorneys' fees) to the Borrowers' account and add
them to the Obligations.
9.17 Defense of Collateral. Borrowers shall defend the
Collateral against all claims and demands of all persons at any time claiming
the same or any interest therein and pay all costs and expenses (including
attorneys' fees) incurred in connection with such defense.
9.18 Financing Statements. At the request of the Bank,
Borrowers shall execute and deliver such financing statements, documents and
instruments, and perform all other acts as the Bank deems necessary or
desirable, to carry out and perform the intent and purpose of this Agreement,
and pay, upon demand, all expenses (including attorneys' fees) incurred by the
Bank in connection therewith. A photocopy of this Agreement shall be sufficient
as a financing statement and may be filed in any appropriate office in lieu
thereof.
9.19 Financial Covenants. That operating division of
Parent doing business as QPI Multipress ("Division") shall maintain the
following financial covenants:
(a) The ratio of Current Assets to Current
Liabilities of not less than 3.3 to 1.0.
(b) A level of Net Working Capital not less than
$900,000.00.
(c) A Total Equity of not less than $875,000.00.
The following terms shall have the following meanings when used herein.
"Current Assets" and "Current Liabilities" shall mean, at any
time, all assets or liabilities respectively, that should, in accordance with
GAAP (Generally Accepted Accounting
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Principles), be classified as current assets or current liabilities,
respectively, on the balance sheet of the Division.
"Liabilities" shall mean all indebtedness, obligations and
other liabilities of the Division, whether matured or unmatured, liquidated or
unliquidated, direct or contingent or joint or several, that should, in
accordance with GAAP, be classified as liabilities on the balance sheet of the
Division.
"Net Working Capital" shall mean, at any time, the amount by
which Current Assets exceed Current Liabilities.
"Total Equity" shall be at any time, the amount reflected as
Total Equity on the financial statement of the Division submitted to the Bank as
required herein (prepared on a basis consistent with the attached financial
statement for the Division dated as of September 30, 1995) and adjusted by
subtracting the sum of (i) any surplus resulting from any write-up of assets,
(ii) goodwill, including any amounts, however designated on a consolidated
balance sheet of the Division representing the excess of the purchase price paid
for assets or stock acquired over the value assigned thereto on the books of the
Division, (iii) patents, trademarks, trade names and copyrights, (iv) deferred
expenses and (v) any other amount in respect of an intangible that should be
classified as an asset on a balance sheet of the Division in accordance with
GAAP.
9.20 Maintenance of Bank Accounts. Borrowers shall maintain
all of its respective depository accounts with Bank, including without
limitation, all demand deposit, lock box, time deposit, concentration and zero
balance accounts, but excluding such other accounts at such other banks as Bank
may permit in its sole discretion.
- 21 -
10. Negative Covenants. Each Borrower covenants and agrees that
until the Obligations have been paid in full, unless the Bank shall consent in
advance in writing, it shall not and shall not permit any subsidiary to:
10.1 Sale of Assets or Merger. Discontinue its business or
liquidate, sell, transfer, assign or otherwise dispose of a material part of its
assets or of the Collateral, by sale, merger, consolidation or otherwise,
provided, however, that it may sell in the ordinary course of business and for a
full consideration in money or money's worth, any product, merchandise or
service produced, marketed or furnished by it. In no event, however, shall any
Borrower make any transfer of an interest in property or incur any obligation if
the Borrower:
(a) made such transfer or incurred such obligation
with actual intent to hinder, delay, or defraud any person or entity to
which the Borrower was or became, on or after the date that such
transfer was made or such obligation was incurred, indebted; or
(b) received less than a reasonably equivalent
value in exchange for such transfer or obligation; and
(i) was insolvent on the date that
such transfer was made or such obligation was incurred, or
became insolvent as a result of such transfer or obligation;
(ii) was engaged in business or a
transaction, or was about to engage in business or a
transaction, for which any property remaining with the
Borrower was an unreasonably small capital; or
- 22 -
(iii) intended to incur, or believed
that the Borrower would incur, indebtedness that would be
beyond the Borrowers' ability to pay such indebtedness as it
matured.
10.2 Liens and Encumbrances. Sell, assign, pledge, grant
or suffer to exist a security interest, lien, mortgage or other encumbrance on
any of the Collateral to any person other than the Bank, or permit any lien,
encumbrance or security interest to attach to any of the Collateral, except
Permitted Liens and purchase money security interests not exceeding $100,000 in
the aggregate.
