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EXHIBIT 4.9
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COMMERCIAL LOAN AGREEMENT
BY
SUMITOMO BANK OF CALIFORNIA,
as Bank
AND
XXXXX AUTOMOTIVE, INC.,
GRANT PRODUCTS, INC., and
G.T. STYLING, INC.,
as Borrowers
Dated August 10, 1995
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TABLE OF CONTENTS
Page
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1. CREDIT FACILITIES, AMOUNT AND TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Revolving Line of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) Accounts Receivable/Inventory Revolving Line of Credit Amount . . . . . . . . . . . . . . 1
(b) Collection of Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(c) Revolving Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(d) Subline Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(e) Minimum Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(f) Maximum Loan Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(g) Availability Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(h) Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(i) Repayment Terms/Revolving Line of Credit . . . . . . . . . . . . . . . . . . . . . . . . . 9
(j) Letter of Credit Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.2 Non-Revolving Acquisition Line of Credit/Term Out Option . . . . . . . . . . . . . . . . . . . . . 10
(a) Non-Revolving Line of Credit Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Non-Revolving Line of Credit Advances . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(c) Availability Period/Non Revolving Line of Credit . . . . . . . . . . . . . . . . . . . . . 11
(d) Interest Rate/Non-Revolving Line of Credit . . . . . . . . . . . . . . . . . . . . . . . . 11
(e) Repayment Terms/Non-Revolving Line of Credit . . . . . . . . . . . . . . . . . . . . . . . 11
2. FEES, EXPENSES AND DEPOSITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(a) Unused Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3. COLLATERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1 All Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4. DISBURSEMENTS, PAYMENTS AND COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.1 Request for Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.2 Disbursements and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.3 Telephone Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.4 Direct Debit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.5 Banking Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.6 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.7 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.8 Interest Calculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.9 Interest on Late Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.10 Default Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.11 Overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.12 Overadvances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5. CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.1 Initial Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(a) Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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(b) Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(c) Borrowing Base Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(d) Security Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(e) Evidence of Priority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(f) Landlord's/Mortgagee Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(g) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(h) Business Interruption Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(i) Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(j) Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(k) Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(l) Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(m) Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(n) Other Required Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.2 Conditions to Each Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.1 Organization of Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.3 Enforceable Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.4 Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.5 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.6 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.7 Lawsuits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.8 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.9 Permits, Franchises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.10 Other Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.11 Income Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.12 No Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.13 ERISA Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.1 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(a) Revolving Line of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(b) Non-Revolving Line of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.2 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.3 Current Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.4 Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.5 Total Liabilities to Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.6 Interest Charge Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.7 Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.8 Profitability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.9 Other Debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.10 Other Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.11 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.12 Dividends/Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.13 Loans to Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.14 Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.15 Notices to Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.16 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.17 Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.18 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.19 Preservation of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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7.20 Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.21 Perfection of Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.22 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.23 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(a) Insurance Covering Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(b) General Business Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(c) Evidence of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.24 Operating/Business Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.25 Additional Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.26 No Consumer Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.27 ERISA Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.28 Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.29 Xxxxx Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.30 Appointment of Bank as Attorney in Fact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(a) Failure to Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(b) Non-Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(c) Other Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(d) Lien Priority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(e) False Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(f) Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(g) Receivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(h) Lawsuits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(i) Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(j) Government Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(k) Default under Guaranty or Subordination Agreement . . . . . . . . . . . . . . . . . . . . 30
(l) Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(m) Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(n) ERISA Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.3 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.1 GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.2 California Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.3 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.4 Severability; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.5 Multiple Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.10 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.11 Hazardous Waste Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.12 Joint Borrower Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.13 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Schedule 1 Joint Borrowing Provisions
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Schedule 6.7 Lawsuits
Schedule 6.8 Permitted Encumbrances
Exhibit A - Revolving Line Note
Exhibit B - Non Revolving Line Note
Exhibit C - Term Note
Exhibit D - Collateral
Exhibit E - Request for Credit
Exhibit F - Borrowing Base Certificate
Exhibit G - Subordination Agreement
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COMMERCIAL LOAN AGREEMENT
This Commercial Loan Agreement dated as of August 10, 1995
("Agreement") is made between Sumitomo Bank of California ("Bank") and Xxxxx
Automotive, Inc., a Delaware corporation ("Xxxxx"), Xxxxx Products, Inc. a
Delaware corporation ("Grant"), and G.T. Styling, Inc., a California
corporation ("G.T.") (each a "Borrower", collectively, the "Borrowers").
1. CREDIT FACILITIES, AMOUNT AND TERMS.
Bank agrees to make available to Borrowers the following
lines of credit and/or credit accommodations on the following terms, covenants
and conditions:
1.1 Revolving Line of Credit.
(a) Accounts Receivable/Inventory Revolving
Line of Credit Amount. During the Availability Period (defined below), so long
as no Event of Default or Potential Event of Default (in each case as defined
below), Bank will, on a revolving basis, make advances (each, an "Advance") to
Grant and/or G.T. under their respective sublines, which may not at any time
exceed, in the aggregate outstanding, the lesser of Eight Million Five Hundred
Thousand and No/100 Dollars ($8,500,000) (the "Commitment") or the Borrowing
Base. Borrowers' obligation to repay advances under this revolving line of
credit (the "Revolving Line of Credit") is evidenced by a promissory note,
substantially in the form of Exhibit A attached hereto (the "Revolving Line
Note").
(i) "Borrowing Base" shall mean the
sum of (A) eighty percent (80%) of the net face amount of
Grant's Eligible Accounts, after deduction of such reserves
as Bank deems necessary and proper, plus fifteen percent
(15%) of Grant's Eligible Raw Materials Inventory, after
deduction of such reserves as Bank deems necessary and
proper, plus thirty-five percent (35%) of Grant's Eligible
Finished Goods Inventory but such advances combined shall
not, at any time, exceed the Commitment (the "Grant
Subline") and (B) seventy percent (70%) of G.T.'s Eligible
Accounts, after deduction of such reserves as Bank deems
necessary and proper, plus forty percent (40%) of G.T.'s
Eligible Inventory, after deduction of such reserves as
Bank deems necessary and proper, but such advances combined
shall not, at any time, exceed the Commitment (the "G.T.
Subline").
(ii) "Accounts Receivable" shall mean
open accounts arising in the ordinary course of a
Borrower's
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business from services performed or goods sold by such
Borrower.
(iii) "Account Debtor" shall mean the
obligor on any Accounts Receivable.
(iv) "Eligible Accounts" shall mean
Accounts Receivable, excluding the following:
(A) Accounts Receivable (excluding
Dating Term Accounts) which remain uncollected
more than ninety (90) days from the date they are
first invoiced.
(B) Dating Term Accounts which
remain uncollected more than thirty (30) days from
the date they are first due. "Dating Term
Accounts" shall mean Accounts Receivable stated to
be due more than sixty (60) but not more than one
hundred twenty (120) days after the original
invoice date.
(C) Accounts Receivable due from an
Account Debtor which suspends business, suffers a
business failure or the termination of its
existence, or makes an assignment for the benefit
of creditors, or as to which a dissolution,
insolvency or bankruptcy proceeding has been
commenced, or as to whose property a trustee,
receiver or conservator has been appointed.
(D) Accounts Receivable due from an
Account Debtor affiliated with a Borrower, such as
a stockholder, owner, parent, subsidiary, officer,
director, agent or employee of Borrower.
(E) Accounts Receivable with
respect to which payment is or may be contingent
or conditional.
(F) Accounts Receivable due from an
Account Debtor who is not a resident or citizen
of, located in, or subject to service of process
in the United States of America or Canada.
(G) Accounts Receivable against
which is asserted a defense, counterclaim,
discount or setoff.
(H) Accounts Receivable due from an
Account Debtor which is any national, federal,
state, county or municipal government, including,
without limitation, any instrumentality, division,
agency,
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body or department thereof, unless (A) there has
been compliance with the federal Assignment of
Claims Act or any similar state or local law which
may apply and (B) Bank deems such Accounts
Receivable to be Eligible Accounts in the exercise
of its sole discretion.
(I) Accounts Receivable commonly
known as "xxxx and hold" or subject to any
repurchase or return agreement, or which relate to
goods on consignment or on approval or any similar
arrangement.
(J) Accounts Receivable relating to
an Account Debtor with respect to which
twenty-five percent (25%) or more of the total
Accounts Receivable owing by such Account Debtor
remain uncollected more than ninety (90) days from
the date they are first invoiced.
(K) Accounts Receivable due from an
Account Debtor which, in the aggregate, exceed
twenty-five percent (25%) of the aggregate amount
of all Eligible Accounts, except that Accounts
Receivable due from Keystone Automotive, Autozone
and Pep Boys shall each be subject to a
concentration limit not to exceed thirty percent
(30%).
(L) Accounts Receivable as to which
Borrower is or may become liable to an Account
Debtor for services rendered or sales made or for
any other reason, except to the extent that such
Accounts Receivable exceed the amount of such
liability.
(M) Accounts Receivable which are
not owned by Borrower or are not free of all
liens, encumbrances, charges, rights or interests
of any kind, except in favor of Bank.
(N) Accounts Receivable which are
evidenced by chattel paper or an instrument of any
kind.
(O) Accounts Receivable which are
not evidenced by an invoice or other documentation
in form acceptable to Bank.
(P) Accounts Receivable which are
otherwise unacceptable to Bank.
(v) "Eligible Inventory" shall mean
those items of Inventory consisting of raw materials, and
finished goods which are in good condition and currently
saleable in the ordinary course of a Borrower's business
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and are not otherwise unacceptable to Bank in its sole
discretion. Eligible Inventory shall not include work in
process, shipping and packing materials, purchased
components owned by G.T. and supplies. Such Inventory
shall not be subject to any other lien or claim, shall not
have been consigned or sold to any person (nor have been
purchased by a Borrower) as part of any bulk sale unless
there was compliance with all applicable bulk sale or
transfer laws. Such Inventory shall be located at such
locations as are acceptable to Bank and shall, at all
times, be subject to and covered by, Bank's perfected
security interest. "Eligible Raw Materials Inventory"
shall mean and be limited to raw materials which otherwise
satisfy the requirements for Eligible Inventory, and
"Eligible Finished Goods Inventory" shall mean and be
limited to finished goods which otherwise satisfy the
requirements for Eligible Inventory.
