$6,000,000
CREDIT AGREEMENT
DATED AS OF NOVEMBER 22, 1996
BETWEEN
XXXX INDUSTRIES, INC. AND ALCORE, INC., AS BORROWER
AND
FIRST UNION NATIONAL BANK OF MARYLAND, AS LENDER
- 1 -
CREDIT AGREEMENT DATED AS OF NOVEMBER 22, 1996
BETWEEN
XXXX INDUSTRIES, INC., A DELAWARE CORPORATION, AND ALCORE, INC.,
A DELAWARE CORPORATION,
AND
FIRST UNION NATIONAL BANK OF MARYLAND,
A NATIONAL BANKING ASSOCIATION
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 DEFINITIONS. All capitalized terms used in this
Agreement or in any Appendix, Schedule or Exhibit hereto which are not otherwise
defined herein or therein shall have the respective meanings set forth in the
Appendix attached hereto identified as the Definitions Appendix. The Definitions
Appendix is incorporated herein by reference in its entirety and is a part of
this Agreement to the same extent as if it had been set forth in this Section
1.01 in full.
Section 1.02 ACCOUNTING TERMS AND DETERMINATIONS. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared, in
accordance with generally accepted accounting principles in the United States of
America as in effect from time to time, applied on a basis consistent (except
for changes concurred in by the Borrower's independent public accountants) with
the most recent audited consolidated financial statements of the Borrower and
all Consolidated Subsidiaries delivered to the Bank.
ARTICLE II
THE CREDIT
Section 2.01 COMMITMENT TO LEND. The Bank agrees, on the terms
and conditions set forth in this Agreement, to make Loans to the Borrower from
time to time during the Revolving Credit Period in amounts such that: (a) the
aggregate principal amount of Loans at any one time outstanding will not exceed
the lesser of (i) the Commitment and (ii) the Borrowing Base; (b) the aggregate
principal amount of Loans at any one time advanced and outstanding against the
Alcore Borrowing Base do not exceed the Alcore Sublimit; and (c) the aggregate
principal amount of Loans advanced and outstanding against the Xxxx Borrowing
Base do not exceed the Xxxx Sublimit. Within the foregoing limits and sublimits,
the Borrower may borrow, prepay and reborrow Loans at any time during the
Revolving Credit Period.
Section 2.02 METHODS OF BORROWING.
(a) Notice of Borrowing; Borrowing Base Certificate. Except as
otherwise provided in this Section, each of Alcore and Xxxx may, with the
approval of the Bank, give the Bank notice substantially in the form of Exhibit
A -- Notice of Borrowing (a "Notice of Borrowing") not later than 12:00 P.M.
(local time in Baltimore, Maryland) on the date of each requested Loan,
specifying the date of such Loan and the amount of such Loan and such other
information as is required to satisfy the requirements of Section 2.01 above.
(b) Operating Account Overdrafts. If on any day Items are
presented to the Bank for payment
- 2 -
against an Operating Account which Items, in the aggregate, would, if paid in
full, cause the Available Balance in such Operating Account on such day to be
less than $0, such presentation shall be deemed to be a request by the
applicable Borrower for a Loan on the date of such presentation in an amount
equal to the amount (rounded upward to the nearest $1,000) required to cause
such Available Balance to equal $0.
(c) Overdrafts in Other Accounts. The Bank may, at its option,
pay any Item which will cause any deposit account maintained by the Borrower
with the Bank to become overdrawn, and such payment shall be deemed a Loan
hereunder.
Section 2.03 FUNDING OF LOANS. The Bank shall disburse the
proceeds of each Loan requested, or deemed to be requested, pursuant to Section
2.02 as follows:
(a) The proceeds of each Loan under Section 2.02(a) shall be
made available by the Bank to the applicable Borrower in Federal or other funds
immediately available at the Bank's address referred to in Section 8.01.
(b) The proceeds of each Loan under Section 2.02(b) or (c)
shall be disbursed by the Bank by way of direct payment of the relevant Item or
by way of deposit to the Operating Account of the amount set forth in Section
2.02(b), as the case may be.
Section 2.04 NOTE.
(a) Evidence of Loans. The Loans shall be evidenced by a
single Note made by Alcore and Xxxx, jointly and severally, as co-borrowers,
payable to the order of the Bank in the principal amount of $6,000,000.
(b) Records of Amounts Due. The Bank shall record the date and
amount of each Loan made by it and the date and amount of each payment of
principal made by each Borrower with respect thereto, and may, if the Bank so
elects in connection with any transfer or enforcement of the Note, endorse on
the schedule forming a part thereof appropriate notations to evidence the
foregoing information with respect to each such Loan then outstanding; provided
that the failure of the Bank to make any such recordation or endorsement shall
not affect the obligations of the Borrower hereunder or under the Note. The Bank
is hereby irrevocably authorized by the Borrower so to endorse the Note and to
attach to and make a part of the Note a continuation of any such schedule as and
when required.
Section 2.05 INTEREST RATES.
(a) LIBOR-Based Rate. Except as otherwise provided in
subsection (c) below, each Loan shall bear interest on the outstanding principal
amount thereof, for each day from the date such Loan is made until it becomes
due, at a rate per annum equal to the applicable LIBOR-based Rate for such day.
Such interest shall be payable for each month in arrears on the first day of the
immediately succeeding calendar month.
The "Adjusted London Interbank Offered Rate" means on any day
a rate per annum equal to the quotient obtained (rounded upward, if necessary,
to the next higher 1/100 of 1%) by dividing (i) the London Interbank Offered
Rate for such day by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.
"LIBOR-based Rate" means for any day, the sum of (i) the
Adjusted London Interbank Offered Rate for such day plus (ii) 250 basis points.
The "London Interbank Offered Rate" means the rate per annum
designated as the British Bankers' Association settlement rate as of 11:00 A.M.
(London time) for one month deposits in Dollars in the London interbank market
that appears on the display on page 3750 (under the caption "USD" of the
Telerate Services, Incorporated screen (the "Telerate Screen") (or on such other
display as may replace such page on the Telerate Screen) at such time) each
Euro-Dollar Business Day; provided that if no offered quotations appear on the
Telerate Screen or if quotations are not
- 3 -
given on the Telerate Screen for such one month period, then the London
Interbank Offered Rate shall mean the rate per annum determined by the Bank at
which United States Dollars in the amount of $5,000,000 are being offered to
leading banks in the London interbank market for Dollar deposits at
approximately 11:00 A.M. London time two Euro-Dollar Business Days prior to such
day for settlement in immediately available funds by leading banks in the London
interbank market for a one month period.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank of
the Federal Reserve System in New York City with deposits exceeding five billion
dollars in respect of "Eurocurrency liabilities" (or in respect of any other
category of liabilities which includes deposits by reference to which the
interest rate on Loans is determined or any category of extensions of credit or
other assets which includes loans by a non-United States office of the Bank to
United States residents). The Adjusted London Interbank Offered Rate shall be
adjusted automatically on and as of the effective date of any change in the
Euro-Dollar Reserve Percentage.
The LIBOR-based Rate shall change from time to time with
changes to occur on the date the London Interbank Offered Rate changes on the
Telerate Screen page 3750, or if such rate is not available, by reference to the
rate being offered to leading banks.
(b) Overdue Amounts. Any overdue principal of or interest on
any Loan shall bear interest, payable on demand, for each day from and including
the date payment thereof was due to but excluding the date of actual payment, at
a rate per annum equal to the sum of 2% plus the LIBOR-based Rate or Base Rate,
as the case may be, applicable to such Loan on such day.
(c) Base Rate. Each Loan required to be converted into or made
as a Base Rate Loan pursuant to the provisions of Article VII shall bear
interest on the outstanding principal amount thereof, for each day on which such
Loan constitutes a Base Rate Loan, at a rate per annum equal to the Base Rate
for such day. Such interest shall be payable for each month in arrears on the
first day of the immediately succeeding calendar month.
"Base Rate" means for any day, the Prime Rate.
"Prime Rate" means the rate announced by the Bank from time to
time as its Prime Rate, as such rate may change from time to time with changes
to occur on the date the Bank's Prime Rate changes. The Bank's Prime Rate is one
of several interest rate bases used by the Bank. The Bank lends at rates above
and below the Bank's Prime Rate, and the Borrower acknowledges that the Bank's
Prime Rate is not represented or intended to be the lowest or most favorable
rate of interest offered by the Bank.
(d) Determination and Notice of Interest Rates. The Bank shall
determine each interest rate applicable to the Loans hereunder. The Bank shall
give prompt notice to the Borrower of each rate of interest so determined, and
its determination thereof shall be conclusive in the absence of manifest error.
Section 2.06 FEES.
(a) Servicing Fee. The Borrower shall pay to the Bank a
monthly servicing fee (the "Servicing Fee") equal to $750.00. The Servicing Fee
shall accrue from and including the Effective Date to but excluding the
Termination Date (or earlier date of termination of the Commitment in its
entirety), and be payable on the first day of the first month immediately
following the Effective Date, and on the first day of each month thereafter,
unless the Commitment is terminated prior to any such date, in which case all
Servicing Fees which have accrued and remain unpaid shall be payable on the
effective date of such termination.
(b) Commitment Fee. On the Effective Date, the Borrower
shall pay to the Bank a commitment fee equal to $27,500.
- 4 -
(c) Audit Fees. Recurring field audits of the Borrower's
books, records and assets will be conducted not more than semi-annually, and all
costs thereof (estimated to be no more than $2,500 per audit) will be paid by
the Borrower.
Section 2.07 TERMINATION, REDUCTION OR EXTENSION OF
COMMITMENT.
(a) Optional Termination or Reductions of Commitment. The
Borrower may, upon at least three Business Days' notice to the Bank, (i)
terminate the Commitment at any time, if no Loans are outstanding at the time of
termination or (ii) reduce from time to time the amount of the Commitment in
excess of the aggregate outstanding principal amount of the Loans.
(b) Optional Extension of Commitment. In September, 1997 (and
each September thereafter, if the Loan is extended), after receipt and review of
each Borrower's quarterly financial statement, the Bank shall consider, in its
sole discretion, extending the Revolving Credit Period for an additional
twelve-month period.
Section 2.08 MATURITY AND REPAYMENT OF LOANS.
(a) Maturity at Termination Date. Each Loan shall mature,
and the principal amount thereof shall be due and payable, on the Termination
Date.
(b) Mandatory Prepayments of Loans Exceeding Borrowing Base.
If on any day the aggregate outstanding principal amount of all Loans exceeds
the Borrowing Base, the Borrower shall prepay, and there shall become due and
payable, on such date the principal amount of the Loans equal to such excess,
together with interest thereon to the date of repayment.
(c) Mandatory Repayments from Operating Accounts.
(i) Deposits of Proceeds to Operating
Accounts. The Borrower shall instruct all Account Debtors and other Persons
obligated in respect of Accounts and other Collateral to make all payments in
respect of the Accounts or other Collateral directly to the Bank (by instructing
that such payments be remitted to a post office box which shall be in the name
and under the control of the Bank). Except as provided in Section 3.04 of the
Security Agreement, all such payments made to the Bank with respect to Alcore
shall be deposited in the Alcore Operating Account, and all such payments made
to the Bank with respect to Xxxx shall be deposited in the Xxxx Operating
Account. In addition to the foregoing, the Borrower agrees that if the proceeds
of any Collateral (including the payments made in respect of Accounts) shall be
received by it, the Borrower shall, unless Section 3.04 of the Security
Agreement shall require otherwise, as promptly as possible deposit such proceeds
to the appropriate Operating Account. Until so deposited, all such proceeds
shall be held in trust by the Borrower for and as the property of the Bank and
shall not be commingled with any other funds or property of the Borrower. The
Borrower hereby irrevocably authorizes and empowers the Bank, its officers,
employees and authorized agents to endorse and sign its name on all checks,
drafts, money orders or other media of payment so delivered, and such
endorsements or assignments shall, for all purposes, be deemed to have been made
by the Borrower prior to any endorsement or assignment thereof by the Bank. The
Bank may use any convenient or customary means for the purpose of collecting
such checks, drafts, money orders or other media of payment.
(ii) Loans Due to Extent of Available Balance.
Each Business Day, that principal amount of the Loans equal to the then
Available Balance shall become due and payable.
(iii) Withdrawals from Operating Account to Pay
Obligations. The Available Balance on deposit in each Operating Account, or
so much thereof as is necessary to pay in full the Obligations referred to in
this Section 2.08(c)(iii), shall be withdrawn by the Bank each Business Day and
applied to repay the respective Obligations of each Borrower which are then due
and payable (including those which become due and payable on
- 5 -
such date pursuant to subsection (ii) above).
(d) Optional Prepayments of Loans. The Borrower may upon at
least one Business Day's notice to the Bank, prepay any Loan, in whole at any
time, or from time to time in part, by paying the principal amount to be prepaid
together with accrued interest thereon to the date of prepayment. The notice of
prepayment delivered by the Borrower to the Bank shall not be revocable by the
Borrower following its receipt by the Bank.
Section 2.09 GENERAL PROVISIONS AS TO PAYMENTS. The Borrower
shall make each payment of principal of and interest on the Loans and fees
hereunder not later than 12:00 Noon (local time in Baltimore, Maryland) on the
date when due, without set-off, counterclaim or other deduction, in Federal or
other funds immediately available in Baltimore, Maryland, to the Bank at its
address referred to in Section 8.01. Each Borrower hereby irrevocably authorizes
the Bank to deduct from its respective Operating Account at any time such amount
as may then be necessary to pay Obligations referred to in clause (ii)(A) of the
definition of Available Balance. Whenever any payment of principal of, or
interest on, the Loans or of fees shall be due on a day which is not a Business
Day, the date for payment thereof shall be extended to the next succeeding
Business Day. If the date for any payment of principal is extended by operation
of law or otherwise, interest thereon shall be payable for such extended time.
Section 2.10 COMPUTATION OF INTEREST AND FEES. Interest on
Loans hereunder shall be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed (including the first day but excluding the
last day).
ARTICLE III
CONDITIONS
Section 3.01 CONDITIONS TO CLOSING. The obligation of
the Bank to make the first Loan hereunder is subject to the satisfaction of
the following conditions:
(a) Effectiveness. This Agreement shall have become
effective in accordance with Section 8.08.
(b) Note. On or prior to the Closing Date, the Bank shall have
received a duly executed Note dated on or before the Closing Date complying with
the provisions of Section 2.04.
(c) Other Loan Documents. Each of the Loan Documents to be
executed on or before the Closing Date shall be in form and substance
satisfactory to the Bank and shall have been duly executed and delivered to the
Bank by each of the parties thereto.
(d) Adverse Change, etc. On the Closing Date, nothing shall
have occurred (and the Bank shall not have become aware of any facts or
conditions not previously known) which the Bank shall determine has, or could
reasonably be expected to have, a Material Adverse Effect.