10.3 Contingent Liabilities. Endorse, guarantee or become
surety for the obligations of any person, firm or corporation, except that the
Borrowers may endorse checks and negotiable instruments for collection or
deposit in the ordinary course of business.
10.4 Loans. Make any loans to an Affiliate (as defined
in the Loan Agreement) or any other Borrower.
10.5 Change in Management or Business. Change its management
or make any material change in any of its business objectives, purposes and
operations which might in any way adversely affect the repayment of the Loans.
10.6 Change in Ownership. Permit to occur a change in record
or beneficial ownership of the voting stock of any Borrower which Bank, in its
sole discretion, deems material with respect to the control of such Borrower.
10.7 Transaction with Affiliates. Enter into, or be a
party to, any transaction with any of Borrowers' Affiliates, except in the
ordinary course of business, pursuant to the reasonable
- 23 -
requirements of Borrowers' business, and upon fair and reasonable terms which
are fully disclosed to Bank and are no less favorable to such Borrower than such
Borrower could obtain in a comparable arm's length transaction with a person not
an Affiliate of such Borrower.
10.8 Indebtedness. Directly or indirectly create, incur,
assume, guaranty or be or remain liable with respect to any indebtedness, except
for (a) indebtedness incurred in the ordinary course of Borrowers' business, (b)
the Obligations, (c) any existing indebtedness disclosed in the financial
statements referenced in Section 8.4 hereof, and (d) any other indebtedness to
which Bank has consented in writing.
11. Collection of Collateral and Notice of Assignment.
11.1 Collections on Collateral. All collections on the
Collateral shall be directed to a lockbox at Bank and shall not be commingled
with the Borrowers' other funds or be deposited in any bank account of the
Borrowers (except for the Cash Collateral Account), or used in any manner except
to pay the Obligations or for such other purposes as expressly permitted
hereunder. All collections on the Collateral (other than the proceeds of the
liquidation of Technical Metals and Q.P.I. Consumer, which shall be immediately
applied to the balance of Borrowers' Obligations) shall be deposited in the Cash
Collateral Account of the appropriate Borrower maintained at Bank for that
purpose, over which the Bank alone shall have the sole power of withdrawal. In
no event shall Bank be obligated to advance to Borrowers any amounts in excess
of the collected balance in the Cash Collateral Account. Borrowers shall be
entitled to use the funds in the Cash Collateral Account in Borrowers' ordinary
course of business. The crediting of items deposited in the Cash Collateral
Account to the reduction of the Obligations shall be conditioned upon final
payment of the item and
- 24 -
if any item is not so paid, the amount of any credit given for it may be charged
to the Obligations or to any other deposit account of such Borrower, whether or
not the item is returned.
11.2 Notice of Assignment. The Bank shall have the right at
any time to notify Debtors of its security interest in the Accounts and to
require payments to be made directly to the Bank. Upon request of the Bank at
any time, Borrowers will so notify the account debtors and will indicate on all
xxxxxxxx to the account debtors that the Accounts are payable to the Bank. To
facilitate direct collection, the Borrowers hereby appoint the Bank and any
officer or employee of the Bank, as the Bank may from time to time designate, as
attorney-in-fact for the Borrowers to (a) receive, open and dispose of all mail
addressed to the Borrowers and take therefrom any payments on or proceeds of
Accounts; (b) take over the Borrowers' post office boxes or make other
arrangements, in which the Borrowers shall cooperate, to receive the Borrowers'
mail, including notifying the post office authorities to change the address for
delivery of mail addressed to the Borrowers to such address as the Bank shall
designate; (c) endorse the name of the Borrowers in favor of the Bank upon any
and all checks, drafts, money orders, notes, acceptances or other evidences or
payment or Collateral that may come into the Bank's possession; (d) sign and
endorse the name of the Borrowers on any invoice or xxxx of lading relating to
any of the Accounts, on verifications of Accounts sent to any debtor, to drafts
against debtors, to assignments of Accounts and to notices to Debtors; and (e)
do all acts and things necessary to carry out this Agreement, including signing
the name of the Borrowers on any instruments required by law in connection with
the transactions contemplated hereby and on financing statements as permitted by
the Uniform Commercial Code. The Borrowers hereby ratify and approve all acts of
such attorneys-in-fact, and neither the Bank nor any other such
- 25 -
attorney-in-fact shall be liable for any acts of commission or omission, or for
any error of judgment or mistake of fact or law. This power, being coupled with
an interest, is irrevocable so long as any of the Obligations remain
unsatisfied.
