LOAN AND SECURITY AGREEMENT
by and between
CONGRESS FINANCIAL CORPORATION (CENTRAL)
as Lender
and
NORD KAOLIN COMPANY
as Borrower
Dated: July 10, 1996
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. CREDIT FACILITIES. . . . . . . . . . . . . . . . . . . . . . 8
2.1 Revolving Loans. . . . . . . . . . . . . . . . . . . . . . . 8
2.2 [Intentionally Deleted]. . . . . . . . . . . . . . . . . . . 8
2.3 Availability Reserves. . . . . . . . . . . . . . . . . . . . 8
SECTION 3. INTEREST AND FEES. . . . . . . . . . . . . . . . . . . . . . 9
3.1 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Closing Fee. . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Servicing Fee. . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 Unused Line Fee. . . . . . . . . . . . . . . . . . . . . . . 9
3.5 Maximum Lawful Rate. . . . . . . . . . . . . . . . . . . . . 9
SECTION 4. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . 10
4.1 Conditions Precedent to Initial Loans. . . . . . . . . . . . 10
4.2 Conditions Precedent to All Loans. . . . . . . . . . . . . . 12
SECTION 5. GRANT OF SECURITY INTEREST . . . . . . . . . . . . . . . . . 12
SECTION 6. COLLECTION AND ADMINISTRATION. . . . . . . . . . . . . . . . 13
6.1 Borrower's Loan Account. . . . . . . . . . . . . . . . . . . 13
6.2 Statements . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.3 Collection of Accounts . . . . . . . . . . . . . . . . . . . 13
6.4 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.5 Authorization to Make Loans. . . . . . . . . . . . . . . . . 15
6.6 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 7. COLLATERAL REPORTING AND COVENANTS . . . . . . . . . . . . . 15
7.1 Collateral Reporting . . . . . . . . . . . . . . . . . . . . 15
7.2 Accounts Covenants . . . . . . . . . . . . . . . . . . . . . 15
7.3 Inventory Covenants. . . . . . . . . . . . . . . . . . . . . 17
7.4 Equipment Covenants. . . . . . . . . . . . . . . . . . . . . 17
7.5 Power of Attorney. . . . . . . . . . . . . . . . . . . . . . 18
7.6 Right to Cure. . . . . . . . . . . . . . . . . . . . . . . . 18
7.7 Access to Premises . . . . . . . . . . . . . . . . . . . . . 19
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PAGE
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SECTION 8. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . 19
8.1 Partnership Existence; Power and Authority . . . . . . . . . 19
8.2 Financial Statements; No Material Adverse Change . . . . . . 19
8.3 Chief Executive Office; Collateral Locations . . . . . . . . 19
8.4 Priority of Liens; Title to Properties . . . . . . . . . . . 20
8.5 Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . 20
8.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.7 Compliance with Other Agreements and Applicable Laws . . . . 20
8.8 Environmental Compliance . . . . . . . . . . . . . . . . . . 20
8.9 Employee Benefits. . . . . . . . . . . . . . . . . . . . . . 21
8.10 Accuracy and Completeness of Information . . . . . . . . . . 22
8.11 Survival of Warranties; Cumulative . . . . . . . . . . . . . 22
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS . . . . . . . . . . . . . 22
9.1 Maintenance of Existence . . . . . . . . . . . . . . . . . . 22
9.2 New Collateral Locations . . . . . . . . . . . . . . . . . . 22
9.3 Compliance with Laws, Regulations, Etc. . . . . . . . . . . 23
9.4 Payment of Taxes and Claims. . . . . . . . . . . . . . . . . 24
9.5 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.6 Financial Statements and Other Information . . . . . . . . . 24
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. . . 25
9.8 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . 26
9.9 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 26
9.10 Loans, Investments, Guarantees, Etc. . . . . . . . . . . . . 26
9.11 Distributions. . . . . . . . . . . . . . . . . . . . . . . . 27
9.12 Transactions with Affiliates . . . . . . . . . . . . . . . . 27
9.13 Compliance with ERISA. . . . . . . . . . . . . . . . . . . . 27
9.14 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . 28
9.15 Further Assurances . . . . . . . . . . . . . . . . . . . . . 28
9.16 Payments to Kemira Pigments, Inc . . . . . . . . . . . . . . 28
9.17 Permitted Payments to Nord Resources . . . . . . . . . . . . 28
9.18 Security Interests of Kemira Pigments, Inc . . . . . . . . . 29
9.19 Insurance Policies . . . . . . . . . . . . . . . . . . . . . 29
9.20 Consigned Inventory. . . . . . . . . . . . . . . . . . . . . 29
9.21 Resolutions and Consents of Norplex, Inc. . . . . . . . . . 29
9.22 Accountant's Reliance Letter . . . . . . . . . . . . . . . . 29
SECTION 10. EVENTS OF DEFAULT AND REMEDIES . . . . . . . . . . . . . . . 30
10.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . 30
10.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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PAGE
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SECTION II. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS;
GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . 33
11.1 Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver. . . . . . . . . . . . . . . . . . . . . . 33
11.2 Waiver of Notices. . . . . . . . . . . . . . . . . . . . . . 34
11.3 Amendments and Waivers . . . . . . . . . . . . . . . . . . . 34
11.4 Waiver of Counterclaims. . . . . . . . . . . . . . . . . . . 34
11.5 Indemnification. . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS . . . . . . . . . . . . . . 35
12.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.3 Partial Invalidity . . . . . . . . . . . . . . . . . . . . . 36
12.4 Successors . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 37
iii
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Information Certificate
Exhibit B List of Closing Documents
Schedule 6.5 Authorized Officers of Borrower
Schedule 8.4 Existing Liens
Schedule 8.6 Existing Litigation
Schedule 8.7 Existing Noncompliance with Agreements and/or Laws
Schedule 8.8 Environmental Compliance
Schedule 9.12 Permitted Affiliate Transactions
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LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated July 10, 1996 is entered into by and
between Congress Financial Corporation (Central), an Illinois corporation
("Lender") and Nord Kaolin Company, a Georgia limited partnership ("Borrower").
W I T N E S S E T H:
WHEREAS, Borrower has requested that Lender enter into certain financing
arrangements with Borrower pursuant to which Lender may make loans and provide
other financial accommodations to Borrower; and
WHEREAS, Lender is willing to make such loans and provide such financial
accommodations on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
All terms used herein which are defined in Article 1 or Article 9 of the
Uniform Commercial Code ("UCC") shall have the meanings given therein unless
otherwise defined in this Agreement. All references to the plural herein shall
also mean the singular and to the singular shall also mean the plural. All
references to Borrower and Lender pursuant to the definitions set forth in the
recitals hereto, or to any other person herein, shall include their respective
successors and assigns. The words "hereof", "herein", "hereunder", "this
Agreement" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not any particular provision of this Agreement
and as this Agreement now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced. An Event of Default
shall exist or continue or be continuing until such Event of Default is waived
in accordance with Section 11.3. Any accounting term used herein unless
otherwise defined in this Agreement shall have the meanings customarily given to
such term in accordance with GAAP. For purposes of this Agreement, the
following terms shall have the respective meanings given to them below:
1.1 "Accounts" shall mean all present and future rights of Borrower
to payment for goods sold or leased or for services rendered, which are not
evidenced by instruments or chattel paper, and whether or not earned by
performance.
1.2 "Availability Reserves" shall mean, as of any date of
determination, such amounts as Lender may from time to time establish and revise
in good faith reducing the amount of Revolving Loans which would otherwise be
available to Borrower under the lending formula(s) provided for herein: (a) to
reflect events, conditions, contingencies or risks which, as determined by
Lender in good faith, do or may affect either (i) the Collateral or any other
property which is security for the Obligations or its value, (ii) the assets,
business or prospects of Borrower or any Obligor or (iii) the security interests
and other rights of Lender in the Collateral (including the enforceability,
perfection and priority thereof) or (b) to reflect Lender's good faith belief
that any collateral report or financial
information furnished by or on behalf of Borrower or any Obligor to Lender is or
may have been incomplete, inaccurate or misleading in any material respect or
(c) in respect of any state of facts which Lender determines in good faith
constitutes an Event of Default or may, with notice or passage of time or both,
constitute an Event of Default.
1.3 "Blocked Accounts" shall have the meaning set forth in Section
6.3 hereof.
1.4 "Code" shall mean the Internal Revenue Code of 1986, as the same
now exists or may from time to time hereafter be amended, modified, recodified
or supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.5 "Collateral" shall have the meaning set forth in Section 5
hereof.
1.6 "Eligible Accounts" shall mean Accounts created by Borrower which
are and continue to be acceptable to Lender based on the criteria set forth
below. In general, Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and BONA FIDE sale and
delivery of goods by Borrower or rendition of services by Borrower in the
ordinary course of its business which transactions are completed in accordance
with the terms and provisions contained in any documents related thereto;
(b) such Accounts are not unpaid more than ninety (90) days
after the date of the original invoice for them;
(c) such Accounts comply with the terms and conditions contained
in Section 7.2(c) of this Agreement;
(d) such Accounts do not arise from sales on consignment,
guaranteed sale, sale and return, sale on approval, or other terms under which
payment by the account debtor may be conditional or contingent;
(e) the chief executive office of the account debtor with
respect to such Accounts is located in the United States of America or Canada,
or, at Lender's option, if either: (i) the account debtor has delivered to
Borrower an irrevocable letter of credit issued or confirmed by a bank
satisfactory to Lender, sufficient to cover such Account, in form and substance
satisfactory to Lender and, if required by Lender, the original of such letter
of credit has been delivered to Lender or Lender's agent and the issuer thereof
notified of the assignment of the proceeds of such letter of credit to Lender,
or (ii) such Account is subject to credit insurance payable to Lender issued by
an insurer and on terms and in an amount acceptable to Lender, or (iii) such
Account is otherwise acceptable in all respects to Lender (subject to such
lending formula with respect thereto as Lender may determine);
(f) such Accounts do not consist of progress xxxxxxxx, xxxx and
hold invoices or retainage invoices, except as to xxxx and hold invoices, if
Lender shall have received an agreement in writing from the account debtor, in
form and substance satisfactory to Lender, confirming the unconditional
obligation of the account debtor to take the goods related thereto and pay such
invoice;
2
(g) the account debtor with respect to such Accounts has not
asserted a counterclaim, defense or dispute and does not have, and does not
engage in transactions which may give rise to, any right of setoff against such
Accounts;
(h) there are no facts, events or occurrences which would impair
the validity, enforceability or collectability of such Accounts or reduce the
amount payable or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid and
perfected security interest of Lender and any goods giving rise thereto are not,
and were not at the time of the sale thereof, subject to any liens except those
permitted in this Agreement;
(j) neither the account debtor nor any officer or employee of
the account debtor with respect to such Accounts is an officer, employee or
agent of or affiliated with Borrower directly or indirectly by virtue of family
membership, ownership, control, management or otherwise;
(k) the account debtors with respect to such Accounts are not
any foreign government, the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, unless, if the
account debtor is the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, upon Lender's
request, the Federal Assignment of Claims Act of 1940, as amended or any similar
State or local law, if applicable, has been complied with in a manner
satisfactory to Lender;
(l) there are no proceedings or actions which are threatened or
pending against the account debtors with respect to such Accounts which might
result in any material adverse change in any such account debtor's financial
condition;
(m) such Accounts of a single account debtor or its affiliates
do not constitute more than forty (40%) percent of all otherwise Eligible
Accounts (but the portion of the Accounts not in excess of such percentage may
be deemed Eligible Accounts);
(n) such Accounts are not owed by an account debtor who has
Accounts unpaid more than ninety (90) days after the date of the original
invoice for them which constitute more than fifty (50%) percent of the total
Accounts of such account debtor;
(o) such Accounts are owed by account debtors whose total
indebtedness to Borrower does not exceed the credit limit with respect to such
account debtors as determined by Lender from time to time (but the portion of
the Accounts not in excess of such credit limit may still be deemed Eligible
Accounts); and
(p) such Accounts are owed by account debtors deemed
creditworthy at all times by Lender, as determined by Lender.