(vi) "Inventory" shall mean all
inventory (as that term is defined in the Commercial Code
of the State of California) wherever located, which is or
may at any time be held for sale or lease, furnished under
any contract of service or held as raw materials, work in
process, supplies or materials used or consumed in a
Borrower's business or which are or might be used in
connection with the manufacturing, shipping, advertising or
selling or finishing of such goods, merchandise and other
personal property and all documents of title or documents
representing the same, and all such property, the sale or
other disposition of which has given rise to Accounts
Receivable and which has been returned to or repossessed or
stopped in transit by a Borrower.
(b) Collection of Accounts Receivable.
Borrowers shall have the privilege, subject to revocation at the sole
discretion of Bank, to collect, at Borrowers' expense, the payments due on
Accounts Receivable upon the express condition that all such collections shall
be received by Borrowers in trust for Bank. Upon demand by Bank, whether
before or after an Event of Default, Borrowers shall promptly deliver to Bank,
at the location specified in this Agreement, in kind, all remittances received
by Borrowers on Accounts Receivable, or if sales are made for cash, the
identical checks, cash, or other form of payment. The receipt of any check or
other item of payment by Bank shall not be considered a payment in reduction of
the Loan Balance until such check or other item of payment is honored and
finally paid. At any time, Bank in its sole discretion may, but is not
obligated to, notify any Account Debtor to make payment directly to Bank, and
exercise any and all of Borrowers' rights regarding the Account Receivable or
the Account Debtor.
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(c) Revolving Line. This is a revolving line
of credit. During the Availability Period, Borrowers may repay principal
amounts and Grant and G.T. may reborrow them.
(d) Subline Facility. A revolving line of
credit subline facility for letters of credit is available under the Revolving
Line of Credit, as set forth in Section 1.1(j) hereof. The aggregate
outstanding face amount of letters of credit may not exceed One Million Dollars
($1,000,000).
(e) Minimum Advance. Each advance must be for
at least One Hundred Thousand Dollars ($100,000.00), or for the amount of the
remaining available Revolving Line of Credit, if less.
(f) Maximum Loan Balance. Borrowers agree not
to permit the outstanding principal balance of the Revolving Line of Credit
plus the outstanding amounts of any letters of credit, including amounts drawn
on letters of credit and not yet reimbursed (such sum is the "Loan Balance"),
to exceed the lesser of the Commitment or the Borrowing Base.
(g) Availability Period. The period under
which Borrowers may draw on the Revolving Line of Credit ("Availability
Period") is between the date of this Agreement and July 31, 1997 (the "Maturity
Date") unless Borrowers are in default, in which event Bank need not make any
advances.
(h) Interest Rate.
(i) Unless the Agent (defined below)
on behalf of Borrowers elects an Optional Interest Rate as
described below, the interest rate is Bank's Prime Rate in
effect from time to time plus the Applicable Rate (as
defined below), per annum.
(A) The "Prime Rate" equals the
rate of interest set from time to time by Bank at
its head office in San Francisco, California as
its Prime Rate. The Prime Rate is determined by
Bank as a means of pricing credit extensions to
some customers and is neither tied to any external
rate of interest or index nor is it necessarily
the lowest rate of interest charged by Bank at any
given time for any particular class of customers
or credit extensions. Any changes in the interest
rate resulting from a change in the Prime Rate
shall take effect without notice on the date
specified at the time the Prime Rate is set.
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(B) The "Applicable Rate" shall be
determined based upon Grant's and G.T.'s
consolidated Total Liabilities to Tangible Net
Worth ratio as follows:
Applicable Rate Total Debt to Tangible Net Worth
--------------- --------------------------------
0.75% greater than or equal to 1.75:1.00
0.50% 1.25:1.00 - 1.74:1.00
0.25% 0.65:1.00 - 1.24:1.00
0.00% less than 0.65:1.00
and shall be set on the first day of each quarter
based upon Borrowers' most recent monthly
financial statement.
(ii) Optional Interest Rate. Instead
of the interest rate based on Bank's Prime Rate, Agent on
behalf of Borrowers may elect to have all or portions of
the Revolving Line of Credit during the Availability Period
bear interest at the rate described in Section 1.1(h)(iii)
below (the "Optional Interest Rate") during an interest
period agreed to by the Bank and Agent on behalf of
Borrowers. Each interest rate is a rate per annum.
Interest will be paid on the last day of each interest
period and, if the interest period is longer than thirty
(30) days, then on the first day of each month during the
interest period. At the end of any interest period, the
interest rate will revert to the rate based on the Prime
Rate, unless Agent on behalf of Borrowers has again
designated the Optional Interest Rate for that portion.
(iii) Eurodollar Rate/Rate Plus
Disclosed Spread. Agent on behalf of Borrowers may elect
to have all or portions of the principal balance of the
Revolving Line of Credit bear interest at the Eurodollar
Rate plus the Disclosed Spread (each an "Eurodollar Rate
Portion"). The "Disclosed Spread" shall be determined
based upon Grant's and G.T.'s consolidated Total
Liabilities to Tangible Net Worth as follows:
Disclosed Spread Total Debt to Tangible Net Worth
---------------- --------------------------------
2.75% greater than or equal to 1.75:1.00
2.50% 1.25:1.00 - 1.74:1.00
2.25% 0.65:1.00 - 1.24:1.00
2.00% less than 0.65:1:00
and shall be set on the first day of each quarter based
upon Borrowers' most recent monthly financial statement.
Designation of a Eurodollar Rate Portion is subject to the
following requirements:
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(A) Each request for an Advance
hereunder to bear interest at the Optional
Interest Rate must be received by Bank by 9:00
a.m. (Los Angeles time) at least two (2) Banking
Days before the first day of the applicable
interest period.
(B) The interest period during
which the Optional Interest Rate will be in effect
will be a period of either 30, 60, or 90 days, as
selected by Borrowers, with the consent of Bank.
The last day of the interest period will be
determined by Bank using the practices of the
Eurodollar inter- bank market.
(C) Unless the Optional Interest
Rate is not available to Borrowers under the
provisions of this Agreement, Agent on behalf of
Borrowers shall at times elect the Optional
Interest Rate for an amount equal to the lesser of
the Loan Balance or One Million and no/100 Dollars
($1,000,000.00), and in any case in integral
multiples of Five Hundred Thousand and no/100
Dollars ($500,000.00). Each incremental
Eurodollar Rate Portion will be for an amount not
less than Five Hundred Thousand and No/100 Dollars
($500,000) ("Eurodollar Rate Loan").
(D) The "Eurodollar Rate" means the
interest rate determined by the following formula,
rounded upward to the nearest 1/100 of one
percent. (All amounts in the calculation will be
determined by Bank as of the first day of interest
period.)
Eurodollar Rate = LIBOR Rate
----------
(1.00 - Reserve Percentage)
Where,
(1) "LIBOR Rate" means the
interest rate (rounded upward to the
nearest 1/16th of one percent) at which
Bank's Branch in London, England, would
offer U.S. dollar deposits for the
applicable interest period to other major
banks in the Eurodollar inter-bank market.
(2) "Reserve Percentage"
means the total of the maximum reserve
percentages for determining the reserves
to be maintained by member banks of the
Federal Reserve System for Eurocurrency
Liabilities, as defined in the Federal
Reserve Board Regulation D, rounded upward
to the nearest 1/100 of one percent. The
per-
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centage will be expressed as a decimal,
and will include, but not be limited to,
marginal, emergency, supplemental,
special, and other reserve percentages.
(3) Borrowers may not
elect the Optional Interest Rate with
respect to any portion of the principal
balance of the Revolving Line of Credit
which is scheduled to be repaid before the
last day of the applicable interest period.
(4) No portion of the
principal balance of the Revolving Line
of Credit already bearing interest at the
Optional Interest Rate may be converted to
a different rate during its interest
period.
(E) Each prepayment of a Eurodollar
Rate Portion, whether voluntary, by reason of
acceleration or otherwise, will be accompanied by
the amount of accrued interest on the amount
prepaid, and a prepayment fee equal to the amount
(if any) by which:
(1) the additional
interest which would have been payable
on the amount prepaid had it not been paid
until the last day of the interest period,
exceeds
(2) the interest
which would have been recoverable by
Bank by placing the amount prepaid on
deposit in the Eurodollar market for a
period starting on the date on which it was
prepaid and ending on the last day of the
interest period for such portion.
(3) Bank will have
no obligation to accept an election of
Eurodollar Rate Portion if any of the
following described events has occurred and
is continuing:
(x) Dollar deposits in the
principal amount, and
for periods equal to
the interest period,
of a Eurodollar Rate
Portion are not
available in the
Eurodollar interbank
market; or
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(y) the Eurodollar Rate
does not accurately
reflect the cost of
Eurodollar Rate
portion.
(i) Repayment Terms/Revolving Line of Credit.
(i) Borrowers will pay interest in
arrears commencing on September 1, 1995, and then on the
first day of each month thereafter until payment in full of
all amounts outstanding under the Revolving Line of Credit.
(ii) Borrowers will repay in full, all
principal, interest and other charges outstanding under the
Revolving Line of Credit no later than the Maturity Date.
(iii) Any amount bearing interest at an
Optional Interest Rate may be repaid at the end of the
applicable interest period.
(iv) Subject to provisions contained
elsewhere herein, Borrowers may prepay the Revolving Line
of Credit in full or in part at any time without penalty or
premium, except for the prepayment fee with respect to the
prepayment of Eurodollar Rate Portion, if applicable, as
set forth in Section 1.1(h)(iii)(E). The prepayment will
be applied first to interest and charges and then to the
most remote installment of principal due under this
Agreement.
(j) Letter of Credit Line. This Revolving
Line of Credit may be used for financing: (1) commercial letters of credit with
a maximum maturity of 365 days but not to extend beyond the Maturity Date, and
each such commercial letter of credit will require drafts payable up to 90 days
after sight; or (2) standby letters of credit with a maximum maturity of 365
days but not to extend beyond the Maturity Date.
(i) The amount of outstanding letters of
credit, including amounts drawn on letters of credit and
not yet reimbursed, may not exceed at any one time One
Million Dollars ($1,000,000).
(ii) Any sum drawn under a letter of
credit shall be added to the principal amount outstanding
under this Agreement. The amount will bear interest at the
rate set forth in Section 1.1(h)(i) and be due as described
elsewhere in this Agreement.
(iii) In the event any letters of credit
are outstanding on the Maturity Date, or in the event an
Event
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of Default shall have occurred, Borrowers shall immediately
prepay such letters of credit and deposit with Bank, as
cash collateral for the obligations of Borrowers under such
letters of credit (and Borrowers hereby grant to Bank a
security interest in such cash collateral), an amount equal
to the face amount of all outstanding letters of credit, to
be applied to repay draws under such letters of credit as
and when made.