(e) Officer's Certificate. The Bank shall have received a
certificate dated the Closing Date signed on behalf of the Borrower by the
Chairman of the Board, the President, any Vice President or the Treasurer of
each Borrower stating that (x) on the Closing Date and after giving effect to
the Loan being made on the Closing Date, no Default or Event of Default shall
have occurred and be continuing and (y) to the best knowledge and belief of such
officer, the representations and warranties of the Borrower contained in the
Loan Documents are true and correct on and as of the Closing Date.
(f) Opinion of Borrower's Counsel. On the Closing Date,
the Bank shall have received from
- 6 -
counsel to the Borrower an opinion addressed to the Bank, dated the Closing
Date, substantially in the form of Exhibit C hereto and covering such additional
matters incident to the transactions contemplated hereby as the Bank may
reasonably request.
(g) Corporate Proceedings. On the Closing Date, the Bank shall
have received (i) a copy of each Borrower's articles or certificate of
incorporation (or analogous organizational documents), as amended, certified by
the applicable state filing office; (ii) certificates of the Maryland Department
of Assessments and Taxation and the Secretary of State of New York with respect
to Alcore, and certificates of the Secretary of State of Delaware and the
Secretary of the State of New York with respect to Xxxx, dated as of a recent
date, as to the good standing and if available listing in long-form the charter
or similar organizational documents of the Borrower on file; and (iii) a
certificate of the Secretary or an Assistant Secretary of each Borrower dated
the Closing Date and certifying (A) that the articles or certificate of
incorporation of such Borrower have not been amended since the date of the last
amendment thereto indicated on the certificate furnished pursuant to clause (ii)
above, (B) as to the absence of dissolution or liquidation proceedings by or
against such Borrower, (C) that attached thereto is a true and complete copy of
the by-laws of such Borrower as in effect on the date of such certification and
all other times relevant to the transactions contemplated hereby, (D) that
attached thereto is a true, correct and complete copy of resolutions adopted by
the board of directors of such Borrower authorizing the execution, delivery and
performance of the Credit Agreement, the Note and the Security Agreement and
each other document delivered in connection herewith or therewith and that said
resolutions have not been amended and are in full force and effect on the date
of such certificate, (E) as to the incumbency and specimen signatures of each
officer of such Borrower executing this Agreement, the Note and the Security
Agreement or any other document delivered in connection herewith or therewith
and (F) certifying as to the names and respective jurisdictions of incorporation
of all Subsidiaries of such Borrower existing on the Closing Date. The
certificate referred to in clause (iii) of this subsection shall be
substantially in the form of such certificate as attached to the Memorandum of
Closing furnished by counsel for the Bank.
All corporate and legal proceedings and instruments and
agreements relating to the transactions contemplated by this Agreement or
in any other document delivered in connection therewith shall be
satisfactory in form and substance to the Bank and its counsel, and the
Bank shall have received all information and copies of all documents and
papers, including records of corporate proceedings, governmental
approvals, good standing certificates and bring-down telegrams, if any,
which the Bank reasonably may have requested in connection therewith, such
documents and papers where appropriate to be certified by proper corporate
or governmental authorities.
(h) Perfection of Security Interests; Search Reports.
On or prior to the Closing Date, the Bank shall have received:
(i) a Perfection Certificate of the Borrower,
substantially in the form of Exhibit A to the Security
Agreement;
(ii) appropriate Financing Statements (Form UCC-1 or
such other financing statements or similar notices as shall be
required by local law) fully executed for filing under the
Uniform Commercial Code or other applicable local law of each
jurisdiction in which the filing of a financing statement or
giving of notice may be required, or reasonably requested by
the Bank, to perfect the security interests purported to be
created by the Loan Documents;
(iii) copies of reports from Xxxxxxxx-Xxxx Financial
Services or other independent search service reasonably
satisfactory to the Bank listing all effective financing
statements that name each Borrower (under its present name and
any previous name and, if requested by the Bank, under any
trade names) as debtor or seller that are filed in the
jurisdictions referred to in clause (i) above, together with
copies of such other financing statements (none of which shall
cover the Collateral except to the extent evidencing Permitted
Liens or for which the Bank shall have
- 7 -
received termination statements (Form UCC-3) or such other
termination statements as shall be required by local law)
fully executed for filing; and
(iv) evidence of the completion of all other filings
and recordings of, or with respect to, the Loan Documents as
may be necessary or, in the opinion of the Bank, desirable to
perfect the security interests intended to be created by the
Loan Documents.
(i) Closing Date Borrowing Base Certificate. On the Closing
Date, each Borrower shall have delivered to the Bank an initial Borrowing
Base Certificate meeting the requirements of Section 5.01(f) hereof.
(j) Payment of Fees. All costs, fees and expenses due to
the Bank on or before the Closing Date shall have been paid.
(k) Counsel Fees. The Bank shall have received payment
from the Borrower of the fees and expenses of Piper & Marbury L.L.P.
described in Section 8.03 which are billed through the Closing Date, which shall
not exceed $7,500 plus disbursements.
(l) Cash Management and Depository Accounts. On or
before the Closing Date, each Borrower shall have established its
respective cash management and depository accounts with the Bank.
(m) Field Audits. On or before the Closing Date, the Bank
shall have received (a) an initial audit of each Borrower's Inventory, (b) an
initial audit of all of each Borrower's Machinery and Equipment in all
locations, and (c) an initial audit of each Borrower's books, records and other
assets. Such initial audits shall be paid for by the Bank, prepared by a firm
acceptable to the Bank, and otherwise be satisfactory to the Bank in form and
substance.
The Bank shall promptly notify the Borrower of the Closing Date, and
such notice shall be conclusive and binding on all parties hereto. The documents
referred to in this Section shall be delivered to the Bank no later than the
Closing Date. The certificates and opinion referred to in this Section shall be
dated the Closing Date.
Section 3.02 CONDITIONS TO ALL LOANS. The obligation of the
Bank to make each Loan is subject to the satisfaction of the following
conditions:
(a) the fact that the Closing Date shall have occurred;
(b) the fact that, immediately after the making of such Loan,
the aggregate outstanding principal amount of all Loans shall not exceed the
lesser of (A) the Commitment and (B) the Borrowing Base;
(c) the fact that, immediately after making such Loan,
neither the Alcore Sublimit nor the Xxxx Sublimit is exceeded;
(d) the fact that, immediately before and after the making of
such Loan, no Default shall have occurred and be continuing; and
(e) the fact that the representations and warranties of the
Borrower contained in this Agreement shall be true on and as of the date of such
Loan.
Each Loan hereunder shall be deemed to be a representation and warranty by the
Borrower on the date of such Loan as to the facts specified in clauses (iii) and
(iv) of this Section.
ARTICLE IV
- 8 -
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
Section 4.01 CORPORATE EXISTENCE AND POWER. Each Borrower and
each of its Subsidiaries is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
and has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted. Each Borrower and each of its Subsidiaries is duly qualified as a
foreign corporation, licensed and in good standing in each jurisdiction where
qualification or licensing is required by the nature of its business or the
character and location of its property, business or customers and in which the
failure to so qualify or be licensed, as the case may be, in the aggregate,
could have a Material Adverse Effect.
Section 4.02 CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO
CONTRAVENTION. The execution, delivery and performance by the Borrower of the
Loan Documents to which it is a party are within the corporate powers of the
Borrower, have been duly authorized by all necessary corporate action, require
no action by or in respect of, or filing with, any governmental body, agency or
official (except for any such action or filing as shall have been taken or made
and that is in full force and effect from and after the Closing Date) and do not
contravene, or constitute (with or without the giving of notice or lapse of time
or both) a default under, any provision of applicable law or of the articles or
certificate of incorporation or by-laws (or analogous organizational documents)
of the Borrower or any Subsidiary or of any agreement, judgment, injunction,
order, decree or other instrument binding upon or affecting the Borrower or any
Subsidiary or result in the creation or imposition of any Lien on any asset of
the Borrower or any of its Subsidiaries.
Section 4.03 BINDING EFFECT. Each Loan Document to which the
Borrower is a party constitutes a valid and binding agreement of the Borrower
enforceable against the Borrower in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and by equitable principles of general
applicability (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
Section 4.04 FINANCIAL CONDITION.
(a) Audited Financial Statements. The consolidated balance
sheet of the Borrower and all Consolidated Subsidiaries as of December 31, 1995
and the related consolidated statements of income and cash flows for the fiscal
year then ended, reported on by Coopers & Xxxxxxx, copies of which have been
delivered to the Bank, fairly present, in conformity with generally accepted
accounting principles, the consolidated financial position of the Borrower and
all Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such fiscal year. As of the date of such financial
statements, the Borrower and all Consolidated Subsidiaries did not have any
material contingent obligation, contingent liability or liability for taxes,
long-term lease or unusual forward or long-term commitment, which is not
reflected in any of such financial statements or notes thereto.
(b) Interim Financial Statements. The unaudited consolidated
balance sheet of the Borrower and all Consolidated Subsidiaries as of June 30,
1996 and the related unaudited consolidated income statements for the twelve
months then ended, copies of which have been delivered to the Bank, fairly
present, in conformity with generally accepted accounting principles applied on
a basis consistent with the financial statements referred to in subsection (a)
of this Section, the consolidated financial position of the Borrower and all
Consolidated Subsidiaries as of such date and their consolidated results of
operations and changes in financial position for such twelve-month period
(subject to normal year-end audit adjustments).
(c) Material Adverse Change. Since June 30, 1996 there
has been no material adverse change in condition (financial or otherwise),
results of operations, properties, assets, business or prospects of the Borrower
- 9 -
or of the Borrower and all Consolidated Subsidiaries, considered as a whole.
Section 4.05 LITIGATION. Except as described in Schedule 4.05
attached hereto and made a part hereof, there is no action, suit, proceeding or
investigation pending against, or to the knowledge of the Borrower threatened
against, contemplated or affecting, the Borrower or any of its Subsidiaries
before any court, arbitrator or any governmental body, agency or official which
has, or, if adversely determined, could reasonably be expected to have, a
Material Adverse Effect, or which in any manner draws into question the validity
or enforceability of this Agreement or the Note, and there is no basis known to
the Borrower or any of its Subsidiaries for any such action, suit, proceeding or
investigation.
Section 4.06 REGULATION U; USE OF PROCEEDS. The Borrower and
its Subsidiaries do not own any "margin stock" as such term is defined in
Regulation U. The proceeds of the Loans will be used by the Borrower only for
the purposes set forth in Section 5.17 hereof.
Section 4.07 REGULATORY RESTRICTIONS ON BORROWING. Neither the
Borrower nor any of its Subsidiaries is an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, a "holding company"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended, or otherwise subject to any regulatory scheme which restricts its
ability to incur debt.
Section 4.08 SUBSIDIARIES. Part I of Schedule 4.08 (as such
Schedule may be supplemented by a writing delivered by the Borrower to the Bank
from time to time after the Effective Date) hereto lists each Subsidiary of the
Borrower (and the direct and indirect ownership interests of the Borrower
therein), in each case existing on the Effective Date. Except as set forth on
Part 1 of such Schedule 4.08, each such Subsidiary existing on the date hereof
is, and, in the case of any additional corporate Subsidiaries formed after the
Effective Date, each of such additional corporate Subsidiaries will be at each
time that this representation is made or deemed to be made after the Effective
Date, a wholly-owned Subsidiary that is a corporation duly incorporated, validly
existing and, to the extent relevant in such jurisdiction, in good standing
under the laws of its jurisdiction of incorporation, and has all corporate
powers and all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted. Except as listed
on Part 2 of Schedule 4.08 (as such Schedule may be supplemented by a writing
delivered by the Borrower to the Bank from time to time after the Effective
Date), neither the Borrower nor any of its Subsidiaries is engaged in any joint
venture or partnership with any other Person.
Section 4.09 FULL DISCLOSURE. All factual information (taken
as a whole) furnished by or on behalf of the Borrower or any of its Subsidiaries
in writing to the Bank for purposes of or in connection with this Agreement or
any transaction contemplated hereby is true and accurate in all material
respects on the date as of which such information is dated or certified and is
not incomplete by omitting to state any material fact necessary to make such
information (taken as a whole) not misleading at such time in light of the
circumstances under which such information was provided. Except for economic
trends generally known to the public affecting generally the industry in which
the Borrower and its Subsidiaries conduct their business, the Borrower has
disclosed to the Bank in writing any and all facts which materially and
adversely affect or may materially and adversely affect (to the extent the
Borrower can now reasonably foresee), the business, operations or financial
condition of the Borrower and its Consolidated Subsidiaries, taken as a whole,
or the ability of the Borrower to perform its obligations under this Agreement.
Section 4.10 TAX RETURNS AND PAYMENTS. Except as described in
Schedule 4.10 attached hereto and made a part hereof, each of the Borrower and
its Subsidiaries has filed all United States Federal income tax returns and all
other material tax returns, domestic and foreign, required to be filed by it and
has paid all taxes and assessments payable by it which have become due pursuant
to such returns or pursuant to any assessment received by the Borrower or any
Subsidiary, other than those not yet delinquent and except for those contested
in good faith. Each of the Borrower and its Subsidiaries has paid, or has
provided adequate reserves (in good faith judgment of the management of the
Borrower) for the payment of, all federal, state and foreign income taxes
applicable for all prior fiscal years and for the current fiscal year to the
date hereof.
- 10 -
Section 4.11 COMPLIANCE WITH ERISA. Each member of the ERISA
Group has fulfilled its obligations under the minimum funding standards of ERISA
and the Internal Revenue Code with respect to each Plan and is in compliance in
all material respects with the presently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Internal Revenue Code or (iii)
incurred any liability under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA.
Section 4.12 INTELLECTUAL PROPERTY. Each of the Borrower and
its Subsidiaries owns or possesses or holds under valid non-cancelable licenses
all Patents, Trademarks, service marks, trade names, copyrights, Licenses and
other intellectual property rights that are necessary for the operation of their
respective properties and businesses, and neither the Borrower nor any of its
Subsidiaries is in violation of any provision thereof. The Borrower and its
Subsidiaries conduct their business without infringement or claim of
infringement of any material license, patent, trademark, trade name, service
xxxx, copyright, trade secret or any other intellectual property right of others
and there is no infringement or claim of infringement by others of any material
license, patent, trademark, trade name, service xxxx, copyright, trade secret or
other intellectual property right of the Borrower and its Subsidiaries.
Section 4.13 NO BURDENSOME RESTRICTIONS. No contract, lease,
agreement or other instrument to which the Borrower or any of its Subsidiaries
is a party or by which any of its property is bound or affected, no charge,
corporate restriction, judgment, decree or order and no provision of applicable
law or governmental regulation has had or is reasonably expected to have a
Material Adverse Effect.
