Exhibit 10.49
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
PNC BANK, NATIONAL ASSOCIATION (AS LENDER AND AS AGENT)
WITH
U.S. RUBBER RECLAIMING, INC. (BORROWER)
Dated as of October 25, 2002
Table of Contents
1. DEFINITIONS ........................................................1
1.1 ACCOUNTING TERMS ...............................................1
1.2 GENERALTERMS....................................................1
1.1 UNIFORM COMMERCIAL CODE TERMS.......................................16
1.2 CERTAIN MATTERS OF CONSTRUCTION.....................................16
2. ADVANCES, PAYMENTS..................................................16
2.1 REVOLVING ADVANCES..................................................16
2.2 DISCRETIONARY
RIGHTS.....................................................17
2.3 PROCEDURE FOR REVOLVING ADVANCES BORROWING ................17
2.4 DISBURSEMENT OF ADVANCE PROCEEDS...........................19
2.5 TERM LOAN..................................................19
2.6 MAXIMUM ADVANCES.......................................... 20
2.7 REPAYMENT OF ADVANCES..................................... 20
2.8 REPAYMENT OF EXCESS ADVANCES ............................. 20
2.9 STATEMENT OF ACCOUNT...................................... 20
2.10 LETTERS OF CREDIT......................................... 21
2.11 ISSUANCE OF LETTERS OF CREDIT..............................21
2.12 REQUIREMENTS FOR ISSUANCE OF LETTERS OF CREDIT.............22
2.13 ADDITIONAL PAYMENTS........................................23
2.14 MANNER OF BORROWING AND PAYMENT........................... 23
2.15 MANDATORY PREPAYMENTS..................................... 25
2.16 USE OF PROCEEDS........................................... 25
2.17 DEFAULTING LENDER......................................... 25
3. INTEREST AND 0FEES...................................................26
3.1 INTEREST.............................................................26
3.2 LETTER OF CREDIT FEES .............................................. 26
3.3 CLOSING FEE..........................................................27
3.4 FACILITY FEE.........................................................27
3.5 COLLATERAL EVALUATION FEE........................................... 28
3.6 COLLATERAL MONITORING FEE........................................... 28
3.7 COMPUTATION OF INTEREST AND FEES.................................... 28
3.8 MAXIMUM CHARGES..................................................... 28
3.9 INCREASED COSTS..................................................... 28
3.10 BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR............ 29
3.11 CAPITAL ADEQUACY.....................................................30
3.12 GROSS UP FOR TAXES.................................................. 30
3.13 WITHHOLDING TAX EXEMPTION .......................................... 30
4. COLLATERAL: GENERAL TERMS........................................... 31
4.1 SECURITY INTEREST THE COLLATERAL.................................... 31
4.2 PERFECTION OF SECURITY INTEREST..................................... 31
4.3 DISPOSITION OF COLLATERAL........................................... 32
4.4 PRESERVATION OF COLLATERAL.......................................... 32
4.5 OWNERSHIP OF COLLATERAL..............................................32
4.6 DEFENSE OF AGENT'S AND LENDER'S INTERESTS .......................... 32
4.7 BOOKS AND RECORDS................................................... 33
4.8 FINANCIAL DISCLOSURE................................................ 33
4.9 COMPLIANCE WITH LAWS ............................................... 33
4.10 INSPECTION OF PREMISES ............................................. 34
4.11 INSURANCE............................................................34
4.12 FAILURE TO PAY INSURANCE ........................................... 34
4.13 PAYMENT OF TAXES.....................................................35
4.14 PAYMENT OF LEASEHOLD OBLIGATIONS.................................... 35
4.15 RECEIVABLES..........................................................35
4.15.1 Nature of Receivables....................................... 35
4.15.2 Solvency of Customers ...................................... 35
4.15.3 Location of Borrower........................................ 35
4.15.4 Collection of Receivables................................... 35
4.15.5 Notification of Assignment of Receivables................... 36
4.15.6 Power of Agent to Act on Borrower's Behalf.................. 36
4.15.7 No Liability.................................................36
4.15.8 Establishment of a Lockbox Account, Dominion Account ....... 37
4.15.9 Adjustments..................................................37
4.16 INVENTORY............................................................37
4.17 MAINTENANCE OF EQUIPMENT............................................ 37
4.18 EXCULPATION OF LIABILITY............................................ 37
4.19 ENVIRONMENTAL MATTERS................................................38
4.20 FINANCING STATEMENTS ............................................... 40
5. REPRESENTATIONS AND WARRANTIES...................................... 40
5.1 AUTHORITY............................................................40
5.2 FORMATION AND QUALIFICATION..........................................40
5.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES...........................41
5.4 TAX RETURNS..........................................................41
5.5 FINANCIAL STATEMENTS.................................................41
5.6 CORPORATE NAME.......................................................42
5.7 O.S.H.A. AND ENVIRONMENTAL COMPLIANCE............................... 42
5.8 SOLVENCY; NO LITIGATION, VIOLATION, INDEBTEDNESS OR DEFAULT ........ 42
5.9 PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES ....................... 43
5.10 LICENSES AND PERMITS................................................ 44
5.11 DEFAULT OF INDEBTEDNESS............................................. 44
5.12 NO DEFAULT...........................................................44
5.13 NO BURDENSOME RESTRICTIONS.......................................... 44
5.14 NO LABOR DISPUTES....................................................44
5.15 MARGIN REGULATIONS...................................................44
5.16 INVESTMENT COMPANY ACT.............................................. 45
5.17 DISCLOSURE...........................................................45
5.18 DELIVERY OF MEZZANINE DOCUMENTATION ................................ 45
5.19 SWAPS................................................................45
5.20 CONFLICTING AGREEMENTS...............................................45
5.21 APPLICATION OF CERTAIN LAWS AND REGULATIONS .........................45
5.22 BUSINESS AND PROPERTY OF BORROWER................................... 45
5.24 SECTION 20 SUBSIDIARIES..............................................45
6. AFFIRMATIVE COVENANTS................................................46
6.1 PAYMENT OF FEES......................................................46
6.2 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS .........46
6.3 VIOLATIONS...........................................................46
6.4 GOVERNMENT RECEIVABLES.............................................. 46
6.5 NET WORTH............................................................46
6.6 FIXED CHARGE COVERAGE RATIO......................................... 46
6.7 EXECUTION OF SUPPLEMENTAL INSTRUMENTS .............................. 47
6.8 PAYMENT OF INDEBTEDNESS............................................. 47
6.9 STANDARDS OF FINANCIAL STATEMENTS................................... 47
7. NEGATIVE COVENANTS.................................................. 47
7.1 MERGER, CONSOLIDATION, ACQUISITION AND SALE OF ASSETS .............. 47
7.2 CREATION OF LIENS....................................................47
7.3 GUARANTEES...........................................................47
7.4 INVESTMENTS..........................................................47
7.5 LOANS................................................................48
7.6 CAPITAL EXPENDITURES.................................................48
7.7 DIVIDENDS............................................................48
7.8 INDEBTEDNESS.........................................................48
7.9 NATURE OF BUSINESS...................................................48
7.10 TRANSACTIONS WITH AFFILIATES.........................................48
7.11 LEASES...............................................................48
7.12 SUBSIDIARIES.........................................................48
7.13 FISCAL YEAR AND ACCOUNTING CHANGES.................................. 48
7.14 PLEDGE OF CREDIT.....................................................49
7.15 AMENDMENT OF ARTICLES OF INCORPORATION, BY-LAWS .....................49
7.16 COMPLIANCE WITH ERISA............................................... 49
7.17 PREPAYMENT OF INDEBTEDNESS...........................................49
7.18 SUBORDINATED NOTE....................................................49
8. CONDITIONS PRECEDENT................................................ 49
8.1 CONDITIONS TO INITIAL ADVANCES...................................... 49
8.1.1 Note.................................................................50
8.1.2 Filings, Registrations and Recordings............................... 50
8.1.3 Corporate Proceedings of Borrower................................... 50
8.1.4 Incumbency Certificates of Borrower................................. 50
8.1.5 Certificates.........................................................50
8.1.6 Good Standing Certificates.......................................... 50
8.1.7 Legal Opinion........................................................50
8.1.8 No Litigation........................................................51
8.1.9 Collateral Examination.............................................. 51
8.1.10 Fees.................................................................51
8.1.11 Financial Statements.................................................51
8.1.12 Acquisition and Mezzanine Documents................................. 51
8.1.13 Subordination Agreements............................................ 51
8.1.14 Insurance............................................................51
8.1.15 Title Insurance......................................................51
8.1.16 Environmental Reports............................................... 52
8.1.17 Payment Instructions................................................ 52
8.1.18 Blocked Accounts.....................................................52
8.1.19 Consents.............................................................52
8.1.20 No Adverse Material Change.......................................... 52
8.1.21 Leasehold Agreements................................................ 52
8.1.22 Mortgage.............................................................52
8.1.23 Subordinated Note Documentation..................................... 52
8.1.24 Contract Review.....................................................52
8.1.25 Closing Certificate.................................................52
8.1.26 Borrowing Base..................................................... 52
8.1.27 UNDRAWN AVAILABILITY................................................53
8.1.28 Other...............................................................53
8.2 CONDITIONS TO EACH ADVANCE......................................... 53
8.2.1 Representations and Warranties..................................... 53
8.2.2 No Default..........................................................53
8.2.3 Maximum Advances....................................................53
9. INFORMATION AS TO BORROWERS......................................... 53
9.1 DISCLOSURE OF MATERIAL MATTERS...................................... 53
9.2 SCHEDULES............................................................53
9.3 ENVIRONMENTAL REPORTS................................................54
9.4 LITIGATION...........................................................54
9.5 MATERIAL OCCURRENCES................................................ 54
9.6 GOVERNMENT RECEIVABLES.............................................. 54
9.7 ANNUAL FINANCIAL STATEMENTS......................................... 54
9.8 QUARTERLY FINANCIAL STATEMENTS...................................... 55
9.9 MONTHLY FINANCIAL STATEMENTS........................................ 55
9.10 OTHER REPORTS....................................................... 56
9.11 ADDITIONAL INFORMATION.............................................. 56
9.12 PROJECTED OPERATING BUDGET.......................................... 56
9.13 VARIANCES FROM OPERATING BUDGET..................................... 56
9.14 NOTICE OF SUITS, ADVERSE EVENTS..................................... 56
9.15 ERISA NOTICES AND REQUESTS.......................................... 56
9.16 ADDITIONAL DOCUMENTS................................................ 57
10. EVENTS OF DEFAULT....................................................57
11. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT ..........................60
11.1 RIGHTS AND REMEDIES................................................. 60
11.2 AGENT'S DISCRETION.................................................. 61
11.3 SETOFF...............................................................61
11.4 RIGHTS AND REMEDIES NOT EXCLUSIVE................................... 61
11.5 ALLOCATION OF PAYMENTS AFTER EVENT OF DEFAULT........................61
12. WAIVERS AND JUDICIAL PROCEEDINGS.....................................62
12.1 WAIVER OF NOTICE.....................................................62
12.2 DELAY................................................................62
12.3 JURY WAIVER..........................................................62
13. EFFECTIVE DATE AND TERMINATION.......................................62
13.1 TERM.................................................................62
13.2 TERMINATION..........................................................63
14. REGARDING AGENT......................................................63
14.1 APPOINTMENT..........................................................63
14.2 NATURE OF DUTIES.................................................... 64
14.3 LACK OF RELIANCE ON AGENT AND RESIGNATION .......................... 64
14.4 CERTAIN RIGHTS OF AGENT............................................. 65
14.5 RELIANCE.............................................................65
14.6 NOTICE OF DEFAULT................................................... 65
14.7 INDEMNIFICATION......................................................65
14.8 AGENT IN ITS INDIVIDUAL CAPACITY.................................... 65
14.9 DELIVERY OF DOCUMENTS............................................... 66
14.10 BORROWER'S UNDERTAKING TO AGENT..................................... 66
15. MISCELLANEOUS........................................................66
15.1 GOVERNING LAW........................................................66
15.2 ENTIRE UNDERSTANDING.................................................66
15.3 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; NEW LENDERS................. 69
15.4 APPLICATION OF PAYMENTS............................................. 70
15.5 INDEMNITY............................................................70
15.6 NOTICE...............................................................71
15.7 SURVIVAL.............................................................72
15.8 SEVERABILITY.........................................................72
15.9 EXPENSES.............................................................72
15.10 INJUNCTIVE RELIEF................................................... 73
15.11 CONSEQUENTIAL DAMAGES................................................73
15.12 CAPTIONS.............................................................73
15.13 COUNTERPARTS; FACSIMILE SIGNATURES...................................73
15.14 CONSTRUCTION.........................................................73
15.15 CONFIDENTIALITY; SHARING INFORMATION ................................73
15.16 PUBLICITY............................................................74
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
Revolving Credit, Term Loan and Security Agreement dated as of October 25,
2002 among U.S. RUBBER RECLAIMING, INC., a corporation organized under the laws
of the State of Indiana ("Borrower"), the financial institutions which are now
or which hereafter become a party hereto (collectively, the "Lenders" and
individually a "Lender") and PNC BANK, NATIONAL ASSOCIATION ("PNC"), as agent
for Lenders (PNC, in such capacity, the "Agent").
IN CONSIDERATION of the mutual covenants and undertakings herein contained,
Borrower, Lenders and Agent hereby agree as follows:
1. DEFINITIONS.
1.1 Accounting Terms. As used in this Agreement, the Loan Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP; provided,
however, whenever such accounting terms are used for the purposes of determining
compliance with financial covenants in this Agreement, such accounting terms
shall be defined in accordance with GAAP as applied in preparation of the
audited financial statements of Borrower for the fiscal year ended October 31,
2001.
1.2 General Terms. For purposes of this Agreement the following terms shall
have the following meanings:
"Accountants" shall have the meaning set forth in Section 9.7 hereof.
"Advances" shall mean and include the Revolving Advances, Letters of
Credit, as well as the Term Loan.
"Advance Rates" shall have the meaning set forth in Section 2.1 hereof.
"Affiliate" of any Person shall mean (a) any Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person, or (b) any Person who is a director
or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of
any Person described in clause (a) above. For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (x) to vote 5% or
more of the securities having ordinary voting power for the election of
directors of such Person, or (y) to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.
"Agent" shall have the meaning set forth in the preamble to this Agreement
and shall include its successors and assigns.
"Alternate Base Rate" shall mean, for any day, a rate per annum equal to
the higher of (i) the Base Rate in effect on such day and (ii) the Federal Funds
Rate in effect on such day plus 1/2 of 1%.
"Applicable Law" shall mean all laws, rules and regulations applicable to
the Person, conduct, transaction, covenant, Other Document or contract in
question, including all applicable common law and equitable principles; all
provisions of all applicable state, federal and foreign constitutions, statutes,
rules, regulations and orders of any Governmental Body, and all orders,
judgments and decrees of all courts and arbitrators.
"Authority" shall have the meaning set forth in Section 4.19.4.
"Base Rate" shall mean the base commercial lending rate of PNC as publicly
announced to be in effect from time to time, such rate to be adjusted
automatically, without notice, on the effective date of any change in such rate.
This rate of interest is determined from time to time by PNC as a means of
pricing some loans to its customers and is neither tied to any external rate of
interest or index nor does it necessarily reflect the lowest rate of interest
actually charged by PNC to any particular class or category of customers of PNC.
"Blocked Accounts" shall have the meaning set forth in Section 4.15.8.
"Borrower" shall have the meaning set forth in the preamble to this
Agreement and shall extend to all permitted successors and assigns of such
Person.
"Borrower's Account" shall have the meaning set forth in Section 2.9.
"Business Day" shall mean any day other than Saturday or Sunday or a legal
holiday on which commercial banks are authorized or required by law to be closed
for business in East Brunswick, New Jersey and, if the applicable Business Day
relates to any Eurodollar Rate Loans, such day must also be a day on which
dealings are carried on in the London interbank market.
"Capital Availability Agreement" shall mean the capital availability
agreement among Agent, Borrower and Obsidian Capital Partners, L.P. dated as of
even date herewith, and all amendments, modifications and restatements thereof.
"Capital Expenditures" shall mean expenditures made or liabilities incurred
for the acquisition of any fixed assets or improvements, replacements,
substitutions or additions thereto which have a useful life of more than one
year, including the total principal portion of Capitalized Lease Obligations,
which, in accordance with GAAP, would be classified as capital expenditures.
"Capitalized Lease Obligation" shall mean any Indebtedness of Borrower
represented by obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, 42 U.S.C. ss.ss.9601 et seq.
"Change of Control" shall mean (a) the occurrence of any event (whether in
one or more transactions) which results in a transfer of control of Borrower to
a Person who is not an Original Owner or (b) any merger or consolidation of or
with Borrower or sale of all or substantially all of the property or assets of
Borrower. For purposes of this definition, "control of Borrower" shall mean the
power, direct or indirect (x) to vote 50% or more of the securities having
ordinary voting power for the election of directors of Borrower or (y) to direct
or cause the direction of the management and policies of Borrower by contract or
otherwise.
"Change of Ownership" shall mean (a) 50% or more of the common stock of
Borrower is no longer owned or controlled by (including for the purposes of the
calculation of percentage ownership, any shares of common stock into which any
capital stock of Borrower held by the Original Owner is convertible or for which
any such shares of the capital stock of Borrower or of any other Person may be
exchanged and any shares of common stock issuable to Original Owner upon
exercise of any warrants, options or similar rights which may at the time of
calculation be held by Original Owner) a Person who is an Original Owner or (b)
any merger, consolidation or sale of substantially all of the property or assets
of Borrower.
"Charges" shall mean all taxes, charges, fees, imposts, levies or other
assessments, including, without limitation, all net income, gross income, gross
receipts, sales, use, ad valorem, value added, transfer, franchise, profits,
inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation and property taxes,
custom duties, fees, assessments, liens, claims and charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts, imposed by any taxing or other authority, domestic or
foreign (including, without limitation, the Pension Benefit Guaranty Corporation
or any environmental agency or superfund), upon the Collateral, Borrower or any
of its Affiliates.
"Closing Date" shall mean the date of this Agreement or such other date as
may be agreed to by the parties hereto.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time and the regulations promulgated thereunder.
"Collateral" shall mean and include:
(a) all Receivables;
(b) all Equipment;
(c) all General Intangibles;
(d) all Inventory;
(e) all Investment Property;
(f) all Real Property;
(g) all Subsidiary Stock;
(h) the Leasehold Interests;
(i) all of Borrower's right, title and interest in and to (i) its
respective goods and other property including, but not limited to, all
merchandise returned or rejected by Customers, relating to or securing
any of the Receivables; (ii) all of Borrower's rights as a consignor,
a consignee, an unpaid vendor, mechanic, artisan, or other lienor,
including stoppage in transit, setoff, detinue, replevin, reclamation
and repurchase; (iii) all additional amounts due to Borrower from any
Customer relating to the Receivables; (iv) other property, including
warranty claims, relating to any goods securing this Agreement; (v)
all of Borrower's contract rights, rights of payment which have been
earned under a contract right, instruments (including promissory
notes), documents, chattel paper (including electronic chattel paper),
warehouse receipts, deposit accounts, letters of credit and money;
(vi) all commercial tort claims (whether now existing or hereafter
arising); (vii) if and when obtained by Borrower, all real and
personal property of third parties in which Borrower has been granted
a lien or security interest as security for the payment or enforcement
of Receivables; and (viii) any other goods, personal property or real
property now owned or hereafter acquired in which Borrower has
expressly granted a security interest or may in the future grant a
security interest to Agent hereunder, or in any amendment or
supplement hereto or thereto, or under any other agreement between
Agent and Borrower;
(j) all of Borrower's ledger sheets, ledger cards, files, correspondence,
records, books of account, business papers, computers, computer
software (owned by Borrower or in which it has an interest), computer
programs, tapes, disks and documents relating to (a), (b), (c), (d),
(e), (f), (g), (h) or (i) of this Paragraph; and
(k) all proceeds and products of (a), (b), (c), (d), (e), (f), (g), (h),
(i) and (j) in whatever form, including, but not limited to: cash,
deposit accounts (whether or not comprised solely of proceeds),
certificates of deposit, insurance proceeds (including without
limitation, hazard, flood, business interruption and credit
insurance), negotiable instruments and other instruments for the
payment of money, chattel paper, security agreements, documents,
eminent domain proceeds, condemnation proceeds and tort claim
proceeds.
"Commitment Percentage" of any Lender shall mean the percentage set forth
below such Lender's name on the signature page hereof as same may be adjusted
upon any assignment by a Lender pursuant to Section 15.3.2 hereof.
"Commitment Transfer Supplement" shall mean a document in form and
substance satisfactory to Agent by which the Purchasing Lender purchases and
assumes a portion of the obligation of Lenders to make Advances under this
Agreement.
"Consents" shall mean all filings and all licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental authorities
and other third parties, domestic or foreign, necessary to carry on Borrower's
business, including, without limitation, any Consents required under all
applicable federal, state or other applicable law.
"Contract Rate" shall mean, as applicable, the Revolving Interest Rate or
the Term Loan Rate.
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with Borrower, are treated as a single employer
under Section 414 of the Code.
"Customer" shall mean and include the account debtor with respect to any
Receivable and/or the prospective purchaser of goods, services or both with
respect to any contract or contract right, and/or any party who enters into or
proposes to enter into any contract or other arrangement with Borrower, pursuant
to which Borrower is to deliver any personal property or perform any services.
"Default" shall mean an event which, with the giving of notice or passage
of time or both, would constitute an Event of Default.
"Default Rate" shall have the meaning set forth in Section 3.1 hereof.
"Defaulting Lender" shall have the meaning set forth in Section 2.17.1
hereof.
"Depository Accounts" shall have the meaning set forth in Section 4.15.8
hereof.
"Disclosure Schedule" shall mean the Disclosure Schedule and the responses
thereto provided by Borrower and delivered to Agent.
"Documents" shall have the meaning set forth in Section 8.1.3 hereof.
"Dollar" and the sign "$" shall mean lawful money of the United States of
America.
"Domestic Rate Loan" shall mean any Advance that bears interest based upon
the Alternate Base Rate.
"Early Termination Date" shall have the meaning set forth in Section 13.1
hereof.
"Earnings Before Interest and Taxes" shall mean for any period the sum of
(i) net income (or loss) of Borrower for such period (excluding extraordinary
gains [and losses], plus (ii) all interest expense of Borrower for such period,
plus (iii) all charges against income of Borrower for such period for federal,
state and local taxes actually paid.
"EBITDA" shall mean for any period the sum of (i) Earnings Before Interest
and Taxes for such period plus (ii) depreciation expenses for such period, plus
(iii) amortization expenses for such period.
"Eligible Inventory" shall mean and include Inventory excluding work in
process valued at the lower of cost or market value, determined on a
first-in-first-out basis, which is not, in Agent's opinion, obsolete, slow
moving or unmerchantable and which Agent, in its sole discretion, shall not deem
ineligible Inventory, based on such considerations as Agent may from time to
time deem appropriate including, without limitation, whether the Inventory is
subject to a perfected, first priority security interest in favor of Agent and
whether the Inventory conforms to all standards imposed by any governmental
agency, division or department thereof which has regulatory authority over such
goods or the use or sale thereof.
"Eligible Receivables" shall mean and include with respect to Borrower,
each Receivable of Borrower arising in the ordinary course of Borrower's
business and which Agent, in its sole credit judgment, shall deem to be an
Eligible Receivable, based on such considerations as Agent may from time to time
deem appropriate. A Receivable shall not be deemed eligible unless such
Receivable is subject to Agent's first priority perfected security interest and
no other Lien (other than Permitted Encumbrances), and is evidenced by an
invoice or other documentary evidence satisfactory to Agent. In addition, no
Receivable shall be an Eligible Receivable if.
(a) it arises out of a sale made by Borrower to an Affiliate of Borrower
or to a Person controlled by an Affiliate of Borrower;
(b) it is due or unpaid more than ninety (90) days after the original
invoice date;
(c) fifty percent (50%) or more of the Receivables from such Customer are
not deemed Eligible Receivables hereunder. Such percentage may, in
Agent's sole discretion, be increased or decreased from time to time;
(d) any covenant, representation or warranty contained in this Agreement
with respect to such Receivable has been breached;
(e) the Customer shall (i) apply for, suffer, or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its
property or call a meeting of its creditors, (ii) admit in writing its
inability, or be generally unable, to pay its debts as they become due
or cease operations of its present business, (iii) make a general
assignment for the benefit of creditors, (iv) commence a voluntary
case under any state or federal bankruptcy laws (as now or hereafter
in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a
petition seeking to take advantage of any other law providing for the
relief of debtors, (vii) acquiesce to, or fail to have dismissed, any
petition which is filed against it in any involuntary case under such
bankruptcy laws, or (viii) take any action for the purpose of
effecting any of the foregoing;
(f) the sale is to a Customer outside the continental United States of
America, unless the sale is on letter of credit, guaranty or
acceptance terms, in each case acceptable to Agent in its sole
discretion, provided however, that Receivables from Customers in
Canada (excluding the provinces of Quebec and Newfoundland, the
Northwest Territories and the Territory of Nunavit) to be paid in
Dollars may be Eligible Receivables up to the maximum aggregate amount
of $500,000 assuming in all cases that the Receivable is otherwise
acceptable to Agent in its reasonable credit judgment and not excluded
by the other eligibility standards set forth herein;
(g) the sale to the Customer is on a xxxx-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment or any other repurchase
or return basis or is evidenced by chattel paper;
(h) Agent believes, in its sole judgment, that collection of such
Receivable is insecure or that such Receivable may not be paid by
reason of the Customer's financial inability to pay;
(i) the Customer is the United States of America, any state or any
department, agency or instrumentality of any of them, unless Borrower
assigns its right to payment of such Receivable to Agent pursuant to
the Assignment of Claims Act of 1940, as amended (31 U.S.C.
Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section 15 et seq.) or has
otherwise complied with other applicable statutes or ordinances;
(j) the goods giving rise to such Receivable have not been shipped to the
Customer or the services giving rise to such Receivable have not been
performed by Borrower or the Receivable otherwise does not represent a
final sale;
(k) the Receivables of the Customer exceed a credit limit determined by
Agent, in its sole discretion, to the extent such Receivable exceeds
such limit;
(l) the Receivable is subject to any offset, deduction, defense, dispute,
or counterclaim, the Customer is also a creditor or supplier of
Borrower or the Receivable is contingent in any respect or for any
reason;
(m) Borrower has made any agreement with any Customer for any deduction
therefrom, except for discounts or allowances made in the ordinary
course of business for prompt payment, all of which discounts or
allowances are reflected in the calculation of the face value of each
respective invoice related thereto;
(n) any return, rejection or repossession of the merchandise has occurred
or the rendition of services has been disputed;
(o) such Receivable is not payable to Borrower; or
(p) such Receivable is not otherwise satisfactory to Agent as determined
in good faith by Agent in the exercise of its discretion in a
reasonable manner.
"Environmental Complaint" shall have the meaning set forth in Section
4.19.4
hereof.
"Environmental Laws" shall mean all federal, state and local environmental,
land use, zoning, health, chemical use, safety and sanitation laws, statutes,
ordinances and codes relating to the protection of the environment and/or
governing the use, storage, treatment, generation, transportation, processing,
handling, production or disposal of Hazardous Substances and the rules,
regulations, policies, guidelines, interpretations, decisions, orders and
directives of federal, state and local governmental agencies and authorities
with respect thereto.
"Equipment" shall mean and include all of Borrower's goods (other than
Inventory) whether now owned or hereafter acquired and wherever located
including, without limitation, all equipment, machinery, apparatus, motor
vehicles, fittings, furniture, furnishings, fixtures, parts, accessories and all
replacements and substitutions therefor or accessions thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time and the rules and regulations promulgated thereunder.
"Eurodollar Rate" shall mean for any Eurodollar Rate Loan for the then
current Interest Period relating thereto the interest rate per annum determined
by PNC by dividing (the resulting quotient rounded upwards, if necessary, to the
nearest 1/100th of 1% per annum) (i) the rate of interest determined by PNC in
accordance with its usual procedures (which determination shall be conclusive
absent manifest error) to be the average of the London interbank offered rates
for U.S. Dollars quoted by the British Bankers' Association as set forth on
Bridge Information Services (formerly known as Dow Xxxxx Markets Service) (or
appropriate successor or, if British Banker's Association or its successor
ceases to provide such quotes, a comparable replacement determined by PNC)
display page 3750 (or such other display page on the Bridge Information Services
system as may replace display page 3750) two (2) Business Days prior to the
first day of such Interest Period for an amount comparable to such Eurodollar
Rate Loan and having a borrowing date and a maturity comparable to such Interest
Period by (ii) a number equal to 1.00 minus the Reserve Percentage. The
Eurodollar Rate may also be expressed by the following formula:
Average of London interbank offered rates quoted by BBA as shown on Eurodollar
Rate = Bridge Information Services display page 3750 or appropriate successor
1.00 - Reserve Percentage.
"Eurodollar Rate Loan" shall mean an Advance at any time that bears
interest based on the Eurodollar Rate.
"Event of Default" shall have the meaning set forth in Article 10 hereof.
"Federal Funds Rate" shall mean, for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day which is a Business Day, the average of quotations for such day on such
transactions received by PNC from three Federal funds brokers of recognized
standing selected by PNC.
"Fixed Charge Coverage Ratio" shall mean and include, with respect to any
fiscal period, the ratio of (a) EBITDA, minus unfinanced capitalized
expenditures made during such period, minus cash taxes paid during such period
to (b) all Senior Debt Payments, plus all Subordinated Debt Payments made during
such period, plus all dividends and distributions made during such period.
"Formula Amount" shall have the meaning set forth in Section 2.1.
"GAAP" shall mean generally accepted accounting principles in the United
States of America in effect from time to time.
"General Intangibles" shall mean and include all of Borrower's general
intangibles, whether now owned or hereafter acquired including, without
limitation, all payment intangibles, all choses in action, causes of action,
corporate or other business records, inventions, designs, patents, patent
applications, equipment formulations, manufacturing procedures, quality control
procedures, trademarks, trademark applications, service marks, trade secrets,
goodwill, copyrights, design rights, software, computer information, source
codes, codes, records and dates, registrations, licenses, franchises, customer
lists, tax refunds, tax refund claims, computer programs, all claims under
guaranties, security interests or other security held by or granted to Borrower
to secure payment of any of the Receivables by a Customer (other than to the
extent covered by Receivables) all rights of indemnification and all other
intangible property of every kind and nature (other than Receivables).
"Governmental Body" shall mean any nation or government, any state or other
political subdivision thereof or any entity exercising the legislative,
judicial, regulatory or administrative functions of or pertaining to a
government.
"Guarantor" shall mean any Person who may hereafter guarantee payment or
performance of the whole or any part of the Obligations and "Guarantors" means
collectively all such Persons.
"Guarantor Security Agreement" shall mean any Security Agreement executed
by any Guarantor in favor of Agent securing the Guaranty of such Guarantor.
"Guaranty" shall mean any guaranty of the obligations of Borrower executed
by a Guarantor in favor of Agent for its benefit and for the ratable benefit of
Lenders.
"Hazardous Discharge" shall have the meaning set forth in Section 4.19.4
hereof.
"Hazardous Substance" shall mean, without limitation, any flammable
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or
related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of
the New York State Environmental Conservation Law or any other applicable
Environmental Law and in the regulations adopted pursuant thereto.
"Hazardous Wastes" shall mean all waste materials subject to regulation
under CERCLA, RCRA or applicable state law, and any other applicable Federal and
state laws now in force or hereafter enacted relating to hazardous waste
disposal.
"Indebtedness" of a Person at a particular date shall mean all obligations
of such Person which in accordance with GAAP would be classified upon a balance
sheet as liabilities (except capital stock and surplus earned or otherwise) and
in any event, without limitation by reason of enumeration, shall include all
indebtedness, debt and other similar monetary obligations of such Person whether
direct or guaranteed, and all premiums, if any, due at the required prepayment
dates of such indebtedness, and all indebtedness secured by a Lien on assets
owned by such Person, whether or not such indebtedness actually shall have been
created, assumed or incurred by such Person. Any indebtedness of such Person
resulting from the acquisition by such Person of any assets subject to any Lien
shall be deemed, for the purposes hereof, to be the equivalent of the creation,
assumption and incurring of the indebtedness secured thereby, whether or not
actually so created, assumed or incurred.
"Ineligible Security" shall mean any security which may not be underwritten
or dealt in by member banks of the Federal Reserve System under Section 16 of
the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended.
"Interest Period" shall mean the period provided for any Eurodollar Rate
Loan pursuant to Section 2.3.2.
"Inventory" shall mean and include all of Borrower's now owned or hereafter
acquired goods, merchandise and other personal property, wherever located, to be
furnished under any consignment arrangement, contract of service or held for
sale or lease, all raw materials, work in process, finished goods and materials
and supplies of any kind, nature or description which are or might be used or
consumed in Borrower's business or used in selling or furnishing such goods,
merchandise and other personal property, and all documents of title or other
documents representing them.
"Inventory Advance Rate" shall have the meaning set forth in Section 2.1.2
hereof.
"Investment Property" shall mean and include all of Borrower's now owned or
hereafter acquired securities (whether certificated or uncertificated),
securities entitlements, securities accounts, commodities contracts and
commodities accounts.
"Issuer" shall mean any Person who issues a Letter of Credit and/or accepts
a draft pursuant to the terms hereof.
"Leasehold Interests" shall mean all of Borrower's right, title and
interest in and to the premises listed on the Disclosure Schedule, and all other
premises in which Borrower may hereafter hold an interest.
"Lender" and "Lenders" shall have the meaning ascribed to such term in the
preamble to this Agreement and shall include each Person which becomes a
transferee, successor or assign of any Lender.
"Letter of Credit Fees" shall have the meaning set forth in Section 3.2.
"Letters of Credit" shall have the meaning set forth in Section 2.10.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, security interest, lien (whether statutory or otherwise), Charge,
claim or encumbrance, or preference, priority or other security agreement or
preferential arrangement held or asserted in respect of any asset of any kind or
nature whatsoever including, without limitation, any conditional sale or other
title retention agreement, any lease having substantially the same economic
effect as any of the foregoing, and the filing of, or agreement to give, any
financing statement under the Uniform Commercial Code or comparable law of any
jurisdiction.
"Loan Documents" shall mean the Mortgage, the Capital Availability
Agreement, the Note, the Disclosure Schedule, any Guaranty, any Guarantor
Security Agreement and any and all other agreements, instruments and documents,
including, without limitation, guaranties, pledges, powers of attorney,
consents, interest or currency swap agreements or other similar agreements and
all other writings heretofore, now or hereafter executed by Borrower or any
Guarantor and/or delivered to Agent or any Lender in respect of the transactions
contemplated by this Agreement.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
condition, operations, assets, business or prospects of Borrower, (b) Borrower's
ability to pay the Obligations in accordance with the terms thereof, (c) the
value of the Collateral, or Agent's Liens on the Collateral or the priority of
any such Lien or (d) the practical realization of the benefits of Agent's and
each Lender's rights and remedies under this Agreement and the Loan Documents.
"Maximum Loan Amount" shall mean Eight Million Dollars ($8,000,000) less
repayments of the Tern Loan.
"Maximum Revolvine Advance Amount" shall mean -Four Million Dollars
($4,000,000).
"Mezzanine Documentation" shall mean collectively, the subordinated loan
documents between Borrower and Mezzanine Lender.
"Mezzanine Lender" shall mean individually and collectively, Obsidian
Enterprises, Inc. and DC Investments, LLC.
"Mortgage" shall mean the mortgage on the Real Property securing the
Obligations together with all extensions, renewals, amendments, supplements,
modifications, substitutions and replacements thereto and thereof.
"Multiemaloyer Plan" shall mean a "multiemployer plan" as defined in
Sections 3(37) and 4001(a)(3) of ERISA.
"Note" shall mean collectively, the Term Note and the Revolving Credit
Note.
"Obligations" shall mean and include any and all loans, advances, debts,
liabilities, obligations, covenants and duties owing by the Borrower to Lenders
or Agent or to any other direct or indirect subsidiary or affiliate of Agent or
any Lender of any kind or nature, present or future (including, without
limitation, any interest accruing thereon after maturity, or after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding),
whether or not evidenced by any note, guaranty or other instrument, whether
arising under any agreement, instrument or document, (including, without
limitation, this Agreement and the Loan Documents) whether or not for the
payment of money, whether arising by reason of an extension of credit, opening
of a letter of credit, loan, equipment lease or guarantee, under any interest or
currency swap, future, option or other similar agreement, or in any other
manner, whether arising out of overdrafts or deposit or other accounts or
electronic funds transfers (whether through automated clearing houses or
otherwise) or out of the Agent's or any Lenders non-receipt of or inability to
collect funds or otherwise not being made whole in connection with depository
transfer check or other similar arrangements, whether direct or indirect
(including those acquired by assignment or participation), absolute or
contingent, joint or several, due or to become due, now existing or hereafter
arising, contractual or tortious, liquidated or unliquidated, regardless of how
such indebtedness or liabilities arise or by what agreement or instrument they
may be evidenced or whether evidenced by any agreement or instrument, including,
but not limited to, any and all of Borrower's Indebtedness and/or liabilities
under this Agreement, the Loan Documents or under any other agreement between
Agent or Lenders and Borrower and any amendments, extensions, renewals or
increases and all costs and expenses of Agent and any Lender incurred in the
documentation, negotiation, modification, enforcement, collection or otherwise
in connection with any of the foregoing, including but not limited to reasonable
attorneys' fees and expenses and all obligations of Borrower to Agent or Lenders
to perform acts or refrain from taking any action.
"Original Owner" shall mean Obsidian Enterprises, Inc.
"Out-of-Formula Loans" shall have the meaning set forth in Section 15.2.2.
"Parent" of any Person shall mean a corporation or other
entity owning, directly or indirectly at least 50% of the shares of stock or
other ownership interests having ordinary voting power to elect a majority of
the directors of the Person, or other Persons performing similar functions for
any such Person.
"Participant" shall mean each Person who shall be granted the right by any
Lender to participate in any of the Advances and who shall have entered into a
participation agreement in form and substance satisfactory to such Lender.
"Payment Office" shall mean initially Xxx Xxxxx Xxxxxx Xxxx., 0xx Xxxxx,
Xxxx Xxxxxxxxx, XX 00000; thereafter, such other office of Agent, if any, which
it may designate by notice to Borrower and to each Lender to be the Payment
Office.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permitted Encumbrances" shall mean (a) Liens in favor of Agent for the
benefit of Agent and Lenders; (b) Liens for taxes, assessments or other
governmental charges not delinquent or being contested in good faith and by
appropriate proceedings and with respect to which proper reserves have been
taken by Borrower; provided, that, the Lien shall have no effect on the priority
of the Liens in favor of Agent or the value of the assets in which Agent has
such a Lien and a stay of enforcement of any such Lien shall be in effect; (c)
Liens disclosed in the financial statements referred to in Section 5.5, the
existence of which Agent has consented to in writing; (d) deposits or pledges to
secure obligations under worker's compensation, social security or similar laws,
or under unemployment insurance; (e) deposits or pledges to secure bids,
tenders, contracts (other than contracts for the payment of money), leases,
statutory obligations, surety and appeal bonds and other obligations of like
nature arising in the ordinary course of Borrower's business; (f) judgment Liens
that have been stayed or bonded and mechanics', workers', materialmen's or other
like Liens arising in the ordinary course of Borrower's business with respect to
obligations which are not due or which are being contested in good faith by
Borrower; and (g) Liens disclosed on Schedule 1.2.
"Person" shall mean any individual, sole proprietorship, partnership,
corporation, business trust, joint stock company, trust, unincorporated
organization, association, limited liability company, institution, public
benefit corporation, joint venture, entity or government (whether federal,
state, county, city, municipal or otherwise, including any instrumentality,
division, agency, body or department thereof).
"Plan" shall mean any employee benefit plan within the meaning of Section
3(3) of ERISA, maintained for employees of Borrower or any member of the
Controlled Group or any such Plan to which Borrower or any member of the
Controlled Group is required to contribute on behalf of any of its employees.
"Purchasing Lender" shall have the meaning set forth in Section 15.3.3
hereof.
"RCRA" shall mean the Resource Conservation and Recovery Act, 42
U.S.C.ss.ss.6901 et seq., as same may be amended from time to time.
"Real Property" shall mean all of Borrower's right, title and interest in
and to the owned and leased premises identified on the Disclosure Schedule.
"Receivables" shall mean and include, as to Borrower, all of Borrower's
accounts, contract rights, instruments (including those evidencing indebtedness
owed to Borrower by its Affiliates), documents, chattel paper (including
electronic chattel paper), general intangibles relating to accounts, drafts and
acceptances, credit card receivables and all other forms of obligations owing to
Borrower arising out of or in connection with the sale or lease of Inventory or
the rendition of services, all supporting obligations, guarantees and other
security therefor, whether secured or unsecured, now existing or hereafter
created, and whether or not specifically sold or assigned to Agent hereunder.
"Receivables Advance Rate" shall have the meaning set forth in Section
2.1.1 hereof.
"Release" shall have the meaning set forth in Section 5.7.3 hereof.
"Reportable Event" shall mean a reportable event described in Section
4043(b) of ERISA or the regulations promulgated thereunder.
"Required Lenders" shall mean Lenders holding greater than fifty percent
(50%) of the Advances and, if no Advances are outstanding, shall mean Lenders
holding greater than fifty percent (50%) of the Commitment Percentages.
"Reserve Percentage" shall mean the maximum effective percentage in effect
on any day as prescribed by the Board of Governors of the Federal Reserve System
(or any successor) for determining the reserve requirements (including, without
limitation, supplemental, marginal and emergency reserve requirements) with
respect to eurocurrency funding.