(iv) The issuance of any letter of credit
or any amendment to a letter of credit is subject to Bank's
written approval and must be in form and content
satisfactory to Bank and in favor of a beneficiary
acceptable to Bank.
(v) Borrowers will sign Bank's form
Application and Security Agreement for Commercial Letter of
Credit or Application and Agreement for Standby Letter of
Credit.
(vi) Borrowers agree that Bank may
automatically charge the Account (defined below) for
applicable fees, discounts, and other charges relating to
any letters of credit.
(vii)Borrowers will pay any issuance
and/or other fees that Bank notifies Borrowers will be
charged for issuing and processing letters of credit for
Borrowers.
1.2 Non-Revolving Acquisition Line of Credit/Term Out
Option.
(a) Non-Revolving Line of Credit Amount.
During the Non-Revolving Line Availability Period, Bank will, on a
non-revolving basis, make advances to Borrowers, which may not at any time
exceed in the aggregate principal amount of Three Million and No/100 Dollars
($3,000,000.00) (the "Non-Revolving Commitment"). This is a "Non-Revolving
Line of Credit" with a term repayment option to be used by Borrowers. Any
amount borrowed, even if repaid before the end of the Non-Revolving Line of
Credit Availability Period, permanently reduces the remaining available
Non-Revolving Line of Credit and such amounts may not be reborrowed.
Borrowers' obligation to repay advances under the Non-Revolving Line of Credit
shall be evidenced by a promissory note, substantially in the form of Exhibit B
attached hereto (the "Non-Revolving Line Note").
(b) Non-Revolving Line of Credit Advances.
Each advance under the Non-Revolving Line of Credit shall be used solely to
fund stock or asset purchases or acquisitions, each subject to review and
approval by Bank on a case by case
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basis as permitted by the terms of this Agreement. All stock or assets
acquired with the proceeds of such advances shall be free and clear of any
security interests, liens, encumbrances of rights of others except the security
interests of Bank under any security agreements required under this Agreement
unless otherwise approved by Bank. Each request for an advance under the
Non-Revolving Line of Credit shall describe in adequate detail the stock or
assets proposed to be purchased or acquired by Borrowers and shall be
accompanied by a copy of the purchase and sale agreement or other documentary
evidence acceptable to Bank for the stock and/or assets to be purchased with
the proceeds of the advance. Bank reserves the right to withhold approval of
any requested advance in the exercise of its sole discretion, which it shall
exercise without unreasonable delay. Each advance under the Non-Revolving Line
of Credit must be for at least Fifty Thousand and No/100 Dollars ($50,000.00),
or for the remaining Non-Revolving Line of Credit, if less.
(c) Availability Period/Non Revolving Line of
Credit. The Non-Revolving Line of Credit shall be available upon
("Non-Revolving Line Availability Period") the later of (i) the date on which
Bank completes a satisfactory field audit of Grizzly Products, Inc. ("Grizzly")
or (ii) the date on which Grizzly becomes a Borrower under this Agreement, and
shall terminate on July 31, 1996 (the "Conversion Date") unless Borrowers are
in default hereunder in which event Bank need not make any advances under the
Non-Revolving Line of Credit.
(d) Interest Rate/Non-Revolving Line of
Credit. Each advance outstanding under the Non-Revolving Line of Credit shall
bear interest at a rate per annum equal to Bank's Prime Rate in effect from
time to time plus the Applicable Rate or at an Optional Interest Rate, each as
set forth in Section 1.1(h), plus, in each case, one-quarter of one percent
(0.25%).
(e) Repayment Terms/Non-Revolving Line of
Credit.
(i) Borrowers will pay interest
commencing on September 1, 1995, and then on the first day
of each month thereafter, whether under the Non-Revolving
Line Note or the Term Note (defined below).
(ii) On the Conversion Date (which may
be extended, in the exercise of Bank's discretion, for the
length of any applicable cure period permitted hereunder),
so long as Borrowers are in compliance with all terms and
conditions contained herein and in any other documents and
agreements executed in connection herewith, Bank will
convert the then outstanding amount of the Non-Revolving
Line of Credit to a term loan. Borrowers shall execute and
deliver to Bank a Term Note substantially in the form
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of Exhibit C attached hereto and made a part hereof (the
"Term Note"), payable to Bank or its order to evidence such
conversion of the Non-Revolving Line of Credit to a term
loan (the "Term Loan").
(iii) As will be further set forth in
the Term Note, Borrowers will repay the principal amount
outstanding on the Conversion Date in forty-seven (47)
successive equal monthly installments commencing on August
31, 1996, and then on the forty-eighth (48th) and final
installment in an amount equal to the then remaining
principal balance of the Term Note plus accrued and unpaid
interest and other charges thereon due and payable on July
31, 2000.
(iv) Borrowers may prepay the
Non-Revolving Line of Credit Note or the Term Note, as the
case may be, in full or in part at anytime without penalty
or premium, except that any such partial prepayment shall
be (A) an integral multiple of $50,000, (B) in an amount of
not less than $100,000, and (C) any prepayment of an
Offshore Rate Portion shall include the fees as set forth
in Section 1.1(h)(iii)(E). Any such prepayment will be
applied first to the interest and charges then to the most
remote installment of principal due under the Non-Revolving
Line of Credit Note or the Term Note, as applicable.
2. FEES, EXPENSES AND DEPOSITS.
2.1 Fees.
(a) Unused Commitment Fee.
(i) Revolving Line of Credit.
Borrowers agree to pay an unused commitment fee equal to
one-quarter of one percent (0.25%) times the average daily
difference between the Revolving Line of Credit Commitment
and the principal balance evidenced by the Revolving Line
Note. This fee is payable in arrears and is due commencing
on September 30, 1995 and on the first Banking Day
following the last day of each quarter until the expiration
of the Availability Period.
(ii) Non-Revolving Line of Credit.
Borrowers agree to pay an unused commitment fee equal to
one-quarter of one percent (0.25%) times the average daily
difference between the Non-Revolving Commitment and the
principal indebtedness evidenced by the Non-Revolving Line
Note. This fee shall begin to accrue upon the earlier of
(A) the date upon which Grizzly becomes a Borrower
hereunder or (B) September 30, 1995, and shall be due and
payable commencing December 31, 1995 and thereafter on the
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first Banking Day following the last day of each quarter
until the expiration of the Non-Revolving Availability
Period.
2.2 Expenses.
(a) Borrowers agree to immediately repay Bank
for costs and expenses that include, without limitation, filing, recording and
search fees, appraisal fees, title report fees, documentation fees, and all
other costs and expenses incurred in the negotiation, preparation,
administration and enforcement of this Agreement and any agreement or
instrument required by this Agreement, and any amendments or modifications of
the foregoing. Expenses include, but are not limited to, reasonable attorneys'
fees, including any allocated costs of Bank's in-house counsel.
(b) Borrowers agree to reimburse Bank for the
cost of periodic audits and appraisals of the personal property collateral
securing this Agreement, at such intervals as Bank may reasonably require but,
unless an Event of Default or Potential Event of Default has occurred or
exists, no more frequently than semi-annually. The audits and appraisals may
be performed by employees of Bank or by independent appraisers.
3. COLLATERAL.
3.1 All Personal Property. Borrowers' obligations to
Bank under this Agreement are secured by, and Borrowers hereby grants Bank a
security interest in, all personal property Borrowers now own or will own in
the future and other property described in Exhibit D attached hereto, including
the Stock of G.T., Grant, effective concurrently with the release of the lien
of Bank Leumi Trust Company of New York as to the Stock of Grant only, pursuant
to the Subordination Agreement, and any other stock owned by any Borrower
("Collateral"), and as is further described in security agreements and pledge
agreements of even date herewith executed by Borrowers in favor of Bank (the
"Security Agreements"). In addition, all Collateral securing this Agreement
shall also secure all other present and future obligations of Borrowers to Bank
(excluding any consumer credit covered by the federal Truth in Lending law,
unless Borrower has otherwise agreed in writing). All personal property
Collateral securing any other present or future obligations of Borrower to Bank
shall also secure this Agreement.
4. DISBURSEMENTS, PAYMENTS AND COSTS.
4.1 Request for Credit. Each request for an extension
of credit will be made in writing by an authorized officer of Arlen, Grant or
G.T. acting on behalf of the
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Borrowers (the "Agent"), in a manner acceptable to Bank, substantially in the
form of Exhibit E or by another means acceptable to Bank.
4.2 Disbursements and Payments. Each disbursement by
Bank and each payment by Borrowers will be:
(a) made at Bank's branch (or other location)
selected by Bank from time to time.
(b) made for the account of Bank's branch
selected by Bank from time to time.
(c) made in immediately available funds, or
such other type of funds selected by Bank.
(d) evidenced by records kept by Bank. In
addition, Bank may, at its discretion, require Borrowers to sign one or more
promissory notes.
4.3 Telephone Authorization.
(a) Bank may honor telephone instructions for
advances or repayments or for the designation of optional interest rates given
by any officer of Borrowers or a person or persons so authorized by any officer
of Borrowers.
(b) Advances will be deposited in, and
repayments will be withdrawn from, Borrowers' account numbers 01800149770
("Xxxxx Account"), 01800146270 ("Grant Account") or 01800144670 ("G.T.
Account") (collectively, the "Accounts"), or such other account(s) with Bank as
designated in writing by Borrowers.
(c) Bank will provide written confirmation to
Borrowers of transactions made based on telephone instructions. Borrowers
agree to notify Bank promptly of any discrepancy between the confirmation and
telephone instructions. If there is a discrepancy and Bank has already acted
on the telephone instructions, the telephone instructions will prevail over the
written confirmation.
(d) Borrowers indemnify and holds harmless
Bank (including its officers, employees, and agents) from all liability, loss,
and costs in connection with any act resulting from telephone instructions it
reasonably believes are made by an officer of any Borrower or a person
authorized by an officer of any Borrower. This indemnity and agreement to hold
harmless will survive this Agreement's termination.
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4.4 Direct Debit.
(a) Borrowers agree that interest and
principal payments and any fees will be deducted automatically on the due date
from the Xxxxx Account, or any of the other Accounts which contains sufficient
funds.
(b) Bank will debit the Accounts on the dates
the payments become due. If a due date does not fall on a Banking Day, Bank
will debit the Accounts on the first Banking Day following the due date.