Section 4.14 ENVIRONMENTAL MATTERS. In the ordinary course of
its business, the Borrower conducts an ongoing review of the effect of
Environmental Laws on the business, operations and properties of the Borrower
and its Subsidiaries, in the course of which it identifies and evaluates
associated liabilities and costs (including, without limitation, any capital or
operating expenditures required for clean-up or closure of properties presently
or previously owned, any capital or operating expenditures required to achieve
or maintain compliance with environmental protection standards imposed by law or
as a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted at any such facility, any costs or liabilities in connection with
off-site disposal of wastes or Hazardous Substances, and any actual or potential
liabilities to third parties, including employees, and any related costs and
expenses). On the basis of this review, the Borrower has reasonably concluded
that such associated liabilities and costs, including the costs of compliance
with Environmental Laws, are unlikely to have a material adverse effect on the
business, financial condition, results of operations or prospects of the
Borrower and its Consolidated Subsidiaries, considered as a whole.
Section 4.15 ACCOUNTS. With respect to each Account, all
records, papers and documents relating thereto (if any) are genuine and in all
respects what they purport to be, and all papers and documents (if any) relating
thereto: (i) represent legal, valid and binding obligations of the respective
Account Debtor, subject to adjustments customary in the business of the
Borrower, with respect to unpaid indebtedness incurred by such Account Debtor in
respect of the performance of labor or services or the sale or lease and
delivery of the merchandise listed therein, or both, (ii) are the only original
writings evidencing and embodying such obligation of the Account Debtor named
therein (other than copies created for general accounting purposes) and are in
compliance with all applicable federal, state and local laws and applicable laws
of any relevant foreign jurisdiction.
ARTICLE V
COVENANTS
- 11 -
The Borrower agrees that, so long as the Bank has any
Commitment hereunder or any Obligation remains unpaid:
Section 5.01 INFORMATION. The Borrower will deliver or
cause to be delivered to the Bank:
(a) Annual Financial Statements. As soon as available and in
any event within 120 days after the end of each fiscal year of the Borrower, a
consolidated and consolidating balance sheet of the Borrower and all
Consolidated Subsidiaries as of the end of such fiscal year and the related
consolidated and consolidating statements of income and cash flows for such
fiscal year, setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and accompanied by an opinion
thereon by Coopers & Xxxxxxx or other independent public accountants
satisfactory to the Bank, which opinion shall not be qualified as to the scope
of the audit and which shall state that such consolidated financial statements
present fairly the consolidated financial position of the Borrower and its
Consolidated Subsidiaries as of the date of such financial statements and the
results of their operations for the period covered by such financial statements
in conformity with generally accepted accounting principles applied on a
consistent basis (except for changes in the application of which such
accountants concur) and shall not contain any "going concern" or like
qualification or exception or qualification arising out of the scope of the
audit.
(b) Quarterly Financial Statements. As soon as available and
in any event within 50 days after the end of each quarter of each fiscal year of
the Borrower, a consolidated and consolidating balance sheet of the Borrower and
all Consolidated Subsidiaries as of the end of such fiscal quarter (with all
supporting schedules), the related consolidated and consolidating statements of
income and cash flows of the Borrower and all Consolidated Subsidiaries for such
quarter, and a profit and loss statement of the Borrower and its Consolidated
Subsidiaries, setting forth in each case in comparative form the figures for the
corresponding quarter of the Borrower's previous fiscal year, all certified
(subject to normal year-end audit adjustments) as to fairness of presentation,
generally accepted accounting principles and consistency by the chief financial
officer or chief accounting officer of the Borrower.
(c) Officer's Certificate. Simultaneously with the delivery of
each set of financial statements referred to in subsections (a) and (b) above, a
certificate of the chief financial officer or chief accounting officer of the
Borrower, (i) if applicable, setting forth in reasonable detail the calculations
required to establish whether the Borrower was in compliance with the
requirements of Sections 5.12, 5.15, and 5.19 through 5.22, on the date of such
financial statements, (ii) stating whether there exists on the date of such
certificate any Default and, if any Default then exists, setting forth the
details thereof and the action which the Borrower is taking or proposes to take
with respect thereto, and (iii) stating whether, since the date of the most
recent previous delivery of financial statements pursuant to subsections (a) and
(b) of this Section, there has been any material adverse change in the condition
(financial or otherwise), results of operations, properties, assets, business or
prospects of the Borrower or of the Borrower and all Consolidated Subsidiaries,
considered as a whole, and, if so, the nature of such material adverse change.
(d) Accountant's Certificate. Simultaneously with the delivery
of each set of financial statements referred to in subsection (a) above, a
statement of the firm of independent public accountants which reported on such
statements as to whether anything has come to their attention to cause them to
believe that any Default existed on the date of such statements and whether the
Borrower is in compliance with the financial covenants set forth in the Loan
Documents, and confirming the calculations set forth in the officer's
certificate delivered simultaneously therewith pursuant to subsection (c) above.
(e) Borrowing Base Certificate. As soon as available and in
any event within 10 days after the end of each calendar month, a Borrowing Base
Certificate executed by the chief financial officer or chief accounting officer
of each Borrower setting forth the Alcore Borrowing Base and the Xxxx Borrowing
Base,
- 12 -
respectively, as of the last Business Day of such month, each of which
certificates shall include Eligible Accounts, Eligible Inventory, their advance
rates, the then applicable Machinery and Equipment Advance (as reduced that
month), and the aggregate amount of Loans outstanding to each Borrower.
(f) Accounts Receivable, Account Payable Agings and Inventory
Reports. As soon as available and in any event within 10 business days after the
end of each calendar month:
(i) a report listing all Accounts of each Borrower as
of the last Business Day of such month, which report shall
include a detailed listing or the amount and age of each
Account, a summary listing with the name and mailing address
of each Account Debtor, the original date of each invoice, a
reconciliation statement, and such other information as the
Bank may require in order to verify the Eligible Accounts, all
in reasonable detail and in form satisfactory to the Bank;
(ii) a report listing all Inventory of each Borrower
as of the last Business Day of such month, which shall include
the cost and location thereof and such other information as
the Bank may require in order to verify the Eligible Inventory
(including, without limitation, individual values for raw
materials, work-in-progress, finished products and any
inventory obsolescence), all in reasonable detail and in form
satisfactory to the Bank; and
(iii) a report listing all accounts payable of each
Borrower (including a detailed aging of payables by total and
a summary aging of payables by vendor and vendor address, a
reconciliation statement and original invoice dates) in
reasonable detail and in form satisfactory to the Bank.
(g) Default. Forthwith upon the occurrence of any Default, a
certificate of the chief financial officer or chief accounting officer of
the Borrower setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto.
(h) Litigation. As soon as reasonably practicable after
obtaining knowledge of the commencement of, or of a material threat of the
commencement of, an action, suit, proceeding or investigation against the
Borrower or any of its Subsidiaries which could materially adversely
affect the condition (financial or otherwise), results of operations,
properties, assets, business or prospects of the Borrower and its
Consolidated Subsidiaries, considered as a whole, or could otherwise have
a Material Adverse Effect or which in any manner questions the validity of
this Agreement or any of the other transactions contemplated hereby or
thereby, an explanation of the nature of such pending or threatened
action, suit, proceeding or investigation and such additional information
as may be reasonably requested by the Bank.
(i) Auditors' Management Letters. Promptly upon receipt
thereof, copies of each report submitted to the Borrower or any of its
Consolidated Subsidiaries by independent public accountants in connection
with any annual, interim or special audit made by them of the books of the
Borrower or any of its Consolidated Subsidiaries including, without
limitation, each report submitted to the Borrower or any of its
Consolidated Subsidiaries concerning its accounting practices and systems
and any final comment letter submitted by such accountants to management
in connection with the annual audit of the Borrower and its Consolidated
Subsidiaries.
(j) Tax Returns. Within 30 days after filing, copies of (i)
all federal, state and local income tax returns filed by the Borrower or
any Subsidiary, (ii) all quarterly reports by the Borrower or any
Subsidiary on Form 941 and (iii) all annual FUTA tax returns of the
Borrower or any Subsidiary.
(k) ERISA Matters. If and when any member of the ERISA Group
(i) gives or is required to give notice to the PBGC of any "reportable
event" (as defined in Section 4043 of ERISA) with respect to any Plan
which might constitute grounds for a termination of such Plan under Title
IV of ERISA, or knows that the
- 13 -
plan administrator of any Plan has given or is required to give notice of
any such reportable event, a copy of the notice of such reportable event
given or required to be given to the PBGC; (ii) receives notice of
complete or partial withdrawal liability under Title IV of ERISA or notice
that any Multiemployer Plan is in reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives notice from the PBGC
under Title IV of ERISA of an intent to terminate, impose liability (other
than for premiums under Section 4007 of ERISA) in respect of, or appoint a
trustee to administer any Plan, a copy of such notice; (iv) applies for a
waiver of the minimum funding standard under Section 412 of the Internal
Revenue Code, a copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of such notice
and other information filed with the PBGC; (vi) gives notice of withdrawal
from any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or
(vii) fails to make any payment-or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could
reasonably be expected to result in the imposition of a Lien or the
posting of a bond or other security, a certificate of the chief financial
officer or the chief accounting officer of the Borrower setting forth
details as to such occurrence and action, if any, which the Borrower or
applicable member of the ERISA Group is required or proposes to take.
(l) Reports and Proxies. The Borrower shall deliver to the
Bank: (i) prior to or simultaneously with its annual financial statements,
copies of all 10K's, (ii) prior to or simultaneously with its quarterly
financial statements, (A) copies of all 10-Q's, and (B) a current backlog
report, and (iii) promptly following the date of items, copies of all other
financial statements, reports, notices and proxy statements which are sent to
stockholders of the Borrower or its Consolidated Subsidiaries, and all regular
and periodic reports required to be filed by Borrower or its Consolidated
Subsidiaries with any governmental agency or authority.
(m) Environmental Matters. Promptly, upon receipt of any
complaint, order, citation, notice or other written communication from any
Person with respect to, or upon the Borrower's obtaining knowledge of, (i) the
existence or alleged existence of a violation of any applicable Environmental
Law in connection with any property now or previously owned, leased or operated
by the Borrower or any of its Subsidiaries, (ii) any release on such property or
any part thereof in a quantity that is reportable under any applicable
Environmental Law and (iii) any pending or threatened proceeding for the
termination, suspension or non-renewal of any permit required under any
applicable Environmental Law, in each case in which there is a reasonable
likelihood of an adverse decision or determination which could result in a
Material Adverse Effect.
(n) Other Information. From time to time such additional
financial or other information regarding the condition (financial or otherwise),
results of operations, properties, assets, business or prospects of the Borrower
or any of its Subsidiaries as the Bank may reasonably request.
Section 5.02 PAYMENT OF OBLIGATIONS. The Borrower will pay and
discharge, and will cause each of its Subsidiaries to pay and discharge, as the
same shall become due and payable, (i) all their respective obligations and
liabilities, including all claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like persons which, in any such
case, if unpaid, might by law give rise to a Lien upon any of their properties
or assets and (ii) all lawful taxes, assessments and charges or levies made upon
their properties or assets, by any governmental body, agency or official, except
where any of the items in clause (i) or (ii) of this Section 5.02 may be
diligently contested in good faith by appropriate proceedings and the Borrower
or such Subsidiary shall have set aside on its books, if required under
generally accepted accounting principles, appropriate reserves for the accrual
of any such items.
Section 5.03 MAINTENANCE OF PROPERTY; INSURANCE.
(a) Maintenance of Properties. The Borrower will keep, and
will cause each of its Subsidiaries to keep, all property useful and necessary
in their respective businesses in good working order and condition, subject to
ordinary wear and tear.
- 14 -
(b) Insurance. The Borrower will maintain, and will cause each
of its Subsidiaries to maintain, insurance with financially sound and
responsible companies in such amounts (and with such risk retentions) and
against such risks as is usually carried by owners of similar businesses and
properties in the same general areas in which the Borrower and its Subsidiaries
operate. The Borrower will deliver to the Bank upon request from time to time
full information as to the insurance carried.
Section 5.04 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE.
The Borrower will continue, and will cause each of its Subsidiaries to continue,
to engage in business of the same general type as now conducted by the Borrower
and its Subsidiaries, and will preserve, renew and keep in full force and
effect, and will cause each of its Subsidiaries to preserve, renew and keep in
full force and effect, their respective corporate existence and their respective
rights, privileges and franchises necessary or desirable in the normal conduct
of business; provided that nothing in this Section 5.04 shall prohibit the
merger of a Subsidiary into the Borrower or the merger or consolidation of a
Subsidiary with or into another Person if the corporation surviving such
consolidation or merger is a Subsidiary and if, in each case, after giving
effect thereto, no Default shall have occurred.
Section 5.05 COMPLIANCE WITH LAWS. The Borrower will comply,
and will cause each of its Subsidiaries to comply, with all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
(including, without limitation, Environmental Laws, ERISA and the rules and
regulations thereunder) except (i) where the necessity of compliance therewith
is contested in good faith by appropriate proceedings or (ii) where
noncompliance could not reasonably be expected to have a Material Adverse
Effect. Section 5.06 ACCOUNTING; INSPECTION OF PROPERTY, BOOKS AND RECORDS. The
Borrower will keep, and will cause each of its Subsidiaries to keep, proper
books of record and account in which full, true and correct entries in
conformity with generally accepted accounting principles shall be made of all
dealings and transactions in relation to their respective businesses and
activities, will maintain, and will cause each of its Subsidiaries to maintain,
their respective fiscal reporting periods on the present basis and will permit,
and will cause each of its Subsidiaries to permit, representatives of the Bank
to visit and inspect any of their respective properties, to examine and make
copies from any of their respective books and records and to discuss their
respective affairs, finances and accounts with their officers, employees and
independent public accountants, all at such reasonable times and as often as may
reasonably be desired.
Section 5.07 COLLECTION OF ACCOUNTS. The Borrower shall use
its best efforts to cause to be collected from each Account Debtor, as and when
due, any and all amounts owing under or on account of each Account (including,
without limitation, Accounts which are delinquent, such Accounts to be collected
in accordance with lawful collection procedures) and shall apply forthwith upon
receipt thereof all such amounts as are so collected to the outstanding balance
of such Account. The Borrower shall not rescind or cancel any indebtedness or
obligation evidenced by any Account, modify, make adjustments to, extend, renew,
compromise or settle any material dispute, claim, suit or legal proceeding
relating to or sell or assign any Account, or interest therein, without the
prior written consent of the Bank, except that, subject to the rights of the
Bank under the Loan Documents, if a Default or an Event of Default shall have
occurred and be continuing, the Borrower may allow in the ordinary course of
business as adjustments to amounts owing under its Accounts (i) an extension or
renewal of the time or times of payment, or settlement for less than the total
unpaid balance, which the Borrower finds appropriate in accordance with sound
business judgment and (ii) a refund or credit due as a result of discounts,
over-xxxxxxxx and miscellaneous credits, all in accordance with the Borrower's
ordinary course of business consistent with its historical collection practices.