General criteria for Eligible Accounts may be established and revised from time
to time by Lender in good faith. Any Accounts which are not Eligible Accounts
shall nevertheless be part of the Collateral.
1.7 "Environmental Laws" shall mean all federal, state, district,
local and foreign laws, rules, regulations, ordinances, and consent decrees
relating to health, safety, hazardous substances,
3
pollution and environmental matters, as now or at any time hereafter in effect,
applicable to Borrower's business and facilities (whether or not owned by it),
laws relating to emissions, discharges, releases or threatened releases of
pollutants, contamination, chemicals, or hazardous, toxic or dangerous
substances, materials or wastes into the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata) or otherwise relating to the generation, manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals, or hazardous, toxic or dangerous
substances, materials or wastes.
1.8 "Equipment" shall mean all of Borrower's now owned and hereafter
acquired equipment, machinery, computers and computer hardware and software
(whether owned or licensed), vehicles, tools, furniture, fixtures not forming
part of the Real Estate, all attachments, accessions and property now or
hereafter affixed thereto or used in connection therewith, and substitutions and
replacements thereof, wherever located; PROVIDED, THAT, pumps, motors, parts and
fuel held as inventory for maintenance shall not constitute Equipment.
1.9 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, as the same now exists or may hereafter from time to time
be amended, modified, recodified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.
1.10 "ERISA Affiliate" shall mean any person required to be aggregated
with Borrower or any of its Subsidiaries under Sections 414(b), 414(c), 414(m)
or 414(o) of the Code.
1.11 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof
1.12 "Financing Agreements" shall mean, collectively, this Agreement
and all notes, guarantees, security agreements and other agreements, documents
and instruments now or at any time hereafter executed and/or delivered by
Borrower or any Obligor in connection with this Agreement, as the same now exist
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.
1.13 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Boards which are applicable to the
circumstances as of the date of determination consistently applied, except that,
for purposes of Section 9.13 hereof, GAAP shall be determined on the basis of
such principles in effect on the date hereof and consistent with those used in
the preparation of the audited financial statements delivered to Lender prior to
the date hereof.
1.14 "General Intangibles" shall mean all of Borrower's now owned and
hereafter acquired general intangibles, including, but not limited to, contract
rights, tax and duty refunds, goodwill, processes, drawings, blueprints,
customer lists, licenses, whether as licensor or licensee, chooses in action and
other claims but excluding therefrom, in any event, all Intellectual Property
and any other license, document or instrument which, by its terms, prohibits any
collateral or other assignment of or encumbrance upon the same.
4
1.15 "Hazardous Materials" shall mean any hazardous, toxic or
dangerous substances, materials and wastes, including, without limitation,
hydrocarbons (including naturally occurring or man-made petroleum and
hydrocarbons), flammable explosives, asbestos, urea formaldehyde insulation,
radioactive materials, biological substances, polychlorinated biphenyls,
pesticides, herbicides and any other kind and/or type of pollutants or
contaminants (including, without limitation, materials which include hazardous
constituents), sewage, sludge, industrial slag, solvents and/or any other
similar substances, materials, or wastes and including any other substances,
materials or wastes that are or become regulated under any Environmental Law
(including, without limitation any that are or become classified as hazardous or
toxic under any Environmental Law).
1.16 "Information Certificate" shall mean the Information Certificate
of Borrower constituting EXHIBIT A hereto containing material information with
respect to Borrower, its business and assets provided by or on behalf of
Borrower to Lender in connection with the preparation of this Agreement and the
other Financing Agreements and the financing arrangements provided for herein.
1.17 "Intellectual Property" shall mean all registered and
unregistered patents, service marks, copyrights, trade names, applications for
the foregoing and trade secrets now owned or hereafter acquired by the Borrower.
1.18 "Inventory" shall mean all of Borrower's now owned and hereafter
existing or acquired raw materials, including those minerals which have been
extracted or recovered at minehead, work in process, finished goods and all
other inventory of whatsoever kind or nature, including pumps, motors, parts and
fuel held as inventory for maintenance, wherever located.
1.19 "Loans" shall mean the Revolving Loans.
1.20 "Maximum Credit" shall mean the amount of $6,000,000.
1.21 "Mineral Rights" shall mean all of Borrower's now owned and
hereafter existing or acquired rights to minerals other than those minerals
which have been extracted or recovered at minehead, which minerals shall
constitute Inventory of Borrower.
1.22 "Net Amount of Eligible Accounts" shall mean the gross amount of
Eligible Accounts less (a) sales, excise or similar taxes included in the amount
thereof and (b) returns, discounts, claims, credits and allowances of any nature
at any time issued, owing, granted, outstanding, available or claimed with
respect thereto.
1.23 "Nord Resources" shall mean Nord Resources Corporation.
1.24 "NRC Debt Payments" shall mean those repayments made, by Borrower
to Nord Resources (i) after September 30, 1996 for advances made by Nord
Resources to Borrower (A) during the quarterly period occurring between January
1, 1996 and March 31, 1996 and (B) during the quarterly period occurring
between April 1, 1996 and June 30, 1996, (ii) after December 31, 1996 for
advances made by Nord Resources to Borrower during the quarterly period
occurring between July 1, 1996 and September 30, 1996, (iii) after January 31,
1997 for advances made by Nord Resources to Borrower during the quarterly period
occurring between October 1, 1996 and December 31, 1996 and (iv) after thirty
days following the end of each calendar quarter occurring
5
after December 31, 1996 for advances made by Nord Resources to Borrower during
such calendar quarter.
1.25 "Obligations" shall mean any and all Revolving Loans and all
other obligations, liabilities and indebtedness of every kind, nature and
description owing by Borrower to Lender and/or its affiliates, including
principal, interest, charges, reasonable fees, costs and expenses, however
evidenced, whether as principal, surety, endorser, guarantor or otherwise,
whether arising under this Agreement or otherwise, whether now existing or
hereafter arising, whether arising before, during or after the initial or any
renewal term of this Agreement or after the commencement of any case with
respect to Borrower under the United States Bankruptcy Code or any similar
statute (including, without limitation, the payment of interest and other
amounts which would accrue and become due but for the commencement of such
case), whether direct or indirect, absolute or contingent, joint or several, due
or not due, primary or secondary, liquidated or unliquidated, secured or
unsecured, and however acquired by Lender.
1.26 "Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations, other than Borrower.
1.27 "Payment Account" shall have the meaning set forth in Section 6.3
hereof.
1.28 "Permitted NRC Debt Payments" shall mean NRC Debt Payments owing
by Borrower to Nord Resources which may only be made so long as (i) Lender
receives, in form and substance satisfactory to Lender, quarterly operating
results for the quarter of calendar year 1996 for which Borrower seeks to make a
Permitted NRC Debt Payment within thirty (30) days of the end of such quarter
(except in the case of repayment of any portion of the Supplemental NRC Advance
which may only be paid on a date 30 days after the date of the initial funding
under this Agreement), (ii) Lender concludes, in the sole discretion of Lender,
that (x) no Event of Default has occurred and is then continuing and (y)
Borrower is performing financially and operationally in a manner satisfactory to
Lender and in accordance with Borrower's projections in all material respects,
and (iii) immediately before and after making any NRC Debt Payment, unused
Revolving Loan availability computed pursuant to Section 2.1 hereof shall not be
less than $1,500,000 (except in the case of repayment of any portion of the
Supplemental NRC Advance, in which case unused Revolving Loan availability
computed pursuant to Section 2.1 hereof immediately before and after making such
repayment shall not be less than $1,000,000).
1.29 "Permitted Support Services Payments" shall mean payments made by
Borrower to, or distributions to its General Partner for payment to, Nord
Resources for support and administrative services rendered by Nord Resources to
Borrower and/or its General Partner from and after January 1, 1996 ("Support
Services") together with interest thereon accruing at the rate then applicable
to Revolving Loans under this Agreement from the tenth (10th) Business Day
following the end of the calendar quarter during which such Support Services
were rendered to the date the same are paid in full so long as (i) such payments
are in an amount not exceeding the lesser of (A) the projected value of such
Support Services specified in the projections provided by Borrower to Lender
prior to such calendar quarter and (B) the actual value of such Support Services
as determined by Lender in good faith, and (ii) immediately before and after
making any such payments, unused Revolving Loan availability computed pursuant
to Section 2.1 hereof shall not be less than $1,500,000.
