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Exhibit 10.1
[EXECUTION COPY]
FINANCING AND SECURITY AGREEMENT
THE CIT GROUP/BUSINESS CREDIT, INC.
(AS LENDER)
AND
XXXXXXX-XXXXXXX, INC.,
(BORROWER)
DATED: OCTOBER 23, 1995
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TABLE OF CONTENTS
Page
SECTION 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3. Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4. Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 6. Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 8. Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 9. Interest, Fees, Expenses and Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 10. Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 11. Events of Default and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 12. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 13. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 14. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
EXHIBITS
Exhibit A1 - Form of Term Loan Promissory Note
Exhibit A2 - Form of Revolving Loans Promissory Note
Exhibit B - Form of opinion of Xxxx Xxxxx & Xxxx
Exhibit C - Form of Local counsel opinions
Exhibit D - Form of Mortgage
Exhibit E - Assignment of Key Man Life Insurance
Exhibit F - Form of Weekly Availability Report
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SCHEDULES
Schedule 1(a) - Real Estate
Schedule 1(b) - Permitted Encumbrances
Schedule 1(c) - Shawmut Letters of Credit
Schedule 3.5 - Bank Accounts
Schedule 7.1 - Corporate Existence
Schedule 7.4 - Required Consents
Schedule 7.6 - Litigation
Schedule 7.10 - Subordinated Debt
Schedule 7.14 - Possession of Patents
Schedule 7.15 - Broker's or Finder's Commissions
Schedule 7.18 - ERISA
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THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation
(hereinafter "CITBC") with offices located at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, is pleased to confirm the terms and conditions under
which CITBC shall make a term loan and revolving loans, advances and other
financial accommodations to XxXxxxx-Xxxxxxx, Inc., a Delaware corporation (as
successor of a merger of The National Acme Company with and into
XxXxxxx-Xxxxxxx, Inc.) (herein the "Borrower").
SECTION 1. DEFINITIONS
ACCOUNTS shall mean all of the Borrower's now existing and
future: (a) accounts receivable (whether or not specifically listed on
schedules furnished to CITBC), and any and all instruments, documents, contract
rights, chattel paper, general intangibles relating to such accounts
receivable, including, without limitation, all accounts created by or arising
from all of the Borrower's sales of goods or rendition of services to its
customers, and all accounts arising from sales or rendition of services made
under any of the Borrower's trade names or styles, or through any of the
Borrower's divisions; (b) unpaid seller's rights (including rescission,
replevin, reclamation and stoppage in transit) relating to the foregoing or
arising therefrom; (c) rights to any goods represented by any of the foregoing,
including rights to returned or repossessed goods; (d) reserves and credit
balances arising thereunder; (e) guarantees or collateral for any of the
foregoing; (f) insurance policies or rights relating to any of the foregoing;
and (g) cash and non-cash proceeds of any and all the foregoing.
ACQUISITION shall mean the acquisition by DeVlieg of all of
the issued and outstanding capital stock of National Acme from Seller under or
pursuant to the Stock Purchase Agreement.
ASSIGNMENT OF CLAIMS ACT shall mean 00 Xxxxxx Xxxxxx Code
Annotated Section 3727 and all amendments and supplements thereto and all rules
and regulations promulgated thereunder.
ASSIGNMENT OF KEY MAN LIFE INSURANCE POLICY shall mean the
assignment of Key Man Life Insurance Policy delivered pursuant to Section 11,
paragraph i of this Financing Agreement as the same may be amended or modified
from time to time.
AVAILABILITY shall mean at any time the excess, as determined
by CITBC based upon the most recently delivered
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Weekly Availability Report of (A) the sum of a) Eligible Accounts Receivable
multiplied by the percentage provided for in clause (b)(i) of the third
sentence of Section 3(1)(a) of this Financing Agreement plus b) Eligible
Inventory multiplied by the percentage provided for in clause (b)(ii) of the
third sentence of Section 3(1)(a) of this Financing Agreement but not to exceed
the limitation set forth therein, over (B) the sum of y) the outstanding
aggregate amount of all Revolving Loans of the Borrower plus z) the maximum
amount drawable under the Letters of Credit of the Borrower.
BALANCE SHEET shall mean a balance sheet for the Borrower
prepared in accordance with GAAP.
CAPITAL EXPENDITURES shall mean, for any period, the aggregate
of all expenditures of the Borrower and its Subsidiaries during such period
that in conformity with GAAP are required to be included in or reflected by the
property, plant or equipment or similar fixed asset account reflected in the
balance sheet of the Borrower and its Subsidiaries.
CAPITAL LEASE shall mean any lease of property (whether real,
personal or mixed) which, in conformity with GAAP, is accounted for as a
capital lease or a Capital Expenditure on the balance sheet of the Borrower.
CHEMICAL BANK RATE shall mean the rate of interest per annum
announced by Chemical Bank from time to time as its prime rate in effect at its
principal office in the City of New York. (The prime rate is not intended to
be the lowest rate of interest charged by Chemical Bank to its borrowers).
CLOSING DATE shall mean October 23, 1995.
CODE shall mean the Internal Revenue Code of 1986, as amended.
COLLATERAL shall mean all present and future Accounts,
Equipment, Inventory, Documents of Title, General Intangibles, Real Estate and
all other personal property of the Borrower and any other collateral delivered
to CITBC pursuant to any collateral agreement, including, without limitation,
this Financing Agreement, the Assignment of Key Man Life Insurance Policy, the
Patent Security Agreement, the Trademark Security Agreement, and the copyright
security agreement, if any, requested pursuant to Section 8 paragraph 1 of this
Financing Agreement.
COLLATERAL MANAGEMENT FEE shall mean the sum of $50,000 per
year for each year this Financing Agreement is in effect which shall be paid to
CITBC in accordance with
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Section 9, paragraph 13 hereof to offset the expenses and costs of CITBC in
connection with record keeping, periodic examinations, analyzing and evaluating
the Collateral.
COLLECTION ACCOUNTS shall mean the Collection Accounts
described in Section 3, paragraph 5 of this Financing Agreement.
COLLECTION BANK(S) shall mean the Collection Bank(s) described
in Section 3, paragraph 5 of this Financing Agreement.
CONSOLIDATED CURRENT ASSETS shall mean those assets of the
Borrower and its Consolidated Subsidiaries, on a consolidated basis, which in
accordance with GAAP, are classified as "current".
CONSOLIDATED CURRENT LIABILITIES shall mean those liabilities
of the Borrower and its Consolidated Subsidiaries, on a consolidated basis,
which in accordance with GAAP, are classified as "current"; provided, however,
that notwithstanding GAAP, the Revolving Loans and the current portion of
Permitted Indebtedness shall be considered "current liabilities".
CONSOLIDATED EBITDA shall mean, in any period, all earnings of
the Borrower and its Consolidated Subsidiaries, on a consolidated basis, before
all interest, tax obligations, depreciation and amortization of intangibles, of
the Borrower and its Consolidated Subsidiaries, on a consolidated basis, for
said period, determined in accordance with GAAP.
CONSOLIDATED FIXED CHARGE COVERAGE RATIO shall mean, for any
period, a ratio determined as of the relevant calculation date by dividing (a)
Consolidated EBITDA by (b) the sum for such period of (i) Consolidated Interest
Expense, plus (ii) payments made on the Term Loan pursuant to Section 4 of this
Financing Agreement, plus (iii) Capital Expenditures, plus (iv) income taxes of
the Borrower and its Consolidated Subsidiaries determined in accordance with
GAAP.
CONSOLIDATED INTEREST COVERAGE RATIO shall mean a ratio
determined as of the relevant calculation date by dividing Consolidated EBITDA
by Consolidated Interest Expense for the relevant period.
CONSOLIDATED INTEREST EXPENSE shall mean total consolidated
interest obligations of the Borrower and its Consolidated Subsidiaries, on a
consolidated basis, determined in accordance with GAAP and in a manner
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consistent with the latest audited statements of the Borrower but exclusive of
amortization of debt discount.
CONSOLIDATED NET WORTH shall mean, with respect to the
Borrower and its Consolidated Subsidiaries, assets in excess of liabilities,
and determined in accordance with GAAP, in a manner consistent with the latest
audited financial statements of the Borrower and its Consolidated Subsidiaries.
CONSOLIDATED SUBSIDIARIES shall mean all subsidiaries of the
Borrower that should be included in the Borrower's consolidated financial
statements, all as determined in accordance with GAAP.
CONSOLIDATED TOTAL LIABILITIES shall mean total liabilities of
the Borrower and its Consolidated Subsidiaries, on a consolidated basis, all as
determined in accordance with GAAP.
CUSTOMARILY PERMITTED LIENS shall mean:
(a) liens of local or state authorities for franchise or
other like taxes provided the aggregate amounts of such liens shall
not exceed $500,000 in the aggregate at any one time;
(b) statutory liens of landlords and liens of carriers,
warehousemen, mechanics, materialmen and other like liens imposed by
law, created in the ordinary course of business and for amounts not
yet due (or which are being contested in good faith by appropriate
proceedings or other appropriate actions which are sufficient to
prevent imminent foreclosure of such liens) and with respect to which
adequate reserves or other appropriate provisions are being maintained
in accordance with GAAP;
(c) deposits made (and the liens thereon) in the ordinary
course of business (including, without limitation, security deposits
for leases, surety bonds and appeal bonds) in connection with workers'
compensation, unemployment insurance and other types of social
security benefits or to secure the performance of tenders, bids
contracts (other than for the repayment or guarantee of borrowed money
or purchase money obligations), statutory obligations and other
similar obligations arising as a result of progress payments under
government contracts; and
(d) easements (including, without limitation, reciprocal
easement agreements and utility agreements), encroachments, minor
defects or irregularities in
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title, variation and other restrictions, charges or encumbrances
(whether or not recorded) affecting the Real Estate and which are
listed in Schedule B of the title insurance policy delivered to CITBC
herewith and previously approved by CITBC or its special counsel.
DEFAULT shall mean any event specified in Section 11 hereof,
whether or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, event or act, has been satisfied.
DEFAULT RATE OF INTEREST shall mean a rate of interest per
annum equal to the sum of: a) four percent (4%) and b) the Chemical Bank Rate,
which CITBC shall be entitled to charge the Borrower on all Obligations due
CITBC by the Borrower to the extent provided in Section 9, paragraph 2 of this
Financing Agreement.
DEVLIEG means XxXxxxx-Xxxxxxx, Inc., a Delaware corporation.
DOCUMENTS OF TITLE shall mean all present and future warehouse
receipts, bills of lading, shipping documents, chattel paper, instruments and
similar documents, all whether negotiable or not and all goods and inventory
relating thereto and all cash and non-cash proceeds of the foregoing.
DOLLAR(S) and the sign "$" means lawful money of the United
States of America.
EARLY TERMINATION DATE shall mean the date on which the
Borrower terminates this Financing Agreement or the Revolving Line of Credit if
such date is prior to the ninetieth day preceding the Initial Term Date.
EARLY TERMINATION FEE shall: i) mean the fee CITBC is
entitled to charge the Borrower in the event the Borrower terminates the
Revolving Line of Credit or this Financing Agreement on a date prior to the
Initial Term Date; and ii) be an amount equal to (x) $450,000 if the Early
Termination Date is a date after the Closing Date but prior to the first
anniversary of the Closing Date; (y) $350,000 if the Early Termination Date is
a date on or after the first anniversary of the Closing Date but prior to the
second anniversary of the Closing Date; and (z) $250,000 if the Early
Termination Date is a date on or after the second anniversary of the Closing
Date.
ELIGIBLE ACCOUNTS RECEIVABLE shall mean the gross amount of
the Borrower's accounts receivable that conform to the warranties contained
herein and at all times continue to be acceptable to CITBC in the exercise of
its reasonable
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business judgment, less, without duplication, the sum of a) any returns,
discounts, claims, credits and allowances of any nature (whether issued, owing,
granted or outstanding) and b) reserves for: i) sales to the United States of
America or to any agency, department or division thereof except where
assignment of all resulting accounts receivable or to become due under a
particular contract is made by the Borrower to CITBC and CITBC is satisfied
that all requirements for compliance with the Assignment of Claims Act and/or
other applicable statutes, rules or regulations have been fulfilled, provided
that the aggregate amount of accounts receivable described in this exception
which shall be permitted to constitute Eligible Accounts Receivable shall not
exceed at any one time $1,000,000; ii) foreign sales other than sales x)
secured by stand-by letters of credit (in form and substance satisfactory to
CITBC) issued or confirmed by, and payable at, banks having a place of business
in the United States of America and payable in United States currency, or y) to
customers residing in Canada provided such sales otherwise comply with all of
the other criteria for eligibility hereunder, are payable in United States
currency and such sales do not exceed $2,000,000 in the aggregate at any one
time; iii) accounts that remain unpaid more than ninety (90) days from invoice
date; iv) contras; v) sales to any subsidiary, or to any company affiliated
with the Borrower in any way; vi) xxxx and hold (deferred shipment) or
consignment sales; vii) sales to any customer which is a) insolvent, b) the
debtor in any bankruptcy, insolvency, arrangement, reorganization, receivership
or similar proceedings under any federal or state law, c) negotiating, or has
called a meeting of its creditors for purposes of negotiating, a compromise of
its debts or d) financially unacceptable to CITBC or has a credit rating
unacceptable to CITBC; viii) all sales to any customer if fifty percent (50%)
or more of either x) all outstanding invoices or y) the aggregate dollar amount
of all outstanding invoices, are unpaid more than ninety (90) days from invoice
date; ix) any other reasons deemed necessary by CITBC in its reasonable
business judgment and which are customary either in the commercial finance
industry or in the lending practices of CITBC; and x) an amount representing,
historically, returns, discounts, claims, credits and allowances.
ELIGIBLE INVENTORY shall mean the gross amount of the
Borrower's inventory that conforms to the warranties contained herein and which
at all times continue to be acceptable to CITBC in the exercise of its
reasonable business judgment less any work-in-process, supplies (other than raw
material), goods not present in the United States of America, goods returned or
rejected by the Borrower's customers other than goods that are undamaged and
resalable in the normal course of business, goods to be returned to
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the Borrower's suppliers, goods in transit to third parties (other than the
Borrower's agents or warehouses) and less any reserves required by CITBC in its
reasonable discretion for special order goods, market value declines and xxxx
and hold (deferred shipment) or consignment sales. Notwithstanding the
foregoing, until one year after the Closing Date, Eligible Inventory shall
include work-in-process to the extent of the lesser of (1) ten percent (10%) of
work-in-process, and (2) $1,000,000. Eligible Inventory shall be valued at
the lower of cost or market on a first in first out basis.
EMPLOYEE BENEFIT PLAN shall mean any plan, agreement,
arrangement or commitment which is an employee benefit plan, as defined in
section 3(3) of ERISA, maintained by the Borrower or any ERISA Affiliate with
respect to which the Borrower or any ERISA Affiliate at any relevant time has
any liability or obligation to contribute.
EQUIPMENT shall mean all present and hereafter acquired
machinery, equipment, furnishings and fixtures owned by the Borrower, and all
additions, substitutions and replacements thereof, wherever located, together
with all attachments, components, parts, equipment and accessories installed
thereon or affixed thereto and all proceeds of whatever sort.
ERISA shall mean the Employee Retirement Income Security Act
or 1974, as amended from time to time and the rules and regulations promulgated
thereunder from time to time.
ERISA AFFILIATE shall mean, with respect to the Borrower, any
entity required to be aggregated with the Borrower under Section 414(b), (c),
(m) or (o) of the Code.
EUROCURRENCY RESERVE REQUIREMENTS shall mean, for any day as
applied to a Revolving Loan or Term Loan, the aggregate (without duplication)
of the rates (expressed as a decimal) of reserve requirements in effect with
respect to Chemical Bank on such day (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of the
Board of Governors of the Federal Reserve System or other Governmental
Authority having jurisdiction with respect thereto), dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of such Board) maintained by
Chemical Bank.
EUROCURRENCY BASE RATE shall mean, with respect to the LIBOR
Rate Period, the rate per annum at which Chemical Bank is offered Dollar
deposits two business days prior to the beginning of such LIBOR Rate Period in
the interbank
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eurodollar market where the eurodollar and foreign currency and exchange
operations of Chemical Bank are customarily conducted at or about 10:00 A.M.,
New York City time, for delivery on the first day of such LIBOR Rate Period for
the number of days comprised therein and in an amount comparable to the amount
of the Revolving Loan or Term Loan to which such LIBOR Rate Period applies.
EVENT(S) OF DEFAULT shall have the meaning provided for in
Section 11 of this Financing Agreement.
EXECUTIVE OFFICERS shall mean the Chairman, President, Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, Executive
Vice President(s), Senior Vice President(s), Treasurer, Controller and
Secretary of the Borrower.
FINANCING AGREEMENT shall mean this Financing and Security
Agreement as amended supplemented or modified from time to time.
GAAP shall mean generally accepted accounting principles in
the United States of America as in effect from time to time and for the period
as to which such accounting principles are to apply.
GENERAL INTANGIBLES shall mean the Borrower's general
intangibles with such term having the meaning set forth in the Uniform
Commercial Code as in effect in the State of New York and shall include,
without limitation, all present and future right, title and interest in and to
all tradenames, trademarks (together with the goodwill associated therewith),
patents, licenses, engineers' drawings, customer lists, distribution
agreements, supply agreements and tax refunds, together with all monies and
claims for monies now or hereafter due and payable in connection with any of
the foregoing or otherwise, and all cash and non-cash proceeds thereof.
HAZARDOUS SUBSTANCES shall have the meaning set forth in
Section 7, paragraph 19(b) of this Financing Agreement.
INDEBTEDNESS shall mean, without duplication, all liabilities,
contingent or otherwise, which are any of the following: (a) obligations in
respect of money (borrowed or otherwise) or for the deferred purchase price of
property, services or assets, other than Inventory, (b) lease obligations
which, in accordance with GAAP, have been, or which should be capitalized, (c)
obligations as guarantor or in any like capacity under any arrangement with
respect to liabilities for borrowed money or pursuant to take or pay contracts,
or (d) any other obligations (other than deferred
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taxes) which are required by generally accepted accounting principles to be
shown as liabilities on a balance sheet and which are payable or remain unpaid
more than one year from the date of determination thereof.
INITIAL TERM DATE shall mean the date occurring three (3)
years from the Closing Date hereof.
INSOLVENCY shall mean, at any particular time, a Multiemployer
Plan which is insolvent within the meaning of section 4245 of ERISA.
INTERCREDITOR AGREEMENT shall mean the intercreditor agreement
dated October 23, 1995, among the Borrower, the Subordinating Creditors and
CITBC pursuant to which the Subordinated Debt is subordinated to the prior
payment and satisfaction of the Borrower's Obligations to CITBC, as the same
may be amended or modified from time to time.
INVENTORY shall mean all of the Borrower's present and
hereafter acquired merchandise, inventory and goods, and all additions,
substitutions and replacements thereof, wherever located, together with all
goods and materials used or usable in manufacturing, processing, packaging or
shipping same; in all stages of production -- from raw materials through
work-in-process to finished goods -- and all proceeds thereof of whatever sort.
ISSUING BANK shall mean any Bank issuing a Letter of Credit
for the Borrower.
KEY MAN LIFE INSURANCE POLICY shall mean an insurance policy
maintained by the Borrower insuring the life of Xx. Xxxxxxx X. Xxxxxx and
providing for a payment of at least Two Million Dollars ($2,000,000) upon Xx.
Xxxxxx' death.
LENDER shall mean CITBC and any Transferee hereunder.
LETTER OF CREDIT OR LETTERS OF CREDIT shall mean all letters
of credit issued with the assistance of CITBC by any Issuing Bank for or on
behalf of the Borrower.
LETTER OF CREDIT GUARANTIES shall mean the guaranties
delivered by CITBC to any Issuing Bank, providing the guaranty of the
obligations of the Borrower to such Issuing Bank under the related
reimbursement agreement (or other similar document) between such Issuing Bank
and the Borrower.
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LETTER OF CREDIT GUARANTY FEE shall mean the fee CITBC may
charge the Borrower under Section 9, paragraph 15 of this Financing Agreement
for i) issuing the Letter of Credit Guaranty, or ii) otherwise aiding the
Borrower in obtaining Letters of Credit.