The costs and expenses (including, without limitation, attorneys' fees) of
collection, whether incurred by the Borrower or the Bank, shall be borne by the
Borrower.
Section 5.08 NOTIFICATION TO ACCOUNT DEBTORS. Upon the
effectiveness of this Agreement, the Borrower will promptly notify each Account
Debtor in respect of any Account or Instrument that any payments due or to
become due in respect of such Collateral are to be made in the name of the
Borrower to such address and post office box as shall be specified by the Bank.
Except as set forth in Section 3.04 of the Security Agreement, each such payment
shall, upon receipt by the Bank, be deposited in the Operating Account in
accordance with Section 2.08(c). Upon the occurrence of a Default or an Event of
Default, the Borrower will promptly notify (and the Borrower
- 15 -
hereby authorizes the Bank so to notify) each Account Debtor in respect of any
Account or Instrument that such Collateral has been assigned to the Bank and
that any payments due or to become due in respect of such Collateral are to be
made directly to the Bank in accordance with Section 3.04 of the Security
Agreement.
Section 5.09 RESTRICTION ON LIENS. The Borrower will not, and
will not permit any of its Subsidiaries to, create, incur, assume or suffer to
exist any Lien upon or with respect to any property or assets of any kind (real
or personal, tangible or intangible) of the Borrower or any such Subsidiary
whether now owned or hereafter acquired, or sell any such property or assets
subject to an understanding or agreement, contingent or otherwise, to repurchase
such property or assets (including sales of accounts receivable or notes with
recourse to the Borrower or any of its Subsidiaries) or assign any right to
receive income, or file or permit the filing of any financing statement under
the Uniform Commercial Code as in effect in any applicable jurisdiction or any
other similar notice of Lien under any similar recording or notice statute;
provided that the provisions of this Section 5.09 shall not prevent the
creation, incurrence, assumption or existence of the following (with such Liens
described below being herein referred to as "Permitted Liens"):
(a) Liens created by the Loan Documents;
(b) other Liens in favor of the Bank;
(c) Liens for taxes not yet due or Liens for taxes being contested in
good faith and by appropriate proceedings for which adequate reserves (in the
good faith judgment of the management of the Borrower) have been established;
(d) Liens imposed by law securing the charges, claims, demands or
levies of carriers, warehousemen, mechanics and other like persons which were
incurred in the ordinary course of business which (A) do not in the aggregate
materially detract from the value of the property or assets subject to such Lien
or materially impair the use thereof in the operation of the business of the
Borrower or any Subsidiary or (B) are being contested in good faith by
appropriate proceedings, which proceedings have the effect of preventing the
forfeiture or sale of the property or assets subject to such lien; and
(E) LIENS (OTHER THAN ANY LIENS IMPOSED BY ERISA OR PURSUANT TO ANY
ENVIRONMENTAL LAW) NOT SECURING DEBT OR DERIVATIVES OBLIGATIONS INCURRED OR
DEPOSITS MADE IN THE ORDINARY COURSE OF BUSINESS IN CONNECTION WITH WORKERS'
COMPENSATION, UNEMPLOYMENT INSURANCE AND OTHER TYPES OF SOCIAL SECURITY, OR TO
SECURE THE PERFORMANCE OF TENDERS, STATUTORY OBLIGATIONS, SURETY BONDS (OTHER
THAN APPEAL BONDS), BIDS, LEASES, GOVERNMENT CONTRACTS, PERFORMANCE AND
RETURN-OF-MONEY BONDS AND OTHER SIMILAR OBLIGATIONS INCURRED IN THE ORDINARY
COURSE OF BUSINESS.
The parties acknowledge that Alcore intends (a) to purchase the land
and the building presently being leased by Alcore at 0000 Xxxxx Xxxx Xxxx,
Xxxxxxx, Xxxxxxxx, as well certain additional land and equipment, and (b) to
finance such purchase with tax-exempt financing to be provided by the Maryland
Industrial Development Finance Authority ("MIDFA") and either the Bank or
another lender. In the event that such tax-exempt financing is provided by
another lender, the Bank agrees to subordinate its blanket lien covering the
Alcore Equipment to the lien of MIDFA and such other lender with respect to any
new equipment purchased with the proceeds of such tax-exempt financing, provided
that such new equipment is excluded from the Alcore Borrowing Base for purposes
of this Agreement.
Section 5.10 LIMITATION ON GUARANTEES. Neither the Borrower nor any of
its Subsidiaries shall Guarantee any Debt of any Person or Persons.
Section 5.11 NO VOLUNTARY PREPAYMENT OF SUBORDINATED DEBT AND LONG TERM
DEBT. Except as described in Schedule 5.11 attached hereto and made a part
hereof, the Borrower will not, and will not permit any of its Subsidiaries to,
directly or indirectly, redeem, retire, purchase, acquire, defease or otherwise
make any payment in respect of the principal of any Long Term Debt at a date in
advance of its legal obligations to do so.
Section 5.12 CONSOLIDATED CAPITAL EXPENDITURES. Unless previously
approved by the Bank, the
- 16 -
Borrower will not make any Consolidated Capital Expenditures for any fiscal year
in excess of $2,000,000, excluding Consolidated Capital Expenditures for the
purchase of, and improvements to, the facility currently leased by Alcore and
located at 0000 Xxxxx Xxxx Xxxx, Xxxxxxx, Xxxxxxxx.
Section 5.13 CHANGE OF MANAGEMENT. The Borrower will not make any
material change of management.
Section 5.14 INVESTMENTS; LINE OF BUSINESS. Neither the Borrower nor
any Subsidiary will make or acquire any Investment in any Person, exclusive of
loans and advances to employees in the ordinary course of business, which loans
or advances, in the aggregate, at any time in excess of $500,000 outstanding.
Section 5.15 LIMITATION ON DEBT. Unless previously approved by the Bank
in writing, neither Borrower nor any of its Consolidated Subsidiaries shall,
directly or indirectly, become liable for any Consolidated Debt, contingent or
direct, if, giving effect to such additional Debt on a pro forma basis, causes
the aggregate amount of Borrower's Debt, excluding Debt outstanding with the
Bank, to exceed $500,000.
Section 5.16. CHANGE IN FISCAL YEAR. The Borrower shall not, without
the Bank's prior consent, change its fiscal year.
Section 5.17 USE OF PROCEEDS. The proceeds of the Loans made under this
Agreement will be used by the Borrower to (a) finance accounts receivable and
inventory purchases of the Borrower, (b) refinance existing term debt of the
Borrower, (c) finance working capital needs of the Borrower, and (d) satisfy
short-term financing needs for Equipment purchases. No such use of the proceeds
for general corporate purposes will be, directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of buying or carrying any "margin
stock" within the meaning of Regulation U.
Section 5.18 TRANSACTIONS WITH OTHER PERSONS. The Borrower will not,
and will not permit any of its Subsidiaries to, enter into any agreement with
any Person whereby any of them shall agree to any restriction on the right of
the Borrower or any of its Subsidiaries to amend or waive any of the provisions
of this Agreement or any other Loan Document.
Section 5.19 CONSOLIDATED CURRENT RATIO. The Consolidated Current
Ratio of Borrower, measured quarterly, shall not be less than 1.00 to 1.00.
Section 5.20 MINIMUM CONSOLIDATED TANGIBLE NET WORTH. Consolidated
Tangible Net Worth, measured quarterly, will at no time be less than $9,800,000.
Section 5.21 CONSOLIDATED DEBT TO CONSOLIDATED TANGIBLE NET WORTH. The
ratio of (i) Consolidated Debt (including Subordinated Debt) to (ii)
Consolidated Tangible Net Worth, will not exceed 1.00 to 1.00, measured
quarterly.
Section 5.22 CONSOLIDATED CASH FLOW COVERAGE RATIO. The Consolidated
Cash Flow Coverage Ratio will not be less than 1.25 to 1.00, measured quarterly.
Section 5.23 CASH MANAGEMENT RELATIONSHIP. Each Borrower will maintain
its cash management accounts with the Bank.
Section 5.24 DEPOSIT RELATIONSHIP. Each Borrower will maintain its
primary depository relationship with the Bank. The parties hereto acknowledge
and agree that Xxxx may maintain its payroll account in New York with a
financial institution other than the Lender.
Section 5.25 INDEPENDENCE OF COVENANTS. All covenants contained herein
shall be given independent
- 17 -
effect so that if a particular action or condition is not permitted by any of
such covenants, the fact that such action or condition would be permitted by an
exception to, or otherwise be within the limitations of another covenant shall
not avoid the occurrence of a Default if such action is taken or condition
exists.
ARTICLE VI
DEFAULTS
Section 6.01 EVENTS OF DEFAULT. If one or more of the following events
("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of the Loans
or shall fail to pay any interest on the Loans, any fee or any other amount
payable hereunder or under the Note;
(b) the Borrower shall fail to observe or perform any covenant
contained in Article V (other than those contained in Sections 5.01 through
5.06);
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clauses (i)
or (ii) above) for 30 days after notice thereof has been given to the Borrower
by the Bank;
(d) any representation, warranty, certification or statement made by
the Borrower in this Agreement or in any certificate, financial statement or
other document delivered pursuant hereto or thereto shall prove to have been
incorrect in any material respect when made;
(e) the Borrower or any Subsidiary shall fail to make any payment or
perform any collateralization obligation with respect to any Material Financial
Obligations when due or within any applicable grace period;
(f) the Borrower shall default in the payment or performance of any
term, covenant, agreement or condition in any loan agreement, credit agreement,
note, deed of trust, security agreement, pledge agreement or other contract
securing or evidencing payment of any indebtedness to the Bank or any Affiliate
or Subsidiary of the Bank, other than the Loan.
(g) the Borrower or any Subsidiary shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing;
(h) an involuntary case or other proceeding shall be commenced against
the Borrower or any Subsidiary seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days; or an order for
relief shall be entered against the Borrower or any Subsidiary under the federal
Bankruptcy laws as now or hereafter in effect;
(i) any member of the ERISA Group shall fail to pay when due an amount
or amounts aggregating in excess of $25,000 which it shall have become liable to
pay under Title IV of ERISA; or notice of intent to terminate a
- 18 -
Material Plan shall be filed under Title IV of ERISA by any member of the ERISA
Group, any plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or to cause a trustee to be appointed to administer any Material Plan; or a
condition shall exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or default, within the meaning of
Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans
which could reasonably be expected to cause one or more members of the ERISA
Group to incur a current payment obligation in excess of $25,000;
(j) one or more judgments, orders for the payment of money, writs of
attachment or garnishment against any property or debt due Borrower, or tax lien
against any property or debt of Borrower, in excess of $500,000 in the aggregate
shall be rendered against the Borrower or any Subsidiary of the Borrower and
such judgments or orders shall continue unsatisfied and unstayed for a period of
30 days;
(k) (A) the Bank shall in good faith determine that its prospect of
receiving payment in full of the Obligations then outstanding or its ability to
exercise its rights and remedies hereunder and under the other Loan Documents
has been impaired, (B) an event or condition shall have occurred since the
Effective Date which has or could reasonably be expected to have a Material
Adverse Effect or (C) the Bank shall reasonably suspect that one or more Events
of Default have occurred, and the Borrower, upon 30 days' notice thereof by the
Bank, shall have failed to provide reasonably satisfactory evidence to the Bank
that such Events of Default have not in fact occurred;
then, and in every such event, while such event is continuing, the Bank may (A)
by notice to the Borrower terminate the Commitment and it shall thereupon
terminate, and (B) by notice to the Borrower declare the Loans (together with
accrued interest thereon) to be, and the Loans shall thereupon become,
immediately due and payable without presentment, demand, protest or other notice
of any kind (except as set forth in clause (A) above), all of which are hereby
waived by the Borrower; provided that in the case of any Default or any Event of
Default specified in clause 6.01(g) or 6.01(h) above with respect to the
Borrower, without any notice to the Borrower or any other act by the Bank, the
Commitment shall thereupon terminate and the Loans (together with accrued
interest and accrued and unpaid fees thereon) shall become immediately due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower.
ARTICLE VII
CHANGE IN CIRCUMSTANCES
Section 7.01 UNAVAILABILITY OF INTEREST RATE. If, at any time, (a) the
Bank shall determine that, by reasons of circumstances affecting foreign
exchange and interbank markets generally, the London Interbank Offered Rate in
the applicable amounts are not being offered to the Bank; or (b)a new, or a
revision in any existing law or interpretation or administration (including
reversals) thereof, by any government authority, central bank or comparable
agency shall make it unlawful or impossible for the Bank to honor its
obligations under this Agreement, (i) the Bank's obligation to make, maintain or
convert into the Adjusted London Interbank Offered Rate shall be suspended; and
(ii) the applicable the Adjusted London Interbank Offered Rate shall immediately
be converted to the Base Rate for the remainder of the applicable interest
period. The Bank shall forthwith give notice thereof to the Borrower, whereupon
until the Bank notifies the Borrower that the circumstances giving rise to such
suspension no longer exist, (i) the obligations of the Bank to make Loans at the
LIBOR-based Rate shall be suspended and (ii) each outstanding Loan shall be
converted into a Base Rate Loan on the date of such determination. Unless the
Borrower notifies the Bank at least two Business Days before the date of any
Loan for which a Notice of Borrowing has previously been given that it elects
not to borrow on such date, such Loan shall instead be made as a Base Rate Loan.
Section 7.02 ILLEGALITY. If, on or after the date of this Agreement,
the adoption of any applicable law,
- 19 -
rule or regulation, or any change in any applicable law, rule or regulation, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for the Bank to make,
maintain or fund Loans and the Bank shall so notify the Borrower, until the Bank
notifies the Borrower that the circumstances giving rise to such suspension no
longer exist, the obligation of the Bank to make Loans shall be suspended. If
such notice is given, each Loan then outstanding which bears interest at the
LIBOR-based Rate shall be converted immediately to a Base Rate Loan.
Section 7.03 INCREASED COST AND REDUCED RETURN.