6
1.30 "Permitted Tax Distributions" shall mean a distribution to
Norplex, Inc. to which Lender has provided its prior written consent pursuant to
Section 9.11 hereto made at one time during any fiscal year of the Borrower in
respect of the immediately preceding fiscal year that does not exceed the sum
of:
(a) the product of (1) the Borrower's net taxable income for the
immediately preceding year (after subtracting any applicable net operating
losses for any preceding fiscal years) and (ii) the highest marginal federal
income tax rate for C corporations having net taxable income for such year
similar to that of Borrower; and
(b) the product of (i) the Borrower's net taxable income for the
immediately preceding year (after subtracting any applicable net operating
losses for any preceding fiscal years) and (ii) the applicable state income tax
rate(s) for C corporations having net taxable income for such year similar to
that of the Borrower.
1.31 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including, without limitation, any
corporation which elects subchapter S status under the Internal Revenue Code of
1986, as amended), business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
1.32 "Prime Rate" shall mean the rate from time to time publicly
announced by Philadelphia National Bank, incorporated as CoreStates Bank, N.A.,
or its successors, at its office in Philadelphia, Pennsylvania, as its prime
rate, whether or not such announced rate is the best rate available at such
bank.
1.33 "Real Estate" shall mean the real property, improvements,
fixtures sufficiently affixed to real property to become fixtures under
applicable state law and interests in real property owned by Borrower and all
proceeds thereof of whatever kind, including, without limitation, insurance
proceeds, rents, profits and condemnation awards related thereto.
1.34 "Records" shall mean all of Borrower's present and future books
of account of every kind or nature, purchase and sale agreements, invoices,
ledger cards, bills of lading and other shipping evidence, statements,
correspondence, memoranda, credit files and other data relating to the
Collateral or any account debtor, together with the tapes, disks, diskettes and
other data and software storage media and devices or containers in or on which
the foregoing are stored (including any rights of Borrower with respect to the
foregoing maintained with or by any other person).
1.35 "Revolving Loans" shall mean the loans now or hereafter made by
Lender to or for the benefit of Borrower on a revolving basis (involving
advances, repayments and readvances) as set forth in Section 2.1 hereof.
1.36 "Supplemental NRC Advance" shall mean a loan from Nord Resources
to Borrower funded after the date of this Agreement for the purpose of allowing
Borrower to fund trade payments to Kemira Pigments, Inc. to induce Kemira
Pigments, Inc. to release its security interests in the assets of Borrower.
7
1.37 "Unused Line" shall mean the amount by which $6,000,000 exceeds
the average dally principal balance of the outstanding Revolving Loans during
the immediately preceding month (or part thereof).
1.38 "Value" shall mean, as determined by Lender in good faith, with
respect to Inventory, the lower of (a) cost computed on a first-in-first-out
basis in accordance with GAAP or (b) market value.
SECTION 2. CREDIT FACILITIES
2.1 REVOLVING LOANS.
(a) Subject to, and upon the terms and conditions contained
herein, Lender agrees to make Revolving Loans to Borrower from time to time in
amounts requested by Borrower up to the amount equal to:
(i) eighty-five (85%) percent of the Net Amount of
Eligible Accounts,
LESS
(ii) any Availability Reserves.
(b) Lender may, in its discretion, from time to time, upon not
less than five (5) days prior notice to Borrower, reduce the lending formula
with respect to Eligible Accounts to the extent that Lender determines in good
faith that: (i) the dilution with respect to the Accounts for any period (based
on the ratio of (A) the aggregate amount of reductions in Accounts other than as
a result of payments in cash to (B) the aggregate amount of total sales) has
increased in any material respect or may be reasonably anticipated to increase
in any material respect above historical levels, or (ii) the general
creditworthiness of account debtors has declined. In determining whether to
reduce the lending formula(s), Lender may consider events, conditions,
contingencies or risks which are also considered in determining Eligible
Accounts or in establishing Availability Reserves.
(c) Except in Lender's discretion, the aggregate amount of the
Loans outstanding at any time shall not exceed the Maximum Credit. In the event
that the outstanding amount of any component of the Loans, or the aggregate
amount of all outstanding Loans, exceed the amounts available under the
lending formulas or the Maximum Credit, as applicable, such event shall not
limit, waive or otherwise affect any rights of Lender in that circumstance or on
any future occasions and Borrower shall, upon demand by Lender, which may be
made at any time or from time to time, immediately repay to Lender the entire
amount of any such excess(es) for which payment is demanded.
2.2 [INTENTIONALLY DELETED].
2.3 AVAILABILITY RESERVES. All Revolving Loans otherwise available
to Borrower pursuant to the lending formulas and subject to the Maximum Credit
and other applicable limits hereunder shall be subject to Lender's continuing
right to establish and revise Availability Reserves.
8
SECTION 3. INTEREST AND FEES
3.1 INTEREST.
(a) Borrower shall pay to Lender interest on the first day of
each calendar month on the higher of (x) the average daily outstanding principal
amount of the Obligations for the preceding month or (y) $2,000,000 at the rate
of two (2.0%) percent per annum in excess of the Prime Rate, except that
Borrower shall pay to Lender interest, at Lender's option, without notice, at
the rate of four percent (4.0%) per annum in excess of the Prime Rate: (i) on
the Obligations for the period from and after the effective date of termination
or non-renewal hereof, or the date of the occurrence of an Event of Default, and
for so long as such Event of Default is continuing as determined by Lender in
good faith and until such time as Lender has received full and final
payment of all such Obligations (notwithstanding entry of any against Borrower)
and (ii) on the Revolving Loans at any time outstanding in excess of the amounts
available to Borrower under Section 2 (whether or not such excess(es), arise or
are made with or without Lender's knowledge or consent and whether made before
or after an Event of Default). All interest accruing hereunder on and after the
occurrence of any of the events referred to in Sections 3.1(a)(i) or 3.1(a)(ii)
above shall be payable on demand.
(b) Interest shall be calculated on the basis of a three hundred
sixty (360) day year and actual days elapsed. The interest rate shall increase
or decrease by an amount equal to each increase or decrease in the Prime Rate
effective on the first day of the month after any change in such Prime Rate is
announced based on the Prime Rate in effect on the last day of the month in
which any such change occurs. In no event shall charges constituting interest
payable by Borrower to Lender exceed the maximum amount or the rate permitted
under any applicable law or regulation, and if any part or provision of this
Agreement is in contravention of any such law or regulation, such part or
provision shall be deemed amended to conform thereto.
3.2 CLOSING FEE. Borrower shall pay to Lender as a closing fee the
amount of $60,000, which shall be fully earned as of and payable on the date
hereof.
3.3 SERVICING FEE. Borrower shall pay to Lender monthly a servicing
fee in an amount equal to $2,500 in respect of Lender's services for each month
(or part thereof) while this Agreement remains in effect and for so long
thereafter as any of the Obligations are outstanding, which fee shall be fully
earned as of and payable in advance on the date hereof and on the first day of
each month hereafter.
3.4 UNUSED LINE FEE. While this Agreement is in effect and for so
long thereafter as any of the Obligations are outstanding, Borrower shall pay to
Lender monthly an unused line fee, which fee shall be payable on the first day
of each month in arrears, equal at a rate equal to one-half of one percent
(.50%) per annum calculated upon (i) the value of the Unused Line, if the value
of the Unused Line is not greater than $4,000,000, or (ii) $2,000,000 if the
value of the Unused Line is greater than $4,000,000.
3.5 MAXIMUM LAWFUL RATE. Notwithstanding anything to the contrary
contained in SECTION 3 hereof or elsewhere in the Financing Agreements:
(a) If at any time until payment in full of all of the
Obligations, the interest payable hereunder would exceed the highest rate of
interest permissible under any law which a court
9
of competent jurisdiction shall, in a final determination, deem applicable
hereto (the "Maximum Lawful Rate"), then in such event and so long as the
Maximum Lawful Rate would be so exceeded, the interest payable hereunder shall
be calculated on the principal amount of the Obligations at the Maximum Lawful
Rate; PROVIDED, HOWEVER, that if at any time thereafter the interest payable
hereunder would be less than the Maximum Lawful Rate, Borrower shall, to the
extent permitted by law, continue to pay interest on the principal amount of the
Obligations at the Maximum Lawful Rate until such time as the total interest
received by Lender on the principal amount of the Obligations is equal to the
total interest which Lender would have received (but for the operation of this
SECTION 3.5 since the Obligations were first advanced pursuant to this
Agreement); thereafter, interest shall again be payable at the rates provided
for in SECTION 3, unless and until such interest would again exceed the Maximum
Lawful Rate, in which event this SECTION 3.5 shall again apply; and
(b) In no event shall the total interest received by Lender, on
the principal amount of the Obligations pursuant to the terms hereof exceed the
amount which any lender could lawfully have received had the interest due
hereunder been calculated for the full term hereof at the Maximum Lawful Rate.
In the event interest payable hereunder is calculated at the Maximum Lawful Rate
pursuant to this SECTION 3.5, such interest shall be calculated at a daily rate
equal to the Maximum Lawful Rate provided by the number of days in the year in
which such calculation is made. In the event that a court of competent
Jurisdiction, notwithstanding the provisions of this SECTION 3.5, shall make a
final determination that Lender has received interest under any of the Financing
Agreements in excess of the Maximum Lawful Rate, Lender shall, to the extent
permitted by law, promptly apply such excess first to any interest due and not
yet paid under the Obligations hereunder, and then to the principal amount of
the Obligations hereunder. Any excess then remaining shall be refunded to
Borrower.