"Revolving Advances" shall mean Advances made other than Letters of Credit
and the Term Loan.
"Revolving Credit Note" shall mean the promissory note referred to in
Section 2.1.1 hereof.
"Revolving Interest Rate" shall mean an interest rate per annum equal to
(a) the Alternate Base Rate with respect to Domestic Rate Loans or (b) the sum
of the Eurodollar Rate plus three percent (3.00%) with respect to Eurodollar
Rate Loans.
"Section 20 Subsidiary" shall mean the Subsidiary of the bank holding
company controlling PNC, which Subsidiary has been granted authority by the
Federal Reserve Board to underwrite and deal in certain Ineligible Securities.
"Senior Debt Payments" shall mean and include all cash actually expended by
Borrower to make (a) interest payments on any Advances hereunder, plus (b)
scheduled principal payments on the Term Loan, plus (c) payments for all fees,
commissions and charges set forth herein and with respect to any Advances, plus
(d) capitalized lease payments, plus (e) payments with respect to any other
Indebtedness for borrowed money.
"Settlement Date" shall mean the Closing Date and thereafter Wednesday or
Thursday of each week or more frequently if Agent deems appropriate unless such
day is not a Business Day in which case it shall be the next succeeding Business
Day.
"Subordinated Debt Payments" shall mean and include all cash actually
expended to make payments of principal and interest on the Subordinated Note.
"Subordinated Loan" shall mean the loans evidenced by the Subordinated
Note.
"Subordinated Note" shall mean individually and collectively, the
subordinated promissory notes issued by Borrower in favor of each Mezzanine
Lender dated as of even date herewith, in the principal sum of $700,000 each.
"Subordination Agreement" shall mean the Subordination Agreement dated as
of even date, herewith among Agent, Borrower and Mezzanine Lender.
"Subsidiary" shall mean a corporation or other entity of whose shares of
stock or other ownership interests having ordinary voting power (other than
stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
"Subsidiary Stock" shall mean all of the issued and outstanding shares of
the subsidiaries of the Borrower, if any.
"Tangible Net Worth" shall mean, at a particular date, (a) the aggregate
amount of all assets of Borrower as may be properly classified as such in
accordance with GAAP consistently applied excluding such other assets as are
properly classified as intangible assets under GAAP, less (b) the aggregate
amount of all liabilities of Borrower.
"Term" shall have the meaning set forth in Section 13.1 hereof.
"Term Loan" shall mean the Advances made pursuant to Section 2.5 hereof.
"Term Loan Rate" shall mean an interest rate per annum equal to (a) the sum
of the Alternate Base Rate plus one-half percent (0.50%) with respect to
Domestic Rate Loans or (b) the sum of the Eurodollar Rate plus three and
one-half percent (3.50%) with respect to Eurodollar Rate Loans.
"Term Note" shall mean the promissory note described in Section 2.5 hereof.
"Termination Event" shall mean (i) a Reportable Event with respect to any
Plan or Multiemployer Plan; (ii) the withdrawal of Borrower or any member of the
Controlled Group from a Plan or Multiemployer Plan during a plan year in which
such entity was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA; (iii) the providing of notice of intent to terminate a Plan in a distress
termination described in Section 4041(c) of ERISA; (iv) the institution by the
PBGC of proceedings to terminate a Plan or Multiemployer Plan; (v) any event or
condition (a) which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan or
Multiemployer Plan, or (b) that may result in termination of a Multiemployer
Plan pursuant to Section 4041 A of ERISA; or (vi) the partial or complete
withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of Borrower or
any member of the Controlled Group from a Multiemployer Plan.
"Toxic Substance" shall mean and include any material present on the Real
Property or the Leasehold Interests which has been shown to have significant
adverse effect on human health or which is subject to regulation under the Toxic
Substances Control Act (TSCA), 15 U.S.C. xx.xx. 2601 et seq., applicable state
law, or any other applicable Federal or state laws now in force or hereafter
enacted relating to toxic substances. "Toxic Substance" includes but is not
limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.
"Transferee" shall have the meaning set forth in Section 15.3.2 hereof.
"Undrawn Availability" at a particular date shall mean an amount equal to
(a) the lesser of (i) the Formula Amount or (ii) the Maximum Revolving Advance
Amount, minus (b) the sum of (i) the outstanding amount of Advances (other than
the Term Loan) plus (ii) all amounts due and owing to Borrower's trade creditors
which are outstanding beyond 60 days after the due date thereof, plus (iii) fees
and expenses of Agent or Lenders for which Borrower is liable but which have not
been paid or charged to Borrower's Account.
"Week" shall mean the time period commencing with the opening of business
on a Wednesday and ending on the end of business the following Tuesday.
1.3 Uniform Commercial Code Terms. All terms used herein and defined in the
Uniform Commercial Code as adopted in the State of Indiana from time to time
shall have the meaning given therein unless otherwise defined herein. To the
extent the definition of any category or type of collateral is expanded by any
amendment, modification or revision to the Uniform Commercial Code, such
expanded definition will apply automatically as of the date of such amendment,
modification or revision.
1.4 Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. Wherever appropriate in the context, terms
used herein in the singular also include the plural and vice versa. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. Unless otherwise provided, all
references to any instruments or agreements to which Agent is a party,
including, without limitation, references to any of the Loan Documents, shall
include any and all modifications or amendments thereto and any and all
extensions or renewals thereof.
2. ADVANCES, PAYMENTS.
2.1 Revolving Advances. Subject to the terms and conditions set forth in
this Agreement including, without limitation, Section 2.2, each Lender,
severally and not jointly, will make Revolving Advances to Borrower in aggregate
amounts outstanding at any time equal to such Lender's Commitment Percentage of
the lesser of (x) the Maximum Revolving Advance Amount less the aggregate amount
of outstanding Letters of Credit or (y) an amount equal to the sum of:
2.1.1 up to eighty-five percent (85%), subject to the provisions of Section
2.2 hereof ("Receivables Advance Rate"), of Eligible Receivables, plus
2.1.2 up to the lesser of (A) forty-two percent (42%), subject to the
provisions of Section 2.2 hereof ("Inventory Advance Rate"), of the value of the
Eligible Inventory (the Receivables Advance Rate and the Inventory Advance Rate
shall be referred to collectively, as the "Advance Rates") or (B) One Million
Five Hundred Thousand Dollars ($1,500,000) in the aggregate at any one time,
minus
2.1.3 the aggregate amount of outstanding Letters of Credit, minus
2.1.4 such reserves as Agent may reasonably deem proper and necessary from
time to time.
The amount derived from the sum of (x) Sections 2.1.1 and 2.1.2 minus (y)
Sections 2.1.3 and 2.1.4 at any time and from time to time shall be referred to
as the "Formula Amount". The Revolving Advances shall be evidenced by one or
more secured promissory notes (collectively, the "Revolving Credit Note").
2.2 Discretionary Rights. The Advance Rates may be increased or decreased
by Agent at any time and from time to time in the exercise of its reasonable
discretion. Borrower consents to any such increases or decreases and
acknowledges that decreasing the Advance Rates or increasing or imposing the
reserves may limit or restrict Advances requested by Borrower.
2.3 Procedure for Revolving Advances Borrowing.
2.3.1 Borrower may notify Agent prior to 11:00 a.m. on a Business Day of
Borrower's request to incur, on that day, a Revolving Advance hereunder. Should
any amount required to be paid as interest hereunder, or as fees or other
charges under this Agreement or any other agreement with Agent or Lenders, or
with respect to any other Obligation, become due, same shall be deemed a request
for a Revolving Advance as of the date such payment is due, in the amount
required to pay in full such interest, fee, charge or Obligation under this
Agreement or any other agreement with Agent or Lenders, and such request shall
be irrevocable.
2.3.2 Notwithstanding the provisions of Section 2.3.1 above, in the event
Borrower desires to obtain a Eurodollar Rate Loan, Borrower shall give Agent at
least three (3) Business Days' prior written notice, specifying (i) the date of
the proposed borrowing (which shall be a Business Day), (ii) the type of
borrowing and the amount on the date of such Advance to be borrowed, which
amount shall be an integral multiple of $100,000, and (iii) the duration of the
first Interest Period therefor. Interest Periods for Eurodollar Rate Loans shall
be for one, two, or three months; provided, if an Interest Period would end on a
day that is not a Business Day, it shall end on the next succeeding Business Day
unless such day falls in the next succeeding calendar month in which case the
Interest Period shall end on the next preceding Business Day. No Eurodollar Rate
Loan shall be made available to Borrower during the continuance of a Default or
an Event of Default.
2.3.3 Each Interest Period of a Eurodollar Rate Loan shall commence on the
date such Eurodollar Rate Loan is made and shall end on such date as Borrower
may elect as set forth above provided that the exact length of each Interest
Period shall be determined in accordance with the practice of the interbank
market for offshore Dollar deposits and no Interest Period shall end after the
last day of the Term.
Borrower shall elect the initial Interest Period applicable to a Eurodollar
Rate Loan by its notice of borrowing given to Agent pursuant to Section 2.3.2 or
by its notice of conversion given to Agent pursuant to Section 2.3.4, as the
case may be. Borrower shall elect the duration of each succeeding Interest
Period by giving irrevocable written notice to Agent of such duration not less
than three (3) Business Days prior to the last day of the then current Interest
Period applicable to such Eurodollar Rate Loan. If Agent does not receive timely
notice of the Interest Period elected by Borrower, Borrower shall be deemed to
have elected to convert to a Domestic Rate Loan subject to Section 2.3.4
hereinbelow.
2.3.4 Provided that no Event of Default shall have occurred and be
continuing, Borrower may, on the last Business Day of the then current Interest
Period applicable to any outstanding Eurodollar Rate Loan, or on any Business
Day with respect to Domestic Rate Loans, convert any such loan into a loan of
another type in the same aggregate principal amount provided that any conversion
of a Eurodollar Rate Loan shall be made only on the last Business Day of the
then current Interest Period applicable to such Eurodollar Rate Loan. If
Borrower desires to convert a loan, Borrower shall give Agent not less than
three (3) Business Days' prior written notice to convert from a Domestic Rate
Loan to a Eurodollar Rate Loan or one (1) Business Day's prior written notice to
convert from a Eurodollar Rate Loan to a Domestic Rate Loan, specifying the date
of such conversion, the loans to be converted and if the conversion is from a
Domestic Rate Loan to any other type of loan, the duration of the first Interest
Period therefor. After giving effect to each such conversion, there shall not be
outstanding more than three (3) Eurodollar Rate Loans, in the aggregate.
2.3.5 At its option and upon three (3) Business Days' prior written notice,
Borrower may prepay the Eurodollar Rate Loans in whole at any time or in part
from time to time with accrued interest on the principal being prepaid to the
date of such repayment. Borrower shall specify the date of prepayment of
Advances which are Eurodollar Rate Loans and the amount of such prepayment. In
the event that any prepayment of a Eurodollar Rate Loan is required or permitted
on a date other than the last Business Day of the then current Interest Period
with respect thereto, Borrower shall indemnify Agent and Lenders therefor in
accordance with Section 2.3.6 hereof.
2.3.6 Borrower shall indemnify Agent and Lenders and hold Agent and Lenders
harmless from and against any and all losses or expenses that Agent and Lenders
may sustain or incur as a consequence of any prepayment, conversion of or any
default by Borrower in the payment of the principal of or interest on any
Eurodollar Rate Loan or failure by Borrower to complete a borrowing of, a
prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof
has been given, including, but not limited to, any interest payable by Agent or
Lenders to lenders of funds obtained by it in order to make or maintain its
Eurodollar Rate Loans hereunder. A certificate as to any additional amounts
payable pursuant to the foregoing sentence submitted by Agent or any Lender to
Borrower shall be conclusive absent manifest error.
2.3.7 Notwithstanding any other provision hereof, if any applicable law,
treaty, regulation or directive, or any change therein or in the interpretation
or application thereof, shall make it unlawful for any Lender (for purposes of
this Section 2.3.7, the term "Lender" shall include any Lender and the office or
branch where any Lender or any corporation or bank controlling such Lender makes
or maintains any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate
Loans, the obligation of Lenders to make Eurodollar Rate Loans hereunder shall
forthwith be cancelled and Borrower shall, if any affected Eurodollar Rate Loans
are then outstanding, promptly upon request from Agent, either pay all such
affected Eurodollar Rate Loans or convert such affected Eurodollar Rate Loans
into loans of another type. If any such payment or conversion of any Eurodollar
Rate Loan is made on a day that is not the last day of the Interest Period
applicable to such Eurodollar Rate Loan, Borrower shall pay Agent, upon Agent's
request, such amount or amounts as may be necessary to compensate Lenders for
any loss or expense sustained or incurred by Lenders in respect of such
Eurodollar Rate Loan as a result of such payment or conversion, including (but
not limited to) any interest or other amounts payable by Lenders to lenders of
funds obtained by Lenders in order to make or maintain such Eurodollar Rate
Loan. A certificate as to any additional amounts payable pursuant to the
foregoing sentence submitted by Lenders to Borrower shall be conclusive absent
manifest error.
2.4 Disbursement of Advance Proceeds. All Advances shall be disbursed from
whichever office or other place Agent may designate from time to time and,
together with any and all other Obligations of Borrower to Agent or Lenders,
shall be charged to Borrower's Account on Agent's books. During the Term,
Borrower may use the Revolving Advances by borrowing, prepaying and reborrowing,
all in accordance with the terms and conditions hereof. The proceeds of each
Revolving Advance requested by Borrower or deemed to have been requested by
Borrower under Section 2.3.1 hereof shall, with respect to requested Revolving
Advances to the extent Lenders make such Revolving Advances, be made available
to Borrower on the day so requested by way of credit to Borrower's operating
account at PNC, or such other bank as Borrower may designate following
notification to Agent, in immediately available federal funds or other
immediately available funds or, with respect to Revolving Advances deemed to
have been requested by Borrower, be disbursed to Agent to be applied to the
outstanding Obligations giving rise to such deemed request.
2.5 Term Loan. Subject to the terms and conditions of this Agreement, each
Lender, severally and not jointly, will make a Term Loan to Borrower in the sum
equal to such Lender's Commitment Percentage of Four Million Dollars
($4,000,000). The Term Loan shall be advanced on the Closing Date and shall be,
with respect to principal, payable as follows, subject to acceleration upon the
occurrence of an Event of Default under this Agreement or termination of this
Agreement: Principal will be due and payable in monthly installments of Forty
Seven Thousand Six Hundred Nineteen Dollars ($47,619) each, commencing on
November 1, 2002 and continuing on the first day of each month thereafter.
Accrued interest at the applicable Term Loan Rate will be due and payable on the
due date of each principal payment. The remaining principal balance and accrued
interest on the Term Loan will be due and payable in full on the earlier of the
last day of the Term or the maturity date set forth in the Tern Note, whichever
is sooner. The Term Loan shall be evidenced by one or more secured promissory
notes (collectively, the "Term Note").
2.6 Maximum Advances. The aggregate balance of Revolving Advances
outstanding at any time shall not exceed the lesser of (a) the Maximum Revolving
Advance Amount or (b) the Formula Amount.
2.7 Repayment of Advances.
2.7.1 The Revolving Advances shall be due and payable in full on the last
day of the Term subject to earlier prepayment as herein provided. The Term Loan
shall be due and payable as provided in Section 2.5. hereof and in the Term
Note, subject to mandatory prepayments as herein provided.
2.7.2 Borrower recognizes that the amounts evidenced by checks, notes,
drafts or any other items of payment relating to and/or proceeds of Collateral
may not be collectible by Agent on the date received. In consideration of
Agent's agreement to conditionally credit Borrower's Account as of the Business
Day on which Agent receives those items of payment, Borrower agrees that, in
computing the charges under this Agreement, all items of payment shall be deemed
applied by Agent on account of the Obligations one (1) Business Day after (i)
the Business Day Agent receives such payments via wire transfer or electronic
depository check or (ii) in the case of payments received by Agent in any other
form, the Business Day such payment constitutes good funds in Agent's account.
Agent is not, however, required to credit Borrower's Account for the amount of
any item of payment which is unsatisfactory to Agent and Agent may charge
Borrower's Account for the amount of any item of payment which is returned to
Agent unpaid.
2.7.3 All payments of principal, interest and other amounts payable
hereunder, or under any of the Loan Documents shall be made to Agent at the
Payment Office not later than 1:00 P.M. (New York time) on the due date therefor
in lawful money of the United States of America in federal funds or other funds
immediately available to Agent. Agent shall have the right to effectuate payment
on any and all Obligations due and owing hereunder by charging Borrower's
Account or by making Advances as provided in Section 2.3 hereof.
2.7.4 Borrower shall pay principal, interest, and all other amounts payable
hereunder, or under any related agreement, without any deduction whatsoever,
including, but not limited to, any deduction for any setoff or counterclaim.
2.8 Repayment of Excess Advances. The aggregate balance of Advances
outstanding at any time in excess of the maximum amount of Advances permitted
hereunder shall be immediately due and payable without the necessity of any
demand, at the Payment Office, whether or not a Default or Event of Default has
occurred.
2.9 Statement of Account. Agent shall maintain, in accordance with its
customary procedures, a loan account ("Borrower's Account") in the name of
Borrower in which shall be recorded the date and amount of each Advance made by
Agent and the date and amount of each payment in respect thereof; provided,
however, the failure by Agent to record the date and amount of any Advance shall
not adversely affect Agent or any Lender. Each month, Agent shall send to
Borrower a statement showing the accounting for the Advances made, payments made
or credited in respect thereof, and other transactions between Agent and
Borrower, during such month. The monthly statements shall be deemed correct and
binding upon Borrower in the absence of manifest error and shall constitute an
account stated between Lenders and Borrower unless Agent receives a written
statement of Borrower's specific exceptions thereto within thirty (30) days
after such statement is received by Borrower. The records of Agent with respect
to the loan account shall be conclusive evidence absent manifest error of the
amounts of Advances and other charges thereto and of payments applicable
thereto.
2.10 Letters of Credit. Subject to the terms and conditions hereof, Agent
shall (a) issue or cause the issuance of Letters of Credit ("Letters of Credit")
on behalf of Borrower; provided, however, that Agent will not be required to
issue or cause to be issued any Letters of Credit to the extent that the face
amount of such Letters of Credit would then cause the sum of (i) the outstanding
Revolving Advances plus (ii) outstanding Letters of Credit to exceed the lesser
of (x) the Maximum Revolving Advance Amount or (y) the Formula Amount. The
maximum amount of outstanding Letters of Credit shall not exceed Two Hundred
Fifty Thousand Dollars ($250,000) in the aggregate at any time. All
disbursements or payments related to Letters of Credit shall be deemed to be
Domestic Rate Loans consisting of Revolving Advances and shall bear interest at
the Revolving Interest Rate for Domestic Rate Loans; Letters of Credit that have
not been drawn upon shall not bear interest.
2.11 Issuance of Letters of Credit.
2.11.1 Borrower may request Agent to issue or cause the issuance of a
Letter of Credit by delivering to Agent at the Payment Office, Agent's form of
Letter of Credit Application (the "Letter of Credit Application") completed to
the satisfaction of Agent; and, such other certificates, documents and other
papers and information as Agent may reasonably request. Borrower also has the
right to give instructions and make agreements with respect to any application,
any applicable letter of credit and security agreement, any applicable letter of
credit reimbursement agreement and/or any other applicable agreement, any letter
of credit and the disposition of documents, disposition of any unutilized funds,
and to agree with Agent upon any amendment, extension or renewal of any Letter
of Credit.
2.11.2 Each Letter of Credit shall, among other things, (i) provide for the
payment of sight drafts or acceptances of usance drafts when presented for honor
thereunder in accordance with the terms thereof and when accompanied by the
documents described therein and (ii) have an expiry date not later than six (6)
months after such Letter of Credit's date of issuance and in no event later than
the last day of the Term. Each Letter of Credit shall be subject to the Uniform
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500, and any amendments or revision thereof
adhered to by the Issuer and, to the extent not inconsistent therewith, the laws
of the State of Indiana.
2.11.3 Agent shall use its reasonable efforts to notify Lenders of the
request by Borrower for a Letter of Credit hereunder.
2.11.4 Agent shall have absolute discretion whether to accept any draft.
Without in any way limiting Agent's absolute discretion whether to accept any
draft, Borrower will not present for acceptance any draft, and Agent will
generally not accept any drafts (i) that arise out of transactions involving the
sale of goods by Borrower not in the ordinary course of its business, (ii) that
involve a sale to an Affiliate of Borrower, (iii) that involve any purchase for
which Agent has not received all related documents, instruments and forms
requested by Agent, (iv) for which Agent is unable to locate a purchaser in the
ordinary course of business on standard terms, or (v) that is not eligible for
discounting with Federal Reserve Banks pursuant to paragraph 7 of Section 13 of
the Federal Reserve Act, as amended.
2.12 Requirements For Issuance of Letters of Credit.
2.12.1 In connection with the issuance of any Letter of Credit, Borrower
shall indemnify, save and hold Agent, each Lender and each Issuer harmless from
any loss, cost, expense or liability, including, without limitation, payments
made by Agent, any Lender or any Issuer and expenses and reasonable attorneys'
fees incurred by Agent, any Lender or Issuer arising out of, or in connection
with, any Letter of Credit to be issued or created for Borrower. Borrower shall
be bound by Agent's or any Issuer's regulations and good faith interpretations
of any Letter of Credit issued or created for Borrower's Account, although this
interpretation may be different from its own; and, neither Agent, nor any
Lender, nor any Issuer nor any of their correspondents shall be liable for any
error, negligence, or mistakes, whether of omission or commission, in following
Borrower's instructions or those contained in any Letter of Credit or of any
modifications, amendments or supplements thereto or in issuing or paying any
Letter of Credit, except for Agent's, any Lender's, any Issuer's or such
correspondents' willful misconduct.
2.12.2 Borrower shall authorize and direct any Issuer to name Borrower as
the "Applicant" or "Account Party" of each Letter of Credit. If Agent is not the
Issuer of any Letter of Credit, Borrower shall authorize and direct the Issuer
to deliver to Agent all instruments, documents, and other writings and property
received by the Issuer pursuant to the Letter of Credit and to accept and rely
upon Agent's instructions and agreements with respect to all matters arising in
connection with the Letter of Credit or the application therefor.
2.12.3 In connection with all Letters of Credit issued or caused to be
issued by Agent under this Agreement, Borrower hereby appoints Agent, or its
designee, as its attorney, with full power and authority if an Event of Default
or Default shall have occurred, (i) to sign and/or endorse Borrower's name upon
any warehouse or other receipts, and letter of credit applications; (ii) to sign
Borrower's name on bills of lading; (iii) to clear Inventory through the United
States of America Customs Department ("Customs") in the name of Borrower or
Agent or Agent's designee, and to sign and deliver to Customs officials powers
of attorney in the name of Borrower for such purpose; and (iv) to complete in
Borrower's name or Agent's, or in the name of Agent's designee, any order, sale
or transaction, obtain the necessary documents in connection therewith, and
collect the proceeds thereof. Neither Agent nor its attorneys will be liable for
any acts or omissions nor for any error of judgment or mistakes of fact or law,
except for Agent's or its attorney's willful misconduct. This power, being
coupled with an interest, is irrevocable as long as any Letters of Credit remain
outstanding.
2.12.4 Each Lender shall to the extent of the percentage amount equal to
the product of such Lender's Commitment Percentage times the aggregate amount of
all unreimbursed reimbursement obligations arising from disbursements made or
obligations incurred with respect to the Letters of Credit be deemed to have
irrevocably purchased an undivided participation in each such unreimbursed
reimbursement obligation. In the event that at the time a disbursement is made
the unpaid balance of Revolving Advances exceeds or would exceed, with the
making of such disbursement, the lesser of the Maximum Revolving Advance Amount
or the Formula Amount, and such disbursement is not reimbursed by Borrower
within two (2) Business Days, Agent shall promptly notify each Lender and upon
Agent's demand each Lender shall pay to Agent such Lender's proportionate share
of such unreimbursed disbursement together with such Lender's proportionate
share of Agent's unreimbursed costs and expenses relating to such unreimbursed
disbursement. Upon receipt by Agent of a repayment from Borrower of any amount
disbursed by Agent for which Agent had already been reimbursed by Lenders, Agent
shall deliver to each Lender that Lender's pro rata share of such repayment.
Each Lender's participation commitment shall continue until the last to occur of
any of the following events: (A) Agent ceases to be obligated to issue or cause
to be issued Letters of Credit hereunder; (B) no Letter of Credit issued or
created hereunder remains outstanding and uncancelled or (C) all Persons (other
than Borrower) have been fully reimbursed for all payments made under or
relating to Letters of Credit.
2.13 Additional Payments. Any sums expended by Agent or any Lender due to
Borrower's failure to perform or comply with its obligations under this
Agreement or any Other Document including, without limitation, Borrower's
obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be
charged to Borrower's Account as a Revolving Advance and added to the
Obligations.
2.14 Manner of Borrowing and Payment.
2.14.1 Each borrowing of Revolving Advances shall be advanced according to
the applicable Commitment Percentages of Lenders. The Term Loan shall be
advanced according to the Commitment Percentages of Lenders.
2.14.2 Each payment (including each prepayment) by Borrower on account of
the principal of and interest on the Revolving Advances, shall be applied to the
Revolving Advances pro rata according to the applicable Commitment Percentages
of Lenders. Each payment (including each prepayment) by Borrower on account of
the principal of and interest on the Term Note, shall be made from or to, or
applied to that portion of the Term Loan evidenced by the Term Note pro rata
according to the Commitment Percentages of Lenders. Except as expressly provided
herein, all payments (including prepayments) to be made by Borrower on account
of principal, interest and fees shall be made without set off or counterclaim
and shall be made to Agent on behalf of the Lenders to the Payment Office, in
each case on or prior to 1:00 P.M., New York time, in Dollars and in immediately
available funds.
2.14.3 (i) Notwithstanding anything to the contrary contained in Sections
2.14.1 and 2.14.2 hereof, commencing with the first Business Day following the
Closing Date, each borrowing of Revolving Advances shall be advanced by Agent
and each payment by Borrower on account of Revolving Advances shall be applied
first to those Revolving Advances advanced by Agent. On or before 1:00 P.M, New
York time, on each Settlement Date commencing with the first Settlement Date
following the Closing Date, Agent and Lenders shall make certain payments as
follows: (I) if the aggregate amount of new Revolving Advances made by Agent
during the preceding Week (if any) exceeds the aggregate amount of repayments
applied to outstanding Revolving Advances during such preceding Week, then each
Lender shall provide Agent with funds in an amount equal to its applicable
Commitment Percentage of the difference between (w) such Revolving Advances and
(x) such repayments and (II) if the aggregate amount of repayments applied to
outstanding Revolving Advances during such Week exceeds the aggregate amount of
new Revolving Advances made during such Week, then Agent shall provide each
Lender with funds in an amount equal to its applicable Commitment Percentage of
the difference between (y) such repayments and (z) such Revolving Advances; (ii)
each Lender shall be entitled to earn interest at the applicable Contract Rate
on outstanding Advances which it has funded; or (iii) promptly following each
Settlement Date, Agent shall submit to each Lender a certificate with respect to
payments received and Advances made during the Week immediately preceding such
Settlement Date. Such certificate of Agent shall be conclusive in the absence of
manifest error.
2.14.4 If any Lender or Participant (a "benefitted Lender") shall at any
time receive any payment of all or part of its Advances, or interest thereon, or
receive any Collateral in respect thereof (whether voluntarily or involuntarily
or by set-off) in a greater proportion than any such payment to and Collateral
received by any other Lender, if any, in respect of such other Lender's
Advances, or interest thereon, and such greater proportionate payment or receipt
of Collateral is not expressly permitted hereunder, such benefitted Lender shall
purchase for cash from the other Lenders a participation in such portion of each
such other Lender's Advances, or shall provide such other Lender with the
benefits of any such Collateral, or the proceeds thereof, as shall be necessary
to cause such benefitted Lender to share the excess payment or benefits of such
Collateral or proceeds ratably with each of the other Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Each Lender so purchasing a portion of another
Lender's Advances may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.
2.14.5 Unless Agent shall have been notified by telephone, confirmed in
writing, by any Lender that such Lender will not make the amount which would
constitute its applicable Commitment Percentage of the Advances available to
Agent, Agent may (but shall not be obligated to) assume that such Lender shall
make such amount available to Agent on the next Settlement Date and, in reliance
upon such assumption, make available to Borrower a corresponding amount. Agent
will promptly notify Borrower of its receipt of any such notice from a Lender.
If such amount is made available to Agent on a date after such next Settlement
Date, such Lender shall pay to Agent on demand an amount equal to the product of
(i) the daily average Federal Funds Rate (computed on the basis of a year of 360
days) during such period as quoted by Agent, times (ii) such amount, times (iii)
the number of days from and including such Settlement Date to the date on which
such amount becomes immediately available to Agent. A certificate of Agent
submitted to any Lender with respect to any amounts owing under this paragraph
(e) shall be conclusive, in the absence of manifest error. If such amount is not
in fact made available to Agent by such Lender within three (3) Business Days
after such Settlement Date, Agent shall be entitled to recover such an amount,
with interest thereon at the rate per annum then applicable to such Revolving
Advances hereunder, on demand from Borrower; provided, however, that Agent's
right to such recovery shall not prejudice or otherwise adversely affect
Borrower's rights (if any) against such Lender.
2.15 Mandatory Prepayments.
2.15.1 Subject to Section 4.3 hereof, when Borrower sells or otherwise
disposes of any Collateral other than Inventory in the ordinary course of
business, Borrower shall repay the Advances in an amount equal to the net
proceeds of such sale (i.e., gross proceeds less the reasonable costs of such
sales or other dispositions), such repayments to be made promptly but in no
event more than one (1) Business Day following receipt of such net proceeds, and
until the date of payment, such proceeds shall be held in trust for Agent. The
foregoing shall not be deemed to be implied consent to any such sale otherwise
prohibited by the terms and conditions hereof. Such repayments shall be applied
first, to the outstanding principal installments of the Term Loan in the inverse
order of the maturities thereof and second, to the remaining Advances in such
order as Agent may determine, subject to Borrower's ability to reborrow
Revolving Advances in accordance with the terms hereof.
2.15.2 Borrower shall repay or cause the repayment of the Advances in an
amount equal to the following, such repayments to be made promptly but in no
event more than 5 Business Days following receipt of the proceeds thereof, and
until the date of payment, such proceeds shall be held in trust for Agent: (a)
all cash proceeds of condemnation awards; (b) all tax refunds received; (c) all
proceeds of insurance recoveries; and (d) all proceeds of debt (except to the
extent permitted by Section 7.8). Such repayments shall be applied to the
Advances in such order as Agent may determine.
2.16 Use of Proceeds. Borrower shall apply the proceeds of Advances to (i)
refinance existing indebtedness owed to Bank One, Indiana, NA, and (ii) provide
for the ongoing working capital needs of Borrower.
2.17 Defaulting Lender.
2.17.1 Notwithstanding anything to the contrary contained herein, in the
event any Lender (x) has refused (which refusal constitutes a breach by such
Lender of its obligations under this Agreement) to make available its portion of
any Advance or (y) notifies either Agent or Borrower that it does not intend to
make available its portion of any Advance (if the actual refusal would
constitute a breach by such Lender of its obligations under this Agreement)
(each, a "Lender Default"), all rights and obligations hereunder of such Lender
(a "Defaulting Lender") as to which a Lender Default is in effect and of the
other parties hereto shall be modified to the extent of the express provisions
of this Section 2.17 while such Lender Default remains in effect.
2.17.2 Advances shall be incurred pro rata from Lenders (the
"Non-Defaulting Lenders") which are not Defaulting Lenders based on their
respective Commitment Percentages, and no Commitment Percentage of any Lender or
any pro rata share of any Advances required to be advanced by any Lender shall
be increased as a result of such Lender Default. Amounts received in respect of
principal of any type of Advances shall be applied to reduce the applicable
Advances of each Lender pro rata based on the aggregate of the outstanding
Advances of that type of all Lenders at the time of such application; provided,
that, such amount shall not be applied to any Advances of a Defaulting Lender at
any time when, and to the extent that, the aggregate amount of Advances of any
Non-Defaulting Lender exceeds such Non-Defaulting Lender's Commitment Percentage
of all Advances then outstanding.
2.17.3 A Defaulting Lender shall not be entitled to give instructions to
Agent or to approve, disapprove, consent to or vote on any matters relating to
this Agreement and the Loan Documents. All amendments, waivers and other
modifications of this Agreement and the Loan Documents may be made without
regard to a Defaulting Lender and, for purposes of the definition of "Required
Lenders", a Defaulting Lender shall be deemed not to be a Lender and not to have
Advances outstanding.
2.17.4 Other than as expressly set forth in this Section 2.17, the rights
and obligations of a Defaulting Lender (including the obligation to indemnify
Agent) and the other parties hereto shall remain unchanged. Nothing in this
Section 2.17 shall be deemed to release any Defaulting Lender from its
obligations under this Agreement and the Loan Documents, shall alter such
obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which Borrower, Agent or any Lender may
have against any Defaulting Lender as a result of any default by such Defaulting
Lender hereunder.
2.17.5 In the event a Defaulting Lender retroactively cures to the
satisfaction of Agent the breach which caused a Lender to become a Defaulting
Lender, such Defaulting Lender shall no longer be a Defaulting Lender and shall
be treated as a Lender under this Agreement.
3. INTEREST AND FEES.
3.1 Interest. Interest on Advances shall be payable in arrears on the first
day of each month with respect to Domestic Rate Loans and, with respect to
Eurodollar Rate Loans, at the end of each Interest Period. Interest charges
shall be computed on the actual principal amount of Advances outstanding during
the month at a rate per annum equal to (i) with respect to Revolving Advances,
the applicable Revolving Interest Rate and (ii) with respect to the Term Loan,
the applicable Tern Loan Rate (as applicable, the "Contract Rate"). Whenever,
subsequent to the date of this Agreement, the Alternate Base Rate is increased
or decreased, the applicable Contract Rate shall be similarly changed without
notice or demand of any kind by an amount equal to the amount of such change in
the Alternate Base Rate during the time such change or changes remain in effect.
The Eurodollar Rate shall be adjusted with respect to Eurodollar Rate Loans
without notice or demand of any kind on the effective date of any change in the
Reserve Percentage as of such effective date. Upon and after the occurrence of
an Event of Default, and during the continuation thereof, (i) the Obligations
other than the then outstanding Eurodollar Rate Loans shall bear interest at the
applicable Contract Rate plus two (2%) percent per annum and (ii) the then
outstanding Eurodollar Rate Loans shall bear interest at the applicable Contract
Rate for Eurodollar Rate Loans plus two (2%) percent per annum (as applicable,
the "Default Rate").
3.2 Letter of Credit Fees.
3.2.1 Borrower shall pay (x) to Agent, for the benefit of Lenders, fees for
each Letter of Credit for the period from and excluding the date of issuance of
same to and including the date of expiration or termination, equal to the
average daily face amount of each outstanding Letter of Credit multiplied by
three percent (3%) per annum, such fees to be calculated on the basis of a
360-day year for the actual number of days elapsed and to be payable monthly in
arrears on the first day of each month and on the last day of the Term and (y)
to the Issuer, any and all fees and expenses as agreed upon by the Issuer and
the Borrower in connection with any Letter of Credit, including, without
limitation, in connection with the opening, amendment or renewal of any such
Letter of Credit and any acceptances created thereunder and shall reimburse
Agent for any and all fees and expenses, if any, paid by Agent to the Issuer
(all of the foregoing fees, the "Letter of Credit and Acceptance Fees"). All
such charges shall be deemed earned in full on the date when the same are due
and payable hereunder and shall not be subject to rebate or proration upon the
termination of this Agreement for any reason. Any such charge in effect at the
time of a particular transaction shall be the charge for that transaction,
notwithstanding any subsequent change in the Issuer's prevailing charges for
that type of transaction. All Letter of Credit Fees payable hereunder shall be
deemed earned in full on the date when the same are due and payable hereunder
and shall not be subject to rebate or proration upon the termination of this
Agreement for any reason.
On demand, Borrower will cause cash to be deposited and maintained in an account
with Agent, as cash collateral, in an amount equal to one hundred and five
percent (105%) of the outstanding Letters of Credit [and Acceptances], and
Borrower hereby irrevocably authorizes Agent, in its discretion, on Borrower's
behalf and in Borrower's name, to open such an account and to make and maintain
deposits therein, or in an account opened by Borrower, in the amounts required
to be made by Borrower, out of the proceeds of Receivables or other Collateral
or out of any other funds of Borrower coming into any Lender's possession at any
time. Agent will invest such cash collateral (less applicable reserves) in such
short-term money-market items as to which Agent and Borrower mutually agree and
the net return on such investments shall be credited to such account and
constitute additional cash collateral. Borrower may not withdraw amounts
credited to any such account except upon payment and performance in full of all
Obligations and termination of this Agreement.
3.3 Closing Fee. Upon the execution of this Agreement, Borrower shall pay
to Agent for the ratable benefit of Lenders a closing fee of Forty Thousand
Dollars ($40,000) less that portion of the commitment fee of Ten Thousand
Dollars ($10,000) and the Deposit Fee of Forty Thousand Dollars ($40,000)
heretofore paid by Borrower to Agent remaining after application of such fee to
out of pocket expenses.
3.4 Facility Fee. If, for any calendar quarter during the Tenor, the
average daily unpaid balance of the Revolving Advances for each day of such
calendar quarter does not equal the Maximum Revolving Advance Amount, then
Borrower shall pay to Agent for the ratable benefit of Lenders a fee at a rate
equal to three-eighths of one percent (0.375%) per annum on the amount by which
the Maximum Revolving Advance Amount exceeds such average daily unpaid balance.
Such fee shall be payable to Agent in arrears on the first day of each calendar
quarter with respect to the previous calendar quarter.
3.5 Collateral Evaluation Fee. Borrower shall pay Agent a collateral
evaluation fee equal to One Thousand Five Hundred Dollars ($1,500) per month
commencing on the first day of the month following the Closing Date and on the
first day of each month thereafter during the Term. The collateral evaluation
fee shall be deemed earned in full on the date when same is due and payable
hereunder and shall not be subject to rebate or proration upon termination of
this Agreement for any reason.
3.6 Collateral Monitoring Fee. Borrower shall pay to Agent on the first day
of each month following any month in which Agent performs any collateral
monitoring - namely any field examination, collateral analysis of other business
analysis, the need for which is to be determined by Agent and which monitoring
is undertaken by Agent or for Agent's benefit - a collateral monitoring fee in
an amount equal to seven hundred and fifty dollars ($750) per day for each
person employed to perform such monitoring, plus all costs and disbursements
incurred by Agent in the performance of such examination or analysis.
3.7 Computation of Interest and Fees. Interest and fees hereunder shall be
computed on the basis of a year of 360 days and for the actual number of days
elapsed. If any payment to be made hereunder becomes due and payable on a day
other than a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and interest thereon shall be payable at the applicable
Contract Rate during such extension.
3.8 Maximum Charges. In no event whatsoever shall interest and other
charges charged hereunder exceed the highest rate permissible under law. In the
event interest and other charges as computed hereunder would otherwise exceed
the highest rate permitted under law, such excess amount shall be first applied
to any unpaid principal balance owed by Borrower, and if the then remaining
excess amount is greater than the previously unpaid principal balance, Lenders
shall promptly refund such excess amount to Borrower and the provisions hereof
shall be deemed amended to provide for such permissible rate.
3.9 Increased Costs. In the event that any applicable law, treaty or
governmental regulation, or any change therein or in the interpretation or
application thereof, or compliance by any Lender (for purposes of this Section
3.9, the term "Lender" shall include Agent or any Lender and any corporation or
bank controlling Agent or any Lender) and the office or branch where Agent or
any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any
request or directive (whether or not having the force of law) from any central
bank or other financial, monetary or other authority, shall:
3.9.1 subject Agent or any Lender to any tax of any kind whatsoever with
respect to this Agreement or any Other Document or change the basis of taxation
of payments to Agent or any Lender of principal, fees, interest or any other
amount payable hereunder or under any Loan Documents (except for changes in the
rate of tax on the overall net income of Agent or any Lender by the jurisdiction
in which it maintains its principal office);
3.9.2 impose, modify or hold applicable any reserve, special deposit,
assessment or similar requirement against assets held by, or deposits in or for
the account of, advances or loans by, or other credit extended by, any office of
Agent or any Lender, including (without limitation) pursuant to Regulation D of
the Board of Governors of the Federal Reserve System; or
3.9.3 impose on Agent or any Lender or the London interbank Eurodollar
market any other condition with respect to this Agreement or any Other Document;
and the result of any of the foregoing is to increase the cost to Agent or any
Lender of making, renewing or maintaining its Advances hereunder by an amount
that Agent or such Lender deems to be material or to reduce the amount of any
payment (whether of principal, interest or otherwise) in respect of any of the
Advances by an amount that Agent or such Lender deems to be material, then, in
any case Borrower shall promptly pay Agent or such Lender, upon its demand, such
additional amount as will compensate Agent or such Lender for such additional
cost or such reduction, as the case may be, provided that the foregoing shall
not apply to increased costs which are reflected in the Eurodollar Rate, as the
case may be. Agent or such Lender shall certify the amount of such additional
cost or reduced amount to Borrower, and such certification shall be conclusive
absent manifest error.
