Exhibit 10.16
Loan and Security Agreement
This Loan and Security Agreement (as it may be amended, this "Agreement")
is entered into on January 21, 2000 between BANC OF AMERICA COMMERCIAL FINANCE
CORPORATION, THROUGH ITS COMMERCIAL FUNDING DIVISION ("Lender"), having an
address at 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 and XXXXXX
INDUSTRIES, INC. ("Borrower"), whose chief executive office is located at 00000
Xxxx Xxxx, Xxxxxxxxxx, XX 00000 ("Borrower's Address"). The Schedules to this
Agreement are an integral part of this Agreement and are incorporated herein by
reference. Terms used, but not defined elsewhere, in this Agreement are defined
in Schedule B.
1. LOANS AND CREDIT ACCOMMODATIONS.
1.1 Amount. Subject to the terms and conditions contained in this
Agreement, Lender will:
(a) Revolving Loans and Credit Accommodations. From time to time
during the Term at Borrower's request, make revolving loans to
Borrower ("Revolving Loans"), and make letters of credit, bankers
acceptances and other credit accommodations ("Credit
Accommodations") available to Borrower, in each case to the
extent that there is sufficient Availability at the time of such
request to cover, dollar for dollar, the requested Revolving Loan
or Credit Accommodation; provided, that after giving effect to
such Revolving Loan or Credit Accommodation, (x) the outstanding
balance of all monetary Obligations (including the principal
balance of any Term Loan and, solely for the purpose of
determining compliance with this provision, the Credit
Accommodation Balance) will not exceed the Maximum Facility
Amount set forth in Section 1(a) of Schedule A and (y) none of
the other Loan Limits set forth in Section 1 of Schedule A will
be exceeded. For this purpose, "Availability" means:
(i) the aggregate amount of Eligible Accounts (less maximum
existing or asserted taxes, discounts, credits and
allowances) multiplied by the Accounts Advance Rate set
forth in Section 1(b)(i) of Schedule A but not to exceed the
Accounts Sublimit set forth in Section l(c) of Schedule A;
plus
(ii) the lower of cost or market value of Eligible Inventory
multiplied by the Inventory Advance Rate(s) set forth in
Section 1 (b)(ii) of Schedule A, but not to exceed the
Inventory Sublimit(s) set forth in Section l(d) of Schedule
A;
minus
(iii)all Reserves which Lender has established pursuant to
Section 1.2 (including those to be established in connection
with the requested Revolving Loan or Credit Accommodation);
minus
(iv) the outstanding balance of all of the monetary Obligations
(excluding the Credit Accommodation Balance and the
principal balance of the Term Loan); and
plus
(v) the Overadvance Amount, if any, set forth in Section l(g) of
Schedule A.
(b) Term Loan. On the date of this Agreement, make (i) an advance to
Borrower computed with respect to the value of Borrower's
Eligible Equipment (the "Equipment Advance") in the principal
amount, if any, set forth in Section 2(a)(i) of Schedule A, and
(ii) an advance to Borrower computed with respect to the value of
Borrower's Eligible Real Property (the "Real Property Advance")
in the principal amount, if any, set forth in Section 2(a)(ii) of
Schedule A. The Equipment Advance and the Real Property Advance
are collectively referred to as the "Term Loan."
1.2 Reserves. Lender may from time to time establish and revise such
reserves as Lender deems appropriate in its sole discretion
("Reserves") to reflect (i) events, conditions, contingencies or risks
which affect or may affect (A) the Collateral or its value, or the
security interests and other rights of Lender in the Collateral or (B)
the assets, business or prospects of Borrower or any Obligor, (ii)
Lender's good faith concern that any Collateral report or financial
information furnished by or on behalf of Borrower or any Obligor to
Lender is or may have been incomplete, inaccurate or misleading in any
material respect, (iii) any fact or circumstance which Lender
determines in good faith constitutes, or could constitute, a Default
or Event of Default or (iv) any other events or circumstances which
Lender determines in good faith make the establishment or revision of
a Reserve prudent. Without limiting the foregoing, Lender shall (x) in
the case of each Credit Accommodation issued for the purchase of
Inventory (a) which meets the criteria for Eligible Inventory set
forth in clauses (i), (ii), (iii), (v) and (vi) of the definition of
Eligible Inventory, (b) which is or will be in transit to one of the
locations set forth in Section 9(d) of Schedule A, (c) which is fully
insured in a manner satisfactory to Lender and (d) with respect to
which Lender is in possession of all bills of lading and all other
documentation which Lender has requested, all in form and substance
satisfactory to Lender in its sole discretion, establish a Reserve
equal to the cost of such Inventory (plus all duties, freight, taxes,
insurance, costs and other charges and expenses relating to such
Credit Accommodation or such Eligible Inventory) multiplied by a
percentage equal to 100% minus the Inventory Advance Rate applicable
to Eligible Inventory and (y) in the case of any other Credit
Accommodation issued for any purpose, establish a Reserve equal to the
full amount of such Credit Accommodation plus all costs and other
charges and expenses relating to such Credit Accommodation. In
addition, (x) Lender shall establish a permanent Reserve in the amount
set forth in Section l(f) of Schedule A, and (y) if the outstanding
principal balance of the Term Loan advance with respect to Eligible
Equipment exceeds the percentage set forth in Section 2(a)(i) of
Schedule A of the appraised value of such Eligible Equipment, Lender
may establish an additional Reserve in the amount of such excess (and,
for this purpose, if payments of principal on the Term Loan advances
against Eligible Equipment and Real Property are not calculated
separately, payments of principal of the Term Loan made by Borrower
shall be deemed to apply to the Term Loan advance with respect to
Eligible Equipment and Real Property, respectively, in proportion to
the original principal amounts of such advances). Lender may, in its
discretion, establish and revise Reserves by deducting them in
determining Availability or by reclassifying Eligible Accounts or
Eligible Inventory as ineligible. In no event shall the establishment
of a Reserve in respect of a particular actual or contingent liability
obligate Lender to make advances hereunder to pay such liability or
otherwise obligate Lender with respect thereto.
1.3 Other Provisions Applicable to Credit Accommodations. Lender may, in
its sole discretion and on terms and conditions acceptable to Lender,
make Credit Accommodations available to Borrower either by issuing
them, or by causing other financial institutions to issue them
supported by Lender's guaranty or indemnification; provided, that
after giving effect to each Credit Accommodation, the Credit
Accommodation Balance will not exceed the Credit Accommodation Limit
set forth in Section l(e) of Schedule A. Any amounts paid by Lender in
respect of a Credit Accommodation will be treated for all purposes as
a Revolving Loan which shall be secured by the Collateral and bear
interest, and be payable, in the same manner as a Revolving Loan.
Borrower agrees to execute all documentation required by Lender or the
issuer of any Credit Accommodation in connection with any such Credit
Accommodation.
1.4 Repayment. Accrued interest on all monetary Obligations shall be
payable on the first day of each month. Principal of the Term Loan
shall be repaid as set forth in Section 2(b) of Schedule A. If at any
time any of the Loan Limits are exceeded, Borrower will immediately
pay to Lender such amounts (or provide cash collateral to Lender with
respect to the Credit Accommodation Balance in the manner set forth in
Section 7.3), as shall cause Borrower to be in fall compliance with
all of the Loan Limits. Notwithstanding the foregoing, Lender may, in
its sole discretion, make or permit Revolving Loans, the Term Loan,
any Credit Accommodations or any other monetary Obligations to be in
excess of any of the Loan Limits; provided, that Borrower shall, upon
Lender's demand, pay to Lender such amounts as shall cause Borrower to
be in full compliance with all of the Loan Limits. All unpaid monetary
Obligations shall be payable in fall on the Maturity Date (as defined
in Section 7.1) or, if earlier, the date of any early termination
pursuant to Section 7.2.
1.5 Minimum Borrowing. Subject to the terms and conditions of this
Agreement, Borrower agrees to (i) borrow sufficient amounts to cause
the outstanding principal balance of the Loans to equal or exceed, at
all times prior to the Maturity Date, the Minimum Loan Amount set
forth in Section 4 of Schedule A or pay the Minimum Borrowing Fee set
forth in Section 6 of Schedule A; and (ii) maintain Availability
sufficient to enable Borrower to do so. However, Lender shall not be
obligated to loan Borrower the Minimum Loan Amount other than in
accordance with all of the terms and conditions of this Agreement.
2. INTEREST AND FEES.
2.1 Interest. All Loans and other monetary Obligations shall bear interest
at the Interest Rate(s) set forth in Section 3 of Schedule A, except
where expressly set forth to the contrary in this Agreement or another
Loan Document; provided, that after the occurrence of an Event of
Default, all Loans and other monetary Obligations shall, at Lender's
option, bear interest at a rate per annum equal to two percent (2%) in
excess of the rate otherwise applicable thereto (the "Default Rate")
until paid in full (notwithstanding the entry of any judgment against
Borrower or the exercise of any other right or remedy by Lender), and
all such interest shall be payable on demand. Changes in the Interest
Rate shall be effective as of the date of any change in the Prime
Rate. Notwithstanding anything to the contrary contained in this
Agreement, the aggregate of all amounts deemed to be interest
hereunder and charged or collected by Lender is not intended to exceed
the highest rate permissible under any applicable law, but if it
should, such interest shall automatically be reduced to the extent
necessary to comply with applicable law and Lender will refund to
Borrower any such excess interest received by Lender.
2.2 Fees and Warrants. Borrower shall pay Lender the following fees, and
issue Lender the following warrants, which are in addition to all
interest and other sums payable by Borrower to Lender under this
Agreement, and are not refundable:
(a) Closing Fee. A closing fee in the amount set forth in Section
6(a) of Schedule A, which shall, be deemed to be fully earned as
of, and payable on, the date hereof.
(b) Facility Fees. (i) A facility fee for the Initial Term, which
shall be fully earned as of the date of this Agreement, and shall
be payable in equal installments in the amount set forth in
Section 6(b)(i) of Schedule A on each anniversary of this
Agreement during the Initial Term, and (ii) a facility fee for
each Renewal Term,, which shall be fully earned as of the first
day of such Renewal Term, and shall be payable in equal
installments in the amount set forth in Section 6(b)(ii) of
Schedule A on the first day of such Renewal Term and on each
anniversary thereof during such Renewal Term.
(c) Servicing Fee. A monthly servicing fee in the amount set forth in
Section 6(c) of Schedule A, in consideration of Lender's
administration and other services for each month (or part
thereof), which shall be fully earned as of, and payable in
advance on, the date of this Agreement and on the first day of
each month thereafter so long as any of the Obligations are
outstanding.
(d) Unused Line Fee. An unused line fee at a rate equal to the
percentage per annum. set forth in Section 6(d) of Schedule A of
the amount by which the Maximum Facility Amount exceeds the
average daily outstanding principal balance of the Loans and the
Credit Accommodation Balance during the immediately preceding
month (or part thereof, which fee shall be payable, in arrears,
on the first day of each month so long as any of the Obligations
are outstanding and on the Maturity Date.
(e) Minimum Borrowing Fee. A minimum borrowing fee equal to the
excess, if any, of (i) interest which would have been payable in
respect of each period set forth in Section 6(e)(i) of Schedule A
if, at all times during such period, the principal balance of the
Loans was equal to the Minimum Loan Amount over (ii) the actual
interest payable in respect of such period, which fee shall be
fully earned as of the last day of such period and payable on the
date set forth in Section 6(e)(ii) of Schedule A and on the
Maturity Date, commencing with the immediately following period.