SECTION 4. CONDITIONS PRECEDENT
4.1 CONDITIONS PRECEDENT TO INITIAL LOANS. Each of the following is
a condition precedent to Lender making the initial Loans hereunder:
(a) Lender shall have received evidence, in form and substance
satisfactory to Lender, that Lender has valid perfected and first priority
security interests in and liens upon the Collateral and any other property which
is intended to be security for the Obligations or the liability of any Obligor
in respect thereof, subject only to the security interests and liens permitted
herein or in the other Financing Agreements;
(b) all requisite partnership action and proceedings in
connection with this Agreement and the other Financing Agreements shall be
satisfactory in form and substance to Lender, and Lender shall have received all
information and copies of all documents, including, without limitation, records
of requisite partnership action and proceedings which Lender may have requested
in connection therewith, such documents where requested by Lender or its counsel
to be certified by appropriate officers or governmental authorities;
(c) no material adverse change shall have occurred in the
assets, business or prospects of Borrower since the date of Lender's latest
field examination and no change or event shall have occurred which would
materially impair the ability of Borrower or any Obligor to
10
perform its obligations hereunder or under any of the other Financing Agreements
to which it is a party or of Lender to enforce the Obligations or realize upon
the Collateral;
(d) Lender shall have completed a field review of the Records
and such other information with respect to the Collateral as Lender may require
to determine the amount of Revolving Loans available to Borrower, the results
of which shall be satisfactory to Lender, not more than eight (8) business days
prior to the date hereof;
(e) Lender shall have received, in form and substance
satisfactory to Lender, all consents, waivers, acknowledgments and other
agreements from third persons which Lender may deem necessary or desirable in
order to permit, protect and perfect its security interests in and liens upon
the Collateral or to effectuate the provisions or purposes of this Agreement and
the other Financing Agreements, including, without limitation, all documents and
instruments described on the List of Closing Documents attached hereto as
EXHIBIT B;
(f) Lender shall have received evidence of insurance and loss
payee endorsements required hereunder and under the other Financing Agreements,
in form and substance satisfactory to Lender, and certificates of insurance
policies and/or endorsements naming Lender as loss payee;
(g) Lender shall have received, in form and substance
satisfactory to Lender, a Credit Support and Intercreditor Agreement duly
executed by Nord Resources;
(h) Lender shall have received, in form and substance
satisfactory to Lender, such opinion letters of counsel to Borrower with respect
to the Financing Agreements and such other matters as Lender may request; and
(i) the other Financing Agreements and all instruments and
documents hereunder and thereunder shall have been duly executed and delivered
to Lender, in form and substance satisfactory to Lender.
(j) Lender shall have received, in form and substance
satisfactory to Lender, all financial information, projections, budgets,
business plans, cash flow reports, information on "trials" in process and such
other matters and information as Lender may request;
(k) Lender shall have completed a review of all existing
purchase orders for any and all inventory, goods, services or other items held
by Borrower, the results of which shall be satisfactory to Lender, in its sole
discretion;
(1) Lender shall have received and completed a review of the
Annual Report for Repap Enterprises, Inc. for the fiscal year which ended on
December 31, 1995, the results of which shall be satisfactory to Lender, in its
sole discretion;
(m) Lender shall be satisfied that on the date of the initial
advance hereunder unused loan availability computed pursuant to Section 2.1
shall be not less than $750,000 (after deducting therefrom all checks and drafts
previously drawn but not yet presented in respect of payment of invoices which
are in excess of 60 days past the original invoice date thereof); and
11
(n) Lender shall have received, in form and substance
satisfactory to Lender, and completed a review of all information and copies of
all documents and such other matters and information as Lender may have
requested related to the gross profit margins of the certain "Norplex" line of
products which are sold, produced or distributed by Borrower, the results of
which shall be satisfactory to Lender.
4.2 CONDITIONS PRECEDENT TO ALL LOANS. Each of the following is an
additional condition precedent to Lender making Loans to Borrower, including the
initial Loans and any future Loans:
(a) all representations and warranties contained herein and in
the other Financing Agreements shall be true and correct in all material
respects with the same effect as though such representations and warranties had
been made on and as of the date of the making of each such Loan and after giving
effect thereto; and
(b) no Event of Default and no event or condition which, with
notice or passage of time or both, would constitute an Event of Default, shall
exist or have occurred and be continuing on and as of the date of the making of
such Loan and after giving effect thereto.
SECTION 5. GRANT OF SECURITY INTEREST
To secure payment and performance of all Obligations, Borrower hereby
grants to Lender a continuing security interest in, a lien upon, and a right of
set off against, and hereby assigns to Lender as security, the following
property and interests in property of Borrower, whether now owned or hereafter
acquired or existing, and wherever located (collectively, the "Collateral"):
5.1 Accounts;
5.2 all present and future monies, securities, credit balances,
deposits, deposit accounts and other property of Borrower now or hereafter held
or received by or in transit to Lender or its affiliates to the extent derived
from the proceeds of any of the property described any of Sections 5.1, 5.3. 5.4
or 5.5 of the definition of Collateral herein or at any other depository or
other institution from or for the account of Borrower, whether for safekeeping,
pledge, custody, transmission, collection or otherwise, and all present and
future liens, security interests, rights, remedies, title and interest in, to
and in respect of Accounts and other Collateral, including, without limitation,
(a) rights and remedies under or relating to guaranties, contracts of
suretyship, letters of credit and credit and other insurance related to the
Collateral, (b) rights of stoppage in transit, replevin, repossession,
reclamation and other rights and remedies of an unpaid vendor, lienor or secured
party, (c) goods described in invoices, documents, contracts or instruments with
respect to, or otherwise representing or evidencing, Accounts or other
Collateral, including, without limitation, returned, repossessed and reclaimed
goods, and (d) deposits by and property of account debtors or other persons
securing the obligations of account debtors;
5.3 Inventory and Equipment;
5.4 Records;
5.5 all present and future General Intangibles, chattel paper,
documents, instruments, letters of credit, bankers' acceptances and guaranties
to the extent the same (a) directly derive from
12
the proceeds or products of any of the property described above in Sections 5.1,
5.2, 5.3 or 5.4, (b) constitute tax or duty refunds or (c) constitute credits or
refunds owing to, or claims or other chooses in action held by Borrower with
respect to third parties which relate to or arise from Borrower's (i),railroad
car usage and/or leasing, (ii) overfunding of insurance policy obligations
and/or (iii) purchase, use, sale or return of goods constituting Inventory;
5.6 all products and proceeds of the foregoing, in any form,
including, without limitation, insurance proceeds and all claims against third
parties for loss or damage to or destruction of any or all of the foregoing; and
5.7 PROVIDED, THAT, notwithstanding the foregoing subparts Sections
5.1, 5.2, 5.3, 5.4, 5.5 or 5.6 above, the Collateral shall NOT include any of
the following: Mineral Rights, Real Estate, Intellectual Property or any other
license, document or instrument which, by its terms, prohibits any collateral or
other assignment of or encumbrance upon the same.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 BORROWER'S LOAN ACCOUNT. Lender shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans and other
Obligations and the Collateral, (b) all payments made by or on behalf of
Borrower and (c) all other appropriate debits and credits as provided in this
Agreement, including, without limitation, fees, charges, costs, expenses and
interest. All entries in the loan account(s) shall be made in accordance with
Lender's customary practices as in effect from time to time.
6.2 STATEMENTS. Lender shall render to Borrower each month a
statement setting forth the balance in the Borrower's loan account(s) maintained
by Lender for Borrower pursuant to the provisions of this Agreement, including
principal, interest, fees, costs and expenses. Each such statement shall be
subject to subsequent adjustment by Lender but shall, absent manifest errors or
omissions, be considered correct and deemed accepted by Borrower and
conclusively binding upon Borrower as an account stated except to the extent
that Lender receives a written notice from Borrower of any specific exceptions
of Borrower thereto within thirty (30) days after the date such statement has
been mailed by Lender. Until such time as Lender shall have rendered to
Borrower a written statement as provided above, the balance in Borrower's loan
account(s) shall be presumptive evidence of the amounts due and owing to Lender
by Borrower.
6.3 COLLECTION OF ACCOUNTS.
(a) Borrower shall establish and maintain, at its expense,
blocked accounts or lockboxes and related blocked accounts (in either case,
"Blocked Accounts"), as Lender may specify, with such banks as are acceptable
to Lender into which Borrower shall promptly deposit and direct its account
debtors to directly remit all payments on Accounts and all payments constituting
proceeds of Inventory or other Collateral in the identical form in which such
payments are made, whether by cash, check or other manner. The banks at which
the Blocked Accounts are established shall enter into an agreement, in form and
substance satisfactory to Lender, providing that all items received or deposited
in the Blocked Accounts are the property of Lender, that the depository bank has
no lien upon, or right to setoff against, the Blocked Accounts, the items
received for deposit therein, or the funds from time to time on deposit therein
and that the depository bank will wire, or otherwise transfer, in immediately
available funds, on a daily basis, all
13
funds received or deposited into the Blocked Accounts to such bank account of
Lender as Lender may from time to time designate for such purpose ("Payment
Account"). Borrower agrees that all payments made to such Blocked Accounts or
other funds received and collected by Lender, whether on the Accounts or as
proceeds of Inventory or other Collateral or otherwise shall be the property of
Lender.
(b) For purposes of calculating interest on the Obligations,
such payments or other funds received will be applied (conditional upon final
collection) to the Obligations two (2) business days following the date of
receipt of immediately available funds by Lender in the Payment Account. For
purposes of calculating the amount of the Revolving Loans available to Borrower
such payments will be applied (conditional upon final collection) to the
Obligations on the business day of receipt by Lender in the Payment Account, if
such payments are received within sufficient time (in accordance with Lender's
usual and customary practices as in effect from time to time) to credit
Borrower's loan account on such day, and if not, then on the next business day.
(c) Borrower and all of its affiliates, subsidiaries,
shareholders, directors, employees or agents shall, acting as trustee for
Lender, receive, as the property of Lender, any monies, checks, notes, drafts or
any other payment relating to and/or proceeds of Accounts or other Collateral
which come into their possession or under their control and immediately upon
receipt thereof, shall deposit or cause the same to be deposited in the Blocked
Accounts, or remit the same or cause the same to be remitted, in kind, to
Lender. In no event shall the same be commingled with Borrower's own funds.
Borrower agrees to reimburse Lender on demand for any amounts owed or paid to
any bank at which a Blocked Account is established or any other bank or person
involved in the transfer of funds to or from the Blocked Accounts arising out of
Lender's payments to or indemnification of such bank or person. The obligation
of Borrower to reimburse Lender for such amounts pursuant to this Section 6.3
shall survive the termination or non-renewal of this Agreement.
6.4 PAYMENTS. All Obligations shall be payable to the Payment
Account as provided in Section 6.3 or such other similar lockboxes or blocked
accounts as Lender may designate from time to time. Lender may apply payments
received or collected from Borrower or for the account of Borrower (including,
without limitation, the monetary proceeds of collections or of realization upon
any Collateral) to such of the Obligations, whether or not then due, in such
order and manner as Lender determines. At Lender's option, all principal,
interest, fees, costs, expenses and other charges provided for in this Agreement
or the other Financing Agreements may be charged directly to the loan account(s)
of Borrower. Borrower shall make all payments to Lender on the Obligations free
and clear of, and without deduction or withholding for or on account of, any
setoff, counterclaim, defense, duties, taxes, levies, imposts, fees, deductions,
withholding, restrictions or conditions of any kind. If after receipt of any
payment of, or proceeds of Collateral applied to the payment of, any of the
Obligations, Lender is required to surrender or return such payment or proceeds
to any Person for any reason, then the Obligations intended to be satisfied by
such payment or proceeds shall be reinstated and continue and this Agreement
shall continue in full force and effect as if such payment or proceeds had not
been received by Lender. Borrower shall be liable to pay to Lender, and does
hereby indemnify and hold Lender harmless for the amount of any payments or
proceeds surrendered or returned. This Section 6.4 shall remain effective
notwithstanding any contrary action which may be taken by Lender in reliance
upon such payment or proceeds. This Section 6.4 shall survive the payment of
the Obligations and the termination or non-renewal of this Agreement.