(a) Increased Costs. If on or after the date hereof, the adoption of
any applicable law, rule or regulation, or any change in any applicable law,
rule or regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by the Bank
with any request or directive (whether or not having the force of law) of any
such authority, central bank or comparable agency:
(i) shall subject the Bank to any tax, duty or other charge
with respect to its Loans, the Note or its obligation to make Loans, or
shall change the basis of taxation of payments to the Bank of the
principal of or interest on its Loans or any other amounts due under
this Agreement in respect of its Loans or its obligation to make Loans
(except for changes in the rate of tax on the overall net income of the
Bank imposed by the jurisdiction in which the Bank's principal
executive office is located); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any such requirement imposed by the
Board of Governors of the Federal Reserve System, but excluding any
such requirement included in an applicable Euro-Dollar Reserve
Percentage, special deposit, insurance assessment or similar
requirement against assets of, deposits with or for the account of,
letters of credit issued or participated in by, or other credit
extended by, the Bank or shall impose on the Bank or on the United
States market for certificates of deposit or the London interbank
market any other condition affecting its Loans, the Note or its
obligation to make Loans;
and the result of any of the foregoing is to increase the cost to the Bank of
making or maintaining any Loan, or to reduce the amount of any sum received or
receivable by the Bank under this Agreement or under the Note with respect
thereto, by an amount deemed by the Bank to be material, then, within 30
Business Days after demand by the Bank, the Borrower shall pay to the Bank such
additional amount or amounts, as determined by the Bank in good faith, as will
compensate the Bank for such increased cost or reduction.
(b) Capital Adequacy. If the Bank shall have determined that, after the
date hereof, the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change in any such law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on capital of the Bank (or its Parent) as a consequence of the Bank's
obligations hereunder to a level below that which the Bank could have achieved
but for such adoption, change, request or directive (taking into consideration
its policies with respect to capital adequacy) by an amount deemed by the Bank
to be material, then from time to time, within 30 Business Days after demand by
the Bank, the Borrower shall pay to the Bank such additional amount or amounts
as will compensate the Bank (or its Parent) for such reduction.
(c) Notices. The Bank will promptly notify the Borrower of any event of
which it has knowledge, occurring after the date hereof, that will entitle the
Bank to compensation pursuant to this Section. A certificate of the Bank
claiming compensation under this Section and setting forth in reasonable detail
the additional amount or amounts
- 20 -
to be paid to it hereunder shall be conclusive in the absence of manifest error.
In determining such amount, the Bank may use any reasonable averaging and
attribution methods.
Section 7.04 BASE RATE LOANS SUBSTITUTED FOR AFFECTED LIBOR-BASED
LOANS. If (i) the obligation of the Bank to make or maintain Loans has been
suspended pursuant to Section 7.02 or (ii) the Bank has demanded compensation
under Section 7.03(a) with respect to its Loans and the Borrower shall, by at
least four Business Days' prior notice to the Bank have elected that the
provisions of this Section shall apply, then, unless and until the Bank notifies
the Borrower that the circumstances giving rise to such suspension or demand for
compensation no longer apply:
(a) all Loans shall be Base Rate Loans, and
(b) after each of the Loans, as the case may be, has been
repaid (or converted to a Base Rate Loan), all payments of principal that would
otherwise be applied to repay such Loans shall be applied to repay the Base Rate
Loans instead.
If the Bank notifies the Borrower that the circumstances giving rise to such
notice no longer apply, the principal amount of each such Base Rate Loan shall
cease immediately to constitute a Base Rate Loan and shall thereafter bear
interest in accordance with Section 2.05(a).
ARTICLE VIII
MISCELLANEOUS
Section 8.01 NOTICES. Unless otherwise specified herein, all
notices, requests and other communications to a party hereunder shall be in
writing (including bank wire, telex, facsimile transmission or similar writing)
and shall be given to such party: (i) at its address, facsimile number or telex
number set forth on the signature pages hereof, or (ii) at such other address,
facsimile number or telex number as such party may hereafter specify for the
purpose of communication hereunder by notice to the other party hereto. Each
such notice, request or other communication shall be effective (i) if given by
telex, when such telex is transmitted to the telex number specified in this
Section and the appropriate answer back is received, (ii) if given by facsimile
transmission, when transmitted to the facsimile number specified in this Section
and confirmation of receipt is received, (iii) if given by mail, 72 hours after
such communication is deposited in the mails, certified mail, return receipt
requested, with appropriate first class postage prepaid, addressed as specified
in this Section or (iv) if given by any other means, when delivered at the
address specified in this Section 8.01. Rejection or refusal to accept, or the
inability to deliver because of a changed address of which no notice was given
shall not affect the validity of notice given in accordance with this Section.
Section 8.02 NO WAIVERS. No failure by the Bank to exercise,
no course of dealing with respect to, and no delay in exercising any right,
power or privilege hereunder or under the Note shall operate as a waiver thereof
nor shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies provided herein shall be cumulative and not exclusive of any
rights or remedies provided by law.
Section 8.03 EXPENSES; INDEMNIFICATION.
- 21 -
(a) Expenses. With the exception of the Bank's legal fees and
expenses incurred in connection with the preparation of the Loan Documents and
the closing of the Line of Credit which shall be paid for by the Bank, the
Borrower shall pay (i) all out-of-pocket expenses of the Bank, including fees
and disbursements of special and local counsel for the Bank, in connection with
the preparation and administration of this Agreement and the other Loan
Documents, any waiver or consent thereunder or any amendment thereof or any
Default or alleged Default thereunder and (ii) if an Event of Default occurs,
all out-of-pocket expenses incurred by the Bank, including (without duplication)
the fees and disbursements of outside counsel, in connection with such Event of
Default and collection, bankruptcy, insolvency and other enforcement proceedings
resulting therefrom.
(b) Indemnity in Respect of Loan Documents. The Borrower
agrees to indemnify the Bank, its affiliates and the respective directors,
officers, trustees, agents and employees of the foregoing (each an "Indemnitee")
and hold each Indemnitee harmless from and against any and all liabilities,
losses, damages, costs and expenses of any kind, including, without limitation,
the reasonable fees and disbursements of counsel, which may be incurred by such
Indemnitee in connection with any investigative, administrative or judicial
proceeding (whether or not such Indemnitee shall be designated a party thereto)
brought or threatened relating to or arising out of this Agreement or any actual
or proposed use of proceeds of Loans hereunder; provided that no Indemnitee
shall have the right to be indemnified hereunder for such Indemnitee's own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction.
(c) Indemnity in Respect of Environmental Liabilities. The
Borrower hereby indemnifies the Bank from and against and agrees to hold each of
them harmless from any and all liabilities, losses, damages, costs and expenses
of any kind (including without limitation reasonable expenses of investigation
by engineers, environmental consultants and similar technical personnel and
reasonable fees and disbursements of counsel) of the Bank arising out of, in
respect of or in connection with any and all violations or alleged violations of
Environmental Laws. Without limiting the generality of the foregoing, the
Borrower hereby waives all rights for contribution or any other rights of
recovery with respect to liabilities, losses, damages, costs and expenses
arising under or related to Environmental Laws that it might have by statute or
otherwise against the Bank.
Section 8.04 AMENDMENTS AND WAIVERS. Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Borrower and the Bank.
Section 8.05 SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Borrower may not
assign or otherwise transfer any of its rights under this Agreement without the
prior written consent of the Bank.
Section 8.06 GOVERNING LAW. This Agreement and the Note
shall be governed by and construed in accordance with the laws of the State of
Maryland.
Section 8.07 ARBITRATION; SUBMISSION TO JURISDICTION.
(a) Upon demand of any party hereto, whether made before or
after institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Agreement, the Note or any
other Loan Document ("Disputes") between parties to this Agreement shall be
resolved by binding arbitration as provided herein. Institution of a judicial
proceeding by a party does not waive the right of that party to demand
arbitration hereunder. Disputes may include, without limitation, tort claims,
counterclaims, disputes as to whether a matter is subject to arbitration, claims
brought as class actions, claims arising from loan documents executed in the
future, or claims arising out of or connected with the transaction reflected by
this Agreement.
Arbitration shall be conducted under and governed by the
Commercial Financial Disputes Arbitration Rules (the "Arbitration Rules") of the
American Arbitration Association (the "AAA") and Title 9 of the U.S. Code. All
- 22 -
arbitration hearings shall be conducted in the city in which is located the
office of the Bank identified in Section 8.01 as the place where notices are to
be sent to the Bank. The expedited procedures set forth in Rule 51 et seq. of
the Arbitration Rules shall be applicable to claims of less than $1,000,000. All
applicable statutes of limitation shall apply to any Dispute. A judgment upon
the award may be entered in any court having jurisdiction. The panel from which
all arbitrators are selected shall be comprised of licensed attorneys. The
single arbitrator selected for expedited procedure shall be a retired judge from
the highest court of general jurisdiction, state or federal, of the state where
the hearing will be conducted or if such person is not available to serve, the
single arbitrator may be a licensed attorney. Notwithstanding the foregoing,
this arbitration provision does not apply to disputes under or related to
Derivatives Obligations.
(b) Notwithstanding the preceding binding arbitration
provisions, the Bank and the Borrower agree to preserve, without diminution,
certain remedies that any party hereto may employ or exercise freely,
independently or in connection with an arbitration proceeding or after an
arbitration action is brought. The Bank and the Borrower shall have the right to
proceed in any court of proper jurisdiction or by self-help to exercise or
prosecute the following remedies, as applicable: (i) all rights to foreclose
against any real or personal property or other security by exercising a power of
sale granted under any Loan Document or under applicable law or by judicial
foreclosure and sale, including a proceeding to confirm the sale; (ii) all
rights of self-help including peaceful occupation of real property and
collection of rents, set-off, and peaceful possession of personal property;
(iii) obtaining provisional or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of receiver and filing an
involuntary bankruptcy proceeding; and (iv) when applicable, a judgment by
confession of judgment. Preservation of these remedies does not limit the power
of an arbitrator to grant similar remedies that may be requested by a party in a
Dispute.
The Borrowers and the Bank agree that they shall not have a
remedy of punitive or exemplary damages against the other in any Dispute and
hereby waive any right or claim to punitive or exemplary damages they have now
or which may arise in the future in connection with any Dispute whether the
Dispute is resolved by arbitration or judicially.
(c) Any legal action or proceeding with respect to this
Agreement, the Note or any other Loan Document or any document related hereto or
thereto may be brought in the courts of the State of Maryland or of the United
States of America for the District of Maryland, and by execution and delivery of
this Agreement the Borrower hereby accepts for itself and in respect of its
property, generally and unconditionally, the nonexclusive jurisdiction of the
aforesaid courts. The Borrower hereby irrevocably and unconditionally waives any
objection, including without limitation, any objection to the laying of venue or
based on the grounds of the forum non conveniens which it now or hereafter may
have to the bringing of any action or proceeding in such respective
jurisdictions. Service of process in any such case may be had against the
Borrower by delivery in accordance with the notice provisions herein or as
otherwise permitted by law, and the Borrower agrees that such service shall be
valid in all respects for establishing personal jurisdiction over it.
Section 8.08 COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement and the Note constitute the entire agreement
and understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof. This Agreement shall become effective upon receipt by the Bank of
counterparts hereof signed by each of the parties hereto.
Section 8.09 CONFIDENTIALITY. The Bank agrees to hold all
non-public information obtained pursuant to the requirements of this Agreement
in accordance with its customary procedure for handling confidential information
of this nature and in accordance with safe and sound banking practices, provided
that nothing herein shall prevent any Bank from disclosing such information (i)
to any other Person if reasonably incidental to the administration of the Loans,
(ii) upon the order of any court or administrative agency, (iii) upon the
request or demand of any regulatory agency or authority, (iv) which had been
publicly disclosed other than as a result of a
- 23 -
disclosure by the Bank prohibited by this Agreement, (v) in connection with any
litigation to which the Bank or its subsidiaries or parent may be a party, (vi)
to the extent necessary in connection with the exercise of any remedy hereunder
and (vii) to the Bank's legal counsel and independent auditors. The Bank or
Bank's counsel may circulate promotional materials and place advertisements in
financial and other newspapers and periodicals or on a home page or similar
place for dissemination of information on the Internet or worldwide web after
the closing of the transactions contemplated by this Agreement in the form of a
"tombstone" or otherwise describing the name of the Borrower and the amount,
type and closing date of such transactions, all at their sole expense.
Section 8.10 WAIVER OF JURY TRIAL. Each Borrower waives trial
by jury in any action or proceeding to which such Borrower and Lender may be
parties, arising out of, in connection with or in any way pertaining to, this
Agreement, the Note, the Security Agreement or any of the other Loan Documents.
It is agreed and understood that this waiver constitutes a waiver of trial by
jury of all claims against all parties to such action or proceedings, including
claims against parties who are not parties to this Agreement. This waiver is
knowingly, willingly and voluntarily made by each Borrower, and each Borrower
hereby represents that no representations of fact or opinion have been made by
any individual to induce this waiver of trial by jury or to in any way modify or
nullify its effect. Each Borrower further represents and warrants that it has
been represented in the signing of this Agreement and in the making of this
waiver by independent legal counsel, or has had the opportunity to be
represented by independent legal counsel selected of its own free will, and that
it has had the opportunity to discuss this waiver with counsel.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
BORROWER:
XXXX INDUSTRIES, INC.
By:_____________________________(SEAL)
Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer and Chairman
0 Xxxxxxx Xxxxx Xxxx
Xxxx Xxxx, Xxx Xxxx 00000-0000
Facsimile No.:________________
ALCORE, INC.
By:_____________________________(SEAL)
Name: Xxxxxx X. Xxxxx
Title: President/General Manager
0000 Xxxxx Xxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile No.:__________________
- 24 -
FIRST UNION NATIONAL BANK OF
MARYLAND
By:_____________________________(SEAL)
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
0 Xxxx Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxxx
Facsimile No.:000-000-0000
- 25 -
Schedule 4.08
SUBSIDIARIES
PART I
PERCENT OF OUTSTANDING SHARES OF SUBSIDIARY
NAME OF SUBSIDIARY OWNED BY XXXX
------------------------------------------------- ------------------------------------------------
PERCENT OF OUTSTANDING SHARES OF SUBSIDIARY
NAME OF SUBSIDIARY OWNED BY ALCORE
------------------------------------------------- ------------------------------------------------
PART II
- 26 -
Schedule 5.09
BORROWER SECURED PARTY/LESSOR JURISDICTION FILING TYPE FILING NUMBER FILING DATE COLLATERAL DESCRIPTION
-------- -------------------- ------------ ----------- ------------- ----------- ----------------------
--------------------- ------------ ------------ -------------- ---------- -----------------------
- 1 -
EXHIBIT A
Form of Notice of Borrowing
_____________________, 199_
First Union National Bank of Maryland
0 Xxxx Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxxx
Ladies and Gentlemen:
This notice shall constitute a "Notice of Borrowing" pursuant
to Section 2.02(a) of the Credit Agreement dated as of November __, 1996 (the
"Credit Agreement") by and among Xxxx Industries, Inc., Alcore, Inc. and First
Union National Bank of Maryland. Capitalized terms not otherwise defined herein
have the meanings ascribed to them in the Credit Agreement.