(f) Success Fee. A success fee in the amount set forth in Section
6(f) of Schedule A, which shall be fully earned as of the date of
this Agreement and payable as set forth in Section 6(f) of
Schedule A.
(g) Warrants. Warrants to acquire the capital stock of Borrower, as
summarized in Section 6(g) of Schedule A and as more fully set
forth in a separate warrant agreement executed by Borrower
contemporaneously with this Agreement. N/A
(h) Credit Accommodation Fees. All of the fees relating to Credit
Accommodations set forth in Section 6(i) of Schedule A.
2.3 Computation of Interest and Fees. All interest and fees shall be
calculated daily on the closing balances in the Loan Account based on
the actual number of days elapsed in a year of 360 days. For purposes
of calculating interest and fees, if the outstanding daily principal
balance of the Revolving Loans is a credit balance, such balance shall
be deemed to be zero.
2.4 Loan Account; Monthly Accountings. Lender shall maintain a loan
account for Borrower reflecting all advances, charges, expenses and
payments made pursuant to this Agreement (the "Loan Account'), and
shall provide Borrower with a monthly accounting reflecting the
activity in the Loan Account. Each accounting shall be deemed correct,
accurate and binding on Borrower and an account stated (except for
reverses and reapplications of payments made and corrections of errors
discovered by Lender), unless Borrower notifies Lender in writing to
the contrary within sixty days after such account is rendered,
describing the nature of any alleged errors or omissions. However,
Lender's failure to maintain the Loan Account or to provide any such
accounting shall not affect the legality or binding nature of any of
the Obligations. Interest, fees and other monetary Obligations due and
owing under this Agreement (including fees and other amounts paid by
Lender to issuers of Credit Accommodations) may, in Lender's
discretion, be charged to the Loan Account, and will thereafter be
deemed to be Revolving Loans and will bear interest at the same rate
as other Revolving Loans.
3. SECURITY INTEREST.
3.1 To secure the full payment and performance of all of the Obligations,
Borrower hereby grants to Lender a continuing security interest in all
of Borrower's property and interests in property, whether tangible or
intangible, now owned or in existence or hereafter acquired or
arising, wherever located, including Borrower's interest in all of the
following, whether or not eligible for lending purposes: (i) all
Accounts, Chattel Paper, Instruments, Documents, Goods (including
Inventory, Equipment, farm products and consumer goods), Investment
Property, General Intangibles, Deposit Accounts and money, (ii) all
proceeds and products of all of the foregoing (including proceeds of
any insurance policies, proceeds of proceeds and claims against third
parties for loss or any destruction of any of the foregoing) and (iii)
all books and records relating to any of the foregoing.
4. ADMINISTRATION.
4.1 Lock Boxes and Blocked Accounts. Borrower will, at its expense,
establish (and revise from time to time as Lender may require)
collection procedures acceptable to Lender, in Lender's sole
discretion, for the collection of checks, wire transfers and other
proceeds of Accounts ("Account Proceeds"), each may include (i)
directing all Account Debtors to send all such proceeds directly to a
post office box designated by Lender either in the name of Borrower
(but as to which Lender has exclusive access) or, at Lender's option,
in the name of Lender (a "Lock Box") or (ii) depositing all Account
Proceeds received by Borrower into one or more bank accounts
maintained in Lender's name (each, a "Blocked Account"), under an
arrangement acceptable to Lender with a depository bank acceptable to
Lender, pursuant to which all funds deposited into each Blocked
Account are to be transferred to Lender in such manner, and with such
frequency, as Lender shall specify or (iii) a combination of the
foregoing. Borrower agrees to execute, and to cause its depository
banks to execute, such Lock Box and Blocked Account agreements and
other documentation as Lender shall require from time to time in
connection with the foregoing.
4.2 Remittance of Proceeds. Except as provided in Section 4.1, all
proceeds arising from the sale or other disposition of any Collateral
shall be delivered, in kind, by Borrower to Lender in the original
form in which received by Borrower not later than the following
Business Day after receipt by Borrower. Until so delivered to Lender,
Borrower shall hold such proceeds separate and apart from Borrower's
other funds and property in an express trust for Lender. Nothing in
this Section 4.2 shall limit the restrictions on disposition of
Collateral set forth elsewhere in this Agreement.
4.3 Application of Payments. Lender may, in its sole discretion, apply,
reverse and re-apply all cash and non-cash proceeds of Collateral or
other payments received with respect to the Obligations, in such order
and manner as Lender shall determine, whether or not the Obligations
are due, and whether before or after the occurrence of a Default or an
Event of Default. For purposes of determining Availability, such
amounts will be credited to the Loan Account and the Collateral
balances to which they relate upon Lender's receipt of advice from
Lender's Bank (set forth in Section 11 of Schedule A) that such items
have been credited to Lender's account at Lender's Bank (or upon
Lender's deposit thereof at Lender's Bank in the case of payments
received by Lender in kind), in each case subject to final payment and
collection. However, for purposes of computing interest on the
Obligations, such items shall be deemed applied by Lender three
Business Days after Lender's receipt of advice of deposit thereof at
Lender's Bank.
4.4 Notification; Verification. Lender or its designee may, from time to
time, whether or not a Default or Event of Default has occurred: (i)
verify directly with the Account Debtors the validity, amount and
other matters relating to the Accounts and Chattel Paper, by means of
mail, telephone or otherwise, either in the name of Borrower or Lender
or such other name as Lender may choose; (ii) notify Account Debtors
that Lender has a security interest in the Accounts and that payment
thereof is to be made directly to Lender; and (iii) demand, collect or
enforce payment of any Accounts and Chattel Paper (but without any
duty to do so).
4.5 Power of Attorney. Borrower hereby grants to Lender an irrevocable
power of attorney, coupled with an interest, authorizing and
permitting Lender (acting through any of its officers, employees,
attorneys or agents), at any time (whether or not a Default or Event
of Default has occurred and is continuing, except as expressly
provided below), at Lender's option, but without obligation, with or
without notice to Borrower, and at Borrower's expense, to do any or
all of the following, in Borrower's name or otherwise: (i) execute on
behalf of Borrower any documents that Lender may, in its sole
discretion, deem advisable in order to perfect and maintain Lender's
security interests in the Collateral, to exercise a right of Borrower
or Lender, or to fully consummate all the transactions contemplated by
this Agreement and the other Loan Documents (including such financing
statements and continuation financing statements, and amendments
thereto, as Lender shall deem necessary or appropriate) and to file as
a financing statement any copy of this Agreement or any financing
statement signed by Borrower; (ii) execute on behalf of Borrower any
document exercising, transferring or assigning any option to purchase,
sell or otherwise dispose of or lease (as lessor or lessee) any real
or personal property which is part of the Collateral or in which
Lender has an interest; (iii) execute on behalf of Borrower any
invoices relating to any Accounts, any draft against any Account
Debtor, any proof of claim in bankruptcy, any notice of Lien or claim,
and any assignment or satisfaction of mechanic's, materialman's or
other Lien; (iv) execute on behalf of Borrower any notice to any
Account Debtor; (v) receive and otherwise take control in any manner
of any cash or non-cash items of payment or proceeds of Collateral;
(vi) endorse Borrower's name on all checks and other forms of
remittances received by Lender; (vii) pay, contest or settle any Lien,
charge, encumbrance, security interest and adverse claim in or to any
of the Collateral, or any judgment based thereon, or otherwise take
any action to terminate or discharge the same; (viii) after the
occurrence of a Default or Event of Default, grant extensions of time
to pay, compromise claims relating to, and settle Accounts, Chattel
Paper and General Intangibles for less than face value and execute all
releases and other documents in connection therewith; (ix) pay any
sums required on account of Borrower's taxes or to secure the release
of any Liens therefor; (x) pay any amounts necessary to obtain, or
maintain in effect, any of the insurance described in Section 5.12;
(xi) settle and adjust, and give releases of, any insurance claim that
relates to any of the Collateral and obtain payment therefor; (xii)
instruct any third party having custody or control of any Collateral
or books or records belonging to, or relating to, Borrower to give
Lender the same rights of access and other rights with respect thereto
as Lender has under this Agreement; and (xiii) after the occurrence of
a Default or Event of Default, change the address for delivery of
Borrower's mail and receive and open all mail addressed to Borrower.
Any and all sums paid, and any and all costs, expenses, liabilities,
obligations and reasonable attorneys' fees incurred, by Lender with
respect to the foregoing shall be added to and become part of the
Obligations, shall be payable: on demand, and shall bear interest at a
rate equal to the highest interest rate applicable to any of the
Obligations. Borrower agrees that Lender's rights under the foregoing
power of attorney or any of Lender's other rights under this Agreement
or the other Loan Documents shall not be construed to indicate that
Lender is in control of the business, management or properties of
Borrower.
4.6 Disputes. Borrower shall promptly notify Lender of all disputes or
claims relating to Accounts and Chattel Paper. Borrower will not,
without Lender's prior written consent, compromise or settle any
Account or Chattel Paper for less than the full amount thereof, grant
any extension of time of payment of any Account or Chattel Paper,
release (in whole or in part) any Account Debtor or other person
liable for the payment of any Account or Chattel Paper or grant any
credits, discounts, allowances, deductions, return authorizations or
the like with respect to any Account or Chattel Paper; except that
prior to the occurrence of an Event of Default Borrower may take any
of such actions in the ordinary course of its business, provided that
Borrower promptly reports the same to Lender.
4.7 Invoices. At Lender's request, Borrower will cause all invoices and
statements which it sends to Account Debtors or other third parties to
be marked, in a manner satisfactory to Lender, to reflect Lender's
security interest therein.
4.8 Inventory.
(a) Returns. Provided that no Event of Default has occurred and is
continuing, if any Account Debtor returns any Inventory to
Borrower in the ordinary course of its business, Borrower will
promptly determine the reason for such return and promptly issue
a credit memorandum to the Account Debtor in the appropriate
amount (sending a copy to Lender). After the occurrence of an
Event of Default, Borrower will not accept any return without
Lender's prior written consent. Regardless of whether an Event of
Default has occurred, Borrower will (i) hold the returned
Inventory in trust for Lender; (ii) segregate all returned
Inventory from all of Borrower's other property; (iii)
conspicuously label the returned Inventory as Lender's property;
and (iv) immediately notify Lender of the return of such
Inventory, specifying the reason for such return, the location
and condition of the returned Inventory and, at Lender's request,
deliver such retained Inventory to Lender at an address specified
by Lender.
(b) Other Covenants. Borrower will not, without Lender's prior
written consent, (i) store any Inventory with any warehouseman or
other third party other than as set forth in Section 9(d) of
Schedule A or (ii) sell any Inventory on a sale-or-return,
guaranteed sale, consignment, or other contingent basis. All of
the Inventory has been produced only in accordance with the Fair
Labor Standards Act of 1938 and all rules, regulations and orders
promulgated thereunder.