11.3 Enforcement of Accounts. The Bank shall not, under any
circumstances, be liable for any error or omission or delay of any kind
occurring in the settlement, collection or payment of any Accounts or any
instruments received in payment thereof or for any damage resulting therefrom.
The Bank may, without notice to or consent from the Borrowers, xxx upon or
otherwise collect, extend the time of payment of, or compromise or settle for
cash, credit or otherwise upon any terms, any of the Accounts or any securities,
instruments or insurance applicable thereto and/or release the obligator
thereon. The Bank is authorized to accept the return of the goods represented by
any of the Accounts, without notice to or consent by the Borrowers, or without
discharging or any way affecting the Obligations hereunder.
11.4 Returned or Rejected Goods. Upon receipt of any returned
or rejected goods Borrowers shall immediately issue and deliver a credit memo to
the Bank with respect thereto, or, at the Bank's election, Borrowers shall set
aside such goods, xxxx them in the Bank's name and hold them in trust for the
Bank at Borrowers' expense, and, upon request, shall pay the Bank the sales
price thereof. If the Bank shall request Borrowers to pay the sales price of
such goods and Borrowers fail to forthwith pay the sales price to the Bank, the
Bank may take possession of such goods and sell or cause the goods to be sold,
at public or private sale, at such prices, to such purchasers and upon such
terms as the Bank deems advisable. Borrowers shall remain liable to the
- 26 -
Bank for any deficiency and shall pay the costs and expenses of such sale,
including reasonable attorneys' fees.
11.5 Limitation of Bank's Liability. The Bank shall not be
liable for or prejudiced by any loss, depreciation or other damage to Accounts
or other Collateral unless caused by the Bank's willful and malicious act, and
the Bank shall have no duty to take any action to preserve or collect any
Account or other Collateral.
11.6 Verification of Accounts. The Bank may confirm and verify
all Accounts in any reasonable manner at any time. Bank shall have no obligation
to disclose or discuss with Borrowers the names or identities of any customers
from whom the Bank obtains or requests information as to Accounts. Borrowers
agree to cooperate with Bank in the confirmation and verification of any
Accounts, or reconciling any discrepancy between those amounts verified by the
Bank and information provided to the Bank by the Borrower.
12. Service Charges. In addition to the principal and interest on the
Loans and the reimbursement of expenses to Bank pursuant to this Agreement,
Borrowers shall pay to the Bank a monthly service charge for the services
provided by Bank in connection with this Agreement in the amount of $10,000,
which service charge may be increased or decreased in the sole discretion of
Bank upon 30 days prior written notice to Borrowers.
13. One General Obligation: Cross Collateral. All loans and advances
by Bank to Borrowers under this Agreement and under all other agreements
constitute one loan, and all indebtedness and obligations of Borrowers to Bank
under this and under all other agreements, present and future, constitute one
general obligation secured by the Collateral and security held and
- 27 -
to be held by Bank hereunder and by virtue of all other assignments and security
agreements between Borrowers and Bank now and hereafter existing. It is
expressly understood and agreed that all of the rights of Bank contained in this
Agreement shall likewise apply insofar as applicable to any modification of or
supplement to this Agreement and to any other agreements, present and future,
between Bank and Borrowers.