3.10 Basis For Determining Interest Rate Inadequate or Unfair. In the event
that Agent or any Lender shall have determined that:
3.10.1 reasonable means do not exist for ascertaining the Eurodollar Rate
for any Interest Period; or
3.10.2 Dollar deposits in the relevant amount and for the relevant maturity
are not available in the London interbank Eurodollar market, with respect to an
outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate Loan, or a proposed
conversion of a Domestic Rate Loan into a Eurodollar Rate Loan, then Agent shall
give Borrower prompt written, telephonic or telegraphic notice of such
determination. If such notice is given, (i) any such requested Eurodollar Rate
Loan shall be made as a Domestic Rate Loan, unless Borrower shall notify Agent
no later than 10:00 a.m. (New York time) two (2) Business Days prior to the date
of such proposed borrowing, that its request for such borrowing shall be
cancelled or made as an unaffected type of Eurodollar Rate Loan, (ii) any
Domestic Rate Loan or Eurodollar Rate Loan which was to have been converted to
an affected type of Eurodollar Rate Loan shall be continued as or converted into
a Domestic Rate Loan, or, if Borrower shall notify Agent, no later than 10:00
a.m. (New York time) two (2) Business Days prior to the proposed conversion,
shall be maintained as an unaffected type of Eurodollar Rate Loan, and (iii) any
outstanding affected Eurodollar Rate Loans shall be converted into a Domestic
Rate Loan, or, if Borrower shall notify Agent, no later than 10:00 a.m. (New
York time) two (2) Business Days prior to the last Business Day of the then
current Interest Period applicable to such affected Eurodollar Rate Loan, shall
be converted into an unaffected type of Eurodollar Rate Loan, on the last
Business Day of the then current Interest Period for such affected Eurodollar
Rate Loans. Until such notice has been withdrawn, Lenders shall have no
obligation to make an affected type of Eurodollar Rate Loan or maintain
outstanding affected Eurodollar Rate Loans and Borrower shall not have the right
to convert a Domestic Rate Loan or an unaffected type of Eurodollar Rate Loan
into an affected type of Eurodollar Rate Loan.
3.11 Capital Adequacy.
3.11.1 In the event that Agent or any Lender shall have determined that any
applicable law, rule, regulation or guideline regarding capital adequacy, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Agent or any Lender
(for purposes of this Section 3.11, the term "Lender" shall include Agent or any
Lender and any corporation or bank controlling Agent or any Lender) and the
office or branch where Agent or any Lender (as so defined) makes or maintains
any Eurodollar Rate Loans with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on Agent or any Lender's capital as a consequence of its obligations
hereunder to a level below that which Agent or such Lender could have achieved
but for such adoption, change or compliance (taking into consideration Agent's
and each Lender's policies with respect to capital adequacy) by an amount deemed
by Agent or any Lender to be material, then, from time to time, Borrower shall
pay upon demand to Agent or such Lender such additional amount or amounts as
will compensate Agent or such Lender for such reduction. In determining such
amount or amounts, Agent or such Lender may use any reasonable averaging or
attribution methods. The protection of this Section 3.11 shall be available to
Agent and each Lender regardless of any possible contention of invalidity or
inapplicability with respect to the applicable law, regulation or condition.
3.11.2 A certificate of Agent or such Lender setting forth such amount or
amounts as shall be necessary to compensate Agent or such Lender with respect to
Section 3.11.1 hereof when delivered to Borrower shall be conclusive absent
manifest error.
3.12 Gross Up for Taxes. If Borrower shall be required by Applicable Law to
withhold or deduct any taxes from or in respect of any sum payable under this
Agreement or any of the Loan Documents, (a) the sum payable to Agent or such
Lender shall be increased as may be necessary so that, after.making all required
withholding or deductions, Agent or such Lender (as the case may be) receives an
amount equal to the sum it would have received had no such withholding or
deductions been made, (b) Borrower shall make such withholding or deductions,
and (c) Borrower shall pay the full amount withheld or deducted to the relevant
taxation authority or other authority in accordance with Applicable Law.
3.13 Withholding Tax Exemption. At least five (5) Business Days prior to
the first date on which interest or fees are payable hereunder for the account
of any Lender, each Lender that is not incorporated under the laws of the United
States or any state thereof agrees that it will deliver to Borrower and Agent
two (2) duly completed copies of United States Internal Revenue Service Form
1001 or 4224, certifying in either case that such Lender is entitled to receive
payment under this Agreement and its Notes without deduction or withholding of
any United States federal income taxes. Each Lender which so delivers a Form
1001 or 4224 further undertakes to deliver to Borrower and Agent two (2)
additional copies of such form (or a successor form) on or before the date that
such form expires (currently, three (3) successive calendar years for Form 1001
and one calendar year for Form 4224) or becomes obsolete or after the occurrence
of any event requiring a change in the most recent form so delivered by it, and
such amendments thereto or extensions or renewals thereof as may be reasonably
requested by Borrower or Agent, in each case, certifying that such Lender is
entitled to receive payments under this Agreement and its Note without deduction
or withholding of any United States federal income taxes, unless an event
(including any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required that renders all
such forms inapplicable or that would prevent such Lender from duly completing
and delivering any such form with respect to it and such Lender advises Borrower
and Agent that it is not capable of receiving payments without any deduction or
withholding of United States federal income taxes.
4. COLLATERAL: GENERAL TERMS.
4.1 Security. Interest in the Collateral. To secure the prompt payment and
performance to Agent and each Lender of the Obligations, Borrower hereby
assigns, pledges and grants to Agent for its benefit and for the ratable benefit
of each Lender a continuing security interest in and to all of its Collateral,
whether now owned or existing or hereafter acquired or arising and wheresoever
located. Borrower shall xxxx its books and records as may be necessary or
appropriate to evidence, protect and perfect Agent's security interest and shall
cause its financial statements to reflect such security interest. Borrower shall
promptly provide Agent with written notice of all commercial tort claims, such
notice to contain the case title together with the applicable court and a brief
description of the claim(s). Upon delivery of each such notice, Borrower shall
be deemed to hereby grant to Agent a security interest and lien in and to such
commercial tort claims and all proceeds thereof.
4.2 Perfection of Security Interest. Borrower shall take all action that
may be necessary or desirable, or that Agent may request, so as at all times to
maintain the validity, perfection, enforceability and priority of Agent's
security interest in the Collateral or to enable Agent to protect, exercise or
enforce its rights hereunder and in the Collateral, including, but not limited
to, (i) immediately discharging all Liens other than Permitted Encumbrances,
(ii) obtaining landlords' or mortgagees' lien waivers, (iii) delivering to
Agent, endorsed or accompanied by such instruments of assignment as Agent may
specify, and stamping or marking, in such manner as Agent may specify, any and
all chattel paper, instruments, letters of credits and advices thereof and
documents evidencing or forming a part of the Collateral, (iv) entering into
warehousing, lockbox and other custodial arrangements satisfactory to Agent, and
(v) executing and delivering financing statements, control agreements,
instruments of pledge, mortgages, notices and assignments, in each case in form
and substance satisfactory to Agent, relating to the creation, validity,
perfection, maintenance or continuation of Agent's security interest under the
Uniform Commercial Code or other applicable law. Agent is hereby authorized to
file financing statements signed by Agent instead of Borrower in accordance with
the Uniform Commercial Code as adopted in the State of Indiana from time to
time. By its signature hereto, Borrower hereby authorizes Agent to file against
Borrower, one or more financing continuation or amendment statements pursuant to
the Uniform Commercial Code in form and substance satisfactory to Agent (which
statements may have a description of collateral which is broader than that set
forth herein). All charges, expenses and fees Agent may incur in doing any of
the foregoing, and any local taxes relating thereto, shall be charged to
Borrower's Account as a Revolving Advance of a Domestic Rate Loan and added to
the Obligations, or, at Agent's option, shall be paid to Agent for its benefit
and for the ratable benefit of Lenders immediately upon demand.
4.3 Disposition of Collateral. Borrower will safeguard and protect all
Collateral for Agent's general account and make no disposition thereof whether
by sale, lease or otherwise except (a) the sale of Inventory in the ordinary
course of business and (b) the disposition or transfer of obsolete and worn-out
Equipment in the ordinary course of business during any fiscal year having an
aggregate fair market value of not more than Fifty Thousand Dollars ($50,000)
and only to the extent that (i) the proceeds of any such disposition are used to
acquire replacement Equipment which is subject to Agent's first priority
security interest or (ii) the proceeds of which are remitted to Agent to be
applied pursuant to Section 2.15.
4.4 Preservation of Collateral. Following the occurrence of a Default or
Event of Default and the demand by Agent for payment of all Obligations due and
owing, in addition to the rights and remedies set forth in Section 11.1 hereof,
Agent: (a) may at any time take such steps as Agent deems necessary to protect
Agent's interest in and to preserve the Collateral, including the hiring of such
security guards or the placing of other security protection measures as Agent
may deem appropriate; (b) may employ and maintain at any of Borrower's premises
a custodian who shall have full authority to do all acts necessary to protect
Agent's interests in the Collateral; (c) may lease warehouse facilities to which
Agent may move all or part of the Collateral; (d) may use Borrower's owned or
leased lifts, hoists, trucks and other facilities or equipment for handling or
removing the Collateral; and (e) shall have, and is hereby granted, a right of
ingress and egress to the places where the Collateral is located, and may
proceed over and through any of Borrower's owned or leased property. Borrower
shall cooperate fully with all of Agent's efforts to preserve the Collateral and
will take such actions to preserve the Collateral as Agent may direct. All of
Agent's expenses of preserving the Collateral, including any expenses relating
to the bonding of a custodian, shall be charged to Borrower's Account as a
Revolving Advance and added to the Obligations
4.5 Ownership of Collateral. With respect to the Collateral, at the time
the Collateral becomes subject to Agent's security interest: (a) Borrower shall
be the sole owner of and fully authorized and able to sell, transfer, pledge
and/or grant a first priority security interest in each and every item of the
its respective Collateral to Agent; and, except for Permitted Encumbrances the
Collateral shall be free and clear of all Liens and encumbrances whatsoever; (b)
each document and agreement executed by Borrower or delivered to Agent or any
Lender in connection with this Agreement shall be true and correct in all
respects; (c) all signatures and endorsements of Borrower that appear on such
documents and agreements shall be genuine and Borrower shall have full capacity
to execute same; and (d) Borrower's Equipment and Inventory shall be located as
set forth on the Disclosure Schedule and shall not be removed from such
location(s) without the prior written consent of Agent except with respect to
the sale of Inventory in the ordinary course of business and Equipment to the
extent permitted in Section 4.3 hereof.
4.6 Defense of Agent's and Lender's Interests. Until (a) payment and
performance in full of all of the Obligations and (b) termination of this
Agreement, Agent's interests in the Collateral shall continue in full force and
effect. During such period Borrower shall not, without Agent's prior written
consent, pledge, sell (except Inventory in the ordinary course of business and
Equipment to the extent permitted in Section 4.3 hereof), assign, transfer,
create or suffer to exist a Lien upon or encumber or allow or suffer to be
encumbered in any way except for Permitted Encumbrances, any part of the
Collateral. Borrower shall defend Agent's interests in the Collateral against
any and all Persons whatsoever. At any time following demand by Agent for
payment of all Obligations, Agent shall have the right to take possession of the
indicia of the Collateral and the Collateral in whatever physical form
contained, including without limitation: labels, stationery, documents,
instruments and advertising materials. If Agent exercises this right to take
possession of the Collateral, Borrower shall, upon demand, assemble it in the
best manner possible and make it available to Agent at a place reasonably
convenient to Agent. In addition, with respect to all Collateral, Agent and
Lenders shall be entitled to all of the rights and remedies set forth herein and
further provided by the Uniform Commercial Code or other applicable law.
Borrower shall, and Agent may, at its option, instruct all suppliers, carriers,
forwarders, warehousers or others receiving or holding cash, checks, Inventory,
documents or instruments in which Agent holds a security interest to deliver
same to Agent and/or subject to Agent's order and if they shall come into
Borrower's possession, they, and each of them, shall be held by Borrower in
trust as Agent's trustee, and Borrower will immediately deliver them to Agent in
their original form together with any necessary endorsement.
4.7 Books and Records. Borrower shall (a) keep proper books of record and
account in which full, true and correct entries will be made of all dealings or
transactions of or in relation to its business and affairs; (b) set up on its
books accruals with respect to all taxes, assessments, charges, levies and
claims; and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables, advances and investments and
all other proper accruals (including without limitation by reason of
enumeration, accruals for premiums, if any, due on required payments and
accruals for depreciation, obsolescence, or amortization of properties), which
should be set aside from such earnings in connection with its business. All
determinations pursuant to this subsection shall be made in accordance with, or
as required by, GAAP consistently applied in the opinion of such independent
public accountant as shall then be regularly engaged by Borrower.
4.8 Financial Disclosure. Borrower hereby irrevocably authorizes and
directs all accountants and auditors employed by Borrower at any time during the
Term to exhibit and deliver to Agent and each Lender copies of any of Borrower's
financial statements, trial balances or other accounting records of any sort in
the accountant's or auditor's possession, and to disclose to Agent and each
Lender any information such accountants may have concerning Borrower's financial
status and business operations. Borrower hereby authorizes all federal, state
and municipal authorities to furnish to Agent and each Lender copies of reports
or examinations relating to Borrower, whether made by Borrower or otherwise;
however, Agent and each Lender will attempt to obtain such information or
materials directly from Borrower prior to obtaining such information or
materials from such accountants or such authorities.
4.9 Compliance with Laws. Borrower shall comply in all material respects
with all acts, rules, regulations and orders of any legislative, administrative
or judicial body or official applicable to the Collateral or any part thereof or
to the operation of Borrower's business the non-compliance with which could
reasonably be expected to have a Material Adverse Effect. Borrower may, however,
contest or dispute any acts, rules, regulations, orders and directions of those
bodies or officials in any reasonable manner, provided that any related Lien is
inchoate or stayed and sufficient reserves are established to the reasonable
satisfaction of Agent to protect Agent's Lien on or security interest in the
Collateral. The assets of Borrower at all times shall be maintained in
accordance with the requirements of all insurance carriers which provide
insurance with respect to the assets of Borrower so that such insurance shall
remain in full force and effect.
4.10 Inspection of Premises. At all reasonable times Agent and each Lender
shall have full access to and the right to audit, check, inspect and make
abstracts and copies from Borrower's books, records, audits, correspondence and
all other papers relating to the Collateral and the operation of Borrower's
business. Agent, any Lender and their agents may enter upon any of Borrower's
premises at any time during business hours and at any other reasonable time, and
from time to time, for the purpose of inspecting the Collateral and any and all
records pertaining thereto and the operation of Borrower's business.
4.11 Insurance. Borrower shall bear the full risk of any loss of any nature
whatsoever with respect to the Collateral. At Borrower's own cost and expense in
amounts and with carriers acceptable to Agent, Borrower shall (a) keep all its
insurable properties and properties in which Borrower has an interest insured
against the hazards of fire, flood, sprinkler leakage, those hazards covered by
extended coverage insurance and such other hazards, and for such amounts, as is
customary in the case of companies engaged in businesses similar to Borrower's
including, without limitation, business interruption insurance; (b) maintain a
bond in such amounts as is customary in the case of companies engaged in
businesses similar to Borrower insuring against larceny, embezzlement or other
criminal misappropriation of insured's officers and employees who may either
singly or jointly with others at any time have access to the assets or funds of
Borrower either directly or through authority to draw upon such funds or to
direct generally the disposition of such assets; (c) maintain public and product
liability insurance against claims for personal injury, death or property damage
suffered by others; (d) maintain all such worker's compensation or similar
insurance as may be required under the laws of any state or jurisdiction in
which Borrower is engaged in business; (e) furnish Agent with (i) copies of all
policies and evidence of the maintenance of such policies by the renewal thereof
at least thirty (30) days before any expiration date, and (ii) appropriate loss
payable endorsements in form and substance satisfactory to Agent, naming Agent
as a co-insured and loss payee as its interests may appear with respect to all
insurance coverage referred to in clauses (a), and (c) above, and providing (A)
that all proceeds thereunder shall be payable to Agent, (B) no such insurance
shall be affected by any act or neglect of the insured or owner of the property
described in such policy, and (C) that such policy and loss payable clauses may
not be cancelled, amended or terminated unless at least thirty (30) days' prior
written notice is given to Agent. In the event of any loss thereunder, the
carriers named therein hereby are directed by Agent and Borrower to make payment
for such loss to Agent and not to Borrower and Agent jointly. If any insurance
losses are paid by check, draft or other instrument payable to Borrower and
Agent jointly, Agent may endorse Borrower's name thereon and do such other
things as Agent may deem advisable to reduce the same to cash. Agent is hereby
authorized to adjust and compromise claims under insurance coverage referred to
in clauses (a), (b) and (c) above. All loss recoveries received by Agent upon
any such insurance may be applied to the Obligations, in such order as Agent in
its sole discretion shall determine. Any surplus shall be paid by Agent to
Borrower or applied as may be otherwise required by law.
4.12 Failure to Pay Insurance. If Borrower fails to obtain insurance as
hereinabove provided, or to keep the same in force, Agent, if Agent so elects,
may obtain such insurance and pay the premium therefor on behalf of Borrower,
and charge Borrower's Account therefor as a Revolving Advance of a Domestic Rate
Loan and such expenses so paid shall be part of the Obligations.
4.13 Payment of Taxes. Borrower will pay, when due, all taxes, assessments
and other Charges lawfully levied or assessed upon Borrower or any of the
Collateral including, without limitation, real and personal property taxes,
assessments and charges and all franchise, income, employment, social security
benefits, withholding, and sales taxes. If any tax by any governmental authority
is or may be imposed on or as a result of any transaction between Borrower and
Agent or any Lender which Agent or any Lender may be required to withhold or pay
or if any taxes, assessments, or other Charges remain unpaid after the date
fixed for their payment, or if any claim shall be made which, in Agent's or any
Lender's opinion, may possibly create a valid Lien on the Collateral, Agent may
without notice to Borrower pay the taxes, assessments or other Charges and
Borrower hereby indemnifies and holds Agent and each Lender harmless in respect
thereof. The amount of any payment by Agent under this Section 4.13 shall be
charged to Borrower's Account as a Revolving Advance and added to the
Obligations and, until Borrower shall furnish Agent with an indemnity therefor
(or supply Agent with evidence satisfactory to Agent that due provision for the
payment thereof has been made), Agent may hold without interest any balance
standing to Borrower's credit and Agent shall retain its security interest in
any and all Collateral held by Agent.
4.14 Payment of Leasehold Obligations. Borrower shall at all times pay,
when and as due, its rental obligations under all leases under which it is a
tenant, and shall otherwise comply, in all material respects, with all other
terms of such leases and keep them in full force and effect and, at Agent's
request will provide evidence of having done so.
4.15 Receivables.
4.15.1 Nature of Receivables. Each of the Receivables shall be a bona fide
and valid account representing a bona fide indebtedness incurred by the Customer
therein named, for a fixed sum as set forth in the invoice relating thereto
(provided immaterial or unintentional invoice errors shall not be deemed to be a
breach hereof) with respect to an absolute sale or lease and delivery of goods
upon stated terms of Borrower, or work, labor or services theretofore rendered
by Borrower as of the date each Receivable is created. Same shall be due and
owing in accordance with Borrower's standard terms of sale without dispute,
setoff or counterclaim except as may be stated on the accounts receivable
schedules delivered by Borrower to Agent.
4.15.2 Solvency of Customers. Each Customer, to the best of Borrower's
knowledge, as of the date each Receivable is created, is and will be solvent and
able to pay all Receivables on which the Customer is obligated in full when due
or with respect to such Customers of Borrower who are not solvent Borrower has
set up on its books and in its financial records bad debt reserves adequate to
cover such Receivables.
4.15.3 Location of Borrower. Borrower's chief executive office is located
as set forth on the Disclosure Schedule. Until written notice is given to Agent
by Borrower of any other office at which Borrower keeps its records pertaining
to Receivables, all such records shall be kept at such executive office.
4.15.4 Collection of Receivables. Until Borrower's authority to do so is
terminated by Agent (which notice Agent may give at any time following the
occurrence of an Event of Default or a Default or when Agent in its sole
discretion deems it to be in Lenders' best interest to do so), Borrower will, at
Borrower's sole cost and expense, but on Agent's behalf and for Agent's account,
collect as Agent's property and in trust for Agent all amounts received on
Receivables, and shall not commingle such collections with Borrower's funds or
use the same except to pay Obligations. Borrower shall deposit in the Blocked
Account or, upon request by Agent, deliver to Agent, in original form and on the
date of receipt thereof, all checks, drafts, notes, money orders, acceptances,
cash and other evidences of Indebtedness.
4.15.5 Notification of Assignment of Receivables. At any time following the
occurrence of an Event of Default or a Default, Agent shall have the right to
send notice of the assignment of, and Agent's security interest in, the
Receivables to any and all Customers or any third party holding or otherwise
concerned with any of the Collateral. Thereafter, Agent shall have the sole
right to collect the Receivables, take possession of the Collateral, or both.
Agent's actual collection expenses, including, but not limited to, stationery
and postage, telephone and telegraph, secretarial and clerical expenses and the
salaries of any collection personnel used for collection, may be charged to
Borrower's Account and added to the Obligations.
4.15.6 Power of Agent to Act on Borrower's Behalf. Agent shall have the
right to receive, endorse, assign and/or deliver in the name of Agent or
Borrower any and all checks, drafts and other instruments for the payment of
money relating to the Receivables, and Borrower hereby waives notice of
presentment, protest and non-payment of any instrument so endorsed. Borrower
hereby constitutes Agent or Agent's designee as Borrower's attorney with power
(i) to endorse Borrower's name upon any notes, acceptances, checks, drafts,
money orders or other evidences of payment or Collateral; (ii) to sign
Borrower's name on any invoice or xxxx of lading relating to any of the
Receivables, drafts against Customers, assignments and verifications of
Receivables; (iii) to send verifications of Receivables to any Customer; (iv) to
sign Borrower's name on all financing statements or any other documents or
instruments deemed necessary or appropriate by Agent to preserve, protect, or
perfect Agent's interest in the Collateral and to file same; (v) to demand
payment of the Receivables; (vi) to enforce payment of the Receivables by legal
proceedings or otherwise; (vii) to exercise all of Borrower's rights and
remedies with respect to the collection of the Receivables and any other
Collateral; (viii) to settle, adjust, compromise, extend or renew the
Receivables; (ix) to settle, adjust or compromise any legal proceedings brought
to collect Receivables; (x) to prepare, file and sign Borrower's name on a proof
of claim in bankruptcy or similar document against any Customer; (xi) to
prepare, file and sign Borrower's name on any notice of Lien, assignment or
satisfaction of Lien or similar document in connection with the Receivables; and
(xii) to do all other acts and things necessary to carry out this Agreement. All
acts of said attorney or designee are hereby ratified and approved, and said
attorney or designee shall not be liable for any acts of omission or commission
nor for any error of judgment or mistake of fact or of law, unless done
maliciously or with gross (not mere) negligence; this power being coupled with
an interest is irrevocable while any of the Obligations remain unpaid. Agent
shall have the right at any time following the occurrence of an Event of Default
or Default, to change the address for delivery of mail addressed to Borrower to
such address as Agent may designate and to receive, open and dispose of all mail
addressed to Borrower.
4.15.7 No Liability. Neither Agent nor any Lender shall, under any
circumstances or in any event whatsoever, have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or payment
of any of the Receivables or any instrument received in payment thereof, or for
any damage resulting therefrom. Following the occurrence of an Event of Default
or Default Agent may, without notice or consent from Borrower, xxx upon or
otherwise collect, extend the time of payment of, compromise or settle for cash,
credit or upon any terms any of the Receivables or any other securities,
instruments or insurance applicable thereto and/or release any obligor thereof.
Agent is authorized and empowered to accept following the occurrence of an Event
of Default or Default the return of the goods represented by any of the
Receivables, without notice to or consent by Borrower, all without discharging
or in any way affecting Borrower's liability hereunder.
4.15.8 Establishment of a Lockbox Account, Dominion Account. All proceeds
of Collateral shall be deposited by Borrower into a lockbox account, dominion
account or such other "blocked account" ("Blocked Accounts") as Agent may
require pursuant to an arrangement with such bank as may be selected by Borrower
and be acceptable to Agent. Borrower shall issue to any such bank, an
irrevocable letter of instruction directing said bank to transfer such funds so
deposited to Agent, either to any account maintained by Agent at said bank or by
wire transfer to appropriate account(s) of Agent. All funds deposited in such
Blocked Accounts shall immediately become the property of Agent and Borrower
shall obtain the agreement by such bank to waive any offset rights against the
funds so deposited. Neither Agent nor any Lender assumes any responsibility for
such blocked account arrangement, including without limitation, any claim of
accord and satisfaction or release with respect to deposits accepted by any bank
thereunder. Alternatively, Agent may establish depository accounts ("Depository
Accounts") in the name of Agent at a bank or banks for the deposit of such funds
and Borrower shall deposit all proceeds of Collateral or cause same to be
deposited, in kind, in such Depository Accounts of Agent in lieu of depositing
same to the Blocked Accounts.
4.15.9 Adjustments. Borrower will not, without Agent's consent, compromise
or adjust any material amount of the Receivables (or extend the time for payment
thereof) or accept any material returns of merchandise or grant any additional
discounts, allowances or credits thereon except for those compromises,
adjustments, returns, discounts, credits and allowances as have been heretofore
customary in the business of Borrower.
4.16 Inventory. To the extent Inventory held for sale or lease has been
produced by Borrower, it has been and will be produced by Borrower in accordance
with the Federal Fair Labor Standards Act of 1938, as amended, and all rules,
regulations and orders thereunder.
4.17 Maintenance of Equipment. The Equipment shall be maintained in good
operating condition and repair (reasonable wear and tear excepted) and all
necessary replacements of and repairs thereto shall be made so that the value
and operating efficiency of the Equipment shall be maintained and preserved.
Borrower shall not use or operate the Equipment in violation of any law,
statute, ordinance, code, rule or regulation. Borrower shall have the right to
sell Equipment to the extent set forth in Section 4.3 hereof.
4.18 Exculpation of Liability. Nothing herein contained shall be construed
to constitute Agent or any Lender as Borrower's agent for any purpose
whatsoever, nor shall Agent or any Lender be responsible or liable for any
shortage, discrepancy, damage, loss or destruction of any part of the Collateral
wherever the same may be located and regardless of the cause thereof. Neither
Agent nor any Lender, whether by anything herein or in any assignment or
otherwise, assume any of Borrower's obligations under any contract or agreement
assigned to Agent or such Lender, and neither Agent nor any Lender shall be
responsible in any way for the performance by Borrower of any of the terms and
conditions thereof.
4.19 Environmental Matters.
4.19.1 Borrower shall ensure that the Real Property remains in compliance
with all Environmental Laws and they shall not place or permit to be placed any
Hazardous Substances on any Real Property except as permitted by applicable law
or appropriate governmental authorities.
4.19.2 Borrower shall establish and maintain a system to assure and monitor
continued compliance with all applicable Environmental Laws which system shall
include periodic reviews of such compliance.
4.19.3 Borrower shall (i) employ in connection with the use of the Real
Property appropriate technology necessary to maintain compliance with any
applicable Environmental Laws and (ii) dispose of any and all Hazardous Waste
generated at the Real Property only at facilities and with carriers that
maintain valid permits under RCRA and any other applicable Environmental Laws.
Borrower shall use its best efforts to obtain certificates of disposal, such as
hazardous waste manifest receipts, from all treatment, transport, storage or
disposal facilities or operators employed by Borrower in connection with the
transport or disposal of any Hazardous Waste generated at the Real Property.
4.19.4 In the event Borrower obtains, gives or receives notice of any
Release or threat of Release of a reportable quantity of any Hazardous
Substances at the Real Property (any such event being hereinafter referred to as
a "Hazardous Discharge") or receives any notice of violation, request for
information or notification that it is potentially responsible for investigation
or cleanup of environmental conditions at the Real Property, demand letter or
complaint, order, citation, or other written notice with regard to any Hazardous
Discharge or violation of Environmental Laws affecting the Real Property or
Borrower's interest therein (any of the foregoing is referred to herein as an
"Environmental Complaint") from any Person, including any state agency
responsible in whole or in part for environmental matters in the state in which
the Real Property is located or the United States Environmental Protection
Agency (any such person or entity hereinafter the "Authority"), then Borrower
shall, within five (5) Business Days, give written notice of same to Agent
detailing facts and circumstances of which Borrower is aware giving rise to the
Hazardous Discharge or Environmental Complaint. Such information is to be
provided to allow Agent to protect its security interest in the Real Property
and the Collateral and is not intended to create nor shall it create any
obligation upon Agent or any Lender with respect thereto.
4.19.5 Borrower shall promptly forward to Agent copies of any request for
information, notification of potential liability, demand letter relating to
potential responsibility with respect to the investigation or cleanup of
Hazardous Substances at any other site owned, operated or used by Borrower to
dispose of Hazardous Substances and shall continue to forward copies of
correspondence between Borrower and the Authority regarding such claims to Agent
until the claim is settled. Borrower shall promptly forward to Agent copies of
all documents and reports concerning a Hazardous Discharge at the Real Property
that Borrower is required to file under any Environmental Laws. Such information
is to be provided solely to allow Agent to protect Agent's security interest in
the Real Property and the Collateral.
4.19.6 Borrower shall respond promptly to any Hazardous
Discharge or Environmental Complaint and take all necessary action in order to
safeguard the health of any Person and to avoid subjecting the Collateral or
Real Property to any Lien. If Borrower shall fail to respond promptly to any
Hazardous Discharge or Environmental Complaint or Borrower shall fail to comply
with any of the requirements of any Environmental Laws, Agent on behalf of
Lenders may, but without the obligation to do so, for the sole purpose of
protecting Agent's interest in the Collateral: (A) give such notices or (B)
enter onto the Real Property (or authorize third parties to enter onto the Real
Property) and take such actions as Agent (or such third parties as directed by
Agent) deem reasonably necessary or advisable, to clean up, remove, mitigate or
otherwise deal with any such Hazardous Discharge or Environmental Complaint. All
reasonable costs and expenses incurred by Agent and Lenders (or such third
parties) in the exercise of any such rights, including any sums paid in
connection with any judicial or administrative investigation or proceedings,
fines and penalties, together with interest thereon from the date expended at
the Default Rate for Domestic Rate Loans constituting Revolving Advances shall
be paid upon demand by Borrower, and until paid shall be added to and become a
part of the Obligations secured by the Liens created by the terms of this
Agreement or any other agreement between Agent, any Lender and Borrower.
4.19.7 Promptly upon the written request of Agent from time to time,
Borrower shall provide Agent, at Borrower's expense, with an environmental site
assessment or environmental audit report prepared by an environmental
engineering firm acceptable in the reasonable opinion of Agent, to assess with a
reasonable degree of certainty the existence of a Hazardous Discharge and the
potential costs in connection with abatement, cleanup and removal of any
Hazardous Substances found on, under, at or within the Real Property. Any report
or investigation of such Hazardous Discharge proposed and acceptable to an
appropriate Authority that is charged to oversee the clean-up of such Hazardous
Discharge shall be acceptable to Agent. If such estimates, individually or in
the aggregate, exceed $100,000, Agent shall have the right to require Borrower
to post a bond, letter of credit or other security reasonably satisfactory to
Agent to secure payment of these costs and expenses.
4.19.8 Borrower shall defend and indemnify Agent and Lenders and hold
Agent, Lenders and their respective employees, agents, directors and officers
harmless from and against all loss, liability, damage and expense, claims,
costs, fines and penalties, including attorney's fees, suffered or incurred by
Agent or Lenders under or on account of any Environmental Laws, including,
without limitation, the assertion of any Lien thereunder, with respect to any
Hazardous Discharge, the presence of any Hazardous Substances affecting the Real
Property, whether or not the same originates or emerges from the Real Property
or any contiguous real estate, including any loss of value of the Real Property
as a result of the foregoing except to the extent such loss, liability, damage
and expense is attributable to any Hazardous Discharge resulting from actions on
the part of Agent or any Lender. Borrower's obligations under this Section 4.19
shall arise upon the discovery of the presence of any Hazardous Substances at
the Real Property, whether or not any federal, state, or local environmental
agency has taken or threatened any action in connection with the presence of any
Hazardous Substances. Borrower's obligation and the indemnifications hereunder
shall survive the termination of this Agreement.
4.19.9 For purposes of Section 4.19 and 5.7, all references to Real
Property shall be deemed to include all of Borrower's right, title and interest
in and to its owned and leased premises.
4.19.10 In addition to the foregoing covenants, Borrower shall, within 60
days of the Closing Date:
4.19.10.1 select an environmental consultant reasonably acceptable to
Lender (the "Environmental Consultant") to review the prior environmental
reports, recommendations and proposals from other environmental consultants and
provide an opinion and recommendations, if any, regarding the need for further
investigation and/or remedial action with respect to environmental conditions at
the Real Property. If the Environmental Consultant makes recommendations with
respect to additional investigation and/or remedial action at the Real Property,
Borrower shall diligently implement the recommendations, including any followup
recommendations; or
4.19.10.2 provide a secured creditor impaired property policy with a
coverage amount of Nine Hundred Thousand Dollars ($900,000) with regard to the
Real Property reasonably acceptable to the Agent.
4.20 Financing Statements. Except as respects the financing statements
filed by Agent and the financing statements described on Schedule 1.2, no
financing statement covering any of the Collateral or any proceeds thereof is on
file in any public office.
5. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants as
follows:
5.1 Authority. Borrower has full power, authority and legal right to enter
into this Agreement and the Loan Documents and to perform all its respective
Obligations hereunder and thereunder. This Agreement and the Loan Documents
constitute the legal, valid and binding obligation of Borrower enforceable in
accordance with their terms, except as such enforceability may be limited by any
applicable bankruptcy, insolvency, moratorium or similar laws affecting
creditors' rights generally. The execution, delivery and performance of this
Agreement and of the Loan Documents (a) are within Borrower's corporate powers,
have been duly authorized, are not in contravention of law or the terms of
Borrower's by-laws, certificate of incorporation or other applicable documents
relating to Borrower's formation or to the conduct of Borrower's business or of
any material agreement or undertaking to which Borrower is a party or by which
Borrower is bound, and (b) will not conflict with nor result in any breach in
any of the provisions of or constitute a default under or result in the creation
of any Lien except Permitted Encumbrances upon any asset of Borrower under the
provisions of any agreement, charter document, instrument, by-law, or other
instrument to which Borrower is a party or by which it or its property may be
bound.
5.2 Formation and Qualification.
5.2.1 Borrower is duly incorporated and in good standing under the laws of
the state listed on the Disclosure Schedule and is qualified to do business and
is in good standing in the states listed on the Disclosure Schedule which
constitute all states in which qualification and good standing are necessary for
Borrower to conduct its business and own its property and where the failure to
so qualify could reasonably be expected to have a Material Adverse Effect.
Borrower has delivered to Agent true and complete copies of its certificate of
incorporation and by-laws and will promptly notify Agent of any amendment or
changes thereto.
5.2.2 The only Subsidiaries of Borrower are listed on the Disclosure
Schedule.
5.3 Survival of Representations and Warranties. All representations and
warranties of Borrower contained in this Agreement and the Loan Documents shall
be true at the time of Borrower's execution of this Agreement and the Loan
Documents, and shall survive the execution, delivery and acceptance thereof by
the parties thereto and the closing of the transactions described therein or
related thereto.
5.4 Tax Returns. Borrower's federal tax identification number is set forth
on the Disclosure Schedule. Borrower has filed all federal, state and local tax
returns and other reports each is required by law to file and has paid all
taxes, assessments, fees and other governmental charges that are due and
payable. Federal, state and local income tax returns of Borrower have been
examined and reported upon by the appropriate taxing authority or closed by
applicable statute and satisfied for all fiscal years prior to and including the
fiscal year ending October 31, 2001. The provision for taxes on the books of
Borrower is adequate for all years not closed by applicable statutes, and for
its current fiscal year, and Borrower has no knowledge of any deficiency or
additional assessment in connection therewith not provided for on its books.
5.5 Financial Statements.
5.5.1 The twelve-month cash flow projections of Borrower and its projected
balance sheets as of the Closing Date were prepared by the Chief Financial
Officer of Borrower, are based on underlying assumptions which provide a
reasonable basis for the projections contained therein and reflect Borrower's
judgment based on present circumstances of the most likely set of conditions and
course of action for the projected period.
5.5.2 The consolidated and consolidating balance sheets of Borrower, its
Subsidiaries and such other Persons described therein (including the accounts of
all Subsidiaries for the respective periods during which a subsidiary
relationship existed) as of October 31, 2001, and the related statements of
income, changes in stockholder's equity, and changes in cash flow for the period
ended on such date, all accompanied by reports thereon containing opinions
without qualification by independent certified public accountants, copies of
which have been delivered to Agent, have been prepared in accordance with GAAP,
consistently applied (except for changes in application in which such
accountants concur and present fairly the financial position of Borrower and its
Subsidiaries at such date and the results of their operations for such period.
Since October 31, 2001 there has been no change in the condition, financial or
otherwise, of Borrower or its Subsidiaries as shown on the consolidated balance
sheet as of such date and no change in the aggregate value of machinery,
equipment and Real Property owned by Borrower and its Subsidiaries, except
changes in the ordinary course of business, none of which individually or in the
aggregate has been materially adverse. The financial statements delivered to
Agent in accordance with Article 9 hereof are true, complete and accurate in all
material respects and fairly present its financial condition, assets and
liabilities, whether accrued, absolute, contingent or otherwise and the results
of its operations for the periods specified therein.
5.6 Corporate Name. Borrower has not been known by any other corporate name
in the past five years and does not sell Inventory under any other name except
as set forth on the Disclosure Schedule, nor has Borrower been the surviving
corporation of a merger or consolidation or acquired all or substantially all of
the assets of any Person during the preceding five (5) years, except as noted on
Disclosure Schedule.
5.7 O.S.H.A. and Environmental Compliance.
5.7.1 Borrower has duly complied with, and its facilities, business,
assets, property, leaseholds and Equipment are in compliance in all material
respects with, the provisions of the Federal Occupational Safety and Health Act,
the Environmental Protection Act, RCRA and all other Environmental Laws; there
have been no outstanding citations, notices or orders of non-compliance issued
to Borrower or relating to its business, assets, property, leaseholds or
Equipment under any such laws, rules or regulations.
5.7.2 Borrower has been issued all required federal, state and local
licenses, certificates or permits relating to all applicable Environmental Laws.
5.7.3 Except as noted in Phase I Environmental Report of the Real Property
dated as of October 10, 2002, (i) there are no visible signs of releases,
spills, discharges, leaks or disposal (collectively referred to as "Releases")
of Hazardous Substances at, upon, under or within any Real Property or any
premises leased by Borrower; (ii) there are no underground storage tanks or
polychlorinated biphenyls on the Real Property or any premises leased by
Borrower; (iii) neither the Real Property nor any premises leased by Borrower
has ever been used as a treatment, storage or disposal facility of Hazardous
Waste; and (iv) no Hazardous Substances are present on the Real Property or any
premises leased by Borrower, excepting such quantities as are handled in
accordance with all applicable manufacturer's instructions and governmental
regulations and in proper storage containers and as are necessary for the
operation of the commercial business of Borrower or of its tenants.
5.8 Solvency; No Litigation, Violation, Indebtedness or Default.
5.8.1 Borrower is solvent, able to pay its debts as they mature, has
capital sufficient to carry on its business and all businesses in which it is
about to engage, and (i) as of the Closing Date, the fair present saleable value
of its assets, calculated on a going concern basis, is in excess of the amount
of its liabilities and (ii) subsequent to the Closing Date, the fair saleable
value of its assets (calculated on a going concern basis) will be in excess of
the amount of its liabilities.
5.8.2 Except as disclosed in the Disclosure Schedule, Borrower has no (i)
pending or threatened litigation, arbitration, actions or proceedings which
involve the possibility of having a Material Adverse Effect, and (ii)
liabilities or indebtedness for borrowed money other than the Obligations.
5.8.3 Borrower is not in violation of any applicable statute, regulation or
ordinance in any respect which could reasonably be expected to have a Material
Adverse Effect, nor is Borrower in violation of any order of any court,
governmental authority or arbitration board or tribunal.
5.8.4 Neither Borrower nor any member of the Controlled Group maintains or
contributes to any Plan other than those listed on Schedule 5.8.4 hereto. Except
as set forth in Schedule 5.8.4, (i) no Plan has incurred any "accumulated
funding deficiency," as defined in Section 302(a)(2) of ERISA and Section 412(a)
of the Code, whether or not waived, and Borrower and each member of the
Controlled Group has met all applicable minimum funding requirements under
Section 302 of ERISA in respect of each Plan, (ii) each Plan which is intended
to be a qualified plan under Section 401(a) of the Code as currently in effect
has been determined by the Internal Revenue Service to be qualified under
Section 401 (a) of the Code and the trust related thereto is exempt from federal
income tax under Section 501(a) of the Code, (iii) neither Borrower nor any
member of the Controlled Group has incurred any liability to the PBGC other than
for the payment of premiums, and there are no premium payments which have become
due which are unpaid, (iv) no Plan has been terminated by the plan administrator
thereof nor by the PBGC, and there is no occurrence which would cause the PBGC
to institute proceedings under Title IV of ERISA to terminate any Plan, (v) at
this time, the current value of the assets of each Plan exceeds the present
value of the accrued benefits and other liabilities of such Plan and neither
Borrower nor any member of the Controlled Group knows of any facts or
circumstances which would materially change the value of such assets and accrued
benefits and other liabilities, (vi) neither Borrower nor any member of the
Controlled Group has breached any of the responsibilities, obligations or duties
imposed on it by ERISA with respect to any Plan, (vii) neither Borrower nor any
member of a Controlled Group has incurred any liability for any excise tax
arising under Section 4972 or 4980B of the Code, and no fact exists which could
give rise to any such liability, (viii) neither Borrower nor any member of the
Controlled Group nor any fiduciary of, nor any trustee to, any Plan, has engaged
in a "prohibited transaction" described in Section 406 of the ERISA or Section
4975 of the Code nor taken any action which would constitute or result in a
Termination Event with respect to any such Plan which is subject to ERISA, (ix)
Borrower and each member of the Controlled Group has made all contributions due
and payable with respect to each Plan, (x) there exists no event described in
Section 4043(b) of ERISA, for which the thirty (30) day notice period contained
in 29 CFR ss.2615.3 has not been waived, (xi) neither Borrower nor any member of
the Controlled Group has any fiduciary responsibility for investments with
respect to any plan existing for the benefit of persons other than employees or
former employees of Borrower and any member of the Controlled Group, and (xii)
neither Borrower nor any member of the Controlled Group has withdrawn,
completely or partially, from any Multiemployer Plan so as to incur liability
under the Multiemployer Pension Plan Amendments Act of 1980.