14
6.5 AUTHORIZATION TO MAKE LOANS. Lender is authorized to make the
Loans based upon telephonic or other instructions received from anyone listed on
SCHEDULE 6.5 purporting to be an officer of Borrower or other authorized person
(in either event, listed on an authorization form previously submitted by
Borrower) or, at the discretion of Lender, if such Loans are necessary to
satisfy any Obligations. All requests for Loans hereunder shall specify the
date on which the requested advance is to be made (which day shall be a business
day) and the amount of the requested Loan. Requests received after 11:00 a.m.
Chicago time on any day shall be deemed to have been made as of the opening of
business on the immediately following business day. All Loans under this
Agreement shall be conclusively presumed to have been made to, and at the
request of and for the benefit of, Borrower when deposited to the credit of
Borrower or otherwise disbursed or established in accordance with the
instructions of Borrower or in accordance with the terms and conditions of this
Agreement.
6.6 USE OF PROCEEDS. Borrower shall use the initial proceeds of the
Loans provided by Lender to Borrower hereunder only for: (a) payments to each of
the persons listed in the disbursement direction letter furnished by Borrower to
Lender on or about the date hereof and (b) costs, expenses and fees in
connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Financing Agreements. All other Loans made by Lender to
Borrower pursuant to the provisions hereof shall be used by Borrower only for
general operating, working capital and other proper corporate purposes of
Borrower not otherwise prohibited by the terms hereof. None of the proceeds
will be used, directly or indirectly, for the purpose of purchasing or carrying
any margin security or for the purposes of reducing or retiring any indebtedness
which was originally incurred to purchase or carry any margin security or for
any other purpose which might cause any of the Loans to be considered a "purpose
credit" within the meaning of Regulation G of the Board of Governors of the
Federal Reserve System, as amended.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 COLLATERAL REPORTING, Borrower shall provide Lender with the
following documents in a form satisfactory to Lender: (a) on a regular basis as
required by Lender, a schedule of Accounts; (b) on a weekly basis or more
frequently as Lender may reasonably request, (i) perpetual inventory reports,
(ii) inventory reports by category and (iii) agings of accounts payable (on a
monthly basis), (c) upon Lender's request, (i) copies of customer statements and
credit memos, remittance advices and reports, and copies of deposit slips and
bank statements, (ii) copies of shipping and delivery documents, and (iii)
copies of purchase orders, invoices and delivery documents for Inventory and
Equipment acquired by Borrower; (d) agings of accounts receivable on a monthly
basis or more frequently as Lender may reasonably request; and (e) such other
reports as to the Collateral as Lender shall reasonably request from time to
time. If any of Borrower's records or reports of the Collateral are prepared or
maintained by an accounting service, contractor, shipper or other agent,
Borrower hereby irrevocably authorizes such service, contractor, shipper or
agent to deliver such records, reports, and related documents to Lender and to
follow Lender's instructions with respect to further services at any time that
an Event of Default exists or has occurred and is continuing.
7.2 ACCOUNTS COVENANTS.
(a) Borrower shall notify Lender promptly of: (i) any material
delay in Borrower's performance of any of its obligations to any account debtor
or the assertion of any
15
claims, offsets, defenses or counterclaims by any account debtor, or any
disputes with account debtors, or any settlement, adjustment or compromise
thereof, (ii) all material adverse information relating to the financial
condition of any account debtor of which Borrower's officers have actual
knowledge and (iii) any event or circumstance which, to Borrower's knowledge
would cause Lender to consider any then existing Accounts as no longer
constituting Eligible Accounts. No credit, discount, allowance or extension or
agreement for any of the foregoing shall be granted to any account debtor
without Lender's consent, except in the ordinary course of Borrower's business
consistent with past practices and policies disclosed to Lender prior to the
date hereof. So long as no Event of Default exists or has occurred and is
continuing, Borrower shall have the right to settle, adjust or compromise any
claim, offset, counterclaim or dispute with any account debtor. At any time
that an Event of Default exists or has occurred and is continuing, Lender shall,
at its option, have the exclusive right to settle, adjust or compromise any
claim, offset, counterclaim or dispute with account debtors or grant any
credits, discounts or allowances.
(b) Borrower shall promptly report to Lender any return of
Inventory by an account debtor having a sales price in excess of $10,000. At
any time that Inventory is returned, reclaimed or repossessed, the related
Account shall not be deemed an Eligible Account. In the event any account
debtor returns Inventory when an Event of Default exists or has occurred and is
continuing, Borrower shall, upon Lender's request, (i) hold the returned
Inventory in trust for Lender, (ii) segregate all returned Inventory from all of
its other property, (iii) dispose of the returned Inventory solely according to
Lender's instructions, and (iv) not issue any credits, discounts or allowances
with respect thereto without Lender's prior written consent.
(c) With respect to each Account: (i) the amounts shown on any
invoice delivered to Lender or schedule thereof delivered to Lender shall be
true and complete, (ii) no payments shall be made thereon except payments
immediately delivered to Lender pursuant to the terms of this Agreement, (iii)
no credit, discount, allowance or extension or agreement for any of the
foregoing shall be granted to any account debtor except as reported to Lender in
accordance with this Agreement and except for credits, discounts, allowances or
extensions made or given in the ordinary course of Borrower's business in
accordance with past practices and policies or material modifications thereof
disclosed to Lender prior to the date hereof, (iv) there shall be no setoffs,
deductions, contras, defenses, counterclaims or disputes existing or asserted
with respect thereto except as reported to Lender in accordance with the terms
of this Agreement, (v) none of the transactions giving rise thereto will violate
any applicable State or Federal laws or regulations, all documentation relating
thereto will be legally sufficient under such laws and regulations and all such
documentation will be legally enforceable in accordance with its terms.
(d) Lender shall have the right at any time or times, in
Lender's name or in the name of a nominee of Lender, to verify the validity,
amount or any other matter relating to any Account or other Collateral, by mail,
telephone, facsimile transmission or otherwise.
(e) Borrower shall deliver or cause to be delivered to Lender,
with appropriate endorsement and assignment, with full recourse to Borrower, all
chattel paper and instruments included within the scope of Collateral which
Borrower now owns or may at any time acquire immediately upon Borrower's receipt
thereof, except as Lender may otherwise agree.
(f) Lender may, at any time or times that an Event of Default
exists or has occurred and is continuing, (i) notify any or all account debtors
that the Accounts have been assigned to Lender and that Lender has a security
interest therein and Lender may direct any or all
16
accounts debtors to make payment of Accounts directly to Lender, (ii) extend the
time of payment of, compromise, settle or adjust for cash, credit, return of
merchandise or otherwise, and upon any terms or conditions, any and all Accounts
or other obligations included in the Collateral and thereby discharge or
release the account debtor or any other party or parties in any way liable for
payment thereof without affecting any of the Obligations, (iii) demand, collect
or enforce payment of any Accounts or such other obligations, but without any
duty to do so, and Lender shall not be liable for its failure to collect or
enforce the payment thereof nor for the negligence of its agents or attorneys
with respect thereto and (iv) take whatever other action Lender may deem
necessary or desirable for the protection of its interests. At any time that an
Event of Default exists or has occurred and is continuing, at Lender's request,
all invoices and statements sent to any account debtor shall state that the
Accounts and such other obligations have been assigned to Lender and are payable
directly and only to Lender and Borrower shall deliver to Lender such originals
of documents evidencing the sale and delivery of goods or the performance of
services giving rise to any Accounts as Lender may require.
7.3 INVENTORY COVENANTS. With respect to the Inventory: (a) Borrower
shall at all times maintain inventory records reasonably satisfactory to Lender,
keeping correct and accurate records itemizing and describing the kind, type,
quality and quantity of Inventory, Borrower's cost therefor and daily
withdrawals therefrom and additions thereto; (b) Borrower shall conduct a
physical count of the Inventory at least once each year, but at any time or
times as Lender may request on or after an Event of Default, and promptly
following such physical inventory shall supply Lender with a report in the form
and with such specificity as may be reasonably satisfactory to Lender concerning
such physical count; (c) Borrower shall not remove any Inventory from the
locations set forth or permitted herein, without the prior written consent of
Lender, except for sales of Inventory in the ordinary course of Borrower's
business and except to move Inventory directly from one location set forth or
permitted herein to another such location; (d) upon Lender's request, Borrower
shall, at its expense, no more than once in any twelve (12) month period, but at
any time or times as Lender may request on or after and during the continuance
of an Event of Default, deliver or cause to be delivered to Lender written
reports or appraisals as to the Inventory in form, scope and methodology
reasonably acceptable to Lender and by an appraiser acceptable to Lender,
addressed to Lender or upon which Lender is expressly permitted to rely; (e)
Borrower shall produce, use, store and maintain the Inventory, with all
reasonable care and caution and in accordance with applicable standards of any
insurance and in conformity with applicable laws (including, but not limited to,
the requirements of the Federal Fair Labor Standards Act of 1938, as amended and
all rules, regulations and orders related thereto); (f) Borrower assumes all
responsibility and liability arising from or relating to the production, use,
sale or other disposition of the Inventory; (g) except for sales made in
conformity with Section 9.20 below, Borrower shall not sell Inventory to any
customer on approval, or any other basis which entities the customer to return
or may obligate Borrower to repurchase such Inventory; (h) Borrower shall keep
the Inventory in good and marketable condition; and (1) Borrower shall not,
without prior written notice to Lender, acquire or accept any Inventory on
consignment or approval.