4.9 Access to Collateral, Books and Records. At reasonable times, and on
one Business Day's notice, prior to the occurrence of a Default or an
Event of Default, and at any time and with or without notice after the
occurrence of a Default or an Event of Default, Lender or its agents
shall have the right to inspect the Collateral, and the right to
examine and copy Borrower's books and records. Lender shall take
reasonable steps to keep confidential all information obtained in any
such inspection or examination, but Lender shall have the right to
disclose any such information to its auditors, regulatory agencies,
attorneys and participants, and pursuant to any subpoena or other
legal process. Borrower agrees to give Lender access to any or all of
Borrowers premises to enable Lender to conduct such inspections and
examinations. Such inspections and examinations shall be at Borrower's
expense and the charge therefor shall be $850.00 per person per day
(or such higher amount as shall represent Lender's then current
standard charge), plus reasonable out-of-pocket expenses. Such
inspections and examinations shall not exceed nine person days per
year so long as an Event of Default has not occurred. Lender may, at
Borrower's expense, use Borrower's personnel, computer and other
equipment, programs, printed output and computer readable media,
supplies and premises for the collection, sale or other disposition of
Collateral to the extent Lender, in its sole discretion, deems
appropriate. Borrower hereby irrevocably authorizes all accountants
and third parties to disclose and deliver to Lender, at Borrower's
expense, all financial information, books and records, work papers,
management reports and other information in their possession regarding
Borrower. Borrower will not enter into any agreement with any
accounting firm, service bureau or third party to store Borrower's
books or records at any location other than Borrower's Address without
first obtaining Lenders written consent (which consent may be
conditioned upon such accounting firm, service bureau or other third
party agreeing to give Lender the same rights with respect to access
to books and records and related rights as Lender has under this
Agreement).
5. REPRESENTATIONS, WARRANTIES AND COVENANTS.
To induce Lender to enter into this Agreement, Borrower represents,
warrants and covenants as follows (it being understood that (i) each such
representation and warranty will be deemed remade as of the date on which each
Loan is made and each Credit Accommodation is provided and shall not be affected
by any knowledge of, or any investigation by, Lender, and (ii) the accuracy of
each such representation, warranty and covenant will be a condition to each Loan
and Credit Accommodation):
5.1 Existence and Authority. Borrower is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation or formation. Borrower is qualified and licensed to do
business in all jurisdictions in which any failure to do so would have
a material adverse effect on Borrower. The execution, delivery and
performance by Borrower of this Agreement and all of the other Loan
Documents have been duly and validly authorized, do not violate
Borrower's articles or certificate of incorporation, by-laws or other
organizational documents, or any law or any agreement or instrument or
any court order which is binding upon Borrower or its property, do not
constitute grounds for acceleration of any indebtedness or obligation
under any agreement or instrument which is binding upon Borrower or
its property, and do not require the consent of any Person. This
Agreement and such other Loan Documents have been duly executed and
delivered by, and are enforceable against, Borrower, and all other
Obligors who have signed them, in accordance with their respective
terms. Sections 9(g) and 9(h) of Schedule A set forth the ownership of
Borrower and the names and ownership of Borrower's Subsidiaries as of
the date of this Agreement.
5.2 Name; Trade Names and Styles. The name of Borrower set forth in the
heading to this Agreement is its correct and complete legal name as of
the date hereof. Listed in Sections 9(a), 9(b) and 9(c) of Schedule A
are all prior names of Borrower and all of Borrower's present and
prior trade names. Borrower shall give Lender at least thirty days'
prior written notice before changing its name or doing business under
any other name. Borrower has complied with all laws relating to the
conduct of business under a fictitious business name. Borrower
represents and warrants that (i) each trade name does not refer to
another corporation or other legal entity; (ii) all Accounts invoiced
under any such trade names are owned exclusively by Borrower and are
subject to the security interest of Lender and the other terms of this
Agreement and (iii) all schedules of Accounts, including any sales
made or services rendered using any trade name shall show Borrower's
name as assignor.
5.3 Title to Collateral; Permitted Liens. Borrower has good and marketable
title to the Collateral. The Collateral now is and will remain free
and clear of any and all liens, charges, security interests,
encumbrances and adverse claims, except for Permitted Liens. Lender
now has, and will continue to have, a first-priority perfected and
enforceable security interest in all of the Collateral, subject only
to the Permitted Liens, and Borrower will at all times defend Lender
and the Collateral against all claims of others. None of the
Collateral which is Equipment is or will be affixed to any real
property in such a manner, or with such intent, as to become a
fixture. Except for leases or subleases as to which Borrower has
delivered to Lender a landlord's waiver in form and substance
satisfactory to Lender, Borrower is not a lessee or sublessee under
any real property lease or sublease pursuant to which the lessor or
sublessor may obtain any rights in any of the Collateral, and no such
lease or sublease now prohibits, restrains, impairs or conditions, or
will prohibit, restrain, impair or condition, Borrower's right to
remove any Collateral from the premises. Whenever any Collateral is
located upon premises in which any third party has an interest
(whether as owner, mortgagee, beneficiary under a deed of trust, lien
or otherwise), Borrower shall, whenever requested by Lender, cause
each such third party to execute and deliver to Lender, in form and
substance acceptable to Lender, such waivers and subordinations as
Lender shall specify, so as to ensure that Lender's rights in the
Collateral are, and will continue to fie, superior to the rights of
any such third party. Borrower will keep in full force and effect, and
will comply with all the terms of, any lease of real property where
any of the Collateral now or in the future may be located.
5.4 Accounts and Chattel Paper. As of each date reported by Borrower, all
Accounts which Borrower has reported to Lender as being Eligible
Accounts comply in all respects with the criteria for eligibility
established by Lender and in effect at such time. All Accounts and
Chattel Paper are genuine and in all respects what they purport to be,
arise out of a completed, bona fide and unconditional and
non-contingent sale and delivery of goods or rendition of services by
Borrower in the ordinary course of its business and in accordance with
the terms and conditions of all purchase orders, contracts or other
documents relating thereto, each Account Debtor thereunder had the
capacity to contract at the time any contract or other document giving
rise to such Accounts and Chattel Paper were executed, and the
transactions giving rise to such Accounts and Chattel Paper comply
with all applicable laws and governmental rules and regulations.
5.5 Investment Property. Borrower will take any and all actions required
or requested by Lender, from time to time, to (i) cause Lender to
obtain exclusive control of any Investment Property in a manner
acceptable to Lender and (ii) obtain from any issuers of Investment
Property and such other Persons as Lender shall specify, for the
benefit of Lender, written confirmation of Lender's exclusive control
over such Investment Property and take such other actions as Lender
may request to perfect Lender's security interest in such Investment
Property. For purposes of this Section 5.5, Lender shall have
exclusive control of Investment Property if (A) such Investment
Property consists of certificated securities and Borrower delivers
such certificated securities to Lender (with appropriate endorsements
if such certificated securities are in registered form); (B) such
Investment Property consists of uncertificated securities and either
(x) Borrower delivers such uncertificated securities to Lender or (y)
the issuer thereof agrees, pursuant to documentation in form and
substance satisfactory to Lender, that it will comply with
instructions originated by Lender without further consent by Borrower,
and (C) such Investment Property consists of security entitlements and
either (x) Lender becomes the entitlement holder thereof or (y) the
appropriate securities intermediary agrees, pursuant to documentation
in form and substance satisfactory to Lender, that it will comply with
entitlement orders originated by Lender without further consent by
Borrower.
5.6 Place of Business; Location of Collateral. Borrowers Address is
Borrower's chief executive office and the location , of its books and
records. In addition, except as provided in the immediately following
sentence, Borrower has places of business and Collateral located only
at the locations set forth on Sections 9(d) and 9(e) of Schedule A.
Borrower will give Lender at least thirty days' prior written notice
before opening any additional place of business, changing its chief
executive office or the location of its books and records, or moving
any of the Collateral to a location other than Borrower's Address or
one of the locations set forth in Sections 9(d) and 9(e) of Schedule
A, and will execute and deliver all financing statements and other
agreements, instruments and documents which Lender shall require as a
result thereof.
5.7 Financial Condition, Statements and Reports. All financial statements
delivered to Lender by or on behalf of Borrower have been prepared in
conformity with GAAP and completely and fairly reflect the financial
condition of Borrower, at the times and for the periods therein
stated. Between the last date covered by any such financial statement
provided to Lender and the date hereof (or, with respect to the
remaking of this representation in connection with the making of any
Loan or the providing of any Credit Accommodation, the date such Loan
is made or such Credit Accommodation is provided), there has been no
material adverse change in the financial condition or business of
Borrower. Borrower is solvent and able to pay its debts as they come
due, and has sufficient capital to carry on its business as now
conducted and as. proposed to be conducted. All schedules, reports and
other information and documentation delivered by Borrower to Lender
with respect to the Collateral are, or will be, when delivered, true,
correct and complete as of the date delivered or the date specified
therein.
5.8 Tax Returns and Payments; Pension Contributions. Borrower has timely
filed all tax returns and reports required by applicable law, has
timely paid all applicable taxes, assessments, deposits and
contributions owing by Borrower and will timely pay all such items in
the future as they became due and payable. Borrower may, however,
defer payment of any contested taxes; provided, that Borrower (i) in
good faith contests Borrower's obligation to pay such taxes by
appropriate proceedings promptly and diligently instituted and
conducted; (ii) notifies Lender in writing of the commencement of, and
any material development in, the proceedings; (iii) posts bonds or
takes any other steps required to keep the contested taxes from
becoming a Lien upon any of the Collateral and (iv) maintains adequate
reserves therefor in conformity with GAAP. Borrower is unaware of any
claims or adjustments proposed for any of Borrower's prior tax years
which could result in additional taxes becoming due and payable by
Borrower. Borrower has paid, and shall continue to pay, all amounts
necessary to fund all present and future pension, profit sharing and
deferred compensation plans in accordance with their terms, and
Borrower has not withdrawn from participation in, permitted partial or
complete termination of, or permitted the occurrence of any other
event with respect to, any such plan which could result in any
liability of Borrower, including any liability to the Pension Benefit
Guaranty Corporation or any other governmental agency.
5.9 Compliance with Laws. Borrower has complied in all material respects
with all provisions of all applicable laws and regulations, including
those relating to Borrower's ownership of real or personal property,
the conduct and licensing of Borrower's business, the payment and
withholding of taxes, ERISA and other employee matters, safety and
environmental matters.
5.10 Litigation. Section 9(f) of Schedule A discloses all claims,
proceedings, litigation or investigations pending or (to the best of
Borrower's knowledge) threatened against Borrower. There is no claim,
suit, litigation, proceeding or investigation pending or (to the best
of Borrower's knowledge) threatened by or against or affecting
Borrower in any court or before any governmental agency (or any basis
therefor known to Borrower) which may result, either separately or in
the aggregate, in any material adverse change in the financial
condition or business of Borrower, or in any material impairment in
the ability of Borrower to carry on its business in substantially the
same manner as it is now being conducted. Borrower will promptly
inform Lender in writing of any claim, proceeding, litigation or
investigation in the future threatened or instituted by or against
Borrower.
5.11 Use of Proceeds. All proceeds of all Loans will be used solely for
lawful business purposes.
5.12 Insurance. Borrower will at all times carry property, liability and
other insurance, with insurers acceptable to Lender in such form and
amounts, and with such deductibles and other provisions, as Lender
shall require, and Borrower will provide evidence of such insurance to
Lender, so that Lender is satisfied that such insurance is, at all
times, in full force and effect. Each property insurance policy shall
name Lender as loss payee and shall contain a lender's loss payable
endorsement in form acceptable to Lender, each liability insurance
policy shall name Lender as an additional insured, and each business
interruption insurance policy shall be collaterally assigned to
Lender, all in form and substance satisfactory to Lender. All policies
of insurance shall provide that they may not be cancelled or changed
without at least dirty days' prior written notice to Lender, shall
contain breach of warranty coverage, and shall otherwise be in form
and substance satisfactory to Lender. Upon receipt of the proceeds of
any such insurance, Lender shall apply such proceeds in reduction of
the Obligations as Lender shall determine in its sole discretion.