5.9 Patents, Trademarks, Copyrights and Licenses. All patents, patent
applications, trademarks, trademark applications, service marks, service xxxx
applications, copyrights, copyright applications, design rights, tradenames,
assumed names, trade secrets and licenses owned or utilized by Borrower are set
forth on the Disclosure Schedule, are valid and have been duly registered or
filed with all appropriate governmental authorities and constitute all of the
intellectual property rights which are necessary for the operation of its
business; there is no objection to or pending challenge to the validity of any
such patent, trademark, copyright, design right, tradename, trade secret or
license and Borrower is not aware of any grounds for any challenge, except as
set forth in the Disclosure Schedule. Each patent, patent application, patent
license, trademark, trademark application, trademark license, service xxxx,
service xxxx application, service xxxx license, design right, copyright,
copyright application and copyright license owned or held by Borrower and all
trade secrets used by Borrower consist of original material or property
developed by Borrower or was lawfully acquired by Borrower from the proper and
lawful owner thereof. Each of such items has been maintained so as to preserve
the value thereof from the date of creation or acquisition thereof. With respect
to all customized or specialized operational software used by Borrower, Borrower
is in possession of all source and object codes related to each piece of
software or is the beneficiary of a source code escrow agreement, each such
source code escrow agreement being listed on the Disclosure Schedule.
5.10 Licenses and Permits. Except as set forth in Schedule 5.10, Borrower
(a) is in compliance with and (b) has procured and is now in possession of, all
material licenses or permits required by any applicable federal, state or local
law or regulation for the operation of its business in each jurisdiction wherein
it is now conducting or proposes to conduct business and where the failure to
procure such licenses or permits could have a Material Adverse Effect.
5.11 Default of Indebtedness. Borrower is not in default in the payment of
the principal of or interest on any Indebtedness or under any instrument or
agreement under or subject to which any Indebtedness has been issued and no
event has occurred under the provisions of any such instrument or agreement
which with or without the lapse of time or the giving of notice, or both,
constitutes or would constitute an event of default thereunder.
5.12 No Default. Borrower is not in default in the payment or performance
of any of its contractual obligations and no Default has occurred.
5.13 No Burdensome Restrictions. Borrower is not party to any contract or
agreement the performance of which could have a Material Adverse Effect.
Borrower has not agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property, whether now owned
or hereafter acquired, to be subject to a Lien which is not a Permitted
Encumbrance.
5.14 No Labor Disputes. Borrower is not involved in any labor dispute;
there are no strikes or walkouts or union organization of Borrower's employees
threatened or in existence and no labor contract is scheduled to expire during
the Term other than as set forth on the Schedule 5.14 hereto.
5.15 Margin Regulations. Borrower is not engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" within
the respective meanings of each of the quoted terms under Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. No part of the proceeds of any Advance will be used for
"purchasing" or "carrying" "margin stock" as defined in Regulation U of such
Board of Governors.
5.16 Investment Company Act. Borrower is not an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, nor is it controlled by such a company.
5.17 Disclosure. No representation or warranty made by Borrower in this
Agreement or in any financial statement, report, certificate or any other
document furnished in connection herewith contains any untrue statement of a
material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading. There is no fact known to Borrower
or which reasonably should be known to Borrower which Borrower has not disclosed
to Agent in writing with respect to the transactions contemplated by this
Agreement which could reasonably be expected to have a Material Adverse Effect.
5.18 Delivery of Mezzanine Documentation. Agent has received complete
copies of the Mezzanine Documentation (including all exhibits, schedules and
disclosure letters referred to therein or delivered pursuant thereto, if any)
and all amendments thereto, waivers relating thereto and other side letters or
agreements affecting the terms thereof. None of such documents and agreements
has been amended or supplemented, nor have any of the provisions thereof been
waived, except pursuant to a written agreement or instrument which has
heretofore been delivered to Agent.
5.19 Swaps. Borrower is not a party to, nor will it be a party to, any swap
agreement whereby Borrower has agreed or will agree to swap interest rates or
currencies unless same provides that damages upon termination following an event
of default thereunder are payable on an unlimited "two-way basis" without regard
to fault on the part of either party.
5.20 Conflicting, Agreements. No provision of any mortgage, indenture,
contract, agreement, judgment, decree or order binding on Borrower or affecting
the Collateral conflicts with, or requires any Consent which has not already
been obtained to, or would in any way prevent the execution, delivery or
performance of, the terms of this Agreement or the Loan Documents.
5.21 Application of Certain Laws and Regulations. Neither Borrower nor any
Affiliate of Borrower is subject to any statute, rule or regulation which
regulates the incurrence of any Indebtedness, including without limitation,
statutes or regulations relative to common or interstate carriers or to the sale
of electricity, gas, steam, water, telephone, telegraph or other public utility
services.
5.22 Business and Property of Borrower. Upon and after the Closing Date,
Borrower does not propose to engage in any business other than as conducted now
and activities necessary to conduct the foregoing. On the Closing Date, Borrower
will own all the property and possess all of the rights and Consents necessary
for the conduct of the business of Borrower.
5.23 Section 20 Subsidiaries. Borrower does not intend to use and shall not
use any portion of the proceeds of the Advances, directly or indirectly, to
purchase during the underwriting period, or for 30 days thereafter, Ineligible
Securities being underwritten by a Section 20 Subsidiary.
6. AFFIRMATIVE COVENANTS. Borrower shall, until payment in full of the
Obligations and termination of this Agreement:
6.1 Payment of Fees. Pay to Agent on demand all usual and customary fees
and expenses which Agent incurs in connection with (a) the forwarding of Advance
proceeds and (b) the establishment and maintenance of any Blocked Accounts or
Depository Accounts as provided for in Section 4.15.8. Agent may, without making
demand, charge Borrower's Account for all such fees and expenses.
6.2 Conduct of Business and Maintenance of Existence and Assets. (a)
Conduct continuously and operate actively its business according to good
business practices and maintain all of its properties useful or necessary in its
business in good working order and condition (reasonable wear and tear excepted
and except as may be disposed of in accordance with the terms of this
Agreement), including, without limitation, all licenses, patents, copyrights,
design rights, tradenames, trade secrets and trademarks and take all actions
necessary to enforce and protect the validity of any intellectual property right
or other right included in the Collateral; (b) keep in full force and effect its
existence and comply in all material respects with the laws and regulations
governing the conduct of its business where the failure to do so could
reasonably be expected to have a Material Adverse Effect; and (c) make all such
reports and pay all such franchise and other taxes and license fees and do all
such other acts and things as may be lawfully required to maintain its rights,
licenses, leases, powers and franchises under the laws of the United States or
any political subdivision thereof where the failure to do so could reasonably be
expected to have a Material Adverse Effect.
6.3 Violations. Promptly notify Agent in writing of any violation of any
law, statute, regulation or ordinance of any Governmental Body, or of any agency
thereof, applicable to Borrower which could reasonably be expected to have a
Material Adverse Effect.
6.4 Government Receivables. Take all steps necessary to protect Agent's
interest in the Collateral under the Federal Assignment of Claims Act or other
applicable state or local statutes or ordinances and deliver to Agent
appropriately endorsed, any instrument or chattel paper connected with any
Receivable arising out of contracts between Borrower and the United States, any
state or any department, agency or instrumentality of any of them.
6.5 Tangible Net Worth. Maintain, as of the end of each calendar month, a
Tangible Net Worth of not less than $1,236,521 through the calendar month ending
September 30, 2003, and as of the end of each calendar month thereafter, such
amount plus 50% of positive net income (with no deductions for net losses), on a
cumulative basis from each fiscal year ending on or after October 31, 2003.
6.6 Fixed Charge Coverage Ratio. Maintain at all times a Fixed Charge
Coverage Ratio of not less than 1.00 to 1.00, measured as of the end of each
fiscal quarter on a historical rolling four quarters basis.
6.7 Execution of Supplemental Instruments. Execute and deliver to Agent
from time to time, upon demand, such supplemental agreements, statements,
assignments and transfers, or instructions or documents relating to the
Collateral, and such other instruments as Agent may request, in order that the
full intent of this Agreement may be carried into effect.
6.8 Payment of Indebtedness. Pay, discharge or otherwise satisfy at or
before maturity (subject, where applicable, to specified grace periods and, in
the case of the trade payables, to normal payment practices) all its obligations
and liabilities of whatever nature, except when the failure to do so could not
reasonably be expected to have a Material Adverse Effect or when the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and Borrower shall have provided for such reserves as Agent may
reasonably deem proper and necessary, subject at all times to any applicable
subordination arrangement in favor of Lenders.
6.9 Standards of Financial Statements. Cause all financial statements
referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12 9.13 and 9.14 as to
which GAAP is applicable to be complete and correct in all material respects
(subject, in the case of interim financial statements, to normal year-end audit
adjustments) and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein (except as
concurred in by such reporting accountants or officer, as the case may be, and
disclosed therein).
7. NEGATIVE COVENANTS. Borrower shall not, until satisfaction in full of the
Obligations and termination of this Agreement:
7.1 Merger, Consolidation, Acquisition and Sale of Assets.
7.1.1 Enter into any merger, consolidation or other reorganization with or
into any other Person or acquire all or a substantial portion of the assets or
stock of any Person or permit any other Person to consolidate with or merge with
it.
7.1.2 Sell, lease, transfer or otherwise dispose of any of its properties
or assets, except in the ordinary course of its business and except as provided
in Section 4.3.
7.2 Creation of Liens. Create or suffer to exist any Lien or transfer upon
or against any of its property or assets now owned or hereafter acquired, except
Permitted Encumbrances.
7.3 Guarantees. Become liable upon the obligations of any Person by
assumption, endorsement or guaranty thereof or otherwise (other than to Lenders)
except the endorsement of checks in the ordinary course of business.
7.4 Investments. Purchase or acquire obligations or stock of, or any other
interest in, any Person, except (a) obligations issued or guaranteed by the
United States of America or any agency thereof, (b) commercial paper with
maturities of not more than 180 days and a published rating of not less than A-1
or P-1 (or the equivalent rating), (c) certificates of time deposit and bankers'
acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of a commercial bank if
(i) such bank has a combined capital and surplus of at least $500,000,000, or
(ii) its debt obligations, or those of a holding company of which it is a
Subsidiary, are rated not less than A (or the equivalent rating) by a nationally
recognized investment rating agency, and (d) U.S. money market funds that invest
solely in obligations issued or guaranteed by the United States of America or an
agency thereof.
7.5 Loans. Make advances, loans or extensions of credit to any Person,
including without limitation, any Parent, Subsidiary or Affiliate except with
respect to the extension of commercial trade credit in connection with the sale
of Inventory in the ordinary course of its business.
7.6 Capital Expenditures. Contract for, purchase or make any expenditure or
commitments for Capital Expenditures in any fiscal year in an aggregate amount
for all Borrowers in excess of Four Hundred Thousand Dollars ($400,000).
7.7 Dividends. Declare, pay or make any dividend or distribution on any
shares of the common stock or preferred stock of Borrower (other than dividends
or distributions payable in its stock, or split-ups or reclassifications of its
stock) or apply any of its funds, property or assets to the purchase, redemption
or other retirement of any common or preferred stock, or of any options to
purchase or acquire any such shares of common or preferred stock of Borrower.
7.8 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness
of Borrower except in respect of (a) the Obligations; (b) Indebtedness due under
the Mezzanine Documentation; and (c) trade debt not outstanding beyond normal
trade terms.
7.9 Nature of Business. Substantially change the nature of the business in
which it is presently engaged, nor except as specifically permitted hereby
purchase or invest, directly or indirectly, in any assets or property other than
in the ordinary course of business for assets or property which are useful in,
necessary for and are to be used in its business as presently conducted.
7.10 Transactions with Affiliates. Directly or indirectly, purchase,
acquire or lease any property from, or sell, transfer or lease any property to,
or otherwise deal with, any Affiliate, except transactions in the ordinary
course of business, on an arm's-length basis on terms no less favorable than
terms which would have been obtainable from a Person other than an Affiliate.
7.11 Leases. Enter as lessee into any lease arrangement for real or
personal property (unless capitalized and permitted under Section 7.6 hereof) if
after giving effect thereto, aggregate annual rental payments for all leased
property would exceed Seventy Five Thousand Dollars ($75,000) in any one fiscal
year in the aggregate for Borrower.
7.12 Subsidiaries.
7.12.1 Form any Subsidiary.
7.12.2 Enter into any partnership, joint venture or similar arrangement.
7.13 Fiscal Year and Accounting Changes. Change its fiscal year from
October 31 or make any change (i) in accounting treatment and reporting
practices except as required by GAAP or (ii) in tax reporting treatment except
as required by law.
7.14 Pledge of Credit. Now or hereafter pledge Agent's or any Lender's
credit on any purchases or for any purpose whatsoever or use any portion of any
Advance in or for any business other than Borrower's business as conducted on
the date of this Agreement.
7.15 Amendment of Articles of Incorporation, By-Laws. Amend, modify or
waive any term or material provision of its Articles of Incorporation or By-Laws
unless required by law.
7.16 Compliance with ERISA. (i) (x) Maintain, or permit any member of the
Controlled Group to maintain, or (y) become obligated to contribute, or permit
any member of the Controlled Group to become obligated to contribute, to any
Plan, other than those Plans disclosed on Schedule 5.8.4, (ii) engage, or permit
any member of the Controlled Group to engage, in any non-exempt "prohibited
transaction", as that term is defined in section 406 of ERISA and Section 4975
of the Code, (iii) incur, or permit any member of the Controlled Group to incur,
any "accumulated funding deficiency", as that term is defined in Section 302 of
ERISA or Section 412 of the Code, (iv) terminate, or permit any member of the
Controlled Group to terminate, any Plan where such event could result in any
liability of Borrower or any member of the Controlled Group or the imposition of
a lien on the property of Borrower or any member of the Controlled Group
pursuant to Section 4068 of ERISA, (v) assume, or permit any member of the
Controlled Group to assume, any obligation to contribute to any Multiemployer
Plan not disclosed on Schedule 5.8.4, (vi) incur, or permit any member of the
Controlled Group to incur, any withdrawal liability to any Multiemployer Plan;
(vii) fail promptly to notify Agent of the occurrence of any Termination Event,
(viii) fail to comply, or permit a member of the Controlled Group to fail to
comply, with the requirements of ERISA or the Code or other applicable laws in
respect of any Plan, (ix) fail to meet, or permit any member of the Controlled
Group to fail to meet, all minimum funding requirements under ERISA or the Code
or postpone or delay or allow any member of the Controlled Group to postpone or
delay any funding requirement with respect of any Plan.
7.17 Prepayment of Indebtedness. At any time, directly or indirectly,
prepay any Indebtedness (other than to Lenders), or repurchase, redeem, retire
or otherwise acquire any Indebtedness of Borrower.
7.18 Subordinated Note. At any time, directly or indirectly, pay, prepay,
repurchase, redeem, retire or otherwise acquire, or make any payment on account
of any principal of, interest on or premium payable in connection with the
repayment or redemption of the Subordinated Note, except as expressly permitted
in the Subordination Agreement.
8. CONDITIONS PRECEDENT.
8.1 Conditions to Initial Advances. The agreement of Lenders to make the
initial Advances requested to be made on the Closing Date is subject to the
satisfaction, or waiver by Agent/Lenders, immediately prior to or concurrently
with the making of such Advances, of the following conditions precedent:
8.1.1 Note/Loan Documents. Agent shall have received the Note duly executed
and delivered by an authorized officer of Borrower and shall have received the
other Loan Documents, duly executed and delivered by the parties thereto; 8.1.2
Filings, Registrations and Recordings. Each document (including, without
limitation, any Uniform Commercial Code financing statement) required by this
Agreement, any related agreement or under law or reasonably requested by the
Agent to be filed, registered or recorded in order to create, in favor of Agent,
a perfected security interest in or lien upon the Collateral shall have been
properly filed, registered or recorded in each jurisdiction in which the filing,
registration or recordation thereof is so required or requested, and Agent shall
have received an acknowledgment copy, or other evidence satisfactory to it, of
each such filing, registration or recordation and satisfactory evidence of the
payment of any necessary fee, tax or expense relating thereto;
8.1.2 Filings, Registrations and Recordings. Each document (including,
without ilmitation, any Uniform Commercial Code financing statement) required by
this Agreement, any related agreement or under law or reasonably requested by
the Agent to be filed, registered or recorded in order to create, in favor of
Agent, a perfected security interest in or lien upon the Collateral shall have
been properly filed, registered or recorded in each jurisdiction in which the
filing, registration or recordation thereof is so required or reqeusted, and
Agent shall have received an acknowledgment copy, or other evidence satisfactory
to it, of each such filing, registration or recordation and satisfactory
evidence of the payment of any necessary fee, tax or expense relating thereto;
8.1.3 Corporate Proceedings of Borrower. Agent shall have received a copy
of the resolutions in form and substance reasonably satisfactory to Agent, of
the Board of Directors of Borrower authorizing (i) the execution, delivery and
performance of this Agreement, the Notes, the Mortgage, any related agreements,
and the Mezzanine Documentation (collectively the "Documents") and (ii) the
granting by Borrower of the security interests in and liens upon the Collateral
in each case certified by the Secretary or an Assistant Secretary of Borrower as
of the Closing Date; and, such certificate shall state that the resolutions
thereby certified have not been amended, modified, revoked or rescinded as of
the date of such certificate;
8.1.4 Incumbency Certificates of Borrower. Agent shall have received a
certificate of the Secretary or an Assistant Secretary of Borrower, dated the
Closing Date, as to the incumbency and signature of the officers of Borrower
executing this Agreement, the Loan Documents, any certificate or other documents
to be delivered by it pursuant hereto, together with evidence of the incumbency
of such Secretary or Assistant Secretary;
8.1.5 Certificates. Agent shall have received a copy of the Articles or
Certificate of Incorporation of Borrower, and all amendments thereto, certified
by the Secretary of State or other appropriate official of its jurisdiction of
incorporation together with copies of the By-Laws of Borrower and all agreements
of Borrower's shareholders certified as accurate and complete by the Secretary
of Borrower;
8.1.6 Good Standing Certificates. Agent shall have received good standing
certificates for Borrower dated not more than thirty (30) days prior to the
Closing Date, issued by the Secretary of State or other appropriate official of
Borrower's jurisdiction of incorporation and each jurisdiction where the conduct
of Borrower's business activities or the ownership of its properties
necessitates qualification;
8.1.7 Legal Opinion. Agent shall have received the executed legal opinions
of Xxxx X. Xxxxx and Xxxxxxx Xxxxxxxx in form and substance satisfactory to
Agent which shall cover such matters incident to the transactions contemplated
by this Agreement, the Note, the Loan Documents, and related agreements as Agent
may reasonably require and Borrower hereby authorizes and directs such counsel
to deliver such opinions to Agent and Lenders;
8.1.8 No Litigation. (i) No litigation, investigation or proceeding before
or by any arbitrator or Governmental Body shall be continuing or threatened
against Borrower or against the officers or directors of Borrower (A) in
connection with this Agreement, the Loan Documents or any of the transactions
contemplated thereby and which, in the reasonable opinion of Agent, is deemed
material or (B) which could, in the reasonable opinion of Agent, have a Material
Adverse Effect; and (ii) no injunction, writ, restraining order or other order
of any nature materially adverse to Borrower or the conduct of its business or
inconsistent with the due consummation of the Transactions shall have been
issued by any Governmental Body;
8.1.9 Collateral Examination. Agent shall have completed Collateral
examinations and received appraisals, the results of which shall be satisfactory
in form and substance to Lenders, of the Receivables, Inventory, General
Intangibles, Real Property, Leasehold Interest and Equipment of Borrower and all
books and records in connection therewith;
8.1.10 Fees. Agent shall have received all fees payable to Agent and
Lenders on or prior to the Closing Date hereunder, including, without
limitation, pursuant to Article III hereof;
8.1.11 Financial Statements. Agent shall have received the financial
statements and projections referred to in Section 5.5 above, which shall be
satisfactory in all respects to Agent.
8.1.12 Mezzanine Documents. Agent shall have received final executed copies
of the Mezzanine Documentation, and all related agreements, documents and
instruments as in effect on the Closing Date and the transactions contemplated
by such documentation shall have been consummated prior to the making of the
initial Advance.
8.1.13 Subordination Agreements. Agent shall have entered into a
Subordination Agreement with Borrower and Mezzanine Lender which shall set forth
the basis upon which the "Subordinated Noteholder" may receive, and Borrower may
make, payments under the Subordinated Note, which basis shall be satisfactory in
form and substance to Agent in its sole discretion;
8.1.14 Insurance. Agent shall have received in form and substance
satisfactory to Agent, certified copies of Borrower's casualty insurance
policies, together with loss payable endorsements on Agent's standard form of
loss payee endorsement naming Agent as loss payee, and certified copies of
Borrower's liability insurance policies, together with endorsements naming Agent
as a co-insured;
8.1.15 Title Insurance. Agent shall have received fully paid mortgagee
title insurance policies (or binding commitments to issue title insurance
policies, marked to Agent's satisfaction to evidence the form of such policies
to be delivered with respect to the Mortgage), in standard ALTA form, issued at
closing to Agent by a title insurance company satisfactory to Agent, each in an
amount equal to not less than the fair market value of the Real Property subject
to the Mortgage, insuring the Mortgage to create a valid Lien on the Real
Property with no exceptions which Agent shall not have approved in writing and
no survey exceptions;
8.1.16 Environmental Reports. Agent shall have received all environmental
studies and reports prepared by independent environmental engineering firms with
respect to all Real Property owned or leased by Borrower;
8.1.17 Payment Instructions. Agent shall have received written instructions
from Borrower directing the application of proceeds of the initial Advances made
pursuant to this Agreement;
8.1.18 Blocked Accounts. Agent shall have received duly executed agreements
establishing the Blocked Accounts or Depository Accounts with financial
institutions acceptable to Agent for the collection or servicing of the
Receivables and proceeds of the Collateral;
8.1.19 Consents. Agent shall have received any and all Consents necessary
to permit the effectuation of the transactions contemplated by this Agreement
and the Loan Documents; and, Agent shall have received such Consents and waivers
of such third parties as might assert claims with respect to the Collateral, as
Agent and its counsel shall deem necessary;
8.1.20 No Adverse Material Change. (i) since October 31, 2001, there shall
not have occurred any event, condition or state of facts which could reasonably
be expected to have a Material Adverse Effect and (ii) no representations made
or information supplied to Agent or Lenders shall have been proven to be
inaccurate or misleading in any material respect;
8.1.21 Leasehold Agreements. Agent shall have received landlord, mortgagee
or warehouseman agreements satisfactory to Agent with respect to all premises
leased by Borrower at which Inventory and books and records are located;
8.1.22 Mortgage. Agent shall have received in form and substance
satisfactory to Lenders (i) an executed Mortgage and (ii) a title policy for the
Real Property and (iii) surveys;
8.1.23 Subordinated Note Documentation. Agent shall have received final
executed copies of the Subordinated Note Documentation which shall contain such
terms and provisions including, without limitation, subordination terms,
satisfactory to Agent;
8.1.24 Contract Review. Agent shall have reviewed all material contracts of
Borrower including, without limitation, leases, union contracts, labor
contracts, vendor supply contracts, license agreements and distributorship
agreements and such contracts and agreements shall be satisfactory in all
respects to Agent;
8.1.25 Closing Certificate. Agent shall have received a closing certificate
signed by the Chief Financial Officer of Borrower dated as of the date hereof,
stating that (i) all representations and warranties set forth in this Agreement
and the Loan Documents are true and correct on and as of such date, (ii)
Borrower is on such date in compliance with all the terms and provisions set
forth in this Agreement and the Loan Documents and (iii) on such date no Default
or Event of Default has occurred or is continuing;
8.1.26 Borrowing Base. Agent shall have received evidence from Borrower
that the aggregate amount of Eligible Receivables and Eligible Inventory is
sufficient in value and amount to support Advances in the amount requested by
Borrower on the Closing Date;
8.1.27 Undrawn Availability. After giving effect to the initial Advances
hereunder, Borrower shall have Undrawn Availability of at least $750,000;
8.1.28 Other. All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the Transactions shall be
satisfactory in form and substance to Agent and its counsel.
8.2 Conditions to Each Advance. The agreement of Lenders to make any
Advance requested to be made on any date (including, without limitation, the
initial Advance), is subject to the satisfaction of the following conditions
precedent as of the date such Advance is made:
8.2.1 Representations and Warranties. Each of the representations and
warranties made by Borrower in or pursuant to this Agreement and any related
agreements to which it is a party, and each of the representations and
warranties contained in any certificate, document or financial or other
statement furnished at any time under or in connection with this Agreement or
any related agreement shall be true and correct in all material respects on and
as of such date as if made on and as of such date;
8.2.2 No Default. No Event of Default or Default shall have occurred and be
continuing on such date, or would exist after giving effect to the Advances
requested to be made, on such date; provided, however that Agent, in its sole
discretion, may continue to make Advances notwithstanding the existence of an
Event of Default or Default and that any Advances so made shall not be deemed a
waiver of any such Event of Default or Default; and
8.2.3 Maximum Advances. In the case of any Advances requested to be made,
after giving effect thereto, the aggregate Advances shall not exceed the maximum
amount of Advances permitted under Section 2.1 hereof.
Each request for an Advance by Borrower hereunder shall constitute a
representation and warranty by Borrower as of the date of such Advance that the
conditions contained in this subsection shall have been satisfied.
9. INFORMATION AS TO BORROWERS. Borrower shall, until satisfaction in full of
the Obligations and the termination of this Agreement:
9.1 Disclosure of Material Matters. Immediately upon learning thereof,
report to Agent all matters materially affecting the value, enforceability or
collectibility of any portion of the Collateral including, without limitation,
Borrower's reclamation or repossession of, or the return to Borrower of, a
material amount of goods or claims or disputes asserted by any Customer or other
obligor.
9.2 Schedules. Deliver to Agent on or before the fifteenth (15th) day of
each month as and for the prior month (a) accounts receivable agings inclusive
of reconciliations to the general ledger, (b) accounts payable schedules
inclusive of reconciliations to the general ledger, (c) Inventory reports and
(d) a borrowing base certificate in form and substance satisfactory to Agent
(which shall be calculated as of the last day of the prior month and which shall
not be binding upon Agent or restrictive of Agent's rights under this
Agreement). In addition, Borrower will deliver to Agent at such intervals as
Agent may require: (i) confirmatory assignment schedules, (ii) copies of
Customer's invoices, (iii) evidence of shipment or delivery, and (iv) such
further schedules, documents and/or information regarding the Collateral as
Agent may require including, without limitation, trial balances and test
verifications. Agent shall have the right to confirm and verify all Receivables
by any manner and through any medium it considers advisable and do whatever it
may deem reasonably necessary to protect its interests hereunder. The items to
be provided under this Section are to be in form satisfactory to Agent and
executed by Borrower and delivered to Agent from time to time solely for Agent's
convenience in maintaining records of the Collateral, and Borrower's failure to
deliver any of such items to Agent shall not affect, terminate, modify or
otherwise limit Agent's Lien with respect to the Collateral.
9.3 Environmental Reports. Furnish Agent, concurrently with the delivery of
the financial statements referred to in Sections 9.7 and 9.8, with a certificate
signed by the President of Borrower stating, to the best of his knowledge, that
Borrower is in compliance in all material respects with all federal, state and
local laws relating to environmental protection and control and occupational
safety and health. To the extent Borrower is not in compliance with the
foregoing laws, the certificate shall set forth with specificity all areas of
non-compliance and the proposed action Borrower will implement in order to
achieve full compliance.
9.4 Litigation. Promptly notify Agent in writing of any litigation, suit or
administrative proceeding affecting Borrower, whether or not the claim is
covered by insurance, and of any suit or administrative proceeding, which in any
such case could reasonably be expected to have a Material Adverse Effect.
9.5 Material Occurrences. Promptly notify Agent in writing upon the
occurrence of (a) any Event of Default or Default; (b) any event of default
under the Mezzanine Documentation; (c) any event which with the giving of notice
or lapse of time, or both, would constitute an event of default under the
Mezzanine Documentation; (d) any event, development or circumstance whereby any
financial statements or other reports furnished to Agent fail in any material
respect to present fairly, in accordance with GAAP consistently applied, the
financial condition or operating results of Borrower as of the date of such
statements; (e) any accumulated retirement plan funding deficiency which, if
such deficiency continued for two plan years and was not corrected as provided
in Section 4971 of the Code, could subject Borrower to a tax imposed by Section
4971 of the Code; (f) each and every default by Borrower which might result in
the acceleration of the maturity of any Indebtedness, including the names and
addresses of the holders of such Indebtedness with respect to which there is a
default existing or with respect to which the maturity has been or could be
accelerated, and the amount of such Indebtedness; and (g) any other development
in the business or affairs of Borrower which could reasonably be expected to
have a Material Adverse Effect; in each case describing the nature thereof and
the action Borrower propose to take with respect thereto.
9.6 Government Receivables. Notify Agent immediately if any of its
Receivables arise out of contracts between Borrower and the United States, any
state, or any department, agency or instrumentality of any of them.
9.7 Annual Financial Statements. Furnish Agent within ninety (90) days
after the end of each fiscal year of Borrower, financial statements of Borrower
including, but not limited to, statements of income and stockholders' equity and
cash flow from the beginning of the current fiscal year to the end of such
fiscal year and the balance sheet as at the end of such fiscal year, all
prepared in accordance with GAAP applied on a basis consistent with prior
practices, and in reasonable detail and reported upon without qualification by
an independent certified public accounting firm selected by Borrower and
satisfactory to Agent (the "Accountants"). The accounting firm of Borrower as of
the Closing Date is satisfactory to Agent. The report of the Accountants shall
be accompanied by a statement of the Accountants certifying that (i) they have
caused this Agreement to be reviewed, (ii) in making the examination upon which
such report was based either no information came to their attention which to
their knowledge constituted an Event of Default or a Default under this
Agreement or any related agreement or, if such information came to their
attention, specifying any such Default or Event of Default, its nature, when it
occurred and whether it is continuing, and such report shall contain or have
appended thereto calculations which set forth Borrower's compliance with the
requirements or restrictions imposed by Sections 6.5, 6.6, 7.6 and 7.11 hereof.
In addition, the reports shall be accompanied by a certificate of Borrower's
Chief Financial Officer which shall state that, based on an examination
sufficient to permit him to make an informed statement, no Default or Event of
Default exists, or, if such is not the case, specifying such Default or Event of
Default, its nature, when it occurred, whether it is continuing and the steps
being taken by Borrower with respect to such event, and such certificate shall
have appended thereto calculations which set forth Borrower's compliance with
the requirements or restrictions imposed by Sections 6.5, 6.6, 7.6 and 7.11
hereof.
9.8 Quarterly Financial Statements. Furnish Agent within forty five (45)
days after the end of each fiscal quarter, an unaudited balance sheet of
Borrower and unaudited statements of income and stockholders' equity and cash
flow of Borrower reflecting results of operations from the beginning of the
fiscal year to the end of such quarter and for such quarter, prepared on a basis
consistent with prior practices and complete and correct in all material
respects, subject to normal and recurring year end adjustments that individually
and in the aggregate are not material to Borrower's business. The reports shall
be accompanied by a certificate signed by the Chief Financial Officer of
Borrower, which shall state that, based on an examination sufficient to permit
him to make an informed statement, no Default or Event of Default exists, or, if
such is not the case, specifying such Default or Event of Default, its nature,
when it occurred, whether it is continuing and the steps being taken by Borrower
with respect to such default and, such certificate shall have appended thereto
calculations which set forth Borrower's compliance with the requirements or
restrictions imposed by Sections 6.5, 6.6, 7.6 and 7.11 hereof.
9.9 Monthly Financial Statements. Furnish Agent within thirty (30) days
after the end of each month, an unaudited balance sheet of Borrower and
unaudited statements of income and stockholders' equity and cash flow of
Borrower reflecting results of operations from the beginning of the fiscal year
to the end of such month and for such month, prepared on a basis consistent with
prior practices and complete and correct in all material respects, subject to
normal and recurring year end adjustments that individually and in the aggregate
are not material to Borrower's business. The reports shall be accompanied by a
certificate of Borrower's Chief Financial Officer, which shall state that, based
on an examination sufficient to permit him to make an informed statement, no
Default or Event of Default exists, or, if such is not the case, specifying such
Default or Event of Default, its nature, when it occurred, whether it is
continuing and the steps being taken by Borrower with respect to such event and,
such certificate shall have appended thereto calculations which set forth
Borrower's compliance with the requirements or restrictions imposed by Sections
6.5, 6.6, 7.6 and 7.11 hereof.
9.10 Other Reports. Furnish Agent as soon as available, but in any event
within ten (10) days after the issuance thereof, (i) with copies of such
financial statements, reports and returns as Borrower shall send to its
stockholders and (ii) copies of all notices sent pursuant to the Mezzanine
Documentation.
9.11 Additional Information. Furnish Agent with such additional information
as Agent shall reasonably request in order to enable Agent to determine whether
the terms, covenants, provisions and conditions of this Agreement and the Note
have been complied with by Borrower including, without limitation and without
the necessity of any request by Agent, (a) copies of all environmental audits
and reviews, (b) at least thirty (30) days prior thereto, notice of Borrower's
opening of any new office or place of business or Borrower's closing of any
existing office or place of business, and (c) promptly upon Borrower's learning
thereof, notice of any labor dispute to which Borrower may become a party, any
strikes or walkouts relating to any of its plants or other facilities, and the
expiration of any labor contract to which Borrower is a party or by which
Borrower is bound.
9.12 Projected Operating Budget. Furnish Agent, no later than thirty (30)
days prior to the beginning of Borrower's fiscal years commencing with fiscal
year 2003, a month by month projected operating budget and cash flow of Borrower
for such fiscal year (including an income statement for each month and a balance
sheet as at the end of the last month in each fiscal quarter), such projections
to be accompanied by a certificate signed by the President or Chief Financial
Officer of Borrower to the effect that such projections have been prepared on
the basis of sound financial planning practice consistent with past budgets and
financial statements and that such officer has no reason to question the
reasonableness of any material assumptions on which such projections were
prepared.
9.13 Variances From Operating Budget. Furnish Agent, concurrently with the
delivery of the financial statements referred to in Section 9.7 and each
quarterly report, a written report summarizing all material variances from
budgets submitted by Borrower pursuant to Section 9.12 and a discussion and
analysis by management with respect to such variances.
9.14 Notice of Suits, Adverse Events. Furnish Agent with prompt notice of
(i) any lapse or other termination of any Consent issued to Borrower by any
Governmental Body or any other Person that is material to the operation of
Borrower's business, (ii) any refusal by any Governmental Body or any other
Person to renew or extend any such Consent; and (iii) copies of any periodic or
special reports filed by Borrower with any Governmental Body or Person, if such
reports indicate any material change in the business, operations, affairs or
condition of Borrower, or if copies thereof are requested by Lender, and (iv)
copies of any material notices and other communications from any Governmental
Body or Person which specifically relate to Borrower.
9.15 ERISA Notices and Requests. Furnish Agent with immediate written
notice in the event that (i) Borrower or any member of the Controlled Group
knows or has reason to know that a Termination Event has occurred, together with
a written statement describing such Termination Event and the action, if any,
which Borrower or any member of the Controlled Group has taken, is taking, or
proposes to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, Department of Labor or PBGC with
respect thereto, (ii) Borrower or any member of the Controlled Group knows or
has reason to know that a prohibited transaction (as defined in Sections 406 of
ERISA and 4975 of the Code) has occurred together with a written statement
describing such transaction and the action which Borrower or any member of the
Controlled Group has taken, is taking or proposes to take with respect thereto,
(iii) a funding waiver request has been filed with respect to any Plan together
with all communications received by Borrower or any member of the Controlled
Group with respect to such request, (iv) any increase in the benefits of any
existing Plan or the establishment of any new Plan or the commencement of
contributions to any Plan to which Borrower or any member of the Controlled
Group was not previously contributing shall occur, (v) Borrower or any member of
the Controlled Group shall receive from the PBGC a notice of intention to
terminate a Plan or to have a trustee appointed to administer a Plan, together
with copies of each such notice, (vi) Borrower or any member of the Controlled
Group shall receive any favorable or unfavorable determination letter from the
Internal Revenue Service regarding the qualification of a Plan under Section 401
(a) of the Code, together with copies of each such letter; (vii) Borrower or any
member of the Controlled Group shall receive a notice regarding the imposition
of withdrawal liability, together with copies of each such notice; (viii)
Borrower or any member of the Controlled Group shall fail to make a required
installment or any other required payment under Section 412 of the Code on or
before the due date for such installment or payment; (ix) Borrower or any member
of the Controlled Group knows that (a) a Multiemployer Plan has been terminated,
(b) the administrator or plan sponsor of a Multiemployer Plan intends to
terminate a Multiemployer Plan, or (c) the PBGC has instituted or will institute
proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan.
9.16 Additional Documents. Execute and deliver to Agent, upon request, such
documents and agreements as Agent may, from time to time, reasonably request to
carry out the purposes, terms or conditions of this Agreement.
10. EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an "Event of Default":
10.1 failure by Borrower to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant
to the terms of this Agreement or by notice of intention to prepay, or by
required prepayment or failure to pay any other liabilities or make any other
payment, fee or charge provided for herein when due or in any Other Document;
10.2 any representation or warranty made or deemed made by Borrower in this
Agreement or any related agreement or in any certificate, document or financial
or other statement furnished at any time in connection herewith or therewith
shall prove to have been misleading in any material respect on the date when
made or deemed to have been made;
10.3 failure by Borrower to (i) furnish financial information when due or
when requested which is unremedied for a period of fifteen (15) days, or (ii)
permit the inspection of its books or records;
10.4 issuance of a notice of Lien, levy, assessment, injunction or
attachment against a material portion of Borrower's property which is not stayed
or lifted within thirty (30) days;
10.5 except as otherwise provided for in Sections 10.1 and 10.3, failure or
neglect of Borrower to perform, keep or observe any term, provision, condition,
covenant herein contained, or contained in any other agreement or arrangement,
now or hereafter entered into between Borrower and Agent or any Lender except
for a failure or neglect of Borrower to perform, keep or observe any term,
provision, condition or covenant, contained in Sections 4.6, 4.7, 4.9, 6.1, 6.3,
6.4, 9.4 or 9.6 hereof which is cured within five (5) days from the occurrence
of such failure or neglect;
10.6 any judgment or judgments are rendered or judgment liens filed against
Borrower and/or Obsidian Capital Partners, LP for an aggregate amount in excess
of One Hundred Thousand Dollars ($100,000) which within 30 days of such
rendering or filing is not either satisfied, stayed or discharged of record;
10.7 Borrower shall (i) apply for, consent to or suffer the appointment of,
or the taking of possession by, a receiver, custodian, trustee, liquidator or
similar fiduciary of itself or of all or a substantial part of its property,
(ii) make a general assignment for the benefit of creditors, (iii) commence a
voluntary case under any state or federal bankruptcy laws (as now or hereafter
in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vi) acquiesce to, or fail to have dismissed, within thirty (30) days, any
petition filed against it in any involuntary case under such bankruptcy laws, or
(vii) take any action for the purpose of effecting any of the foregoing;
10.8 Borrower shall admit in writing its inability, or be generally unable,
to pay its debts as they become due or cease operations of its present business;
10.9 any Affiliate or any Subsidiary of Borrower, or any Guarantor, shall
(i) apply for, consent to or suffer the appointment of, or the taking of
possession by, a receiver, custodian, trustee, liquidator or similar fiduciary
of itself or of all or a substantial part of its property, (ii) admit in writing
its inability, or be generally unable, to pay its debts as they become due or
cease operations of its present business, (iii) make a general assignment for
the benefit of creditors, (iv) commence a voluntary case under any state or
federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a
bankrupt or insolvent, (vi) file a petition seeking to take advantage of any
other law providing for the relief of debtors, (vii) acquiesce to, or fail to
have dismissed, within thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (viii) take any action for the
purpose of effecting any of the foregoing;
10.10 any change in Borrower's condition or affairs (financial or
otherwise) which in Agent's opinion has a Material Adverse Effect;
10.11 any Lien created hereunder or provided for hereby or under any
related agreement for any reason ceases to be or is not a valid and perfected
Lien having a first priority interest;
10.12 an event of default has occurred and been declared under the
Mezzanine Documentation which default shall not have been cured or waived within
any applicable grace period;
10.13 a default of the obligations of Borrower under any other agreement to
which it is a party shall occur which adversely affects its condition, affairs
or prospects (financial or otherwise) which default is not cured within any
applicable grace period;
10.14 termination or breach of any Guaranty or Guaranty Security Agreement
or similar agreement executed and delivered to Agent in connection with the
Obligations of Borrower, or if any Guarantor attempts to terminate, challenges
the validity of, or its liability under, any such Guaranty or Guaranty Security
Agreement or similar agreement;
10.15 any Change of Ownership or Change of Control shall occur;
10.16 any material provision of this Agreement shall, for any reason, cease
to be valid and binding on Borrower, or Borrower shall so claim in writing to
Agent;
10.17 (i) any Governmental Body shall (A) revoke, terminate, suspend or
adversely modify any license, permit, patent trademark or tradename of Borrower,
the continuation of which is material to the continuation of Borrower's
business, or (B) commence proceedings to suspend, revoke, terminate or adversely
modify any such license, permit, trademark, tradename or patent and such
proceedings shall not be dismissed or discharged within sixty (60) days, or (c)
schedule or conduct a hearing on the renewal of any license, permit, trademark,
tradename or patent necessary for the continuation of Borrower's business and
the staff of such Governmental Body issues a report recommending the
termination, revocation, suspension or material, adverse modification of such
license, permit, trademark, tradename or patent; (ii) any agreement which is
necessary or material to the operation of Borrower's business shall be revoked
or terminated and not replaced by a substitute acceptable to Agent within thirty
(30) days after the date of such revocation or termination, and such revocation
or termination and non-replacement would reasonably be expected to have a
Material Adverse Effect;
10.18 any portion of the Collateral shall be seized or taken by a
Governmental Body, or Borrower or the title and rights of Borrower or any
Original Owner which is the owner of any material portion of the Collateral
shall have become the subject matter of litigation which might, in the opinion
of Agent, upon final determination, result in impairment or loss of the security
provided by this Agreement or the Loan Documents;
10.19 the operations of Borrower's manufacturing facility are interrupted
at any time for a period of more than five (5) consecutive Business Days, unless
Borrower shall (i) be entitled to receive for such period of interruption,
proceeds of business interruption insurance sufficient to assure that its per
diem cash needs during such period is at least equal to its average per diem
cash needs for the consecutive [three month] period immediately preceding the
initial date of interruption and (ii) receive such proceeds in the amount
described in clause (i) preceding not later than thirty (30) days following the
initial date of any such interruption; provided, however, that notwithstanding
the provisions of clauses (i) and (ii) of this section, an Event of Default
shall be deemed to have occurred if Borrower shall be receiving the proceeds of
business interruption insurance for a period of thirty (30) consecutive days;
10.20 an event or condition specified in Sections 7.16 or 9.15 hereof shall
occur or exist with respect to any Plan and, as a result of such event or
condition, together with all other such events or conditions, Borrower or any
member of the Controlled Group shall incur, or in the opinion of Agent be
reasonably likely to incur, a liability to a Plan or the PBGC (or both) which,
in the reasonable judgment of Agent, would have a Material Adverse Effect; or
10.21 any breach of the Subordination Agreement or Capital Availability
Agreement.
11. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.
11.1 Rights and Remedies. Upon the occurrence of (i) an Event of Default
pursuant to Section 10.7 all Obligations shall be immediately due and payable
and this Agreement and the obligation of Lenders to make Advances shall be
deemed terminated; and, (ii) any of the other Events of Default and at any time
thereafter (such default not having previously been cured), at the option of
Required Lenders all Obligations shall be immediately due and payable and
Lenders shall have the right to terminate this Agreement and to terminate the
obligation of Lenders to make Advances and (iii) a filing of a petition against
Borrower in any involuntary case under any state or federal bankruptcy laws, the
obligation of Lenders to make Advances hereunder shall be terminated other than
as may be required by an appropriate order of the bankruptcy court having
jurisdiction over Borrower. Upon the occurrence of any Event of Default, Agent
shall have the right to exercise any and all other rights and remedies provided
for herein, under the Uniform Commercial Code and at law or equity generally,
including, without limitation, the right to foreclose the security interests
granted herein and to realize upon any Collateral by any available judicial
procedure and/or to take possession of and sell any or all of the Collateral
with or without judicial process. Agent may enter any of Borrower's premises or
other premises without legal process and without incurring liability to Borrower
therefor, and Agent may thereupon, or at any time thereafter, in its discretion
without notice or demand, take the Collateral and remove the same to such place
as Agent may deem advisable and Agent may require Borrower to make the
Collateral available to Agent at a convenient place. With or without having the
Collateral at the time or place of sale, Agent may sell the Collateral, or any
part thereof, at public or private sale, at any time or place, in one or more
sales, at such price or prices, and upon such terms, either for cash, credit or
future delivery, as Agent may elect. Except as to that part of the Collateral
which is perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market, Agent shall give Borrower reasonable
notification of such sale or sales, it being agreed that in all events written
notice mailed to Borrower at least five (5) days prior to such sale or sales is
reasonable notification. At any public sale Agent or any Lender may bid for and
become the purchaser, and Agent, any Lender or any other purchaser at any such
sale thereafter shall hold the Collateral sold absolutely free from any claim or
right of whatsoever kind, including any equity of redemption and such right and
equity are hereby expressly waived and released by Borrower. In connection with
the exercise of the foregoing remedies, Agent is granted permission to use all
of Borrower's (a) trademarks, trade styles, trade names, patents, patent
applications, licenses, franchises and other proprietary rights which are used
in connection with Inventory for the purpose of disposing of such Inventory and
(b) Equipment for the purpose of completing the manufacture of unfinished goods.
The proceeds realized from the sale of any Collateral shall be applied in the
order set forth in Section 11.5 hereof. If any deficiency shall arise, Borrower
shall remain liable to Agent and Lenders therefor.
11.2 Agent's Discretion. Agent shall have the right in its sole discretion
to determine which rights, Liens, security interests or remedies Agent may at
any time pursue, relinquish, subordinate, or modify or to take any other action
with respect thereto and such determination will not in any way modify or affect
any of Agent's or Lenders' rights hereunder.
11.3 Setoff. In addition to any other rights which Agent or any Lender may
have under applicable law, upon the occurrence of an Event of Default hereunder,
Agent and such Lender shall have a right to apply Borrower's property held by
Agent and such Lender to reduce the Obligations.
11.4 Rights and Remedies Not Exclusive. The enumeration of the foregoing
rights and remedies is not intended to be exhaustive and the exercise of any
rights or remedy shall not preclude the exercise of any other right or remedies
provided for herein or otherwise provided by law, all of which shall be
cumulative and not alternative.
11.5 Allocation of Payments After Event of Default. Notwithstanding any
other provisions of this Agreement to the contrary, after the occurrence and
during the continuance of an Event of Default, all amounts collected or received
by the Agent on account of the Obligations or any other amounts outstanding
under any of the Loan Documents or in respect of the Collateral may, at Agent's
discretion, be paid over or delivered as follows:
11.5.1 FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation, reasonable attorneys' fees) of the Agent
in connection with enforcing its rights and the rights of the Lenders under this
Agreement and the Loan Documents and any protective advances made by the Agent
with respect to the Collateral under or pursuant to the terns of this Document;
11.5.2 SECOND, to payment of any fees owed to the Agent;
11.5.3 THIRD, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation, reasonable attorneys' fees) of each of
the Lenders in connection with enforcing its rights under this Agreement and the
Loan Documents or otherwise with respect to the Obligations owing to such
Lender;
11.5.4 FOURTH, to the payment of all of the Obligations consisting of
accrued fees and interest;
11.5.5 FIFTH, to the payment of the outstanding principal amount of the
Obligations (including the payment or cash collateralization of any outstanding
[L]xxxxxx of [C]redit);
11.5.6 SIXTH, to all other Obligations and other obligations which shall
have become due and payable under the Loan Documents or otherwise and not repaid
pursuant to clauses "FIRST" through "FIFTH" above;
11.5.7 SEVENTH, to the payment of the surplus, if any, to whoever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the Lenders shall receive (so long as it is
not a Defaulting Lender) an amount equal to its pro rata share (based on the
proportion that the then outstanding Advances held by such Lender bears to the
aggregate then outstanding Advances) of amounts available to be applied pursuant
to clauses "FOURTH", "FIFTH" and "SIXTH" above; and (iii) to the extent that any
amounts available for distribution pursuant to clause "FIFTH" above are
attributable to the issued but undrawn amount of outstanding Letters of Credit,
such amounts shall be held by the Agent in a cash collateral account and applied
(A) first, to reimburse the Issuer from time to time for any drawings under such
Letters of Credit and (B) then, following the expiration of all Letters of
Credit, to all other obligations of the types described in clauses "FIFTH" and
"SIXTH" above in the manner provided in this Section 11.5.
12. WAIVERS AND JUDICIAL PROCEEDINGS.
12.1 Waiver of Notice. Borrower hereby waives notice of non-payment of any
of the Receivables, demand, presentment, protest and notice thereof with respect
to any and all instruments, notice of acceptance hereof, notice of loans or
advances made, credit extended, Collateral received or delivered, or any other
action taken in reliance hereon, and all other demands and notices of any
description, except such as are expressly provided for herein.
12.2 Delay. No delay or omission on Agent's or any Lender's part in
exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.
12.3 Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) 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 CONSENTS THAT
ANY SUCH CLAIM, DEMAND, 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
CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
13. EFFECTIVE DATE AND TERMINATION.
13.1 Term. This Agreement, which shall inure to the benefit of and shall be
binding upon the respective successors and permitted assigns of Borrower, Agent
and each Lender, shall become effective on the date hereof and shall continue in
full force and effect until October 24, 2005 (the "Term") unless sooner
terminated as herein provided. Borrower may terminate this Agreement at any time
upon ninety (90) days' prior written notice upon payment in full of the
Obligations. In the event the Obligations are prepaid in full prior to the last
day of the Term (the date of such prepayment hereinafter referred to as the
"Early Termination Date"), Borrower shall pay to Agent for the benefit of
Lenders an early termination fee in an amount equal to (x) $240,000 if the Early
Termination Date occurs on or after the Closing Date to and including the date
immediately preceding the first anniversary of the Closing Date, (y) $160,000 if
the Early Termination Date occurs on or after the first anniversary of the
Closing Date to and including the date immediately preceding the second
anniversary of the Closing Date, and (z) $80,000 if the Early Termination Date
occurs on or after the second anniversary of the Closing Date.
13.2 Termination. The termination of the Agreement shall not affect
Borrower's, Agent's or any Lender's rights, or any of the Obligations having
their inception prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have been fully
disposed of, concluded or liquidated. The security interests, Liens and rights
granted to Agent and Lenders hereunder and the financing statements filed
hereunder shall continue in full force and effect, notwithstanding the
termination of this Agreement or the fact that Borrower's Account may from time
to time be temporarily in a zero or credit position, until all of the
Obligations of Borrower have been paid or performed in full after the
termination of this Agreement or Borrower has furnished Agent and Lenders with
an indemnification satisfactory to Agent and Lenders with respect thereto.
Accordingly, Borrower waives any rights which it may have under the Uniform
Commercial Code to demand the filing of termination statements with respect to
the Collateral, and Agent shall not be required to send such termination
statements to Borrower, or to file them with any filing office, unless and until
this Agreement shall have been terminated in accordance with its terms and all
Obligations paid in full in immediately available funds. All representations,
warranties, covenants, waivers and agreements contained herein shall survive
termination hereof until all Obligations are paid or performed in full.
14. REGARDING AGENT.
14.1 Appointment. Each Lender hereby designates PNC to act as Agent for
such Lender under this Agreement and the Loan Documents. Each Lender hereby
irrevocably authorizes Agent to take such action on its behalf under the
provisions of this Agreement and the Loan Documents and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal and interest, fees, charges and collections (without
giving effect to any collection days) received pursuant to this Agreement, for
the ratable benefit of Lenders. Agent may perform any of its duties hereunder by
or through its agents or employees. As to any matters not expressly provided for
by this Agreement (including without limitation, collection of the Note) Agent
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Required Lenders,
and such instructions shall be binding; provided, however, that Agent shall not
be required to take any action which exposes Agent to liability or which is
contrary to this Agreement or the Loan Documents or applicable law unless Agent
is furnished with an indemnification reasonably satisfactory to Agent with
respect thereto.
14.2 Nature of Duties. Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement and the Loan Documents.
Neither Agent nor any of its officers, directors, employees or agents shall be
(i) liable for any action taken or omitted by them as such hereunder or in
connection herewith, unless caused by their gross (not mere) negligence or
willful misconduct, or (ii) responsible in any manner for any recitals,
statements, representations or warranties made by Borrower or any officer
thereof contained in this Agreement, or in any of the Loan Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any of the
Loan Documents or for the value, validity, effectiveness, genuineness, due
execution, enforceability or sufficiency of this Agreement, or any of the Loan
Documents or for any failure of Borrower to perform its obligations hereunder.
Agent shall not be under any obligation to any Lender to ascertain or to inquire
as to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any of the Loan Documents, or to inspect the
properties, books or records of Borrower. The duties of Agent as respects the
Advances to Borrower shall be mechanical and administrative in nature; Agent
shall not have by reason of this Agreement a fiduciary relationship in respect
of any Lender; and nothing in this Agreement, expressed or implied, is intended
to or shall be so construed as to impose upon Agent any obligations in respect
of this Agreement except as expressly set forth herein.
14.3 Lack of Reliance on Agent and Resignation. Independently and without
reliance upon Agent or any other Lender, each Lender has made and shall continue
to make (i) its own independent investigation of the financial condition and
affairs of Borrower in connection with the making and the continuance of the
Advances hereunder and the taking or not taking of any action in connection
herewith, and (ii) its own appraisal of the creditworthiness of Borrower. Agent
shall have no duty or responsibility, either initially or on a continuing basis,
to provide any Lender with any credit or other information with respect thereto,
whether coming into its possession before making of the Advances or at any time
or times thereafter except as shall be provided by Borrower pursuant to the
terms hereof. Agent shall not be responsible to any Lender for any recitals,
statements, information, representations or warranties herein or in any
agreement, document, certificate or a statement delivered in connection with or
for the execution, effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Agreement or any Other Document, or of the
financial condition of Borrower, or be required to make any inquiry concerning
either the performance or observance of any of the terms, provisions or
conditions of this Agreement, the Note, the Loan Documents or the financial
condition of Borrower, or the existence of any Event of Default or any Default.
Agent may resign on sixty (60) days' written notice to each of Lenders and
Borrower and upon such resignation, the Required Lenders will promptly designate
a successor Agent reasonably satisfactory to Borrower.
Any such successor Agent shall succeed to the rights, powers and duties of
Agent, and the tenn "Agent" shall mean such successor agent effective upon its
appointment, and the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent. After any Agent's resignation as Agent, the provisions of this Article
XIV shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement.
14.4 Certain Rights of Agent. If Agent shall request instructions from
Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any Other Document, Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have
received instructions from the Required Lenders; and Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, Lenders shall not have any right of action whatsoever against Agent
as a result of its acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders.
14.5 Reliance. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, order or other
document or telephone message believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters pertaining to this Agreement and the Loan Documents and its
duties hereunder, upon advice of counsel selected by it. Agent may employ agents
and attorneys-in-fact and shall not be liable for the default or misconduct of
any such agents or attorneys-in-fact selected by Agent with reasonable care.
14.6 Notice of Default. Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder or under
the Loan Documents, unless Agent has received notice from a Lender or Borrower
referring to this Agreement or the Loan Documents, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that Agent receives such a notice, Agent shall give notice thereof to
Lenders. Agent shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required Lenders; provided, that,
unless and until Agent shall have received such directions, Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of Lenders.
14.7 Indemnification. To the extent Agent is not reimbursed and indemnified
by Borrower, each Lender will reimburse and indemnify Agent in proportion to its
respective portion of the Advances (or, if no Advances are outstanding,
according to its Commitment Percentage), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against Agent in performing its duties
hereunder, or in any way relating to or arising out of this Agreement or any
Other Document; provided that, Lenders shall not be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from Agent's gross (not mere)
negligence or willful misconduct.
14.8 Agent in its Individual Capacity. With respect to the obligation of
Agent to lend under this Agreement, the Advances made by it shall have the same
rights and powers hereunder as any other Lender and as if it were not performing
the duties as Agent specified herein; and the term "Lender" or any similar term
shall, unless the context clearly otherwise indicates, include Agent in its
individual capacity as a Lender. Agent may engage in business with Borrower as
if it were not performing the duties specified herein, and may accept fees and
other consideration from Borrower for services in connection with this Agreement
or otherwise without having to account for the same to Lenders.
14.9 Delivery of Documents. To the extent Agent receives financial
statements required under Sections 9.7, 9.8, 9.9, 9.12 and 9.13 from Borrower
pursuant to the terms of this Agreement, Agent will promptly furnish such
documents and information to Lenders.
14.10 Borrower's Undertaking to Agent. Without prejudice to its obligations
to Lenders under the other provisions of this Agreement, Borrower hereby
undertakes with Agent to pay to Agent from time to time on demand all amounts
from time to time due and payable by it for the account of Agent or Lenders or
any of them pursuant to this Agreement to the extent not already paid. Any
payment made pursuant to any such demand shall pro tanto satisfy the relevant
Borrower's obligations to make payments for the account of Lenders or the
relevant one or more of them pursuant to this Agreement.
15. MISCELLANEOUS.
15.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Indiana applied to contracts to be
performed wholly within the State of Indiana. Any judicial proceeding brought by
or against Borrower with respect to any of the Obligations, this Agreement, the
Loan Documents or any related agreement may be brought in any court of competent
jurisdiction in the State of Indiana, United States of America, and, by
execution and delivery of this Agreement, Borrower accepts for itself and in
connection with its properties, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement. Borrower hereby
waives personal service of any and all process upon it and consents that all
such service of process may be made by registered mail (return receipt
requested) directed to Borrower at its address set forth in Section 15.6 and
service so made shall be deemed completed five (5) days after the same shall
have been so deposited in the mails of the United States of America. Nothing
herein shall affect the right to serve process in any manner permitted by law or
shall limit the right of Agent or any Lender to bring proceedings against
Borrower in the courts of any other jurisdiction. Borrower waives any objection
to jurisdiction and venue of any action instituted hereunder and shall not
assert any defense based on lack of jurisdiction or venue or based upon forum
non conveniens. Borrower waives the right to remove any judicial proceeding
brought against Borrower in any state court to any federal court. Any judicial
proceeding by Borrower against Agent or any Lender involving, directly or
indirectly, any matter or claim in any way arising out of, related to or
connected with this Agreement or any related agreement, shall be brought only in
a federal or state court located in the County of Marion, State of Indiana.
15.2 Entire Understanding.
15.2.1 This Agreement and the documents executed concurrently herewith
contain the entire understanding between Borrower, Agent and each Lender and
supersedes all prior agreements and understandings, if any, relating to the
subject matter hereof. Any promises, representations, warranties or guarantees
not herein contained and hereinafter made shall have no force and effect unless
in writing, signed by Borrower's, Agent's and each Lender's respective officers.
Neither this Agreement nor any portion or provisions hereof may be changed,
modified, amended, waived, supplemented, discharged, cancelled or terminated
orally or by any course of dealing, or in any manner other than by an agreement
in writing, signed by the party to be charged. Borrower acknowledges that it has
been advised by counsel in connection with the execution of this Agreement and
Loan Documents and is not relying upon oral representations or statements
inconsistent with the terms and provisions of this Agreement.
15.2.2 The Required Lenders, Agent with the consent in writing of the
Required Lenders, and Borrower may, subject to the provisions of this Section
15.2.2, from time to time enter into written supplemental agreements to this
Agreement or the Loan Documents executed by Borrower, for the purpose of adding
or deleting any provisions or otherwise changing, varying or waiving in any
manner the rights of Lenders, Agent or Borrower thereunder or the conditions,
provisions or terms thereof of waiving any Event of Default thereunder, but only
to the extent specified in such written agreements; provided, however, that no
such supplemental agreement shall, without the consent of all Lenders:
15.2.2.1 increase the Commitment Percentage, the maximum dollar commitment
of any Lender or the Maximum Revolving Advance Amount.
15.2.2.2 extend the maturity of any Note or the due date for any amount
payable hereunder, or decrease the rate of interest or reduce any fee payable by
Borrower to Lenders pursuant to this Agreement.
15.2.2.3 alter the definition of the term Required Lenders or alter, amend
or modify this Section 15.2.2.
15.2.2.4 release any Collateral during any calendar year (other than in
accordance with the provisions of this Agreement) having an aggregate value in
excess of Fifty Thousand Dollars ($50,000).
15.2.2.5 change the rights and duties of Agent.
15.2.2.6 permit any Revolving Advance to be made if after giving effect
thereto the total of Revolving Advances outstanding hereunder would exceed the
Formula Amount for more than sixty (60) consecutive Business Days or exceed one
hundred and ten percent (110%) of the Formula Amount.
15.2.2.7 increase the Advance Rates above the Advance Rates in effect on
the Closing Date.
15.2.2.8 release any Guarantor, if any.
Any such supplemental agreement shall apply equally to each Lender and shall be
binding upon Borrower, Lenders and Agent and all future holders of the
Obligations. In the case of any waiver, Borrower, Agent and Lenders shall be
restored to their former positions and rights, and any Event of Default waived
shall be deemed to be cured and not continuing, but no waiver of a specific
Event of Default shall extend to any subsequent Event of Default (whether or not
the subsequent Event of Default is the same as the Event of Default which was
waived), or impair any right consequent thereon.
In the event that Agent requests the consent of a Lender pursuant to this
Section 15.2 and such Lender shall not respond or reply to Agent in writing
within five (5) days of delivery of such request, such Lender shall be deemed to
have consented to the matter that was the subject of the request. In the event
that Agent requests the consent of a Lender pursuant to this Section 15.2 and
such consent is denied, then PNC may, at its option, require such Lender to
assign its interest in the Advances to PNC or to another Lender or to any other
Person designated by the Agent (the "Designated Lender"), for a price equal to
the then outstanding principal amount thereof plus accrued and unpaid interest
and fees due such Lender, which interest and fees shall be paid when collected
from Borrower. In the event PNC elects to require any Lender to assign its
interest to PNC or to the Designated Lender, PNC will so notify such Lender in
writing within forty five (45) days following such Lender's denial, and such
Lender will assign its interest to PNC or the Designated Lender no later than
five (5) days following receipt of such notice pursuant to a Commitment Transfer
Supplement executed by such Lender, PNC or the Designated Lender, as
appropriate, and Agent.
Notwithstanding (a) the existence of a Default or an Event of Default, (b)
that any of the other applicable conditions precedent set forth in Section 8.2
hereof have not been satisfied or (c) any other provision of this Agreement,
Agent may at its discretion and without the consent of the Required Lenders,
voluntarily permit the outstanding Revolving Advances at any time to exceed the
Formula Amount by up to ten percent (10%) of the Formula Amount for up to thirty
(30) consecutive Business Days (the "Out-of-Formula Loans"). If Agent is willing
in its sole and absolute discretion to make such Out-of-Formula Loans, such
Out-of-Formula Loans shall be payable on demand and shall bear interest at the
Default Rate for Revolving Advances consisting of Domestic Rate Loans; provided
that, if Lenders do make Out-of-Formula Loans, neither Agent nor Lenders shall
be deemed thereby to have changed the limits of Section 2.1. For purposes of
this paragraph, the discretion granted to Agent hereunder shall not preclude
involuntary overadvances that may result from time to time due to the fact that
the Formula Amount was unintentionally exceeded for any reason, including, but
not limited to, Collateral previously deemed to be either "Eligible Receivables"
or "Eligible Inventory", as applicable, becomes ineligible, collections of
Receivables applied to reduce outstanding Revolving Advances are thereafter
returned for insufficient funds. In the event Agent involuntarily permits the
outstanding Revolving Advances to exceed the Formula Amount by more than ten
percent (10%), Agent shall use its efforts to have Borrower decrease such excess
in as expeditious a manner as is practicable under the circumstances and not
inconsistent with the reason for such excess. Revolving Advances made after
Agent has determined the existence of involuntary overadvances shall be deemed
to be involuntary overadvances and shall be decreased in accordance with the
preceding sentence.
In addition to (and not in substitution of) the discretionary Revolving
Advances permitted above in this Section 15.2, the Agent is hereby authorized by
Borrower and the Lenders, from time to time in the Agent's sole discretion, (A)
after the occurrence and during the continuation of a Default or an Event of
Default, or (B) at any time that any of the other applicable conditions
precedent set forth in Section 8.2 hereof have not been satisfied, to make
Revolving Advances to Borrower on behalf of the Lenders which the Agent, in its
reasonable business judgment, deems necessary or desirable (a) to preserve or
protect the Collateral, or any portion thereof, (b) to enhance the likelihood
of, or maximize the amount of, repayment of the Advances and other Obligations,
or (c) to pay any other amount chargeable to Borrower pursuant to the terms of
this Agreement; provided, that at any time after giving effect to any such
Revolving Advances the outstanding Revolving Advances do not exceed one hundred
and ten percent (110%) of the Formula Amount.
15.3 Successors and Assigns; Participations; New Lenders.
15.3.1 This Agreement shall be binding upon and inure to the benefit of
Borrower, Agent, each Lender, all future holders of the Obligations and their
respective successors and assigns, except that Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of Agent and each Lender.
15.3.2 Borrower acknowledges that in the regular course of commercial
banking business one or more Lenders may at any time and from time to time sell
participating interests in the Advances to other financial institutions (each
such transferee or purchaser of a participating interest, a "Transferee"). Each
Transferee may exercise all rights of payment (including without limitation
rights of set-off) with respect to the portion of such Advances held by it or
other Obligations payable hereunder as fully as if such Transferee were the
direct holder thereof provided that Borrower shall not be required to pay to any
Transferee more than the amount which it would have been required to pay to
Lender which granted an interest in its Advances or other Obligations payable
hereunder to such Transferee had such Lender retained such interest in the
Advances hereunder or other Obligations payable hereunder and in no event shall
Borrower be required to pay any such amount arising from the same circumstances
and with respect to the same Advances or other Obligations payable hereunder to
both such Lender and such Transferee. Borrower hereby grants to any Transferee a
continuing security interest in any deposits, moneys or other property actually
or constructively held by such Transferee as security for the Transferee's
interest in the Advances.
15.3.3 Any Lender may with the consent of Agent which shall not be
unreasonably withheld or delayed sell, assign or transfer all or any part of its
rights under this Agreement and the Loan Documents to one or more additional
banks or financial institutions and one or more additional banks or financial
institutions may commit to make Advances hereunder (each a "Purchasing Lender"),
in minimum amounts of not less than One Million Dollars ($1,000,000), pursuant
to a Commitment Transfer Supplement, executed by a Purchasing Lender, the
transferor Lender, and Agent and delivered to Agent for recording. Upon such
execution, delivery, acceptance and recording, from and after the transfer
effective date determined pursuant to such Commitment Transfer Supplement, (i)
Purchasing Lender thereunder shall be a party hereto and, to the extent provided
in such Commitment Transfer Supplement, have the rights and obligations of a
Lender thereunder with a Commitment Percentage as set forth therein, and (ii)
the transferor Lender thereunder shall, to the extent provided in such
Commitment Transfer Supplement, be released from its obligations under this
Agreement, the Commitment Transfer Supplement creating a novation for that
purpose. Such Commitment Transfer Supplement shall be deemed to amend this
Agreement to the extent, and only to the extent, necessary to reflect the
addition of such Purchasing Lender and the resulting adjustment of the
Commitment Percentages arising from the purchase by such Purchasing Lender of
all or a portion of the rights and obligations of such transferor Lender under
this Agreement and the Loan Documents. Borrower hereby consents to the addition
of such Purchasing Lender and the resulting adjustment of the Commitment
Percentages arising from the purchase by such Purchasing Lender of all or a
portion of the rights and obligations of such transferor Lender under this
Agreement and the Loan Documents. Borrower shall execute and deliver such
further documents and do such further acts and things in order to effectuate the
foregoing.
15.3.4 Agent shall maintain at its address a copy of each Commitment
Transfer Supplement delivered to it and a register (the "Register") for the
recordation of the names and addresses of each Lender and the outstanding
principal, accrued and unpaid interest and other fees due hereunder. The entries
in the Register shall be conclusive, in the absence of manifest error, and
Borrower, Agent and Lenders may treat each Person whose name is recorded in the
Register as the owner of the Advance recorded therein for the purposes of this
Agreement. The Register shall be available for inspection by Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice. Agent shall receive a fee in the amount of $3,500 payable by the
applicable Purchasing Lender upon the effective date of each transfer or
assignment to such Purchasing Lender.
15.3.5 Borrower authorizes each Lender to disclose to any Transferee or
Purchasing Lender and any prospective Transferee or Purchasing Lender any and
all financial information in such Lender's possession concerning Borrower which
has been delivered to such Lender by or on behalf of Borrower pursuant to this
Agreement or in connection with such Lender's credit evaluation of Borrower.
15.4 Application of Payments. Agent shall have the continuing and exclusive
right to apply or reverse and re-apply any payment and any and all proceeds of
Collateral to any portion of the Obligations. To the extent that Borrower makes
a payment or Agent or any Lender receives any payment or proceeds of the
Collateral for Borrower's benefit, which are subsequently invalidated, declared
to be fraudulent or preferential, set aside or required to be repaid to a
trustee, debtor in possession, receiver, custodian or any other party under any
bankruptcy law, common law or equitable cause, then, to such extent, the
Obligations or part thereof intended to be satisfied shall be revived and
continue as if such payment or proceeds had not been received by Agent or such
Lender.
15.5 Indemnity. Borrower shall indemnify Agent, each Lender and each of
their respective officers, directors, Affiliates, attorneys, employees and
agents from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind or nature whatsoever (including, without limitation, fees and disbursements
of counsel) which may be imposed on, incurred by, or asserted against Agent or
any Lender in any litigation, proceeding or investigation instituted or
conducted by any governmental agency or instrumentality or any other Person with
respect to any aspect of, or any transaction contemplated by, or referred to in,
or any matter related to, this Agreement or the Loan Documents, whether or not
Agent or any Lender is a party thereto, except to the extent that any of the
foregoing arises out of the willful misconduct of the party being indemnified.
15.6 Notice. Any notice or request hereunder may be given to Borrower or to
Agent or any Lender at their respective addresses set forth below or at such
other address as may hereafter be specified in a notice designated as a notice
of change of address under this Section. Any notice, request, demand, direction
or other communication (for purposes of this Section 15.6 only, a "Notice") to
be given to or made upon any party hereto under any provision of this Loan
Agreement shall be given or made by telephone or in writing (which includes by
means of electronic transmission (i.e., "e-mail") or facsimile transmission or
by setting forth such Notice on a site on the World Wide Web (a "Website
Posting") if Notice of such Website Posting (including the information necessary
to access such site) has previously been delivered to the applicable parties
hereto by another means set forth in this Section 15.6) in accordance with this
Section 15.6. Any such Notice must be delivered to the applicable parties hereto
at the addresses and numbers set forth under their respective names on Section
15.6 hereof or in accordance with any subsequent unrevoked Notice from any such
party that is given in accordance with this Section 15.6. Any Notice shall be
effective:
15.6.1 In the case of hand-delivery, when delivered;
15.6.2 If given by mail, four days after such Notice is deposited with the
United States Postal Service, with first-class postage prepaid, return receipt
requested;
15.6.3 In the case of a telephonic Notice, when a party is contacted by
telephone, if delivery of such telephonic Notice is confirmed no later than the
next Business Day by hand delivery, a facsimile or electronic transmission, a
Website Posting or an overnight courier delivery of a confirmatory Notice
(received at or before noon on such next Business Day);
15.6.4 In the case of a facsimile transmission, when sent to the applicable
party's facsimile machine's telephone number, if the party sending such Notice
receives confirmation of the delivery thereof from its own facsimile machine;
15.6.5 In the case of electronic transmission, when actually received;
15.6.6 In the case of a Website Posting, upon delivery of a Notice of such
posting (including the information necessary to access such site) by another
means set forth in this Section 15.6; and
15.6.7 If given by any other means (including by overnight courier), when
actually received.
Any Lender giving a Notice to Borrower shall concurrently send a copy
thereof to the Agent, and the Agent shall promptly notify the other Lenders of
its receipt of such Notice.
If to Agent or PNC at: PNC Bank, National Association
One PNC Plaza
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to: PNC Bank, National Association
PNC Agency Services
Xxx XXX Xxxxx, 00xx Xxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
with a copy to: Xxxxx Xxxxx Xxxx LLC
2200 PNC Center
000 X. 0xx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X'Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to a Lender other than Agent, as specified on the signature pages hereof
If to Borrower: U.S. Rubber Reclaiming, Inc.
000 Xxxxxxxx Xxxxxx
Bank Xxx Xxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxxxxxx & Feibleman
000 Xxxxxxxx Xxxxxx
Bank Xxx Xxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
15.7 Survival. The obligations of Borrower under Sections 2.3.6, 3.9, 3.10
3.11 4.19.8, 14.7 and 15.5 shall survive termination of this Agreement and the
Loan Documents and payment in full of the Obligations.
15.8 Severability. If any part of this Agreement is contrary to, prohibited
by, or deemed invalid under applicable laws or regulations, such provision shall
be inapplicable and deemed omitted to the extent so contrary, prohibited or
invalid, but the remainder hereof shall not be invalidated thereby and shall be
given effect so far as possible.
15.9 Expenses. All costs and expenses including, without limitation,
reasonable attorneys' fees (including the allocated costs of in house counsel)
and disbursements incurred by Agent on its behalf or on behalf of Lenders and
Lenders (a) in all efforts made to enforce payment of any Obligation or effect
collection of any Collateral, or (b) in connection with the entering into,
modification, amendment, administration and enforcement of this Agreement or any
consents or waivers hereunder and all related agreements, documents and
instruments, or (c) in instituting, maintaining, preserving, enforcing and
foreclosing on Agent's security interest in or Lien on any of the Collateral,
whether through judicial proceedings or otherwise, or (d) in defending or
prosecuting any actions or proceedings arising out of or relating to Agent's or
any Lender's transactions with Borrower, or (e) in connection with any advice
given to Agent or any Lender with respect to its rights and obligations under
this Agreement and all related agreements, may be charged to Borrower's Account
and shall be part of the Obligations.
15.10 Injunctive Relief. Borrower recognizes that, in the event Borrower
fails to perform, observe or discharge any of its obligations or liabilities
under this Agreement, any remedy at law may prove to be inadequate relief to
Lenders; therefore, Agent, if Agent so requests, shall be entitled to temporary
and permanent injunctive relief in any such case without the necessity of
proving that actual damages are not an adequate remedy.
15.11 Consequential Damages. Neither Agent nor any Lender, nor any agent or
attorney for any of them, shall be liable to Borrower for consequential damages
arising from any breach of contract, tort or other wrong relating to the
establishment, administration or collection of the Obligations.
15.12 Cautions. The captions at various places in this Agreement are
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.
15.13 Counterparts; Facsimile Signatures. This Agreement may be executed in
any number of and by different parties hereto on separate counterparts, all of
which, when so executed, shall be deemed an original, but all such counterparts
shall constitute one and the same agreement. Any signature delivered by a party
by facsimile transmission shall be deemed to be an original signature hereto.
15.14 Construction. The parties acknowledge that each party and its counsel
have reviewed this Agreement and that the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
15.15 Confidentiality; Sharing Information.
15.15.1 Agent, each Lender and each Transferee shall hold all non-public
information obtained by Agent, such Lender or such Transferee pursuant to the
requirements of this Agreement in accordance with Agent's, such Lender's and
such Transferee's customary procedures for handling confidential information of
this nature; provided, however, Agent, each Lender and each Transferee may
disclose such confidential information (a) to its examiners, affiliates, outside
auditors, counsel and other professional advisors, (b) to Agent, any Lender or
to any prospective Transferees and Purchasing Lenders, and (c) as required or
requested by any Governmental Body or representative thereof or pursuant to
legal process; provided, further that (i) unless specifically prohibited by
applicable law or court order, Agent, each Lender and each Transferee shall use
its best efforts prior to disclosure thereof, to notify Borrower of the
applicable request for disclosure of such non-public information (A) by a
Governmental Body or representative thereof (other than any such request in
connection with an examination of the financial condition of a Lender or a
Transferee by such Governmental Body) or (B) pursuant to legal process and (ii)
in no event shall Agent, any Lender or any Transferee be obligated to return any
materials furnished by Borrower other than those documents and instruments in
possession of Agent or any Lender in order to perfect its Lien on the Collateral
once the Obligations have been paid in full and this Agreement has been
terminated.
15.15.2 Borrower acknowledges that from time to time financial advisory,
investment banking and other services may be offered or provided to Borrower or
one or more of its Affiliates (in connection with this Agreement or otherwise)
by any Lender or by one or more Subsidiaries or Affiliates of such Lender and
Borrower hereby authorizes each Lender to share any information delivered to
such Lender by Borrower and its Subsidiaries pursuant to this Agreement, or in
connection with the decision of such Lender to enter into this Agreement, to any
such Subsidiary or Affiliate of such Lender, it being understood that any such
Subsidiary or Affiliate of any Lender receiving such information shall be bound
by the provisions of this Section 15.15 as if it were a Lender hereunder. Such
authorization shall survive the repayment of the other Obligations and the
termination of the Loan Agreement.
15.16 Publicity. Borrower and each Lender hereby authorizes Agent to make
appropriate announcements of the financial arrangement entered into among
Borrower, Agent and Lenders, including, without limitation, announcements which
are commonly known as tombstones, in such publications and to such selected
parties as Agent shall in its sole and absolute discretion deem appropriate.
[Remainder of page intentionally left blank; signature page to follow.]
Each of the parties has signed this Agreement as of the day and year first
above written.
U.S. RUBBER RECLAIMING, INC.
By:/s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman
PNC BANK, NATIONAL ASSOCIATION,
as Lender and as Agent
By: /s/ Xxxx X. Count
---------------------------------------
Name: Xxxx X. Count
Title: Vice President
Commitment Percentage: 100%
STATE OF INDIANA )
) ss:
COUNTY OF XXXXXXXX )
On this 25TH day of October, 2002, before me personally came Xxx Xxxxxx, to
me known, who, being by me duly sworn, did depose and say that he is the
authorized officer of U.S. RUBBER RECLAIMING, INC., the corporation described in
and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the board of directors of said corporation,
and that he signed his name thereto by like order.
/s/Xxxxxxx Xxxxxx
------------------------------------
Notary Public
XXXXXXX XXXXXX
NOTARY PUBLIC STATE OF INDIANA
XXXXXXXX COUNTY
MY COMMISSION EXP. JUNE 13,2010
LIST OF SCHEDULES
Schedules
Schedule 1.2 Permitted Encumbrances
Schedule 5.7 Environmental
Schedule 5.8.4 Plans
Schedule 5.10 Licenses and Permits
Schedule 5.14 Labor Disputes
TERM NOTE
$4,000,000 Indianapolis, Indiana
Dated as of October 25, 2002
FOR VALUE RECEIVED, U.S. RUBBER RECLAIMING, INC. (the "Borrower") promises
to pay to the order of PNC BANK, NATIONAL ASSOCIATION (the "Lender"), in lawful
money of the United States of America in immediately available funds at the
Lender's offices located at Xxx Xxxxx Xxxxxx Xxxx., 0xx Xxxxx, Xxxx Xxxxxxxxx,
XX 00000, or at such other location as the Lender may designate from time to
time, the principal sum of FOUR MILLION DOLLARS ($4,000,000) (the "Facility")
together with interest accruing on the outstanding principal balance from the
date hereof, all as provided below:
1. Rate of Interest. Subject to the applicability of the Default Rate, the
principal amount outstanding under this Note will bear interest at a rate
per annum as set forth in the Loan Agreement (as defined below). All
interest calculations under the Loan Agreement and this Note will be made
based on a year of 360 days for the actual number of days in each interest
period. In no event will the rate of interest hereunder exceed 25% per
annum or such lesser amount as is the maximum permitted by law.
2. Payment Terms. The obligation to make payments hereunder is without relief
from valuation and appraisement laws. The Borrower shall make payments of
principal and accrued interest on this Note as set forth in the Loan
Agreement. All outstanding principal and accrued but unpaid interest
hereunder shall be due and payable in full on the Expiration Date. The
"Expiration Date" shall mean the last day of the Term set forth in the Loan
Agreement, or such later date as may be designated by the Agent by written
notice to the Borrower. The Borrower hereby authorizes the Agent to charge
the Borrower's Account for any payment when due hereunder. All payments,
including prepayments, received will be applied to charges, fees and
expenses (including reasonable attorneys' fees), accrued interest and
principal in the order specified in the Loan Agreement.
3. Late Payments; Default Rate. If the Borrower fails to make any payment of
principal, interest or other amount due pursuant to the provisions of this
Note and the Loan Agreement, the Borrower also shall pay a late charge
equal to the lesser of five percent (5%) of the amount of such payment or
$100.00. The late charge is imposed for the purpose of defraying the
expenses incident to the handling of delinquent payments and is in addition
to, and not in lieu of, the exercise by the Lender and Agent of any rights
and remedies hereunder, under the Loan Agreement, Loan Documents or under
applicable laws, and any fees and expenses of any agents or attorneys which
the Lender or Agent may employ. If any Obligations are not paid when due
(whether by acceleration, demand or otherwise), the Borrower shall pay
interest on such amount at the Default Rate until it is paid in full. The
Default Rate shall continue to apply whether or not judgment shall be
entered on this Note.
4. Loan Documents. This Note is issued in connection with the Revolving
Credit, Term Loan and Security Agreement between Borrower, Agent, and the
Lenders identified therein of even date herewith (the "Loan Agreement") and
is secured by the Collateral covered by the Loan Agreement and Loan
Documents as that term is defined in the Loan Agreement. All references to
the Loan Agreement and the Loan Documents will include all amendments
thereto as made from time to time. The terms, covenants, conditions,
stipulations and agreements contained in the Loan Agreement hereby are
incorporated herein by reference. Capitalized terns used in this Note and
not otherwise defined herein will have the meanings given such terms in the
Loan Agreement.