(c) Borrowers will maintain sufficient funds
in the Xxxxx Account on the dates Bank enters debits authorized by this
Agreement. If there are insufficient funds in the Xxxxx Account or the other
Accounts on the date Bank enters any debit authorized by this Agreement,
Borrowers shall immediately, after notice from Bank, pay such shortfall to
Bank.
4.5 Banking Days. Unless otherwise provided in this
Agreement, a "Banking Day" is a day other than a Saturday or a Sunday, on which
Bank is open for business in California. For amounts bearing interest at an
Offshore Rate (if any), a Banking Day is a day other than a Saturday or a
Sunday on which Bank is open for business in California and dealing in offshore
dollars. All payments and disbursements which would be due on a day which is
not a Banking Day will be due on the next Banking Day. All payments received
on a day which is not a Banking Day will be applied to the applicable Line of
Credit on the next Banking Day.
4.6 Taxes. Borrowers will not deduct any taxes from
any payments made to Bank. If any government authority imposes any taxes or
charges on any payments made by the Borrowers, Borrowers will pay the taxes or
charges. Upon request by Bank, Borrowers will confirm that it has paid the
taxes by giving Bank official tax receipts (or notarized copies) within 30 days
after the due date.
4.7 Additional Costs. Borrowers will pay Bank, on
demand, for Bank's costs or losses arising from any statute or regulation, or
any request or requirement of a regulatory agency which is applicable to Bank.
The costs and losses will be allocated to the loans in a manner determined by
Bank, using any reasonable method. The costs include the following:
(a) any reserve or deposit requirements; and
(b) any capital requirements relating to Bank's
assets and commitments for credit.
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4.8 Interest Calculation. Except as otherwise stated
in this Agreement, all interest and fees, if any, will be computed on the basis
of a 360-day year and the actual number of days elapsed. This results in more
interest or a higher fee than if a 365-day year is used.
4.9 Interest on Late Payments. At Bank's sole option
in each instance, any amount not paid when due under this Agreement (including
interest) shall bear interest from the due date until paid at Bank's Prime Rate
plus two percent (2.0%). This may result in compounding of interest.
4.10 Default Rate. Upon the occurrence and during the
continuance of any Event of Default, at Bank's sole option Borrowers shall pay
interest on the outstanding principal and interest at the rate of interest
otherwise provided under this Agreement plus three percent (3.0%) (the "Default
Rate"). This will not constitute a waiver of any Event of Default.
4.11 Overdrafts. At Bank's sole option in each
instance, Bank may make advances under this Agreement to prevent or cover an
overdraft on any account of Borrowers with Bank. Each such advance will accrue
interest from the date of the advance or the date on which the account is
overdrawn, whichever occurs first, at the interest rate described in this
Agreement.
4.12 Overadvances. If at any time the Loan Balance
exceeds the lesser of the Commitment or the Borrowing Base, at Bank's option
that amount shall be immediately due and payable on demand.
5. CONDITIONS.
5.1 Initial Advance. Bank must have received the
following items, in form and content acceptable to Bank, before it is required
to extend any credit to Borrowers under this Agreement:
(a) Authorizations. Evidence that the
execution, delivery and performance by Borrowers and each guarantor of this
Agreement and any instrument or agreement required under this Agreement have
been duly authorized.
(b) Notes. The fully executed Revolving Line
Note and Non-Revolving Line Note.
(c) Borrowing Base Certificate. Borrowing
Base Certificate, substantially in the form of Exhibit F hereto, signed by
designated officers of Borrowers and delivered to Banks.
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(d) Security Agreements. Signed original
security agreements, pledge agreements, financing statements and fixture
filings which Bank requires. Borrowers shall also have delivered or caused to
be delivered to Bank all such Collateral, including but not limited to the
stock of G.T., in which Bank requires a possessory security interest.
(e) Evidence of Priority. Evidence that
security interests and liens in favor of Bank are valid, enforceable, perfected
and prior to all other rights and interests, except those Bank consents to in
writing.
(f) Landlord's/Mortgagee Waivers. For any
personal property Collateral located on real property which is subject to a
mortgage or deed of trust or which is not owned by a Borrower, Borrowers shall
use their best efforts to obtain a Landlord's and/or Mortgagee's Waiver from
the owner/lessor of the real property and the holder of any mortgage or deed of
trust.
(g) Insurance. Evidence of insurance
coverage, as required in the "Covenants" section of this Agreement.
(h) Business Interruption Insurance. A
business interruption insurance policy for Grant for at least Two Million Seven
Hundred Thousand Dollars ($2,700,000), and for G.T. for at least Four Million
Dollars ($4,000,000), with an insurer acceptable to Bank, and with Bank named
as an additional loss payee, provided, however, evidence of such coverage may
be provided to Bank within thirty (30) days of the Closing Date.
(i) Guaranties. Continuing Guaranty signed by
Xxxxx Holdings Corp. ("Xxxxx Holdings"), in the amount of Eleven Million Five
Hundred Fifty Thousand Dollars ($11,550,000).
(j) Legal Opinion. A written opinion from
Borrowers' legal counsel, covering such matters as Bank may require. The legal
counsel and the terms of the opinion must be acceptable to Bank.
(k) Good Standing. Certificates of good
standing for Borrowers from their state of incorporation and from any other
state in which Borrowers are required to qualify to conduct their business.
(l) Accounts. The Accounts shall have been
opened, and Borrowers shall have established with Bank all of Borrowers'
primary operating and business accounts.
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(m) Expenses. All Bank's expenses incurred in
connection with the preparation and negotiation of this Agreement.
(n) Other Required Documentation:
Subordination Agreement ("Subordination Agreement"), substantially in the form
of Exhibit G hereto, signed by all signatories indicated therein.
The date on which all of the foregoing conditions have been
satisfied is the "Closing Date." This Agreement, the Notes, the Security
Agreements, the Continuing Guaranty, the Subordination Agreement and the
Authorizations and any amendments, modifications or replacements thereof may be
referred to, collectively as the "Loan Documents."
5.2 Conditions to Each Advance. Before each extension
of credit, including the first:
(a) A Request For Credit in form and substance
satisfactory to Bank.
(b) Borrowing Base Certificate signed by
Borrower and delivered to Bank.
(c) In the case of each Advance under the
Revolving Line of Credit and each issuance of a letter of credit, the Loan
Balance, after giving effect to such Advance or letter of credit, as the case
may be, shall not exceed the lesser of the Commitment or the Borrowing Base.
(d) In the case of an advance under the
Non-Revolving Line of Credit, the stock or asset acquisition shall have been
approved by Bank, as provide in Section 7.28.
(e) Bank's most recent audit of Borrower's
records must be satisfactory.
(f) The Representations and Warranties
hereunder must be true and correct in all material respects.
(g) No Event of Default or condition, event or
act which with the giving of notice or the passage of time or both would
constitute an Event of Default (any such condition, event or act being referred
to herein as a "Potential Event of Default"), shall have occurred and be
continuing or shall exist.
(h) Any other items that Bank reasonably
requires.
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6. REPRESENTATIONS AND WARRANTIES.
When Borrowers sign this Agreement, and until Bank is
repaid in full, Borrowers make the following representations and warranties.
Each request for an extension of credit constitutes a renewed representation.
6.1 Organization of Borrowers. G.T. is a corporation
duly formed and validly existing under the laws of the State of California.
Xxxxx and Xxxxx are corporations duly formed and validly existing under the
laws of the State of Delaware.
6.2 Authorization. This Agreement, and any instrument
or agreement required hereunder, are within Borrowers' powers, have been duly
authorized, and do not conflict with any of its organizational papers.
6.3 Enforceable Agreement. This Agreement and any
related loan documents, are legal, valid and binding agreements of Borrowers,
enforceable against Borrowers in accordance with their terms, and any
instrument or agreement required hereunder or thereunder, when executed and
delivered, will be similarly legal, valid, binding and enforceable.
6.4 Good Standing. In each state in which Borrowers
do business, they are properly licensed, in good standing, and, where required,
in compliance with fictitious name statutes.
6.5 No Conflicts. This Agreement does not conflict
with any law, agreement, or obligation by which any Borrower is bound.
6.6 Financial Information. All financial and other
information that has been or will be supplied to Bank, including Borrowers'
financial statement dated as of February 28, 1995, is:
(a) sufficiently complete to give Bank
accurate knowledge of Borrowers' and Xxxxx Holdings' financial condition;
(b) in form and content required by Bank; and
(c) in compliance with all government
regulations that apply.
Since the dates of the financial statements specified
above, there has been no material adverse change in the assets or the financial
condition of any Borrower or Xxxxx Holdings.
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6.7 Lawsuits. There is no lawsuit, tax claim or other
dispute pending or threatened against any Borrower or any guarantor except as
disclosed on Schedule 6.7 attached hereto.
6.8 Collateral. All Collateral required in this
Agreement is owned by the grantor of the security interest, free of any title
defects or any liens or interests of others, except as disclosed on Schedule
6.8 attached hereto (collectively, the "Permitted Encumbrances").
6.9 Permits, Franchises. Each Borrower possesses all
permits, memberships, franchises, contracts and licenses required and all
trademark rights, trade name rights, patent rights and fictitious name rights
necessary to enable it to conduct the business in which it is now engaged
without conflict with the rights of others.
6.10 Other Obligations. Borrowers are not in default
on any obligation for borrowed money, any purchase money obligation or any
other material lease, commitment, contract, instrument or obligation.
6.11 Income Tax Returns. Borrowers have filed all
required tax returns and have no knowledge of any pending assessments or
adjustments of its income tax for any year.
6.12 No Event of Default. No event has occurred which
is, or with notice or lapse of time or both would be, an Event of Default under
this Agreement.
6.13 ERISA Plans.
(a) Each Borrower has fulfilled its
obligations, if any, under the minimum funding standards of ERISA and the Code
with respect to each Plan and is in compliance in all material respects with
the presently applicable provisions of ERISA and the Code, and has not incurred
any liability with respect to any Plan under Title IV of ERISA.
(b) No reportable event has occurred under
Section 4043(b) of ERISA for which the PBGC requires 30 day notice.
(c) No action by any Borrower to terminate or
withdraw from any Plan has been taken and no notice of intent to terminate a
Plan has been filed under Section 4041 of ERISA.
(d) No proceeding has been commenced with
respect to a Plan under Section 4042 of ERISA, and no event has occurred or
condition exists which might constitute grounds for the commencement of such a
proceeding.