We hereby represent and warrant that all of the information
set forth in the Borrowing Base Certificate attached hereto and made a part
hereof is true and correct as of the date of this notice.
The date of the Loan will be ________________, _________.
The principal amount of the Loan will be $__________________.
The Borrower of the Loan will be the Borrower whose name is set forth
below.
Transfer Instructions:
[Insert appropriate delivery instructions, which shall include bank and account
number].
[BORROWER NAME]
By:____________________________________
Name:_______________________________
Title:________________________________
- 1 -
EXHIBIT B
Form of Note
Baltimore, Maryland
November _, 1996
For value received, XXXX INDUSTRIES, INC., a Delaware
corporation, and ALCORE, INC., a Maryland corporation (collectively, the
"Borrower"), jointly and severally promise to pay to the order of FIRST UNION
NATIONAL BANK OF MARYLAND (the "Bank") the unpaid principal amount of each Loan
made by the Bank to the Borrower (and/or either of them) pursuant to the Credit
Agreement referred to below on the maturity date provided for in the Credit
Agreement. The Borrower promises to pay interest on the unpaid principal amount
of each such Loan on the dates and at the rate or rates provided for in the
Credit Agreement. All such payments of principal and interest shall be made in
accordance with the provisions of the Credit Agreement.
All Loans made by the Bank and all repayments of the principal
thereof shall be recorded by the Bank and, if the Bank so elects in connection
with any transfer or enforcement hereof, appropriate notations to evidence the
foregoing information with respect to each Loan then outstanding shall be
endorsed by the Bank on the schedule attached to and made a part hereof;
provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement.
This note is the Note referred to in the Credit Agreement [of
even date herewith] [dated as of November __, 1996], between the Borrower and
the Bank (as the same may be amended from time to time, the "Credit Agreement").
Terms defined in the Credit Agreement are used herein with the same meanings.
Reference is made to the Credit Agreement for provisions for the mandatory and
optional prepayment hereof and the acceleration of the maturity hereof.
ATTEST: XXXX INDUSTRIES, INC.
____________________ By __________________________SEAL)
Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer and
Chairman
[CORPORATE SEAL]
ALCORE, INC.
___________________ By:__________________________(SEAL)
Name: Xxxxxx X. Xxxxx
Title: President/General Manager
[CORPORATE SEAL]
- 2 -
LOANS AND PAYMENTS OF PRINCIPAL
Amount of UNPAID
BORROWER AMOUNT OF LOAN Principal PRINCIPAL NOTATION
DATE Repaid BALANCE MADE BY
============= ==================== ===================== ================== =================== ==================
============= ==================== ===================== ================== =================== ==================
- 1 -
First Union National Bank of ___________________
November __, 1996
Page 1
EXHIBIT C
Form of Opinion of Counsel
November __, 1996
First Union National Bank of Maryland
0 Xxxx Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
We have acted as counsel for Xxxx Industries, Inc., a Delaware
corporation ("Xxxx"), and Alcore, Inc., a Maryland corporation (Alcore and Xxxx
being herein sometimes collectively called the "Borrower"), in connection with
the Credit Agreement [of even date herewith] [dated as of November __, 1996]
(the "Credit Agreement") between the Borrower and First Union National Bank of
Maryland, a national banking association (the "Bank"). This opinion is being
delivered pursuant to Section 3.01 of the Credit Agreement. Terms defined in the
Credit Agreement and not defined herein are used herein as therein defined.
We have examined (i) executed copies of the Loan Documents,
(ii) unfiled copies of the financing statements on Form UCC-1 (the "Financing
Statements") filed in the offices listed on Schedule I hereto (the "Filing
Jurisdictions") executed by the Borrower, as debtor, in favor of the Bank, (iii)
reports from [SEARCH SERVICE] as to copies of UCC financing statements naming
the Borrower as debtor and of federal tax liens filed against the Borrower that
are on file as set forth therein (the "Search Report") and (iv) originals or
copies, certified or otherwise identified to our satisfaction, of such other
documents, corporate records, certificates of public officials and other
instruments as we have deemed necessary or advisable for purposes of this
opinion.
In rendering the opinions expressed below, we have assumed
(except with respect to the Borrower) (a) the valid existence and good standing
in the jurisdiction of its organization of each of the parties to the Loan
Documents; (b) the due authorization, execution and delivery of the Loan
Documents by the parties thereto, (c) the corporate or partnership power and
authority, as applicable, of each party to the Loan Documents to execute,
deliver and perform the same, and that such execution, delivery and performance
does not violate its certificate or articles of incorporation, bylaws or
partnership agreement, as applicable, or any law or governmental rule or
regulation applicable to it, (d) the genuineness of all signatures and the
authority of all persons signing each of the Loan Documents on behalf of the
parties thereto, (e) that each of the Loan Documents constitutes the legal,
valid and binding obligation of each party to such Loan Document and is
enforceable against each such party in accordance with its terms and (f) the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified, conformed or
photostatic copies and the authenticity of the originals of such copies. As to
certain factual matters we have, to the extent deemed appropriate by us, relied
upon certificates of officers of the Borrower and the representations made by
the Borrower in the Loan Documents to which it is a party.
Based upon the foregoing, we are of the opinion that:
1. Xxxx is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, has all corporate
powers required to carry on its business as now conducted and is duly qualified
as a foreign corporation in each jurisdiction where qualification or licensing
is required by the nature of its
- 1 -
First Union National Bank of ___________________
November __, 1996
Page 2
business or the character and location of its property, business or customers
and in which the failure so to qualify or be licensed, as the case may be, in
the aggregate, could have a material adverse effect on its business, financial
position, results of operations or properties.
2. Alcore is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Maryland, has all corporate
powers required to carry on its business as now conducted and is duly qualified
as a foreign corporation in each jurisdiction where qualification or licensing
is required by the nature of its business or the character and location of its
property, business or customers and in which the failure so to qualify or be
licensed, as the case may be, in the aggregate, could have a material adverse
effect on its business, financial position, results of operations or properties.
3. The execution, delivery and performance by the Borrower of
the Loan Documents to which it is a party are within its corporate power and
have been duly authorized by all necessary corporate action of the Borrower.
Each Borrower has duly executed and delivered the Loan Documents to which it is
a party. Each Loan Document is a valid and binding agreement or obligation of
each Borrower which is a party thereto, in each case enforceable against such
Borrower in accordance with its terms, except (i) as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforceability of creditors' rights generally and by equitable
principles of general applicability (regardless of whether such enforceability
is considered in a proceeding in equity or at law), (ii) that certain of the
remedial provisions in the Security Agreement may be limited by applicable law,
although such limitations do not in our opinion make the remedies provided for
therein inadequate for the practical realization of the principal benefit
intended to be afforded thereby, and (iii) that provisions of the Loan Documents
which permit the Bank to take action or make determinations or to require
payments under indemnity and similar provisions may be subject to a requirement
that such action be taken or such determination be made on a reasonable basis
and in good faith and that any action or omission to act in respect of which
such payment is so required be reasonable and in good faith.
4. The execution, delivery and performance by each Borrower of
the Loan Documents to which it is a party (i) require no action by or in respect
of, or filing with, any governmental body, agency or official (other than the
filings referred to in paragraph 8 of this opinion); (ii) do not contravene or
constitute (with or without the giving of notice or lapse of time or both) a
default under (A) any provision of applicable law or regulation or, to the best
of our knowledge, (B) any material indenture, mortgage, deed of trust, credit
agreement, loan agreement or other material agreement relating to indebtedness
known to us binding upon any Borrower or (C) any judgment, injunction, order,
decree or other instrument known to us binding upon any Borrower; and (iii) do
not result in the creation or imposition of any Lien (other than the Liens of
the Loan Documents) on any asset of any Borrower. The execution, delivery and
performance by the Borrower of the Loan Documents to which it is a party do not
contravene any provision of the articles of incorporation or by-laws of the
Borrower.
5. To the best of our knowledge, there is no action, suit,
proceeding or arbitration pending or threatened against the Borrower before any
court or arbitrator or any governmental body, agency or official in which there
is a reasonable possibility of an adverse decision which could materially and
adversely affect the business, financial position, results of operations or
properties of the Borrower or which in any manner questions the validity of any
Loan Document.
6. The Security Agreement creates security interests in favor
of the Bank, as security for the Loans, the Note and all other Obligations, in
such of the collateral purported to be covered thereby in which a security
interest may be created under Article 9 of the Uniform Commercial Code as in
effect in the State of Maryland (the "Article 9 Collateral"), except that the
Security Agreement will create such security interests in property in which the
Borrower has no present rights only when the Borrower acquires rights therein.
- 2 -
First Union National Bank of ___________________
November __, 1996
Page 3
7. (a) The Financing Statements have been duly filed in all of
the Filing Jurisdictions. Accordingly, the security interests of the Bank in all
right, title and interest of the Borrower in the Article 9 Collateral (the
"Security Interests") have been (or when the Borrower acquires rights therein
will be) perfected under the UCC to the extent that the perfection of a security
interest under Article 9 of the UCC is achieved by the filing of a financing
statement, and no further filing or recording of any document or instrument or
other action will be required to perfect the Security Interests of the Bank
under the UCC, except that: (i) continuation statements with respect to each
Financing Statement must be filed within the respective time periods provided in
Schedule I hereto; (ii) additional filings may be necessary if the Borrower
changes its name, identity or corporate structure or the jurisdictions in which
its chief executive office or the Article 9 Collateral are located; (iii) in the
case of Collateral consisting of proceeds, perfection and the continuation of
perfection of the Security Interests therein is limited to the extent set forth
in Section 9-306 of the UCC and (iv) in the case of property which becomes part
of the Collateral after the date hereof, Section 552 of the federal Bankruptcy
Code limits the extent to which property acquired by the debtor after the
commencement of a case under the Bankruptcy Code may be subject to a security
interest arising from a security agreement entered into by the debtor before the
commencement of such case.
(b) As of each of the dates specified in the Search Report,
there were no
(i) UCC financing statements naming the Borrower as debtor or
seller and covering any of the Article 9 Collateral,
(ii) notices of the filing of any federal tax lien (filed
pursuant to Section 6323 of the Code) or any lien of the PBGC (filed pursuant to
Section 4068 of ERISA) covering any of the Collateral, or
(iii) judgment liens covering any of the Collateral
listed in the available records in any Filing Jurisdiction, except as set forth
therein, and the Filing Jurisdictions are all of the offices (i) prescribed
under the UCC as offices in which filings should be made to perfect security
interests in the Article 9 Collateral which are perfected by filing, and (ii)
having files which must be searched in order to determine fully the existence of
notices of the filing of federal tax liens (filed pursuant to Schedule 6323 of
the Code) liens of the PBGC (filed pursuant to Section 4068 of ERISA) or
judgment liens on the Collateral.
The opinions herein expressed are limited in all respects
solely to the matters governed by the internal laws of the State of Maryland and
the federal laws of the United States of America. Insofar as the matters covered
in this opinion pertaining to Articles 8 or 9 of the UCC are governed by the
laws of any State other than the State of Maryland, we have based our opinions
with regard thereto on our review of unofficial compilations of the UCC as in
effect therein as reported by the [West Publishing Company], and we have
otherwise assumed without independent investigation that the laws of each such
State are in all relevant aspects identical to the laws of the State of
Maryland.
This opinion is issued solely for your benefit, and is not to
be relied upon by any other entity.
Very truly yours,
- 3 -
DEFINITIONS APPENDIX
The definitions set forth in this Definitions Appendix are
incorporated by reference into Section 1.01 of the Credit Agreement dated as of
November __, 1996, by and among Xxxx Industries, Inc., a Delaware corporation,
and Alcore Inc., a Delaware corporation, and First Union National Bank of
Maryland, national banking association (as the same may be amended, modified or
supplemented from time to time, the "Credit Agreement"). Reference in this
Definitions Appendix to "this Agreement", "herein", "hereof", "hereunder" and to
any Article or Section shall be interpreted to mean the Credit Agreement and the
referenced Article or Section, including this Definitions Appendix.
"ACCOUNTS" means all "accounts" (as defined in the UCC) now
owned or hereafter acquired by the Borrower, and shall also mean and include all
accounts receivable, contract rights, book debts, notes, drafts and other
obligations or indebtedness owing to the Borrower arising from the sale, lease
or exchange of goods or other property by it and/or the performance of services
by it (including, without limitation, any such obligation which might be
characterized as an account, contract right or general intangible under the
Uniform Commercial Code in effect in any jurisdiction) and all of the Borrower's
rights in, to and under all purchase orders for goods, services or other
property, and all of the Borrower's rights to any goods, services or other
property represented by any of the foregoing (including returned or repossessed
goods and unpaid seller's rights of rescission, replevin, reclamation and rights
to stoppage in transit) and all monies due to or to become due to the Borrower
under all contracts for the sale, lease or exchange of goods or other property
and/or the performance of services by it (whether or not yet earned by
performance on the part of the Borrower), in each case whether now in existence
or hereafter arising or acquired including, without limitation, the right to
receive the proceeds of said purchase orders and contracts and all collateral
security and guarantees of any kind given by any Person with respect to any of
the foregoing.
"ACCOUNT DEBTOR" means, with respect to any Account, Document,
Instrument or General Intangible, any Person obligated to make payment
thereunder, including, without limitation, any account debtor thereon.
"ADJUSTED LONDON INTERBANK OFFERED RATE" has the meaning
set forth in Section 2.05(a).
"AFFILIATE" means (i) any Person that directly, or indirectly
through one or more intermediaries, controls the Borrower (a "Controlling
Person") or (ii) any Person (other than the Borrower or a Subsidiary) which is
controlled by or is under common control with a Controlling Person. As used
herein, the term "control" means possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"AGREEMENT" means this Credit Agreement, as it may be amended,
modified or supplemented from time to time.
"ALCORE" means Alcore Inc., a Delaware corporation, and its
Consolidated Subsidiaries and Affiliates.
"ALCORE BORROWING BASE" means at any date an amount equal to
(i) eighty-five percent (85%) of the aggregate Net Unpaid Balance of all
Eligible Accounts of Alcore; plus (ii) the lesser of $1,750,000 or fifty percent
(50%) of the value of all Eligible Inventory of Alcore; plus (iii) the then
applicable Alcore Machinery and Equipment Borrowing Base, minus (iv) the
Liquidation Reserve.
"ALCORE MACHINERY AND EQUIPMENT BORROWING BASE" means the
maximum amount under the Alcore Borrowing Base which may be advanced against
Alcore's Machinery and Equipment from time to time, which amount shall equal
$1,072,000 on the Closing Date, but which amount will be automatically and
permanently reduced by $17,867 each month commencing on the first day of the
second month immediately following the Closing Date, and continuing on the first
day of each month thereafter.