5. Events of Default. Immediately and automatically upon the occurrence of an
Event of Default under Section 10.7 of the Loan Agreement, or, at the
option of Lender, immediately upon the occurrence of any other Event of
Default, in any case without demand or notice of any kind (which are hereby
expressly waived): (i) the Obligations will become immediately due and
payable, (ii) Borrower will pay to Agent and Lender all reasonable costs
and expenses (including but not limited to reasonable Attorneys' Fees)
incurred by them in connection with efforts to collect the indebtedness
evidenced hereby, and (iii) Lender and Agent may exercise from time to time
any of the rights and remedies available to them under the Loan Documents
or applicable law. Upon and after the occurrence of any Event of Default or
the maturity of this Note (by acceleration or otherwise), the principal
balance under this Note, together with any arrearage of interest, will bear
interest at the Default Rate until paid in full, whether before or after
judgment. Borrower, all other makers, co-signers and indorsers waive
presentment, demand, protest, and notice of demand, protest, non-payment
and dishonor. Borrower also waives all defenses based on suretyship or
impairment of collateral.
6. Right of Setoff. In addition to all liens upon and rights of setoff against
the money, securities or other property of the Borrower given to the Lender
and/or Agent by law, the Lender and/or Agent shall have, with respect to
the Obligations upon the occurrence of an Event of Default under the Loan
Agreement and to the extent permitted by law, a contractual possessory
security interest in and a contractual right of setoff against, and the
Borrower hereby assigns, conveys, delivers, pledges and transfers to the
Lender and/or Agent all of the Borrower's right, title and interest in and
to, all deposits, moneys, securities and other property of the Borrower now
or hereafter in the possession of or on deposit with, or in transit to, the
Lender and/or Agent whether held in a general or special account or
deposit, whether held jointly with someone else, or whether held for
safekeeping or otherwise, excluding, however, all XXX, Xxxxx, and trust
accounts. Every such security interest and right of setoff may be exercised
without demand upon or notice to the Borrower. Every such right of setoff
shall be deemed to have been exercised immediately upon the occurrence of
an Event of Default hereunder without any action of the Lender and/or
Agent, although the Lender and/or Agent may enter such setoff on its books
and records at a later time.
7. Miscellaneous. No delay or omission of the Lender and/or Agent to exercise
any right or power arising hereunder shall impair any such right or power
or be considered to be a waiver of any such right or power nor shall the
Lender's and/or Agent's action or inaction impair any such right or power.
The Borrower agrees to pay on demand, to the extent permitted by law, all
reasonable costs and expenses incurred by the Lender and/or Agent in the
enforcement of its' rights in this Note and in any security therefor,
including without limitation reasonable fees and expenses of the Lender's
and/or Agent's counsel. If any provision of this Note is found to be
invalid by a court, all the other provisions of this Note will remain in
full force and effect. The Borrower and all other makers and endorsers of
this Note hereby forever waive presentment, protest, notice of dishonor and
notice of non-payment. This Note shall bind the Borrower and its heirs,
executors, administrators, successors and assigns, and the benefits hereof
shall inure to the benefit of Lender and its successors and assigns.
This Note shall be governed by and construed in accordance with the laws of
the State of Indiana applied to contracts to be performed wholly within the
State of Indiana. Any judicial proceeding brought by or against Borrower
with respect to any of the Obligations, this Note, the Loan Documents or
any related agreement may be brought in any court of competent jurisdiction
in the State of Indiana, United States of America, and, by execution and
delivery of this Note, Borrower accepts for itself and in connection with
its properties, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by
any judgment rendered thereby in connection with this Note. Borrower hereby
waives personal service of any and all process upon it and consents that
all such service of process may be made by registered mail (return receipt
requested) directed to Borrower at its address set forth in Section 15.6 of
Loan Agreement and service so made shall be deemed completed five (5) days
after the same shall have been so deposited in the mails of the United
States of America. Nothing herein shall affect the right to serve process
in any manner permitted by law or shall limit the right of Agent or any
Lender to bring proceedings against Borrower in the courts of any other
jurisdiction. Borrower waives any objection to jurisdiction and venue of
any action instituted hereunder and shall not assert any defense based on
lack of jurisdiction or venue or based upon forum non conveniens. Any
judicial proceeding by Borrower against Agent or any Lender involving,
directly or indirectly, any matter or claim in any way arising out of,
related to or connected with this Note or any related agreement, shall be
brought only in a federal or state court located in the County of Xxxxxx,
State of Indiana.
8. WAIVER OF JURY TRIAL. The Borrower irrevocably waives any and all rights
the Borrower may have to a trial by jury in any action, proceeding or claim
of any nature relating to this Note, any documents executed in connection
with this Note or any transaction contemplated in any of such documents.
The Borrower acknowledges that the foregoing waiver is knowing and
voluntary. The Borrower acknowledges that it has read and understood all
the provisions of this Note, including the waiver of jury trial, and has
been advised by counsel as necessary or appropriate.
U.S. RUBBER RECLAIMING, INC.
By: /s/Xxxxxxx X. Xxxxxx
---------------------------------
Print Name: Xxxxxxx X. Xxxxxx
Title: Chairman
DEED OF TRUST, SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES AND RENTS
(U.S. Rubber Reclaiming, Inc.)
"This Deed of Trust secures, among other things, a line of credit as defined in
Miss. Code Xxx.ss.89-1-49 (Supp. 1998), and shall not be extinguished until the
conditions of Miss. Code Xxx.ss.89-5-21 (Supp. 1998) are met."
This Deed of Trust is dated as of October 25, 2002 and is entered into
among U.S. Rubber Reclaiming, Inc., an Indiana corporation, whose address is
0000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000 (referred to hereinafter as
"Grantor"), PNC Bank, National Association, as Agent, whose address is One PNC
Plaza, 000 Xxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000, (referred to
below sometimes as "Agent" and sometimes as "Beneficiary"), and Xxxxxxx X.
Xxxxxxxx, Xx.., whose address is 800 Trustmark National Bank Building, 0000
Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000-0000 (referred to hereinafter as
"Trustee").
For valuable consideration, Grantor conveys to Trustee in trust for the
benefit of Agent for the Lenders, as Beneficiary, all of Grantor's right, title
and interest in and to certain real property located in Xxxxxx County,
Mississippi, more particularly described in Exhibit A, attached hereto and made
a part hereof for all purposes (hereinafter referred to as "Real Estate"),
together with all rights, title and interests of Grantor now existing or
hereafter arising in and to:
(A) All rights, privileges, interests, tenements, hereditaments, easements and
appurtenances in any way now or hereafter benefiting, belonging or
appertaining to all or any of the Real Estate, including without limiting
the generality of the foregoing all land lying within any roadway and
strips adjoining all or any of the Real Estate, all minerals, oil, gas and
other hydrocarbon substances thereon or therein and all air rights and
water rights (collectively, the "Easements and Appurtenances");
(B) All buildings, structures and other improvements of every kind and
description now or hereafter erected, constructed or placed on the Real
Estate, together with all fixtures now or hereafter located upon or
attached to the Real Estate, and all replacements thereof (collectively,
the "Improvements");
(C) All extensions, improvements, betterments, substitutes, replacements,
renewals, additions and appurtenances of or to the Easements and
Appurtenances and of or to the Improvements (collectively, the
"Additions");
(D) All rents, issues, proceeds, income and profits of the Real Estate, the
Easements and Appurtenances, the Additions and the Improvements, including
all leases and subleases of all or any of such property (collectively, the
"Rents");
(E) All Accounts, Inventory, Equipment, General Intangibles, Chattel Paper,
Investment Property, Instruments, Documents, Letter of Credit Rights,
Supporting Obligations, and Commercial Tort Claims, as each such term is
defined under the applicable version of the Uniform Commercial Code in
effect (collectively, the "Personal Property"); and
(F) All awards, payments and proceeds of conversion, whether voluntary or
involuntary, of any of the Real Estate, Easements and Appurtenances,
Improvements, Additions and Rents, including without limitation, all
insurance, condemnation and tort claims, rent claims and other obligations
dischargeable in cash (collectively, the "Proceeds").
The Real Estate, the Easements and Appurtenances, the Improvements, the
Additions, the Rents, the Personal Property, and the Proceeds are referred to
herein collectively, as the "Mortgaged Property".
Capitalized terms used in this Deed of Trust and not otherwise defined
herein shall have the meanings ascribed to such terms in Paragraph 22 of this
Deed of Trust, or in the Loan Agreement, as defined below, as applicable.
This Deed of Trust is given to secure the performance and payment when due
of the Indebtedness. As used herein, the term "Indebtedness" shall mean,
collectively: (i) the covenants and agreements contained in this Deed of Trust,
(ii) all Obligations (as defined below), together with all interest accruing
thereon, and all costs, expenses and attorneys' fees incurred in the enforcement
or collection thereof, whether such indebtedness, obligations and liabilities
are direct, indirect, fixed, contingent, liquidated, unliquidated, joint,
several or joint and several, (iii) the covenants and agreements contained in
any and all other instruments, security agreements, pledge agreements,
assignments of collateral, Deed of Trusts, security documents, guaranties, and
other agreements or documents ever delivered by Grantor to Agent pursuant to the
Loan Agreement or to secure all or any part of the Obligations, (iv) any and all
future advances made in the discretion of Agent or Lenders, and (v) all renewals
or extensions or restatements of, and any and all amendments or modifications of
or supplements to, all or any part of the foregoing.
All persons who have or may acquire an interest in the Mortgaged Property
shall be deemed to have notice of and shall be bound by the terms of the Loan
Documents, and any other instruments or documents made or entered into in
connection herewith and the terms of the Indebtedness, including notice that the
rate of interest on some or all of the Indebtedness may vary from time to time.
Grantor hereby further covenants with the Agent as follows:
1. Payment of Sums Due. Grantor promptly will pay as and when due the
Indebtedness, all without relief from valuation and appraisement laws and with
reasonable attorneys' fees. Grantor waives demand, presentment for payment,
notice of protest and notice of nonpayment or dishonor of the Indebtedness.
2. Care and Condition of Mortgaged Property. Grantor shall (a) promptly
repair, restore or rebuild any part of the Mortgaged Property which may become
damaged or be destroyed; (b) keep the Mortgaged Property in good condition and
thorough repair, ordinary wear and tear excepted, without waste, and free from
Liens and claims for Liens (including, without limitation, mechanic's and
materialmen's Liens) not expressly subordinated to the Lien of this Deed of
Trust, other than Permitted Encumbrances; (c) pay any indebtedness when due
(after expiration of all applicable notice and grace periods) which may be
secured by a Lien or charge on the Mortgaged Property, whether or not superior,
equal or junior to the Lien of this Deed of Trust, excepting only indebtedness
the payment of which is being diligently contested in good faith and by proper
proceedings and for which adequate reserves have been established by Grantor;
(d) comply, and cause any lessees and sublessees of the Mortgaged Property to
comply with all material requirements of law, municipal ordinances, restrictions
of record or insurance covenants with respect to the Mortgaged Property and its
use; and (e) permit Agent to enter upon and inspect the Mortgaged Property with
reasonable prior notice and at reasonable times.
3. Hazardous Substances. The terms "hazardous waste," "hazardous
substance," "disposal," "release," and "threatened release," as used in this
Deed of Trust, shall have the same meanings as set forth in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. ss. 9601, et seq. ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, Pub. L. No. 99-499 ("XXXX"), the Hazardous
Materials Transportation Act, 49 U.S.C. ss. 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. ss.6901, et seq., or other applicable
state or Federal laws, rules, or regulations adopted pursuant to any of the
foregoing. The terms "hazardous waste" and "hazardous substance" shall also
include, without limitation, petroleum and petroleum byproducts or any fraction
thereof an asbestos. Grantor represents and warrants to Agent that, except as
noted in Phase I Environmental Report of the Mortgaged Property dated as of
October 10, 2002: (a) during the period of Grantor's ownership of the Property,
there has been no use, generation, manufacture, storage, treatment, disposal,
release or threatened release of any hazardous waste or substance by any person
on, under, about or from the Property; (b) Grantor has no knowledge of, or
reason to believe that there has been, except as previously disclosed to and
acknowledged by Agent in writing, (i) any use, generation, manufacture, storage,
treatment, disposal, release, or threatened release of any hazardous waste or
substance on, under, about or from the Property by any prior owners or occupants
of the Property, or (ii) any actual or threatened litigation or claims of any
kind by any person relating to such matters; and (c) except as previously
disclosed to and acknowledged by Agent in writing, (i) neither Grantor nor any
tenant, contractor, agent or other authorized user of the Property shall use,
generate, manufacture, store, treat, dispose of, or release any hazardous waste
or substance on, under, about or from the Property and (ii) any such activity
shall be conducted in compliance with all applicable federal, state, and local
laws, regulations and ordinances, including without limitation those laws,
regulations, and ordinances described above. Grantor authorizes Agent and its
agents to enter upon the Property to make such inspections and tests, at
Grantor's expense, as Agent may deem appropriate to determine compliance of the
Property with this section of the Deed of Trust. Any inspections or tests made
by Agent shall be for Agent's purposes only and shall not be construed to create
any responsibility or liability on the part of Agent to Grantor or to any other
person. The representations and warranties contained herein are based on
Grantor's due diligence in investigating the Property for hazardous waste and
hazardous substances. Grantor hereby (a) releases and waives any future claims
against Agent for indemnity or contribution in the event Grantor becomes liable
for cleanup or other costs under any such laws, and (b) agrees to indemnify and
hold harmless Agent against any and all claims, losses, liabilities, damages,
penalties, and expenses which Agent may directly or indirectly sustain or suffer
resulting from a breach of this section of the Deed of Trust or as a consequence
of any use, generation, manufacture, storage, disposal, release or threatened
release of a hazardous waste or substance on the Property. The provisions of
this section of the Deed of Trust, including the obligation to indemnify, shall
survive the payment of the Indebtedness and the satisfaction and reconveyance of
the lien of this Deed of Trust and shall not be affected by Agent's acquisition
of any interest in the Property, whether by foreclosure or otherwise.
4. Covenants and Warranties. Grantor covenants and warrants that: (a)
Grantor is lawfully seized of the Real Estate in fee simple, has valid and
indefeasible title to the Mortgaged Property and has a good and legal right to
Deed of Trust the Mortgaged Property to Agent; and (b) all of the Mortgaged
Property is and will remain free from all Liens excepting only the Lien of real
estate taxes not yet delinquent, Permitted Encumbrances, those easements
disclosed to Agent in writing prior to the execution and delivery of this Deed
of Trust, and those Liens which are in favor of Agent, and Grantor will warrant
and defend, at Grantor's expense, Grantor's rights, title and interests in and
to the Mortgaged Property against all claims made thereon.
5. Insurance. Grantor, at its sole cost and expense, shall obtain and keep
in full force and effect such policies of insurance as required under the terms
of the Credit Agreement to be maintained by Grantor ("Required Insurance"), the
proceeds of which shall be governed by and subject to the terms of the Loan
Agreement.
6. Taxes. Grantor will pay and discharge or cause to be paid and discharged
when due, and before any penalty attaches, all taxes of every kind and nature
relating to or imposed upon the Mortgaged Property, general and special
assessments, water rates and sewer rents, and all other governmental, municipal
and public dues, charges, fmes and impositions whether of a like or different
nature, imposed upon or assessed against Grantor or the Mortgaged Property or
arising in respect of the occupancy, use or possession thereof. Upon request by
Agent, Grantor will deliver to Agent, not later than 30 days after delinquency,
duplicate receipts evidencing the payment of all such taxes, charges and
assessments.
Grantor shall also pay prior to delinquency all taxes, assessments, levies
and charges imposed by any governmental authority upon the Agent by reason of
its interest in any Indebtedness or in any of the Mortgaged Property or by
reason of any payment made to Agent hereunder; but Grantor shall have no
obligation to pay or discharge taxes which may be imposed from time to time upon
this Deed of Trust and which are measured by and imposed upon the income of
Agent.
7. Protection of Security by Agent. Each and every covenant in this Deed of
Trust shall be performed and kept by Grantor solely at Grantor's expense. At its
option, but without any duty or obligation of any sort to do so and without in
any way waiving or relieving any Default by Grantor under this Deed of Trust,
Agent may make any payment and perform any act required of Grantor to be made or
performed by this Deed of Trust, in the event Grantor fails to make such payment
when due or timely perform any such act, including but not limited to: payment
of insurance premiums, taxes, charges and assessments; payment of prior
encumbrances; and purchase, discharge, compromise or settlement of any tax or
other Lien or title, prior or on a parity with the Lien of this Deed of Trust.
As between Grantor and Agent, all such Liens and taxes shall be deemed valid.
Agent agrees to give Grantor at least five (5) days written notice prior to
making any such payment except that no such prior notice shall be required with
respect to payment of insurance premiums or in any other circumstance in which
Agent reasonably determines that such payment is necessary to avoid an
immediate, material adverse affect upon all or any part of the Mortgaged
Property. All monies so paid and all expenses incurred in connection therewith,
including reasonable attorneys' fees, and any other monies advanced and expenses
incurred by Agent to protect the Mortgaged Property, and the security intended
to be given by this Deed of Trust, including all costs, expenses and reasonable
attorneys fees, incurred by Agent in respect of any and all legal or equitable
proceedings which relate to this Deed of Trust or to the Mortgaged Property,
shall constitute Indebtedness secured by this Deed of Trust and shall be
immediately due and payable by Grantor on demand and with interest thereon from
and after such demand until paid in full at a rate of interest per annum equal
to the Default Rate for Domestic Rate Loans.
8. Transfer of Mortgaged Property. Subject to the terms of the Loan
Agreement, Grantor shall not, without the prior written consent of Agent,
directly or indirectly (whether voluntarily, involuntarily or by operation of
law) sell (whether outright or by land contract, conditional sales contract or
any other such agreement), lease (other than leasing office or warehouse space
to lessees in the ordinary course of business), convey, transfer or in any way
further encumber, Deed of Trust or assign the Mortgaged Property or any of
Grantor's rights, title or interests therein (each of such actions or events
being hereinafter called a "Transfer").
9. Condemnation Proceeds. All awards of damages and all other compensation
payable directly or indirectly by reason of a condemnation for public or private
use affecting any interest in the Mortgaged Property shall be governed by and
subject to the terms of the Loan Agreement.
10. Security Agreement, Financing Statement.
(a) This Deed of Trust is intended to be a security agreement pursuant to
the Uniform Commercial Code as adopted and in effect in the State of Mississippi
("UCC") for (i) any and all items of Personal Property specified above as part
of the Mortgaged Property which, under applicable law, may be subject to a
security interest pursuant to the UCC and which are not herein effectively made
part of the real property, and (ii) any and all items of property specified
above as part of the Mortgaged Property which, under applicable law, constitute
fixtures and may be subject to a security interest under Article 9 of the UCC;
and Grantor hereby grants Agent a security interest in said property, and in all
additions thereto, substitutions therefor and proceeds thereof, for the purpose
of securing all Indebtedness now or hereafter secured by this Deed of Trust.
Grantor agrees to execute and deliver financing and continuation statements
covering said property from time to time and in such form as Agent may require
to perfect and continue the perfection of Agent's Lien or security interest with
respect to said property. Grantor shall pay all costs of filing such statements
and renewals and releases thereof and shall pay all reasonable costs and
expenses of any record searches for financing statements Agent may reasonably
require. Upon the occurrence of any Default hereunder, Agent shall have the
rights and remedies of a secured party under the UCC, as well as all other
rights and remedies available at law or in equity, and, at Agent's option, Agent
may also invoke the remedies provided elsewhere in this Deed of Trust as to such
property.
(b) This Deed of Trust constitutes a financing statement filed as a fixture
filing under the UCC in the real estate records of the county in which the
Mortgaged Property is located with respect to any and all fixtures included
within the term "Mortgaged Property" and with respect to any goods or other
personal property that may now be or hereafter become such a fixture. PARTS OF
THE MORTAGED PROPERTY ARE, OR ARE TO BECOME, FIXTURES ON THE REAL ESTATE.
(c) Grantor's address is:
U.S. Rubber Reclaiming, Inc. 0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attn: President
(d) Agent's address is:
PNC Bank, National Association One PNC Plaza.
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, XX 00000 Attention: Xxxxxx Xxxxx
11. Default and Acceleration. It is expressly agreed by Grantor that time
is of the essence of this Deed of Trust. Except as expressly provided otherwise
in this Deed of Trust, upon the occurrence of any Default, as hereinafter
defined, and at any time thereafter, then, in any and every such case, the
entire Indebtedness shall, at the option of Agent, become immediately due and
payable without any notice, presentment, demand, protest, notice of protest, or
other notice of dishonor or demand of any kind, all of which are hereby
expressly waived by Grantor, and Agent shall have the right immediately to
foreclose the Lien created by this Deed of Trust against the Mortgaged Property,
to enforce every other security interest created by this Deed of Trust and to
institute any action, suit or other proceeding which Agent may deem necessary or
proper for the protection of its interests. The following shall each constitute
a "Default" for purposes of this Deed of Trust:
(a) If Grantor shall default under any covenant; condition or term of this
Deed of Trust;
(b) The occurrence of any Transfer prohibited by this Deed of Trust; or
(c) The occurrence of an "Event of Default" (as such term is defined in
the Loan Agreement).
12. Possession of Mortgaged Property During Default. During the continuance
of any Default, Agent (or any person, firm or corporation designated to act on
behalf of Agent), with the irrevocable consent of Grantor herein given (a) may
enter into and upon all or any part of the Mortgaged Property, may exclude
Grantor therefrom and may hold, use, administer, operate, manage and control the
Mortgaged Property, exercise all rights, privileges and powers of Grantor with
respect thereto and conduct the business thereof, all to the same extent Grantor
could do so, and (b) at the expense of Grantor and from time to time, may
maintain and restore or complete the Improvements and in the course of
completion may make such changes in the Improvements as Agent deems desirable.
Agent shall be entitled to collect and receive all the Rents and to deduct
therefrom the expenses of operating and conducting the business of the Mortgaged
Property and of all maintenance, repairs, renewals, replacements, alterations,
additions, betterments, improvements and amounts necessary to pay for taxes,
assessments, Required Insurance and prior or other proper charges upon the
Mortgaged Property as well as reasonable compensation for the services of Agent.
Any expenses of operating and conducting the business of the Mortgaged Property
or as are otherwise incurred by Agent pursuant to the provisions of this
paragraph which remain unpaid after application of such Rents shall constitute
Indebtedness secured by this Deed of Trust and shall be immediately due and
payable by Grantor without notice and with interest thereon at the Default Rate
for Domestic Rate Loans. If Agent shall exercise its rights as stated in this
paragraph, Agent shall apply the net amounts received or collected by it, after
payment of expenses as aforesaid, to the payment of the Indebtedness, when and
as the same shall become due and payable.
13. Expenses. All reasonable expenses, costs and other liabilities,
including reasonable attorneys' fees, which Agent reasonably may incur (i) in
enforcing, defending, construing or administering this Deed of Trust (or its
priority), (ii) for any inspection, evaluation, appraisal, survey or other
service permitted in connection with any of the Mortgaged Property, (iii) for
any title examination or title insurance policy relating to the title to any of
the Mortgaged Property or (iv) in the exercise by Agent of any rights or
remedies granted by this Deed of Trust, shall be paid by Grantor upon demand by
Agent, together with interest thereon, from the date of expenditure until
payment in full, at the Default Rate for Domestic Rate Loans and shall
constitute a part of the Indebtedness secured by this Deed of Trust.
14. Foreclosure Proceedings and Receiver. Subject to the rights of tenants
in possession, Agent shall be entitled and Grantor consents to, as a matter of
right, if Agent shall so elect, without the giving of notice to any other party,
without regard to the adequacy or inadequacy of any security for the
Indebtedness and without the requirement of any bond, to the appointment of a
receiver or receivers. Grantor hereby expressly waives, to the extent allowed by
law, all right to have the Mortgaged Property marshaled upon any foreclosure of
this Deed of Trust. Agent shall be entitled to recover a judgment either before
or after or during the pendency of any proceedings for the enforcement of this
Deed of Trust. The right of Agent to recover such judgment shall not be affected
by any entry or sale hereunder, or by the exercise of any other right, power or
remedy for the enforcement of this Deed of Trust, or the foreclosure of the Lien
of this Deed of Trust.
If any Default shall have occurred then, in that event, the entire
Indebtedness, together with all interest accrued thereon, shall, at the option
of Beneficiary, be and become at once due and payable without notice to Grantor,
and Trustee (or the Substituted Trustee) shall, at the request of Beneficiary,
sell the Land conveyed, or a sufficiency thereof, to satisfy the Indebtedness at
public outcry to the highest bidder for cash. Sale of the Land shall be
advertised for three consecutive weeks preceding the sale in a newspaper
published in the counties where the Land is situated, or if none is so
published, then in some newspaper having a general circulation therein, and by
posting a notice for the same time at the courthouses of the same counties. The
notice and advertisement shall disclose the names of the original debtors in
this Deed of Trust. If the Property is situated in two or more counties, or in
two judicial districts of the same county, Trustee shall have full power to
select in which county, or judicial district, the sale of the property is to be
made, newspaper advertisement published and notice of sale posted, and Trustee's
selection shall be binding upon Grantor and Beneficiary. The newspaper
publication in the various counties where the Land is located shall specify the
county or judicial district in a particular county where the sale is to be made.
The Trustee may sell said property without taking possession of the same, and is
authorized to appoint an agent and auctioneer to make such sale in his absence,
which sale shall be as valid as if made by said Trustee. At any such public
sale, Trustee may execute and deliver to the purchaser a conveyance of the
Mortgaged Property or any part of the Mortgaged Property in fee simple. In the
event of any sale under this Deed of Trust by virtue of the exercise of the
powers herein granted, or pursuant to any order in any judicial proceedings or
otherwise, the Mortgaged Property may be sold as an entirety or in separate
parcels and in such manner or order as Beneficiary in its sole discretion may
elect, and if Beneficiary so elects, Trustee or Beneficiary may sell the
personal property covered by this Deed of Trust at one or more separate sales in
any manner permitted by the Uniform Commercial Code as enacted in the state of
Mississippi, and one or more exercises of the powers herein granted shall not
extinguish or exhaust such powers, until the entire Mortgaged Property is sold
or the Indebtedness paid in full. If the Indebtedness now or hereafter further
secured by any chattel mortgages, pledges, contracts of guaranty, assignments of
lease or other security instruments, Beneficiary at its option may exhaust the
remedies granted under any of said security instruments or this Deed of Trust
either concurrently or independently, and in such order as Beneficiary may
determine.
Said sale may be adjourned by the Trustee, or his agent or successors, and
reset at a later date without additional publication; provided that an
announcement to that effect be made at the scheduled place of sale at the time
and on the date the sale is originally set. Should Agent be a corporation or an
unincorporated association, then any officer thereof may declare Grantor to be
in default as provided in Paragraph 11 and request Trustee to sell the Property.
Agent shall have the same right to purchase the property at the foreclosure sale
as would a purchaser who is not a party to this Deed of Trust, and Agent may
make settlement for the purchase price by crediting the sale price against the
Indebtedness.
With respect to all or any part of the Real Estate, the Trustee shall, at
the request of Agent, sell the Real Estate after giving notice of the time,
place and terms of sale as required by Miss. Code Xxx. ss. 89-1-55 (1972), as
amended, and any successor provisions, and execute a deed to the purchaser of
the Real Estate. Out of the proceeds arising from the sale, the costs and
expenses of executing this Deed of Trust, including a reasonable Trustee's fee
and the attorneys' fees prescribed in the Loan Agreement and in this Deed of
Trust, shall first be paid; next, the amount of the indebtedness then remaining
unpaid shall be paid; and, lastly, any balance remaining shall be paid to
Grantor or to Grantor's representatives, agents, or assigns.
15. No Exclusive Remedy. Each and every right, power and remedy herein
conferred upon or reserved to Agent is cumulative and is not intended to be
exclusive of any other remedy or remedies, and shall be in addition to every
other right, power and remedy given hereunder or now or hereafter existing at
law or in equity or by statute. No delay or omission of Agent in the exercise of
any right, power or remedy or any other right, power or remedy then or
thereafter existing, shall constitute or shall be construed to be a waiver of
any Default or any acquiescence therein; and every right, power and remedy given
by this Deed of Trust to Agent may be exercised from time to time as often as
and in such order as may be deemed expedient by Agent.
16. Powers and Obligations of Trustee. The following provisions relating to
the powers and obligations of Trustee are part of this Deed of Trust:
Powers of Trustee. In addition to all powers of Trustee arising as a matter
of law, Trustee shall have the power to take the following actions with
respect to the Property upon the written request of Agent and Grantor: (a)
join in preparing and filing a map or plat of the Real Estate, including
the dedication of streets or other rights to the public; (b) join in
granting any easement or creating any restriction on the Real Estate; and
(c) join in any subordination or other agreement affecting this Deed of
Trust or the interest of Agent under this Deed of Trust.
Obligations to Notify. Trustee shall not be obligated to notify any other
party of a pending sale under any other trustee, deed or lien, or of any
action or proceeding in which Grantor, Agent, or Trustee shall be a party,
unless the action or proceeding is brought by trustee.
Trustee. Trustee shall meet all qualifications required for Trustee under
applicable law. In addition to the rights and remedies set forth above,
with respect to all or any part of the Property, the Trustee shall have the
right to foreclose by notice and sale, and Agent shall have the right to
foreclose by judicial foreclosure, in either case in accordance with and to
the full extent provided by applicable law.
Successor Trustee. Agent, at Agent's option, may from time to time appoint
a successor Trustee to any Trustee appointed hereunder by an instrument
executed and acknowledged by Agent and recorded in the office of the
Chancery Clerk of Xxxxxx County, Mississippi. The instrument shall contain,
in addition to all other matters required by Mississippi law, the names of
the original Agent, Trustee and Grantor, the book and page where this Deed
of Trust is recorded, and the name and address of the successor trustee,
and the instrument shall be executed and acknowledged by Agent or its
successors in interest. The successor Trustee, without conveyance of the
Property, shall succeed to all the title, power, and duties conferred upon
the Trustee in this Deed of Trust and by applicable law. This procedure for
substitution of trustee shall govern to the exclusion of all other
provisions for substitution.
17. Assignment of Leases and Rents.
(a) To secure payment and performance by Grantor of the Indebtedness,
Grantor hereby grants, transfers and assigns to Agent all of Grantor's rights,
title and interests in, to and under all leases and tenancies now existing or
hereafter entered into by and between Grantor and each and any tenant, lessee or
sublessee of the Mortgaged Property or any part thereof ("Leases"), and all
rents, issues, income and profits of the same including without limitation all
rentals reserved in any of the Leases now or hereafter due and any amendments,
modifications, extensions and renewals thereof.
Until the occurrence of a Default, Grantor shall have the right to collect
and receive, upon but not prior to accrual, all rents, issues and profits under
and from the Leases and with respect to the Mortgaged Property. Subject to the
rights of tenants in possession, upon or at any time after the occurrence of a
Default, Agent at its option and without notice or demand, may enter upon, take
possession of and operate the Mortgaged Property, as lessor, enforce, modify,
and accept the surrender of any or all of the Leases, obtain and evict any of
the lessees or sublessees under any of the Leases, fix or modify rents, and do
any acts which Agent deems proper to protect the security hereof, and, in its
own name, xxx for or otherwise collect and receive all rents, issues and profits
due to Grantor under or pursuant to the Leases, including those past due and
unpaid. Such rights may be exercised by Agent without regard to other security,
if any, for payment of the Indebtedness and without releasing Grantor or any
guarantor of any of the Indebtedness from any obligation. Grantor hereby
irrevocably appoints and constitutes Agent as its true and lawful
attorney-in-fact with full power of substitution for and on behalf of Grantor to
request, demand, enforce payment of, collect and receive the rentals payable
under the Leases, to change, modify, release, waive, terminate, alter, or amend
the Leases or any of the terms or provisions thereof, including the rentals
thereunder, to endorse any checks, drafts or orders evidencing payment of
rentals under the Leases, and to do and perform any acts which Grantor might do
for and on Grantor's own behalf
All rents collected by Agent or a receiver pursuant to this paragraph 17
shall be applied first to the costs of taking control of, and managing and
operating the Mortgaged Property and collecting the rents, including, but not
limited to, reasonable attorneys' fees, receiver's fees, premiums on receiver's
bonds, costs of repairs to the Mortgaged Property, premiums on insurance
policies, taxes, assessments and other charges on the Mortgaged Property, and
the costs of discharging any obligation or liability of Grantor as lessor or
landlord of the Mortgaged Property and then toward payment of the Indebtedness
secured hereby. Agent shall have access to the books and records used in the
operation and maintenance of the Mortgaged Property and shall be liable to
account only for those rents actually received. Agent shall not be liable to
anyone claiming under or through Grantor or anyone having an interest in the
Mortgaged Property by reason of anything done or left undone by Agent under the
assignment made by this Paragraph 17, unless such liability results from the
willful misconduct or bad faith of Agent.
If the rents of the Leases are not sufficient to meet the costs of taking
control of and managing the Mortgaged Property and collecting the rents, any
funds expended by Agent for such purposes shall become Indebtedness of Grantor
to Agent secured by this Deed of Trust, and such amounts shall be payable upon
notice from Agent to Grantor requesting payment thereof and shall bear interest
from the date of disbursement until repaid at the Default Rate for Domestic Rate
Loans.
The entering upon and taking and maintaining of control of the Mortgaged
Property by Agent or a receiver and the application of rents as provided herein
shall not cure or waive any Default or invalidate any other right or remedy of
Agent hereunder.
(b) Grantor hereby covenants and warrants to Agent that (i) Grantor is and
will remain the lawful owner of the Leases and has not made any prior assignment
of Grantor's right, title and interest in, to and under any of the Leases; (ii)
Grantor has not accepted any advance rental payments under the Leases other than
one month's advance and security deposits; (iii) Grantor has not executed or
granted and will not grant any oral modification or amendment of any of the
Leases without the prior written consent of Agent, which consent shall not be
unreasonably withheld or delayed; and (iv) Grantor has not done and will not do
anything which impairs the validity or security of this assignment.
(c) The assignment made by this Paragraph 17 shall not operate to release
or relieve Grantor, as lessor under the Leases, from the full performance of all
of Grantor's obligations and covenants under the Leases. Grantor shall:
faithfully abide by, perform and discharge each and every material obligation,
covenant and agreement to be performed by Grantor under the Leases; give prompt
notice to Agent of any notice of claim of material default on the part of
Grantor given or made by any tenant under any of the Leases; and, at the sole
cost and expense of Grantor, enforce, short of termination of the Leases, or
secure the performance of, each and every material obligation, covenant,
condition and agreement to be performed by the tenants under the Leases. Without
the prior written consent of Agent, Grantor shall not further encumber its
rights, title and interest in and to the Leases. Except in the ordinary course
of Grantor's business, Grantor shall not anticipate rentals under the Leases or
waive, excuse, condone or in any manner release or discharge any lessee
thereunder, of or from the material obligations, covenants, conditions and
agreements to be performed by such lessees, including the obligation to pay
rentals in the manner and at the place and time specified therein.
(d) Grantor shall, at Grantor's sole cost and expense, appear in and defend
any action or proceeding arising under, growing out of or in any manner
connected with the Leases or the obligations, duties or liabilities of Grantor
or the lessees or sublessees under the Leases, and shall pay all costs and
expenses on demand, with interest thereon after such demand until paid in full
at the Default Rate for Domestic Rate Loans, including reasonable attorneys'
fees incurred by Agent in any such action or proceeding in which Agent may
appear, all such expenses being Indebtedness secured by this Deed of Trust.
(e) After the occurrence of a Default, Agent, at its option but without the
assumption of any of Grantor's obligations as lessor and without notice to or
demand on Grantor, and without releasing Grantor from any obligation under the
Leases or this Deed of Trust, may perform any obligation of Grantor under any of
the Leases. In the exercise of such power, Agent shall be entitled to
reimbursement by Grantor for all of Agent's costs and expenses, including
reasonable attorneys' fees, and the same shall be payable upon demand, with
interest thereon from the date paid or incurred at the Default Rate for Domestic
Rate Loans, and shall be Indebtedness secured by this Deed of Trust.
(f) Agent shall not be obligated to perform or discharge, nor does it
hereby undertake to perform or discharge any obligation, duty or liability of
Grantor under the Leases or otherwise. Agent shall not be liable for any loss
sustained by the Grantor resulting from Agent's failure to let the Mortgaged
Property after Default or from any other act or omission of the Agent in
managing the Mortgaged Property after Default, unless such loss is caused by the
willful misconduct and bad faith of Agent. Grantor agrees to indemnify Agent
against and hold it harmless from any and all liability, loss or damage which it
may or might incur under the Leases or under or by reason of this assignment and
of and from any and all claims and demands whatsoever which may be asserted
against Agent by reason of any alleged obligation or undertaking on its part to
perform or discharge any of the terms, covenants or agreements contained in the
Leases, unless such liability or claim arises as a result of Agent's willful
misconduct or bad faith. Except for liability, claims or demands arising from
Agent's willful misconduct or bad faith, in the event Agent incurs any such
liability, loss or damage, the amount thereof, including costs, expenses and
reasonable attorneys' fees, such amount shall be payable by Grantor upon demand,
with interest after such demand until paid in full at the Default Rate of
Interest, all of which is Indebtedness secured by this Deed of Trust. This
Assignment shall not operate to place responsibility for the control, care,
management or repair of the Mortgaged Property or any improvements thereon upon
Agent, nor shall it operate to make the Agent responsible or liable for any
waste committed on the Mortgaged Property or for any dangerous or defective
condition of the property unless and until Agent, in person or by agent, assumes
actual possession of the Mortgaged Property.
(g) Grantor hereby authorizes and directs each and every tenant and
occupant of the Mortgaged Property, or any part thereof, upon receipt from Agent
of written notice to the effect that a Default exists under this Deed of Trust
and such tenant is to pay over to Agent all rents, income and profits arising or
accruing from the Mortgaged Property, and to continue to do so until otherwise
notified by the Agent. Grantor agrees to facilitate in all reasonable ways
Agent's collection of such rent, and upon request will execute a written notice
to each tenant and occupant directing payment to the Agent. Upon the payment in
full of all of the Indebtedness secured hereby, the assignment made in this
Paragraph 17 shall terminate.
18. Provisions Severable. In the event any one or more of the provisions
contained in this Deed of Trust shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall, at the option of the Agent, not affect any other
provision of this Deed of Trust, but this Deed of Trust shall be construed as if
such invalid, illegal or unenforceable provision had never been contained herein
or therein. The invalidity of any provision of this Deed of Trust in any
jurisdiction shall not affect the validity or enforceability of such provision
in any other jurisdiction.
19. Fees. Grantor will pay for filing, registration or recording fees, and
all expenses incident to the execution and acknowledgment of this Deed of Trust,
any Deed of Trust supplemental hereto, any financing statement and continuation
statement and any instrument of further assurance, and all federal, state,
county and municipal stamp taxes and other taxes, duties, imposts, assessments
and charges arising out of or in connection with the execution and delivery of
this Deed of Trust, any Deed of Trust supplemental hereto, or any instrument of
further assurance. Such amounts shall be due and payable within fifteen (15)
days after written demand by Agent for payment therefor, and from and after such
due date until paid in full shall bear interest at the Default Rate for Domestic
Rate Loans.
20. Successors and Assigns. The grants, covenants, terms, provisions and
conditions of this Deed of Trust shall (a) run with the land, (b) apply and
extend to, be binding upon and inure to the benefit of Grantor, Grantor's heirs,
administrators, successors and assigns and all persons claiming under or through
Grantor, and the word "Grantor," when used herein, shall include all such
persons, and (c) shall apply and extend to, be binding upon and inure to the
benefit of Agent and its successors and assigns. The word "Agent" when used
herein shall include the successors and assigns of Agent.
21. Miscellaneous. The captions used in this Deed of Trust are for
convenience only and are not to be construed as defining or limiting the
provisions of this Deed of Trust. Any and all covenants in this Deed of Trust
from time to time may by instrument in writing signed by Agent be waived to such
extent and in such manner as Agent may desire, but no such waiver shall affect
or impair Agent's rights hereunder, except to the extent specifically stated in
such written instrument. No waiver by Agent of any Default shall constitute a
waiver of, or consent to, any subsequent Default. All changes to or
modifications of this Deed of Trust must be in writing signed by Agent and
Grantor and, if this Deed of Trust is recorded, shall not be effective until
being recorded. Wherever used, the singular number shall include the plural, the
plural the singular, and the use of any gender shall be applicable to all
genders. Nothing herein contained shall be construed as constituting Agent a
mortgagee in possession of the Mortgaged Property in the absence of a taking of
actual possession of the Mortgaged Property by Agent. In the exercise of the
powers herein granted Agent, no liability shall be asserted or enforced against
Agent by Grantor, all such liability and claims of liability being expressly
waived and released by Grantor. In the event that all of the Indebtedness is
fully and timely paid and satisfied and no Indebtedness thereafter may arise,
this Deed of Trust shall become of no further force and effect and the lien and
security interest hereof shall be released of record at Grantor's request and at
Grantor's cost and expense.
22. Definitions. As used in this Deed of Trust, the following terms shall
have the meanings ascribed to them below:
"Loan Agreement" shall mean that certain Revolving Credit, Term Loan and
Security Agreement, dated as of even date, among Grantor, Agent, and
Lenders, as the same may be modified, amended, supplemented, replaced,
restated and/or extended from time to time and at any time, which Loan
Agreement establishes and provides for the following described credit
facilities:
Facility Amount Terms Maturity Date
Revolving Loan $4,000,000 Interest monthly; principal and October 14, 2005 interest at maturity
Term Loan $4,000,000 Principal and interest monthly October 14, 2005
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, security interest, lien (whether statutory or otherwise),
Charge, claim or encumbrance, or preference, priority or other security
agreement or preferential arrangement held or asserted in respect of any
asset of any kind or nature whatsoever including, without limitation, any
conditional sale or other title retention agreement, any lease having
substantially the same economic effect as any of the foregoing, and the
filing of, or agreement to give, any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction.