LIBOR RATE shall mean, with respect to any LIBOR Rate Period
pertaining to the Revolving Loans or Term Loan, the rate per annum (rounded
upwards to the next higher 1/16th of one percent) equal to the following:
Eurocurrency Base Rate
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1.00 - Eurocurrency Reserve Requirements
LIBOR RATE PERIOD shall mean with respect to each Revolving
Loan or Term Loan whereby the Borrower has elected a LIBOR Rate:
(a) initially, the period commencing on the Closing Date or
the date as selected by the Borrower pursuant to the Notice of
Revolving Borrowing or pursuant to Section 9, paragraphs 1, 2, or 3 of
this Financing Agreement, as the case may be, and ending one, two,
three or six months thereafter, as selected by the Borrower in its
irrevocable Notice of Revolving Borrowing as provided herein; and
(b) thereafter, each period commencing on the last day of the
next preceding LIBOR Rate Period applicable to such LIBOR loan or
advance and ending one, two, three or six months thereafter, as
selected by the Borrower;
provided, however, that all of the foregoing provisions relating to LIBOR Rate
Periods are subject to the following:
(i) if any LIBOR Rate Period pertaining to a LIBOR
loan or advance would otherwise end on a day which is not a business
day, such LIBOR Rate Period shall be extended to the next succeeding
business day unless the result of such extension would be to carry
such LIBOR Rate Period into another calendar month, in which event
such LIBOR Rate Period shall end on the immediately preceding business
day;
(ii) any LIBOR Rate Period pertaining to a LIBOR
loan or advance that begins on the last business day of a calendar
month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such LIBOR Rate Period) shall end
on the last business day of the calendar month at the end of such
LIBOR Rate Period;
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(iii) no LIBOR Rate Period selected in respect of
any loan or advance shall end after the Initial Term Date;
(iv) the Borrower shall select LIBOR Rate Periods so
as not to have more than ten (10) different LIBOR Rate Periods
outstanding at any one time; and
(v) the Borrower shall select LIBOR Rate Periods
such that, on each date that a mandatory scheduled principal payment
is required to be made pursuant to this Financing Agreement, the
outstanding principal amount of the portion of the Term Loan bearing
interest at the Chemical Bank Rate, when added to the aggregate
principal amount of the portion of the Term Loan bearing interest at a
LIBOR Rate the applicable LIBOR Rate Period of which shall end on such
date, shall equal or exceed the aggregate principal amount of the Term
Loan required to be paid on such date pursuant to Section 4, paragraph
3 of this Financing Agreement.
LINE OF CREDIT FEE shall: (i) mean the fee due CITBC at the
end of each month for the Revolving Line of Credit, and (ii) be determined by
multiplying the difference between (A) the Revolving Line of Credit and (B) the
average daily Revolving Loans of the Borrower for said month, by one-quarter of
one percent (0.25%) per annum for the number of days in said month.
LIBOR RATE ELECTION FEE shall mean the fee payable to CITBC in
accordance with, and pursuant to, the provisions of Section 9, paragraph 14 of
this Financing Agreement.
LOAN DOCUMENTS shall mean each of this Financing Agreement,
the Revolving Loans Promissory Note, the Term Loan Promissory Note, the
Mortgages, the Intercreditor Agreement, the Letters of Credit, the Trademark
Security Agreement, the Patent Security Agreement, and the copyright security
agreement, if any, requested pursuant to Section 8 paragraph 1 of this
Financing Agreement.
MANDATORY PREPAYMENT shall mean the amount by which the
Borrower must prepay the Revolving Loans immediately upon demand as provided in
Section 3, paragraph 1(b) or (d) of this Financing Agreement.
MONTHLY DATE means the last business day of each month.
MORTGAGE shall mean each of the mortgages, or deeds of trust,
deeds to secure debt or other similar documents, as the case may be,
substantially in the form of
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Exhibit D (with any changes to such form as may be necessary to obtain first
(or other contemplated priority) liens on the Real Estate described on Schedule
1(a) and comply with applicable state law requirements) to be executed by the
Borrower or any subsidiary of the foregoing, as the case may be, to CITBC, at
any time and in connection with this Financing Agreement, as the same may be
amended, supplemented or otherwise modified from time to time; collectively,
"Mortgages."
MULTIEMPLOYER PLAN shall mean a plan which is a multiemployer
plan as defined in Section 3(37) of ERISA.
NATIONAL ACME means The National Acme Company, an Ohio
corporation.
NOTICE OF REVOLVING BORROWING shall mean the notice described
in Section 3, paragraph 1(b) of this Financing Agreement.
OBLIGATIONS shall mean all loans and advances made or to be
made by CITBC to the Borrower or to others for the Borrower's account; any and
all indebtedness and obligations which may at any time be owing by the Borrower
to CITBC howsoever arising, whether now in existence or incurred by the
Borrower from time to time hereafter; whether secured by pledge, lien upon or
security interest in any of the Borrower's assets or property or the assets or
property of any other person, firm, entity or corporation; whether such
indebtedness is absolute or contingent, joint or several, matured or unmatured,
direct or indirect and whether the Borrower is liable to CITBC for such
indebtedness as principal, surety, endorser, guarantor or otherwise.
Obligations shall also include indebtedness owing to CITBC by the Borrower
under this Financing Agreement or under any other agreement or arrangement now
or hereafter entered into between the Borrower and CITBC; indebtedness or
obligations incurred by, or imposed on, CITBC as a result of environmental
claims (other than as a result of actions of CITBC) arising out of the
Borrower's operation, premises or waste disposal practices or sites; the
Borrower's liability to CITBC as maker or endorser on any promissory note or
other instrument for the payment of money; the Borrower's liability to CITBC
under any instrument of guaranty or indemnity, or arising under any guaranty,
endorsement or undertaking which CITBC may make or issue to others for the
Borrower's account, including any accommodation extended with respect to
applications for Letters of Credit entered into in connection with this
Financing Agreement, CITBC's acceptance of drafts or CITBC's endorsement of
notes or other instruments for the Borrower's account and benefit.
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OFFICER'S CERTIFICATE shall mean a certificate signed in the
name of the Borrower by one of its Executive Officers.
OPERATING LEASES shall mean all leases of property (whether
real, personal or mixed) other than Capital Leases.
OUT-OF-POCKET EXPENSES shall mean all of CITBC's present and
future expenses incurred in connection with the preparation and execution of
and closing under this Financing Agreement and amendments, supplements and
modifications of or waivers of any condition of, this Financing Agreement, the
enforcement of any rights of CITBC under this Financing Agreement and all other
documents entered into in connection with this Financing Agreement, the
perfection and maintenance of liens and security interests in favor of CITBC
pursuant to this Financing Agreement, the cost of record searches, all costs
and expenses incurred by CITBC in opening bank accounts, depositing checks,
receiving and transferring funds, and any charges imposed on CITBC due to
"insufficient funds" of deposited checks and CITBC's standard fee relating
thereto, any amounts paid by CITBC incurred by or charged to CITBC by the
Issuing Bank under any Letter of Credit Guaranty or any of the Borrower's
reimbursement agreements, application for letter of credit or other like
document which pertain either directly or indirectly to such Letter of Credit,
special counsel fees, local counsel fees, title insurance premiums, real estate
survey costs, fees and taxes relative to the filing of financing statements,
costs of preparing and recording mortgages/deeds of trust against the Real
Estate and all expenses, costs and fees set forth in Section 9, paragraph 3, of
this Financing Agreement.
PATENT SECURITY AGREEMENT shall mean the patent security
agreement delivered pursuant to Section 2, paragraph i of this Financing
Agreement as the same may be amended or modified from time to time.
PBGC shall mean Pension Benefit Guaranty Corporation.
PENSION PLAN shall mean any Employee Benefit Plan which is a
"pension plan" within the meaning of Section 3(2) of ERISA.
PERMITTED ENCUMBRANCES shall mean: (i) liens described on
Schedule 1(b) hereto existing on the Closing Date, and liens expressly
permitted, or consented to, by CITBC in writing; (ii) Purchase Money Liens;
(iii) Customarily Permitted Liens; iv) liens granted CITBC by the Borrower; (v)
liens of judgment creditors provided such liens do not exceed, in the aggregate
for the Borrower,
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at any time, $100,000 (other than liens bonded or insured to the reasonable
satisfaction of CITBC); and (vi) liens for taxes not yet due and payable or
which are being diligently contested in good faith by the Borrower by
appropriate proceedings and which liens are not (x) senior to the liens of
CITBC or (y) for taxes due the United States of America.
PERMITTED INDEBTEDNESS shall mean: (i) Indebtedness maturing
in less than one year and incurred in the ordinary course of business for raw
materials, supplies, equipment, services, taxes or labor; (ii) Indebtedness
secured by the Purchase Money Liens; (iii) Indebtedness of the Borrower which
is subordinated to the prior payment and satisfaction of the Borrower's
Obligations to CITBC by means of the Intercreditor Agreement; (iv) Indebtedness
arising under this Financing Agreement; (v) deferred taxes and other expenses
incurred in the ordinary course of business; (vi) other Indebtedness existing
on the date of execution of this Financing Agreement and listed in the most
recent financial statement delivered to CITBC or otherwise disclosed to CITBC
in writing; and (vii) Capital Leases, provided the amount thereof shall not
exceed $5,000,000 in the aggregate outstanding at any one time.
PERSON shall mean and include an individual, a corporation, an
association, a partnership, a trust estate, a government or any department or
agency thereof.
PROCEEDS shall mean "proceeds", as such term is defined in
the UCC and, to the extent not included in such definition, shall include,
without limitation, (a) any and all proceeds of any insurance, indemnity,
warranty, guaranty or letter of credit payable to the Borrower, from time to
time with respect to any of the Collateral, (b) all payments (in any form
whatsoever) paid or payable to the Borrower from time to time in connection
with any taking of all or any part of the Collateral by any governmental
authority or any Person acting under color of governmental authority, (c) all
judgments in favor of the Borrower in respect of the Collateral and (d) all
other amounts from time to time paid or payable or received or receivable
under or in connection with any of the Collateral.
PURCHASE MONEY LIENS shall mean liens on any item of equipment
acquired after the date of this Financing Agreement; provided, however, that
(i) each such lien shall attach only to the property to be acquired, (ii) a
description of the property so acquired is furnished to CITBC, and (iii) the
debt incurred in connection with such acquisitions shall not exceed in the
aggregate $500,000 in any fiscal year.
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REAL ESTATE shall mean all of the Borrower's fee and/or
leasehold interests in the real property which has been, or will be,
encumbered, mortgaged, pledged or assigned to CITBC or its designee.
REMAINING LIBOR RATE PERIOD shall mean: (i) in the event that
the Borrower shall fail for any reason to borrow after they shall have notified
CITBC of their intent to do so pursuant to Section 3, paragraph 1, of this
Financing Agreement, whereby it shall have requested a loan or advance governed
by the LIBOR Rate pursuant to the terms hereof, a period equal to the LIBOR
Rate Period that the Borrower elected in respect of such loan or advance, or
(ii) in the event that a loan or advance governed by the LIBOR Rate shall
terminate for any reason prior to the last day of the LIBOR Rate Period
applicable thereto, a period equal to the remaining portion of such LIBOR Rate
Period if such LIBOR Rate Period had not been so terminated; and (iii) in the
event that the Borrower shall prepay or repay all or any part of the principal
amount of a loan or advance governed by the LIBOR Rate prior to the last day of
the LIBOR Rate Period applicable thereto, a period equal to the period from and
including the date of such prepayment or repayment to but excluding the last
day of such LIBOR Rate Period.
REORGANIZATION shall mean with respect to any Multiemployer
Plan, the condition that such plan is in reorganization under section 4241 of
ERISA.
REPORTABLE EVENT shall mean an event described in section 4043
of ERISA or in the regulations thereunder.
REVOLVING LINE OF CREDIT shall mean the commitment of CITBC to
make loans and advances pursuant to Section 3 of this Financing Agreement, to
the Borrower in a maximum outstanding principal amount of $25,000,000.
REVOLVING LOANS shall mean the loans and advances made, from
time to time, to or for the account of the Borrower by CITBC pursuant to
Section 3 of this Financing Agreement, plus any amounts drawn on the Letter of
Credit Guaranties.
REVOLVING LOANS PROMISSORY NOTE shall mean the note, in the
form of Exhibit A2 attached hereto, delivered by the Borrower to CITBC to
evidence the Revolving Loans pursuant to, and repayable in accordance with, the
provisions of Section 3 of this Financing Agreement.
ROLLING PERIOD shall mean (a) with respect to any fiscal
quarter ending on or prior to October 31, 1996, the period commencing with
first fiscal quarter commencing
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November 1, 1995 and ending on the last day of such fiscal quarter, and (b)
with respect to a fiscal quarter ending after October 31, 1996, such fiscal
quarter and the preceding three fiscal quarters.
SELLER shall mean each of Acme-Cleveland Corporation, an Ohio
corporation and AC Intermediate Company, an Ohio corporation.
SHAWMUT LETTERS OF CREDIT shall mean the letters of credit
issued by Shawmut Bank N.A. as set forth on Schedule 1(c) to this Financing
Agreement.
SOLVENT shall mean, when used with respect to any Person, that
(1) the fair value of the property of such Person, on a going concern basis, is
greater than the total amount of liabilities (including, without limitation,
contingent liabilities) of such Person, (2) the present fair salable value of
the assets of such Person, on a going concern basis, is not less than the
amount that will be required to pay the probable liabilities of such Person on
its debts as they become absolute and matured, (3) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature, and (4) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person's property would constitute
unreasonably small capital after giving due consideration to the prevailing
practice in the industry in which such Person is engaged. Contingent
liabilities will be computed at the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
STOCK PURCHASE AGREEMENT shall mean the stock purchase
agreement dated September 7, 1995 between DeVlieg and Seller.
SUBORDINATED DEBT shall mean (1) the debt of the Borrower due
the Subordinating Creditors (and the debentures evidencing such debt) pursuant
to the Investment Agreement dated May 25, 1994 among Allied Investment
Corporation, Allied Investment Corporation II, Allied Capital Corporation II,
Banc One Capital Partners Corporation, and PNC Capital Corp., as amended by a
First Amendment to Investment Agreement dated as of October 23, 1995 which has
been subordinated pursuant to the Intercreditor Agreement, to the prior payment
and satisfaction of the Obligations of the Borrower to CITBC, (2) such
Investment Agreement, as so amended by such First Amendment to Investment
Agreement dated as of October 23, 1995, and (3) the Credit Support
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Agreement dated as of October 23, 1995, between the Borrower and CPS Holdings,
Inc.
SUBORDINATING CREDITORS shall mean Banc One Capital, PNC
Capital Corp., Xxxx X. Xxxxx and Xxxxxxx X. Xxxxxxx.
SUBSIDIARY shall mean, as to any Person, a corporation of
which shares of stock having ordinary voting power (other than stock having
such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation are at
the time owned, or the management of which is otherwise controlled, directly,
or indirectly through one or more intermediaries, or both, by such Person.
TERM LOAN shall mean the term loan in the principal amount of
$5,000,000 made by CITBC pursuant to, and repayable in accordance with, the
provisions of Section 4 of this Financing Agreement.
TERM LOAN PROMISSORY NOTE shall mean the note, in the form of
Exhibit A1 attached hereto, delivered by the Borrower to CITBC to evidence the
Term Loan pursuant to, and repayable in accordance with, the provisions of
Section 4 of this Financing Agreement.
TRADEMARK SECURITY AGREEMENT shall mean the trademark security
agreement delivered pursuant to Section 2, paragraph (z) of this Financing
Agreement, as the same may be amended or modified from time to time.
TRANSFEREE shall have the meaning set forth in Section 9,
paragraph 17(b) to this Financing Agreement.
UCC shall mean the Uniform Commercial Code as in effect from
time to time in the State of New York; 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 New York, "UCC" means
the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such perfection or effect of
perfection or non-perfection.
WEEKLY AVAILABILITY REPORT shall mean the report in the form
of Exhibit F hereto, to be (i) delivered by the Borrower to CITBC on or before
the fifth (5th) day of each week, or if such day is not a business day, then
the next succeeding business day and (ii) delivered in connection with the
delivery of any Notice of Revolving Borrowing and from time to time.
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SECTION 2. CONDITIONS PRECEDENT
1. CONDITIONS PRECEDENT TO LOANS ON THE CLOSING DATE. The
obligation of CITBC to make loans hereunder on the Closing Date is subject to
the satisfaction of, or waiver of, immediately prior to or concurrently with
the making of such loans, the following conditions precedent:
(a) LIEN SEARCHES - CITBC shall have received tax, judgment
and Uniform Commercial Code searches satisfactory to CITBC for all locations
presently occupied or used by the Borrower.
(b) CASUALTY INSURANCE - The Borrower shall have delivered to
CITBC evidence satisfactory to CITBC that casualty insurance policies listing
CITBC as loss payee or mortgagee, as the case may be, are in full force and
effect, all as set forth in Section 8, paragraph 5 of this Financing Agreement.
(c) MORTGAGES/DEEDS OF TRUST - The Borrower shall have
executed and delivered to either CITBC or an agent of CITBC or of a title
insurance company acceptable in form and substance satisfactory to CITBC such
Mortgages as CITBC may reasonably require and such Mortgages shall have been
recorded in each jurisdiction where it is necessary or appropriate to secure
the interest of CITBC.
(d) UCC FILINGS - Any documents (including without
limitation, financing statements) required to be filed in order to create, in
favor of CITBC, a first and exclusive perfected security interest in the
Collateral with respect to which a security interest may be perfected by a
filing under the Uniform Commercial Code shall have been properly filed in each
office in each jurisdiction required in order to create in favor of CITBC a
perfected lien on the Collateral. CITBC shall have received acknowledgement
copies of all such filings (or, in lieu thereof, CITBC shall have received
other evidence satisfactory to CITBC that all such filings have been made); and
CITBC shall have received evidence that all necessary filing fees and all taxes
or other expenses related to such filings have been paid in full.
(e) TITLE INSURANCE POLICIES - CITBC shall have received, in
respect of each Mortgage, a mortgagee's title policy or marked-up unconditional
binder for such insurance. Each such policy shall (i) be in an amount
satisfactory to CITBC; (ii) insure that the Mortgage insured thereby creates a
valid first lien on the property covered by such Mortgage, free and clear of
all defects and encumbrances except those acceptable to CITBC; (iii) name CITBC
as the insured
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thereunder; and (iv) contain such endorsements and effective coverage as CITBC
may reasonably request, including without limitation, a revolving line of
credit endorsement. CITBC shall also have received evidence that all premiums
in respect of such policies have been paid and that all charges for mortgage
recording taxes, if any, shall have been paid.
(f) SURVEYS - CITBC and the title insurance company issuing
each policy referred to in the immediately preceding paragraph (each, a "Title
Insurance Company") shall have received maps or plats of a perimeter or
boundary of the site of each of the properties covered by the mortgages or
deeds of trust, dated a date satisfactory to CITBC and the relevant Title
Insurance Company, prepared by an independent professional licensed land
surveyor satisfactory to CITBC and the relevant Title Insurance Company, which
maps or plats and the surveys on which they are based shall be made in
accordance with the Minimum Standard Detail Requirements for Land Title Surveys
jointly established and adopted by the American Land Title Association and the
American Congress on Surveying and Mapping; and, without limiting the
generality of the foregoing, there shall be surveyed and shown on the maps or
plats or surveys the following: (i) the locations on such sites of all the
buildings, structures and other improvements and the established building
setback lines insofar as the foregoing affect the perimeter or boundary of such
property; (ii) the lines of streets abutting the sites and width thereof; (iii)
all access and other easements appurtenant to the sites or necessary or
desirable to use the sites; (iv) all roadways, paths, driveways, easements,
encroachments and overhanging projections and similar encumbrances affecting
the sites, whether recorded, apparent from a physical inspection of the sites
or otherwise known to the surveyor; (v) any encroachments on any adjoining
property by the building structures and improvements on the sites; and (vi) if
the site is designated as being on a filed map, a legend relating the survey to
said map. Further, the survey shall x) be certified to CITBC and the Title
Insurance Company and y) contain a legend reciting as to whether or not the
site is located in a flood zone.
(g) EXAMINATION & VERIFICATION- CITBC shall have completed to
the satisfaction of CITBC an examination and verification of the Accounts,
Inventory, books and records of the Borrower.
(h) OPINIONS - (1) the Borrower shall have delivered to
CITBC a favorable opinion of Xxxx Xxxxx & Xxxx satisfactory to CITBC and their
special counsel dated the Closing date substantially in the form and to the
effect set forth in Exhibit B hereto.
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(2) CITBC shall have received opinions of local counsel set
forth on Exhibit C, in form and substance satisfactory to CITBC and its special
counsel.