Borrower will promptly deliver to Lender copies of all reports made to
insurance companies.
5.13 Financial and Collateral Reports. Borrower has kept and will keep
adequate records and books of account with respect to its business
activities and the Collateral in which proper entries are made in
accordance with GAAP reflecting all its financial transactions, and
will cause to be prepared and furnished to Lender the following (all
to be prepared in accordance with GAAP, unless Borrower's certified
public accountants concur in any change therein and such change is
disclosed to Lender):
(a) Collateral Reports. On or before the fifteenth day of each month,
an aging of Borrower's Accounts, Chattel Paper and notes
receivable, and weekly Inventory reports, all in such form, and
together with such additional certificates, schedules and other
information with respect to the Collateral or the business of
Borrower or any Obligor, as Lender shall request; provided, that
Borrower's failure to execute and deliver the same shall not
affect or limit Lender's security interests and other rights in
any of the Accounts, nor shall Lender's failure to advance or
lend against a specific Account affect or limit Lender's security
interest and other rights therein. Together with each such
schedule, Borrower shall furnish Lender with copies (or, at
Lender's request, originals) of all contracts, orders, invoices,
and other similar documents, and all original shipping
instructions, delivery receipts, bills of lading, and other
evidence of delivery, for any goods the sale or disposition of
which gave rise to such Accounts, and Borrower warrants the
genuineness of all of the foregoing. In addition, Borrower shall
deliver to Lender the originals of all Instruments, Chattel
Paper, security agreements, guaranties and other documents and
property evidencing or securing any Accounts, immediately upon
receipt thereof and in the same form as received, with all
necessary endorsements. Lender may destroy or otherwise dispose
of all documents, schedules and other papers delivered to Lender
pursuant to this Agreement (other than originals of Instruments,
Chattel Paper, security agreements, guaranties and other
documents and property evidencing or securing any Accounts) six
months after Lender receives them, unless Borrower requests their
return in writing in advance and arranges for their return to
Borrower at Borrower's expense.
(b) Annual Statements. Not later than ninety days after the close of
each fiscal year of Borrower, unqualified (except for a
qualification for a change in accounting principles with which
the accountant concurs) audited financial statements of Borrower
and its Subsidiaries as of the end of such year, on a
consolidated and consolidating basis, certified by a firm of
independent certified public accountants of recognized standing
selected by Borrower but acceptable to Lender, together with a
copy of any management letter issued in connection therewith and
a letter from such accountants acknowledging that Lender is
relying on such financial statements;
(c) Interim Statements. Not later than fifteen days after the end of
each month hereafter, including the last month of Borrower's
fiscal year, unaudited interim financial statements of Borrower
and its Subsidiaries as of the end of such month and of the
portion of Borrower's fiscal year then elapsed, on a consolidated
and consolidating basis, certified by the principal financial
officer of Borrower as prepared in accordance with GAAP and
fairly presenting the consolidated financial position and results
of operations of Borrower and its Subsidiaries for such month and
period subject only to changes from audit and year-end
adjustments and except that such statements need not contain
notes;
(d) Projections, Etc. Such business projections, Availability
projections, business plans, budgets and cash flow statements for
Borrower and its Subsidiaries as Lender shall request from time
to time;
(e) Shareholder Reports, Etc. Promptly after the sending or filing
thereof, as the case may be, copies of any proxy statements,
financial statements or reports which Borrower has made available
to its shareholders and copies of any regular, periodic and
special reports or registration statements which Borrower files
with the Securities and Exchange Commission or any governmental
authority which may be substituted therefor, or any national
securities exchange;
(f) ERISA Reports. Upon request by Lender, copies of any annual
report to be filed pursuant to the requirements of ERISA in
connection with each plan subject thereto; and
(g) Other Information. Such other data and information (financial and
otherwise) as Lender, from time to time, may reasonably request
bearing upon or related to the Collateral or Borrower's and each
of its Subsidiary's financial condition or results of operations.
5.14 Litigation Cooperation. Should any third-party suit or proceeding be
instituted by or against Lender with respect to any Collateral or in
any manner relating to Borrower, Borrower shall, without expense to
Lender, make available Borrower and its officers, employees and
agents, and Borrower's books and records, without charge, to the
extent that Lender may deem them reasonably necessary in order to
prosecute or defend any such suit or proceeding.
5.15 Maintenance of Collateral, Etc. Borrower will maintain all of its
Equipment in good working condition, ordinary wear and tear excepted,
and Borrower will riot use the Collateral for any unlawful purpose.
Borrower win immediately advise Lender in writing of any material loss
or damage to the Collateral and of any investigation, action, suit,
proceeding or claim relating to the Collateral or which may result in
an adverse impact upon Borrower's business, assets or financial
condition.
5.16 Notification of Changes. Borrower will promptly notify Lender in
writing of any change in its officers or directors, the opening of any
new bank account or other deposit account, or any material adverse
change in the business or financial affairs of Borrower or the
existence of any circumstance which would make any representation or
warranty of Borrower untrue in any material respect or constitute a
material breach of any covenant of Borrower.
5.17 Further Assurances. Borrower agrees, at its expense, to take all
actions, and execute or cause to be executed and delivered to Lender
all promissory notes, security agreements, agreements with landlords,
mortgagees and processors and other bailees, subordination and
intercreditor agreements and other agreements, instruments and
documents as Lender may request from time to time, to perfect and
maintain Lender's security interests in the Collateral and to fully
effectuate the transactions contemplated by this Agreement.
5.18 Negative Covenants. Except as set forth in Section 13 of Schedule A,
Borrower will not, without Lender's prior written consent, (i) merge
or consolidate with another Person, form any new Subsidiary or acquire
any interest in any Person; (ii) acquire any assets except in the
ordinary course of business and as otherwise permitted by this
Agreement and the other Loan Documents; (iii) enter into any
transaction outside the ordinary course of business; (iv) sell or
transfer any Collateral or other assets, except that Borrower may sell
finished goods Inventory in the ordinary course of its business; (v)
make any loans to, or investments in, any Affiliate or other Person in
the form of money or other assets; (vi) incur any debt outside the
ordinary course of business; (vii) guaranty or otherwise become liable
with respect to the obligations of another party or entity; (viii) pay
or declare any dividends or other distributions on Borrower's stock,
if Borrower is a corporation (except for dividends payable solely in
capital stock of Borrower) or with respect to any equity interests, if
Borrower is not a corporation; (ix) redeem, retire, purchase or
otherwise acquire, directly or indirectly, any of Borrower's capital
stock or other equity interests; (x) make any change in Borrower's
capital structure; (xi) dissolve or elect to dissolve; (xii) pay any
principal or interest on any indebtedness owing to an Affiliate,
(xiii) enter into any transaction with an Affiliate other than on
arms-length terms; or (xiv) agree to do any of the foregoing.
5.19 Financial Covenants.
(a) Capital Expenditures. Borrower will not expend or commit to
expend, directly or indirectly, for capital expenditures
(including capital lease obligations) in excess of the amount set
forth in Section 8(a) of Schedule A as the Capital Expenditure
Limitation in any fiscal year.
(b) Net Worth. Borrower will at all times maintain a net worth of at
least the amount set forth in Section 8(b) of Schedule A.
(c) Tangible Net Worth. Borrower will at all times maintain a minimum
tangible net worth of at least the amount set forth in Section
8(c) of Schedule A.
(d) Working Capital. Borrower will at all times maintain working
capital of at least the amount set forth in Section 8(d) of
Schedule A.
(e) Net Losses. Borrower will not permit its cumulative net loss to
exceed the amount set forth in Section 8(e) of Schedule A.
(f) Net Income. Borrower will not permit its cumulative net income to
be less than the amount set forth in Section 8(f) of Schedule A.
(g) Leverage. Borrower will not permit the ratio of its total
liabilities to its net worth to exceed, at any time, the ratio
set forth in Section 8(g) of Schedule A.
(h) Other Financial Covenants. Borrower will comply with any
additional financial covenants set forth in Section 8(j) of
Schedule A.
5.20.Year 2000 Compliance Representation. Borrower reasonably believes that
all computer applications (including those of its suppliers and
vendors) that are material to its or any of its Subsidiaries' business
and operations will on a timely basis be able to perform properly
date-sensitive functions for all dates before and after January 1,
2000 (that is, be "Year 2000 compliant"), except to the extent that a
failure to do so could not reasonably be expected to have a material
adverse effect on Borrower's business or on the condition or value of
the Collateral ("Material Adverse Effect").
6. RELEASE AND INDEMNITY.
6.1 Release. Borrower hereby releases Lender and its Affiliates and their
respective directors, officers, employees, attorneys and agents and
any other Person affiliated with or representing Lender (the "Released
Parties") from any and all liability arising from acts or omissions
under or pursuant to this Agreement, whether based on errors of
judgment or mistake of law or fact, except for those arising from
willful misconduct. However, in no circumstance will any of the
Released Parties be liable for lost profits or other special or
consequential damages. Such release is made on the date hereof and
remade upon each request for a Loan or Credit Accommodation by
Borrower. Without limiting the foregoing:
(a) Lender shall not be liable for (i) any shortage or discrepancy
in, damage to, or loss or destruction of, any goods, the sale or
other disposition of which gave rise to an Account; (ii) any
error, act, omission, or delay of any kind occurring in the
settlement, failure to settle, collection or failure to collect
any Account; (iii) settling any Account in good faith for less
than the full amount thereof; or (iv) any of Borrower's
obligations under any contract or agreement giving rise to an
Account; and
(b) In connection with Credit Accommodations or any underlying
transaction, Lender shall not be responsible for the conformity
of any goods to the documents presented, the validity or
genuineness of any documents, delay, default or fraud by
Borrower, shippers and/or any other Person. Borrower agrees that
any action taken by Lender, if taken in good faith, or any action
taken by an issuer of any Credit Accommodation, under or in
connection with any Credit Accommodation, shall be binding on
Borrower and shall not create any resulting liability to Lender.
In furtherance thereof, Lender shall have the full right and
authority to clear and resolve any questions of non-compliance of
documents, to give any instructions as to acceptance or rejection
of any documents or goods, to execute for Borrower's account any
and all applications for steamship or airway 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, and to agree to any amendments,
renewals, extensions, modifications, changes or cancellations of
any of the terms or conditions of any of the Credit
Accommodations or applications and other documentation pertaining
thereto.
6.2 Indemnity. Borrower hereby agrees to indemnify the Released Parties
and hold them harmless from and against any and all claims, debts,
liabilities, demands, obligations, actions, causes of action,
penalties, costs and expenses (including attorneys' fees), of every
nature, character and description, which the Released Parties may
sustain or incur based upon or arising out of any of the transactions
contemplated by this Agreement or the other Loan Documents or any of
the Obligations, including any transactions or occurrences relating to
the issuance of any Credit Accommodation, the Collateral relating
thereto, any drafts thereunder and any errors or omissions relating
thereto (including any loss or claim due to any action or inaction
taken by the issuer of any Credit Accommodation) (and for this purpose
any charges to Lender by any issuer of Credit Accommodations shall be
conclusive as to their appropriateness and may be charged to the Loan
Account), or any other matter, cause or thing whatsoever occurred,
done, omitted or suffered to be done by Lender relating to Borrower or
the Obligations (except any such amounts sustained or incurred as the
result of the willful misconduct of the Released Parties).