- 1 -
"ALCORE OPERATING ACCOUNT" means the demand deposit account
maintained with the Bank by Alcore on which Alcore draws checks to pay its
operating expenses.
"ALCORE SUBLIMIT" means $4,500,000, the maximum amount of
Loans that may be advanced to Alcore on the basis of the Alcore Borrowing Base.
"ASSIGNED AGREEMENTS" means those contracts and agreements of
the Borrower identified in or pursuant to Section 7 of the Perfection
Certificate, as the same may be amended, modified or supplemented from time to
time.
"AVAILABLE BALANCE" means at any time, (i) without
duplication, all funds on deposit in an Operating Account on such day which the
Bank, in accordance with its standard practices for posting of debits and
credits to demand deposit accounts of a type similar to such Operating Account,
deems to be collected funds, including, without limitation, all wire transfers
credited to such Operating Account at such time and all other Federal or other
immediately available funds on deposit in or deposited into such Operating
Account at such time less (ii) the sum of (A) all interest, fees and other
Obligations not constituting principal of the Loans which Obligations are due
and payable at such time and (B) all Items deducted from such Operating Account
at such time.
"BANK" means First Union National Bank of Maryland, a national
banking association, and its successors and assigns.
"BASE RATE" has the meaning set forth in Section 2.05(c).
"BASE RATE LOAN" means a Loan which bears interest at the Base
Rate pursuant to Section 2.05(c).
"BENEFIT ARRANGEMENT" means at any time an employee benefit
plan within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"BORROWER" means, collectively, Xxxx and Alcore, and
individually, each of Xxxx and Alcore, and their respective successors.
"BORROWING BASE" means, collectively, the Alcore Borrowing
Base and the Xxxx Borrowing Base.
"BORROWING BASE CERTIFICATE" means a certificate of Xxxx or
Alcore in a form satisfactory to the Bank containing a computation of its
applicable Borrowing Base.
"BUSINESS DAY" means any day except a Saturday, Sunday or
other day on which commercial banks in Maryland are authorized by law to close.
"CAPITAL LEASE" means any lease of property which, in
accordance with generally accepted accounting principles, should be capitalized
on the lessee's balance sheet.
"CASH EQUIVALENTS" means (i) direct obligations of the United
States or any agency thereof, or obligations guaranteed by the United States of
any agency thereof, (ii) commercial paper rated in the highest grade by a
nationally recognized credit rating agency or (iii) time deposits with,
including certificates of deposit issued by, any office located in the United
States of any bank or trust company which is organized under the laws of the
United States or any state thereof and has capital, surplus and undivided
profits aggregating at least $250,000,000; provided, in each case that such
investment matures within one year from the date of acquisition thereof by the
Borrower.
"CASH PROCEEDS ACCOUNTS" has the meaning set forth in Section
3.04 of the Security Agreement.
- 2 -
"CLOSING DATE" means the date not later than November __, 1996
on which the Bank determines that the conditions specified in or pursuant to
Section 3.01 have been satisfied.
"COLLATERAL" means all right, title and interest of the
Borrower in the following, whether now owned or existing or hereafter acquired,
created or arising, whether tangible or intangible, and regardless of where
located:
(i) Accounts;
(ii) Inventory;
(iii) General Intangibles;
(iv) Documents;
(v) Instruments;
(vi) Equipment;
(vii) Assigned Agreements;
(viii) the Collateral Accounts, all cash deposited
therein from time to time, the Liquid Investments made pursuant to
Section 3.04 of the Security Agreement and other monies and property
(including deposit accounts) of any kind of the Borrower maintained
with or in the possession or under the control of the Bank;
(ix) all books and records (including, without
limitation, customer lists, credit files, computer programs, printouts and
other computer materials and records) of the Borrower pertaining to any of the
Collateral; and
(x) all Proceeds of all or any of the
Collateral described in clauses (i) through (ix) above.
"COLLATERAL ACCOUNTS" means the Cash Proceeds Accounts, the
Operating Accounts and the Insurance Account.
"COMMITMENT" means $6,000,000, as such amount may be increased
or decreased pursuant to this Agreement.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the
additions to property, plant and equipment and other capital expenditures of the
Borrower and its Consolidated Subsidiaries for such period (including, without
limitation, gross leases to be capitalized under generally accepted accounting
principles and leasehold improvements), as the same are or would be set forth in
a consolidated statement of cash flows of the Borrower and its Consolidated
Subsidiaries for such period, but excluding (to the extent that they would
otherwise be included) any such expenditures made for the replacement or
restoration of assets to the extent financed by condemnation awards or proceeds
of insurance received with respect to the loss or taking of or damage to the
asset or assets being replaced or restored.
"CONSOLIDATED CASH FLOW COVERAGE RATIO" means the sum of net
profit, taxes, interest expenses, depreciation and amortization divided by
the sum of all current maturities of long term debt and capital lease
obligations and interest expense of the Borrower and its Consolidated
Subsidiaries.
"CONSOLIDATED CURRENT ASSETS" means the aggregate amount of
all assets of the Borrower and its
- 3 -
Consolidated Subsidiaries which would, in accordance with generally accepted
accounting principles, be defined as current assets.
"CONSOLIDATED CURRENT LIABILITIES" means the aggregate amount
of all current liabilities of the Borrower and its Consolidated Subsidiaries, as
determined in accordance with generally accepted accounting principles, but in
any event shall include all liabilities except those having a maturity date
which is more than one (1) year from the date as of which such computation is
being made.
"CONSOLIDATED CURRENT RATIO" means the ratio of Consolidated
Current Assets divided by Consolidated Current Liabilities.
"CONSOLIDATED DEBT" means at any date the Debt of the Borrower
and its Consolidated Subsidiaries, determined on a consolidated basis as of such
date.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the
total interest expense (including, without limitation, that attributable to
Capital Leases, all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing and net costs in
respect of Derivatives Obligations) of the Borrower and its Consolidated
Subsidiaries determined on a consolidated basis for such period.
"CONSOLIDATED NET INCOME" means, for any period, the net
income (or net loss) of the Borrower and its Consolidated Subsidiaries,
determined on a consolidated basis for such period.
"CONSOLIDATED SUBSIDIARY" means with respect to any Person at
any date, any Subsidiary of such Person or other entity, the accounts of which
would be consolidated with those of such Person in its consolidated financial
statements if such statements were prepared as of such date in accordance with
generally accepted accounting principles.
"CONSOLIDATED TANGIBLE NET WORTH" means at any date total
assets (less Intangible Assets) minus total liabilities (including Subordinated
Debt) of the Borrower and its Consolidated Subsidiaries. For purposes of this
definition, "Intangible Assets" means all intangible assets of the Borrower,
including, without limitation, goodwill, franchises, patents, licenses,
trademarks, copyrights, service marks, advances to Affiliates and related
parties, trade names and brand names.
"DEBT" of any Person means, at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable arising in the ordinary
course of business), (iv) all obligations of such Person as lessee under Capital
Leases, (v) all obligations of such Person to purchase securities or other
property which arise out of or in connection with the sale of the same or
substantially similar securities or property, (vi) all non-contingent
obligations (and, for purposes of Section 5.09 and the definitions of Material
Debt and Material Financial Obligations, all contingent obligations) of such
Person to reimburse any bank or other person in respect of amounts paid under a
letter of credit, bankers' acceptance or similar instrument, (vii) all
obligations of others secured by a Lien on any asset of such Person, whether or
not such obligation is assumed by such Person and (viii) all obligations of
others Guaranteed by such Person.
"DEFAULT" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"DERIVATIVES OBLIGATIONS" of any Person means all obligations
of such Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
- 4 -
or any other similar transaction (including any option with respect to any of
the foregoing transactions) or any combination of the foregoing transactions.
"DIVIDEND" has the meaning set forth in Section 5.15.
"DOCUMENTS" means all "documents" (as defined in the UCC) or
other receipts covering, evidencing or representing goods, now owned or
hereafter acquired by the Borrower.
"DOLLARS" and the sign "$" means lawful money of the United
States of America.
"EFFECTIVE DATE" means the date this Agreement becomes
effective in accordance with Section 8.08.
"ELIGIBLE ACCOUNTS" means all billed Accounts for goods
delivered or services rendered owing to the Borrower, excluding:
(i) Accounts arising out of sales that are not
in the ordinary course of the business of the Borrower;
(ii) Accounts on terms other than those normal
or customary in the business of the Borrower;
(iii) Accounts owing from any person that is an
Affiliate of the Borrower unless arising in the ordinary course of
business conducted on an arm's-length basis;
(iv) Domestic accounts which are outstanding
more than 90 days past the original invoice date with respect thereto;
(v) Foreign accounts (i.e., accounts generated
by account debtors outside the United States) which are outstanding
more than 120 days past the original invoice date with respect
thereto;
(vi) Accounts of any (A) domestic Account Debtor if
50% or more of the Accounts of any such domestic Account Debtor are
more than 90 days past original invoice date with respect thereto, or
(B) any foreign Account Debtor if 50% or more of the Accounts of any
such foreign Account Debtor are more than 120 days past the original
invoice date, with respect thereto;
(vii) Accounts the liability for which has been
disputed by the Account Debtor;
(viii) Accounts owing from any Person that shall
take or be the subject of any action or proceeding;
(ix) Accounts owing from any Person that is also
a supplier to or creditor of the Borrower;
(x) Accounts arising out of sales to Account Debtors
outside the United States, unless the account is (A) fully backed by an
irrevocable letter of credit containing terms acceptable to the Bank
issued by a financial institution satisfactory to the Bank or by credit
insurance in form substance satisfactory to the Bank, in either case
naming the Bank as beneficiary, and (B) on terms acceptable to the
Bank;
(xi) Accounts arising out of sales on a
xxxx-and-hold, guaranteed sale, sale-and-return, sale on approval or
consignment basis or subject to any right of return, set-off or
charge-back;
- 5 -
(xii) Accounts owing from an Account Debtor that is
an agency, department or instrumentality of the United States or any
state governmental authority in the United States unless the Borrower
shall have satisfied the requirements of the Assignment of Claims Act
of 1940, as amended, and any similar state legislation in respect
thereof and the Bank is satisfied as to the absence of set-offs,
counterclaims and other defenses to payment on the part of the United
States or such state governmental authority;
(xiii) Accounts representing xxxxxxxx in excess of
costs and earnings and retainage;
(xiv) Accounts in respect of which the Security
Agreement does not or has ceased to create a valid and perfected first
priority Lien in favor of the Bank, subject only to Permitted Liens;
and
(x) That portion of any Account which, when
aggregated with all of the Accounts of that Account Debtor, exceeds 20%
of the then aggregate of Eligible Accounts, unless the long-term senior
debt of that Account Debtor has received a rating of at least BBB-minus
from Standard and Poor's rating agency; and
(xi) Any other Accounts, the validity,
collectibility or amount of which is determined in good faith by the
Borrower or the Bank to be doubtful.
"ELIGIBLE INVENTORY" means (i) all aluminum coil, metallic and
non-metallic block Inventory in the possession of Alcore, and (ii) in the sole
discretion of the Bank after review of a field audit, raw materials of Xxxx
excluding adhesives, in each case valued at the lower of cost or fair market
value on a first-in, first-out basis, as to which the Bank has a first priority
perfected security interest subject only to Permitted Liens, of a kind usually
and customarily sold by the Borrower and which is not, because of damage, age,
unmerchantability, obsolescence or any other condition or circumstance,
materially impaired in condition, value or marketability in the good faith
opinion of the Bank, excluding any inventory reserve, as determined by the Bank
in its sole discretion.
"ENVIRONMENTAL LAWS" means any and all federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
"EQUIPMENT" means all "equipment" (as defined in the UCC) now
owned or hereafter acquired by the Borrower, including all items of machinery,
equipment, furnishings and fixtures of every kind, whether affixed to real
property or not, as well as all motor vehicles, automobiles, trucks, trailers,
railcars, barges and vehicles of every description, trailers, handling and
delivery equipment, all additions to, substitutions for, replacements of or
accessions to any of the foregoing, all attachments, components, parts
(including spare parts) and accessories whether installed thereon or affixed
thereto and all fuel for any thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.
"ERISA GROUP" means the Borrower, any Subsidiary and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower or any Subsidiary, are treated as a single employer under Section 414
of the Internal Revenue Code.
"EURO-DOLLAR BUSINESS DAY" means any Business Day on which
commercial banks are open for
- 6 -
international business (including dealings in Dollar deposits) in London.
"EURO-DOLLAR RESERVE PERCENTAGE" has the meaning set forth in
Section 2.05(a).
"EVENT OF DEFAULT" has the meaning set forth in Section 6.01.
"FYE" and "FQE" mean fiscal year end and fiscal quarter end,
respectively, and when used in conjunction with a particular month mean the date
of ending of the relevant fiscal period nearest the last day of such month.
"GENERAL INTANGIBLES" means all "general intangibles" (as
defined in the UCC) now owned or hereafter acquired by the Borrower, including,
without limitation, (i) all obligations and indebtedness owing to the Borrower
(other than Accounts), from whatever source arising, (ii) all patents,
trademarks, copyrights, licenses, rights in intellectual property, goodwill,
trade names, service marks, trade secrets, confidential or proprietary technical
and business information, know-how, show-how, software, customer lists,
subscription lists, data bases and related documentation, registration,
franchises and all other intellectual or other similar property rights, (iii)
all rights or claims in respect of refunds for taxes paid, (iv) all rights in
respect of any pension plans or similar arrangements maintained for employees of
the Borrower or any member of the ERISA Group and (v) all "uncertificated
securities" (as defined in the UCC).
"GUARANTEE" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the payment thereof
or to protect such obligee against loss in respect thereof (in whole or in
part); provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"HAZARDOUS SUBSTANCES" means any toxic, radioactive, caustic
or otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.
"INDEMNITEE" has the meaning set forth in Section 8.03(b).
"INSTRUMENTS" means all "instruments" (as defined in Article 9
of the UCC), "chattel paper" and "certificated securities" (each as defined in
the UCC) or "letters of credit" (as defined in Article 9 of the UCC) evidencing,
representing, arising from or existing in respect of, relating to, securing or
otherwise supporting the payment of, any of the Accounts or General Intangibles,
including (but not limited to) promissory notes, drafts, bills of exchange and
trade acceptances, now owned or hereafter acquired by the Borrower.
"INSURANCE ACCOUNT" has the meaning set forth in Section
3.03(a) of the Security Agreement.
"INSURANCE PROCEEDS" has the meaning set forth in
Section 3.03(a) of the Security Agreement.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of
1986, as amended, or any successor statute.
"INVENTORY" means all "inventory" (as defined in the UCC) now
owned or hereafter acquired by the Borrower, wherever located, and shall also
mean and include, without limitation, all raw materials and other materials
- 7 -
and supplies, work-in-process and finished goods and any products made or
processed therefrom and all substances, if any, commingled therewith or added
thereto.