(i) PATENT SECURITY AGREEMENT - The Borrower shall have
executed and delivered to CITBC the Patent Security Agreement.
(j) ACQUISITION - CITBC shall be satisfied with the terms and
the structure of the Acquisition and the opinions of counsel delivered in
connection therewith (as to which appropriate reliance letters shall have been
furnished to CITBC), and the Acquisition shall have been consummated.
(k) SOLVENCY CERTIFICATE - Receipt of solvency opinion from
Houlihan, Lokey, Xxxxxx & Zukin, Inc., dated the Closing Date, indicating that
after giving effect to the Acquisition and all of the other transactions
contemplated by the loan documents, the Borrower is Solvent.
(l) ADDITIONAL DOCUMENTS - The Borrower shall have executed
and delivered to CITBC all loan documents necessary to consummate the lending
arrangement contemplated between the Borrower and CITBC.
(m) INTERCREDITOR AGREEMENT - The Subordinating Creditors
shall have executed and delivered to CITBC the Intercreditor Agreement.
(n) SUBORDINATED DEBT - The $12,000,000 of Subordinated Debt
owed by the Borrower to the Subordinating Creditors shall not be secured by any
assets of the Borrower and the other terms and conditions of such Subordinated
Debt shall be satisfactory to CITBC.
(o) ENVIRONMENTAL REPORT - CITBC shall have received,
environmental audit reports on (i) all of the Borrower's leasehold and fee
interests, and (ii) the Borrower's waste disposal practices. The reports must
(x) be satisfactory to CITBC and (y) not disclose or indicate any material
liability (real or potential) stemming from the Borrower's premises, its
operations, its waste disposal practices or waste disposal sites used by the
Borrower. If the reports described above disclose or indicate the presence of
Hazardous Substances violating any local, state or federal laws or regulations,
or any material liability (real or potential) stemming from the Borrower's
premises, its operations, its waste disposal practices or waste disposal sites
used by the Borrower, then CITBC shall have the option to (i) decline to
execute this Financing Agreement and to consummate any transactions
contemplated hereby, or (ii) make their obligations hereunder subject to
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such additional conditions as CITBC may deem necessary. The Borrower shall
bear the cost of the environmental reports.
(p) BOARD RESOLUTION - CITBC shall have received a copy of
the resolutions of the Boards of Directors of the Borrower authorizing the
execution, delivery and performance of (i) this Financing Agreement and (ii)
any related agreements, in each case certified by the Secretary or Assistant
Secretary of such Person as of the date hereof, together with a certificate of
the Secretary or Assistant Secretary of such Person as to the incumbency and
signature of the officers of such Person executing this Financing Agreement and
any certificate or other documents to be delivered by it pursuant hereto,
together with evidence of the incumbency of such Secretary or Assistant
Secretary.
(q) CORPORATE ORGANIZATION - CITBC shall have received (i) a
copy of the Certificate of Incorporation of the Borrower certified by the
Secretary of State of its incorporation, and (ii) a copy of the By-Laws (as
amended through the date hereof) of the Borrower certified by the Secretary or
Assistant Secretary of the Borrower.
(r) OFFICER'S CERTIFICATE - CITBC shall have received an
executed Officer's Certificate of the Borrower, satisfactory in form and
substance to CITBC, certifying that (i) the representations and warranties
contained herein are true and correct on and as of the Closing Date; (ii) the
Borrower is in compliance with all of the terms and provisions set forth
herein; and (iii) no Default has occurred.
(s) NO MATERIAL ADVERSE CHANGE - No material adverse change
in the financial condition, business, prospects, profits, operations or assets
of the Borrower shall have occurred since July 31, 1995.
(t) APPRAISALS - CITBC shall have received an appraisal on
the Borrower's (i) Equipment indicating an orderly liquidation value in a
minimum aggregate amount of $5,000,000 and (ii) Real Estate described on
Schedule 1(a) hereto indicating a liquidation value in a minimum aggregate
amount of $2,700,000 which appraisals shall be by an appraiser(s) mutually
agreed upon by CITBC and the Borrower. The Borrower shall bear the cost of
such appraisals.
(u) DISBURSEMENT AUTHORIZATION - The Borrower shall have
delivered to CITBC all information necessary for CITBC to issue wire transfer
instructions on behalf of the Borrower for the initial and subsequent loans
and/or advances to be made under this Financing Agreement including, but not
limited to, disbursement authorizations in form acceptable to CITBC.
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(v) FEES AND EXPENSES - On the Closing Date, subject to the
credit presently available to the Borrower, the Borrower shall have reimbursed
CITBC for all Out-of-Pocket Expenses for which a request for payment shall have
been made at or prior to the Closing Date and shall have paid the Collateral
Management Fee due at Closing and the Loan Facility Fee.
(w) AVAILABILITY - (A) CITBC will have completed to its
satisfaction an examination of Eligible Accounts Receivable and Inventory for a
calculation of Availability.
(B) The Availability on the Closing Date, after giving
effect to any Revolving Loans, the Term Loan, and the Letters of Credit made by
CITBC at Closing, shall be at least $3,000,000, as evidenced by a Notice of
Revolving Borrowing delivered by the Borrower to CITBC on the Closing Date.
(x) THE NOTES - CITBC shall have received Revolving Loans
Promissory Notes and Term Loan Promissory Notes, payable to it and each duly
executed and delivered by the Borrower with all blanks appropriately filled in.
(y) CITBC shall have received financial projections from
the Borrower in form and substance satisfactory to CITBC.
(z) TRADEMARK SECURITY AGREEMENT - The Borrower shall
have executed and delivered to CITBC the Trademark Security Agreement.
(aa) ERISA SIDE LETTER. The Borrower shall have delivered
a side letter from Acme-Cleveland Corporation regarding the "controlling
groups" pension plans.
(ab) PROCEEDINGS - On or prior to the Closing Date, all
corporate and other proceedings taken or to be taken in connection with the
transactions contemplated hereby and all documents incident thereto shall be
satisfactory in form and substance to CITBC, and CITBC shall have received all
such counterpart originals or certified or other copies of such documents as it
may reasonably request.
Upon the execution of this Financing Agreement and the initial disbursement of
loans hereunder, all of the above Conditions Precedent shall have been deemed
satisfied except as the Borrower and CITBC shall otherwise agree herein or in a
separate writing.
2. CONDITIONS PRECEDENT TO EACH REVOLVING LOAN. The
obligations of CITBC to make each Revolving Loan hereunder shall be subject to
the satisfaction of, or waiver
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of, immediately prior to or concurrently with the making of such Revolving
Loan, the following further conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. All the representations
and warranties contained in this Financing Agreement and in each other
agreement entered into in connection herewith shall be true and correct in all
material respects on and as of the date of providing such Revolving Loan as
though made on and as of such date, except representations and warranties made
with respect to a specified earlier date in which case such representation and
warranty shall be correct on and as of such specified earlier date.
(b) NO DEFAULT. No Default or Event of Default shall have
occurred and be continuing, or could result from providing such Revolving Loan.
(c) ADDITIONAL DOCUMENTS. Upon the request of CITBC, the
Borrower shall have executed and delivered to CITBC an Officer's Certificate of
the Borrower stating that the conditions set forth in this Section 2,
paragraphs 2(a) and 2(b) hereof have been satisfied as of the date of the
requested Revolving Loan.
(d) DEEMED REPRESENTATION. Each delivery of a Notice of
Revolving Borrowing by the Borrower requesting a Revolving Loan shall
constitute a representation and warranty that the statements contained in this
Section 2, paragraph 2(a) hereof are true and correct both on the date of such
delivery of the Notice of Revolving Borrowing and, unless the Borrower
otherwise notifies CITBC prior to the receipt of such Revolving Loan, as of the
date of the providing of such Revolving Loan.
SECTION 3. REVOLVING LOANS
1. (a) CITBC agrees, subject to the terms and conditions of
this Financing Agreement from time to time, and within x) the Availability and
y) the Revolving Line of Credit to make loans and advances to the Borrower on a
revolving basis (i.e., subject to the limitations set forth herein, the
Borrower may borrow, repay and re-borrow Revolving Loans). The Borrower hereby
agrees to execute and deliver to CITBC a Revolving Loans Promissory Note, in
the form of Exhibit A2 hereto, to evidence the Revolving Loans to be extended
by CITBC. Such loans and advances shall be in amounts up to the lesser of (a)
$25,000,000 or (b) the sum of (i) eighty-five percent (85%) of the outstanding
Eligible Accounts Receivable of the Borrower, plus (ii) fifty percent (50%) of
the aggregate value of Eligible
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Inventory of the Borrower; provided, however, that the amount calculated
pursuant to clause (ii) shall not exceed $15,000,000 at any time.
(b) All requests for loans and advances must be made pursuant
to a Notice of Revolving Borrowing delivered by the Borrower and received by an
officer of CITBC no later than 1:00 p.m., New York time, of the day on which
such loans and advances are required; provided, however, CITBC shall have the
right to request and receive from the Borrower a Weekly Availability Report at
any time, including, without limitation, upon receipt from the Borrower of a
Notice of Revolving Borrowing. The Notice of Revolving Borrowing shall
specify: (1) the proposed date of funding (which shall be a business day); (2)
the amount of Revolving Loans requested; (3) the interest rate to be applied,
and if the Borrower shall have elected the LIBOR Rate for all or any portion of
such Revolving Loan (such Revolving Loan or portion to be in a minimum amount
of $1,000,000), the LIBOR Rate Periods; (4) whether or not a Default has
occurred and is continuing; and (5) that no Event of Default has occurred and
is continuing. In lieu of delivering the above described Notice of Revolving
Borrowing, the Borrower may give CITBC telephonic notice by the required time
of the proposed borrowing; provided, however, that such notice shall be
promptly, and in any event within one business day, confirmed in writing by
delivery of a Notice of Borrowing to CITBC; and provided, further, however,
that at such time CITBC may request and receive from the Borrower a Weekly
Availability Report. At any time CITBC requests a Weekly Availability Report
from Borrower, CITBC shall not be required to make any loan or advance
hereunder until after receipt by CITBC of such Weekly Availability Report.
CITBC shall not incur any liability to the Borrower for acting upon any
telephonic notice that CITBC believes in good faith to have been given by a
duly authorized officer or other person authorized to borrow on behalf of the
Borrower or for otherwise acting in good faith under this paragraph 1(b). The
making of an advance pursuant to telephonic notice shall constitute a Revolving
Loan under this Financing Agreement. Each advance to the Borrower of a
Revolving Loan shall, on the date of funding, be deposited, in immediately
available funds, in such account as the Borrower may from time to time
designate to CITBC in writing. Each repayment of a Revolving Loan shall be
deemed a repayment of the oldest then outstanding advances hereunder.
(c) The Borrower shall make Mandatory Prepayments on the
Revolving Loans if at any time the Revolving Loans exceed the limitations set
forth in paragraph 1(a) above. Such Mandatory Prepayments shall be due in an
amount equal to the amount that the outstanding balance of the Revolving
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Loans exceeds such limitations and shall be payable immediately upon demand by
CITBC.
(d) The proceeds of the Key Man Life Insurance Policy shall
be applied by CITBC to such of the Obligations hereunder, and in such amounts,
as CITBC may determine in its sole discretion.
2. In furtherance of the continuing assignment and security
interest in the Borrower's Accounts, the Borrower will, upon the creation of
Accounts, execute and deliver to CITBC in such form and manner as CITBC may
reasonably require, solely for CITBC's convenience in maintaining records of
collateral, such confirmatory schedules of Accounts as CITBC may reasonably
request, and such other appropriate reports designating, identifying and
describing the Accounts as CITBC may reasonably require. In addition, upon
CITBC's request the Borrower shall provide CITBC with copies of agreements
with, or purchase orders from, the Borrower's customers, and copies of invoices
to customers, proof of shipment or delivery and such other documentation and
information relating to said Accounts and other collateral as CITBC may
reasonably require. Failure to provide CITBC with any of the foregoing shall
in no way affect, diminish, modify or otherwise limit the security interests
granted herein. The Borrower hereby authorizes CITBC to regard the Borrower's
printed name or rubber stamp signature on assignment schedules or invoices as
the equivalent of a manual signature by one of the Borrower's authorized
officers or agents.
3. The Borrower hereby represents and warrants as to itself
that: each Account is based on an actual and bona fide sale and delivery of
goods or rendition of services to customers, made by the Borrower in the
ordinary course of its business; the goods and inventory being sold and the
Accounts created are the exclusive property of the Borrower and are not and
shall not be subject to any lien, consignment arrangement, encumbrance,
security interest or financing statement whatsoever, other than the Permitted
Encumbrances; the invoices evidencing such Accounts are in the name of the
Borrower; and the customers of the Borrower have accepted the goods or
services, owe and are obligated to pay the full amounts stated in the invoices
according to their terms, without dispute, offset, defense, counterclaim or
contra, except for disputes and other matters arising in the ordinary course of
business of which the Borrower has advised CITBC pursuant to paragraph 4 of
this Section 3. The Borrower confirms to CITBC that any and all taxes or fees
relating to its business, its sales, the Accounts or goods relating thereto,
are its sole responsibility and that same will be paid by the Borrower when due
and that none of said taxes or fees represent a lien on or claim against the
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Accounts. The Borrower also warrants and represents that it is a duly and
validly existing corporation and is qualified in all states where the failure
to so qualify would have a adverse effect on the business of the Borrower or
the ability of the Borrower to enforce collection of Accounts due from
customers residing in that state. The Borrower agrees to maintain such books
and records regarding Accounts as CITBC may reasonably require and agrees that
the books and records of the Borrower will reflect CITBC's interest in the
Accounts. All of the books and records of the Borrower will be available to
CITBC at normal business hours, including any records handled or maintained for
the Borrower by any other company or entity.
4. The Borrower agrees to notify CITBC promptly of any
matters materially affecting the value, enforceability or collectability of any
Account or Accounts in excess of $250,000 in the aggregate outstanding at any
time and of all material customer disputes, offsets, defenses, counterclaims,
returns, rejections and all reclaimed or repossessed merchandise or goods. The
Borrower agrees to issue credit memoranda promptly (with duplicates to CITBC
upon request after the occurrence of an Event of Default) upon accepting
returns or granting allowances, and may continue to do so until CITBC has
notified the Borrower that an Event of Default has occurred and that all future
credits or allowances are to be made only after CITBC's prior written approval.
Upon the occurrence and during the continuance of an Event of Default and on
notice from CITBC, the Borrower agrees that all returned, reclaimed or
repossessed merchandise or goods shall be set aside by the Borrower, marked
with CITBC's name and held by the Borrower for CITBC's account as owner and
assignee.
5. The Borrower shall maintain the bank accounts listed on
Schedule 3.5 hereto in the name of the Borrower for the purpose of, inter alia,
receiving proceeds relating to the Accounts with the banks specified therein
(the "Collection Bank(s)") hereby designated as the "Collection Accounts." The
Borrower agrees that it will not designate any other bank account as a
Collection Account without the prior written consent of CITBC. Any checks,
cash, notes or other instruments or property received by the Borrower with
respect to any Accounts shall be held by the Borrower in trust for CITBC
separate from the Borrower's own property and funds and immediately turned over
to CITBC with proper assignments or endorsements by deposit to the Collection
Account. All amounts received by CITBC in payment of Accounts will be credited
to the Borrower's accounts upon CITBC's receipt of "collected funds" at CITBC'S
bank account on the business day of receipt if received no later than 1:00 p.m.
or on the next succeeding business day if received after 1:00 p.m. No checks,
drafts or other instrument
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received by CITBC shall constitute final payment to CITBC unless and until such
instruments have actually been collected. Until CITBC has advised the Borrower
to the contrary after the occurrence of an Event of Default, the Borrower may
and will enforce, collect and receive all amounts owing on the Accounts for
CITBC's benefit and on CITBC's behalf, but at the Borrower's expense; such
privilege shall terminate automatically upon the institution by or against the
Borrower of any proceeding under any bankruptcy or insolvency law or, at the
election of CITBC, upon the occurrence and during the continuance of any Event
of Default.
6. CITBC shall maintain a separate account on its books in
the name of the Borrower in which the Borrower will be charged with loans and
advances made by CITBC to it or for its account, and with any other
Obligations, including any and all costs, expenses and reasonable attorney's
fees which CITBC may incur in connection with the exercise by or for CITBC of
any of the rights or powers herein conferred upon CITBC, or in the prosecution
or defense of any action or proceeding to enforce or protect any rights of
CITBC in connection with this Financing Agreement or the Collateral assigned
hereunder, or any Obligations owing to CITBC by the Borrower. The Borrower
will be credited with all amounts received by CITBC from the Borrower or from
others for the Borrower's account, including, as above set forth, all amounts
received by CITBC in payment of assigned Accounts and such amounts will be
applied to payment of the Obligations. In no event shall prior recourse to any
Accounts or other security granted to or by the Borrower be a prerequisite to
CITBC's right to demand payment of any Obligation. Further, it is understood
that CITBC shall have no obligation whatsoever to perform in any respect any of
the Borrower's contracts or obligations relating to the Accounts.
7. After the end of each month, CITBC shall promptly send the
Borrower a statement showing the accounting for the charges, loans, advances
and other transactions occurring between CITBC and the Borrower during that
month. The monthly statements shall be deemed correct and binding upon the
Borrower and shall constitute an account stated between the Borrower and CITBC
unless CITBC receives a written statement of the exceptions within thirty (30)
days of the date of the monthly statement.
8. In the event this Financing Agreement or the Revolving
Line of Credit is terminated by CITBC in accordance with the provisions hereof
or the Borrower for any reason whatsoever, the Revolving Loans shall become
due and payable on the effective date of such termination,
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notwithstanding any provision to the contrary in the Revolving Loans Promissory
Note or this Financing Agreement.
SECTION 4. TERM LOAN
1. The Borrower hereby agrees to execute and deliver to CITBC
the Term Loan Promissory Note, in the form of Exhibit A1 attached hereto, to
evidence the Term Loan to be extended by CITBC.
2. Upon receipt of such Term Loan Promissory Note, CITBC
hereby agrees to extend to the Borrower the Term Loan in the principal amount
of $5,000,000.
3. The principal amount of the Term Loan shall be repaid to
CITBC by the Borrower:
(i) in thirty-five (35) consecutive, monthly
installments each in the amount of $85,714.30 with the first installment
due on November 30, 1995, and with subsequent installments due on each
Monthly Date thereafter to and including September 30, 1998; and
(ii) in one (1) final installment of the remaining
principal amount outstanding, plus all other amounts having accrued and
become outstanding payable on October 23, 1998.
4. The Borrower may prepay the Term Loan in whole or in part
at any time, at their option; provided, however, that on each such prepayment,
the Borrower shall pay accrued interest on the principal so prepaid to the date
of such prepayment. Each optional prepayment made pursuant to this paragraph 4
shall be applied to the last maturing installment(s) of principal on the Term
Loan.
5. In the event this Financing Agreement and the Revolving
Line of Credit are terminated by either CITBC or the Borrower for any reason
whatsoever, the Term Loan shall become due and payable on the effective date of
such termination notwithstanding any provision to the contrary in the Term Loan
Promissory Note or this Financing Agreement.
6. The Borrower hereby authorizes CITBC to charge its
Revolving Loan account with the amount of all amounts due under this Section 4
as such amounts become due. The Borrower confirms that any charges which CITBC
may so make to its account as herein provided will be made as an accommodation
to the Borrower and solely at CITBC's discretion.
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SECTION 5. Letters of Credit
In order to assist the Borrower in continuing the Shawmut
Letters of Credit, on the Closing Date, and in establishing or opening Letters
of Credit with an Issuing Bank to cover the purchase of inventory, equipment or
otherwise, the Borrower has requested CITBC to join in the applications for
such Letters of Credit, and/or guarantee payment or performance of such Letters
of Credit and any drafts or acceptances thereunder through the issuance of the
Letters of Credit Guaranty, thereby lending CITBC's credit to the Borrower and
CITBC has agreed to do so. These arrangements shall be handled by CITBC
subject to the terms and conditions set forth below.
1. (a) The amount, purpose and extent of the Letters of
Credit and changes or modifications thereof by the Borrower and/or the Issuing
Bank of the terms and conditions thereof shall in all respects be subject to
the prior approval of CITBC in the exercise of its reasonable discretion
provided however, that: a) in no event may the aggregate amount of all such
outstanding Letters of Credit exceed, in the aggregate, at any one time
$1,500,000, and b) the Letters of Credit and all documentation in connection
therewith shall be in form and substance satisfactory to the Borrower, CITBC
and the Issuing Bank.