7.4 EQUIPMENT COVENANTS. With respect to the Equipment: (a) upon
Lender's request, Borrower shall, at its expense, at any time or times as Lender
may request on or after an Event of Default, deliver or cause to be delivered
to Lender written reports or appraisals as to the Equipment in form, scope and
methodology acceptable to Lender and by an appraiser acceptable to Lender; (b)
Borrower shall keep the Equipment in good order, repair, running and marketable
condition (ordinary wear and tear excepted); (c) Borrower shall use the
Equipment with all reasonable care and caution and in accordance with applicable
standards of any insurance and in conformity with all
17
applicable laws; (d) the Equipment is and shall be used in Borrower's business
and not for personal, family, household or farming use; (e) Borrower shall not
remove any Equipment from the locations set forth or permitted herein, except to
the extent necessary to have any Equipment repaired or maintained in the
ordinary course of the business of Borrower or to move Equipment directly from
one location set forth or permitted herein to another such location and except
for the movement of motor vehicles used by or for the benefit of Borrower in the
ordinary course of business; (f) the Equipment is now and shall remain personal
property and Borrower shall not permit any of the Equipment to be or become a
part of or affixed to real property; and (g) Borrower assumes all responsibility
and liability arising from the use of the Equipment.
7.5 POWER OF ATTORNEY. Borrower hereby irrevocably designates and
appoints Lender (and all persons designated by Lender) as Borrower's true and
lawful attorney-in-fact, and authorizes Lender, in Borrower's or Lender's name,
to: (a) at any time an Event of Default exists or has occurred and is continuing
(i) demand payment on Accounts or other proceeds of Inventory or other
Collateral, (ii) enforce payment of Accounts by legal proceedings or otherwise,
(iii) exercise all of Borrower's rights and remedies to collect any Account or
other Collateral, (iv) sell or assign any Account upon such terms, for such
amount and at such time or times as the Lender deems advisable, (v) settle,
adjust, compromise, extend or renew an Account, (vi) discharge and release any
Account, (vii) prepare, file and sign Borrower's name on any proof of claim in
bankruptcy or other similar document against an account debtor, (viii) notify
the post office authorities to change the address for delivery of Borrower's
mail to an address designated by Lender, and open and dispose of all mail
addressed to Borrower, and (ix) do all acts and things which are necessary, in
Lender's determination, to fulfill Borrower's obligations under this Agreement
and the other Financing Agreements and (b) at any time to (i) take control in
any manner of any item of payment or proceeds thereof, (ii) have access to any
lockbox or postal box into which Borrower's mail is deposited, (iii) endorse
Borrower's name upon any items of payment or proceeds thereof and deposit the
same in the Lender's account for application to the Obligations, (iv) endorse
Borrower's name upon any chattel paper, document, instrument, invoice, or
similar document or agreement relating to any Account or any goods pertaining
thereto or any other Collateral, (v) sign Borrower's name on any verification of
Accounts and notices thereof to account debtors and (vi) execute in Borrower's
name and file any UCC financing statements or amendments thereto. Borrower
hereby releases Lender and its officers, employees and designees from any
liabilities arising from any act or acts under this power of attorney and in
furtherance thereof, whether of omission or commission, except as a result of
Lender's own gross negligence or wilful misconduct as determined pursuant to a
final non-appealable order of a court of competent jurisdiction.
7.6 RIGHT TO CURE. After notice to Borrower and failure to cure
within 10 days thereafter (except in the event Lender reasonably believes such
delay may have an adverse effect on (i) the perfection or priority of its Liens
upon any Collateral or (ii) the enforceability on collectability of the
Financing Agreements or Obligations), Lender, at Its option, may: (a) cure any
default by Borrower under any agreement with a third party or pay or bond on
appeal any judgment entered against Borrower, (b) discharge taxes, liens,
security interests or other encumbrances at any time levied on or existing with
respect to the Collateral and (c) pay any amount, incur any expense or perform
any act which, in Lender's judgment, is necessary or appropriate to preserve,
protect, insure or maintain the Collateral and the rights of Lender with respect
thereto. Lender may add any amounts so expended in good faith to the
Obligations and charge Borrower's account therefor, such amounts to be repayable
by Borrower on demand. Lender shall be under no obligation to effect such cure,
payment or bonding and shall not, by doing so, be deemed to have assumed any
obligation or liability of Borrower. Any payment made or other action taken by
Lender under this
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Section shall be without prejudice to any right to assert an Event of Default
hereunder and to proceed accordingly.
7.7 ACCESS TO PREMISES. From time to time as requested by Lender, at
the cost and expense of Borrower, (a) Lender or its designee shall have complete
access to all of Borrower's premises during normal business hours and after
reasonable notice to Borrower, or at any time and without notice to Borrower if
an Event of Default exists or has occurred and is continuing, for the purposes
of inspecting, verifying and auditing the Collateral and all of Borrower's books
and records, including, without limitation, the Records, and (b) Borrower shall
promptly furnish to Lender such copies of such books and records or extracts
therefrom as Lender may request, and (c) use during normal business hours such
of Borrower's personnel, equipment, supplies and premises as may be reasonably
necessary for the foregoing and if an Event of Default exists or has occurred
and is continuing for the collection of Accounts and realization of other
Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender the following (which
shall survive the execution and delivery of this Agreement), the truth and
accuracy of which are a continuing condition of the making of Loans Lender to
Borrower:
8.1 PARTNERSHIP EXISTENCE; POWER AND AUTHORITY. Borrower is a
limited partnership duly organized and validly existing under the laws of the
State of Georgia, and duly qualified to do business in the State of Georgia,
with requisite power and authority to (i) incur the indebtedness evidenced by
this Agreement and (ii) execute and deliver this Agreement and the other
Financing Agreements to which it is a party in the State of Illinois. The sole
general partner ("General Partner") of Borrower is Norplex Inc., and the sole
limited partner is Nord Limited. The execution, delivery and performance of
this Agreement, the other Financing Agreements and the transactions contemplated
hereunder and thereunder are all authorized by Borrower's Partnership Agreement
(the "Partnership Agreement"), and will not result in any breach of, or
constitute a default under, or result in the creation of any lien, charge or
encumbrance (other than those contained in any of the Financing Agreements) upon
any property or assets of Borrower under any indenture, loan or credit
agreement or other instrument or agreement to which Borrower is a party or under
the Partnership Agreement. This Agreement and the other Financing Agreements
constitute legal, valid and binding obligations of Borrower enforceable in
accordance with their respective terms. Borrower has no subsidiaries.
8.2 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE. All financial
statements relating to Borrower and its General Partner, which have been or may
hereafter be delivered by Borrower to Lender have been prepared in accordance
with GAAP and fairly present the financial condition and the results of
operation of Borrower and its General Partner as at the dates and for the
periods set forth therein. Except as disclosed in any interim financial
statements furnished by Borrower or its General Partner to Lender prior to the
date of this Agreement, there has been no material adverse change in the assets,
liabilities, properties and condition, financial or otherwise, of Borrower and
its General Partner, since the date of the most recent audited financial
statements furnished by Borrower and its General Partner to Lender prior to the
date of this Agreement.
8.3 CHIEF EXECUTIVE OFFICE; COLLATERAL LOCATIONS. The chief
executive office of Borrower and Borrower's Records concerning Accounts are
located only at the address set forth
19
below and its only other places of business and the only other locations of
Collateral, if any, are the addresses set forth in the Information Certificate,
subject to the right of Borrower to establish new locations in accordance with
Section 9.2 below. The Information Certificate correctly identifies any of such
locations which are not owned by Borrower and sets forth the owners and/or
operators thereof and to the best of Borrower's knowledge, the holders of any
mortgages on such locations.
8.4 PRIORITY OF LIENS; TITLE TO PROPERTIES. The security interests
and liens granted to Lender under this Agreement and the other Financing
Agreements constitute valid and perfected first priority liens and security
interests in and upon the Collateral subject only to the liens indicated on
SCHEDULE 8.4 hereto and the other liens permitted under Section 9.8 hereof.
Borrower has good and marketable title to all of its properties and assets
subject to no liens, mortgages, pledges, security interests, encumbrances or
charges of any kind, except those granted to Lender and such others as are
specifically listed on SCHEDULE 8.4 hereto or permitted under Section 9.8
hereof.
8.5 TAX RETURNS. Except for 1995 returns for which extensions have
been obtained, Borrower has filed, or caused to be filed, in a timely manner all
tax returns, reports and declarations which are required to be filed by it
(without requests for extension except as previously disclosed in writing to
Lender). All information in such tax returns, reports and declarations is
complete and accurate in all material respects. Borrower has paid or caused to
be paid all taxes due and payable or claimed due and payable in any assessment
received by it, except taxes the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to Borrower
and with respect to which adequate reserves have been set aside on its books.
Adequate provision has been made for the payment of all accrued and unpaid
Federal, State, county, local, foreign and other taxes whether or not yet due
and payable and whether or not disputed.
8.6 LITIGATION. Except as set forth on the Information Certificate
and SCHEDULE 8.6, there is no present investigation by any governmental agency
pending, or to the best of Borrower's knowledge threatened, against or affecting
Borrower, its assets or business and there is no action, suit, proceeding or
claim by any Person pending, or to the best of Borrower's knowledge threatened,
against Borrower or its assets or goodwill, or against or affecting any
transactions contemplated by this Agreement, which if adversely determined
against Borrower would result in any material adverse change in the assets,
business or prospects of Borrower or would impair the ability of Borrower to
perform its obligations hereunder or under any of the other Financing Agreements
to which it is a party or of Leader to enforce any Obligations or realize upon
any Collateral.
8.7 COMPLIANCE WITH OTHER AGREEMENTS AND APPLICABLE LAWS. Borrower
is not in default in any material respect under, or in violation in any material
respect of any of the terms of, any agreement, contract, instrument, lease or
other commitment to which it is a party or by which it or any of its assets are
bound and Borrower is in compliance in all material respects with all applicable
provisions of laws, rules, regulations, licenses, permits, approvals and orders
of any foreign, Federal, State or local governmental authority, except as set
forth on SCHEDULE 8.7.
8.8 ENVIRONMENTAL COMPLIANCE.
(a) Except as set forth on SCHEDULE 8.8 hereto, Borrower has not
generated, used, stored, treated, transported, manufactured, handled, produced
or disposed of any Hazardous Materials, on or off its premises (whether or not
owned by it) in any manner which at any time violates any applicable
Environmental Law or any license, permit, certificate, approval or similar
authorization thereunder and the operations of Borrower complies in all material
respects with all
20
Environmental Laws and all licenses, permits, certificates, approvals and
similar authorizations thereunder.