Notwithstanding any provision in this Agreement to the contrary, the
indemnity agreement set forth in this Section shall survive any
termination of this Agreement.
7. TERM.
7.1 MATURITY DATE. LENDER'S OBLIGATION TO MAKE LOANS AND TO PROVIDE CREDIT
ACCOMMODATIONS UNDER THIS AGREEMENT SHALL INITIALLY CONTINUE IN EFFECT
UNTIL TIRE INITIAL MATURITY DATE SET FORTH IN SECTION 7 OF SCHEDULE A
(THE "INITIAL TERM'); PROVIDED, THAT SUCH DATE SHALL AUTOMATICALLY BE
EXTENDED (THE INITIAL MATURITY DATE, AS IT MAY BE SO EXTENDED, BEING
REFERRED TO AS THE "MATURITY DATE") FOR SUCCESSIVE ADDITIONAL TERMS OF
THREE YEARS EACH (EACH A "RENEWAL TERM"), UNLESS ONE PARTY GIVES
WRITTEN NOTICE TO THE OTHER, NOT LESS THAN SIXTY DAYS PRIOR TO THE
MATURITY DATE, THAT SUCH PARTY ELECTS NOT TO EXTEND THE MATURITY DATE.
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND LENDER'S SECURITY
INTERESTS IN AND LIENS UPON THE COLLATERAL, AND ALL REPRESENTATIONS,
WARRANTIES AND COVENANTS OF BORROWER CONTAINED HEREIN AND THEREIN,
SHALL REMAIN IN FULL FORCE AND EFFECT AFTER THE MATURITY DATE UNTIL
ALL OF THE MONETARY OBLIGATIONS ARE INDEFEASIBLY PAID IN FULL.
7.2 Early Termination. Lender's obligation to make Loans and to provide
Credit Accommodations under this Agreement may be terminated prior to
the Maturity Date as follows: (i) by Borrower, effective thirty
business days after written notice of termination' is given to Lender
or (ii) by Lender at any time after the occurrence of an Event of
Default, without notice, effective immediately; provided, that if any
Affiliate of Borrower is also a party to a financing arrangement with
Lender, no such early termination shall be effective unless such
Affiliate simultaneously terminates its financing arrangement with
Lender. If so terminated under this Section 7.2, Borrower shall pay to
Lender (i) an early termination fee (the "Early Termination Fee") in
the amount set forth in Section 6(h) of Schedule A plus (ii) any
earned but unpaid Facility Fee. Such fee shall be due and payable on
the effective date of termination and thereafter shall bear interest
at a rate equal to the highest rate applicable to any of the
Obligations. In addition, if Borrower so terminates and repays the
Obligations without having provided Lender with at least thirty days'
prior written notice thereof, an additional amount equal to thirty
days of interest at the applicable Interest Rate(s), based on the
average outstanding amount of the Obligations for the six month period
immediately preceding the date of termination.
7.3 Payment of Obligations. On the Maturity Date or on any earlier
effective date of termination, Borrower shall pay in full all
Obligations, whether or not all or any part of such Obligations are
otherwise then due and payable. Without limiting the generality of the
foregoing, if, on the Maturity Date or on any earlier effective date
of termination, there are any outstanding Credit Accommodations, then
on such date Borrower shall provide to Lender cash collateral in an
amount equal to 110% of the Credit Accommodation Balance to secure all
of the Obligations (including estimated attorneys' fees and other
expenses) relating to said Credit Accommodations or such greater
percentage or amount as Lender reasonably deems appropriate, pursuant
to a cash pledge agreement in form and substance satisfactory to
Lender.
7.4 Effect of Termination. No termination shall affect or impair any right
or remedy of Lender or relieve Borrower of any of the Obligations
until all of the monetary Obligations have been indefeasibly paid in
fall. Upon indefeasible payment and performance in full of all of the
monetary Obligations (and the provision of cash collateral with
respect to any Credit Accommodation Balance as required by Section
7.3) and termination of this Agreement, Lender shall promptly deliver
to Borrower termination statements, requests for reconveyances and
such other documents as may be reasonably required to terminate
Lender's security interests in the Collateral.
8. EVENTS OF DEFAULT AND REMEDIES.
8.1 Events of Default. The occurrence of any of the following events shall
constitute an "Event of Default" under this Agreement, and Borrower
shall give Lender immediate written notice thereof. (i) if any
warranty, representation, statement, report or certificate made or
delivered to Lender by Borrower or any of Borrower's officers,
employees or agents is untrue or misleading; (ii) if Borrower fails to
pay when due any principal or interest on any Loan or any other
monetary Obligation; (iii) if Borrower breaches any covenant or
obligation contained in this Agreement or any other Loan Document or
fails to perform any other non-monetary Obligation; (iv) if any levy,
assessment, attachment, seizure, lien or encumbrance (other than a
Permitted Lien) is made or permitted to exist on all or any part of
the Collateral; (v) if one or more judgments aggregating in excess of
$25,000, or any injunction or attachment, is obtained against Borrower
or any Obligor which remains unstayed for more than ten days or is
enforced; (vi) the occurrence of any default under any financing
agreement, security agreement or other agreement, instrument or
document executed and delivered by (A) Borrower with, or in favor of,
any Person other than Lender or (B) Borrower or any Affiliate of
Borrower with, or in favor of, Lender or any Affiliate of Lender;
(vii) the dissolution, death, termination of existence in good
standing, insolvency or business failure or suspension or cessation of
business as usual of Borrower or any Obligor (or of any general
partner of Borrower or any Obligor if it is a partnership) or the
appointment of a receiver, trustee or custodian for all or any part of
the property of, or an assignment for the benefit of creditors by
Borrower or any Obligor, or the commencement of any proceeding by
Borrower or any Obligor under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, now or in the future
in effect, or if Borrower makes or sends a notice of a bulk transfer
or calls a meeting of its creditors; (viii) the commencement of any
proceeding against Borrower or any Obligor under any reorganization,
bankruptcy, insolvency, arrangement, readjustment of debt, dissolution
or liquidation law or statute of any jurisdiction, now or in the
future in effect; (ix) the actual or attempted revocation or
termination of, or limitation or denial of liability upon, any
guaranty of the Obligations, or any security document securing the
Obligations, by any Obligor; (x) if Borrower makes any payment on
account of any indebtedness or obligation which has been subordinated
to the Obligations other than as permitted in the applicable
subordination agreement, or if any Person who has subordinated such
indebtedness or obligations attempts to limit or terminate its
subordination agreement; (xi) if there -is any actual or threatened
indictment of Borrower or any Obligor under any criminal statute or
commencement or threatened commencement of criminal or civil
proceedings against Borrower or any Obligor, pursuant to which the
potential penalties or remedies sought or available include forfeiture
of any property of Borrower or such Obligor; (xii) if there is a
change in the record or beneficial ownership of an aggregate of more
than 20% of the outstanding shares of stock of Borrower (or
partnership or membership interests if it is a partnership or limited
liability company), in one or more transactions, compared to the
ownership of outstanding shares of stock (or partnership or membership
interests) of Borrower as of the date hereof, without the prior
written consent of Lender; (xiii) if there is any change in the chief
executive officer, chief operating officer or chief financial officer
of Borrower; (xiv) if an Event of Default occurs under any Loan and
Security Agreement between Lender and an Affiliate of Borrower; or
(xv) if Lender determines in good faith that the Collateral is
insufficient to fully secure the Obligations or that the prospect of
payment of performance of the Obligations is impaired.
8.2 Remedies. Upon the occurrence of any Default, and at any time
thereafter, Lender, at its option, may cease making Loans or otherwise
extending credit to Borrower under this Agreement or any other Loan
Document. Upon the occurrence of any Event of Default, and at any time
thereafter, Lender, at its option, and without notice or demand of any
kind (all of which are hereby expressly waived by Borrower), may do
any one or more of the following: (i) cease making Loans or otherwise
extending credit to Borrower under this Agreement or any other Loan
Document; (ii) accelerate and declare all or any part of the
Obligations to be immediately due, payable and performable,
notwithstanding any deferred or installment payments allowed by any
instrument evidencing or relating to any of the Obligations; (iii)
take possession of any or all of the Collateral wherever it may be
found, and for that purpose Borrower hereby authorizes Lender, without
judicial process, to enter onto any of Borrower's premises without
interference to search for, take possession of, keep, store, or remove
any of the Collateral, and remain (or cause a custodian to remain) on
the premises in exclusive control thereof, without charge for so long
as Lender deems it reasonably necessary in order to complete the
enforcement of its rights under this Agreement or any other agreement;
provided, that if Lender seeks to take possession of any of the
Collateral by court process, Borrower hereby irrevocably waives (A)
any bond and any surety or security relating thereto required by law
as an incident to such possession, (B) any demand for possession prior
to the commencement of any suit or action to recover possession
thereof and (C) any requirement that Lender retain possession of, and
not dispose of, any such Collateral until after trial or final
judgment; (iv) require Borrower to assemble any or all of the
Collateral and make it available to Lender at one or more places
designated by Lender which are reasonably convenient to Lender and
Borrower, and to remove the Collateral to such locations as Lender may
deem advisable; (v) complete the processing, manufacturing or repair
of any Collateral prior to a disposition thereof and, for such purpose
and for the purpose of removal, Lender shall have the right to use
Borrower's premises, vehicles and other Equipment and all other
property without charge; (vi) sell, lease or otherwise dispose of any
of the Collateral, in its condition at the time Lender obtains
possession of it or after further manufacturing, processing or repair,
at one or more public or private sales, in lots or in bulk, for cash,
exchange or other property, or on credit (a "Sale"), and to adjourn
any such Sale from time to time without notice other than oral
announcement at the time scheduled for Sale (and, in connection
therewith, (A) Lender shall have the right to conduct such Sale on
Borrower's premises without charge, for such times as Lender deems
reasonable, on Lender's premises, or elsewhere, and the Collateral
need not be located at the place of Sale; (B) Lender may directly or
through any of its Affiliates purchase or lease any of the Collateral
at any such public disposition, and if permissible under applicable
law, at any private disposition and (C) any Sale of Collateral shall
not relieve Borrower of any liability Borrower may have if any
Collateral is defective as to title, physical condition or otherwise
at the time of sale); (vii) demand payment of and collect any
Accounts, Chattel Paper, Instruments and General Intangibles included
in the Collateral and, in connection therewith, Borrower irrevocably
authorizes Lender to endorse or sign Borrower's name on all
collections, receipts, Instruments and other documents, to take
possession of and open mail addressed to Borrower and remove therefrom
payments made with respect to any item of Collateral or proceeds
thereof and, in Lender's sole discretion, to grant extensions of time
to pay, compromise claims and settle Accounts, General Intangibles and
the like for less than face value; and (viii) demand and receive
possession of any of Borrower's federal and state income tax returns
and the books and records utilized in the preparation thereof or
relating thereto. In addition to the foregoing remedies, upon the
occurrence of any Event of Default resulting from a breach of any of
the financial covenants set forth in Section 5.19, Lender may, at its
option, upon not less than ten days' prior notice to Borrower, reduce
any or all of the Advance Rates set forth in Section I (b) of Schedule
A to the extent Lender, in its sole discretion, deems appropriate. In
addition to the rights and remedies set forth above, Lender shall have
all the other rights and remedies accorded a secured party after
default under the UCC and under all other applicable laws, and under
any other Loan Document, and all of such rights and remedies are
cumulative and non-exclusive. Exercise or partial exercise by Lender
of one or more of its rights or remedies shall not be deemed an
election or bar Lender from subsequent exercise or partial exercise of
any other rights or remedies. The failure or delay of Lender to
exercise any rights or remedies shall not operate as a waiver thereof,
but all rights and remedies shaft continue in full force and effect
until all of the Obligations have been fully paid and performed. If
notice of any sale or other disposition of Collateral is required by
law, notice at least seven days prior to the sale designating the time
and place of sale in the case of a public sale or the time after which
any private sale or other disposition is to be made shall be deemed to
be reasonable notice, and Borrower waives any other notice. If any
Collateral is sold or leased by Lender on credit terms or for future
delivery, the Obligations shall not be reduced as a result thereof
until payment is collected by Lender.