(b) The Borrower and CITBC hereto agree that the
documentation in connection with the Shawmut Letters of Credit is satisfactory
in form and substance and such documentation shall not be amended without the
prior written consent of CITBC.
2. CITBC shall have the right, without notice to the
Borrower, to charge the Borrower's account on CITBC's books with the amount of
any and all indebtedness, liability or obligation of any kind incurred by CITBC
under the Letter of Credit Guaranties at the earlier of a) payment by CITBC
under the Letter of Credit Guaranties, or b) the occurrence of an Event of
Default. Any amount charged to Borrower's loan account shall be deemed a
Revolving Loan hereunder and shall incur interest at the rate provided in
Section 9, paragraph 1 of this Financing Agreement.
3. The Borrower unconditionally indemnifies CITBC and
holds CITBC harmless from any and all loss, claim or liability incurred by
CITBC arising from any transactions or occurrences relating to Letters of
Credit established or opened for the Borrower's account, the collateral
relating thereto and any drafts or acceptances thereunder, and all Obligations
thereunder, including any such loss or claim due to any action taken by any
Issuing Bank, other than for any such loss, claim or liability arising out of
the gross
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negligence or willful misconduct by CITBC under the Letter of Credit
Guaranties. The Borrower further agrees to hold CITBC harmless from any errors
or omission, negligence or misconduct by the Issuing Bank. The Borrower's
unconditional obligation to CITBC hereunder shall not be modified or diminished
for any reason or in any manner whatsoever, other than as a result of CITBC's
gross negligence or willful misconduct. The Borrower agrees that any charges
incurred by CITBC for the Borrower account by the Issuing Bank shall be
conclusive on CITBC and may be charged to the Borrower's account.
4. CITBC shall not be responsible for: the existence,
character, quality, quantity, condition, packing, value or delivery of the
goods purporting to be represented by any documents; any difference or
variation in the character, quality, quantity, condition, packing, value or
delivery of the goods from that (expressed in the documents; the validity,
sufficiency or genuineness of any documents or of any endorsements thereon,
even if such documents should in fact prove to be in any or all respects
invalid, insufficient, fraudulent or forged; the time, place, manner or order
in which shipment is made; partial or incomplete shipment, or failure or
omission to ship any or all of the goods referred to in the Letters of Credit
or documents; any deviation from instructions; delay, default, or fraud by the
shipper and/or anyone else in connection with the Collateral or the shipping
thereof; or any breach of contract between the shipper or vendors and the
Borrower. Furthermore, without being limited by the foregoing, CITBC shall not
be responsible for any act or omission with respect to or in connection with
any Collateral.
5. The Borrower agrees that any action taken by CITBC,
if taken in good faith, or any action taken by any Issuing Bank, under or in
connection with the Letters of Credit, the Letter of Credit Guaranties, the
drafts or acceptances, or the Collateral, shall be binding on the Borrower and
shall not put CITBC in any resulting liability to the Borrower. In furtherance
thereof, CITBC shall have the full right and authority to clear and resolve any
questions of non-compliance of documents; to give any instructions as to
acceptance or rejection of any documents or goods; to execute any and all
steamship or airways guaranties (and applications therefore), indemnities or
delivery orders; to grant any extensions of the maturity of, time of payment
for, or time of presentation of, any drafts, acceptances, or documents; and to
agree to any amendments, renewals, extensions, modifications, changes or
cancellations of any of the terms or conditions of any of the applications,
Letters of Credit, drafts or acceptances; all in CITBC's sole name, and the
Issuing Bank shall be entitled to comply with and honor any and all such
documents
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or instruments executed by or received solely from CITBC, all without any
notice to or any consent from the Borrower.
6. Without CITBC's express consent and endorsement in
writing, the Borrower agrees: a) not to execute any and all applications for
steamship or airway guaranties, indemnities or delivery orders; to grant any
extensions of the maturity of, time of payment for, or time of presentation of,
any drafts, acceptances or documents; or to agree to any amendments, renewals,
extensions, modifications, changes or cancellations of any of the terms or
conditions of any of the applications, Letters of Credit, drafts or
acceptances; and b) after the occurrence of an Event of Default which is not
cured within any applicable grace period, if any, or waived by CITBC, not to i)
clear and resolve any questions of non-compliance of documents, or ii) give any
instructions as to acceptance or rejection of any documents or goods.
7. The Borrower agrees that any necessary import, export
or other licenses or certificates for the import or handling of the Collateral
will have been promptly procured; all foreign and domestic governmental laws
and regulations in regard to the shipment and importation of the Collateral, or
the financing thereof will have been promptly and full complied with; and any
certificates in that regard that CITBC may at any time request will be promptly
furnished. In this connection, the Borrower warrants and represents that all
shipments made under any such Letters of Credit are in accordance with the laws
and regulations of the countries in which the shipments originate and
terminate, and are not prohibited by any such laws and regulations. The
Borrower assumes all risk, liability and responsibility for, and agrees to pay
and discharge, all present and future local, state, federal or foreign taxes,
duties, or levies. Any embargo, restriction, laws, customs or regulations of
any country, state, city, or other political subdivision, where the Collateral
is or may be located, or wherein payments are to be made, or wherein drafts may
be drawn, negotiated, accepted, or paid, shall be solely the Borrower's risk,
liability and responsibility.
8. Upon any payments made to the Issuing Bank under a
Letter of Credit Guaranty, CITBC shall acquire by subrogation, any rights,
remedies, duties or obligations granted or undertaken by the Borrower to the
Issuing Bank in any application for Letters of Credit, any standing agreement
relating to Letters of Credit or otherwise, all of which shall be deemed to
have been granted to CITBC and apply in all respects to CITBC and shall be in
addition to any rights, remedies, duties or obligations contained herein.
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SECTION 6. COLLATERAL
1. As security for the prompt payment in full of all loans
and advances made and to be made to the Borrower from time to time by CITBC
pursuant hereto, as well as to secure the payment in full of the other
Obligations, the Borrower hereby pledges and grants to CITBC a continuing a
first prior general lien upon and security interest in all of its Collateral
subject to Permitted Encumbrances.
2. The security interests granted hereunder shall extend and
attach to:
(a) All Collateral, whether presently in existence or
hereafter acquired or created, however acquired or created, and which
is owned by the Borrower or in which the Borrower has any interest,
whether held by the Borrower or others for its account, and, if any
Collateral is Equipment, whether the Borrower's interest in such
Equipment is as owner or lessee or conditional vendee;
(b) All Equipment whether the same constitutes personal
property or fixtures, including, but without limiting the generality
of the foregoing, all dies, jigs, tools, benches, tables, accretions,
component parts thereof and additions thereto, as well as all
accessories, motors, engines and auxiliary parts used in connection
with or attached to the Equipment;
(c) All Inventory and any portion thereof which may be
returned, rejected, reclaimed or repossessed by either CITBC or the
Borrower from the Borrower's customers, as well as to all supplies,
goods, incidentals, packaging materials, labels and any other items
which contribute to the finished goods or products manufactured or
processed by the Borrower, or to the sale, promotion or shipment
thereof; and
(d) all proceeds and products of the Collateral.
3. The Borrower agrees to safeguard, protect and hold all
Inventory for CITBC's account and make no disposition thereof except in the
ordinary course of business of the Borrower. Until CITBC has given the
Borrower's notice to the contrary, as provided for below, any Inventory may be
sold and shipped by the Borrower to its customers in the ordinary course of the
Borrower's business, on open account and on terms currently being extended by
the Borrower to its customers; provided, however, that all proceeds of all
sales (including cash, accounts receivable, checks, notes, instruments for the
payment of money and similar proceeds) are forthwith transferred, endorsed, and
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turned over and delivered to CITBC in accordance with this paragraph 3. CITBC
shall have the right to withdraw this permission at any time upon the
occurrence and during the continuance of an Event of Default, in which event no
further disposition shall be made of the Inventory by the Borrower without
CITBC's prior written approval. Sales of Inventory in which a lien upon, or
security interest in, Inventory is retained by the Borrower shall be made by
the Borrower only with the approval of CITBC, and the proceeds of such sales of
Inventory shall not be commingled with the Borrower's other property, but shall
be segregated, held by the Borrower in trust for CITBC as CITBC's exclusive
property, and shall be delivered immediately by the Borrower to CITBC in the
identical form received by the Borrower by deposit to the Collection Accounts.
Upon the sale, exchange, or other disposition of Inventory, as herein provided,
the security interest in the Borrowers' Inventory provided for herein shall,
without break in continuity and without further formality or act, continue in,
and attach to, all proceeds, including any instruments for the payment of
money, accounts receivable, contract rights, documents of title, shipping
documents, chattel paper and all other cash and non-cash proceeds of such sale,
exchange or disposition. As to any such sale, exchange or other disposition,
CITBC shall have all of the rights of an unpaid seller, including stoppage in
transit, replevin, rescission and reclamation.
4. The Borrower will, at its own cost and expense, keep the
Equipment in as good and substantial repair and condition as the same is now or
at the time the lien and security interest granted herein shall attach thereto,
reasonable wear and tear excepted, making any and all repairs and replacements
when and where necessary. Except as provided herein, the Borrower also agrees
to make no disposition thereof whether by sale, exchange or otherwise, unless
the Borrower first obtains the prior written approval of CITBC and the proceeds
of any such disposition shall be deposited in the Collection Accounts. Upon
the sale, exchange, or other disposition of the Equipment, as herein provided,
the security interest provided for herein shall, without break in continuity
and without further formality or act, continue in, and attach to, all proceeds,
including any instruments for the payment of money, accounts receivable,
contract rights, documents of title, shipping documents, chattel paper and all
other cash and non-cash proceeds of such sales, exchange or disposition. As to
any such sale, exchange or other disposition, CITBC shall have all of the
rights of an unpaid seller, including stoppage in transit, replevin, rescission
and reclamation. Notwithstanding anything hereinabove contained to the
contrary, upon written notice from the Borrower prior to any disposition of
Equipment, the Borrower may sell, exchange or otherwise dispose of obsolete
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Equipment or Equipment no longer needed in the Borrower's operations; provided,
however, that (a) then book value of the Equipment so disposed of by the
Borrower does not exceed $50,000 in any consecutive twelve-month period; and
provided, further, that no such prior notice shall be required in respect of
sales, exchanges, and other depositions of Equipment unless the book value of
such Equipment disposed of without such prior notice has exceeded, or would
upon such disposition, exceed $50,000 in the aggregate for the Borrower in any
consecutive twelve-month period, and (b) the proceeds of such sales or
dispositions are delivered to CITBC in accordance with the foregoing provisions
of this paragraph, except that the Borrower may retain and use such proceeds to
purchase forthwith replacement Equipment which the Borrower determines in its
reasonable business judgment to have a collateral value at least equal to the
Equipment so disposed of or sold; provided, however, that the aforesaid right
shall automatically cease upon the occurrence and during the continuance of an
Event of Default which is not waived.
5. The rights and security interests granted to CITBC
hereunder are to continue in full force and effect, notwithstanding the
termination of this Financing Agreement or the fact that the account maintained
in the Borrower's name on the books of CITBC may from time to time be
temporarily in a credit position, until the final payment in full to CITBC of
all Obligations and the termination of this Financing Agreement. Any delay, or
omission by CITBC to exercise any right hereunder, shall not be deemed a waiver
thereof, or be deemed a waiver of any other right, unless such waiver be in
writing and signed by CITBC. A waiver on any one occasion shall not be
construed as a bar to or waiver of any right or remedy on any future occasion.
6. The Borrower will, at its sole cost and expense, do,
execute, acknowledge and deliver all and every such further acts, deeds,
conveyances, mortgages, assignments, notices of assignment, transfers and
assurances as CITBC shall from time to time reasonably require, for the better
assuring, conveying, assigning, transferring and confirming unto CITBC the
property and rights hereby conveyed or assigned or intended now or hereafter so
to be, or which the Borrower may be or may hereafter become bound to convey or
assign to CITBC, or for carrying out the intention or facilitating the
performance of the terms of each mortgage granted pursuant to the terms hereof,
or for filing, registering or recording such mortgage and, on demand, will
execute and deliver, and hereby authorizes CITBC to execute and file in the
Borrower's name in the event Borrower fails to promptly do so or if there has
occurred a Default or Event of Default, to the extent it may lawfully do so,
one or more financing statements, chattel
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mortgages or comparable security instruments, to evidence or perfect more
effectively CITBC's security interest in and the lien hereof upon the
Collateral.
7. The rights and security interests granted to CITBC
hereunder and under the Mortgages are to continue in full force and effect
until the final payment in full to CITBC of all Obligations and the termination
of this Financing Agreement.
8. To the extent that the Obligations are now or hereafter
secured by any assets or property other than the Collateral or by the
guarantee, endorsement, assets or property of any other person, then CITBC
shall have the right in its sole discretion to determine which rights,
security, liens, security interests or remedies CITBC shall at any time pursue,
foreclose upon, relinquish, subordinate, modify or take any other action with
respect to, without in any way modifying or affecting any of them, or any of
CITBC's rights hereunder.
9. Any reserves or balances to the credit of the Borrower
and any other property or assets of the Borrower in the possession of CITBC
may be held by CITBC as security for any Obligations and applied in whole or
partial satisfaction of such Obligations when due. The liens and security
interests granted herein and any other lien or security interest CITBC may have
in any other assets of the Borrower, shall secure payment and performance of
all now existing and future Obligations. CITBC may in its discretion charge
any or all of the Obligations to the account of the Borrower when due.
10. This Financing Agreement and the obligation of the
Borrower to perform all of its covenants and obligations hereunder are further
secured by certain Mortgages.
11. The Borrower shall give to CITBC from time to time
such mortgage, deed of trust or assignment on the Real Estate or real estate
acquired after the date hereof as CITBC shall require to obtain a valid first
lien thereon subject only to Permitted Encumbrances.
12. The Borrower shall (i) give to CITBC, and/or shall cause
each subsequently acquired Subsidiary of the Borrower to give to CITBC, from
time to time such pledge or security agreements with respect to subsequently
acquired Collateral of the Borrower, and such guaranty of the Obligations, as
CITBC shall require to obtain an enforceable guaranty of the Obligations and
valid first liens on such Collateral subject to Permitted Encumbrances and (ii)
cause the Borrower or any Subsidiary of the Borrower as the direct
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parent of any subsequently acquired Subsidiary to become a party to a guaranty
of the Obligations and to a pledge agreement and deliver to CITBC, as
collateral thereunder, all capital stock owned by the Borrower or such
Subsidiary in such subsequently acquired Subsidiary, together with duly
executed stock powers in blank.
SECTION 7. REPRESENTATIONS AND WARRANTIES
The Borrower represents, covenants and warrants as follows:
1. CORPORATE EXISTENCE. (a) The Borrower has the corporate
power to own its property and to carry on its business as now being conducted.
The Borrower has delivered to CITBC true, complete and correct copies of its
respective Certificate of Incorporation and By-laws, as amended and in full
force and effect on the date hereof and a list of all jurisdictions in which
it is qualified or licensed to do business.
(b) The Borrower has all requisite power and authority to
enter into and perform all its obligations under this Financing Agreement.
(c) The Borrower has identified on Schedule 7.1 the name and
jurisdiction of incorporation or organization of the Borrower and the number of
shares of capital stock and other equity securities issued and outstanding as
of the date hereof and the percentage of the issued and outstanding capital
stock of each subsidiary owned by the Borrower as of the date hereof. All such
shares of capital stock and other equity securities have been validly issued
and are fully paid and nonassessable and are owned by the Borrower beneficially
and of record, free and clear of any lien, except for the Permitted
Encumbrances.
Except as set forth on Schedule 7.1 hereto, the Borrower does
not have outstanding stock or securities convertible into or exchangeable or
exercisable for any shares of its capital stock, nor does it have outstanding
any rights to subscribe for or to purchase, or any options for the purchase of,
or any agreement providing for the issuance (contingent or otherwise) of, or
any calls, commitments or claims of any character relating to, any shares of
its capital stock or any securities convertible into or exchangeable or
exercisable for any shares of its capital stock. The Borrower has reserved
such number of shares of common stock for issuance pursuant to such instruments
or agreements as are set forth in Schedule 7.1 hereto. As of the date hereof,
no Person holds of record or beneficially owns 5% or more of the outstanding
shares of
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any class of the capital stock of the Borrower, except as set forth in Schedule
7.1 hereto.
2. AUTHORIZATION OF FINANCING AGREEMENT AND OTHER DOCUMENTS.
The Borrower has taken all actions necessary to authorize it to enter into and
perform its obligations under this Financing Agreement and the other Loan
Documents, and to consummate the transactions contemplated hereby and thereby.
Each Loan Document when executed and delivered by the Borrower to the extent a
party thereto as provided in this Financing Agreement, will be, legal, valid
and binding obligations of the Borrower to the extent a party thereto,
enforceable in accordance with their respective terms, subject as to
enforcement of remedies, to applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting the rights of
creditors generally and limitations imposed by federal or state law or
equitable principles upon the specific enforceability of any of the remedies,
covenants or other provisions of this Financing Agreement or any other Loan
Document, and upon the availability of injunctive relief or other equitable
remedies.
3. FINANCIAL STATEMENTS. DeVlieg has furnished CITBC with
the Balance Sheet of DeVlieg as at July 31, 1995 and the related statements of
earnings, stockholders' equity and cash flows of DeVlieg for the fiscal year
ended July 31, 1995, all certified by Price Waterhouse LLP, including in each
case the related schedules and notes.
National Acme has furnished CITBC with the Consolidated
Balance Sheet of National Acme and National Acme Trading Company for each
twelve month period ended October 30, 1993 and October 30, 1994 and for the ten
month period ended July 31, 1995 and the related statements of earnings,
stockholders' equity and cash flows of National Acme for the periods then
ended, all certified by Ernst & Young, including in each case the related
schedules and notes.
All such financial statements (including any related schedules
and/or notes) have been prepared in accordance with generally accepted
accounting principles consistently applied, except to the extent set forth in
the notes to such financial statements, throughout the periods involved and to
the extent required by such principles show all liabilities, direct and
contingent, of DeVlieg, National Acme and National Acme Trading Company,
respectively. The balance sheets and the related schedules and notes fairly
present the financial condition of DeVlieg, National Acme and National Acme
Trading Company, respectively, as at the respective dates thereof; and the net
income and stockholders' equity statements and the related schedules
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and notes fairly present the results of the operations of DeVlieg, National
Acme and National Acme Trading Company, respectively, for the respective
periods indicated.
There have been no material adverse changes in the condition,
financial or other, of DeVlieg, since July 31, 1995.
There have been no material adverse changes in the condition,
financial or other, of National Acme and National Acme Trading Company, since
July 31, 1995.
4. NO VIOLATION. Neither the execution or delivery of this
Financing Agreement or any other Loan Document, nor the performance by the
Borrower to the extent a party thereto, of its obligations hereunder or
thereunder, nor the consummation of the transactions contemplated hereby and
thereby, will:
(a) violate any provision of the charter or by-laws
of the Borrower;
(b) violate any statute or law or any judgment,
decree, order, regulation or rule of any court or governmental
authority to which the Borrower or any of its respective properties
may be subject;
(c) cause the acceleration of the maturity of any
debt or obligation of the Borrower;
(d) violate, or be in conflict with, or constitute a
default under, or permit the termination of, or require the consent of
any Person under, or result in the creation of any lien upon any
property of the Borrower under, any agreement to which the Borrower is
a party or by which the Borrower (or its respective properties) may be
bound other than as would not have a material adverse effect on the
Borrower and its Subsidiaries, taken as a whole; or
(e) except for the consents required and set forth
on Schedule 7.4 to this Financing Agreement, require any consent,
approval or other action by any court or administrative or
governmental body or any other Person pursuant to, the charter or
by-laws of the Borrower, any award of any arbitrator or any agreement
(including any agreement with stockholders), instrument, order,
judgment, decree, statute, law, rule or regulation to which the
Borrower is subject.
The Borrower is not a party to, or otherwise subject to any
provision contained in, any instrument evidencing Indebtedness of the Borrower,
any agreement
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relating thereto or any other contract or agreement (including its charter)
which, except to the extent complied with by the Borrower or consented to in
connection with the execution of this Financing Agreement, the Term Loan
Promissory Note and the Revolving Loans Promissory Note, restricts or otherwise
limits the incurring of the Indebtedness evidenced by this Financing Agreement,
the Term Loan Promissory Note or the Revolving Loans Promissory Note.