(b) Except as set forth on SCHEDULE 8.8 hereto, there has been
no investigation, proceeding, complaint, order, directive, claim, citation or
notice by any governmental authority or any other person nor is any pending or
to the best of Borrower's knowledge threatened, with respect to any
non-compliance with or violation of the requirements of any Environmental Law by
Borrower or the release, spill or discharge, threatened or actual, of any
Hazardous Material or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials or any
other environmental, health or safety matter, which affects Borrower or its
business, operations or assets or any properties at which Borrower has
transported, stored or disposed of any Hazardous Materials.
(c) Borrower has no material liability (contingent or otherwise)
in connection with a release, spill or discharge, threatened or actual, of any
Hazardous Materials or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials.
(d) Borrower has all licenses, permits, certificates, approvals
or similar authorizations required to be obtained or filed in connection with
the operations of Borrower under any Environmental Law and all of such licenses,
permits, certificates, approvals or similar authorizations are valid and in full
force and effect.
8.9 EMPLOYEE BENEFITS.
(a) Borrower has not engaged in any transaction in connection
with which Borrower or any of its ERISA Affiliates could be subject to either a
civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code, including any accumulated funding deficiency described
in Section 8.9(c) hereof and any deficiency with respect to vested accrued
benefits described in Section 8.9(d) hereof.
(b) No liability to the Pension Benefit Guaranty Corporation has
been or is expected by Borrower to be incurred with respect to any employee
pension benefit plan of Borrower or any of its ERISA Affiliates. There has been
no reportable event (within the meaning of Section 4043(b) of ERISA) or any
other event or condition with respect to any employee pension benefit plan of
Borrower or any of its ERISA Affiliates which presents a risk of termination of
any such plan by the Pension Benefit Guaranty Corporation.
(c) Full payment has been made of all amounts which Borrower or
any of its ERISA Affiliates is required under Section 302 of ERISA and Section
412 of the Code to have paid under the terms of each employee pension benefit
plan as contributions to such plan as of the last day of the most recent fiscal
year of such plan ended prior to the date hereof, and no accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, exists with respect to any employee pension benefit plan,
including any penalty or tax described in Section 8.9(a) hereof and any
deficiency with respect to vested accrued benefits described in Section 8.9(d)
hereof.
(d) Except as set forth in the financial statements for the
fiscal period ending December 31, 1995, the current value of all vested accrued
benefits under all employee pension
21
benefit plans maintained by Borrower that are subject to Title IV of ERISA does
not exceed the current value of the assets of such plans allocable to such
vested accrued benefits, including any penalty or tax described in Section
8.9(a) hereof and any accumulated funding deficiency described in Section 8.9(c)
hereof. The terms "current value" and "accrued benefit" have the meanings
specified in ERISA.
(e) Neither Borrower nor any of its ERISA Affiliates is or has
ever been obligated to contribute to any "multiemployer plan" (as such term is
defined in Section 4001(a)(3) of ERISA) that is subject to Title IV of ERISA.
8.10 ACCURACY AND COMPLETENESS OF INFORMATION. All information
furnished by or on behalf of Borrower in writing to Lender in connection with
this Agreement or any of the other Financing Agreements or any transaction
contemplated hereby or thereby, including, without limitation, all information
on the Information Certificate is true and correct in all material respects on
the date as of which such information is dated or certified and does not omit
any material fact necessary in order to make such information not misleading.
No event or circumstance has occurred which has had or could reasonably be
expected to have a material adverse affect on the business, assets or prospects
of Borrower, which has not been fully and accurately disclosed to Lender in
writing.
8.11 SURVIVAL OF WARRANTIES; CUMULATIVE. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Lender on the date of each additional borrowing or
other credit accommodation hereunder and shall be conclusively presumed to have
been relied on by Lender regardless of any investigation made or information
possessed by Lender. The representations and warranties set forth herein shall
be cumulative and in addition to any other representations or warranties which
Borrower shall now or hereafter give, or cause to be given, to Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 MAINTENANCE OF EXISTENCE. Borrower shall at all times preserve,
renew and keep in full, force and effect its valid existence as a duly organized
partnership and rights and franchises with respect thereto and maintain in full
force and effect all permits, licenses, trademarks, tradenames, approvals,
authorizations, leases and contracts necessary to carry on the business as
presently or proposed to be conducted. Neither Borrower, its General Partner
nor its limited partner shall dissolve, sell or assign any interest in, or
portion thereof, the partnership. Borrower shall give Lender thirty (30) days
prior written notice of any proposed change in its name, which notice shall set
forth the new name and Borrower shall deliver to Lender a copy of the amendment
to the Partnership Agreement of Borrower providing for the name change.
9.2 NEW COLLATERAL LOCATIONS. Borrower may open any new location
within the continental United States provided Borrower (a) gives Lender thirty
(30) days prior written notice of the intended opening of any such new location
and (b) executes and delivers, or causes to be executed and delivered, to Lender
such agreements, documents, and instruments as Lender may deem reasonably
necessary or desirable to protect its interests in the Collateral at such
location, including, without limitation, UCC financing statements.
22
9.3 COMPLIANCE WITH LAWS, REGULATIONS, ETC.
(a) Borrower shall, at all times, comply in all material
respects with all laws, rules, regulations, licenses, permits, approvals and
orders applicable to it and duly observe all requirements of any Federal, State
or local governmental authority, including, without limitation, the Employee
Retirement Security Act of 1974, as amended, the Occupational Safety and Hazard
Act of 1970, as amended, the Fair Labor Standards Act of 1938, as amended, and
all statutes, rules, regulations, orders, permits and stipulations relating to
environmental pollution and employee health and safety, including, without
limitation, all of the Environmental Laws.
(b) Borrower shall establish and maintain, at its expense, a
system to assure and monitor its continued compliance with all Environmental
Laws in all of its operations, which system shall include annual reviews of such
compliance by employees or agents of Borrower who are familiar with the
requirements of the Environmental Laws. Copies of all environmental surveys,
audits, assessments, feasibility studies and results of remedial investigations
shall be promptly furnished, or caused to be furnished, by Borrower to Lender.
Borrower shall take prompt and appropriate action to respond to any
non-compliance with any of the Environmental Laws and shall regularly report to
Lender on such response.
(c) Borrower shall give both oral and written notice to Lender
immediately upon Borrower's receipt of any notice of, or Borrower's otherwise
obtaining knowledge of, (i) the occurrence of any event involving the release,
spill or discharge, threatened or actual, of any Hazardous Material or (ii) any
investigation, proceeding, complaint, order, directive, claims, citation or
notice with respect to: (A) any non-compliance with or violation of any
Environmental Law by Borrower or (B) the release, spill or discharge, threatened
or actual, of any Hazardous Material or (C) the generation, use, storage,
treatment, transportation, manufacture, handling, production or disposal of any
Hazardous Materials or (D) any other environmental, health or safety matter,
which affects Borrower or its business, operations or assets or any properties
at which Borrower transported, stored or disposed of any Hazardous Materials.
(d) Without limiting the generality of the foregoing, whenever
Lender reasonably determines that there is non-compliance, or any condition
which requires any action by or on behalf of Borrower in order to avoid any
material non-compliance, with any Environmental Law, Borrower shall, at Lender's
request and Borrower's expense: (i) cause an independent environmental engineer
acceptable to Lender to conduct such tests of the site where Borrower's
non-compliance or alleged non-compliance with such Environmental Laws has
occurred as to such non-compliance and prepare and deliver to Lender a report as
to such non-compliance setting forth the results of such tests, a proposed plan
for responding to any environmental problems described therein, and an estimate
of the costs thereof and (ii) provide to Lender a supplemental report of such
engineer whenever the scope of such non-compliance, or Borrower's response
thereto or the estimated costs thereof, shall change in any material respect.
(e) Borrower shall indemnify and hold harmless Lender, its
directors, officers, employees, agents, invitees, representatives, successors
and assigns, from and against any and all losses, claims, damages, liabilities,
costs, and expenses (including attorneys' fees and legal expenses) directly or
indirectly arising out of or attributable to the use, generation, manufacture,
reproduction, storage, release, threatened release, spill, discharge, disposal
or presence of a Hazardous Material, including, without limitation, the costs
of any required or necessary repair, cleanup or other remedial work with
respect to any property of Borrower and the preparation and
23
implementation of any closure, remedial or other required plans. All
representations, warranties, covenants and indemnifications in this Section 9.3
shall survive the payment of the Obligations and the termination or non-renewal
of this Agreement.
9.4 PAYMENT OF TAXES AND CLAIMS. Borrower shall duly pay and
discharge ail taxes, assessments, contributions and governmental charges upon or
against it or its properties or assets, except for taxes the validity of which
are being contested in good faith by appropriate proceedings diligently pursued
and available to Borrower and with respect to which adequate reserves have been
set aside on its books. Borrower shall be liable for any tax or penalties
imposed on Lender as a result of the financing arrangements provided for herein
and Borrower agrees to indemnify and hold Lender harmless with respect to the
foregoing, and to repay to Lender on demand the amount thereof, and until paid
by Borrower such amount shall be added and deemed part of the Loans, PROVIDED,
THAT, nothing contained herein shall be construed to require Borrower to pay any
income or franchise taxes attributable to the income of Lender from any amounts
charged or paid hereunder to Lender. The foregoing indemnity shall survive the
payment of the Obligations and the termination or non-renewal of this Agreement.
9.5 INSURANCE. Borrower shall, at all times, maintain with
financially sound and reputable insurers insurance with respect to the
Collateral against loss or damage and all other insurance of the kinds and in
the amounts customarily insured against or carried by corporations of
established reputation engaged in the same or similar businesses and similarly
situated. Said policies of insurance shall be reasonably satisfactory to Lender
as to form, amount and insurer. Borrower shall furnish certificates, policies
or endorsements to Lender as Lender shall require as proof of such insurance,
and, if Borrower fails to do so within 5 days after the notice thereof, Lender
is authorized, but not required, to obtain such insurance at the expense of
Borrower. All policies shall provide for at least thirty (30) days prior
written notice to Lender of any cancellation or reduction of coverage and that
Lender may act as attorney for Borrower in obtaining, and at any time an Event
of Default exists or has occurred and is continuing, adjusting, settling,
amending and canceling such insurance. Borrower shall cause Lender to be named
as a loss payee and an additional insured (but without any liability for any
premiums) under such insurance policies and Borrower shall obtain
non-contributory lender's loss payable endorsements to all insurance policies in
form and substance reasonably satisfactory to Lender. Such lender's loss
payable endorsements shall specify that the proceeds of such insurance shall be
payable to Lender as its interests may appear and further specify that Lender
shall be paid regardless of any act or omission by Borrower or any of its
affiliates. At its option, Lender may apply any insurance proceeds received by
Lender at any time to the cost of repairs or replacement of Collateral and/or to
payment of the Obligations, whether or not then due, in any order and in such
manner as Lender may determine or hold such proceeds as cash collateral for the
Obligations.