"Obligations" shall mean and include any and all loans, advances, debts,
liabilities, obligations, covenants and duties owing by the Grantor to
Lenders or Agent or to any other direct or indirect subsidiary or affiliate
of Agent or any Lender of any kind or nature, present or future (including,
without limitation, any interest accruing thereon after maturity, or after
the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding relating to the Grantor,
whether or not a claim for post-filing or post-petition interest is allowed
in such proceeding), whether or not evidenced by any note, guaranty or
other instrument, whether arising under any agreement, instrument or
document, (including, without limitation, the Loan Agreement and the Loan
Documents) whether or not for the payment of money, whether arising by
reason of an extension of credit, opening of a letter of credit, loan,
equipment lease or guarantee, under any interest or currency swap, future,
option or other similar agreement, or in any other manner, whether arising
out of overdrafts or deposit or other accounts or electronic funds
transfers (whether through automated clearing houses or otherwise) or out
of the Agent's or any Lenders non-receipt of or inability to collect funds
or otherwise not being made whole in connection with depository transfer
check or other similar arrangements, whether direct or indirect (including
those acquired by assignment or participation), absolute or contingent,
joint or several, due or to become due, now existing or hereafter arising,
contractual or tortious, liquidated or unliquidated, regardless of how such
indebtedness or liabilities arise or by what agreement or instrument they
may be evidenced or whether evidenced by any agreement or instrument,
including, but not limited to, any and all of Grantor's indebtedness and/or
liabilities under the Loan Agreement, the Loan Documents or under any other
agreement between Agent or Lenders and Grantor and any amendments,
extensions, renewals or increases and all costs and expenses of Agent and
any Lender incurred in the documentation, negotiation, modification,
enforcement, collection or otherwise in connection with any of the
foregoing, including but not limited to reasonable attorneys' fees and
expenses and all obligations of Grantor to Agent or Lenders to perform acts
or refrain from taking any action. Obligations shall also include all
loans, advances, debts, liabilities, obligations, covenants and duties
owing by Grantor or Guarantor to Lenders or Agent or to any other direct or
indirect subsidiary or affiliate of Agent or any Lender arising under any
of the following: (a) any International Swaps and Derivatives Association
Master Agreement ("Master Agreement"), and including each Transaction (as
such term is defined in the Master Agreement), as confirmed in the
applicable confirmation of each such Transaction; or (b) any obligation of
Grantor or Guarantor to any of the foregoing under any other interest rate
swap, cap, collar, floor, option, forward, or other type of interest rate
protection, foreign exchange or derivative transaction agreement.
"Permitted Encumbrances" has the meaning ascribed to such term in the Loan
Agreement.
"Person" shall mean any individual, sole proprietorship, partnership,
corporation, business trust, joint stock company, trust, unincorporated
organization, association, limited liability company, institution, public
benefit corporation, joint venture, entity or government (whether federal,
state, county, city, municipal or otherwise, including any instrumentality,
division, agency, body or department thereof).
IN WITNESS WHEREOF, Grantor has executed and delivered this Deed of Trust
by its duly authorized signatory as of the 23rd day of October, 2002.
U.S. RUBBER RECLAIMING, INC.
By: /s/Xxxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman
Exhibit A to Security Instruments
U. S. Rubber Reclaiming, Inc., Grantor
PNC Bank, National Association, as Agent, Beneficiary
October 25, 2002 Page 1 of
1
Part of section 20, Township 15 North, Range 3 East, Xxxxxx County,
Mississippi.
Commencing at the Southwest corner of the U. S. Rubber Reclaiming, Inc. property
as recorded in Deed Book 824 at Page 143 of the land records of Xxxxxx County,
Mississippi, said point being on the Easterly line of the Kansas City Southern
Railroad Company (formerly Illinois Central Railroad Company) right of way and
run thence South 69(degree)15' 00" East along the South line of said U. S.
Rubber Reclaiming Company, Inc. property 411.79 feet to an existing iron stake
marking the Southwest corner of that certain parcel conveyed as Parcel One to
Xxxxx Rubber Industries, Inc. by U.S. Rubber Reclaiming, Inc., as described
within deed recorded in Book 850 at Page 140, which point further marks the
Southwest corner of the tract described an Parcel One within deed executed by
Xxxxx Rubber Industries, Inc. in favor of U.S. Rubber Reclaiming, Inc. recorded
in Deed Book 930 at Page 740, each within the aforesaid land records; thence
continue along the South line of the tract described as Parcel One within said
deed executed by Xxxxx Rubber Industries, Inc. in favor of U. S. Rubber
Reclaiming, Inc. South 69(degree)15'00" East 166.85 feet to the Southeast corner
of said Parcel one so described within said deed executed by Xxxxx Rubber
Industries, Inc. in favor of U. S. Rubber Reclaiming, Inc.; thence run along the
East line of the tract so described as Parcel One within that said deed North
20(degree)51' 58" East 168.87 feet along the center line of an existing paved
road and easement as described in Deed Book 850 at Page 112 of the Xxxxxx County
Land Records to the Northeast corner of said Parcel One an described within the
aforedescribed deed executed by Xxxxx Rubber Industries, Inc. in favor of said
U. S. Rubber Reclaiming, Inc.; thence leaving the East line of the tract
described within that said deed as Parcel One and continue thence North
20(degree)51' 58" East 123.71 feet, more or less, along the center line of said
road to a point, which point marked the point of beginning of the tract
described as Parcel Two within said deed executed by Xxxxx Rubber Industries,
Inc. in favor of U. S. Rubber Reclaiming, Inc., same further being the
Southernmost Southwest corner of Parcel Two as described within that said deed;
thence leaving the center line of said road and run thence along the South line
of the tract described as Parcel Two within the said deed executed by Xxxxx
Rubber Industries, Inc. in favor of U. S. Rubber Reclaiming, Inc., with the
following courses and distances, viz: South 70(degree)13' 59" East 194.29 feet
to a point within a certain existing building sometimes designated and referred
to as "Manufacturing Building"; thence run South 19(degree)46' 01" West 24.50
feet to a point on the northerly face of an existing interior wall within said
building; thence run along the northerly exterior face of said interior wall
South 70" 13' 59" East 37.07 feet; thence leaving the northerly exterior face of
said interior wall and run North 19" 46'01 " East a distance of 143.02 feet,
more or less, along a line within the interior of an existing building and the
extension thereof as same intersects the Northerly exterior face of said
building and thereafter continues to a point in the center line of an existing
concrete paved road extending in an Easterly-Westerly direction along the
Northerly face of said Manufacturing Building; thence run North 70(degree)29'
12" West along the center line of said concrete paved road 124.99 feet to the
point of intersection of the centerline of said existing concrete paved road
with the centerline of another paved plant road extending in a
Northerly-Southerly direction, each of said roadways providing common
ingress-egress to facilities in ownership of U. S. Rubber Reclaiming,,Inc. and
Xxxxx Rubber Industries, Inc.; thence run along the centerline of the
aforementioned road extending in a Northerly-Southerly direction North
20(degree)54' 32" East 409.14 feet, more or less, to an iron stake being located
on the South bank of an existing drainage ditch, said point being located 10
feet South of the centerline of said drainage ditch; thence run along a line
parallel to and Southerly 10 feet from the centerline of said drainage ditch
with the following courses and distances, viz:
Exhibit A to Security Instruments
U. S. Rubber Reclaiming, Inc., Grantor
PNC Bank, National Association, as Agent, Beneficiary
October 25, 2002 Page 2 of 2
North 73" 15'47" West 110.60 feet; North 70(degree)42'43" West 251.41 feet;
North 63(degree)03'58" West 68.42 feet; North 76(degree)31' 24" West 94.52 feet;
North 68(degree)46'47" West 195.89 feet, more or less, to a point on the
Easterly right of way of the Kansas City Southern Railroad Company (formerly
Illinois Central Railroad Company) property; thence run South 18(degree)1700"
West along the Easterly right of way line of said railroad property 230.03 feet
to a point marking the Northernmost Southwest corner of that certain tract
described as Parcel Two within the aforedescribed deed executed by Xxxxx Rubber
Industries, Inc. in favor of U.S. Rubber Reclaiming, Inc.; thence leaving the
Westerly line of the tract described as Parcel Two within said deed executed by
Xxxxx Rubber Industries, Inc. in favor of U. S. Rubber Reclaiming,, Inc. and run
along the Westerly line of the lands conveyed to U. S. Rubber Reclaiming, Inc.
by deed recorded in Deed Book 824 at Page 143 of the aforesaid Xxxxxx County
land records, same further being the Easterly right of way of the Kansas City
Southern Railroad Company (formerly Illinois Central Railroad Company) property
South 18(degree)17'00" West 574.58 feet, more or less, to the POINT OF
BEGINNING, all lying and being situate in Section 20, Township 15 North, Range 3
East, Xxxxxx County, Mississippi.
TOGETHER WITH the following non-exclusive perpetual easements styled "Common Use
Agreement and Easement", recorded in Deed Book 930 at Page 732, and re-recorded
in Deed Book 932 at Page 42 within the land records of Xxxxxx County,
Mississippi, viz:
THAT CERTAIN NON-EXCLUSIVE EASEMENT AND RIGHT OF WAY for the purpose of
ingress and egress, for the use in common with others, including the
Grantor herein created by deed recorded in Deed Book 930 at Page 740, over
and across the existing roadway along the southern portions of lands
presently vested in Xxxxx Rubber Industries, Inc. as described as Parcel
Two within deed recorded in Deed Book 850 at Page 140 of the aforesaid
Xxxxxx County Land Records, leading in a westerly direction from the west
right-of-way line of U.S. Highway 61 and thereafter continuing in a
westerly direction along the southerly 40 feet of the lands described as
Parcel One within said deed so recorded in said Book 850 at Page 140 of
said land records.
STATE OF INDIANA )
) ss.
COUNTY of Hamilton )
On this 23rd day of October, 2002, before me personally came Xxxxxxx X. Xxxxxx,
to me known, who, being by me duly sworn, did depose and say that he is the
authorized officer of U.S. RUBBER RECLAIMING, INC., the corporation described in
and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the board of directors of said corporation,
and that he signed his name thereto by like order.
/s/Xxxxxxx Xxxxxx
------------------------------------
NOTE: No Notary Seal Required in State of Indiana
INDEX: X00, X00X, X0X
Xxxxxx Xxxxxx, XX
PREPARED BY AND RETURN TO:
Xxxxxxxx Xxxxxxxx Xxxxxxx & Xxxxxx
P. O. Xxx 000
Xxxxxxxxx, XX 00000
000-000-0000
CAPITAL AVAILABILITY AGREEMENT
OBSIDIAN CAPITAL PARTNERS, L.P. ("Investor"), PNC BANK, NATIONAL
ASSOCIATION, as Agent for the Lenders ("Agent") and U.S. RUBBER RECLAIMING, INC.
("Borrower") agree as follows effective as of October 25, 2002:
l. Recitals.
1.1 Agent is agent for certain lenders ("Lenders") under that certain
Revolving Credit, Term Loan and Security Agreement dated as of even
date herewith, as amended, restated or modified from time to time,
previously or in the future with Borrower (the "Loan Agreement").
1.2 Pursuant to the Loan Agreement, Borrower has executed and delivered to
Agent, as Lender, a revolving credit note dated as of even date
herewith in the original principal amount of $4,000,000, and a tern
note dated as of even date herewith in the original principal amount
of $4,000,000.
1.3 Investor is a shareholder of Obsidian Enterprises, Inc., the parent
company of Borrower. Investor has requested that Agent and/or Lenders
extend credit to Borrower and has agreed to execute and deliver this
Agreement to Agent as an inducement for such extension of credit.
1.4 Capitalized terns used herein and not otherwise defined will be given
the definitions set forth in the Loan Agreement, including any
amendments, modifications, or restatements made from time to time.
2. Capital Availability. In consideration of the above premises and other good
and valuable consideration, the receipt of which is hereby acknowledged,
Investor, Agent and Borrower hereby agree as follows:
2.1 Capital Contributions. In the event that the Borrower violates the
Fixed Charge Coverage Ratio requirement set forth at Section 6.6 of
the Loan Agreement, at any time and from time to time while any of the
Obligations are outstanding, Investor, upon written notice as provided
herein, shall contribute capital to Borrower through Agent, in
immediately available funds, up to $1,600,000 ("Maximum Available
Capital") in the aggregate, in such amount(s) as are determined by
Agent in its reasonable discretion to cure such violation(s).
2.2 Notice. Investor shall from time to time while any of the Obligations
are outstanding, transfer capital to Borrower through Agent pursuant
to the terns hereof up to the Maximum Available Capital if so required
by Borrower or Agent upon 10 calendar days prior written notice, which
notice shall specify the cure amount calculated by Agent in accordance
with Section 2.1 above.
2.3 Borrower Acknowledgment. At the time of each such transfer, Borrower
shall deliver to Investor and Agent written acknowledgements that it
has received an equity contribution which will be reflected as such on
its books.
2.4 No Violations. Borrower agrees that it will not take any action in
contravention of the provisions of this Agreement and that all terns,
covenants and provisions of this Agreement will be duly performed and
observed. Borrower further acknowledges that in the event that Agent
requires Investor to provide funds to Borrower pursuant to the terms
of this Agreement, Agent shall receive the funds and Lenders may apply
the funds received to the Obligations in such order as Agent or
Lenders may determine, and may permanently and automatically reduce
any commitment by Lenders to lend funds to Borrower by the amount of
the contribution. The breach by Borrower or Investor of any of the
terms, covenants or provisions herein or of this Agreement shall be an
Event of Default under the Loan Agreement but shall have no effect on
the obligations of Investor hereunder.
2.5 Investor agrees that Agent and/or Lenders at any time and from time to
time, without the consent of or notice to the Investor, and without
impairing or releasing, discharging or modifying the liabilities of
the Investor hereunder, may in its sole discretion: (i) change the
manner, place or terms of payment or performance of or interest rates
on, or change or extend the time of payment or performance of, or
other terms relating to any of the Obligations, (ii) renew, increase,
substitute, modify, amend or alter, or grant consents or waivers
relating to any of the Obligations, any other guarantees or other
liabilities, or any collateral for any Obligations or guarantees or
other liabilities, (iii) apply any and all payments from any source
whatsoever including any proceeds of any collateral, to any
Obligations of Borrower in any order, manner and amount, (iv) deal or
refrain from dealing with any person or entity, in its sole
discretion, with respect to any Obligations in such manner as Agent
and/or Lenders deem appropriate, in its sole discretion, and/or (v)
accept, sell, substitute, exchange, compromise, release, surrender,
offset, realize upon or otherwise deal with in any manner and in any
order any of the Obligations, any guarantee or other liability for any
of the Obligations, or any collateral for any of the Obligations or
for any guarantee or other liability relating to any of the
Obligations. Irrespective of the taking of or refraining from taking
of any of the foregoing actions, the obligations of the Investor will
remain in full force and effect and will not be affected, impaired,
discharged or released in any manner. Agent and/or Lenders in their
sole discretion may determine the reasonableness of the period which
may elapse prior to the making of demand for any payment upon Borrower
and it need not pursue any of its remedies against Borrower, any
guarantor or other person, or any collateral before having recourse
against Investor under this Agreement.
3. Miscellaneous.
3.1 Borrower and Investor may not assign this Agreement without the prior
written consent of Agent, which consent Agent may withhold in its sole
and absolute discretion.
3.2 This Agreement shall remain in full force and effect until the payment
in full of all principal and interest and other Obligations (as
defined in the Loan Agreement) due from Borrower to Agent and/or
Lenders.
3.3 This Agreement shall be construed in accordance with and governed by
the laws of the State of Indiana, without regard to conflicts of law
principles.
3.4 No modification or waiver of any provisions of this Agreement shall be
effective unless the same shall be in writing, and then such waiver or
consent shall be effective only in the specific instance and for the
purposes for which given. Neither any failure nor any delay on the
part of either party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or future exercise, or the
exercise of any other right, power or privilege.
3.5 Any capitalized terns used herein but not otherwise defined herein
will have the meanings provided those terms in the Loan Agreement.
3.6 This Amendment may be executed by one or more to the parties hereto on
any number of separate counterparts, each of which when so executed
shall be an original, but all of which shall be together constitute
one and the same instrument.
3.7 Investor agrees to pay on demand, to the extent permitted by law, all
reasonable costs and expenses incurred by the Lender and/or Agent in
the enforcement of its rights under this Agreement and in any security
therefor, including without limitation reasonable fees and expenses of
the Lender's and/or Agent's counsel. If any provision of this
Agreement is found to be invalid by a court, all the other provisions
of this Agreement will remain in full force and effect. This Agreement
shall bind the Investor and its respective successors and assigns, and
the benefits hereof shall inure to the benefit of Agent and its
successors and assigns. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana applied
to contracts to be performed wholly within the State of Indiana. Any
judicial proceeding brought by or against Investor with respect to any
of the Obligations, this Agreement or any related agreement may be
brought in any court of competent jurisdiction in the State of
Indiana, United States of America, and, by execution and delivery of
this Agreement, Investor accepts for itself and in connection with its
properties, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this
Agreement. Investor hereby waives personal service of any and all
process and consent that all such service of process may be made by
registered mail (return receipt requested) directed to Investor at its
address set forth below its signature and service so made shall be
deemed completed five (5) days after the same shall have been so
deposited in the mails of the United States of America. Nothing herein
shall affect the right to serve process in any manner permitted by law
or shall limit the right of Agent or any Lender to bring proceedings
against Investor in the courts of any other jurisdiction. Investor
waives any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non conveniens. Any judicial
proceeding by Investor against Agent or any Lender involving, directly
or indirectly, any matter or claim in any way arising out of, related
to or connected with this Agreement or any related agreement, shall be
brought only in a federal or state court located in the County of
Xxxxxx, State of Indiana.
3.8 WAIVER OF JURY TRIAL. Investor irrevocably waives any and all rights
the Investor may have to a trial by jury in any action, proceeding or
claim of any nature relating to this Agreement, any documents executed
in connection with this Agreement or any transaction contemplated in
any of such documents. Investor acknowledges that the foregoing waiver
is knowing and voluntary. Investor acknowledges that it has read and
understood all the provisions of this Agreement, including the waiver
of jury trial, and has been advised by counsel as necessary or
appropriate.
IN WITNESS WHEREOF, Investor, Agent and Borrower have duly executed this
Agreement, all as of this day and year first above written.
U.S. RUBBER XXXXXXXXXX.XXX.
By: /s/Xxxxxxx X. Xxxxxx
-----------------------------
Print Name: Xxxxxxx X. Xxxxxx
Title: Chairman
PNC BANK, NATIONAL ASSOCIATION, as Agent
By: /s/Xxxx X. Count
-------------------------
Print Name: Xxxx X. Count
Title: Vice President
OBSIDIAN CAPITAL PARTNERS, L.P.
By: /s/Xxxxxxx X. Xxxxxx
-----------------------------
Print Name: Xxxxxxx X. Xxxxxx
Title: Managing Member
Notice Address:
Obsidian Capital Partners
000 Xxxxxxxx Xxxxxx
Bank Xxx Xxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Copy to:
Xxxxxxxxx & Xxxxxxxxx
000 Xxxxxxxx Xxxxxx
Bank Xxx Xxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (317) 237- 0137
REVOLVING CREDIT NOTE
$4,000,000 Indianapolis, Indiana
Dated as of October 25, 2002
FOR VALUE RECEIVED, U.S. RUBBER RECLAIMING, INC. (the "Borrower") promises
to pay to the order of PNC BANK, NATIONAL ASSOCIATION (the "Lender"), in lawful
money of the United States of America in immediately available funds at the
Lender's offices located at Xxx Xxxxx Xxxxxx Xxxx., 0xx Xxxxx, Xxxx Xxxxxxxxx,
XX 00000, or at such other location as the Lender may designate from time to
time, the principal sum of FOUR MILLION DOLLARS ($4,000,000) (the "Facility") or
such lesser amount as may be advanced to or for the benefit of the Borrower
hereunder, together with interest accruing on the outstanding principal balance
from the date hereof, all as provided below:
1. Advances. The Borrower may request Advances, repay and request additional
Advances under the Loan Agreement until the Expiration Date, subject to the
terms and conditions of this Note and the Other Documents. The "Expiration
Date" shall mean the last day of the Term set forth in the Loan Agreement,
or such later date as may be designated by the Agent by written notice to
the Borrower. The Borrower acknowledges and agrees that in no event will
the Agent or Lenders be under any obligation to extend or renew the
Facility or this Note beyond the initial Expiration Date. In no event shall
the aggregate unpaid principal amount of Advances under this Note exceed
the lesser of the face amount of this Note, the Formula Amount, or any
other maximum amount limitations set forth herein, in the Loan Agreement,
or in the Loan Documents.
2. Rate of Interest. Subject to the applicability of the Default Rate, each
Advance outstanding under this Note will bear interest at a rate per annum
as set forth in the Loan Agreement. All interest calculations under the
Loan Agreement and this Note will be made based on a year of 360 days for
the actual number of days in each interest period. In no event will the
rate of interest hereunder exceed 25% per annum or such lesser amount as is
the maximum permitted by law.
3. Payment Terms. The obligation to make payments hereunder is without relief
from valuation and appraisement laws. The Borrower shall make payments of
principal and accrued interest on this Note as set forth in the Loan
Agreement. All outstanding principal and accrued but unpaid interest
hereunder shall be due and payable in full on the Expiration Date. The
Borrower hereby authorizes the Agent to charge the Borrower's Account for
any payment when due hereunder. All payments, including prepayments,
received will be applied to charges, fees and expenses (including
reasonable attorneys' fees), accrued interest and principal in the order
specified in the Loan Agreement.
4. Late Payments; Default Rate. If the Borrower fails to make any payment of
principal, interest or other amount due pursuant to the provisions of this
Note and the Loan Agreement, the Borrower also shall pay a late charge
equal to the lesser of five percent (5%) of the amount of such payment or
$100.00. The late charge is imposed for the purpose of defraying the
expenses incident to the handling of delinquent payments and is in addition
to, and not in lieu, of, the exercise by the Lender and Agent of any rights
and remedies hereunder, under the Loan Agreement, Loan Documents or under
applicable laws, and any fees and expenses of any agents or attorneys which
the Lender or Agent may employ. If any Obligations are not paid when due
(whether by acceleration, demand or otherwise), the Borrower shall pay
interest on such amount at the Default Rate until it is paid in full. The
Default Rate shall continue to apply whether or not judgment shall be
entered on this Note.
5. Loan Documents. This Note is issued in connection with the Revolving
Credit, Term Loan and Security Agreement between Borrower, Agent, and the
Lenders identified therein of even date herewith (the "Loan Agreement") and
is secured by the Collateral covered by the Loan Agreement and Loan
Documents as that term is defined in the Loan Agreement. All references to
the Loan Agreement and the Loan Documents will include all amendments
thereto as made from time to time. The terms, covenants, conditions,
stipulations and agreements contained in the Loan Agreement hereby are
incorporated herein by reference. Capitalized terms used in this Note and
not otherwise defined herein will have the meanings given such terms in the
Loan Agreement.
6. Advance Procedures. Advances will be made in accordance with the terms of
Section 2.3 of the Loan Agreement and the terms of any disbursement account
agreement between Borrower and Agent. The Borrower may request Advances (i)
in writing by the Request for Advance attached hereto as Exhibit A-1 or
(ii) by telephone notice that is promptly confirmed in writing. The
Borrower hereby indemnifies and holds the Agent and Lender harmless from
and against any and all damages, losses, liabilities, costs and expenses
(including reasonable attorneys' fees and expenses) which may arise or be
created by the good faith acceptance of telephone requests or making of
such Advances. Lender and Agent will have no liability in acting upon any
request that either believes in good faith to have been authorized by the
Borrower and will have no duty to verify the authenticity of the
signature(s) appearing on any written request and no duty to verify the
identity of any person making any telephonic request. The Lender and Agent
will enter on its respective books and records, which entry when made will
be presumed correct absent manifest error, the date and amount of each
Advance, the interest rate and interest -period applicable thereto, as well
as the date and amount of each payment made by the Borrower. Each request
for an Advance, whether telephonic or written, will be binding upon and
irrevocable by Borrower. Each request for an Advance will be subject to all
of the terms and conditions of this Note and the Loan Agreement. Without
limiting the generality of the foregoing, Agent and Lender will have no
duty to make any Advance if insufficient funds remain available pursuant to
the Facility or any other maximum amount limitations set forth herein or in
any of the Other Documents. Agent and/or Lender hereby are authorized at
any time and from time to time, in its discretion, to make an Advance under
this Note for the payment on behalf of Borrower of any interest, principal
or other sums due under any of the Obligations, and each such Advance will
constitute an Advance under the Loan Agreement and part of the Obligations.
Notwithstanding the foregoing, Agent and Lenders are not obligated to take
such action.
7. Events of Default. Immediately and automatically upon the occurrence of an
Event of Default under Section 10.7 of the Loan Agreement, or, at the
option of Lender, immediately upon the occurrence of any other Event of
Default, in any case without demand or notice of any kind (which are hereby
expressly waived): (i) the Obligations will become immediately due and
payable, (ii) Borrower will pay to Agent and Lender all reasonable costs
and expenses (including but not limited to reasonable Attorneys' Fees)
incurred by them in connection with efforts to collect the indebtedness
evidenced hereby, and (iii) Lender and Agent may exercise from time to time
any of the rights and remedies available to them under the Loan Documents
or applicable law. Upon and after the occurrence of any Event of Default or
the maturity of this Note (by acceleration or otherwise), the principal
balance under this Note, together with any arrearage of interest, will bear
interest at the Default Rate until paid in full, whether before or after
judgment. Borrower, all other makers, co-signers and indorsers waive
presentment, demand, protest, and notice of demand, protest, non-payment
and dishonor. Borrower also waives all defenses based on suretyship or
impairment of collateral.
8. Right of Setoff. In addition to all liens upon and rights of setoff against
the money, securities or other property of the Borrower given to the Lender
and/or Agent by law, the Lender and/or Agent shall have, with respect to
the Obligations upon the occurrence of an Event of Default under the Loan
Agreement and to the extent permitted by law, a contractual possessory
security interest in and a contractual right of setoff against, and the
Borrower hereby assigns, conveys, delivers, pledges and transfers to the
Lender and/or Agent all of the Borrower's right, title and interest in and
to, all deposits, moneys, securities and other property of the Borrower now
or hereafter in the possession of or on deposit with, or in transit to, the
Lender and/or Agent whether held in a general or special account or
deposit, whether held jointly with someone else, or whether held for
safekeeping or otherwise, excluding, however, all XXX, Xxxxx, and trust
accounts. Every such security interest and right of setoff may be exercised
without demand upon or notice to the Borrower. Every such right of setoff
shall be deemed to have been exercised immediately upon the occurrence of
an Event of Default hereunder without any action of the Lender and/or
Agent, although the Lender and/or Agent may enter such setoff on its books
and records at a later time.
9. Miscellaneous. No delay or omission of the Lender and/or Agent to exercise
any right or power arising hereunder shall impair any such right or power
or be considered to be a waiver of any such right or power nor shall the
Lender's and/or Agent's action or inaction impair any such right or power.
The Borrower agrees to pay on demand, to the extent permitted by law, all
reasonable costs and expenses incurred by the Lender and/or Agent in the
enforcement of its rights in this Note and in any security therefor,
including without limitation reasonable fees and expenses of the Lender's
and/or Agent's counsel. If any provision of this Note is found to be
invalid by a court, all the other provisions of this Note will remain in
full force and effect. The Borrower and all other makers and endorsers of
this Note hereby forever waive presentment, protest, notice of dishonor and
notice of non-payment. This Note shall bind the Borrower and its heirs,
executors, administrators, successors and assigns, and the benefits hereof
shall inure to the benefit of Lender and its successors and assigns.
This Note shall be governed by and construed in accordance with the laws of
the State of Indiana applied to contracts to be performed wholly within the
State of Indiana. Any judicial proceeding brought by or against Borrower
with respect to any of the Obligations, this Note, the Loan Documents or
any related agreement may be brought in any court of competent jurisdiction
in the State of Indiana, United States of America, and, by execution and
delivery of this Note, Borrower accepts for itself and in connection with
its properties, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by
any judgment rendered thereby in connection with this Note. Borrower hereby
waives personal service of any and all process upon it and consents that
all such service of process may be made by registered mail (return receipt
requested) directed to Borrower at its address set forth in Section 15.6 of
Loan Agreement and service so made shall be deemed completed five (5) days
after the same shall have been so deposited in the mails of the United
States of America. Nothing herein shall affect the right to serve process
in any manner permitted by law or shall limit the right of Agent or any
Lender to bring proceedings against Borrower in the courts of any other
jurisdiction. Borrower waives any objection to jurisdiction and venue of
any action instituted hereunder and shall not assert any defense based on
lack of jurisdiction or venue or based upon forum non conveniens. Any
judicial proceeding by Borrower against Agent or any Lender involving,
directly or indirectly, any matter or claim in any way arising out of,
related to or connected with this Note or any related agreement, shall be
brought only in a federal or state court located in the County of Xxxxxx,
State of Indiana.
10. WAIVER OF JURY TRIAL. The Borrower irrevocably waives any and all rights
the Borrower may have to a trial by jury in any action, proceeding or claim
of any nature relating to this Note, any documents executed in connection
with this Note or any transaction contemplated in any of such documents.
The Borrower acknowledges that the foregoing waiver is knowing and
voluntary. The Borrower acknowledges that it has read and understood all
the provisions of this Note, including the waiver of jury trial, and has
been advised by counsel as necessary or appropriate.
U.S. RUBBER RECLAIMING, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Print Name: Xxxxxxx X. Xxxxxx
Title: Chairman
EXHIBIT A-1
REQUEST FOR ADVANCE
Advance Number
U.S. RUBBER RECLAIMING, INC. ("Borrower"), hereby requests PNC BANK,
NATIONAL ASSOCIATION ("Agent") to take the following action under the Loan
Agreement executed by Borrower, Agent and the Lenders identified therein, dated
as of October ____, 2002 (the "Loan Agreement'). Capitalized terms used herein
and not otherwise defined herein have the meanings given such terms in the Loan
Agreement. To induce Agent to take the action indicated below, Borrower hereby
represents and agrees as follows:
1. Representations and Warranties.
1.1 No Default or Event of Default exists.
1.2 All conditions precedent applicable under the Loan Agreement to any
advance requested hereunder have been fully and timely satisfied.
1.3 The approval of this Request for Advance by Agent will not be deemed
to be a waiver by Lender and/or Agent of any Default or Event of
Default or of any of the conditions to any obligation of Lender and/or
Agent to make further advances (nor in the event that Borrower is
unable to satisfy any such condition will any advance made pursuant to
this Request have the effect of precluding Lender and/or Agent from
thereafter declaring such inability to be an Event of Default).
1.4 All of the representations and warranties made by Borrower in the
Other Documents are true and correct on and as of the date hereof and
the date of the advance requested hereby.
1.5 I (the individual executing this Request on behalf of Borrower) am
duly authorized to make this request on behalf of Borrower.
2. Advance.
2.1 Borrower hereby requests Agent to make an advance on behalf of Lenders
in the amount of $________________.
2.2 The proposed date on which such advance should be made is
__________________ 200_ (such date must be a Business Day).
2.3 The proceeds of the advance subject to this request will be used for
the following purpose: (check one)
_______ Capital Expenditures Described on the Attached Schedule 1
_______ Other (describe): __________________________________
U.S. RUBBER RECLAIMING, INC.
By: ______________________________
Print Name: ________________________
Title: ______________________________
Date: ______________________________
SUBORDINATION AGREEMENT
PNC BANK, NATIONAL ASSOCIATION, as agent for the Lenders (the "Agent") and
DC INVESTMENTS, LLC ("Subordinated Creditor"), hereby agree as follows effective
as of October 25, 2002 ("Effective Date"):
1. Recitals.
1.1 Agent is agent for certain lenders ("Lenders") under that certain
Revolving Credit, Term Loan and Security Agreement dated as of even
date herewith, as amended from time to time (the "Loan Agreement"),
previously or in the future with U.S. RUBBER RECLAIMING, INC.
("Borrower"). Lenders contemplate making loans and extending credit or
other financial accommodations to the Borrowers.
1.2 For good and valuable consideration, receipt of which is hereby
acknowledged by Agent on behalf to Lenders, and in order to induce
Subordinated Creditor, now or from time to time hereafter, to arrange
for the Subordinated Indebtedness, Subordinated Creditor agrees with
Lenders as follows.
1.3 For good and valuable consideration, receipt of which is hereby
acknowledged by Subordinated Creditor, and in order to induce Lenders,
now or from time to time hereafter, to make loans or extend credit or
other financial accommodations to Borrower, or to grant such renewals
or extensions thereof as Lenders may deem advisable in its discretion,
Subordinated Creditor agrees with Agent, acting on behalf of Lenders,
as follows.
2. Definitions.
2.1 "Borrower" will mean Borrower and its successors and assigns,
including but not limited to any receiver, custodian, trustee, or
debtor-in-possession.
2.2 "Closing Date" will mean the date on which this Agreement is executed.
2.3 "Collateral" will mean any collateral now or in the future securing
the Obligations including but not limited to claims against any
guarantors of the Obligations and any Collateral securing such
guarantees.
2.4 "Default" will mean any event or condition that with the passage of
time or giving of notice, or both, would constitute a Senior Event of
Default.
2.5 "Junior Event of Default" will mean: (a) an Event of Default (as
defined therein) under any of the documents evidencing any of the
Subordinated Indebtedness, or (b) a default under any of such
documents that do not have a defined set of Events of Default.
2.6 "Lender's Affiliate" will mean any person, partnership, joint venture,
company or business entity under common control or having similar
equity holders owning at least ten percent (10%) thereof with any
Lender, whether such common control is direct or indirect. All of each
Lender's direct or indirect parent corporations, sister corporations,
and subsidiaries will be deemed to be a Lender's Affiliate for
purposes of this Agreement.
2.7 "Obligations" will mean and include all loans, advances, debts,
liabilities, obligations, covenants and duties owing to any Lender or
any of such Lender's Affiliates, from any Borrower of any kind or
nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, including but not limited to those
arising under: (i) the Loan Agreement, (ii) any International Swap
Dealers Association Master Agreement ("Master Agreement"), and
including each Transaction (as such term is defined in the Master
Agreement), as confirmed in the applicable confirmation of each such
Transaction, (iii) any obligation of any Borrower to Agent, any Lender
or any Lender's Affiliate under any other interest rate swap, cap,
collar, floor, option, forward, or other type of interest rate
protection, foreign exchange or derivative transaction agreement, (iv)
the Notes, as such term is defined in the Loan Agreement, (v) under
any other agreement, instrument or document, whether or not for the
payment of money, whether arising by reason of an extension of credit,
opening of a letter of credit, loan, guaranty, indemnification or in
any other manner, whether direct or indirect (including those acquired
by assignment, participation, purchase, negotiation, discount or
otherwise), absolute or contingent, joint or several, due or to become
due, now existing or hereafter arising and whether or not contemplated
by any Borrower, Agent, any Lender, or any Lender's Affiliate on the
Closing Date; and as to all of the foregoing, including any
amendments, modifications, or superceding documents to each of the
foregoing; and all charges, expenses, fees, including but not limited
to reasonable Attorneys' Fees, and any other sums chargeable to any
Borrower under any of the Obligations.
2.8 "Permitted Payments" means those payments on the Subordinated
Indebtedness listed on Exhibit A attached hereto.
2.9 "Senior Event of Default" will mean: (a) an Event of Default (as
defined therein) under any of the documents evidencing any of the
Obligations, or (b) a default under any of such documents that do not
have a defined set of Events of Default.
2.10 "Subordinated Indebtedness" will mean any and all existing and future
indebtedness, liabilities and obligations of Borrower to Subordinated
Creditor of every kind and nature whatsoever, including, without
limitation, such indebtedness, liabilities, and obligations of
Borrower to Subordinated Creditor which are direct, indirect,
contingent, primary, secondary, alone, jointly with others, unsecured,
secured, future advances, principal, interest, expense payments,
indemnities, liquidation costs, post-petition interest due on any of
the above, and reasonable Attorneys' Fees and expenses, all whether
arising under contract, by tort, at law, in equity or otherwise, and
all guarantees, indemnifications and other undertakings of persons
other than Borrower with respect to the foregoing. The entire
Subordinated Indebtedness existing on the date of this Agreement is
described in Exhibit A attached hereto and made a part hereof.
3. Subordination.
3.1 Subordination of Subordinated Indebtedness. Except for Permitted
Payments made by Borrower to Subordinated Creditor where no Default or
Senior Event of Default exists under any of the Obligations,
Subordinated Creditor hereby subordinates and postpones the payment
and the time of payment of all of the Subordinated Indebtedness to and
in favor of the payment and the time of payment of all of the
Obligations.
3.2 Terms of Payment. Until the Obligations have been indefeasibly paid in
full and all financing arrangements relating to the Obligations have
been terminated:
3.2.1No Prepayments. Subordinated Creditor will not accept from or on
behalf of Borrower any prepayment, in cash or other property or
in any other manner, on any of the Subordinated Indebtedness;
3.2.2Permitted Payments. Subordinated Creditor will not set off,
accept, take or receive, directly or indirectly, in cash or other
property or in any other manner, any payment of any kind of all
or any part of the Subordinated Indebtedness other than Permitted
Payments, whether for principal, interest or otherwise; and, if a
Senior Event of Default has occurred, the Subordinated Creditor
will not set off, take, accept or receive, directly or
indirectly, in cash or property or in any other manner, any
payment of any kind whatsoever on any of the Subordinated
Indebtedness;
3.2.3Standstill. If a Junior Event of Default occurs under all or any
part of the Subordinated Indebtedness, Subordinated Creditor will
not ask, demand, accelerate, declare a default under, xxx for,
set off, accept, take or receive, directly or indirectly, in cash
or other property or in any other manner, any payment of all or
any part of the Subordinated Indebtedness; provided, however,
that if while such Junior Event of Default remains uncured
Lenders accelerate the indebtedness under the Obligations and
exercises its rights as a secured party to the Collateral, then,
in either such event, Subordinated Creditor may, upon notice to
Lenders, accelerate and otherwise pursue its remedies with
respect to the Subordinated Indebtedness, subject and subordinate
in all respects to Lenders' rights under the Obligations and
Lenders' rights in the Collateral, and subject to the other terms
and conditions of this Agreement;
3.2.4Notice of Junior Event of Default. Subordinated Creditor will
give prompt notice to Agent of any Junior Event of Default that
Subordinated Creditor declares or gives notice of to Borrower
together with a copy of any notice given to Borrower relating to
such default;
3.2.5No Right to Possession of Assets. Notwithstanding any right to
ask, demand, xxx for, or exercise any other right or remedy with
respect to the Subordinated Indebtedness, Subordinated Creditor
will have no right to possession of any assets of Borrower or any
Collateral or to foreclose or execute upon any such assets or the
Collateral, by judicial action or otherwise except as provided in
Section 3.2.3, above; and
3.2.6No Amendments to Subordinated Indebtedness. Subordinated
Creditor will not amend or modify all or any part of the
Subordinated Indebtedness.
3.3 Security for Subordinated Indebtedness. Subordinated Creditor agrees,
represents and warrants that except for the collateral listed on the
attached Exhibit A ("Permitted Collateral"), the Subordinated
Indebtedness is not and will not be secured in any way directly or
indirectly.
3.4 Subordination of Lien. Subordinated Creditor hereby subordinates the
lien and priority of any claim, security interest, lien or encumbrance
and other interests now or hereafter acquired by Subordinated Creditor
in and to the Collateral to Lenders' existing and future interest in
the Collateral.
3.5 No Assignment of Subordinated Indebtedness. Subordinated Creditor
agrees not to subordinate, sell, assign, pledge, encumber, transfer or
otherwise dispose of all or any part of the Subordinated Indebtedness
or any Collateral therefor to any other person.
3.6 Subordination Legend on Evidence of Subordinated Indebtedness.
Subordinated Creditor agrees (a) that each note described in Exhibit A
and all other instruments or documents now or hereafter evidencing all
or any portion of the Subordinated Indebtedness will bear on their
face a clear legend that it is subject to the terms of this Agreement,
(b) that it will xxxx its books of account in such a manner as will be
effective to give proper notice of the effect of this Agreement and
(c) that it will execute such further documents and acknowledgments
and take such further actions as Lenders may reasonably require to
confirm or evidence its obligations under this Agreement.
4. Distributions, Etc.
4.1 Insolvency of Borrower. In the event of any distribution, division or
application, partial or complete, voluntary or involuntary, by
operation of law or otherwise, of all or any part of the assets of
Borrower or the proceeds thereof to creditors of Borrower or to any
indebtedness, liabilities and obligations of Borrower, or upon any
liquidation, dissolution or other winding up of Borrower or Borrower's
business, or in the event of any sale (singly or in the aggregate) of
all or any substantial part of the assets of Borrower, or in the event
of any receivership, insolvency or bankruptcy proceeding, or
assignment for the benefit of creditors, or any proceeding by or
against Borrower for any relief under any bankruptcy or insolvency law
or other laws relating to the relief of debtors, readjustment of
indebtedness, reorganization, compositions or extensions, then and in
any such event any payment or distribution of any kind or character,
either in cash, securities or other property, whether or not on
account of any Collateral, which will be payable or deliverable upon
or with respect to all or any part of the Subordinated Indebtedness or
the Collateral will be paid or delivered directly to Lenders for
application to the Obligations (whether due or not due and in such
order and manner as Lenders may elect) until the Obligations will have
been fully paid and satisfied.