The Borrower is not in default (without giving effect to any
grace or cure period or notice requirement) under any agreement for borrowed
money or under any agreement pursuant to which any of its securities were sold.
5. FULL DISCLOSURE. Neither this Financing Agreement nor any
other Loan Document, nor any of the other documents, certificates or statements
furnished to CITBC in writing by or on behalf of the Borrower in connection
herewith or therewith contains any untrue statement of a material fact or, when
read together, omits to state a material fact necessary to make the statements
contained herein or therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to the Borrower which the
Borrower has not disclosed to CITBC which materially adversely affects, or
insofar as the Borrower can reasonably foresee will materially adversely
affect, the properties, business, prospects, operations, earnings, assets,
liabilities or condition (financial or otherwise) of the Borrower or the
ability of the Borrower to perform its obligations under this Financing
Agreement, the Term Loan Promissory Note and the Revolving Loans Promissory
Note, or any other Loan Document contemplated hereby or thereby.
The financial projections delivered in connection with Section
2.1(y) of this Financing Agreement are based on the good faith estimates and
assumptions of the Executive Officers of the Borrower, who have no reason to
believe that such projections are not reasonable based upon current general
economic conditions.
6. LITIGATION. Except as disclosed on Schedule 7.6 hereto,
there is no action, proceeding or investigation pending, or to the best
knowledge of the Executive Officers of the Borrower after due inquiry,
threatened, against or affecting the Borrower in any court or before any
governmental authority or arbitration board or tribunal, foreign or domestic,
except for such actions which, if adversely determined, singly and in the
aggregate, would not have a material adverse effect on the Borrower, and there
is no such action seeking to restrain, enjoin, prevent the consummation of or
otherwise challenge this Financing Agreement or any other Loan Document or any
of the other
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documents or the transactions contemplated hereby or thereby.
The Borrower is not subject to any judgment, order, decree,
rule or regulation of any court, governmental authority or arbitration board or
tribunal which has materially adversely affected or which can reasonably be
expected to have a material adverse effect on the Borrower's business.
7. PROPERTIES. Schedule 1(a) lists all Real Estate owned by
the Borrower. The Borrower has good and marketable fee title to all such Real
Estate and such other Real Estate fee title to which it may acquire after the
Closing Date. All material leases and other material agreements to which the
Borrower is a party are valid and binding and in full force and effect, no
default has occurred or is continuing thereunder which would have a material
adverse effect on the Borrower and its subsidiaries taken as a whole and no
consent need be obtained (other than consents, if any, which have been or will
be obtained prior to the Closing Date, are identified on a schedule previously
delivered to CITBC and copies of which will be delivered to CITBC prior to the
Closing Date) from any Person in respect of any such lease or agreement in
connection with the transactions contemplated hereby. The Borrower enjoys
peaceful and undisturbed possession of all leases necessary in any material
respect for the operation of its respective properties and assets, none of
which contains any unusual or burdensome provisions which materially or
adversely affects or impairs the operation of such properties or assets.
8. COMPLIANCE WITH LAWS. The Borrower is in not violation of
any statutes, laws, ordinances, governmental rules or regulations or any
judgment, order, writ, injunction, decree, rule or regulation (federal, state,
local or foreign) to which it is subject or has failed to obtain any licenses,
permits, franchises or other governmental authorizations necessary to the
ownership or operation of its properties or the conduct of its business, except
for such violations and failures to obtain those which would not have a
material adverse effect on the property, prospects, operations, earnings,
assets, liabilities, or condition (financial or otherwise) of the Borrower.
9. GOVERNMENTAL REGULATIONS. The Borrower is not subject to
regulation under the Investment Company Act of 1940, as amended, the Public
Utility Holding Company Act of 1935, as amended, the Federal Power Act, the
Interstate Commerce Act or to any federal or state statute or regulation
limiting its ability to incur indebtedness for borrowed money.
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10. OUTSTANDING DEBT; NO DEFAULT. The Borrower does not have
outstanding Indebtedness except as set forth in the Balance Sheet of DeVlieg as
at July 31, 1995. The Borrower does not have outstanding subordinated
indebtedness other than the subordinated indebtedness set forth on Schedule
7.10 hereto. No event has occurred or failed to occur which would constitute
a Default or Event of Default under this Financing Agreement.
11. SECURITY INTEREST AND LIENS. The Borrower further
warrants and represents that, except for the Permitted Encumbrances, the
security interests granted herein constitute and shall at all times constitute
the first and only liens on the Collateral; that, except for the Permitted
Encumbrances, the Borrower is the absolute owner of the Collateral with full
right to pledge, sell, consign, transfer and create a security interest
therein, free and clear of any and all claims or liens in favor of others; and
that the Equipment does not comprise a part of the Inventory of the Borrower
and that the Equipment is and will only be used by the Borrower in its
business and will not be held for sale or lease, or removed from its premises,
or otherwise disposed of by the Borrower without the prior written approval of
CITBC.
12. TITLE, LIENS. The Borrower has good and marketable title
to its properties and assets reflected in the Balance Sheet of DeVlieg as at
July 31, 1995 (other than properties and assets disposed of in the ordinary
course of business).
13. TAXES. The Borrower has filed all federal, State and
other income tax returns that, to the knowledge of the Borrower, are required
to be filed, and have paid all taxes as shown on said returns and on all
assessments received by it to the extent that such taxes have become due.
Federal income tax returns of the Borrower have been examined and reported on
by the taxing authorities or closed by applicable statutes and satisfied for
all fiscal years prior to and including the fiscal year ended July 31, 1988.
14. POSSESSION OF PATENTS, ETC. The Borrower possesses or
has the right to the use of all the patents, trademarks, trade names, service
marks, copyrights, licenses and other rights free from burdensome restrictions
that are currently used by it or are necessary in any material respect for the
ownership, maintenance and operation of its respective businesses, properties
and assets. All of the foregoing are listed in Schedule 7.14 hereto. Except
as set forth in Schedule 7.14 hereto, the Borrower is not in violation of any
thereof in any material respect and has neither received notice from nor has
knowledge of any
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material claim by any Person that it is now infringing any of the foregoing.
15. BROKER'S OR FINDER'S COMMISSIONS. Except as set forth on
Schedule 7.15 hereto, no broker's or finder's or placement fee or commission
will be payable with respect to this Financing Agreement, the Term Loan
Promissory Note or the Revolving Loans Promissory Note or any other Loan
Document or the transactions contemplated thereby, and the Borrower will hold
CITBC harmless from any claim, demand or liability for broker's or finder's or
placement fees or commissions alleged to have been incurred in connection with
this Financing Agreement, the Term Loan Promissory Notes, the Revolving Loans
Promissory Note, any other Loan Document or such transactions.
16. APPLICATION OF PROCEEDS. The Borrower does not own any
"margin security" within the meaning of Regulation G (12 CFR Part 207) of the
Board of Governors of the Federal Reserve System (herein called a "margin
security"). The proceeds of the Revolving Loans and Term Loan will be used to
(i) refinance all Indebtedness owed by DeVlieg to Shawmut Bank N.A., (ii) make
loans or advances to the Borrower to enable the Borrower to finance the
Acquisition and (iii) for working capital and other general corporate purposes.
Neither the Borrower nor any agent acting on its behalf has taken or will take
any action which might cause this Financing Agreement, the Term Loan Promissory
Note, the Revolving Loans Promissory Note or any other Loan Document to violate
Regulation G, Regulation T, Regulation U, Regulation X or any other regulation
of the Board of Governors of the Federal Reserve System or to violate the
Exchange Act, in each case as in effect now or as the same hereafter may be in
effect.
17. GOVERNMENTAL CONSENT. Neither the nature of the Borrower,
nor any of its respective businesses or properties, nor any relationship
between the Borrower and any other Person, nor any circumstance in connection
with the transactions contemplated by this Financing Agreement is such as to
require any consent, approval or authorization of, or any notice to, or filing,
registration or qualification with, any court or administrative or
governmental body in connection with the execution and delivery of this
Financing Agreement, the Term Loan Promissory Note or the Revolving Loans
Promissory Note or any other Loan Document, or fulfillment of, or compliance
with, the terms and provisions of this Financing Agreement, the Term Loan
Promissory Note or the Revolving Loans Promissory Note or any other Loan
Document, other than the filings, registrations or qualifications under the
state securities laws or blue sky laws of any state of the United States of
America that may be required to be made or
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obtained which either shall have been made and obtained on the Closing Date
(and copies of which delivered to CITBC) or shall have no bearing on the
validity and enforceability of this Financing Agreement, the Term Loan
Promissory Note or the Revolving Loans Promissory Note or any other Loan
Document.
18. ERISA. Neither the Borrower nor any other Person,
including any fiduciary, has engaged in any prohibited transaction (as defined
in section 4975 of the Code or section 406 of ERISA) which could subject the
Borrower, or any entity which the Borrower has an obligation to indemnify, to
any tax or penalty imposed under section 4975 of the Code or section 502 of
ERISA. Each Employee Benefit Plan intended to be qualified under section
401(a) or 401(k) of the Code is so qualified. The Borrower has received a
letter from the Internal Revenue Service stating that each such plan is so
qualified and the Borrower has no knowledge of any operational defects that
have occurred since the date of such determination letter that could adversely
affect such qualification. Each Employee Benefit Plan is administered in
accordance with its terms and in compliance with all applicable law. With
respect to any Employee Benefit Plan, neither the Borrower nor any ERISA
Affiliate has failed to make any contribution due under the terms of such plan
or as required by law. There is no lien outstanding or security interest given
in connection with a Pension Plan. Neither the Borrower nor any ERISA
Affiliate has incurred an accumulated funding deficiency (as defined in section
302 of ERISA or section 412 of the Code) whether or not waived. With respect
to any terminated Pension Plan, the assets have been distributed in full
satisfaction of all benefit liabilities thereunder, and any such plan has been
terminated in compliance with section 4041 of ERISA and the PBGC has not issued
a notice of noncompliance with respect to any such termination. Neither the
Borrower nor any ERISA Affiliate has incurred or expects to incur any liability
under Title IV or ERISA, including any withdrawal liability. Neither the
Borrower nor any ERISA Affiliate maintains or contributes to any Employee
Benefit Plan subject to Title IV of ERISA, section 412 of the Code or section
302 of ERISA other than those defined benefit pension plans set forth on
Schedule 7.18.
Neither the Borrower nor any ERISA Affiliate has ever
sponsored or maintained, has ever contributed to, or has ever incurred any
withdrawal liability under, a Multiemployer Plan, and neither the Borrower nor
any ERISA Affiliate has any written or verbal commitment to establish, maintain
or contribute to any Multiemployer Plan. Neither the Borrower nor any
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ERISA Affiliate has received notice that any Multiemployer Plan is in
Reorganization, is Insolvent or is terminating. Neither the Borrower nor any
ERISA Affiliate has liability for retiree medical, life insurance or other
death benefits (contingent or otherwise) which provide for continuing benefits
or coverage after termination of employment or retirement other than as a
result of a continuation of medical coverage required under section 4980B of
the Code and except as set forth on Schedule 7.18.
The unfunded benefit liabilities as of the date of the most
recent actuarial valuation for each pension plan is set forth on Schedule 7.18
and to the best knowledge of the Borrower, there has been no material adverse
change in such liabilities.
19. ENVIRONMENTAL COMPLIANCE. (a) Except as disclosed in a
written report to CITBC prior to the Closing Date, the Borrower is not in
violation, or alleged to be in violation, of any judgment, decree, order, law,
license, rule or regulation pertaining to environmental matters, including,
without limitation, those arising under the Resource Conservation and Recovery
Act ("RCRA"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 ("XXXX"), the Federal Clean Water Act, the Federal
Clean Air Act, the Toxic Substances Control Act, or any federal, state or local
statute, regulation, ordinance, order or decree relating to health, safety or
the environment (hereinafter "Environmental Laws"), which violation would have
a material adverse effect on the business, assets or financial condition of the
Borrower.
(b) The Borrower has not received written notice from any
third party, including, without limitation, any federal, state or local
governmental authority, (i) that the Borrower has been identified by the United
States Environmental Protection Agency ("EPA") as a potentially responsible
party under CERCLA with respect to a site listed on the National Priorities
List, 40 C.F.R. Part 000 Xxxxxxxx X (1986); (ii) that any hazardous waste, as
defined by 42 U.S.C. Section 6903(5), any hazardous substances as defined by
42 U.S.C. Section 9601(14), any pollutant or contaminant as defined by 42
U.S.C. Section 9601(33), any medical waste and any toxic substances, oil or
hazardous materials or other chemicals or substances regulated by any
Environmental Laws ("Hazardous Substances") which any one of them has
generated, transported or disposed of has been released at any site at which a
federal, state or local agency has conducted or has ordered that the Borrower
conduct a remedial investigation, removal or other response action pursuant to
any Environmental Law or have named the Borrower as a Potentially Responsible
Party or are seeking contributions from the Borrower; or (iii) that it is or
shall be a name
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party to any claim, action, cause of action, complaint, or legal or
administrative proceeding (in each case, contingent or otherwise) arising out
of any third party's incurrence of costs, expenses, losses or damages of any
kind whatsoever in connection with the release of Hazardous Substances.
(c) To the knowledge of the Borrower and except as disclosed
in a written report to CITBC prior to the Closing Date, to the extent such
activity would have a material adverse effect on the business, assets or
financial condition of the Borrower: (i) no portion of the property of the
Borrower has been used for the handling, processing, storage or disposal of
Hazardous Substances, except in accordance with applicable Environmental Laws;
and except as disclosed in a written report to CITBC prior to the Closing Date,
no underground tank or other underground storage receptacle for Hazardous
Substances is located on any portion of the property; (ii) in the course of any
activities conducted by the Borrower or operators of its properties, no
Hazardous Substances have been generated or are being used on the property
except in accordance with applicable Environmental Laws; (iii) there have been
no releases (i.e., any past or present releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, disposing or
dumping) or threatened releases of Hazardous Substances on, upon, into or from
the property of the Borrower, which releases would have a material adverse
effect on the value of any of the property or adjacent properties or the
environment; and (iv) in addition, any Hazardous Wastes as defined by 42 U.S.C.
Section 6903(5), if any, that have been generated on any of the property have
been transported offsite only by carriers having an identification number
issued by the EPA, treated or disposed of only by treatment or disposal
facilities maintaining valid permits as required under applicable Environmental
Laws, which transporters and facilities have been and are, to the best of the
Borrower's knowledge operating in material compliance with such permits and
applicable Environmental Laws.
20. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
statements contained in any certificate or other document delivered to CITBC by
or on behalf of the Borrower pursuant to or in connection with this Financing
Agreement shall be deemed to constitute representations and warranties under
this Financing Agreement with the same force and effect as the representations
and warranties expressly set forth herein. All the Borrower's representations
and warranties thereunder and hereunder shall survive the execution and
delivery of the same and any investigation by CITBC.
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SECTION 8. CERTAIN COVENANTS
1. ADDITIONAL COLLATERAL. The Borrower hereby covenants
that, except for the Permitted Encumbrances, the Borrower will be at the time
additional Collateral is acquired by it, the absolute owner of the Collateral
with full right to pledge, sell, consign, transfer and create a security
interest therein, free and clear of any and all claims or liens in favor of
others; that the Borrower will at any time CITBC requests, execute and deliver
to CITBC a copyright security agreement in such form as CITBC may reasonably
request in order to more effectively create and perfect in favor of CITBC a
first priority security interest in any copyrights of the Borrower or its
Subsidiaries; that the Borrower will at its expense forever warrant and, at
CITBC's request, defend the same from any and all claims and demands of any
other Person other than the Permitted Encumbrances; and that the Borrower will
not grant, create or permit to exist, any lien upon or security interest in the
Collateral, or any Proceeds thereof, in favor of any other person other than
the holders of the Permitted Encumbrances.
2. INSPECTION RIGHTS. The Borrower will maintain books and
records pertaining to the Collateral in such detail, form and scope as CITBC
shall reasonably require. The Borrower agrees that CITBC or its agents may
enter upon the Borrower's premises at any time during normal business hours,
and from time to time, for the purpose of inspecting the Collateral, and any
and all records pertaining thereto. The Borrower agrees to afford CITBC prior
written notice of any change in the location of any Collateral, including but
not limited to the location of all engineers' drawings, other than to
locations, that as of the date hereof, are known to CITBC and at which CITBC
has filed financing statements and otherwise fully perfected its liens thereon.
The Borrower also agrees to advise CITBC promptly, in sufficient detail, of any
material adverse change relating to the type, quantity or quality of the
Collateral or on the security interests granted to CITBC therein.
3. COLLATERAL REPORTS. The Borrower will execute and deliver
to CITBC, from time to time, solely for CITBC's convenience in maintaining a
record of the Collateral, such written statements and schedules as CITBC may
reasonably require, designating, identifying or describing the Collateral
pledged to CITBC hereunder. The Borrower's failure, however, to promptly give
CITBC such statements, or schedules shall not affect, diminish, modify or
otherwise limit CITBC's security interests in the Collateral.
4. PERFECTION OF SECURITY INTERESTS. The Borrower will
comply with the requirements of all state and
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federal laws in order to grant to CITBC valid and perfected first security
interests in the Collateral, subject only to the Permitted Encumbrances. CITBC
is hereby authorized by the Borrower to file any financing statements covering
the Collateral whether or not the Borrower's signature appears thereon. The
Borrower will do whatever CITBC may reasonably request, from time to time, by
way of: filing notices of liens, financing statements, amendments, renewals
and continuations thereof; cooperating with CITBC's custodians; keeping stock
records; transferring proceeds of Collateral to CITBC's possession; and
performing such further acts as CITBC may reasonably require in order to effect
the purposes of this Financing Agreement.
5. INSURANCE. (a) The Borrower will maintain insurance on
the Real Estate, Equipment and Inventory under such policies of insurance, with
such insurance companies, in such reasonable amounts and covering such
insurable risks as are at all times reasonably satisfactory to CITBC. All
policies covering the Real Estate, Equipment and Inventory are, subject to the
rights of any holders of Permitted Encumbrances holding claims senior to CITBC,
to be made payable to CITBC, in case of loss, under a standard non-contributory
"mortgage", "lender" or "secured party" clause and are to contain such other
provisions as CITBC may require to fully protect CITBC's interest in the Real
Estate, Inventory and Equipment and to any payments to be made under such
policies. True copies thereof are to be delivered to CITBC, premium prepaid,
with the loss payable endorsement in CITBC's favor, and shall provide for not
less than thirty (30) days' prior written notice to CITBC of the exercise of
any right of cancellation. At the Borrower's request or if the Borrower fails
to maintain such insurance, CITBC may arrange for such insurance, but at the
Borrower's expense and without any responsibility on CITBC's part for:
obtaining the insurance, the solvency of the insurance companies, the adequacy
of the coverage, or the collection of claims. Upon the occurrence and during
the continuation of an Event of Default, CITBC shall, subject to the rights of
any holders of Permitted Encumbrances holding claims senior to CITBC, have the
sole right, in the name of CITBC or the Borrower, to file claims under any
insurance policies, to receive, receipt and give acquittance for any payments
that may be payable thereunder, and to execute any and all endorsements,
receipts, releases, assignments, reassignments or other documents that may be
necessary to effect the collection, compromise or settlement of any claims
under any such insurance policies.
(b) (i) In the event of any loss or damage by fire or other
casualty, insurance proceeds relating to Inventory shall first reduce the
Borrower's Revolving Loan, and then the Term Loan;
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(ii) In the event any part of the Borrower's Real Estate
or Equipment is damaged by fire or other casualty and the Proceeds from
insurance for such damage or other casualty is less than or equal to $100,000,
CITBC shall promptly apply such Proceeds to reduce the Borrower's outstanding
balances under the Revolving Loan account.
(iii) As long as no Event of Default has occurred and is
continuing, the Borrower has sufficient business interruption insurance to
replace the lost profits of any of the Borrower's facilities, and the Proceeds
are in excess of $100,000, the Borrower may elect (by the Borrower delivering
written notice to CITBC) to replace, repair or restore such Real Estate or
Equipment to substantially the equivalent condition prior to such fire or other
casualty as set forth herein. If the Borrower does not, or cannot, elect to
use the Proceeds as set forth above, CITBC may, subject to the rights of any
holders of Permitted Encumbrances holding claims senior to CITBC, apply the
Proceeds to the payment of the Obligations in such manner and in such order as
CITBC may reasonably elect.