14. Acceleration. The following shall constitute Acceleration Events,
it being agreed that time is of the essence hereof: (a) failure of the Borrowers
to pay when due or within five (5) days of the date on which it is due any of
the Obligations, including without limitation the interest payments required
under Section 3 hereof; (b) failure of the Borrowers to observe or perform any
covenant contained in this Agreement or in any other agreement between the
Borrowers and the Bank including, without limitation, the Technical Metals
Agreement; (c) any representation or warranty at any time made by the Borrowers
to the Bank orally or in this Agreement or in any other agreement between the
Borrowers and the Bank, or in any document or instrument delivered to the Bank
pursuant to this Agreement or any such other agreement is, or becomes, untrue or
misleading in any material respect; (d) Borrowers shall default under or breach,
and not cure such default or breach within any applicable cure periods, any
material obligation for the payment of borrowed money or for the payment of rent
under any lease agreement covering real or personal property; (e) any
acceleration of any material obligation of any Borrower for the payment of
borrowed money or for the payment of rent under any lease agreement covering
real or personal property; (f) failure of the Borrowers or any guarantor, after
request by the Bank, to furnish within five (5) days of such request financial
information or to permit the inspection of their books of account and records;
(g)
- 28 -
suspension by the Borrowers or of the operation of their present business, or
the calling any meeting of all or any of their creditors or committing any act
of bankruptcy, or the filing by or against any Borrower of any petition under
any provision of the United States Bankruptcy Code, as amended, or the entry of
any judgment or filing of any lien against any Borrower in an amount exceeding
$30,000; (h) there shall occur any material adverse change in any Borrowers'
condition or affairs (financial or otherwise) or in that of any endorser,
guarantor of surety for any of the Obligations; and (i) any uninsured loss,
theft, damage, destruction or encumbrance of any of the Collateral or any levy,
seizure or attachment thereof.
15. Bank's Rights and Remedies of Bank. Upon the occurrence of an
Acceleration Event, Bank may declare all Obligations of the Borrowers to Bank
immediately due and payable, without presentment, notice, protest or demand of
any kind for the payment of all or any part of the Obligations, and exercise all
of its rights and remedies against Borrowers and any Collateral provided herein,
in any other agreement between Borrowers and Bank, at law or in equity and
exercise all rights granted to a secured party under the Ohio Uniform Commercial
Code or otherwise. Without limiting the foregoing, Bank may take possession of
the Collateral, or any part thereof, and Borrowers hereby grant Bank authority
to enter upon any premises on which the Collateral may be situated, and remove
the Collateral from such premises or use such premises, together with the
materials, supplies, books and records of Borrowers, to maintain possession
and/or the condition of the Collateral and to prepare the Collateral for sale.
Borrowers shall, upon demand by Bank, assemble the Collateral and make it
available at a place designated by Bank which is reasonably convenient to Bank
and Borrowers. Borrowers shall not attempt to delay, obstruct or
- 29 -
frustrate the Bank's exercise of its rights and remedies, nor raise any defense
in any legal proceeding commenced by Bank to avail itself of such remedies, if
necessary. Unless the Collateral is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, Bank will give
Borrowers reasonable notice of the time and place of any public sale thereof or
of the time after which any private sales or other intended disposition thereof
is to be made. The requirement of reasonable notice shall be met if such notice
is mailed, postage prepaid, to the address of the Borrowers as set forth herein
at least five (5) days prior to the time of such sale or disposition.
15.1 Application of Proceeds. The Bank shall have the right to
apply the proceeds of any disposition of the Collateral to the payment of the
Obligations in such order of application as the Bank may, in its sole
discretion, elect. The Bank shall have no obligation to xxxxxxxx any assets in
favor of the Borrowers or any other party.
15.2 Remedies Cumulative. The rights, options and remedies of
the Bank shall be cumulative and no failure or delay by the Bank in exercising
any right, option or remedy shall be deemed a waiver thereof or of any other
right, option or remedy, nor shall any single or partial exercise of any such
right, power or remedy preclude any other or further exercise thereof or the
exercise of any other right, power or remedy hereunder. Bank shall not be deemed
to have waived any of the Bank's rights hereunder or under any other agreement,
instrument or paper signed by Borrowers unless such waiver be in writing and
signed by the Bank. Nothing in this Agreement shall be deemed to restrict any of
Bank's rights to seek, in a bankruptcy court or any other court of competent
jurisdiction, any relief that Bank may deem appropriate in the event that a
voluntary or involuntary bankruptcy petition is filed by or against Debtor.