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(e) The following terms have the meanings
indicated for purposes of this Agreement:
(i) "Code" means the Internal Revenue
Code of 1986, as amended from time to time.
(ii) "ERISA" means the Employee
Retirement Income Act of 1974, as amended from time to
time.
(iii) "PBGC" means the Pension Benefit
Guaranty Corporation established pursuant to Subtitle A of
Title IV of ERISA.
(iv) "Plan" means any employee pension
benefit plan maintained or contributed to by Borrower and
insured by the Pension Benefit Guaranty Corporation under
Title IV of ERISA.
7. COVENANTS.
Borrowers agree, so long as credit is available under this
Agreement and until Bank is repaid in full:
7.1 Use of Proceeds.
(a) Revolving Line of Credit. To use the
proceeds of the Revolving Line of Credit only to repay Grant's and G.T.'s
existing lines of credit with Shawmut Capital Corporation and for working
capital purposes (which shall not include any acquisitions of the stock or
assets of any businesses except for inventory acquired in the ordinary course
of business).
(b) Non-Revolving Line of Credit. To use the
proceeds of the Non-Revolving Line of Credit for purchases or acquisitions of
the stock or assets of businesses, as approved by Bank and its counsel on a
case by case basis in the exercise in its sole discretion, as provided in
Section 7.28.
7.2 Financial Information. To provide the following
financial information and statements and such additional information as
requested by Bank from time to time:
(a) Within 120 days of Borrowers' fiscal year
end, Borrowers' annual financial statements. These financial statements must
be audited (with an unqualified opinion) by a Certified Public Accountant
("CPA") acceptable to Bank. The statements shall be prepared on a consolidated
and consolidating basis.
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(b) Within 30 days of the period's end,
Borrowers' monthly financial statements. These financial statements may be
Borrower prepared. The statements shall be prepared on a consolidated and
consolidating basis.
(c) Within 15 days of period end, a monthly
detailed aging of Borrowers' accounts receivable and accounts payable, a
detailed analysis of Borrowers' Inventory and a Borrowing Base Certificate.
(d) Within 30 days of fiscal year end,
Borrowers' annual projections, to include twelve month running balance street,
income statement and cash flow statements. These projections may be prepared
by the Borrowers. The projections shall be prepared on a consolidated and
consolidating basis.
(e) Copies of The Xxxxx Corporation's Form
10-K Annual Report, Form 10-Q Quarterly Report and Form 8-K Current Report
within 15 days after the date of filing with the Securities and Exchange
Commission.
(f) Such financial statements or other
information regarding Xxxxx Holdings which Bank may reasonably request from
time to time.
7.3 Current Ratio. To maintain on a consolidated
basis as of the last day of each month, a ratio of current assets to current
liabilities of at least 1:50:1.00.
7.4 Tangible Net Worth. To maintain on a consolidated
basis as of the last day of each month, Tangible Net Worth equal to at least
Seven Million Two Hundred Fifty Thousand Dollars ($7,250,000).
"Tangible Net Worth" means the gross book value of
Borrowers' assets (excluding goodwill, patents, trademarks, trade names,
organization expense, treasury stock, unamortized debt discount and expense,
deferred research and development costs, deferred marketing expenses, and other
like intangibles, and monies due from affiliates, officers, directors or
shareholders of Borrowers) less total liabilities, including, without
limitation, accrued and deferred income taxes, and any reserves against assets,
plus subordinated debt acceptable to Bank.
7.5 Total Liabilities to Tangible Net Worth. To
maintain on a consolidated basis as of the last day of each month, a ratio of
Total Liabilities to Tangible Net Worth not exceeding 2:00:1.00.
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"Total Liabilities" means the sum of current liabilities
plus long term liabilities less subordinated debt acceptable to Bank.
7.6 Interest Charge Ratio. To maintain on a
consolidated basis as of the last day of each month, calculated on a rolling
twelve-month basis, an Interest Charge ratio of at least 2.50:1.00.
"Interest Charge Ratio" means the ratio of Cash Flow to
Interest Charges. "Cash Flow" is defined as net income from operations and
investments, before taxes, plus interest expense. "Interest Charges" is
defined as the sum of all interest payable for the period to a lender in
connection with borrowed money or the deferred purchase price of assets that is
treated as interest in accordance with GAAP.
7.7 Fixed Charge Coverage Ratio. To maintain on a
consolidated basis as of the end of each month, calculated on a rolling
twelve-month basis, a Fixed Charge Coverage Ratio of at least 2.00:1.00.
"Fixed Charge Coverage Ratio" means the ratio of Adjusted
Net Income to the current portion of long-term debt determined in accordance
with GAAP. "Adjusted Net Income" means the sum of net income after taxes, plus
depreciation and amortization expense.
7.8 Profitability. Borrowers shall maintain, on a
consolidated basis, a positive net income after taxes and extraordinary items
on an annual basis, and shall not suffer losses for any two consecutive
quarters.
7.9 Other Debts. Not to have outstanding or incur any
direct or contingent debts or lease obligations (other than those to Bank), or
guaranty or become liable for the debts of others without Bank's written
consent. This does not prohibit:
(a) Acquiring goods, supplies, or merchandise
on normal trade credit.
(b) Endorsing negotiable instruments received
in the usual course of business.
(c) Obtaining surety bonds in the usual course
of business.
(d) Debts and lines of credit and leases in
existence on the date of this Agreement disclosed in writing to
Bank prior to the date of this Agreement or in Borrowers' financial
statement dated February 28, 1995.
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(e) Additional debts and operating lease
obligations for the acquisition of fixed or capital assets, except
to the extent prohibited elsewhere in this Agreement.
(f) Intercompany loans of the proceeds of the
Revolving Line of Credit among the Borrowers to be used for working
capital purposes only.
7.10 Other Liens. Not to create, assume, or allow any
security interest or lien (including judicial liens) on property Borrowers now
or later own (including the Stock of Grant), except:
(a) Liens or security interests in favor of
Bank.
(b) Liens for taxes not yet due.
(c) The Permitted Encumbrances outstanding on
the date of this Agreement.
7.11 Capital Expenditures. Not to spend or incur
capital leases or direct obligations for more than Seven Hundred Fifty Thousand
dollars ($750,000) in any single fiscal year to acquire fixed or capital
assets, excluding asset acquisitions permitted under the Non-Revolving Line of
Credit or other acquisitions permitted under Section 7.28 of this Agreement.
7.12 Dividends/Distributions. Not to declare or pay
any dividends or distributions on any of its shares in excess of 20% of net
profits after taxes on an annual basis, and not to purchase, redeem or
otherwise acquire for value any of its shares, or create any sinking fund in
relation thereto.
7.13 Loans to Officers. Not to make any loans,
advances or other extensions of credit to any of Borrowers' executives,
officers, directors, shareholders or employees (or any relatives of any of the
foregoing) in excess of an aggregate of $50,000 in any fiscal year.
7.14 Change of Control. Not to cause, permit, or
suffer any change, direct or indirect, in any Borrower's ownership, including
but not limited to a change in ownership arising from the sale, transfer or
foreclosure of the stock of any Borrower which has been pledged to another
financial institution; or any change in the office of the President of any
Borrower.
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7.15 Notices to Bank. To promptly notify Bank in
writing of:
(a) any lawsuit over One Hundred Thousand
Dollars ($100,000) against any Borrower or any guarantor;
(b) any substantial dispute between any
Borrower or any guarantor and any government authority;
(c) any proposed or anticipated sale,
transfer, or foreclosure of the stock of any Borrower which has
been pledged to another financial institution, at least thirty (30)
days in advance thereof;
(d) any failure to comply with this Agreement;
(e) any material adverse change in any
Borrower's or any guarantor's financial condition or operations;
(f) any change in any Borrower's name, address,
or legal structure; and
(g) the occurrence of any Event of Default.
7.16 Books and Records. To maintain adequate books
and records.
7.17 Audits. To allow Bank and its agents to inspect
Borrowers' properties and examine, audit and make copies of books and records
at any reasonable time. If any of Borrowers' properties, books or records are
in the possession of a third party, Borrowers authorize that third party to
permit Bank or its agents to have access to perform inspections or audits and
to respond to Bank's requests for information concerning such properties, books
and records.
7.18 Compliance with Laws. To comply in all material
respects with the laws, regulations, and orders of any government body with
authority over Borrowers' businesses (including any fictitious name statute and
all statutes regarding the processing, manufacture, storage, transportation,
sale or use of hazardous or toxic materials).
7.19 Preservation of Rights. To maintain and preserve
all rights, privileges, and franchises Borrowers now has which are necessary to
carry on Borrowers' businesses.
7.20 Maintenance of Properties. To make any repairs,
renewals, or replacements to keep Borrowers' properties in good working
condition.
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7.21 Perfection of Liens. To help Bank perfect and
protect its security interests and liens, and reimburse the Bank for related
costs incurred to protect its security interests and liens.
7.22 Cooperation. To take any action requested by Bank
to carry out the intent of this Agreement.
7.23 Insurance.
(a) Insurance Covering Collateral. To
maintain all risk property damage insurance policies covering the
tangible property comprising the Collateral. Each insurance policy
must be in an amount acceptable to Bank. The insurance must be
issued by an insurance company acceptable to Bank and must include
a lender's loss payable endorsement in favor of Bank in a form
acceptable to Bank.
(b) General Business Insurance. To maintain
insurance as is usual for the business it is in.
(c) Evidence of Insurance. Upon the request
of Bank, to deliver to Bank a copy of each insurance policy, or, if
permitted by Bank, a certificate of insurance listing all insurance
in force.
7.24 Operating/Business Accounts. Establish and
maintain with Bank all of Borrowers' operating and business accounts and all
other banking services associated with the operation of Borrowers' businesses,
including without limitation any demand deposit accounts, except that Borrowers
may maintain an account no. 00000000-01 at Bank Leumi Trust Company of New
York, with a balance not to exceed $200,000, and Grant may maintain account no.
00000-00000 at Bank of America, with a balance not to exceed $2,500.
7.25 Additional Negative Covenants. Not to, without
Bank's prior written consent:
(a) engage in any business activities
substantially different from Borrowers' present businesses.
(b) liquidate or dissolve any Borrower's
business.
(c) enter into any consolidation, merger,
pool, joint venture, syndicate, or other combination.
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(d) sell, lease or dispose of all or a
substantial part of any Borrower's business or assets except in the
ordinary course of such Borrower's business.