8.3 Application of Proceeds. Subject to any application required by law,
all proceeds realized as the result of any Sale shall be applied by
Lender to the Obligations in such order as Lender shall determine in
its sole discretion. Any surplus shall be paid to Borrower or other
persons legally entitled thereto; but Borrower shall remain liable to
Lender for any deficiency. If Lender, in its sole discretion, directly
or indirectly enters into a deferred payment or other credit
transaction with any purchaser at any Sale, Lender shall have the
option, exercisable at any time, in its sole discretion, of either
reducing the Obligations by the principal amount of the purchase price
or deferring the reduction of the Obligations until the actual receipt
by Lender of the cash therefor.
9. GENERAL PROVISIONS.
9.1 Notices. All notices to be given under this Agreement shall be in
writing and shall be given either personally, by reputable private
delivery service, by regular first-class mail or certified mail return
receipt requested, addressed to Lender or Borrower at the address
shown in the heading to this Agreement or by facsimile to the
facsimile number shown in Section 9(i) of Schedule A, or at any other
address (or to any other facsimile number) designated in writing by
one party to the other party in the manner prescribed in this Section
9. 1. All notices shall be deemed to have been given when received or
when delivery is refused by the recipient.
9.2 Severability. If any provision of this Agreement, or the application
thereof to any party or circumstance, is held to be void or
unenforceable by any court of competent jurisdiction, such defect
shall not affect the remainder of this Agreement, which shall continue
in full force and effect.
9.3 Integration. This Agreement and the other Loan Documents represent the
final, entire and complete agreement between Borrower and Lender and
supersede all prior and contemporaneous negotiations, oral
representations and agreements, all of which are merged and integrated
into this Agreement. THERE ARE NO ORAL UNDERSTANDINGS, REPRESENTATIONS
OR AGREEMENTS BETWEEN THE PARTIES WHICH ARE NOT SET FORTH IN THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS.
9.4 Waivers. The failure of Lender at any time or times to require
Borrower to strictly comply with any of the provisions of this
Agreement or any other Loan Documents shall not waive or diminish any
right of Lender later to demand and receive strict compliance
therewith. Any waiver of any default shall not waive or affect any
other default, whether prior or subsequent, and whether or not
similar. None of the provisions of this Agreement or any other Loan
Document shall be deemed to have been waived by any act or knowledge
of Lender or its agents or employees, but only by a specific written
waiver signed by an authorized officer of Lender and delivered to
Borrower. Borrower waives demand, protest, notice of protest and
notice of default or dishonor, notice of payment and nonpayment
release, compromise, settlement, extension or renewal of any
commercial paper, Instrument, Account, General Intangible, Document,
Chattel Paper, Investment Property or guaranty at any time held by
Lender on which Borrower is or may in any way be liable, and notice of
any action taken by Lender, unless expressly required by this
Agreement, and notice of acceptance hereof.
9.5 Amendment. The terms and provisions of this Agreement may not be
amended or modified except in a writing executed by Borrower and a
duly authorized officer of Lender.
9.6 Time of Essence. Time is of the essence in the performance by Borrower
of each and every obligation under this Agreement and the other Loan
Documents.
9.7 Attorneys Fees and Costs. Borrower shall reimburse Lender for all
reasonable attorneys' and paralegals' fees (including in-house
attorneys and paralegals employed by Lender) and all filing,
recording, search, title insurance,. appraisal, audit, and other costs
incurred by Lender, pursuant to, in connection with, or relating to
this Agreement, including all reasonable attorneys' fees and costs
Lender incurs to prepare and negotiate this Agreement and the other
Loan Documents; to obtain legal advice in connection with this
Agreement and the other Loan Documents or Borrower or any Obligor; to
administer this Agreement and the other Loan Documents (including the
cost of periodic financing statement, tax lien and other searches
conducted by Lender); to enforce, or seek to enforce, any of its
rights; prosecute actions against, or defend actions by, Account
Debtors; to commence, intervene in, or defend any action or
proceeding; to initiate any complaint to be relieved of the automatic
stay in bankruptcy; to file or prosecute any probate claim, bankruptcy
claim, third-party claim, or other claim; to examine, audit, copy, and
inspect any of the Collateral or any of Borrower's books and records;
to protect, obtain possession of, lease, dispose of, or otherwise
enforce Lender's security interests in, the Collateral; and to
otherwise represent Lender in any litigation relating to Borrower. If
either Lender or Borrower files any lawsuit against the other
predicated on a breach of this Agreement, the prevailing party in such
action shall be entitled to recover its reasonable costs and
attorneys' fees, including reasonable attorneys' fees and costs
incurred in the enforcement of, execution upon or defense of any
order, decree, award or judgment. All attorneys' fees and costs to
which Lender may be entitled pursuant to this Section shall
immediately become part of the Obligations, shall be due on demand,
and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations.
9.8 Benefit of Agreement; Assignability. The provisions of this Agreement
shall be binding upon and inure to the benefit of the respective
successors, assigns, heirs, beneficiaries and representatives of
Borrower and Lender; provided, that Borrower may not assign or
transfer any of its rights under this Agreement without-the prior
written consent of Lender, and any prohibited assignment shall be
void. No consent by Lender to any assignment shall release Borrower
from its liability for any of the Obligations. Lender shall have the
right to assign all or any of its rights and obligations under the
Loan Documents, and to sell participating interests therein, to one or
more other Persons, and Borrower agrees to execute all agreements,
instruments and documents requested by Lender in connection with each
such assignment and participation.
9.9 Headings; Construction. Section and subsection headings are used in
this Agreement only for convenience. Borrower and Lender acknowledge
that the headings may not describe completely the subject matter of
the applicable Sections or subsections, and the headings shall not be
used in any manner to construe, limit, define or interpret any term or
provision of this Agreement. This Agreement has been fully reviewed
and negotiated between the parties and no uncertainty or ambiguity in
any term or provision of this Agreement shall be construed strictly
against Lender or Borrower under any rule of construction or
otherwise.
9.10 GOVERNING LAW; CONSENT TO FORUM, ETC. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED, AND SHALL BE DEEMED TO HAVE BEEN
MADE, IN CHICAGO, ILLINOIS, AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF SUCH STATE. BORROWER HEREBY CONSENTS AND
AGREES THAT THE STATE AND FEDERAL COURTS IN CHICAGO, ILLINOIS OR THE
STATE IN WHICH ANY OF THE COLLATERAL IS LOCATED SHALL HAVE
NON-EXCLUSIVE JURISDICTION TO BEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN BORROWER AND LENDER PERTAINING TO THIS AGREEMENT, ANY
OTHER LOAN DOCUMENTS OR ANY MATTER ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS. BORROWER EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND WAIVES ANY OBJECTION WHICH BORROWER
MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS. BORROWER ALSO AGREES THAT ANY CLAIM OR DISPUTE
BROUGHT BY BORROWER AGAINST LENDER PURSUANT TO THIS AGREEMENT, ANY
OTHER LOAN DOCUMENT OR ANY MATTER ARISING OUT OF THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT SHALL BE BROUGHT EXCLUSIVELY IN THE STATE AND
FEDERAL COURTS OF XXXX COUNTY. BORROWER HEREBY WAIVES PERSONAL SERVICE
OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION
OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAY BE MADE IN THE MANNER AND SHALL BE DEEMED RECEIVED AS SET
FORTH IN SECTION 9.1 FOR NOTICES, TO TEE EXTENT PERMITTED BY LAW.
NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE
RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OR
ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS
AGREEMENT TO ENFORCE THE SAW IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION.
9.11 WAIVER OF JURY TRIAL, ETC. BORROWER WAIVES (i) THE RIGHT TO TRIAL BY
JURY (WHICH LENDER ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN
DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL OR ANY CONDUCT, ACTS OR
OMISSIONS OF LENDER OR BORROWER OR ANY OF THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS OR ANY OTHER PERSONS
AFFILIATED WITH LENDER OR BORROWER, WHETHER SOUNDING IN CONTRACT, TORT
OR OTHERWISE; (ii) THE RIGHT TO INTERPOSE ANY CLAIMS, DEDUCTIONS,
SETOFFS OR COUNTERCLAIMS OF ANY KIND IN ANY ACTION OR PROCEEDING
INSTITUTED BY LENDER WITH RESPECT TO THE LOAN DOCUMENTS OR ANY MATTER
RELATING THERETO, EXCEPT FOR COMPULSORY COUNTERCLAIMS; (iii) NOTICE
PRIOR TO LENDER'S TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR
ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO
ALLOWING LENDER TO EXERCISE ANY OF LENDER'S REMEDIES AND (iv) THE
BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS. BORROWER
ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO
LENDER'S ENTERING INTO TIES AGREEMENT AND THAT LENDER IS RELYING UPON
THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWER. BORROWER
WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS
WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT.
IN WITNESS WHEREOF, Borrower and Lender have signed this Agreement as of
the date set forth in the heading.
Borrower: Lender:
Xxxxxx Industries, Inc. Banc of America Commercial Finance
Corporation, through its
Commercial Funding Division
By /s/ M.E. Xxxxxxxx By /s/ Xxxxxxx X. Xxxxxx
Its President Its Authorized Signatory
Schedule A
Description of Certain Terms
This Schedule is an integral part of the Loan and Security Agreement
between XXXXXX INDUSTRIES, INC. and BANC OF AMERICA COMMERCIAL FINANCE
CORPORATION, THROUGH ITS COMMERCIAL FUNDING DIVISION (the "Agreement").
1. Loan Limits for Revolving
Loans:
(a) Maximum Facility
Amount: $1,750,000
(b) Advance Rates:
(i) Accounts 85%; provided, that if the Dilution
Advance Rate: Percentage exceeds 3%, such advance rate
will be reduced by the number of full or
partial percentage points of such excess.