(iv) If the Borrower elects to use the Proceeds for the
repair, replacement or restoration of any Real Estate or Equipment, and there
is then no Event of Default, i) proceeds of insurance on Equipment and Real
Estate in excess of $100,000 will be applied to the reduction of the Revolving
Loans of the Borrower and ii) CITBC may set up a reserve against Availability
for an amount equal to the proceeds referred to in clause i) hereof. The
reserve will be reduced dollar-for-dollar upon receipt of non-cancelable
executed purchase orders, delivery receipts or contracts for the replacement,
repair or restoration of Equipment or the Real Estate and disbursements in
connection therewith. Prior to the commencement of any restoration, repair or
replacement of Real Estate, the Borrower shall provide CITBC with a restoration
plan and a total budget certified by an independent third party experienced in
construction costing. If there are insufficient Proceeds to cover the cost of
restoration as so determined, the Borrower shall be responsible for the amount
of any such insufficiency prior to the commencement of restoration and shall
demonstrate evidence of such before the reserve will be reduced. Completion of
restoration shall be evidenced by a final, unqualified certification of the
design architect employed, if any; an unconditional certificate of occupancy,
if applicable; such other certification as may be required by law; or if none
of the above is applicable, a written good faith determination of completion by
the Borrower (herein collectively the "Completion"). Upon Completion, any
remaining reserve as established hereunder will be automatically released.
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(v) The Borrower will pay any reasonable costs, fees or
expenses which CITBC may reasonably incur in connection herewith.
6. TAXES. The Borrower will pay, prior to their becoming
delinquent, all taxes, assessments, claims and other charges (herein "taxes")
lawfully levied or assessed upon the Borrower or the Collateral and if such
taxes remain unpaid after the date fixed for the payment thereof, unless such
taxes are being diligently contested in good faith by the Borrower by
appropriate proceedings, or if any lien shall be claimed thereunder x) for
taxes due the United States of America or y) which in the opinion of CITBC
might create a valid obligation having priority over the rights granted to
CITBC herein, CITBC may, on the Borrower's behalf, pay such taxes, and the
amount thereof shall be an Obligation secured hereby and due to CITBC on
demand.
7. COMPLIANCE WITH LAWS. The Borrower: (a) will comply with
all acts, rules, regulations and orders of any legislative, administrative or
judicial body or official, which the failure to comply with would have a
material and adverse impact on the Collateral, or any part thereof, or on the
operation of the Borrower's business; provided, however, that the Borrower may
contest any acts, rules, regulations, orders and directions of such bodies or
officials in any reasonable manner which will not, in CITBC's reasonable
opinion, materially and adversely affect the operation of the business of the
Borrower or CITBC's rights or priority in the Collateral; (b) will comply with
all environmental statutes, acts, rules, regulations or orders as presently
existing or as adopted or amended in the future, applicable to the ownership
and/or use of its real property and operation of its business, which the
failure to comply with would have a material and adverse impact on the
Collateral, or any part thereof, or on the operation of the business of the
Borrower. The Borrower hereby indemnifies CITBC and agrees to defend and hold
CITBC harmless from and against any and all loss, damage, claim, liability,
injury or expense which CITBC may sustain or incur (other than as a result of
actions of CITBC) in connection with: any claim or expense asserted against
CITBC as a result of any environmental pollution, hazardous material or
environmental clean-up of the Borrower's real property; or any claim or expense
which results from the Borrower's operations (including, but not limited to,
the Borrower's off-site disposal practices) and the Borrower further agrees
that this indemnification shall survive termination of this Financing Agreement
as well as the payment of all Obligations or amounts payable hereunder.
8. FINANCIAL STATEMENTS. Until termination of the Financing
Agreement and payment and satisfaction of all
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Obligations due hereunder, the Borrower agrees that, unless CITBC shall have
otherwise consented in writing, the Borrower will furnish to CITBC, within
ninety (90) days after the end of each fiscal year of the Borrower, an audited
Consolidated Balance Sheet as at the close of such year, and statements of
consolidated earnings, cash flow and reconciliation of surplus of the Borrower
and its Consolidated Subsidiaries, audited by Price Waterhouse LLP, LLP, or
such other independent public accountants selected by the Borrower, and
satisfactory to CITBC; within forty-five (45) days after the end of each fiscal
quarter a Balance Sheet as at the end of such period and statements of
earnings, cash flow and surplus of the Borrower, certified by an authorized
financial or accounting officer of the Borrower; and within thirty (30) days
after the end of each month monthly interim financial statements, certified by
an authorized financial or accounting officer of the Borrower; and from time to
time, such further information regarding the business affairs and financial
condition of the Borrower as CITBC may reasonably request. The Borrower shall
deliver to CITBC no later than (30) days prior to each fiscal year end of the
Borrower a preliminary budget for the following fiscal year. The Borrower
shall deliver to CITBC no later than sixty (60) days from the start of each
fiscal year of the Borrower, annual cash flow projections for such fiscal year,
including a projected consolidated balance sheet and consolidated statements of
earnings, cash flow and surplus (and such consolidating statements as CITBC may
request). All such financial statements shall be prepared in accordance with
generally accepted accounting principles consistently applied, subject to year
end adjustments. Each financial statement which the Borrower is required to
submit hereunder must be accompanied by an Officer's Certificate certifying
that: (i) the financial statement(s) fairly and accurately represent(s) the
Borrower's and Consolidated Subsidiaries' financial condition at the end of the
particular accounting period, as well as the Borrower's and Consolidated
Subsidiaries' operating results during such accounting period, subject to
year-end audit adjustments; (ii) during the particular accounting period: (x)
there has been no default or condition which, with the passage of time or
notice, or both, would constitute a Default or Event of Default under this
Financing Agreement; provided, however, that if any Executive Officer has
knowledge that any such Default or Event of Default has occurred during such
period, the existence of and a detailed description of same shall be set forth
in the Officer's Certificate; and (y) the Borrower has not received any notice
of cancellation with respect to its property insurance policies; and (iii) the
exhibits attached to such financial statement(s) constitute detailed
calculations showing compliance with all financial covenants contained in this
Financing Agreement.
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The Borrower shall furnish to CITBC promptly upon receipt
thereof, copies of any reports submitted to the Borrower by independent
certified accountants in connection with the examination of the financial
statements and financial, accounting and auditing controls (including, without
limitation, management letters) of the Borrower and its Consolidated
Subsidiaries made by such accountants.
9. CERTAIN RESTRICTIONS. Until termination of the Financing
Agreement and payment and satisfaction of all Obligations due hereunder, the
Borrower will not, without the prior written consent of CITBC, except as
otherwise herein provided:
A. Mortgage, assign, pledge, transfer or otherwise permit any lien,
charge, security interest, encumbrance or judgment (whether as a
result of a purchase money or title retention transaction, or other
security interest, or otherwise) to exist on any of its assets or
goods, whether real, personal or mixed, whether now owned or hereafter
acquired, except for the Permitted Encumbrances;
B. Incur or create any Indebtedness other than the Permitted Indebtedness
or increase the principal amount of any Permitted Indebtedness;
C. Borrow any money on the security of the Collateral from sources other
than CITBC;
D. Sell, lease, assign, transfer or otherwise dispose of i) Collateral,
except as otherwise specifically permitted by this Financing
Agreement, or ii) either all or substantially all of the Borrower's
assets, which do not constitute Collateral;
E. Merge, consolidate or otherwise alter or modify its corporate name,
principal place of business, structure, status or existence, or enter
into or engage in any operation or activity materially different from
that presently being conducted by the Borrower;
F. Assume, guarantee, endorse, or otherwise become liable upon the
obligations of any person, firm, entity or corporation, except by the
endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business;
G. Declare or pay any dividend of any kind on, or purchase, acquire,
redeem or retire, any of the capital stock or equity interest, of any
class whatsoever, whether now or hereafter outstanding;
H. Make any advance or loan to, or any investment in, any firm, entity,
person or corporation;
I. Change its fiscal year; or
J. Amend the terms of any stock warrant of the Borrower outstanding on
October 23, 1995 or any registration agreement in effect on such date
relating to the
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registration of its securities under the Securities Act of 1933, as
amended.
10. MINIMUM CONSOLIDATED NET WORTH. The Borrower and its
Consolidated Subsidiaries shall maintain at the end of each Rolling Period, a
Consolidated Net Worth of not less than the following:
Rolling Period Amount
-------------- ------
January 31, 1996 $20,000,000
April 30, 1996 $20,000,000
July 31, 1996 $20,000,000
October 31, 1996 $20,000,000
January 31, 1997 $20,000,000
April 30, 1997 $20,000,000
July 31, 1997 $25,000,000
October 31, 1997 $25,000,000
January 31, 1998 $25,000,000
April 30, 1998 $25,000,000
July 31, 1998 $30,000,000
and thereafter
11. CONSOLIDATED INTEREST COVERAGE RATIO. The Borrower and
its Consolidated Subsidiaries shall maintain at the end of each Rolling Period,
a Consolidated Interest Coverage Ratio of not less than the following:
Rolling Period Ratio
-------------- -----
January 30, 1996 1.90 to 1.00
April 30, 1996 2.50 to 1.00
July 31, 1996 2.75 to 1.00
October 31, 1996 2.75 to 1.00
January 30, 1997 2.75 to 1.00
April 30, 1997 2.75 to 1.00
July 31, 1997 3.25 to 1.00
October 31, 1997 3.25 to 1.00
January 30, 1995 3.25 to 1.00
April 30, 1998 3.25 to 1.00
July 31, 1998 4.00 to 1.00
and thereafter
12. CONSOLIDATED TOTAL LIABILITIES TO CONSOLIDATED NET WORTH.
The Borrower and its Consolidated Subsidiaries will not at the end of each
Rolling Period, permit the ratio of Consolidated Current Liabilities to
Consolidated Net Worth to be greater than the following:
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Rolling Period Ratio
-------------- -----
January 31, 1996 5.00 to 1.00
April 30, 1996 4.90 to 1.00
July 31, 1996 4.60 to 1.00
October 31, 1996 4.60 to 1.00
January 31, 1997 4.60 to 1.00
April 30, 197 4.60 to 1.00
July 31, 1997 3.80 to 1.00
October 31, 1997 3.80 to 1.00
January 31, 1998 3.80 to 1.00
April 30, 1998 3.80 to 1.00
July 31, 1998 3.00 to 1.00
and thereafter
13. CONSOLIDATED CURRENT RATIO. The Borrower and its
Consolidated Subsidiaries shall have at the end of each Rolling Period a ratio
of Consolidated Current Assets to Consolidated Current Liabilities of not less
than the following:
Rolling Period Ratio
-------------- -----
January 31, 1996 1.00 to 1.00
April 30, 1996 1.00 to 1.00
July 31, 1996 1.05 to 1.00
October 31, 1996 1.05 to 1.00
January 31, 1997 1.05 to 1.00
April 30, 1997 1.05 to 1.00
July 31, 1997 1.20 to 1.00
October 31,1997 1.20 to 1.00
January 31, 1998 1.20 to 1.00
April 30, 1998 1.20 to 1.00
July 31, 1998 1.40 to 1.00
and thereafter
14. CONSOLIDATED FIXED CHARGE COVERAGE RATIO. The Borrower
and its Consolidated Subsidiaries shall maintain at the end of each Rolling
Period a Consolidated Fixed Charge Coverage Ratio of not less than the
following:
Rolling Period Ratio
-------------- -----
January 31, 1996 0.60 to 1.00
April 30, 1996 0.85 to 1.00
July 31, 1996 1.00 to 1.00
October 31, 1996 1.00 to 1.00
January 31, 1997 1.00 to 1.00
April 30, 1997 1.00 to 1.00
July 31, 1997 1.50 to 1.00
October 31, 1997 1.50 to 1.00
January 31, 1998 1.50 to 1.00
April 30, 1998 1.50 to 1.00
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July 31, 1998 1.60 to 1.00
and thereafter
15. CONSOLIDATED EDITDA. The Borrower and its Consolidated
Subsidiaries shall have as of the end of each Rolling Period an amount of
Consolidated EDITDA of not less than the following:
Rolling Period Amount
-------------- ------
January 31, 1996 $ 1,900,000
April 30, 1996 $ 5,000,000
July 31, 1996 $ 7,500,000
October 31, 1996 $ 7,500,000
January 31, 1997 $ 7,500,000
April 30, 1997 $ 7,500,000
July 31, 1997 $13,500,000
October 31, 1997 $13,500,000
January 31, 1998 $13,500,000
April 30, 1998 $13,500,000
July 31, 1998 $16,500,000
and thereafter
16. CERTAIN ADJUSTMENTS. Notwithstanding the foregoing
financial covenants set forth in paragraphs 10 through 15 of this Section 8, to
the extent the Borrower is obligated to pay any amounts in settlement of the
litigation entitled Xxxxxxxxx x. Xxxxxxxx Oil & Gas, Inc. et al, and such
obligation or payment results in noncompliance by the Borrower and its
Consolidated Subsidiaries for any period with any or all of such financial
covenants, then for the relevant period and for the purpose of determining such
compliance, Consolidated EBITDA (in the case of the financial covenants in
paragraphs 11, 14 and 15) will be increased, and Consolidated Current
Liabilities in the case of the financial covenants in paragraphs 10, 12 and 13)
will be decreased, by the lesser of (i) $2,000,000, or (ii) such amount as may
be necessary to effect the minimum level of compliance with the relevant
financial covenant.
17. CAPITAL EXPENDITURES. The aggregate amount of all
Capital Expenditures of Borrower and its Subsidiaries will not exceed
$1,500,000 for the period from October 23, 1995 through July 31, 1996 or
$1,500,000 in any fiscal year thereafter. In any fiscal year the Borrower and
its Subsidiaries shall be entitled to add to the $1,500,000 ceiling for such
fiscal year Capital Expenditures equal to Capital Expenditures which were made
in the preceding fiscal year, provided that for the fiscal year commencing
August 1, 1996 the applicable addition shall be one-half of the excess of the
$1,500,000 over the amount of one-half of the amount, if any, by which
$1,500,000 exceeds the amount of Capital Expenditures which were made in the
preceding fiscal year, providedthat for the fiscal year commencing August 1,
1996 the applicable addition shall be one-half of the excess of $1,500,000 over
the amount of
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Capital Expenditures made in the period from October 23, 1995 through July 31,
1996.
18. ENVIRONMENTAL COMPLIANCE. The Borrower will advise CITBC
in writing of: a) all expenditures (actual or anticipated) in excess of
$150,000 for x) environmental clean-up, y) environmental compliance or z)
environmental testing and the impact of said expenses on the Borrower's working
capital; and b) any notices the Borrower receives from any local, state or
federal authority advising the Borrower of any environmental liability (real or
potential) stemming from the Borrower's operations, its premises, its waste
disposal practices, or waste disposal sites used by the Borrower and to provide
CITBC with copies of all such notices if so required.
19. TRANSACTIONS WITH AFFILIATES. Without the prior written
consent of CITBC, the Borrower will not enter into any transaction, including,
without limitation, any purchase, sale, lease, loan or exchange of property
with any Subsidiary or affiliate of the Borrower unless such transaction shall
be on an arm's-length basis on terms no less favorable to the Borrower than a
transaction with a third party.
20. ERISA NOTICES. The Borrower will deliver to CITBC, if
and when (but in no case less than ten (10) days from the date of such event)
(i) the Borrower or any ERISA Affiliate gives or is required to give notice to
the PBGC of any Reportable Event with respect to any Pension Plan, a copy of
the notice of such Reportable Event; (ii) the Borrower or any ERISA Affiliate
becomes obligated to contribute to a Multiemployer Plan to which such entity
was not obligated to contribute on the Closing Date, a letter of a financial
officer describing such event and estimating the future contingent withdrawal
liability with respect thereto; (iii) the Borrower or any ERISA Affiliate
receives notice of complete or partial withdrawal liability with respect to a
Multiemployer Plan or receives notice that a Multiemployer Plan may be or has
been terminated, in Reorganization or Insolvency, or receives notice from the
administrator of a Multiemployer Plan that indicates the existence of potential
withdrawal liability under a Multiemployer Plan, a copy of such notice; (iv)
the Borrower or any ERISA Affiliate receives notice from the PBGC of an intent
to terminate or appoint a trustee to administer any Pension Plan or
Multiemployer Plan, a copy of such notice; (v) the Borrower or any ERISA
Affiliate fails to make a timely contribution to a Pension Plan which may give
rise or has given rise to an accumulated funding deficiency or a lien, a letter
of a financial officer describing such event; (vi) the Borrower or any ERISA
Affiliate adopts or proposes to adopt an amendment which may require or
requires the granting of a
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security interest, a letter of a financial officer describing such event; (vii)
the Borrower or any ERISA Affiliate fails to make a contribution required under
the terms of an Employee Benefit Plan or Pension Plan or as required by law,
which failure has a material adverse effect on such Employee Benefit Plan or
Pension Plan, a letter of a financial officer describing such event; (ix) if
any Pension Plan intending to qualify under section 401(a) or 401(k) of the
Code fails to so qualify, a letter of a financial officer describing such
event; (x) a transaction prohibited under section 4975 of the Code or section
406 of ERISA occurs resulting in liability to the Borrower or any entity which
the Borrower has an obligation to indemnify, a letter of a financial officer
describing such event. Upon the request of CITBC made from time to time, the
Borrower will deliver a copy of the most recent actuarial report and annual
report completed with respect to any Employee Benefit Plan or any other
financial information the Borrower or any ERISA Affiliate has with respect to
any Employee Benefit Plan.
21. ERISA COVENANT. The Borrower will, and will cause
each of its ERISA Affiliates to, maintain all Employee Benefit Plans and
Pension Plans in material compliance with all applicable law, including any
reporting requirements, and make all contributions due under the terms of each
Pension Plan and Employee Benefit Plan or as required by law.
22. CERTAIN NOTICES. The Borrower will notify CITBC of
litigation involving the Borrower or its Subsidiaries to the same extent and in
the same manner in which it notifies the Subordinated Creditors of such
litigation pursuant to the Investment Agreement, as amended by the First
Amendment to the Investment Agreement, referred to in the definition of
"Subordinated Debt" set forth in Section 1 hereof.
SECTION 9. INTEREST, FEES, EXPENSES AND ASSIGNMENTS.
1. INTEREST ON REVOLVING LOANS. Interest on the Revolving
Loans shall be payable monthly on each Monthly Date commencing October 31,
1995, and shall be an amount equal to (a) the Chemical Bank Rate plus one
percent (1.0%) per annum or (b) the LIBOR Rate for the applicable LIBOR Rate
Period(s) elected by the Borrower plus three percent (3.0%) per annum on the
average of the net balances owing by the Borrower to CITBC in the Borrower's
account at the close of each day during such month, but in no event in excess
of the maximum amount of interest permitted by law, as the Borrower may elect
with respect to all or any portion of the outstanding Revolving Loans, such
election to be set forth
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in the Notice of Revolving Borrowing delivered pursuant to Section 3, paragraph
1(b) of this Financing Agreement or in a notice delivered pursuant to Section
9, paragraph 3 of this Financing Agreement. In the event of any change in said
Chemical Bank Rate, the rate applicable to the Revolving Loans under clause (a)
above shall change, as of the first day of the month following any change, so
as to remain one percent (1.00%) above the Chemical Bank Rate. All rates
hereunder shall be calculated based on a 360-day year for the actual number of
days elapsed. CITBC shall be entitled to charge the Borrower's account at the
rate provided for herein when due until all Obligations have been paid in full.
2. INTEREST ON TERM LOAN. Interest on the Term Loan shall be
payable monthly on each Monthly Date, commencing October 31, 1995, on the
unpaid balance or on payment in full prior to maturity in an amount equal to
(a) the Chemical Bank Rate plus one and one-quarter of one percent (1.25%) per
annum or, (b) the LIBOR Rate for the applicable LIBOR Rate Period(s) elected by
the Borrower plus three and one-quarter of one percent (3.25%) per annum. In
the event of any change in said Chemical Bank Rate, the rate applicable to the
Term Loan under clause (a) above shall change, as of the first day of the month
following any change, so as to remain one and one-quarter percent (1.25%) above
the Chemical Bank Rate. All rates applicable to the Term Loan under clause (a)
above shall be calculated based on a 360-day year for the actual number of days
elapsed. CITBC shall be entitled to charge the Borrower's account at the rate
provided for herein when due until all Obligations have been paid in full.