(e) sell or otherwise dispose of any assets
for less than fair market value, or enter into any sale and
leaseback agreement covering any of its fixed or capital assets.
(f) issue any new stock of any Borrower or any
subsidiary of any Borrower in which Bank does not have a first
priority, perfected security interest.
(g) voluntarily suspend its business for more
than ten (10) days in any thirty (30) day period.
7.26 No Consumer Purpose. Not to use any loans or
advances hereunder for personal, family or household purposes.
7.27 ERISA Plans. To give prompt written notice to
Bank of:
(a) The occurrence of any reportable event
under Section 4043(b) of ERISA for which the PBGC requires 30 day
notice.
(b) Any action by any Borrower to terminate or
withdraw from a Plan or the filing of any notice of intent to
terminate under Section 4041 of ERISA.
(c) Any notice of noncompliance made with
respect to a Plan under Section 4041(b) of ERISA.
(d) The commencement of any proceeding with
respect to a Plan under Section 4042 of ERISA.
7.28 Acquisitions. Not to acquire or purchase a
business or its assets without the prior written consent of Bank unless (a)
Borrowers are currently, and on a proforma basis, in compliance with the
requirements of the Loan Documents, (b) a Borrower is the surviving entity
after the acquisition, (c) the acquisition involves a business in a related
line to the acquiring Borrower's business, (d) all such acquisitions do not
exceed One Million Dollars ($1,000,000) in the aggregate in any calendar year
and (e) the documentation and the transactions contemplated thereby for each
such acquisition has been approved by Bank and its legal counsel.
7.29 Xxxxx Guaranty. Not to permit the liability of
Xxxxx, pursuant to a guaranty of the obligations of Grizzly in favor of
American Pacific Savings Bank, to increase above the principal amount of
$500,000.
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7.30 Appointment of Bank as Attorney in Fact. Until
all the obligations of Borrowers to Bank have been paid in full, each Borrower
irrevocably appoints Bank as its attorney in fact and authorizes and empowers
it to:
(a) Endorse and affix such Borrower's name to
or upon any check, draft, note, instrument or other writing
relating to the collection of Accounts Receivable, or relating to
any other Collateral, or upon any check or other instrument given
in payment thereof, or upon any omitted assignment, notification of
assignment, demand or auditor's verification relating to Collateral
and upon all other instruments and writings required to assert and
protect Bank's rights in the Collateral.
(b) Upon the happening of an Event of Default,
receive, open and dispose of all mail addressed to any Borrower and
notify the Post Office authorities to change the address for the
delivery of mail addressed to such Borrower to such address as Bank
may designate. These powers, being coupled with an interest, are
irrevocable while Borrowers' obligations to Bank remain unpaid.
8. DEFAULT.
8.1 Events of Default. The occurrence of any one or
more of the following events shall constitute an "Event of Default":
(a) Failure to Pay. Borrowers fail to make a
payment under this Agreement when due.
(b) Non-Compliance. Borrowers or any
guarantor fail to meet the conditions of, or fail to perform any
obligation under:
(i) this Agreement (provided, however,
Borrowers shall be permitted a ten (10) day cure period for
any Event of Default arising from a failure to timely
deliver financial reports and other information required
under Section 7.2 hereof),
(ii) any guaranty,
(iii) any other agreement made in
connection with this Agreement, or
(iv) any other agreement any Borrower or
any guarantor has with Bank or any affiliate of Bank.
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(c) Other Defaults. Any default occurs under
any agreement in connection with any credit Borrowers or any
guarantor has obtained from any other creditor or which any
Borrower or any guarantor has guaranteed if the default consists of
failing to make a payment when due or gives the other creditor the
right to accelerate the obligation.
(d) Lien Priority. Bank fails to have an
enforceable first lien (except for any liens to which Bank has
consented in writing) on or security interest in any Collateral.
(e) False Information. Any representation or
warranty under this Agreement or any agreement, instrument or
certificate executed pursuant to this Agreement or in connection
with any transaction contemplated hereby shall prove to have been
false or misleading in any material respect when made or when
deemed to have been made.
(f) Bankruptcy. Any Borrower or any guarantor
files a bankruptcy petition, a bankruptcy petition is filed against
any Borrower or any guarantor or any Borrower or any guarantor
makes a general assignment for the benefit of creditors. The
default will be deemed cured if any bankruptcy petition filed
against a Borrower or any guarantor is dismissed within a period of
sixty (60) days after the filing; provided, however, that Bank will
not be obligated to extend any additional credit to such Borrower
during any bankruptcy period.
(g) Receivers. A receiver or similar official
is appointed for any Borrower's or any guarantor's business, or the
business is terminated.
(h) Lawsuits. Any lawsuit or lawsuits are
filed on behalf of one or more trade creditors against any Borrower
or any guarantor in an aggregate amount of Two Hundred Thousand
Dollars ($200,000.00) and such lawsuit or lawsuits are not
dismissed or fully bonded within twenty (20) calendar days after
service of process upon such Borrower or any guarantor.
(i) Judgments. Any judgments or arbitration
awards are entered against any Borrower or any guarantor and,
absent procurement of a stay of execution, such judgment or award
remains unbonded or unsatisfied for ten (10) calendar days after
the date of entry; or Borrower or any guarantor enters into any
settlement agreement with respect to any litigation or arbitration,
in an aggregate amount of Fifty Thousand Dollars ($50,000.00) or
more in excess of any insurance coverage.
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(j) Government Action. Any government
authority takes action that Bank reasonably believes adversely
affects any Borrower's or any guarantor's financial condition or
ability to repay.
(k) Default under Guaranty or Subordination
Agreement. Any guaranty, subordination agreement, security
agreement, deed of trust, or other document required by this
Agreement is violated, revoked or no longer in effect.
(l) Change of Control. Any change of
ownership of any Borrower arising from the sale, transfer or
foreclosure of the stock of any Borrower which has been pledged to
another financial institution.
(m) Material Adverse Change. A material
adverse change occurs in any Borrower's or any guarantor's
financial condition, properties or prospects, or ability to repay
the obligations hereunder.
(n) ERISA Plans. The occurrence of a
reportable event with respect to a Plan which is, in the reasonable
judgment of Bank, likely to result in the termination of such Plan
for purposes of Title IV of ERISA, or could reasonably be expected,
in the judgment of Bank, to subject Borrower to any tax, penalty or
liability (or any combination of the foregoing) which,in the
aggregate, would have a material adverse effect on the financial
condition of Borrower with respect to a Plan.
8.2 Remedies. Upon and after the occurrence of an
Event of Default, Bank shall have all of the following rights and remedies:
(a) All obligations and indebtedness hereunder
may, at the option of Bank and without demand, notice, or legal
process of any kind, be declared, and immediately shall become, due
and payable;
(b) The Loans shall bear interest at the
Default Rate;
(c) All of the rights and remedies of a
secured party under the California Commercial Code or other
applicable law, all of which rights and remedies shall be
cumulative, and not exclusive, to the extent permitted by law, in
addition to any other rights and remedies contained in this
Agreement or in any of the documents or agreements executed in
connection herewith or which Bank may otherwise have under any
applicable law or in equity;
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(d) The right to (i) peacefully enter upon the
premises of any Borrower or any other place or places where the
Collateral is located, without any obligation to pay rent to such
Borrower or any other person, through self-help and without
judicial process or first obtaining a final judgment or giving such
Borrower notice and opportunity for a hearing on the validity of
Bank's claim, and remove the Collateral from such premises and
places to the premises of Bank or any agent of Bank, for such time
as Bank may require to collect or liquidate the Collateral, and/or
(ii) require Borrower to assemble and deliver the Collateral to
Bank at a place to be designated by Bank;
(e) The right to (i) open Borrowers' mail and
collect any and all amounts due from Account Debtors or direct that
Borrowers' mail be diverted to a post office box or other location
as determined by Bank, (ii) notify Account Debtors that the
Accounts Receivable have been assigned to Bank and that Bank has a
security interest therein and (iii) direct such Account Debtors to
make all payments due from them upon the Accounts Receivable,
directly to Bank or to a lock box designated by Bank. Bank shall
promptly furnish Borrowers with a copy of any such notice sent and
Borrowers hereby agree that any such notice in Bank's sole
discretion, may be sent on Bank's stationery, in which event, such
Borrower shall, upon demand, co-sign such notice with Bank; and
The right to sell, lease or to otherwise
dispose of all or any Collateral in its then condition, or after
any further manufacturing or processing thereof, at public or
private sale or sales, in lots or in bulk, for cash or on credit,
all as Bank, in its sole discretion, may deem advisable. At any
such sale or sales of the Collateral, the Collateral need not be in
view of those present and attending the sale, nor at the same
location at which the sale is being conducted. Bank shall have the
right to conduct such sales on Borrowers' premises or elsewhere and
shall have the right to use Borrowers' premises without charge for
such sales for such time or times as Bank may see fit. Bank is
hereby granted a license or other right to use, without charge,
Borrowers' labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks and advertising matter, or
any property of a similar nature, as it pertains to the Collateral,
in advertising for sale and selling any Collateral and Borrowers'
rights under all licenses and all franchise agreements shall inure
to Bank's benefit but Bank shall have no obligations thereunder.
Bank may purchase all or any part of the
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Collateral at public or, if permitted by law, private sale and, in
lieu of actual payment of such purchase price, may setoff the
amount of such price against amounts due under this Agreement. The
proceeds realized from the sale of any Collateral shall be applied
first to the costs and expenses, including attorneys' fees,
incurred by Bank for collection and for acquisition, completion,
protection, removal, storage, sale and delivery of the Collateral;
second to interest due upon the Loans; and third to the principal
of the Loans. Bank shall account to Borrower for any surplus. If
any deficiency shall arise, Borrower shall remain liable to Bank
therefor.
8.3 Costs and Expenses. Upon the occurrence of any
Event of Default, Bank shall be entitled to recover all costs, expenses, and
reasonable attorneys' fees (including any allocated costs of in-house counsel)
in connection with the administering or enforcing of this Agreement, whether or
not an action is filed, in accordance with Section 2.2 hereof.
9. MISCELLANEOUS.
9.1 GAAP. Except as otherwise stated in this
Agreement, all financial information provided to Bank and all financial
covenants will be made under generally accepted accounting principles
consistently applied ("GAAP").
9.2 California Law. This Agreement is governed by
California law.