(ii) Inventory
Advance N/A
Rate(s):
(A) Finished
goods: N/A
(B) Raw
materials: N/A
(C) Work in
process: N/A
(c) Accounts Sublimit: N/A
(d) Inventory Sublimit(s): N/A
(i) Overall sublimit
on advances
against Eligible
Inventory N/A
(ii) Sublimit on N/A
advances
against finished
goods
(iii) Sublimit on N/A
advances
against work in
process
(e) Credit
Accommodation N/A
Limit:
(f) Permanent Reserve
Amount: N/A
(g) Overadvance
Amount: N/A
2. Loan Limits for Term
Loan:
(a) Principal Amount: $600,000
(i) Equipment N/A
Advance
(ii) Real Property $600,000
Advance:
(b) Repayment Schedule:
(i) Equipment N/A
Advance:
(ii) Real Property The Real Property Advance shall be repaid
Advance: in equal consecutive monthly installments
amortized over 84 months
payable on the first day of
each calendar month
commencing March 1, 2000,
with the entire unpaid
balance due and payable on
the Maturity Date.
3. Interest Rates:
(a) Revolving Loans: 2.25% per annum in excess of the Prime
Rate
(b) Term Loan: 2.25% per annum in excess of the Prime
Rate
4. Minimum Loan Amount: $1,000,000
5. Maximum Days:
(a) Maximum days after
original invoice date
for Eligible Accounts: 90
(b) Maximum days after
original invoice due
date for Eligible 60
Accounts:
6. Fees:
(a) Closing Fee: $8,750
(b) Facility Fee:
(i) Initial Term: 0.75% of the Maximum Facility Amount
payable on each anniversary of the date
hereof.
(ii) Renewal 0.75% of the Maximum Facility Amount
Term(s): payable on each anniversary of such
renewal.
(c) Servicing Fee: N/A
(d) Unused Line Fee: 0.25% per annum of the excess of the
Maximum Facility Amount over the average
monthly balance of loans outstanding,
payable monthly.
(e) Minimum Borrowing The difference between the actual monthly
Fee: average loan balance and the Minimum Loan
Amount multiplied by the Interest Rate.
(i) Applicable Each month
period:
(ii) Date payable: The first day of each month.
(f) Success Fee: N/A
(g) Warrants: N/A
(h) Early Termination 5% of the Maximum Facility Amount if
Fee: terminated during the first year of the
Term, 4% of the Maximum Facility Amount if
terminated during the second year of the Term,
3% of the Maximum Facility Amount if terminated
during the third year of the Term, and 1 % of
the Maximum Facility Amount if terminated
during the fourth year of the Term and
thereafter prior to the Maturity Date.
(i) Fees for letters of credit
and other Credit N/A
Accommodations (or
guaranties thereof by
Lender):
7. Initial Maturity Date: January 21, 2005
8. Financial Covenants:
(a) Capital Expenditure
Limitation: N/A
(b) Minimum Net Worth
Requirement: N/A
(c) Minimum Tangible
Net Worth: N/A
(d) Minimum Working
Capital: N/A
(e) Maximum
Cumulative Net Loss: N/A
(f) Minimum Cumulative
Net Income: N/A
(g) Maximum Leverage
Ratio: N/A
(h) Limitation on
Purchase Money N/A
Security Interests:
(i) Limitation on
Equipment Leases: N/A
(j) Additional Financial In the event Borrower's cash losses
Covenants: (defined as: net income plus
depreciation and amortization less
principal payments on debt and
non-financed capital expenditures),
cumulative from the date hereof,
exceed $200,000, Lender may, in its
discretion, reduce the Accounts
Advance Rates and/or declare an
Event of Default.
9. Borrower Information:
(a) Prior Names of
Borrower: Xxxxxx Metal Works Company
(b) Prior Trade Names of Airline Products Company
Borrower:
(c) Existing Trade Names
of Borrower: Xxxxxxxx
(d) Inventory Locations: 00000 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
(e) Other Locations: N/A
(f) Litigation: N/A
(g) Ownership of
Borrower: Global Environmental Holdings, Inc.
(h) Subsidiaries (and
ownership thereof): N/A
(i) Facsimile Numbers:
Lender: (000) 000-0000
Borrower: (000) 000-0000
with a copy to Borrower's Xxxx & Xxxxxx, P.A.
counsel: 00 Xxxx Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Att'n.: Xxxxxx Xxxxxx, Esq.
(000) 000-0000
10. Description of Real 00000 Xxxx Xxxx
Property: Xxxxxxxxxx, Xxxxxxxx 00000
11. Lender's Bank: Bank One Chicago
12. Other Covenants: N/A
13. Exceptions to Negative N/A
Covenants:
IN WITNESS WHEREOF, Borrower and Lender have signed this Schedule A as of
the date set forth in the heading to the Agreement.
Borrower: Lender:
Xxxxxx Industries, Inc. Banc of America Commercial Finance
Corporation, through its
Commercial Funding Division
By /s/ M.E. Xxxxxxxx By /s/ Xxxxxxx X. Xxxxxx
Its President Its Authorized Signatory
Schedule B
Definitions
This Schedule is an integral part of the Loan and Security Agreement
between XXXXXX INDUSTRIES, INC. and BANC OF AMERICA COMMERCIAL FINANCE
CORPORATION, THROUGH ITS COMMERCIAL FUNDING DIVISION (the "Agreement').
As used in the Agreement, the following terms have the following meanings:
"Account" means any right to payment for Goods sold or leased or for
services rendered which is not evidenced by an Instrument or Chattel Paper,
whether or not it has been earned by performance.
"Account Debtor" means the obligor on an Account or Chattel Paper.
"Account Proceeds" has the meaning set forth in Section 4.1.
"Affiliate" means, with respect to any Person, a relative, partner,
shareholder, member, manager, director, officer, or employee of such
Person, any parent or subsidiary of such Person, or any Person controlling,
controlled by or under common control with such Person or any other Person
affiliated, directly or indirectly, by virtue of family membership,
ownership, management or otherwise.
"Agreement" and "this Agreement" mean the Loan and Security Agreement of
which this Schedule B is a part and the Schedules thereto.
"Availability" has the meaning set forth in Section 1.1(a)
"Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C.ss.10 1
et seq.).
"Blocked Account" has the meaning set forth in Section 4.1.
"Borrower" has the meaning set forth in the heading to the Agreement.
"Borrower's Address" has the meaning set forth in the heading to the
Agreement.
"Business Day" means a day other than a Saturday or Sunday or any other day
on which Lender or banks in Chicago, Illinois are authorized to close.
"Chattel Paper" has the meaning set forth in the UCC.
"Collateral" means all property and interests in property in or upon which
a security interest or other Lien is granted pursuant to this Agreement or
the other Loan Documents.
"Credit Accommodation" has the meaning set forth in Section 1. 1(a).
"Credit Accommodation Balance" means the sum of (i) the aggregate undrawn
face amount of all outstanding Credit Accommodations and (ii) all interest,
fees and costs due or, in Lender's estimation, likely to become due in
connection therewith.
"Default" means any event which with notice or passage of time, or both,
would constitute an Event of Default.
"Default Rate" has the meaning set forth in Section 2.1.
"Deposit Account" has the meaning set forth in the UCC.
"Dilution Percentage" means the gross amount of all returns, allowances,
discounts, credits, write-offs and similar items relating to Borrower's
Accounts computed as a percentage of Borrower's gross sales, calculated on
a ninety (90) day rolling average.
"Document" has the meaning set forth in the UCC.
"Early Termination Fee" has the meaning set forth in Section 7.2.
"Eligible Account" means, at any time of determination, an Account which
satisfies the general criteria set forth below and which is otherwise
acceptable to Lender (provided, that Lender may, in its sole discretion,
change the general criteria for acceptability of Eligible Accounts upon at
least fifteen days' prior notice to Borrower). An Account shall be deemed
to meet the current general criteria if (i) neither the Account Debtor nor
any of its Affiliates is an Affiliate, creditor or supplier of Borrower;
(ii) it does not remain unpaid more than the earlier to occur of (A) the
number of days after the original invoice date set forth in Section 5(a) of
Schedule A or (B) the number of days after the original invoice due date
set forth in Section 5(b) of Schedule A; (iii) the Account Debtor or its
Affiliates are not past due on other Accounts owing to Borrower comprising
more than 25% of all of the Accounts owing to Borrower by such Account
Debtor or its Affiliates; (iv) all Accounts owing by the Account Debtor or
its Affiliates do not represent more than 20% of all otherwise Eligible
Accounts (provided, that Accounts which are deemed to be ineligible solely
by reason of this clause (iv) shall be considered Eligible Accounts to the
extent of the amount thereof which does not exceed 20% of all otherwise
Eligible Accounts), except as set forth in clause (xviii); (v) no covenant,
representation or warranty contained in this Agreement with respect to such
Account (including any of the representations set forth in Section 5.4) has
been breached; (vi) the Account is not subject to any contra relationship,
counterclaim, dispute or set-off (provided, that Accounts which are deemed
to be ineligible solely by reason of this clause (vi) shall be considered
Eligible Accounts to the extent of the amount thereof which is not affected
by such contra relationships, counterclaims, disputes or set-offs); (vii)
the Account Debtor's chief executive office or principal place of business
is located in the United States or Provinces of Canada which have adopted
the Personal Property Security Act or a similar act, unless (A) the sale is
fully backed by a letter of credit, guaranty or acceptance acceptable to
Lender in its sole discretion, and if backed by a letter of credit, such
letter of credit has been issued or confirmed by a bank satisfactory to
Lender, is sufficient to cover such Account and if required by Lender, the
original of such letter of credit has been delivered to Lender or Lender's
agent and the issuer thereof notified of the assignment of the proceeds of
such letter of credit to Lender or (B) such Account is subject to credit
insurance payable to Lender issued by an insurer and on terms and in an
amount acceptable to Lender; (viii) it is absolutely owing to Borrower and
does not arise from a sale on a xxxx-and-hold, guarantied sale,
sale-or-return, sale-on-approval, consignment, retainage or any other
repurchase or return basis or consist of progress xxxxxxxx; (ix) Lender
shall have verified the Account in a mariner satisfactory to Lender; (x)
the Account Debtor is not the United States of America or any state or
political subdivision (or any department agency or instrumentality
thereof), unless Borrower has complied with the Assignment of Claims Act of
1940 (31 U.S.C. ss. 203 et seq.) or other applicable similar state or local
law in a manner satisfactory to Lender; (xi) it is at all times subject to
Lender's duly perfected, first priority security interest and to no other
Lien that is not a Permitted Lien, and the goods giving rise to such
Account (A) were not, at the time of sale, subject to any Lien except
Permitted Liens and (B) have been delivered to and accepted by the Account
Debtor, or the services giving rise to such Account have been performed by
Borrower and accepted by the Account Debtor; (xii) the Account is not
evidenced by Chattel Paper or an Instrument of any kind and has not been
reduced to judgment; (xiii) the Account Debtor's total indebtedness to
Borrower does not exceed the amount of any credit limit established by
Borrower or Lender and the Account Debtor is otherwise deemed to be
creditworthy by Lender (provided, that Accounts which are deemed to be
ineligible solely by reason of Us clause (xiii) shall be considered
Eligible Accounts to the extent the amount of such Accounts does not exceed
the lower of such credit limits); (xiv) there are no facts or circumstances
existing, or which could reasonably be anticipated to occur, which might
result in any adverse change in the Account Debtor's financial condition or
impair or delay the collectibility of all or any portion of such Account;
(xv) Lender has been furnished with all documents and other information
pertaining to such Account which Lender has requested, or which Borrower is
obligated to deliver to Lender, pursuant to this Agreement; (xvi) Borrower
has not made an agreement with the Account Debtor to extend the time of
payment thereof beyond the time periods set forth in clause (ii) above;
(xvii) Borrower has not posted a surety or other bond in respect of the
contract under which such Account arose; and (xviii) accounts due from
Mobile Tool International, Inc. to the extent of the amount thereof which
does not exceed 25% of all otherwise Eligible Accounts, unless insured by
credit insurance or alternative credit support acceptable to Lender and
assigned to Lender.