3. SUBSTITUTED INTEREST RATE AT OPTION OF BORROWER. (a) If
the Borrower has elected to base all or a portion of the interest payments due
pursuant to paragraphs 1 or 2 above on the Chemical Bank Rate plus the
appropriate percentage, then at any time during the term of this Financing
Agreement and upon three (3) days' prior written notice to CITBC, the Borrower
may elect to substitute in whole or in part for such rate a LIBOR Rate for the
applicable LIBOR Rate Period(s) elected by the Borrower plus three percent (3%)
or three and one-quarter of one percent (3.25%), as applicable. Alternatively,
if the Borrower has elected to base all or a portion of the interest payments
due pursuant to paragraphs 1 or 2 above on a LIBOR Rate plus the appropriate
percentage, then upon written notice from the Borrower received by CITBC, at
least three (3) days prior to the expiration of then current LIBOR Rate Period
with respect to such loan, the Borrower may elect to substitute in whole or in
part for such LIBOR Rate the Chemical Bank Rate plus one percent (1.0%) or one
and one-quarter of one percent (1.25%), as applicable.
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(b) If the Borrower has elected to base all or a portion of
the interest payments due pursuant to paragraphs 1 or 2 above on the LIBOR Rate
plus the appropriate percentage, or have elected to substitute in whole or in
part for a Chemical Base Rate a LIBOR Rate for the applicable LIBOR Rate
Period(s) elected by the Borrower pursuant to paragraph 3(a) above, then at any
time during the term of this Financing Agreement the Borrower may elect to
substitute in whole or in part for the LIBOR Rate Period(s) then in effect with
respect to any loan one or more new LIBOR Rate Period(s); provided, however,
that CITBC shall receive written notice from Borrower of such election at least
three (3) days prior to the expiration of then current LIBOR Rate Period with
respect to such loan(s); provided, further, however, that such substitution may
be made only upon the expiration of then current LIBOR Rate Period with respect
to such loan(s). Unless the Borrower shall elect to substitute for a LIBOR
Rate Period then in effect one or more new LIBOR Rate Periods, upon the
expiration of such LIBOR Rate Period, the Borrower shall be deemed to have
elected a new LIBOR Rate Period of the same duration.
(c) At any time a Default or Event of Default shall have
occurred and be continuing under this Financing Agreement, the Borrower shall
not have the option to elect a LIBOR Rate for any loan or advance pursuant to
paragraphs 1 or 2, or this paragraph 3, and (i) any requested loan or advance,
if made, shall be made at the Chemical Bank Rate plus one percent (1.0%) or one
and one-quarter of one percent (1.25%), as applicable, and (ii) any loan or
advance that was to have been converted to the LIBOR Rate pursuant to this
paragraph 3 shall be converted to or continue at the Chemical Bank Rate plus
one percent (1.0%) or one and one-quarter of one percent (1.25%), as
applicable, and (iii) any outstanding loan or advance accruing interest at a
LIBOR Rate shall be converted, on the last day of the then current LIBOR Rate
Period with respect thereto, to a loan at the Chemical Bank Rate plus one
percent (1.0%) or one and one-quarter of one percent (1.25%), as applicable.
During the continuation of any such Default or Event of Default, no further
LIBOR loans and advances shall be made hereunder by CITBC nor shall CITBC have
the right to convert any loan or advance to the LIBOR Rate.
4. SUBSTITUTED INTEREST RATE AT OPTION OF CITBC. In the
event that (a) CITBC shall have determined (which determination shall be
conclusive and binding upon the Borrower) that by reason of circumstances
affecting the interbank LIBOR market adequate and reasonable means do not exist
for ascertaining the LIBOR Rate applicable pursuant to the Borrower's election
as provided herein or (b) CITBC
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determines (which determination shall be conclusive and binding on the
Borrower) that the applicable LIBOR Rate will not adequately and fairly reflect
the cost to it of maintaining or funding loans bearing interest based on such
LIBOR Rate, with respect to a proposed loan or advance that the Borrower has
requested be made at the LIBOR Rate, or a loan or advance that will result from
the requested conversion of the Chemical Bank Rate into the LIBOR Rate (any
such loan or advance being herein called an "Affected Loan"), CITBC shall
promptly notify the Borrower (by telephone or otherwise) of such determination,
confirmed in writing, to the Borrower on or prior to the requested borrowing
date for such Affected Loan or the requested conversion date of such loan or
advance. If CITBC shall give such notice, (i) any requested Affected Loan
shall be made at the Chemical Bank Rate plus the appropriate percentage, (ii)
any loan that was to have been converted to an Affected Loan shall be converted
to or continued at the Chemical Bank Rate plus the appropriate percentage and
(iii) any outstanding Affected Loan shall be converted, on the last day of the
then current LIBOR Rate Period with respect thereto, to a loan at the Chemical
Bank Rate plus the appropriate percentage. Until any such notice under clause
(a) of this paragraph 4 has been withdrawn by CITBC (by notice to the Borrower
promptly upon CITBC's having determined that such circumstances affecting the
interbank LIBOR market and that adequate and reasonable means do exist for
determining the LIBOR Rate) no further LIBOR loans and advances shall be made
by CITBC nor shall the Borrower have the right to convert any loans or advances
to the LIBOR Rate. Until any such notice under clause (b) of this paragraph 4
has been withdrawn by CITBC (by notice to the Borrower promptly upon CITBC's
determination that circumstances no longer render any loan or advance an
Affected Loan), no further LIBOR loans or advances shall be required to be made
by CITBC nor shall the Borrower have the right to convert any loan or advance
of CITBC to the LIBOR Rate.
The Borrower shall pay CITBC a processing fee in amount equal
to $500 upon the effective date of each election by the Borrower of the LIBOR
Rate (the "LIBOR Rate Election Fee").
5. ILLEGALITY. Notwithstanding any other provisions herein,
if any law, regulation, treaty or directive, or any change therein or in the
interpretation or application thereof, shall make it unlawful for CITBC to make
or maintain any LIBOR loans or advances as contemplated by this Financing
Agreement, (a) the commitment of CITBC hereunder to make or continue LIBOR
loans and advances, shall forthwith be suspended and (b) CITBC's loans and
advances, then outstanding at the LIBOR Rate affected
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hereby, if any, shall be converted automatically to the Chemical Bank Rate plus
the applicable percentage on the last day of then current LIBOR Rate Period
applicable thereto or within such earlier period as required by law. If the
commitment of CITBC with respect to any LIBOR loans or advances is suspended
pursuant to this paragraph and CITBC shall notify the Borrower that it is once
again legal for CITBC to make or maintain LIBOR loans and advances, CITBC's
commitment to make or maintain such LIBOR loans and advances shall be
reinstated.
6. INCREASED COSTS. In the event that any law, regulation,
treaty or directive hereafter enacted, promulgated, approved or issued or any
change in any presently existing law, regulation, treaty or directive therein
or in the interpretation or application thereof by any governmental authority
charged with the administration thereof or compliance by CITBC (or any
corporation directly or indirectly owning or controlling CITBC) with any
request or directive from any central bank or other governmental authority,
agency or instrumentality:
(a) does or shall subject CITBC to any tax of any kind
whatsoever with respect to any loans or advances or its obligations under this
Financing Agreement to make loans or advances, or changes the basis of taxation
of payments to CITBC of principal, interest or any other amount payable
hereunder in respect of its loans or advances (except for imposition of, or
change in the rate of, tax on the overall net income of CITBC, other than a tax
imposed solely or primarily on United States branches or subsidiaries of
foreign corporations); or
(b) does or shall impose, modify or make applicable any
reserve, special deposit, compulsory loan, assessment, increased cost or
similar requirement against assets held by, or deposits of, or advances or
loans by, or other credit extended by, or any other acquisitions of funds by,
any office of CITBC in respect of its loans or advances which is not otherwise
included in the determination of the applicable rate or rates of interest
hereunder;
and the result of any of the foregoing is to increase the cost to CITBC of
making, renewing, converting or maintaining its loans or advances hereunder or
its commitment to make such loans or advances, or to reduce any amount
receivable hereunder in respect of its loans and advances, then, in any such
case, the Borrower shall promptly pay CITBC, upon its demand, any additional
amounts necessary to compensate CITBC for such additional cost or reduction in
such amount receivable which CITBC deems to be material as determined by CITBC.
No failure by CITBC to demand compensation for any increased cost shall
constitute a waiver of CITBC's right to
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demand such compensation at any time; provided, however, that CITBC shall
notify the Borrower of any such increased cost within ninety (90) days after
the officer of CITBC having primary responsibility for this Financing Agreement
has obtained knowledge of such increased cost. A statement setting forth the
calculations of any additional amounts payable pursuant to the foregoing
sentence submitted by CITBC to the Borrower shall be conclusive absent manifest
error.
7. INDEMNIFICATION FOR LOSS. Notwithstanding anything
contained herein to the contrary, if the Borrower shall fail to borrow on a
borrowing date after it shall have given notice to do so in which it shall have
requested the LIBOR Rate pursuant to the terms hereof, or if a LIBOR loan or
advance shall be terminated for any reason prior to the last day of the LIBOR
Rate Period applicable thereto, or if, while a LIBOR loan or advance is
outstanding, any repayment or prepayment of such LIBOR loan or advance is made
for any reason (including, without limitation, as a result of acceleration or
illegality) on a date which is prior to the last day of the LIBOR Rate Period
applicable thereto, the Borrower agrees to indemnify any Lender against, and to
pay on demand directly to such Lender, any loss or expense suffered by CITBC as
a result of such failure to borrow, termination or repayment, including,
without limitation, an amount, if greater than zero, equal to:
A x (B-C) x D
---
360
where:
"A" equals such Lender's pro rata share of the Affected Principal Amount;
"B" equals the LIBOR Rate (expressed as a decimal), applicable to such Loan;
"C" equals the applicable LIBOR Rate (expressed as a decimal), in effect on or
about the first day of the applicable Remaining LIBOR Rate Period, based on the
applicable rates offered or bid, as the case may be, on or about such date, for
deposits in an amount equal approximately to such Lender's pro rata share of
the Affected Principal Amount with an LIBOR Rate Period equal approximately to
the applicable Remaining LIBOR Rate Period, as determined by such Lender;
"D" equals the number of days from and including the first day of the
applicable Remaining LIBOR Rate Period to but excluding the last day of such
Remaining LIBOR Rate Period;
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and any other out-of-pocket loss or expense (including any internal processing
charge customarily charged by such Lender) suffered by such Lender in
liquidating deposits prior to maturity in amounts which correspond to such
Lender's pro rata share of such proposed borrowing, terminated LIBOR loan or
advance or repayment.
8. OPTION TO FUND. CITBC has indicated that, if the Borrower
elects to borrow or convert to the LIBOR Rate, CITBC may wish to purchase one
or more deposits in order to fund or maintain its funding of such LIBOR loans
or advances during the LIBOR Rate Period in question; it being understood that
the provisions of this Financing Agreement relating to such funding are
included only for the purpose of determining the rate of interest to be paid in
respect of such LIBOR Loan and any amounts owing under this Section 9,
paragraphs 1, 2, 3, 6, and 7. CITBC shall be entitled to fund and maintain its
fundings of all or any part of each LIBOR loan or advance made by it in any
manner it sees fit, but all determinations under this Section 9, paragraphs 1,
2, 3, 6, and 7 shall be made as if CITBC had actually funded and maintained
such LIBOR Rate during the applicable LIBOR Rate Period through the purchase of
deposits in an amount equal to such LIBOR Rate and having a maturity
corresponding to such LIBOR Rate Period. The obligations of the Borrower under
this Section 9, paragraphs 1, 2, 3, 6 and 7 shall survive the termination of
the Revolving Line of Credit and the payment of the Obligations hereunder.
9. CAPITAL ADEQUACY. (a) If either (i) the introduction of,
the adoption or effectiveness of or any change or phasing in of any law or
regulation or in the interpretation thereof by any United States or foreign
governmental authority charged with the administration thereto, (ii) compliance
with any directive, guideline, decision or request from any central bank or
United States or foreign governmental authority (whether or not having the
force of law) promulgated or made after the Closing Date, or (iii) compliance
with the Risk-Based Capital Guidelines of the Federal Reserve System as set
forth in 12 C.F.R., Parts 208 and 225, or of the Comptroller of the Currency,
Department of Treasury, as set forth in 12 C.F.R., Part 3 or similar
legislation, rules, guidelines, directives or regulations issued by any United
States or foreign governmental authority affects or would affect the amount of
capital required or expected to be maintained by CITBC (or any lending office
of CITBC) or any corporation directly or indirectly owning or controlling
CITBC, and CITBC shall have determined that such introduction, change or
compliance has or would have the effect of reducing the rate of return on
CITBC's capital or the asset value to CITBC of any loan or advance made by
CITBC as a consequence, directly or indirectly, of its obligations to make and
maintain the
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funding of loans and advances hereunder to a level below that which CITBC could
have achieved but for such introduction, change or compliance (after taking
into account CITBC's policies regarding capital adequacy) by an amount deemed
by CITBC to be material, then, upon demand by CITBC, the Borrower shall
promptly pay to CITBC such additional amount or amounts as shall be sufficient
to compensate CITBC for such reduction in the rate of return. A certificate as
to such amounts submitted to the Borrower and CITBC setting forth the
determination of such amounts that will compensate CITBC for such reductions
shall be presumed correct absent manifest error.
(b) If CITBC requests compensation pursuant to paragraph
6(a), the Borrower may require that CITBC transfer all of its right, title and
interest under this Financing Agreement to any commercial bank (having
undivided capital and surplus of no less than $1,000,000,000) identified by the
Borrower, pursuant to an assignment and acceptance agreement, if such bank (a
"Proposed Lender") agrees to assume all of the obligations of CITBC hereunder
and under any other documents entered into by CITBC in connection with this
Financing Agreement for consideration equal to the sum of (i) the outstanding
principal amount of CITBC's pro rata share of loans and advances hereunder,
(ii) accrued interest on such loans and advances to the date of such transfer,
and (iii) all other amounts payable hereunder to CITBC on or prior to the date
of such transfer (including any fees accrued hereunder and any amounts which
would be payable under paragraph 6(a) as if all of CITBC's loans and advances
were being prepaid in full on such date). Subject to the approval of such
Proposed Lender in the reasonable discretion of CITBC, and such assignment and
acceptance agreement, such Proposed Lender be a "Lender" for all purposes
hereunder.
10. OUT-OF-POCKET EXPENSES. The Borrower shall reimburse
or pay CITBC, as the case may be, for all Out-of- Pocket Expenses of CITBC on
the Closing Date.
11. LINE OF CREDIT FEE. Upon each Monthly Date, commencing
with the month in which the Closing Date occurs, the Borrower shall pay CITBC
the Line of Credit Fee.
12. LOAN FACILITY FEE. To induce CITBC to enter into this
Financing Agreement and to extend to the Borrower the Revolving Loan and the
Term Loan, the Borrower shall pay to CITBC a Loan Facility Fee in the amount
of $300,000 payable on the Closing Date.
13. COLLATERAL MANAGEMENT FEE. The Borrower shall pay the
Collateral Management Fee to CITBC in full for the first year on the Closing
Date, and for each year
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thereafter, commencing on the first anniversary of the Closing Date, such
payment shall be made on the anniversary of the Closing Date.
14. LIBOR RATE ELECTION FEE. In connection with paragraph 4
of this Section 9, the Borrower shall pay CITBC the LIBOR Rate Election Fee.
15. LETTER OF CREDIT GUARANTY FEE. The Borrower shall pay
CITBC the Letter of Credit Guaranty Fee which shall be an amount equal to
two percent (2%) per annum, payable monthly in arrears, on the maximum amount
drawable from time to time under Letters of Credit.
16. MISCELLANEOUS FEES. The Borrower shall pay CITBC's
standard charges for, and the fees and expenses of, the CITBC personnel used by
CITBC for reviewing the books and records of the Borrower and for verifying,
testing protecting, safeguarding, preserving or disposing of all or any part of
the Collateral; provided, however, that the foregoing shall not be payable
until the occurrence of and during the continuance of an Event of Default.
17. CHARGE TO BORROWER'S ACCOUNT. The Borrower hereby
authorize CITBC to charge the Borrower's accounts with CITBC with the amount of
all payments due hereunder as such payments become due. The Borrower confirms
that any charges which CITBC may so make to the Borrower's account as herein
provided will be made as an accommodation to the Borrower and solely at CITBC's
discretion.
18. ASSIGNMENTS AND PARTICIPATIONS. (a) CITBC may assign
its rights and delegate its obligations under this Financing Agreement and
further may assign, or sell participations in, all or any part of the
Obligations, the Revolving Line of Credit, the Term Loan, and any other
interest herein or therein to any affiliate or to one or more other Persons.
The Borrower acknowledges that in assigning or selling participations of any of
its interests under this Financing Agreement, CITBC may grant to such
participant certain rights which would require the participant's consent to
certain waivers, amendments and other actions with respect to the provisions of
this Financing Agreement.
(b) The Borrower authorizes CITBC to disclose to any
participant or purchasing lender (each, a "Transferee") and any bona fide
prospective Transferee any and all financial information in CITBC's possession
concerning the Borrower and its affiliates which has been delivered to CITBC by
or on behalf of the Borrower pursuant to this Financing Agreement or which has
been delivered to CITBC by or on behalf of the Borrower in connection with
CITBC's
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credit evaluation of the Borrower and its affiliates prior to entering into
this Financing Agreement.
(c) In the case of an assignment authorized under this
paragraph 17, the assignee shall have, to the extent of such assignment, the
same rights, benefits and obligations as it would if it were a party hereunder
and the assigning party shall be relieved of its obligations hereunder with
respect to its Revolving Line of Credit, or Term Loan commitment or assigned a
portion thereof on and after the date of such assignment. The Borrower hereby
acknowledges and agrees that any assignment permitted hereunder will give rise
to a direct obligation of Borrower to the assignee and that the assignee shall
be considered to be a Lender under this Financing Agreement.
SECTION 10. POWERS
The Borrower hereby authorizes CITBC or any person or agent
CITBC may designate as its attorney-in-fact, at the Borrower's cost and
expense, to exercise all of the following powers, which being coupled with an
interest, shall be irrevocable until all of the Borrower's Obligations to CITBC
have been paid in full:
(a) To receive, take, endorse, sign, assign and deliver,
all in the name of CITBC or the Borrower, any and all checks, notes,
drafts, and other documents or instruments relating to the Collateral;
(b) To receive, open and dispose of all mail addressed to
the Borrower and to notify postal authorities to change the address
for delivery thereof to such address as CITBC may designate;
(c) To request from customers indebted on Accounts at any
time, in the name of CITBC or the Borrower or that of CITBC's
designee, information concerning the amounts owing on the Accounts;
(d) To transmit to customers indebted on Accounts notice of
CITBC's interest therein and to notify customers indebted on Accounts
to make payment directly to CITBC for the Borrower's account; and
(e) To take or bring, in the name of CITBC or the Borrower,
all steps, actions, suits or proceedings deemed by CITBC necessary or
desirable to enforce or effect collection of the Accounts.
Notwithstanding anything hereinabove contained to the
contrary, the powers set forth in (b), (d) and (e) above
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may only be exercised after the occurrence of and during the continuance of an
Event of Default.