9.3 Successors and Assigns. This Agreement is binding
on Borrowers' and Bank's successors and assignees. Borrowers agree that they
may not assign this Agreement without Bank's prior written consent. Bank may
sell participations in or assign these loans, or any portion thereof, and may
exchange financial information about Borrowers with actual or potential
participants or assignees. If a participation is sold or any portion of the
loans is assigned, the purchaser will have the right of set-off against
Borrowers.
9.4 Severability; Waivers. If any part of this
Agreement is not enforceable, the rest of the Agreement may be enforced. No
failure on the part of Bank to exercise, and no delay in exercising, any right,
power, or remedy under this Agreement shall operate as a waiver thereof; nor
shall any single or partial exercise of any right under this Agreement preclude
any other or further exercise thereof or the exercise of any other right. Any
consent or waiver under this Agreement must be in writing. If Bank waives a
default, it may enforce a later default.
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9.5 Multiple Borrowers. If two or more borrowers sign
this Agreement, each will be individually obligated to repay Bank in full, and
all will be obligated together.
9.6 Entire Agreement. This Agreement and any related
security or other agreements required by this Agreement, collectively:
(a) represent the sum of the understandings
and agreements between Bank and Borrowers concerning this credit;
and
(b) replace any prior oral or written
agreements between Bank and Borrowers concerning this credit; and
(c) are intended by Bank and Borrowers as the
final, complete and exclusive statement of the terms agreed to by
them.
In the event of any conflict between this Agreement and any
other agreements required by this Agreement, this Agreement will prevail.
9.7 Notices. Except as otherwise provided herein, all
notices required under this Agreement shall be personally delivered or sent by
first class mail, postage prepaid, to the addresses on the signature page of
this Agreement, or to such other addresses as Bank and Borrowers may specify
from time to time in writing.
9.8 Headings. Article and paragraph headings are for
reference only and shall not affect the interpretation or meaning of any
provisions of this Agreement.
9.9 Counterparts. This Agreement may be executed in
as many counterparts as necessary or convenient, and by the different parties
on separate counterparts each of which, when so executed, shall be deemed an
original but all such counterparts shall constitute but one and the same
agreement.
9.10 Further Assurances. Borrowers shall, at their
expense and without expense to Bank, do, execute and deliver such further acts
and documents as Bank from time to time reasonably requires for the assuring to
Bank the rights created or intended to be created by this Agreement, the
perfection or priority of Bank's liens and security interests, and for carrying
out the intention or facilitating the performance of the terms of this
Agreement or any document executed in connection with this Agreement.
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9.11 Hazardous Waste Indemnification. Borrowers will
indemnify and hold harmless Bank from any loss or liability directly or
indirectly arising out of the use, generation, manufacture, production,
storage, release, threatened release, discharge, disposal or presence of a
hazardous substance. This indemnity will apply whether the hazardous substance
is on, under or about Borrowers' property or operations or property leased to
Borrowers. The indemnity includes but is not limited to attorneys' fees
(including the reasonable estimate of the allocated cost of in-house counsel
and staff). The indemnity extends to Bank, its parent, subsidiaries and all of
their directors, officers, employees, agents, successors, attorneys and
assigns. For these purposes, the term "hazardous substances" means any
substance which is or becomes designated as "hazardous" or "toxic" under any
federal, state or local law. This indemnity will survive repayment of
Borrowers' obligations to Bank.
Upon demand by Bank, Borrowers will defend any
investigation, action or proceeding alleging the presence of any hazardous
substance in any such location, which affects any of Borrowers' or operations
or property leased to Borrowers or which is brought or commenced against Bank,
whether alone or together with Borrowers or any other person, all at Borrowers'
own cost and by counsel to be approved by Bank in the exercise of its
reasonable judgment. In the alternative, Bank may elect to conduct its own
defense at the expense of Borrower.
9.12 Joint Borrower Provisions. The Joint Borrower
Provisions set forth on Schedule 1 attached hereto are incorporated herein as
if fully set forth are hereby made a part of this Agreement.
9.13 Waiver of Jury Trial. The parties to this
Agreement acknowledge that jury trials often entail additional expenses and
delays not occasioned by nonjury trials. The parties to this Agreement further
agree and stipulate that a fair trial may be had before a state or federal
judge by means of a bench trial without a jury. In view of the foregoing, and
as a specifically negotiated provision of this Agreement, each party to this
Agreement hereby expressly waives any right to trial by jury of any claim,
demand, action or cause of action (1) arising under this Agreement or any other
instrument, document or agreement executed or delivered in connection herewith,
or (2) in any way connected with or related or incidental to the dealings of
the parties hereto or any of them with respect to this Agreement or any other
instrument, document or agreement executed or delivered in connection herewith,
or the transactions related hereto or thereto, in each case whether now
existing or hereafter arising, and whether sounding in contract or tort or
otherwise; and each party hereby agrees and consents that any such claim,
demand,
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action or cause of action shall be decided by court trial without a jury, and
that any party to this Agreement may file an original counterpart or a copy of
this section with any court as written evidence of the consent of the parties
hereto to the waiver of their right to trial by jury.
This Agreement is executed as of the date stated at the top
of the first page.
"Borrowers"
XXXXX AUTOMOTIVE, INC., a Delaware
corporation
By /s/ Xxxxx X.Xxxxxx
------------------------------------
Xxxxx X. Xxxxxx, President
By /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx,
Assistant Secretary
Address where notices to all Borrowers
are to be sent:
c/o Xxxxx Automotive, Inc.
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
GRANT PRODUCTS, INC.,
a Delaware corporation
By /s/ Xxxxx X. Xxxxxx
------------------------------------
Xxxxx X. Xxxxxx, President
By /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx,
Assistant Secretary
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G.T. STYLING, INC.,
a California corporation
By /s/ Xxxxxxx X. Xxxx
----------------------------------
Xxxxxxx X. Xxxx, President
By /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxx X. Xxxxxx,
Assistant Secretary
"Bank"
SUMITOMO BANK OF CALIFORNIA
By /s/ Xxxxxxx X.Xxxxxxxxxx
-----------------------------------
Xxxxxxx X. Xxx Xxxxxxxxxx
Vice President
Address where notices to Bank are to be
sent:
Sumitomo Bank of California
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxx Xxxxxxxxxx
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Schedule 1
Joint Borrower Provisions
Borrowers acknowledge and agree that Borrowers shall be
jointly and severally liable for all obligations arising under this Agreement,
the Revolving Line Note, the Non-Revolving Line Note, the Term Note and all of
the other documents and agreements executed in connection with this Agreement
(collectively, the "Loan Documents"). In furtherance thereof, Borrowers
acknowledge and agree as follows:
1. For the purpose of implementing the joint borrower
provisions of the Loan Documents, Borrowers hereby irrevocably appoint each
other as their agent and attorney-in-fact for all purposes of the Loan
Documents, including the giving and receiving of notices and other
communications.
2. It is understood and agreed that the handling of
this credit facility on a joint borrowing basis as set forth in this Agreement
is solely as an accommodation to Borrowers and at their request, and that Bank
shall incur no liability to Borrowers as a result thereof. To induce Bank to
do so, and in consideration thereof, Borrowers hereby agree to indemnify Bank
and hold Bank harmless from and against any and all liabilities, expenses,
losses, damages and/or claims of damage or injury asserted against Bank by
Borrowers or by any other person or entity arising from or incurred by reason
of Bank's handling of the financing arrangement of Borrowers as herein
provided, reliance by Bank on any requests or instructions from Borrowers or
any other action taken by Bank.
3. Each Borrower acknowledges that the liens and
security interests created or granted herein and by the other Loan Documents
will or may secure obligations of persons or entities other than such Borrower
and, in full recognition of that fact, Borrowers consent and agree that Bank
may, at any time and from time to time, without notice or demand, and without
affecting the enforceability or security hereof or of any other Loan Document:
(a) supplement, modify, amend, extend, renew,
accelerate, or otherwise change the time for payment or the terms
of the obligations of Borrowers or any part thereof, including any
increase or decrease of the rate(s) of interest thereon;
(b) supplement, modify, amend or waive, or
enter into or give any agreement, approval or consent with respect
to, the obligations of Borrowers or any part thereof or any of the
Loan Documents or any additional
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security or guaranties, or any condition, covenant, default,
remedy, right, representation or term thereof or thereunder;
(c) accept new or additional instruments,
documents or agreements in exchange for or relative to any of the
Loan Documents or the obligations of Borrowers or any part thereof;
(d) accept partial payments on the obligations
of Borrowers;
(e) receive and hold additional security or
guaranties for the obligations of Borrowers or any part thereof;
(f) release, reconvey, terminate, waive,
abandon, subordinate, exchange, substitute, transfer and enforce
any security or guaranties, and apply any security and direct the
order or manner of sale thereof as Bank in its sole and absolute
discretion may determine;
(g) release any person or entity or any
guarantor from any personal liability with respect to the
obligations of Borrowers or any part thereof;
(h) settle, release on terms satisfactory to
Bank or by operation of applicable laws or otherwise liquidate or
enforce any obligations of Borrowers and any security or guaranty
therefor in any manner, consent to the transfer of any security and
bid and purchase at any sale; and
(i) consent to the merger, change or any other
restructuring or termination of the corporate existence of
Borrowers or any other person, and correspondingly restructure the
obligations of Borrowers, and any such merger, change,
restructuring or termination shall not affect the liability of
Borrowers or the continuing existence of any lien or security
interest hereunder, under any other Loan Document to which any
Borrower is a party or the enforceability hereof or thereof with
respect to all or any part of the obligations of Borrowers.