4.2 Appointment of Agent as Attorney-in-Fact. Subordinated Creditor hereby
irrevocably authorizes and empowers Agent on behalf of Lenders to
demand, xxx for, collect and receive every such payment or
distribution and give acquittance therefor and to file claims and take
such other proceedings in Agent's own name or in the name of
Subordinated Creditor or otherwise, as Agent may deem necessary or
advisable to carry out the provisions of this Subordination Agreement.
Subordinated Creditor hereby irrevocably authorizes and empowers
Agent, and irrevocably appoints Agent, Subordinated Creditor's
attorney-in-fact to demand, xxx for, collect and receive every such
payment or distribution and give acquittance therefor and to file
claims and take such other proceedings in Agent's own name or in the
name of Subordinated Creditor or otherwise, as Agent may deem
necessary or advisable to carry out the provisions of this Agreement.
Subordinated Creditor hereby agrees to execute and deliver to Agent
such other limited powers of attorney, assignments, endorsements or
other instruments as may be requested by Agent in order to enable
Agent to enforce any and all claims upon or with respect to the
Subordinated Indebtedness and/or the Collateral, and to collect and
receive any and all payments or distributions which may be payable or
deliverable at any time upon or with respect to the Subordinated
Indebtedness and/or the Collateral.
5. Receipt of Payments by Subordinated Creditor. Should any payment or
distribution not permitted by the provisions of this Agreement or the
Collateral or proceeds thereof be received by Subordinated Creditor upon or
with respect to all or any part of the Subordinated Indebtedness and/or the
Collateral prior to the full payment and satisfaction of the Obligations
and the termination of all financing arrangements between Lenders and
Borrower, Subordinated Creditor will deliver the same to Agent in precisely
the form received (with the endorsement or assignment of Subordinated
Creditor where necessary), for application to the Obligations (whether due
or not due and in such order and manner as Lenders may elect), and, until
so delivered, the same will be held in trust by Subordinated Creditor as
property of Lenders. In the event of the failure of Subordinated Creditor
to make any such endorsement or assignment, Agent, or any of its officers
or employees on behalf of Agent, is hereby irrevocably authorized in its
own name or in the name of Subordinated Creditor to make the same, and is
hereby appointed Subordinated Creditor's attorney-in-fact for those
purposes, that appointment being coupled with an interest and irrevocable.
6. Consents, Waivers, Etc. Subordinated Creditor hereby consents that at any
time and from time to time and with or without consideration, without
further consent of or notice to Subordinated Creditor and without in any
manner affecting, impairing, lessening or releasing any of the provisions
of this Subordination Agreement, Lenders may extend credit or other
financial accommodation or benefit and loan monies to or for the account of
Borrower, and may renew, extend, change the manner, time, place and terms
of payment of, otherwise alter the terms of, sell, exchange, release,
substitute, surrender, realize upon, modify, waive, grant indulgences with
respect to and otherwise deal with in any manner: (a) all or any part of
the Obligations; (b) all or any of the agreements, documents or instruments
evidencing, securing, guaranteeing or otherwise relating to all or any of
the Obligations; (c) all or any part of the Collateral; and (d) any person
at any time primarily or secondarily liable for all or any part of the
Obligations and/or any Collateral, all as if this Subordination Agreement
did not exist. This Subordination Agreement will not be affected, impaired
or released by any delay or failure of Lenders to exercise any of their
rights and remedies against Borrower or any guarantor or under any of the
Obligations or against any collateral or security for any of the
Obligations, by any failure of Lenders to take steps to perfect or maintain
its lien on, or to preserve any rights to, any Collateral by any
irregularity, unenforceability or invalidity of any of the Obligations or
any part thereof or any security or guarantee therefor, or by any other
event or circumstance which otherwise might constitute a defense available
to, or a discharge of, Borrower or a subordinated creditor. Subordinated
Creditor hereby agrees that all payments received by Lenders may be applied
and reapplied, in whole or in part, to any of the Obligations, as Lenders,
in their sole discretion, deems appropriate. Subordinated Creditor hereby
waives demand, presentment for performance, protest, notice of dishonor and
of protest with respect to the Obligations and/or the Collateral, notice of
acceptance of this Subordination Agreement, notice of the making of any of
the Obligations and notice of default under any of the Obligations.
7. Representations and Warranties. Subordinated Creditor represents and
warrants that:
7.1 No Prior Assignment or Transfer. It is the sole holder and owner of
the Subordinated Indebtedness and has not made any sale, assignment,
pledge, encumbrance or other disposition of all or any part of the
Subordinated Indebtedness, and the same is free from all encumbrances
of any kind.
7.2 Legal. Valid and Binding Agreement. This Agreement is the legal, valid
and binding obligation of Subordinated Creditor, enforceable in
accordance with its terms.
7.3 No Violation of Other Agreements. This Agreement does not violate and
is not in contravention of any other agreement to which Subordinated
Creditor is a party.
8. Continuing Agreement. This is a continuing Subordination Agreement and will
remain in full force and effect until all of Borrower's Obligations and
Subordinated Creditor's obligations to Lenders have been fully performed
and satisfied and until all financing agreements between Lenders and
Borrower have been terminated.
9. Transfer or Assignment of Obligations; New Senior Lender. If any of the
Obligations should be transferred or assigned by any of the Lenders, this
Subordination Agreement will inure to the benefit of Lenders' transferee or
assignee to the extent of such transfer or assignment, provided that
Lenders will continue to have the unimpaired right to enforce this
Subordination Agreement as to any of the Obligations not so transferred or
assigned. In addition, if the Obligations are paid in full by a loan from
the proceeds of one or more other financings by Borrower, regardless of
whether or not this Agreement is assigned to the persons or entities
providing such financing(s), the obligations under the Subordinated
Indebtedness will be subordinate to such financings to the same extent as
provided in this Agreement and Subordinated Creditor on the request of the
persons or entities providing such financing(s) will enter into a
subordination agreement with such persons or entities substantially similar
to this Agreement to confirm such subordination.
10. Notices. All notices, demands, requests, consents, approvals and other
communications required or permitted hereunder will be in writing and will
be conclusively deemed to have been received by a party hereto and to be
effective if delivered personally to such party, or sent by telecopy
(followed by written confirmation), or by overnight courier service, or by
certified or registered mail, return receipt requested, postage prepaid,
addressed to such party at the address set forth below or to such other
address as any party may give to the other in writing for such purpose:
If to Agent at: PNC Bank, National Association
One PNC Plaza
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to: PNC Bank, National Association
PNC Agency Services
Xxx XXX Xxxxx, 00xx Xxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
with a copy to: Xxxxx Xxxxx Xxxx LLC
2200 PNC Center
000 X. 0xx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X'Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To Subordinated Creditor: DC Investments, LLC
000 Xxxxxxxx Xxxxxx
Bank Xxx Xxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (317) 237- 0137
With a copy to: Xxxxxxxxx & Feibleman
000 Xxxxxxxx Xxxxxx
Bank Xxx Xxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
All such communications, if personally delivered, will be conclusively
deemed to have been received by a party hereto and to be effective when so
delivered, or if sent by telecopy, on the day on which transmitted, or if
sent by overnight courier service, on the day after deposit thereof with
such service, or if sent by certified or registered mail, on the third
business day after the day on which deposited in the mail.
ll. Further Agreements.
11.1 Suit by Subordinated Creditor. If Subordinated Creditor, contrary to
this Agreement, commences or participates in any action or proceeding
against Borrower or the Collateral, Borrower may interpose as a
defense or dilatory plea the making of this Agreement, and Agent may
intervene and interpose such defense or plea in Agent's name or in the
name of Borrower. Should Subordinated Creditor, contrary to this
Agreement, in any way attempt to enforce payment of the Subordinated
Indebtedness or any part thereof, either Agent, in its own name or in
the name of Borrower, Borrower itself or both Agent and Borrower, may
restrain Subordinated Creditor from so doing, it being understood and
agreed by Subordinated Creditor that (i) Lenders' and/or Borrower's
damages from its actions may at that time be difficult to ascertain
and may be irreparable, and (ii) Subordinated Creditor waives any
defense of Borrower and/or that Lenders cannot demonstrate damage
and/or can be made whole by the awarding of damages and/or any other
defense based on the adequacy of a remedy at law which might be
asserted as a bar to the remedy of specific performance.
11.2 improper Payment by Borrower to Subordinated Creditor. If Subordinated
Creditor, Borrower or both, contrary to this Agreement, make, attempt
to or threaten to make any payment or take any action contrary to this
Agreement, Agent may restrain Subordinated Creditor and Borrower from
so doing, it being understood and agreed by Subordinated Creditor and
Borrower that (i) Lenders' damages from their actions may at that time
be difficult to ascertain and may be irreparable and (ii) Subordinated
Creditor and Borrower waive any defense or claim that Borrower and/or
Lenders cannot demonstrate damage and/or can be made whole by the
awarding of damages.
11.3 Subrogation of Lenders. Subordinated Creditor also hereby agrees that,
regardless of whether the Obligations are secured or unsecured,
Lenders will be subrogated for Subordinated Creditor with respect to
Subordinated Creditor's claims against Borrower and Subordinated
Creditors rights, liens and security interests, if any, in any of
Borrower's assets and the proceeds thereof until all of the
Obligations will have been fully paid and satisfied and all financing
arrangements between Borrower and Lenders have been terminated.
Subordinated Creditor agrees that no payment or distribution to
Lenders pursuant to this Agreement will entitle Subordinated Creditor
to exercise any rights of subrogation in respect thereof until all of
the Obligations have been fully paid and all financing arrangements
between Lenders and Borrower terminated.
11.4 Effectiveness of Agreement. This Agreement will continue to be
effective or will be reinstated, as the case may be, if at any time
any payment of the Obligations is rescinded or must otherwise be
returned by Lenders upon the insolvency, bankruptcy, or reorganization
of Borrower or otherwise, all as though such payment had not been
made.
11.5 Indemnification of Lenders. Subordinated Creditor agrees to indemnify
Lenders and to hold Lenders harmless for any and all expenses and
obligations, including reasonable attorney's fees, as they arise,
relating to actions of Subordinated Creditor taken contrary to this
Agreement.
11.6 No Obligation of Lenders to Borrower. Nothing herein contained will
obligate Lenders to grant credit to, or continue financing
arrangements with, Borrower.
11.7 Joint and Several Liability, Binding Nature of Agreement. If this
Subordination Agreement is executed by more than one person or entity
as the "Subordinated Creditor," the obligations of such persons or
entities hereunder will be joint and several. Unless otherwise
specified herein, any reference to "Subordinated Creditor" will mean
each such person or entity executing this Note individually and all of
such persons or entities collectively. This Subordination Agreement
will bind Subordinated Creditor and the heirs, administrators,
successors and assigns of Subordinated Creditor, and the benefits
hereof will inure to the benefit of each of the Lenders and its
successors and assigns. All references herein to the "Subordinated
Creditor" and "Lenders" will be deemed to apply to Subordinated
Creditor and Lenders and their respective heirs, administrators,
successors and assigns.
11.8 Gender, Etc. As used herein, the singular number will include the
plural, the plural the singular and the use of the masculine, feminine
or neuter gender will include all genders, as the context may require,
and the term "person" will include an individual, a corporation, an
association, a partnership, a trust, an organization or any other
entity.
11.9 Headings. The Section headings of this Agreement are for convenience
only, and will not limit or otherwise affect any of the terms hereof.
11.10No Third Party Beneficiaries. This Agreement is solely for the
benefit of Lenders and will not give Borrower or any other person any
right or remedy hereunder or by reason hereof.
11.11No Waiver. No delay or failure on the part of Lenders to exercise any
of its rights or remedies hereunder or now or hereafter existing at
law or in equity or by statute or otherwise, or any partial or single
exercise thereof, will constitute a waiver thereof. All such rights
and remedies are cumulative and may be exercised singly or
concurrently and the exercise of any one or more of them will not be a
waiver of any other. No waiver of any of its rights and remedies
hereunder, and no modification or amendment of this Subordination
Agreement, will be deemed to be made by Lenders unless the same will
be in writing, duly signed on behalf of Lenders, and each such waiver,
if any, will apply only with respect to the specific instance involved
and will in no way impair the rights and remedies of Lenders hereunder
in any other respect at any other time.
11.12Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts,
each of which when so executed will be deemed to be an original and
all of which taken together will constitute one and the same
agreement. Any party so executing this Agreement by facsimile
transmission shall promptly deliver a manually executed counterpart,
provided that any failure to do so shall not affect the validity of
the counterpart executed by facsimile transmission.
11.13Governing Law. THIS AGREEMENT WILL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF INDIANA WITHOUT REGARD TO ITS CONFLICTS OF LAWS
AND PRINCIPLES.
11.14Jurisdiction. SUBORDINATED CREDITOR HEREBY AGREES TO THE EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN XXXXXX
COUNTY, INDIANA; PROVIDED THAT NOTHING CONTAINED HEREIN WILL PREVENT
LENDERS OR AGENT ON BEHALF OF LENDERS FROM BRINGING ANY ACTION OR
EXERCISING ANY RIGHTS AGAINST ANY COLLATERAL AGAINST SUBORDINATED
CREDITOR INDIVIDUALLY, OR AGAINST ANY PROPERTY OF SUBORDINATED
CREDITOR WITHIN ANY OTHER STATE OR NATION. SUBORDINATED CREDITOR AND
THE AGENT ACTING ON BEHALF OF LENDERS EACH WAIVE ANY OBJECTION BASED
ON FORUM NON CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION
INSTITUTED HEREUNDER.
11.15Waiver of Jury Trial. SUBORDINATED CREDITOR AND AGENT EACH WAIVE ANY
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT, THE SECURITY DOCUMENTS OR ANY TRANSACTION CONTEMPLATED IN
ANY OF SUCH AGREEMENTS.
Signed as of October 25, 2002
SUBORDINATED CREDITOR:
DC INVESTMENTS, LLC
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Member
AGENT ON BEHALF OF LENDERS:
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Xxxx X. Count
---------------------------------
Name: Xxxx X. Count
Title: Vice President
ACKNOWLEDGMENT OF BORROWER
U.S. RUBBER RECLAIMING, INC., Borrower referred to in the foregoing
Subordination Agreement, hereby accepts and acknowledges receipt of a copy of
the foregoing Subordination Agreement this 25th day of October, 2002, and agrees
that it will not pay any of the Subordinated Indebtedness (as defined in the
foregoing Agreement) owing by it to Subordinated Creditor, except as the
foregoing Agreement provides, or take any other action in contravention of the
provisions of the foregoing Agreement and that all other terms, covenants and
provisions of the foregoing Agreement will be duly performed and observed. In
the event of a breach by Borrower or Subordinated Creditor of any of the terms,
covenants or provisions herein or of the foregoing Agreement, then, in addition
to and not in lieu of any other right or remedy of Lenders, all of the
Obligations (as defined in the foregoing Agreement) will, at the option of
Agent, and without presentment, demand, protest or notice of any kind, become
immediately due and payable.
BORROWER:
U.S. RUBBER RECLAIMING, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman
EXHIBIT A
1. Description of Subordinated Indebtedness:
Promissory Note dated as of October 25, 2002, in the original principal
amount of $700,000, with a maturity date of March 1, 2007.
2. Verification of Subordination Legend which provides substantially as
follows: " THIS DOCUMENT IS SUBJECT TO A SUBORDINATION AGREEMENT BETWEEN
PNC BANK, NATIONAL ASSOCIATION, AS AGENT AND DC INVESTMENTS, LLC DATED
OCTOBER 25, 2002."
3. Permitted Payments on Subordinated Indebtedness:
Scheduled, non-accelerated payments of interest only.
4. Permitted Collateral for Subordinated Indebtedness:
All assets of Borrower.
SUBORDINATION AGREEMENT
PNC BANK, NATIONAL ASSOCIATION, as agent for the Lenders (the "Agent") and
OBSIDIAN ENTERPRISES, INC. ("Subordinated Creditor"), hereby agree as follows
effective as of October 25, 2002 ("Effective Date"):
1. Recitals.
1.1 Agent is agent for certain lenders ("Lenders") under that certain
Revolving Credit, Term Loan and Security Agreement dated as of even
date herewith, as amended from time to time (the "Loan Agreement"),
previously or in the future with U.S. RUBBER RECLAIMING, INC.
("Borrower"). Lenders contemplate making loans and extending credit or
other financial accommodations to the Borrowers.
1.2 For good and valuable consideration, receipt of which is hereby
acknowledged by Agent on behalf to Lenders, and in order to induce
Subordinated Creditor, now or from time to time hereafter, to arrange
for the Subordinated Indebtedness, Subordinated Creditor agrees with
Lenders as follows.
1.3 For good and valuable consideration, receipt of which is hereby
acknowledged by Subordinated Creditor, and in order to induce Lenders,
now or from time to time hereafter, to make loans or extend credit or
other financial accommodations to Borrower, or to grant such renewals
or extensions thereof as Lenders may deem advisable in its discretion,
Subordinated Creditor agrees with Agent, acting on behalf of Lenders,
as follows.
2. Definitions.
2.1 "Borrower" will mean Borrower and its successors and assigns,
including but not limited to any receiver, custodian, trustee, or
debtor-in-possession.
2.2 "Closing Date" will mean the date on which this Agreement is executed.
2.3 "Collateral" will mean any collateral now or in the future securing
the Obligations including but not limited to claims against any
guarantors of the Obligations and any Collateral securing such
guarantees.
2.4 "Default" will mean any event or condition that with the passage of
time or giving of notice, or both, would constitute a Senior Event of
Default.
2.5 "Junior Event of Default" will mean: (a) an Event of Default (as
defined therein) under any of the documents evidencing any of the
Subordinated Indebtedness, or (b) a default under any of such
documents that do not have a defined set of Events of Default.
2.6 "Lender's Affiliate" will mean any person, partnership, joint venture,
company or business entity under common control or having similar
equity holders owning at least ten percent (10%) thereof with any
Lender, whether such common control is direct or indirect. All of each
Lender's direct or indirect parent corporations, sister corporations,
and subsidiaries will be deemed to be a Lender's Affiliate for
purposes of this Agreement.
2.7 "Obligations" will mean and include all loans, advances, debts,
liabilities, obligations, covenants and duties owing to any Lender or
any of such Lender's Affiliates, from any Borrower of any kind or
nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, including but not limited to those
arising under: (i) the Loan Agreement, (ii) any International Swap
Dealers Association Master Agreement ("Master Agreement"), and
including each Transaction (as such term is defined in the Master
Agreement), as confirmed in the applicable confirmation of each such
Transaction, (iii) any obligation of any Borrower to Agent, any Lender
or any Lender's Affiliate under any other interest rate swap, cap,
collar, floor, option, forward, or other type of interest rate
protection, foreign exchange or derivative transaction agreement, (iv)
the Notes, as such term is defined in the Loan Agreement, (v) under
any other agreement, instrument or document, whether or not for the
payment of money, whether arising by reason of an extension of credit,
opening of a letter of credit, loan, guaranty, indemnification or in
any other manner, whether direct or indirect (including those acquired
by assignment, participation, purchase, negotiation, discount or
otherwise), absolute or contingent, joint or several, due or to become
due, now existing or hereafter arising and whether or not contemplated
by any Borrower, Agent, any Lender, or any Lender's Affiliate on the
Closing Date; and as to all of the foregoing, including any
amendments, modifications, or superceding documents to each of the
foregoing; and all charges, expenses, fees, including but not limited
to reasonable Attorneys' Fees, and any other sums chargeable to any
Borrower under any of the Obligations.
2.8 "Permitted Payments" means those payments on the Subordinated
Indebtedness listed on Exhibit A attached hereto.
2.9 "Senior Event of Default" will mean: (a) an Event of Default (as
defined therein) under any of the documents evidencing any of the
Obligations, or (b) a default under any of such documents that do not
have a defined set of Events of Default.
2.10 "Subordinated Indebtedness" will mean any and all existing and future
indebtedness, liabilities and obligations of Borrower to Subordinated
Creditor of every kind and nature whatsoever, including, without
limitation, such indebtedness, liabilities, and obligations of
Borrower to Subordinated Creditor which are direct, indirect,
contingent, primary, secondary, alone, jointly with others, unsecured,
secured, future advances, principal, interest, expense payments,
indemnities, liquidation costs, post-petition interest due on any of
the above, and reasonable Attorneys' Fees and expenses, all whether
arising under contract, by tort, at law, in equity or otherwise, and
all guarantees, indemnifications and other undertakings of persons
other than Borrower with respect to the foregoing. The entire
Subordinated Indebtedness existing on the date of this Agreement is
described in Exhibit A attached hereto and made a part hereof.
3. Subordination.
3.1 Subordination of Subordinated Indebtedness. Except for Permitted
Payments made by Borrower to Subordinated Creditor where no Default or
Senior Event of Default exists under any of the Obligations,
Subordinated Creditor hereby subordinates and postpones the payment
and the time of payment of all of the Subordinated Indebtedness to and
in favor of the payment and the time of payment of all of the
Obligations.
3.2 Terms of Payment. Until the Obligations have been indefeasibly paid in
full and all financing arrangements relating to the Obligations have
been terminated:
3.2.1No Prepayments. Subordinated Creditor will not accept from or on
behalf of Borrower any prepayment, in cash or other property or
in any other manner, on any of the Subordinated Indebtedness;
3.2.2Permitted Payments. Subordinated Creditor will not set off,
accept, take or receive, directly or indirectly, in cash or other
property or in any other manner, any payment of any kind of all
or any part of the Subordinated Indebtedness other than Permitted
Payments, whether for principal, interest or otherwise; and, if a
Senior Event of Default has occurred, the Subordinated Creditor
will not set off, take, accept or receive, directly or
indirectly, in cash or property or in any other manner, any
payment of any kind whatsoever on any of the Subordinated
Indebtedness;
3.2.3Standstill. If a Junior Event of Default occurs under all or any
part of the Subordinated Indebtedness, Subordinated Creditor will
not ask, demand, accelerate, declare a default under, xxx for,
set off, accept, take or receive, directly or indirectly, in cash
or other property or in any other manner, any payment of all or
any part of the Subordinated Indebtedness; provided, however,
that if while such Junior Event of Default remains uncured
Lenders accelerate the indebtedness under the Obligations and
exercises its rights as a secured party to the Collateral, then,
in either such event, Subordinated Creditor may, upon notice to
Lenders, accelerate and otherwise pursue its remedies with
respect to the Subordinated Indebtedness, subject and subordinate
in all respects to Lenders' rights under the Obligations and
Lenders' rights in the Collateral, and subject to the other terms
and conditions of this Agreement;
3.2.4Notice of Junior Event of Default. Subordinated Creditor will
give prompt notice to Agent of any Junior Event of Default that
Subordinated Creditor declares or gives notice of to Borrower
together with a copy of any notice given to Borrower relating to
such default;
3.2.5No Right to Possession of Assets. Notwithstanding any right to
ask, demand, xxx for, or exercise any other right or remedy with
respect to the Subordinated Indebtedness, Subordinated Creditor
will have no right to possession of any assets of Borrower or any
Collateral or to foreclose or execute upon any such assets or the
Collateral, by judicial action or otherwise except as provided in
Section 3.2.3, above; and
3.2.6No Amendments to Subordinated Indebtedness. Subordinated Creditor
will not amend or modify all or any part of the Subordinated
Indebtedness.
3.3 Security for Subordinated Indebtedness. Subordinated Creditor agrees,
represents and warrants that except for the collateral listed on the
attached Exhibit A ("Permitted Collateral"), the Subordinated
Indebtedness is not and will not be secured in any way directly or
indirectly.
3.4 Subordination of Lien. Subordinated Creditor hereby subordinates the
lien and priority of any claim, security interest, lien or encumbrance
and other interests now or hereafter acquired by Subordinated Creditor
in and to the Collateral to Lenders' existing and future interest in
the Collateral.
3.5 No Assignment of Subordinated Indebtedness. Subordinated Creditor
agrees not to subordinate, sell, assign, pledge, encumber, transfer or
otherwise dispose of all or any part of the Subordinated Indebtedness
or any Collateral therefor to any other person.
3.6 Subordination Legend on Evidence of Subordinated Indebtedness.
Subordinated Creditor agrees (a) that each note described in Exhibit A
and all other instruments or documents now or hereafter evidencing all
or any portion of the Subordinated Indebtedness will bear on their
face a clear legend that it is subject to the terms of this Agreement,
(b) that it will xxxx its books of account in such a manner as will be
effective to give proper notice of the effect of this Agreement and
(c) that it will execute such further documents and acknowledgments
and take such further actions as Lenders may reasonably require to
confirm or evidence its obligations under this Agreement.
4. Distributions, Etc.
4.1 Insolvency of Borrower. In the event of any distribution, division or
application, partial or complete, voluntary or involuntary, by
operation of law or otherwise, of all or any part of the assets of
Borrower or the proceeds thereof to creditors of Borrower or to any
indebtedness, liabilities and obligations of Borrower, or upon any
liquidation, dissolution or other winding up of Borrower or Borrower's
business, or in the event of any sale (singly or in the aggregate) of
all or any substantial part of the assets of Borrower, or in the event
of any receivership, insolvency or bankruptcy proceeding, or
assignment for the benefit of creditors, or any proceeding by or
against Borrower for any relief under any bankruptcy or insolvency law
or other laws relating to the relief of debtors, readjustment of
indebtedness, reorganization, compositions or extensions, then and in
any such event any payment or distribution of any kind or character,
either in cash, securities or other property, whether or not on
account of any Collateral, which will be payable or deliverable upon
or with respect to all or any part of the Subordinated Indebtedness or
the Collateral will be paid or delivered directly to Lenders for
application to the Obligations (whether due or not due and in such
order and manner as Lenders may elect) until the Obligations will have
been fully paid and satisfied.
4.2 Appointment of Agent as Attorney-in-Fact. Subordinated Creditor hereby
irrevocably authorizes and empowers Agent on behalf of Lenders to
demand, xxx for, collect and receive every such payment or
distribution and give acquittance therefor and to file claims and take
such other proceedings in Agent's own name or in the name of
Subordinated Creditor or otherwise, as Agent may deem necessary or
advisable to carry out the provisions of this Subordination Agreement.
Subordinated Creditor hereby irrevocably authorizes and empowers
Agent, and irrevocably appoints Agent, Subordinated Creditor's
attorney-in-fact to demand, xxx for, collect and receive every such
payment or distribution and give acquittance therefor and to file
claims and take such other proceedings in Agent's own name or in the
name of Subordinated Creditor or otherwise, as Agent may deem
necessary or advisable to carry out the provisions of this Agreement.
Subordinated Creditor hereby agrees to execute and deliver to Agent
such other limited powers of attorney, assignments, endorsements or
other instruments as may be requested by Agent in order to enable
Agent to enforce any and all claims upon or with respect to the
Subordinated Indebtedness and/or the Collateral, and to collect and
receive any and all payments or distributions which may be payable or
deliverable at any time upon or with respect to the Subordinated
Indebtedness and/or the Collateral.
5. Receipt of Payments by Subordinated Creditor. Should any payment or
distribution not permitted by the provisions of this Agreement or the
Collateral or proceeds thereof be received by Subordinated Creditor upon or
with respect to all or any part of the Subordinated Indebtedness and/or the
Collateral prior to the full payment and satisfaction of the Obligations
and the termination of all financing arrangements between Lenders and
Borrower, Subordinated Creditor will deliver the same to Agent in precisely
the form received (with the endorsement or assignment of Subordinated
Creditor where necessary), for application to the Obligations (whether due
or not due and in such order and manner as Lenders may elect), and, until
so delivered, the same will be held in trust by Subordinated Creditor as
property of Lenders. In the event of the failure of Subordinated Creditor
to make any such endorsement or assignment, Agent, or any of its officers
or employees on behalf of Agent, is hereby irrevocably authorized in its
own name or in the name of Subordinated Creditor to make the same, and is
hereby appointed Subordinated Creditor's attorney-in-fact for those
purposes, that appointment being coupled with an interest and irrevocable.
6. Consents, Waivers, Etc. Subordinated Creditor hereby consents that at any
time and from time to time and with or without consideration, without
further consent of or notice to Subordinated Creditor and without in any
manner affecting, impairing, lessening or releasing any of the provisions
of this Subordination Agreement, Lenders may extend credit or other
financial accommodation or benefit and loan monies to or for the account of
Borrower, and may renew, extend, change the manner, time, place and terms
of payment of, otherwise alter the terms of, sell, exchange, release,
substitute, surrender, realize upon, modify, waive, grant indulgences with
respect to and otherwise deal with in any manner: (a) all or any part of
the Obligations; (b) all or any of the agreements, documents or instruments
evidencing, securing, guaranteeing or otherwise relating to all or any of
the Obligations; (c) all or any part of the Collateral; and (d) any person
at any time primarily or secondarily liable for all or any part of the
Obligations and/or any Collateral, all as if this Subordination Agreement
did not exist. This Subordination Agreement will not be affected, impaired
or released by any delay or failure of Lenders to exercise any of their
rights and remedies against Borrower or any guarantor or under any of the
Obligations or against any collateral or security for any of the
Obligations, by any failure of Lenders to take steps to perfect or maintain
its lien on, or to preserve any rights to, any Collateral by any
irregularity, unenforceability or invalidity of any of the Obligations or
any part thereof or any security or guarantee therefor, or by any other
event or circumstance which otherwise might constitute a defense available
to, or a discharge of, Borrower or a subordinated creditor. Subordinated
Creditor hereby agrees that all payments received by Lenders may be applied
and reapplied, in whole or in part, to any of the Obligations, as Lenders,
in their sole discretion, deems appropriate. Subordinated Creditor hereby
waives demand, presentment for performance, protest, notice of dishonor and
of protest with respect to the Obligations and/or the Collateral, notice of
acceptance of this Subordination Agreement, notice of the making of any of
the Obligations and notice of default under any of the Obligations.
7. Representations and Warranties. Subordinated Creditor represents and
warrants that:
7.1 No Prior Assignment or Transfer. It is the sole holder and owner of
the Subordinated Indebtedness and has not made any sale, assignment,
pledge, encumbrance or other disposition of all or any part of the
Subordinated Indebtedness, and the same is free from all encumbrances
of any kind.
7.2 Legal, Valid and Binding Agreement. This Agreement is the legal, valid
and binding obligation of Subordinated Creditor, enforceable in
accordance with its terms.
7.3 No Violation of Other Agreements. This Agreement does not violate and
is not in contravention of any other agreement to which Subordinated
Creditor is a party.
8. Continuing Agreement. This is a continuing Subordination Agreement and will
remain in full force and effect until all of Borrower's Obligations and
Subordinated Creditor's obligations to Lenders have been fully performed
and satisfied and until all financing agreements between Lenders and
Borrower have been terminated.
9. Transfer or Assignment of Obligations, New Senior Lender. If any of the
Obligations should be transferred or assigned by any of the Lenders, this
Subordination Agreement will inure to the benefit of Lenders' transferee or
assignee to the extent of such transfer or assignment, provided that
Lenders will continue to have the unimpaired right to enforce this
Subordination Agreement as to any of the Obligations not so transferred or
assigned. In addition, if the Obligations are paid in full by a loan from
the proceeds of one or more other financings by Borrower, regardless of
whether or not this Agreement is assigned to the persons or entities
providing such financing(s), the obligations under the Subordinated
Indebtedness will be subordinate to such financings to the same extent as
provided in this Agreement and Subordinated Creditor on the request of the
persons or entities providing such financing(s) will enter into a
subordination agreement with such persons or entities substantially similar
to this Agreement to confirm such subordination.
10. Notices. All notices, demands, requests, consents, approvals and other
communications required or permitted hereunder will be in writing and will
be conclusively deemed to have been received by a party hereto and to be
effective if delivered personally to such party, or sent by telecopy
(followed by written confirmation), or by overnight courier service, or by
certified or registered mail, return receipt requested, postage prepaid,
addressed to such party at the address set forth below or to such other
address as any party may give to the other in writing for such purpose:
If to Agent at: PNC Bank, National Association
One PNC Plaza
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to: PNC Bank, National Association
PNC Agency Services
Xxx XXX Xxxxx, 00xx Xxxxx 000
Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
with a copy to: Xxxxx Xxxxx Xxxx LLC
2200 PNC Center
000 X. 0xx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X'Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To Subordinated Creditor: Obsidian Enterprises, Inc.
000 Xxxxxxxx Xxxxxx
Bank Xxx Xxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx '
Telephone: (000) 000-0000
Facsimile: (317) 237- 0137
With a copy to: Xxxxxxxxx & Feibleman
000 Xxxxxxxx Xxxxxx
Bank Xxx Xxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
All such communications, if personally delivered, will be conclusively deemed to
have been received by a party hereto and to be effective when so delivered, or
if sent by telecopy, on the day on which transmitted, or if sent by overnight
courier service, on the day after deposit thereof with such service, or if sent
by certified or registered mail, on the third business day after the day on
which deposited in the mail.
11. Further Agreements.
11.1 Suit by Subordinated Creditor. If Subordinated Creditor, contrary to
this Agreement, commences or participates in any action or proceeding
against Borrower or the Collateral, Borrower may interpose as a
defense or dilatory plea the making of this Agreement, and Agent may
intervene and interpose such defense or plea in Agent's name or in the
name of Borrower. Should Subordinated Creditor, contrary to this
Agreement, in any way attempt to enforce payment of the Subordinated
Indebtedness or any part thereof, either Agent, in its own name or in
the name of Borrower, Borrower itself or both Agent and Borrower, may
restrain Subordinated Creditor from so doing, it being understood and
agreed by Subordinated Creditor that (i) Lenders' and/or Borrower's
damages from its actions may at that time be difficult to ascertain
and may be irreparable, and (ii) Subordinated Creditor waives any
defense of Borrower and/or that Lenders cannot demonstrate damage
and/or can be made whole by the awarding of damages and/or any other
defense based on the adequacy of a remedy at law which might be
asserted as a bar to the remedy of specific performance.
11.2 Improper Payment by Borrower to Subordinated Creditor. If Subordinated
Creditor, Borrower or both, contrary to this Agreement, make, attempt
to or threaten to make any payment or take any action contrary to this
Agreement, Agent may restrain Subordinated Creditor and Borrower from
so doing, it being understood and agreed by Subordinated Creditor and
Borrower that (i) Lenders' damages from their actions may at that time
be difficult to ascertain and may be irreparable and (ii) Subordinated
Creditor and Borrower waive any defense or claim that Borrower and/or
Lenders cannot demonstrate damage and/or can be made whole by the
awarding of damages.
11.3 Subrogation of Lenders. Subordinated Creditor also hereby agrees that,
regardless of whether the Obligations are secured or unsecured,
Lenders will be subrogated for Subordinated Creditor with respect to
Subordinated Creditor's claims against Borrower and Subordinated
Creditor's rights, liens and security interests, if any, in any of
Borrower's assets and the proceeds thereof until all of the
Obligations will have been fully paid and satisfied and all financing
arrangements between Borrower and Lenders have been terminated.
Subordinated Creditor agrees that no payment or distribution to
Lenders pursuant to this Agreement will entitle Subordinated Creditor
to exercise any rights of subrogation in respect thereof until all of
the Obligations have been fully paid and all financing arrangements
between Lenders and Borrower terminated.
11.4 Effectiveness of Agreement. This Agreement will continue to be
effective or will be reinstated, as the case may be, if at any time
any payment of the Obligations is rescinded or must otherwise be
returned by Lenders upon the insolvency, bankruptcy, or reorganization
of Borrower or otherwise, all as though such payment had not been
made.
11.5 Indemnification of Lenders. Subordinated Creditor agrees to indemnify
Lenders and to hold Lenders harmless for any and all expenses and
obligations, including reasonable attorney's fees, as they arise,
relating to actions of Subordinated Creditor taken contrary to this
Agreement.
11.6 No Obligation of Lenders to Borrower. Nothing herein contained will
obligate Lenders to grant credit to, or continue financing
arrangements with, Borrower.
11.7 Joint and Several Liability, Binding Nature of Agreement. If this
Subordination Agreement is executed by more than one person or entity
as the "Subordinated Creditor," the obligations of such persons or
entities hereunder will be joint and several. Unless otherwise
specified herein, any reference to "Subordinated Creditor" will mean
each such person or entity executing this Note individually and all of
such persons or entities collectively. This Subordination Agreement
will bind Subordinated Creditor and the heirs, administrators,
successors and assigns of Subordinated Creditor, and the benefits
hereof will inure to the benefit of each of the Lenders and its
successors and assigns. All references herein to the "Subordinated
Creditor" and "Lenders" will be deemed to apply to Subordinated
Creditor and Lenders and their respective heirs, administrators,
successors and assigns.
11.8 Gender, Etc. As used herein, the singular number will include the
plural, the plural the singular and the use of the masculine, feminine
or neuter gender will include all genders, as the context may require,
and the term "person" will include an individual, a corporation, an
association, a partnership, a trust, an organization or any other
entity.
11.9 Headings. The Section headings of this Agreement are for convenience
only, and will not limit or otherwise affect any of the terms hereof.
11.10No Third Party Beneficiaries. This Agreement is solely for the
benefit of Lenders and will not give Borrower or any other person any
right or remedy hereunder or by reason hereof.
11.11No Waiver. No delay or failure on the part of Lenders to exercise any
of its rights or remedies hereunder or now or hereafter existing at
law or in equity or by statute or otherwise, or any partial or single
exercise thereof, will constitute a waiver thereof. All such rights
and remedies are cumulative and may be exercised singly or
concurrently and the exercise of any one or more of them will not be a
waiver of any other. No waiver of any of its rights and remedies
hereunder, and no modification or amendment of this Subordination
Agreement, will be deemed to be made by Lenders unless the same will
be in writing, duly signed on behalf of Lenders, and each such waiver,
if any, will apply only with respect to the specific instance involved
and will in no way impair the rights and remedies of Lenders hereunder
in any other respect at any other time.
11.12Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts,
each of which when so executed will be deemed to be an original and
all of which taken together will constitute one and the same
agreement. Any party so executing this Agreement by facsimile
transmission shall promptly deliver a manually executed counterpart,
provided that any failure to do so shall not affect the validity of
the counterpart executed by facsimile transmission.
11.13Governing Law. THIS AGREEMENT WILL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF INDIANA WITHOUT REGARD TO ITS CONFLICTS OF LAWS
AND PRINCIPLES.
11.14Jurisdiction. SUBORDINATED CREDITOR HEREBY AGREES TO THE EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN XXXXXX
COUNTY, INDIANA; PROVIDED THAT NOTHING CONTAINED HEREIN WILL PREVENT
LENDERS OR AGENT ON BEHALF OF LENDERS FROM BRINGING ANY ACTION OR
EXERCISING ANY RIGHTS AGAINST ANY COLLATERAL AGAINST SUBORDINATED
CREDITOR INDIVIDUALLY, OR AGAINST ANY PROPERTY OF SUBORDINATED
CREDITOR WITHIN ANY OTHER STATE OR NATION. SUBORDINATED CREDITOR AND
THE AGENT ACTING ON BEHALF OF LENDERS EACH WAIVE ANY OBJECTION BASED
ON FORUM NON CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION
INSTITUTED HEREUNDER.
11.15Waiver of Jury Trial. SUBORDINATED CREDITOR AND AGENT EACH WAIVE ANY
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT, THE SECURITY DOCUMENTS OR ANY TRANSACTION CONTEMPLATED IN
ANY OF SUCH AGREEMENTS.
Signed as of October 25, 2002
SUBORDINATED CREDITOR:
OBSIDIAN ENTERPRISES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Print Name: Xxxxxxx X. Xxxxxx
Title: CEO
AGENT ON BEHALF OF LENDERS:
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Print Name: Xxxxxxx X. Xxxxxx
Title: Vice President
ACKNOWLEDGMENT OF BORROWER
U.S. RUBBER RECLAIMING, INC., Borrower referred to in the foregoing
Subordination Agreement, hereby accepts and acknowledges receipt of a copy of
the foregoing Subordination Agreement this 25TH day of October, 2002, and agrees
that it will not pay any of the Subordinated Indebtedness (as defined in the
foregoing Agreement) owing by it to Subordinated Creditor, except as the
foregoing Agreement provides, or take any other action in contravention of the
provisions of the foregoing Agreement and that all other terms, covenants and
provisions of the foregoing Agreement will be duly performed and observed. In
the event of a breach by Borrower or Subordinated Creditor of any of the terms,
covenants or provisions herein or of the foregoing Agreement, then, in addition
to and not in lieu of any other right or remedy of Lenders, all of the
Obligations (as defined in the foregoing Agreement) will, at the option of
Agent, and without presentment, demand, protest or notice of any kind, become
immediately due and payable.
BORROWER:
U.S. RUBBER RECLAIMING, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Print Name: Xxxxxxx X. Xxxxxx
Title: Chairman
EXHIBIT A
l. Description of Subordinated Indebtedness:
Promissory Note dated as of October 25, 2002, in the original principal
amount of $700,000, with a maturity date of March 1, 2007.
2. Verification of Subordination Legend which provides substantially as
follows:
" THIS DOCUMENT IS SUBJECT TO A SUBORDINATION AGREEMENT BETWEEN PNC BANK,
NATIONAL ASSOCIATION, AS AGENT AND OBSIDIAN ENTERPRISES, INC. DATED OCTOBER
25,2002."
3. Permitted Payments on Subordinated Indebtedness:
Scheduled, non-accelerated payments of interest only.
4. Permitted Collateral for Subordinated Indebtedness: All assets of Borrower.