- 30 -
16. Release of All Claims. Borrowers hereby jointly and severally, for
themselves, their respective heirs, executors, administrators, legal
representatives, successors and assigns: (a) acknowledge that no Borrower has
any Claims (as herein defined) against Bank; (b) for good and valuable
consideration, receipt of which is hereby acknowledged, release and forever
discharge Bank and its employees, officers, directors, agents, accountants,
attorneys and parent companies, and all direct and indirect subsidiaries and
affiliates of such parent companies and all employees, officers, directors,
agents, accountants and attorneys of such parent companies, subsidiaries and
affiliates, and the heirs, executors, administrators, successors and assigns of
all of the foregoing, jointly and severally (collectively, the "Bank Parties"),
of and from the following (collectively, the "Claims"): any and all actions,
causes of action, suits, debts, accounts, obligations, defenses, offsets,
counterclaims, damages, judgments, claims, demands and liabilities of any kind
or character whatsoever, known or unknown, suspected or unsuspected, in contract
or in tort, in law or in equity, including, without limitation, fraud, duress,
mistake, usury, tortious interference, negligence, and other matters of any kind
whatsoever, of Borrowers had, have, may have or may in the future have against
any one or more of the Bank Parties arising out of, for or by reason of or
resulting from or in any way relating to, in whole or in part, directly or
indirectly, any past or present act, omission, matter, cause or thing
whatsoever, including, without limitation, this Agreement, the Loan Agreement,
the December Agreement, any Note, security document, other document, matter or
thing relating thereto or to the Loans generally, any other past or present
financing or banking transactions between Bank and the Borrowers; (c) agree not
to commence, aid, cause, permit, join in, prosecute or participate in any suit
or other proceeding in a position adverse to any of the Bank Parties, which
- 31 -
suit or proceeding arises from or relates to, in whole or in part, any of the
Claims; (d) acknowledge that nothing contained herein is to be construed as an
admission that any Claims exist or as an admission of liability of any of the
Bank Parties; and (e) agree that Bank hereby is forever discharged from any and
all duties or obligations under or relating in any way to the Loan Agreement,
the December Agreement, or related documents.
17. Miscellaneous
17.1 Governing Law; Jurisdiction and Venue. The provisions of
this Agreement shall be governed by and interpreted in accordance with the laws
of the State of Ohio. The Bank and Borrower hereby designate all courts of
record sitting in Cincinnati, Ohio, both state and federal, as forums where any
action, suit or proceeding in respect of or arising out of this Agreement or the
transactions contemplated by this Agreement may be prosecuted as to all parties,
their successors and assigns, and by the foregoing designation the Bank and
Borrowers consent to the jurisdiction and venue of such courts.
17.2 MUTUAL WAIVER OF JURY TRIAL. AS A SPECIFICALLY BARGAINED
INDUCEMENT FOR THE BANK TO EXTEND CREDIT TO BORROWERS AND FOR BORROWERS TO
BORROW FROM BANK, AND AFTER HAVING THE OPPORTUNITY TO CONSULT COUNSEL, EACH
BORROWER HEREBY EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR
PROCEEDING RELATING TO THIS AGREEMENT OR ARISING IN ANY WAY FROM THE
OBLIGATIONS.
- 32 -
17.3 Other Waivers. The Borrowers waive notice of nonpayment,
demand, notice of demand, presentment, protest and notice of protest with
respect to the Obligations, or notice of acceptance hereof, notice of Loans
made, credit extended, Collateral received or delivered, or any other action
taken in reliance hereon, and all other demands and notices of any description,
except such as are expressly provided for herein.
17.4 Collection Costs. All costs and expenses incurred by the
Bank to obtain, enforce or preserve the security interests granted by this
Agreement and to collect the Obligations, including, without limitation,
stationery and postage, telephone and telegraph, secretarial and clerical
expenses, all costs incurred and amounts paid directly or indirectly by the Bank
in connection with the Bankruptcy Case, including all amounts paid or costs
incurred in connection with the confirmation and execution of Consumer Product's
plan of reorganization, the fees or salaries of any collection agents utilized,
all costs to maintain and preserve the Collateral and all attorneys' fees and
legal expenses incurred in obtaining or enforcing payment of any of the
Obligations or foreclosing the Bank's security interest in any of the
Collateral, whether through judicial proceedings or otherwise, or in enforcing
or protecting its rights and interests under this Agreement or under any other
instrument or document delivered pursuant hereto, or in protecting the rights of
any holder or holders with respect thereto, or in defending or prosecuting any
actions or proceedings arising out of or relating to the Bank's transactions
with the Borrowers, shall be paid by the Borrowers to the Bank, upon demand, or,
at the Bank's election, charged to the appropriate Borrowers' account and added
to the Obligations, and the Bank may take judgment against the Borrowers for all
such costs, expense and fees in addition to all other amounts due from the
Borrowers hereunder.