"INVESTMENT" means any investment in any Person, whether by
means of share purchase, capital contribution, loan, time deposit or otherwise.
"ITEM" means any "item" as defined in Section 4-104 of the
UCC, and shall also mean and include checks, drafts, money orders or other media
of payment.
"LIBOR-BASED RATE" has the meaning set forth in
Section 2.05(a).
- 8 -
"LICENSE" means (i) with respect to any Patent, any agreement
now or hereafter in existence granting to the Borrower, or pursuant to which the
Borrower has granted to any other Person, any right with respect to any Patent
or any invention now or hereafter in existence, whether patentable or not,
whether a Patent or application for Patent is in existence on such invention or
not, and whether a Patent or application for Patent on such invention may come
into existence, and (ii) with respect to any Trademark, any agreement now or
hereafter in existence granting to the Borrower, or pursuant to which the
Borrower has granted to any other Person, any right to use any Trademark (in
each case exclusive of license agreements entered into after the date hereof
which by their terms prohibit assignment or a grant of a security interest by
the Borrower as licensee thereunder); provided that rights to payments under any
such license shall be included in the Collateral to the extent permitted thereby
or by Section 9-318 of the UCC.
"LIEN" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset. For the purposes of this Agreement, the Borrower or any Subsidiary shall
be deemed to own subject to a Lien any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
agreement, Capital Lease or other title retention agreement relating to such
asset.
"LINE OF CREDIT" means the revolving credit facility extended
by the Bank to the Borrower under which one or more Loans may be made pursuant
to the terms and conditions of the Loan Documents.
"LIQUID INVESTMENTS" has the meaning set forth in
Section 3.03(c) of the Security Agreement.
"Liquidation Reserve has the meaning set forth in Insert A
attached hereto and made a part hereof.
"LOAN" means a loan made pursuant to Section 2.01.
"LOAN DOCUMENTS" means the Credit Agreement, the Note, the
Security Agreement and any and all other documents or instruments executed and
delivered by Borrower to evidence, secure, or in connection with, the Loans,
collectively, and "Loan Document" means any of them.
"LONDON INTERBANK OFFERED RATE" has the meaning set forth in
Section 2.05(a).
"LONG TERM DEBT" means liabilities with maturity dates greater
than one (1) year from the date as of which such computation in being made. For
purposes of calculating the financial covenants described herein, the Borrower
shall at all times characterize the Line of Credit and the Loans as Long Term
Debt
"XXXX" means Xxxx Industries, Inc., a Delaware corporation,
and its Consolidated Subsidiaries and Affiliates.
-9-
"XXXX BORROWING BASE" means at any date the sum of (i)
eighty-five percent (85%) of the aggregate Net Unpaid Balance of all Eligible
Accounts of Xxxx; plus (ii) the lesser of $250,000 or fifty percent (50 %) of
the value of all Eligible Inventory of Xxxx; plus (iii) the then applicable Xxxx
Machinery and Equipment Borrowing Base.
"XXXX MACHINERY AND EQUIPMENT BORROWING BASE" means the
maximum amount under the Xxxx Borrowing Base which may be advanced against
Xxxx'x Machinery and Equipment from time to time, which amount shall equal
$600,000 on the Closing Date, but which amount will be automatically and
permanently reduced by $10,000 each month commencing on the first day of the
second month immediately following the Closing Date, and continuing on the first
day of each month thereafter.
"XXXX OPERATING ACCOUNT" means the demand deposit account
maintained with the Bank by Xxxx on which Xxxx draws checks to pay its operating
expenses.
"XXXX SUBLIMIT" means $1,500,000, the maximum amount of Loans
that may be advanced to Xxxx on the basis of the Xxxx Borrowing Base.
"MATERIAL ADVERSE EFFECT" means (i) any material adverse
effect upon the condition (financial or otherwise), results of operations,
properties, assets, business or prospects of the Borrower or of the Borrower and
its Consolidated Subsidiaries, taken as a whole; (ii) a material adverse effect
on the ability of the Borrower to consummate the transactions contemplated
hereby to occur on the Closing Date; (iii) a material adverse effect on the
ability of the Borrower to perform its obligations under this Agreement and the
Note or (iv) a material adverse effect on the rights and remedies of the Bank
under this Agreement and the Note.
"MATERIAL DEBT" means Debt (other than the Notes) of the
Borrower and/or one or more of its Subsidiaries, arising in one or more related
or unrelated transactions, in an aggregate principal or face amount exceeding
$10,000.
"MATERIAL FINANCIAL OBLIGATIONS" means a principal or face
amount of Debt and/or payment obligations in respect of Derivatives Obligations
of the Borrower and/or one or more of its Subsidiaries, arising in one or more
related or unrelated transactions, exceeding in the aggregate $250,000.
"MATERIAL PLAN" means at any time a Plan or Plans having
aggregate Unfunded Liabilities in excess of $25,000.
-10-
"MOODY'S" means Xxxxx'x Investors Service, a Delaware
corporation, and its successors or, absent any successor, such nationally
recognized statistical rating organization as the Borrower and the Bank may
select.
"MULTIEMPLOYER PLAN" means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any
member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the ERISA
Group during such five year period.
"NET UNPAID BALANCE" means at any date the unpaid balance of
an Eligible Account at such date not including any unearned finance charges,
late payment charges or other charges, or any extension, service or collection
fees in respect thereof.
"NOTE" means a promissory note of the Borrower, substantially
in the form of Exhibit B hereto, evidencing the obligation of the Borrower to
repay the Loans.
"NOTICE OF BORROWING" means a Notice of Borrowing (as defined
in Section 2.02(a)).
"OBLIGATIONS" means:
(i) all principal of and interest (including, without
limitation, any interest which accrues after the commencement of any
case, proceeding or other action relating to the bankruptcy, insolvency
or reorganization of the Borrower, whether or not allowed or allowable
as a claim in any such proceeding) on any loan, fees payable or
reimbursement obligation under, or any note issued pursuant to, this
Agreement or any other Loan Document;
(ii) all other amounts now or hereafter payable by
the Borrower and all other obligations or liabilities now existing or
hereafter arising or incurred (including, without limitation, any
amounts which accrue after the commencement of any case, proceeding or
other action relating to the bankruptcy, insolvency or reorganization
of the Borrower, whether or not allowed or allowable as a claim in any
such proceeding) on the part of the Borrower pursuant to this Agreement
or any other Loan Document;
(iii) all Derivatives Obligations (including, without
limitation, any amounts which accrue after the commencement of any
case, proceeding or other action relating to the bankruptcy, insolvency
or reorganization of the Borrower, whether or not allowed or allowable
as a claim in any such proceeding) of the Borrower to the Bank;
(iv) all other indebtedness, obligations and
liabilities of the Borrower to the Bank, now existing or hereafter
arising or incurred, whether or not evidenced by notes or other
instruments, and whether such indebtedness, obligations and liabilities
are direct or indirect, fixed or contingent, liquidated or
unliquidated, due or to become due, secured or unsecured, joint,
several or joint and several, related or unrelated to the Loans,
similar or dissimilar to the indebtedness arising out of or in
connection with the Credit Agreement or of the same or a different
class of indebtedness as the indebtedness arising out of or in
connection with the Credit Agreement, including, without limitation,
any overdrafts in any deposit accounts maintained by the Borrower with
the Bank, all obligations of the Borrower with respect to letters of
credit, if any, issued by the Bank for the account of the Borrower any
indebtedness of the Borrower that is purchased by or assigned to the
Bank;
together in each case with all renewals, modifications, consolidations or
extensions thereof.
"OPERATING ACCOUNTS" means, collectively, the Alcore Operating
Account and the Xxxx Operating
-11-
Account.
"PARENT" means, with respect to the Bank, any Person
controlling the Bank.
"PATENTS" means all of the following:
(i) all letters patent and design letters patent of
the United States or any other country, all applications for letters
patent and design letters patent of the United States or any other
country including, without limitation, applications in the United
States Patent and Trademark Office or in any similar office or agency
of the United States, any State thereof or any other country or
political subdivision thereof;
(ii) all reissues, divisions, continuations,
continuations-in-part, renewals or extensions thereof;
(iii) all claims for, and rights to xxx for, past
or future infringement of any of the foregoing; and
(iv) all income, royalties, damages and payments
now or hereafter due or payable with respect to any of the foregoing, including,
without limitation, damages and payments for past or future infringements
thereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"PERFECTION CERTIFICATE" means a certificate, substantially in
the form of Exhibit A to the Security Agreement, completed and supplemented with
the schedules and attachments contemplated thereby to the satisfaction of the
Bank, and duly executed by the chief executive officer and the chief legal
officer of the Borrower.
"PERMITTED LIENS" means the Security Interests and the other
Liens on the Collateral permitted to be created, to be assumed or to exist
pursuant to Section 5.09.
"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"PLAN" means at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Internal
Revenue Code and either (i) is maintained, or contributed to, by any member of
the ERISA Group for employees of any member of the ERISA Group or (ii) has at
any time within the preceding five years been maintained, or contributed to, by
any Person which was at such time a member of the ERISA Group for employees of
any Person which was at such time a member of the ERISA Group.
"PRIME RATE" has the meaning set forth in Section 2.05(c).
"PRINCIPAL" means any general partner of, or the holder of
any majority ownership interest in any Borrower.
"PROCEEDS" means all proceeds of, and all other profits,
products, rents or receipts, in whatever form, arising from the collection,
sale, lease, exchange, assignment, licensing or other disposition of or other
realization upon or payment for the use of, Collateral, including (without
limitation) all claims of the Borrower against third parties for loss of, damage
to or destruction of, or for proceeds payable under, or unearned premiums with
respect to, policies of insurance in respect of, any Collateral, and any
condemnation or requisition payments with respect to any Collateral, in each
case whether now existing or hereafter arising.
-12-
"QUARTERLY DATE" means the first Business Day of each January,
April, July and October.
"REGULATION U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"REVOLVING CREDIT PERIOD" means the period from and including
the Closing Date to but not including the Termination Date.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc., a New York corporation, and its successors or, absent of any
successor, such nationally recognized statistical rating organization as the
Borrower and the Bank may select.
"SECURITY INTERESTS" means the security interests in the
Collateral granted under the Security Agreement securing the Obligations.
"SHAREHOLDER" means any Person owning shares of stock of the
Borrower, and "Shareholders" means any two or more of such Shareholders,
collectively.
"SUBORDINATED DEBT" of any Person means all Debt which (i)
bears interest at rates not greater than such Person shall reasonably determine
to be the prevailing market rate, at the time such Subordinated Debt is issued,
for interest on comparable subordinated debt issued by comparable issuers, (ii)
is subordinated in right of payment to such Person's indebtedness, obligations
and liabilities to the Bank under the Loan Documents pursuant to payment and
subordination provisions satisfactory in form and substance to the Bank and
(iii) is issued pursuant to loan documents having covenants and events of
default that are satisfactory in form and substance to the Bank but that in no
event are less favorable, including with respect to rights of acceleration, to
the Borrower than the terms hereof.
"SUBSIDIARY" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by the Borrower.
"TERMINATION DATE" means twenty four (24) months from the
Closing Date.
"TRADEMARK" means all of the following:
(i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos, brand names, trade dress, prints and labels on
which any of the foregoing have appeared or appear, package and other
designs, and any other source or business identifiers, and general
intangibles of like nature, and the rights in any of the foregoing
which arise under applicable law;
(ii) the goodwill of the business symbolized
thereby or associated with each of them;
(iii) all registrations and applications in
connection therewith, including, without limitation, registrations and
applications in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof;
(iv) all reissues, extensions and renewals
thereof;
(v) all claims for, and rights to xxx for, past
or future infringements of any of the foregoing; and
-13-
(vi) all income, royalties, damages and payments
now or hereafter due or payable with respect to any of the foregoing,
including, without limitation, damages and payments for past or future
infringements thereof.
"UCC" means the Uniform Commercial Code as in effect on the
date hereof in the State of Maryland with respect to Alcore, and the State of
New York with respect to Xxxx; provided that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of the Security Interest in any Collateral is governed by the Uniform Commercial
Code as in effect in a jurisdiction other than Maryland or New York, "UCC" means
the Uniform Commercial Code as in effect in such other jurisdictions for
purposes of the provisions hereof relating to such perfection or effect of
perfection or non-perfection.
"UNFUNDED LIABILITIES" means, with respect to any Plan at any
time, the amount (if any) by which (i) the value of all benefit liabilities
under such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such liabilities under Title
IV of ERISA (excluding any accrued but unpaid contributions), all determined as
of the then most recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of a member of the ERISA Group
to the PBGC or any other Person under Title IV of ERISA.
"UNITED STATES" means the United States of America, including
the States and the District of Columbia, but excluding its territories and
possessions.
"WHOLLY-OWNED CONSOLIDATED SUBSIDIARY" means any Consolidated
Subsidiary all of the shares of capital stock or other ownership interests of
which (except directors' qualifying shares) are at the time directly or
indirectly owned by the Borrower.
USAGE
The following rules of construction and usage shall be
applicable to any instrument that is governed by this Appendix:
All terms defined in this Appendix shall have the
defined meanings when used in any instrument governed hereby and in any
certificate or other document made or delivered pursuant thereto unless
otherwise defined therein.
The words "hereof", "herein", "hereunder" and words
of similar import when used in an instrument refer to such instrument as a whole
and not to any particular provision or subdivision thereof; references in any
instrument to "Article", "Section" or another subdivision or
to an attachment are, unless the context otherwise requires, to an article,
section or subdivision of or an attachment to such instrument; and the term
"including" means "including without limitation".
The definitions contained in this Appendix are
equally applicable to both the singular and plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such terms.
4. Any agreement, instrument or statute defined or referred to
below or in any agreement or instrument that is governed by this Appendix means
such agreement or instrument or statute as from time to time amended, modified
or supplemented, including (in the case of agreements or instruments) by waiver
or consent and (in the case of statutes) by succession of comparable successor
statutes and includes (in the case of agreements or instruments) references to
all attachments thereto and instruments incorporated therein. References to a
Person are also to its permitted successors and assigns.
-14-
INSERT A.
(ATTACHED TO AND MADE A PART OF THIS DEFINITIONS APPENDIX OF PAGE 11 HEREOF)
"Liquidation Reserve" means a portion of availability under the Alcore
Borrowing Base equal to $200,000 (or such lower amount as may be approved by the
Lender in its sole discretion) to be reserved for any and all potential costs
associated with liquidating Alcore's Equipment located at its Jessup, Maryland
facility (such as costs of advertising and sale, rent payable in the event such
premises are vacated by Alcore, damages or other costs payable to the landlord
by the Lender, and any amounts payable to the landlord from the proceeds of any
sale of the Alcore Equipment).
-15-