Upon the occurrence of and during the continuance of any
Event of Default, Bank may enforce this Agreement and the other Loan Documents
independently as to each Borrower and independently of any other remedy or
security Bank at any time may have or hold in connection with the obligations
of Borrowers, and it shall not be necessary for Bank to marshal assets in favor
of any of the Borrowers or any other person or entity or to proceed upon or
against and/or exhaust any other
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security or remedy before proceeding to enforce this Agreement and the other
Loan Documents. Each of the Borrowers expressly waives any right to require
Bank to marshal assets in favor of any Borrower or any other person or entity
or to proceed against any other person or entity or any Collateral provided by
any other person, and agrees that Bank may proceed against any persons or
entities and/or Collateral in such order as it shall determine in its sole and
absolute discretion. Bank may file a separate action or actions against any
Borrower, whether action is brought or prosecuted with respect to any other
security or against any other person, or whether any other person or entity is
joined in any such action or actions. Each of the Borrowers agrees that Bank
and each of the Borrowers and any other person or entity may deal with each
other in connection with the obligations of Borrowers or otherwise, or alter
any contracts or agreements now or hereafter existing between any of them, in
any manner whatsoever, all without in any way altering or affecting the
security of this Agreement or the other Loan Documents. Each of the Borrowers
expressly waives the benefit of any statute(s) of limitations affecting its
liability hereunder or the enforcement of the obligations of Borrowers or any
liens or security interests created or granted herein or by any other Loan
Document. The rights of Bank hereunder and under the other Loan Documents
shall be reinstated and revived, and the enforceability of this Agreement and
the other Loan Documents shall continue, with respect to any amount at any time
paid on account of the obligations of Borrowers which thereafter shall be
required to be restored or returned by Bank upon bankruptcy, insolvency or
reorganization of any Borrower or any other person, or otherwise, all as though
such amount had not been paid. The enforceability of this Agreement and the
other Loan Documents at all times shall remain effective even though the
obligations of Borrowers, including any part thereof or any other security or
guaranty therefor, may be or hereafter may become invalid or otherwise
unenforceable as against any of the Borrowers or any other person or entity and
whether or not any of the Borrowers or any other person or entity shall have
any personal liability with respect thereto. Each of the Borrowers expressly
waives any and all defenses now or hereafter arising or asserted by reason of
(a) any disability or other defense of any of the other Borrowers or any other
person or entity with respect to the obligations of Borrowers, (b) the
unenforceability or invalidity of any security or guaranty for the obligations
of Borrowers or the lack of perfection or continuing perfection or failure of
priority of any security for the obligations of Borrowers, (c) the cessation
for any cause whatsoever of the liability of any other Borrower or any other
person or entity (other than by reason of the full payment and performance of
all obligations of Borrowers), (d) any failure of Bank to marshal assets in
favor of any of the Borrowers or any other person, (e) any failure of Bank to
give notice of sale or
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other disposition to any of the other Borrowers or any other person or entity
or any defect in any notice that may be given in connection with any sale or
disposition, (f) any failure of Bank to comply with applicable laws in
connection with the sale or other disposition of any Collateral or other
security for any obligation of Borrowers, including any failure of Bank to
conduct a commercially reasonable sale or other disposition of any Collateral
or other security for any obligation of Borrowers, (g) any act or omission of
Bank or others that directly or indirectly results in or aids the discharge or
release of any Borrower or any other person or entity or the obligations of
Borrowers or any other security or guaranty therefor by operation of law or
otherwise, (h) any law which provides that the obligation of a surety or
guarantor must neither be larger in amount nor in other respects more
burdensome than that of the principal or which reduces a surety's or
guarantor's obligation in proportion to the principal obligation, (i) any
failure of Bank to file or enforce a claim in any bankruptcy or other
proceeding with respect to any person, (j) the election by Bank, in any
bankruptcy proceeding of any person, of the application or non-application of
Section 1111(b)(2) of the United States Bankruptcy Code, (k) any extension of
credit or the grant of any lien under Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx
Bankruptcy Code, (l) any use of cash collateral under Section 363 of the United
States Bankruptcy Code, (m) any agreement or stipulation with respect to the
provision of adequate protection in any bankruptcy proceeding of any person,
(n) the avoidance of any lien or security interest in favor of Bank for any
reason, or (o) any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, liquidation or dissolution proceeding commenced by or
against any person, including any discharge of, or bar or stay against
collecting, all or any of the obligations of Borrowers (or any interest
thereon) in or as a result of any such proceeding.
4. Each of the Borrowers represents and warrants to
Bank that such Borrower has established adequate means of obtaining from the
other Borrowers, on a continuing basis, financial and other information
pertaining to the businesses, operations and condition (financial and
otherwise) of the other Borrowers and their respective properties, and each of
the Borrowers now is and hereafter will be completely familiar with the
businesses, operations and condition (financial and otherwise) of the other
Borrowers and their respective properties. Each of the Borrowers hereby
expressly waives and relinquishes any duty on the part of Bank to disclose to
such Borrower any matter, fact or thing related to the businesses, operations
or condition (financial or otherwise) of any other Borrower or such other
Borrower's properties, whether now known or hereafter known by Bank during the
life of this Agreement. With respect to any of the obligations of Borrowers,
Bank need
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not inquire into the powers of any of the Borrowers or the officers or
employees acting or purporting to act on its behalf.
5. In the event that all or any part of the
obligations of Borrowers at any time are secured by any one or more deeds of
trust or mortgages creating or granting liens on any interests in real
property, each of the Borrowers authorizes Bank, upon the occurrence of and
during the continuance of any Event of Default, at the sole option, without
notice or demand and without affecting any obligations of Borrowers, the
enforceability of this Agreement, or the validity or enforceability of any
liens or security interests of Bank on any Collateral, to foreclose any or all
of such deeds of trust or mortgages by judicial or nonjudicial sale. Each of
the Borrowers expressly waives any defenses to the enforcement of this
Agreement or the other Loan Documents or any liens or security interests
created or granted hereby or by the other Loan Documents or to the recovery by
Bank against any other Borrower or any other person or entity liable therefor
of any deficiency after a judicial or nonjudicial foreclosure or sale, even
though such a foreclosure or sale may impair the subrogation rights of such
Borrower and may preclude any of them from obtaining reimbursement or
contribution from any other person. Each of the Borrowers expressly waives any
defenses or benefits that may be derived from California Code of Civil
Procedure Section Section 580a, 580b, 580d or 726, or comparable provisions of
the laws of any other jurisdiction, and all other suretyship defenses it
otherwise might or would have under California law or other applicable law.
Each of the Borrowers expressly waives any right to receive notice of any
judicial or nonjudicial foreclosure or sale of any real property or interest
therein subject to any such deeds of trust or mortgages made by any other
Borrower and failure to receive any such notice shall not impair or affect any
Borrower's obligations hereunder or the enforceability of this Agreement or the
other Loan Documents or any liens created or granted hereby or thereby.
6. Notwithstanding anything to the contrary elsewhere
contained herein or in any other Loan Document to which any Borrower is a
party, each of the Borrowers hereby waives with respect to each other Borrower
and its respective successors and assigns (including any surety) and any other
party any and all rights at law or in equity, to subrogation, to reimbursement,
to exoneration, to contribution, to setoff or to any other rights that could
accrue to a surety against a principal, to a guarantor against a maker or
obligor, to an accommodation party against the party accommodated, or to a
holder or transferee against a maker and which each of the Borrowers may have
or hereafter acquire against any other Borrower or any other party in
connection with or as a result
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of any Borrower's execution, delivery and/or performance of this Agreement or
any other Loan Document to which any such Borrower is a party. Each of the
Borrowers agrees that it shall not have or assert any such rights against any
other Borrower or any such Borrower's successors and assigns or any other
person or entity (including any surety), either directly or as an attempted
setoff to any action commenced against such Borrower by the other such Borrower
(as borrower or in any other capacity) or any other person. Each of the
Borrowers hereby acknowledges and agrees that this waiver is intended to
benefit Bank and shall not limit or otherwise affect any of the Borrowers'
liability hereunder, under any other Loan Document to which any Borrower is a
party, or the enforceability hereof or thereof.
7. Each of the Borrowers warrants and agrees that
each of the waivers and consents set forth herein is made with full knowledge
of its significance and consequences, with the understanding that events giving
rise to any defense waived may diminish, destroy or otherwise adversely affect
rights which each of the Borrowers otherwise may have against the other
Borrowers, Bank, or others, or against any Collateral. If any of the waivers
or consents herein are determined to be contrary to any applicable law or
public policy, such waivers and consents shall be effective to the maximum
extent permitted by law.
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EXHIBIT D
Description of Collateral
"Collateral" means all present and future right, title and
interest of Borrowers in or to any personal property or assets whatsoever, and
all rights and powers of Borrowers to transfer any interest in or to any
personal property or assets whatsoever, including, without limitation, any and
all of the following property:
(a) All present and future accounts, accounts
receivable, agreements, contracts, leases, contract rights, rights
to payment, instruments, documents, chattel paper, security
agreements, guaranties, undertakings, surety bonds, insurance
policies, notes and drafts, and all forms of obligations owing to
any Borrower or in which Borrower may have any interest, however
created or arising;
(b) All present and future general
intangibles, all tax refunds of every kind and nature to which
Borrower now or hereafter may become entitled, however arising, all
other refunds, and all deposits, goodwill, choses in action, trade
secrets, computer programs, software, customer lists, trademarks,
trade names, patents, licenses, copyrights, technology, processes,
proprietary information, franchises and insurance proceeds;
(c) All present and future deposit accounts of
Borrower, including, without limitation, any demand, time, savings,
passbook or like account maintained by any Borrower with any bank,
savings and loan association, credit union or like organization,
and all money, cash and cash equivalents of Borrower, whether or
not deposited in any such deposit account;
(d) All present and future books and records,
including, without limitation, books of account and ledgers of
every kind and nature, all electronically recorded data relating to
any Borrower or the business thereof, all receptacles and
containers for such records, and all files and correspondence;
(e) All present and future goods, including,
without limitation, all consumer goods, farm products, inventory,
equipment, machinery, tools, molds, dies, furniture, furnishings,
fixtures, trade fixtures, motor vehicles and all other goods used
in connection with or in the conduct of any
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Borrower's business, including without limitation, all goods as
defined in Section 9109(2) of the California Commercial Code;
(f) All present and future inventory and
merchandise, including, without limitation, all present and future
goods held for sale or lease or to be furnished under a contract of
service, all raw materials, work in process and finished goods, all
packing materials, supplies and containers relating to or used in
connection with any of the foregoing, and all bills of lading,
warehouse receipts or documents of title relating to any of the
foregoing;
(g) All present and future accessions,
appurtenances, components, repairs, repair parts, spare parts,
replacements, substitutions, additions, issue and/or improvements
to or of or with respect to any of the foregoing;
(h) All other tangible and intangible property
of any Borrower;
(i) All rights, remedies, powers and/or
privileges of any Borrower with respect to any of the foregoing;
and
(j) Any and all proceeds and products of any
of the foregoing, including, without limitation, all money,
accounts, general intangibles, deposit accounts, documents,
instruments, chattel paper, goods, insurance proceeds, and any
other tangible or intangible property received upon the sale or
disposition of any of the foregoing.
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