- 33 -
17.5 Expenses. Borrowers shall reimburse the Bank for all
out-of-pocket costs and expenses incurred by the Bank in connection with the
preparation of this Agreement and the making of the Loans hereunder, including
the reasonable fees and expenses of the Bank's counsel, and for all UCC search,
filing, recording and other costs connected with the perfection of the Bank's
security interest in the Collateral.
17.6 Notices. All notices, requests, directions, demands,
waivers and other communications provided for herein shall be in writing and
shall be deemed to have been given or made when delivered personally, by
telecopy, or sent by registered or certified mail, postage prepaid and return
receipt requested, addressed to Borrowers or the Bank, as the case may be, at
their respective addresses set forth below. Notices of changes of address shall
be given in the same manner.
If to Bank: The Provident Bank
Attention: Xxxxxxx Xxxxxxxx
Suite 200
00 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
If to Borrowers: Quality Products, Inc.
Suite 201
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxx, XX 00000
17.7 Severability. Any provision of this Agreement which is
prohibited and unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
- 34 -
17.8 Entire Agreement, Modification, Benefit. This Agreement,
taken together with the Loan Agreement and the December Agreement, shall
constitute the entire agreement of the parties with respect to the matters dealt
with herein and no provision of this Agreement, including the provisions of this
Section, may be modified, deleted or amended in any manner except by agreement
in writing executed by the parties. All terms of this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns, provided, however, that Borrowers shall not
assign or transfer their rights hereunder.
17.9 Construction. All references in this Agreement to the
single number and neuter gender shall be deemed to mean and include the plural
number and all genders, and vice versa, unless the context shall otherwise
require.
17.10 Headings. The underlined headings contained herein
are for convenience only and shall not affect the interpretation of this
Agreement.
17.11 Counterparts. This Agreement may be executed in
more than one counterpart, each of which shall be deemed an original.
17.12 Nonliability of Bank. The relationship between the
Borrower and the Bank shall be solely that of borrower and lender. The Bank
shall not have any fiduciary responsibilities to the Borrowers. The Bank
undertakes no responsibility to the Borrowers to review or inform the Borrowers
of any matter in connection with any phase of the Borrowers' business or
operations.
17.13 Warrant of Attorney. The Borrowers authorize any
attorney at law, including an attorney engaged by the Bank, to appear in any
court of record in the State of Ohio or any other State or Territory of the
United States, after the occurrence of an Event of Default
- 35 -
hereunder and waive the issuance and service of process and confess judgment
against the Borrowers or any one of them in favor of the Bank, for the amount of
the Obligations then appearing due, together with costs of suit and, thereupon,
to release all errors and waive all rights of appeal and stay of execution, but
no such judgment or judgments against any one of the Borrowers shall be a bar to
a subsequent judgment or judgments against any one or more than one of such
persons against whom judgment has not been obtained hereon. The Borrowers hereby
expressly waive any conflict of interest that the Bank's attorney may have in
confessing such judgment against Borrowers and expressly consent to the
confessing attorney receiving a legal fee from the holder for confessing such
judgment against Borrowers. This warrant of attorney to confess judgment is a
joint and several warrant of attorney. The foregoing warrant of attorney shall
survive any judgment; and if any judgment be vacated for any reason, the Bank
nevertheless may thereafter use the foregoing warrant of attorney to obtain an
additional judgment or judgments against the Borrowers or any one or more of
them.
18. Effect on Loan Agreement and December Agreement. Except as
specifically modified hereby as between the parties hereto, the terms of the
Loan Agreement and the December Agreement shall remain in full force and effect.
Nothing contained herein shall have any effect upon Consumer Products' rights or
obligations under the Loan Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers.
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT
- 36 -
JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF
A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE
AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS
PART TO COMPLY WITH THE AGREEMENT OR ANY OTHER CAUSE.
QUALITY PRODUCTS, INC. QPI MULTIPRESS CORP.
BY: BY:
_________________________ ___________________________
Title: Title:
_______________________ ________________________
QUALITY TOYS, INC. TECHNICAL METALS COMPANY
BY: BY:
_________________________ ___________________________
Title: Title:
______________________ ________________________
WITNESSES: AMERICAN LIBERTY MINING
CORPORATION
________________________________
Secretary or Assistant Secretary BY:
____________________________
Title:
________________________
THE PROVIDENT BANK
BY:
___________________________
Title:
________________________