"Eligible Equipment" means, at any time of determination, Equipment owned
by Borrower which Lender, in its sole discretion, deems to be eligible for
borrowing purposes.
"Eligible Inventory" means, at any time of determination, Inventory (other
than packaging materials and supplies) which satisfies the general criteria
set forth below and which is otherwise acceptable to Lender (provided, that
Lender may, in its sole discretion, change the general criteria for
acceptability of Eligible Inventory upon at least fifteen days' prior
written notice to Borrower). Inventory shall be deemed to meet the current
general criteria if (i) it consists of raw materials or finished goods, or
work-in-process that is readily marketable in its current form; (ii) it is
in good, new and saleable condition; (iii) it is not slow-moving, obsolete,
unmerchantable, returned or repossessed; (iv) it is not in the possession
of a processor, consignee or bailee, or located on premises leased or
subleased to Borrower, or on premises subject to a mortgage in favor of a
Person other than Lender, unless such processor, consignee, bailee or
mortgagee or the lessor or sublessor of such premises, as the case may be,
has executed and delivered all documentation which Lender shall require to
evidence the subordination or other limitation or extinguishment of such
Person's rights with respect to such Inventory and Lender's right to gain
access thereto; (v) it meets all standards imposed by any governmental
agency or authority; (vi) it conforms in all respects to any covenants,
warranties and representations set forth in the Agreement; (vii) it is at
all times subject to Lender's duly perfected, first priority security
interest and no other Lien except a Permitted Lien; and (viii) it is
situated at an Inventory Location listed in Section 9(d) of Schedule A or
other location of which Lender has been notified as required by Section
5.6.
"Eligible Real Property" means, at any time of determination, Real Property
owned by Borrower which Lender, in its sole discretion, deems to be
eligible for borrowing purposes.
"Equipment" means all Goods which are used or bought for use primarily in
business (including farming or a profession) or by 'a Person who is a
non-profit organization or governmental subdivision or agency and which are
not Inventory, farm products or consumer goods, including all machinery,
molds, machine tools, motors, furniture, equipment, furnishings, fixtures,
trade fixtures, motor vehicles, tools, parts, dies and jigs, and all
attachments, accessories, accessions, replacements, substitutions,
additions or improvements to, or spare parts for, any of the foregoing.
"Equipment Advance" has the meaning set forth in Section 1.1(b).
"ERISA" means the Employee Retirement Income Security Act of 1974 and all
rules, regulations and orders promulgated thereunder.
"Event of Default" has the meaning set forth in Section 8.1.
"GAAP" means generally accepted accounting principles as in effect from
time to time, consistently applied.
"General Intangibles" has the meaning set forth in the UCC, and includes
all books and records pertaining to the Collateral and other business and
financial records in the possession of Borrower or any other Person,
inventions, designs, drawings, blueprints, patents, patent applications,
trademarks, trademark applications (other than "intent to use" applications
until a verified statement of use is filed with respect to such
applications) and the goodwill of the business symbolized thereby, names,
trade names, trade secrets, goodwill, copyrights, registrations, licenses,
franchises, customer lists, security and other deposits, causes of action
and other rights in all litigation presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments
now or hereafter arising therefrom, rights to purchase or sell real or
personal property, rights as a licensor or licensee of any kind, royalties,
telephone numbers, internet addresses, proprietary information, purchase
orders, and all insurance policies and claims (including life insurance,
key man insurance, credit insurance, liability insurance, property
insurance and other insurance), tax refunds and claims, letters of credit,
banker's acceptances and guaranties, computer programs, discs, tapes and
tape files in the possession of Borrower or any other Person, claims under
guaranties, security interests or other security held by or granted to
Borrower, all rights to indemnification and all other intangible property
of every kind and nature.
"Goods" means all things which are movable at the time the security
interest attaches or which are fixtures (other than money, Documents,
Instruments, Investment Property, Accounts, Chattel Paper, General
Intangibles, or minerals or the like (including oil and gas) before
extraction), including standing timber which is to be cut and removed under
a conveyance or contract for sale, the unborn young of animals, and growing
crops.
"Initial Term" has the meaning set forth in Section 7. 1.
"Instrument" has the meaning set forth in the UCC.
"Inventory" means all Goods held for sale or lease or furnished or to be
finished under contracts of service, including all raw materials, work in
process, finished goods, goods in transit and materials and supplies which
are or might be used or consumed in a business or used in connection with
the manufacture, packing, shipping, advertising, selling or finishing of
such Goods, and all products of the foregoing, and shall include interests
in goods represented by Accounts, returned, reclaimed or repossessed goods
and rights as an unpaid vendor.
"Investment Property" shall mean all of Borrower's securities, whether
certificated or uncertificated, securities entitlements, securities
accounts, commodity contracts and commodity accounts.
"Lender" has the meaning set forth in the heading to the Agreement.
"Lien" means any interest in property securing an obligation owed to, or a
claim by, a Person other than the owner of the property, whether such
interest is based on common law, statute or contract, including rights of
sellers under conditional sales contracts or title retention agreements and
reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting property. For the purpose of this Agreement,
Borrower shall be deemed to be the owner of any property which it has
acquired or holds subject to a conditional sale agreement or other
arrangement pursuant to which title to the property has been retained by or
vested in some other Person for security purposes.
"Loan Account' has the meaning set forth in Section 2.4.
"Loan Documents" means the Agreement and all notes, guaranties, security
agreements, certificates, landlord's agreements, Lock Box and Blocked
Account agreements and all other agreements, documents and instruments now
or hereafter executed or delivered by Borrower or any Obligor in connection
with, or to evidence the transactions contemplated by, this Agreement.
"Loan Limits" means, collectively, the Availability limits and all other
limits on the amount of Loans and Credit Accommodations set forth in this
Agreement.
"Loans" means, collectively, the Revolving Loans and any Term Loan,
"Lock Box" has the meaning set forth in Section 4.1.
"Material Adverse Effect" has the meaning set forth in Section 5.20.
"Maturity Date" has the meaning set forth in Section 7.1.
"Obligations" means all present and future Loans, advances, debts,
liabilities, obligations, guaranties, covenants, duties and indebtedness at
any time owing by Borrower to Lender, whether evidenced by this Agreement
or any other Loan Document, whether arising from an extension of credit,
opening of a Credit Accommodation, guaranty, indemnification or otherwise
(including all fees, costs and other amounts which may be owing to issuers
of Credit Accommodations and all taxes, duties, freight, insurance, costs
and other expenses, costs or amounts payable in connection with Credit
Accommodations or the underlying goods), whether direct or indirect
(including those acquired by assignment and any participation by Lender in
Borrower's indebtedness owing to others), whether absolute or contingent,
whether due or to become due,, and whether arising before or after the
commencement of a proceeding under the Bankruptcy Code or any similar
statute, including all interest, charges, expenses, fees, attorney's fees,
expert witness fees, audit fees, letter of credit fees, loan fees, Early
Termination Fees, Minimum Borrowing Fees and any other sums chargeable to
Borrower under this Agreement or under any other Loan Document.
"Obligor" means any guarantor, endorser, acceptor, surety or other person
liable on, or with respect to, the Obligations or who is the owner of any
property which is security for the Obligations, other than Borrower.
"Permitted Liens" means: (i) purchase money security interests in specific
items of Equipment in an aggregate amount not to exceed the limit set forth
in Section 8(h) of Schedule A; (ii) leases of specific items of Equipment
in an aggregate amount not to exceed the limit set forth in Section 8(i) of
Schedule A; (iii) Liens for taxes not yet due and payable; (iv) additional
Liens which are fully subordinate to the security interests of Lender and
are consented to in writing by Lender; (v) security interests being
terminated concurrently with the execution of this Agreement; (vi) Liens of
materialmen, mechanics, warehousemen or carriers arising in the ordinary
course of business and securing obligations which are not delinquent; (vii)
Liens incurred in connection with the extension, renewal or refinancing of
the indebtedness secured by Liens of the type described in clause (i) or
(ii) above; provided, that any extension, renewal or replacement Lien is
limited to the property encumbered by the existing Lien and the principal
amount of the indebtedness being extended, renewed or refinanced does not
increase; (viii) Liens in favor of customs and revenue authorities which
secure payment of customs duties in connection with the importation of
goods; and (ix) security deposits posted in connection with real property
leases or subleases. Lender will have the right to require, as a condition
to its consent under clause (iv) above, that the holder of the additional
Lien sign an intercreditor agreement in form and substance satisfactory to
Lender, in its sole discretion, acknowledging that the Lien is subordinate
to the security interests of Lender, and agreeing not to take any action to
enforce its subordinate Lien so long as any Obligations remain outstanding,
and that Borrower agree that any uncured default in any obligation secured
by the subordinate Lien shall also constitute an Event of Default under
this Agreement.
"Person" means any individual, sole proprietorship, partnership, joint
venture, limited liability company, trust unincorporated organization,
association, corporation, government or any agency or political division
thereof, or any other entity.
"Prime Rate" means, at any given time, the prime rate as quoted in The Wall
Street Journal as the base rate on corporate loans posted as of such time
by at least 75% of the nation's 30 largest banks (which rate is not
necessarily the lowest rate offered by such banks).
"Real Property" means the real property described in Section 10 of Schedule
A.
"Real Property Advance" has the meaning set forth in Section 1.1(b).
"Released Parties" has the meaning set forth in Section 6.1.
"Renewal Term" has the meaning set forth in Section 7.1.
"Reserves" has the meaning set forth in Section 1.2.
"Revolving Loans" has the meaning set forth in Section 1.1(a).
"Sale" has the meaning set forth in Section 8.2.
"Subsidiary" means any corporation or other entity of which a Person owns,
directly or indirectly, through one or more intermediaries, more than 50%
of the capital stock or other equity interest at the time of determination.
"Term" means the period commencing on the date of this Agreement and ending
on the Maturity Date.
"Term Loan" has the meaning set forth in Section 1.1(b).
"UCC" means, at any given time, the Uniform Commercial Code as adopted and
in effect at such time in the State of Illinois.
All accounting terms used in this Agreement, unless otherwise indicated,
shall have the meanings given to such terms in accordance with GAAP. All other
terms contained in this Agreement, unless otherwise indicated, shall have the
meanings provided by the UCC, to the extent such terms are defined therein. The
term "including," whenever used in this Agreement, shall mean "including but not
limited to." The singular form of any term shall include the plural form, and
vice versa, when the context so requires. References to Sections, subsections
and Schedules are to Sections and subsections of, and Schedules to, this
Agreement. All references to agreements and statutes shall include all
amendments thereto and successor statutes in the case of statutes.
IN WITNESS WHEREOF, Borrower and Lender have signed this Schedule B as of
the date set forth in the heading to the Agreement.
Borrower: Lender:
Xxxxxx Industries, Inc. Banc of America Commercial Finance
Corporation, through its
Commercial Funding Division
By /s/ M.E. Xxxxxxxx By /s/ Xxxxxxx X. Xxxxxx
Its President Its Authorized Signatory