SECTION 11. EVENTS OF DEFAULT AND REMEDIES
1. Notwithstanding anything hereinabove to the contrary,
CITBC may terminate this Financing Agreement immediately upon the occurrence of
any of the following (herein "Events of Default"):
(a) cessation of the business of the Borrower or the calling
of a meeting of the creditors of the Borrower for purposes of
compromising the debts and obligations of the Borrower;
(b) the Borrower shall generally not pay its debts as they
become due or shall admit in writing its inability to pay its debts,
or shall make a general assignment for the benefit of creditors; or
the Borrower shall commence any case, proceeding or other action
seeking to have an order for relief entered on its behalf as debtor
or to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, liquidation, dissolution or
composition of it or its debts under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors or seeking appointment
of a receiver, trustee, custodian or other similar official for it or
for all or any substantial part of its property or shall file an
answer or other pleading in any such case, proceeding or other action
admitting the material allegations of any petition, complaint or
similar pleading filed;
(c) any involuntary case, proceeding or other action against
the Borrower shall be commenced seeking to have an order for relief
entered against it as debtor or to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts under any
law relating to bankruptcy, insolvency, reorganization or relief of
debtors or seeking appointment of a receiver, trustee, custodian or
other similar official for it or for all or any substantial part of
its property, and such case, proceeding or other action (i) results in
the entry of any order for relief against it or (ii) shall remain
undismissed for a period of sixty (60) days;
(d) any representation or warranty contained herein shall
prove to have been false in any material respect when made (other than
those referred to in sub-paragraph (f) below) or in any other written
agreement including, without limitation, any Loan
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Document or any document delivered by the Borrower to CITBC in
connection herewith or therewith or the transactions contemplated
hereby or thereby;
(e) breach by the Borrower of any covenant in this Financing
Agreement (other than those referred to in sub-paragraph (f) below)
or in any other written agreement between the Borrower and CITBC
including, without limitation, any Loan Document, or any other
document delivered by the Borrower to CITBC in connection herewith or
therewith or the transactions contemplated hereby or thereby, if such
breach shall not have been remedied within thirty (30) days after such
breach;
(f) breach by the Borrower of any warranty, representation or
covenant of Section 3, paragraphs 3 (other than the third sentence of
paragraph 3); Section 6, Paragraphs 3 or 4; Section 8, Paragraphs 1,
5(a) or (b), 6, or 9 through 16;
(g) failure of the Borrower to pay when due i) any of the
principal of the Revolving Credit Loans, or ii) to pay any of the
interest on the Revolving Credit Loans within five (5) business days
of the due date thereof; provided, however, that nothing contained
herein shall prohibit CITBC from charging such amounts to the
Borrower's account on the due date thereof;
(h) (i) a default by the Borrower shall have occurred and
be continuing in any payment of principal of or interest on any other
obligation for borrowed money (or any obligation or obligations under
a conditional sale or other title retention agreement or any
obligation or obligations issued or assumed as full or partial payment
for property whether or not secured by a purchase money mortgage or
any obligation under notes payable or drafts accepted representing
extensions of credit) beyond any period of grace provided with respect
thereto in each case involving any individual obligation or one or
more obligations in an aggregate principal amount of $250,000 or more
or (ii) a default by the Borrower shall have occurred and be
continuing in the performance of any other agreement, term or
condition contained in any agreement under which any such obligation
referred to in clause (i) is created (or if any other default under
any such agreement shall occur and be continuing) if the effect of
such default is to cause, or permit the holder or holders of such
obligation or obligations (or a trustee on behalf of such holder or
holders) to cause, such obligation or obligations to become due prior
to its or their stated maturity in each case involving any
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individual obligation or one or more obligations in an aggregate
principal amount of $250,000 or more;
(i) The Borrower or any other person engages in a transaction
in connection with which the Borrower or any entity which the
Borrower has an obligation to indemnify, could be subject to
liability for either a civil penalty assessed pursuant to section 502
of ERISA or a tax imposed by section 4975 of the Code; an accumulated
funding deficiency (as defined in section 302 of ERISA or section 412
of the Code), whether or not waived, exists with respect to any
Pension Plan; a lien arises or security interest is granted with
respect to any Pension Plan; a Pension Plan is terminated; a
Reportable Event occurs or proceedings commence to terminate or to
have a trustee appointed to terminate any Pension Plan which
Reportable Event or commencement of proceedings or appointment is, in
the reasonable opinion of CITBC, likely to result in the termination
of any such Pension Plan; the Borrower or any ERISA Affiliate incurs
or is likely to incur any liability in connection with a withdrawal
from or the Insolvency, Reorganization or termination of a
Multiemployer Plan or with respect to section 515 of ERISA; or any
other similar event or condition shall occur or exist with respect to
any Employee Benefit Plan;
(j) without the prior written consent of CITBC, the Borrower
shall x) amend or modify the Subordinated Debt or y) make any
payment on account of the Subordinated Debt except as permitted
herein;
(k) the Borrower shall not have executed and delivered to
CITBC an Assignment of Key Man Life Insurance Policy in the form of
Exhibit E hereto within thirty (30) days from the Closing Date;
(l) if the Borrower fails to pay all amounts required to be
paid in connection with the Bonds, as defined in the Indenture of
Mortgage between the County of Sandusky, Ohio (the "County") and the
Cleveland Trust Company dated November 1, 1976 and recorded in Book
291, page 18, not later than August 1, 1996;
(m) if the Borrower fails to cause the County, promptly upon
the payment to the County described in paragraph (l) above, to convey
directly to the Borrower the fee interest in the Fremont Property, as
hereinafter defined;
(n) if the Borrower fails to perform any one or more of the
following actions, simultaneously with the
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transfer of the Fremont Property, as hereinafter defined, from the
County to the Borrower:
(i) execute, deliver and cause to be filed in the
appropriate recorder's office a confirmatory spreader agreement as
contemplated by Section 1.10(c) of that certain leasehold mortgage
between the Borrower and CITBC dated as of the date hereof with
respect to the real property located in Fremont, Ohio (the "Fremont
Property"); or
(ii) deliver to CITBC an ALTA Lender's Fee Title Policy 1992
containing exceptions and requirements satisfactory to CITBC in its
sole discretion; or
(iii) deliver to CITBC an opinion from Ohio counsel, in form
and substance satisfactory to CITBC in its sole discretion, opining
that the confirmatory spreader agreement referenced in clause (i)
above has been duly authorized, executed and delivered and that such
confirmatory spreader agreement is enforceable in accordance with its
terms.
2. Upon the occurrence and continuation of a Default and/or
an Event of Default, at the option of CITBC, all loans and advances provided
for in Section 3, paragraph 1 of this Financing Agreement shall be thereafter
in CITBC's sole discretion and the obligation of CITBC to make Revolving Loans
and/or assist in opening Letters of Credit shall cease, and at the option of
CITBC upon the occurrence and continuation of an Event of Default: i) all
Obligations shall become immediately due and payable; provided, however, that
CITBC has given the Borrower written notice of the Event of Default; provided,
further, however, that no notice is required if the Event of Default is an
Event of Default listed in paragraph 1(b) or 1(c) of this Section 11; ii)
CITBC may charge the Borrower the Default Rate of Interest on all then
outstanding or thereafter incurred Obligations in lieu of the interest
provided for in Section 9, paragraphs 1, 2, 3 and 4 of this Financing
Agreement; and iii) CITBC may immediately terminate this Financing Agreement
upon notice to the Borrower; provided, however, that no notice of termination
is required if the Event of Default is the Event listed in paragraph 1(b) or
1(c) of this Section 11. The exercise of any option is not exclusive of any
other option which may be exercised at any time by CITBC.
3. Immediately upon the occurrence of any Event of Default
and as long as such Event of Default is continuing, CITBC may to the extent
permitted by law: (a) remove from any premises where same may be located any
and all documents, instruments, files and records, and any
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receptacles or cabinets containing same, relating to the Accounts, or CITBC may
use, at the Borrower's expense, such of the Borrower's personnel, supplies or
space at the Borrower's places of business or otherwise, as may be necessary to
properly administer and control the Accounts or the handling of collections and
realizations thereon; (b) bring suit, in the name of the Borrower or CITBC, and
generally shall have all other rights respecting said Accounts, including,
without limitation, the right to: accelerate or extend the time of payment,
settle, compromise, release in whole or in part any amounts owing on any
Accounts and issue credits in the name of the Borrower or CITBC; (c) sell,
assign and deliver the Collateral and any returned, reclaimed or repossessed
merchandise, with or without advertisement to the extent permitted by
applicable law, at public or private sale, for cash, on credit or otherwise, at
CITBC's sole option and discretion, and CITBC may bid or become a purchaser at
any such sale, free from any right of redemption, which right is hereby
expressly waived by the Borrower to the extent permitted by law; (d) foreclose
the security interests created herein by any available judicial procedure, or
to take possession of any or all of the Inventory and Equipment without
judicial process, and to enter any premises where any Inventory and Equipment
may be located for the purpose of taking possession of or removing the same and
(e) exercise any other rights and remedies provided in law, in equity, by
contract or otherwise. CITBC shall have the right, without notice or
advertisement, to sell, lease, or otherwise dispose of all or any part of the
Collateral whether in its then condition or after further preparation or
processing, in the name of the Borrower or CITBC, or in the name of such other
party as CITBC may designate, either at public or private sale or at any
broker's board, in lots or in bulk, for cash or for credit, with or without
warranties or representations, and upon such other terms and conditions as
CITBC in its sole discretion may deem advisable, and CITBC shall have the right
to purchase at any such sale. If any Inventory and Equipment shall require
rebuilding, repairing, maintenance or preparation, CITBC shall have the right,
at its option, to do such of the aforesaid as is necessary, for the purpose of
putting the Inventory and Equipment in such saleable form as CITBC shall deem
appropriate. The Borrower agrees, at the request of CITBC, to assemble the
Inventory and Equipment and to make it available to CITBC at premises of the
Borrower or elsewhere and to make available to CITBC the premises and
facilities of the Borrower for the purpose of CITBC's taking possession of,
removing or putting the Inventory and Equipment in saleable form. However, if
notice of intended disposition of any Collateral is required by law, it is
agreed that ten (10) days' notice shall constitute reasonable notification and
full compliance with the law. The net cash proceeds resulting from CITBC's
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exercise of any of the foregoing rights, (after deducting all charges, costs
and expenses, including reasonable attorneys' fees) shall be applied by CITBC
to the payment of the Obligations, whether due or to become due, in such order
as CITBC may elect, and the Borrower shall remain liable to CITBC for any
deficiencies, and CITBC in turn agrees to remit to the Borrower or its
successors or assigns, any surplus resulting therefrom. The enumeration of the
foregoing rights is not intended to be exhaustive and the exercise of any right
shall not preclude the exercise of any other rights, all of which shall be
cumulative. The Mortgages shall govern the rights and remedies of CITBC
thereto.
SECTION 12. TERMINATION
Except as otherwise permitted herein, the Borrower or CITBC
may terminate this Financing Agreement and the Revolving Line of Credit only as
of the Initial Term Date or any anniversary date of the Initial Term Date and
then only by giving the other at least sixty (60) days' prior written notice of
termination. Notwithstanding the foregoing, CITBC may terminate the Financing
Agreement immediately upon the occurrence of an Event of Default; provided,
however, that if the Event of Default is an event listed in Section 11,
paragraph 1(b) or 1(c) of this Financing Agreement, CITBC may regard the
Financing Agreement as terminated and notice to that effect is not required.
This Financing Agreement, unless terminated as herein provided, shall
automatically continue from year to year after the Initial Term Date.
Notwithstanding the foregoing, the Borrower may terminate this Financing
Agreement and the Revolving Line of Credit at any time upon sixty (60) days'
prior written notice to CITBC; provided, however, that the Borrower pay to
CITBC immediately on demand, an Early Termination Fee, if applicable. All
Obligations shall become due and payable as of any termination hereunder or
under Section 11 hereof and, pending a final accounting, CITBC may withhold any
balances in the Borrower's account (unless supplied with an indemnity
satisfactory to CITBC) to cover all of the Borrower's Obligations, whether
absolute or contingent. All of CITBC's rights, liens and security interests
shall continue after any termination until all Obligations have been paid and
satisfied in full.
SECTION 13. INDEMNIFICATION
In addition to the payment of expenses pursuant to Section 9
of this Financing Agreement, whether or not the transactions contemplated
hereby shall be consummated, the Borrower agrees to indemnify, pay and hold
CITBC and the
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officers, directors, partners, employees, agents, affiliates and attorneys of
CITBC (collectively called the "Indemnitees") harmless from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including the reasonable fees and disbursements of attorneys and
accountants for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened by the Borrower
or by any other Person as against CITBC or any other Person, whether or not
such Indemnitee shall be designated a party thereto) that may be imposed on,
incurred by, or asserted against that Indemnitee, in any manner relating to or
arising out of a Default or Event of Default under this Financing Agreement or
(except to the extent provided for or limited elsewhere in this Financing
Agreement) the consummation of the transactions contemplated hereby, the use or
intended use of the proceeds of the Revolving Loans and the Term Loans or the
exercise of any right or remedy hereunder, including, without limitation, any
obligations which may become due and payable after the termination of this
Financing Agreement (the "Indemnified Liabilities"); provided, however, that
the Borrower shall not have any obligation to an Indemnitee hereunder with
respect to Indemnified Liabilities to the extent arising from the gross
negligence or willful misconduct of any Indemnitee as determined by a court of
competent jurisdiction. To the extent that the undertaking to indemnify, pay
and hold harmless set forth in the preceding sentence may be unenforceable
because it is violative of any law or public policy, the Borrower will
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by the Indemnitees or any of them.
SECTION 14. MISCELLANEOUS
1. The Borrower hereby waives diligence, demand,
presentment and protest and any notices thereof as well as notice of
nonpayment. No delay or omission of CITBC or the Borrower to exercise any
right or remedy hereunder, whether before or after the happening of any Event
of Default, shall impair any such right or shall operate as a waiver thereof or
as a waiver of any such Event of Default. No single or partial exercise by
CITBC of any right or remedy precludes any other or further exercise thereof,
or precludes any other right or remedy.
2. This Financing Agreement and the documents executed
and delivered in connection therewith constitute the entire agreement between
the Borrower and CITBC;
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supersede any prior agreements; can be amended, modified or supplemented only
by a writing signed by the Borrower and CITBC; and shall bind and benefit the
Borrower and CITBC and their respective successors and assigns.
3. In no event shall the Borrower, upon demand by CITBC
for payment of any indebtedness relating hereto, by acceleration of the
maturity thereof, or otherwise, be obligated to pay interest and fees in excess
of the amount permitted by law. Regardless of any provision herein or in any
agreement made in connection herewith, CITBC shall never be entitled to
receive, charge or apply, as interest on any indebtedness relating hereto, any
amount in excess of the maximum amount of interest permissible under applicable
law. If CITBC ever receives, collects or applies any such excess, it shall be
deemed a partial repayment of principal and treated as such; and if principal
is paid in full, any remaining excess shall be refunded to the Borrower. This
paragraph shall control every other provision hereof and of any other agreement
made in connection herewith.
4. If any provision hereof or of any other agreement made
in connection herewith is held to be illegal or unenforceable, such provision
shall be fully severable, and the remaining provisions of the applicable
agreement shall remain in full force and effect and shall not be affected by
such provision's severance. Furthermore, in lieu of any such provision, there
shall be added automatically as a part of the applicable agreement a legal and
enforceable provision as similar in terms to the severed provision as may be
possible.
5. (a) THE BORROWER AND CITBC HEREBY IRREVOCABLY SUBMIT TO
THE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN NEW YORK, NEW YORK
IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS FINANCING
AGREEMENT, OR ANY OF THE OTHER DOCUMENTS ENTERED INTO IN CONNECTION WITH THIS
FINANCING AGREEMENT, TO WHICH THE BORROWER IS A PARTY, AND THE BORROWER AND
CITBC HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR IN SUCH
FEDERAL COURT. THE BORROWER AND CITBC HEREBY IRREVOCABLY WAIVE, TO THE
FULLEST EXTENT THEY MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING. THE BORROWER AND CITBC
AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT
OR IN ANY OTHER MANNER PROVIDED BY LAW.
(b) THE BORROWER AND CITBC EACH HEREBY WAIVE ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS FINANCING
AGREEMENT. THE BORROWER AND CITBC
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HEREBY IRREVOCABLY WAIVE PERSONAL SERVICE OF PROCESS AND CONSENT TO SERVICE OF
PROCESS BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO
THE BORROWER, AND CITBC, AS THE CASE MAY BE, AT THE ADDRESS PROVIDED HEREIN FOR
NOTICES.
6. (a) The obligations of the Borrower hereunder and
under the other loan documents shall be construed as continuing, absolute and
unconditional without regard to (and the Borrower hereby waives any right or
claim it may have with respect to) (a) the validity or enforceability of this
Financing Agreement, or any other loan document at any time or from time to
time held by CITBC, as against or with respect to the Borrower, (b) any
defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by the
Borrower against CITBC, or (c) any other circumstances whatsoever which
constitute, or might be construed to constitute, an equitable or legal
discharge of the Borrower hereunder, in bankruptcy or in any other instance.
When CITBC is pursuing rights and remedies hereunder against the Borrower,
CITBC may, but shall be under no obligation to, pursue such rights and remedies
as it may have against another Borrower or person or against any collateral
security or guaranty or any right of offset with respect thereto, and any
failure by CITBC to pursue such other rights or remedies or to collect any
payments from such other Borrower or person or to realize upon any such
collateral security or guaranty or to exercise any such right of offset, or any
release of such other Borrower or any such other person or of any such
collateral security, guaranty or right of offset, shall not relieve the
Borrower of any liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of
CITBC against the Borrower.
(b) The obligations of the Borrower hereunder shall continue
to be effective, or be reinstated, as the case may be, if at any time any
payment of, by or for the Borrower is rescinded or must otherwise be restored
or returned by CITBC upon the insolvency, bankruptcy, dissolution, liquidation
or reorganization of the Borrower or upon or as a result of the appointment of
a receiver, intervenor or conservator of, or trustee or similar officer for,
the Borrower or any substantial part of its property, or otherwise, all as
though such payments had not been made.
7. The Borrower authorizes and CITBC shall have the right,
upon five (5) business days' prior written notice, upon any amount becoming
due and payable hereunder, to set-off and apply against any and all property
held by, or in the possession of CITBC or the Collateral the Obligations due
and payable CITBC; provided, however, that
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if an Event of Default has occurred and is continuing, CITBC shall not be
required to give notice prior to the exercise of their rights set forth in this
paragraph 7.
8. Except as otherwise herein provided, any notice or other
communication required hereunder shall be in writing, and shall be deemed to
have been validly served, given or delivered when hand delivered or sent by
telegram or telex, or three days after deposit in the United State mails, with
proper first class postage prepaid and addressed to the party to be notified as
follows:
(A) if to CITBC, at:
The CIT Group/Business Credit, Inc.
1211 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy Number: (000) 000-0000
Attn: Xxxxxxx Xxxxxx
(B) if to the Borrower, at:
XxXxxxx-Xxxxxxx, Inc.
One Xxxxxx Island
Westport, Connecticut
Attn: Xx. Xxxxxxxx Xxxxxx
Telecopy: (000) 000-0000
with a copy to:
Bass, Xxxxx & Xxxx
First Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: J. Page Davidson
Telecopy: (000) 000-0000
or to such other address as any party may designate for itself by like notice.
9. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
FINANCING AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
10. All representations, warranties and indemnities
contained herein or made in writing by the Borrower in connection herewith
shall survive the execution and delivery of this Financing Agreement, for so
long as any Obligations remain outstanding, unless otherwise stated herein,
regardless of any investigation made by CITBC or on CITBC's behalf.
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11. All covenants and agreements contained in this Financing
Agreement by or on behalf of any party hereto shall bind and inure to the
benefit of the respective successors and assigns of the parties hereto
whether so expressed or not.
12. If any agreement, certificate or other writing, or any
action taken or to be taken, is by the terms of this Financing Agreement
required to be satisfactory to CITBC, the determination of such satisfaction
shall be made by CITBC in its sole and exclusive judgment exercised in good
faith.
13. The descriptive headings of the several paragraphs of
this Financing Agreement and the table of contents are inserted for convenience
only and do not constitute a part of this Financing Agreement.
14. This Financing Agreement may be executed in two or more
counterparts, all of which shall be deemed but one and the same instrument
and each of which shall be deemed an original, and it shall not be necessary in
making proof of this Financing Agreement to produce or account for more than
one such counterpart.
15. If the date for making any payment or the last date for
performance of any or the exercising of any right, as provided in this
Financing Agreement (other than in connection with the Term Loan or any
Revolving Loan for which a LIBOR Rate Period is selected), shall not be a
business day, such payment may be made or act performed or right exercised on
the next succeeding business day, with the same force and effect as if done on
the nominal date provided in this Financing Agreement, except that interest
shall accrue and be payable for the period after such nominal date.
16. The Borrower will hold CITBC harmless from any claim,
demand or liability for broker's or finder's or placement fees or commissions
alleged to have been incurred in connection with this Financing Agreement, the
Revolving Loans Promissory Note or the transactions contemplated hereby or
thereby.
17. Each party hereto shall do and perform or cause to be
done and performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments and documents as
any other party hereto reasonably may request in order to carry out the intent
and accomplish the purposes of this Financing Agreement and the consummation of
the transactions contemplated hereby.
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18. All of the obligations of the Borrower hereunder shall
survive the repayment of principal and interest under any loans or advances
made or issued hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Financing Agreement to be executed and delivered by their proper and duly
authorized officers as of the date set forth above. This Financing Agreement
shall take effect as of the date set forth above after being accepted below by
an officer of CITBC after which, CITBC shall forward to the Borrower a fully
executed original for its files.
Lender:
THE CIT GROUP/BUSINESS CREDIT, INC.
By /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
Borrower:
XXXXXXX-XXXXXXX, INC.
By /s/ W. O. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President and Chief
Executive Officer
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