9.6 FINANCIAL STATEMENTS AND OTHER INFORMATION.
(a) Borrower and its General Partner shall keep proper books and
records in which true and complete entries shall be made of all dealings or
transactions of or in relation to the Collateral and the business of Borrower
and its General Partner in accordance with GAAP and Borrower and its General
Partner shall furnish or cause to be furnished to Lender: (i) within thirty (30)
days after the end of each fiscal month, monthly unaudited consolidated
financial statements (including in each case balance sheets, statements of
income and loss and statements of shareholders' equity), all in reasonable
detail, fairly presenting the financial position and the results of the
operations of Borrower and its General Partner as of the end of and through such
fiscal
24
month and (ii) within ninety (90) days after the end of each fiscal year,
audited consolidated financial statements of Borrower and its General Partner
(including in each case balance sheets, statements of income and loss,
statements of cash flow and statements of shareholders' equity), and the
accompanying notes thereto, all in reasonable detail, fairly presenting the
financial position and the results of the operations of Borrower and its General
Partner as of the end of and for such fiscal year, together with the letter of
independent certified public accountants, which accountants shall be an
independent accounting firm selected by Borrower or its General Partner and
reasonably acceptable to Lender and in form and substance reasonably
satisfactory to Lender.
(b) Borrower shall promptly notify Lender in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to the Collateral or any other property which is security for the
Obligations or which would result in any material adverse change in Borrower's
business, properties, assets, goodwill or condition, financial or otherwise and
(ii) the occurrence of any Event of Default or event which, with the passage of
time or giving of notice or both, would constitute an Event of Default.
(c) Borrower shall promptly after the sending or filing thereof
furnish or cause to be furnished to Lender copies of all reports which its
General Partner sends to its stockholders generally and copies of all reports
and registration statements which its General Partner files with the Securities
and Exchange Commission, any national securities exchange or the National
Association of Securities Dealers, Inc.
(d) Borrower shall furnish or cause to be furnished to Lender
such budgets, forecasts, projections and other information respecting the
Collateral and the business of Borrower and its General Partner, as Lender may,
from time to time, reasonably request. Lender is hereby authorized to deliver a
copy of any financial statement or any other information relating to the
business of Borrower and its General Partner (i) if required by applicable law
to any court or other government agency or (ii) in any event to any participant
or assignee or prospective participant or assignee. Borrower and its General
Partner hereby irrevocably authorizes and directs all accountants or auditors to
deliver to Lender, at Borrower's expense, copies of the financial statements of
Borrower and its General Partner and any reports or management letters prepared
by such accountants or auditors on behalf of Borrower and its General Partner
and to disclose to Lender such information as they may have regarding the
business of Borrower and its General Partner. Any documents, schedules,
invoices or other papers delivered to Lender may be destroyed or otherwise
disposed of by Lender one (1) year after the same are delivered to Lender,
except as otherwise designated by Borrower to Lender in writing.
9.7 SALE OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ETC. Borrower
shall not, directly or indirectly, (a) merge into or with or consolidate with
any other Person or permit any other Person to merge into or with or consolidate
with it, or (b) sell, assign, lease, transfer, abandon or otherwise dispose of
any stock or indebtedness to any other Person or any of its assets to any other
Person (except for (i) sales of Inventory in the ordinary course of business so
long as any proceeds of such Inventory sales are remitted to a Blocked Account
or otherwise paid to Lender and (ii) the disposition of worn-out or obsolete
Equipment or Equipment no longer used in the business of Borrower so long as (A)
if an Event of Default exists or has occurred and is continuing, any proceeds
are paid to Lender and (B) such sales do not involve Equipment having an
aggregate fair market value in excess of $250,000 for all such Equipment
disposed of in any fiscal year of Borrower), or (c) form or acquire any
subsidiaries, or (d) wind up, liquidate or dissolve or (e) agree or take any
action to do any of the foregoing.
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9.8 ENCUMBRANCES. Borrower shall not create, incur, assume or suffer
to exist any security interest, mortgage, pledge, lien, charge or other
encumbrance of any nature whatsoever on any of its assets or properties,
including, without limitation. the Collateral, EXCEPT: (a) liens and security
interests of Lender and Nord Resources; (b) liens securing the payment of taxes,
either not yet overdue or the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to Borrower
and with respect to which adequate reserves have been set aside on its books;
(c) non-consensual statutory liens (other than liens securing the payment of
taxes) arising in the ordinary course of Borrower's business to the extent: (i)
such liens secure indebtedness which is not overdue or (ii) such liens secure
indebtedness relating to claims or liabilities which are fully insured and being
defended at the sole cost and expense and at the sole risk of the insurer or
being contested in good faith by appropriate proceedings diligently pursued and
available to Borrower, in each case prior to the commencement of foreclosure or
other similar proceedings and with respect to which adequate reserves have been
set aside on its books; (d) zoning restrictions, easements, licenses, covenants
and other restrictions affecting the use of real property which do not interfere
in any material respect with the use of such real property or ordinary conduct
of the business of Borrower as presently conducted thereon or materially impair
the value of the real property which may be subject thereto; (e) purchase money
security interests in Equipment (including capital leases) and purchase money
mortgages on Real Estate not to exceed $1,000,000 in the aggregate at any time
outstanding so long as such security interests and mortgages do not apply to any
property of Borrower other than the Equipment or Real Estate so acquired, and
the indebtedness secured thereby does not exceed the cost of the Equipment or
real estate so acquired, as the case may be; and (f) the security interests and
liens set forth on SCHEDULE 8.4 hereto.
9.9 INDEBTEDNESS. Borrower shall not incur, create, assume, become
or be liable in any manner with respect to, or permit to exist, any obligations
or indebtedness EXCEPT (a) the Obligations; (b) trade obligations and normal
accruals in the ordinary course of business not yet due and payable, or with
respect to which the Borrower is contesting in good faith the amount or validity
thereof by appropriate proceedings diligently pursued and available to Borrower,
and with respect to which adequate reserves have been set aside on its books;
(c) purchase money indebtedness (including capital leases) to the extent not
incurred or secured by liens (including capital leases) in violation of any
other provision of this Agreement; (d) obligations or indebtedness set forth on
the Information Certificate; (e) to Nord Resources and (f) other indebtedness
not described in subparts (a) through (e) above in an amount not exceeding at
any time $200,000 in the aggregate; PROVIDED, THAT, (i) Borrower may only make
regularly scheduled payments of principal and interest in respect of such
indebtedness in accordance with the terms of the agreement or instrument
evidencing or giving rise to such indebtedness as in effect on the date hereof
except in the case of payments or distributions described in Sections 9.11, 9.16
and/or 9.17 which shall only be payable when and as permitted by such Sections,
(ii) Borrower shall not, directly or indirectly, (A) amend, modify, alter or
change the terms of such indebtedness or any agreement, document or instrument
related thereto as in effect on the date hereof, or (B) redeem, retire, defease,
purchase or otherwise acquire such indebtedness, or set aside or otherwise
deposit or invest any sums for such purpose, and (iii) Borrower shall furnish to
Lender all default notices or other notices of a material nature or any written
demands in connection with such indebtedness either received by Borrower or on
its behalf, promptly after the receipt thereof, or sent by Borrower or on its
behalf, concurrently with the sending thereof, as the case may be.
9.10 LOANS, INVESTMENTS, GUARANTEES, ETC. Borrower shall not,
directly or indirectly, make any loans or advance money or property to any
person, or invest in (by capital contribution,
26
dividend or otherwise) or purchase or repurchase the stock or indebtedness or
all or a substantial part of the assets or property of any person, or guarantee,
assume, endorse, or otherwise become responsible for (directly or indirectly)
the indebtedness, performance, obligations or dividends of any Person or agree
to do any of the foregoing, EXCEPT: (a) the endorsement of instruments for
collection or deposit in the ordinary course of business; (b) investments in:
(i) short-term direct obligations of the United States Government, (ii)
negotiable certificates of deposit issued by any bank satisfactory to Lender,
payable to the order of the Borrower or to bearer and delivered to Lender, and
(iii) commercial paper rated A1 or P1; PROVIDED, THAT, as to any of the
foregoing, unless waived in writing by Lender, Borrower shall take such actions
as are deemed necessary by Lender to perfect the security interest of Lender in
such investments and (c) the guarantees set forth in the Information
Certificate.
9.11 DISTRIBUTIONS. Borrower shall not, directly or indirectly,
declare or make any distributions or other payments to its General Partner or
its limited partner, except for Permitted Support Services Payments and
Permitted Tax Distributions. Prior to the occurrence of any Permitted Tax
Distribution, Borrower shall provide and/or cause to be delivered to Lender
audited financial statements for the immediately preceding fiscal year and a
written analysis of all state and federal income tax obligations (or benefits)
for such fiscal year which Borrower would have incurred if Borrower was taxed at
the applicable state income tax rate(s) and the highest marginal tax rate under
federal tax law for C corporations with similar net taxable income together with
such additional information as Lender may request pertaining to such tax
obligations (or benefits). Lender will not unreasonably withhold or delay its
written consent to any proposed Permitted Tax Distribution provided that Lender
is satisfied that the amount of such Permitted Tax Distribution has been
properly ascertained.
9.12 TRANSACTIONS WITH AFFILIATES. Except for Permitted Support
Services Payments and Permitted Tax Distributions and as otherwise set forth on
SCHEDULE 9.12, Borrower shall not enter into any transaction for the purchase,
sale or exchange of property or the rendering of any service to or by any
affiliate, except in the ordinary course of and pursuant to the reasonable
requirements of Borrower's business and upon fair and reasonable terms no less
favorable to the Borrower than Borrower would obtain in a comparable arm's
length transaction with an unaffiliated person.
9.13 COMPLIANCE WITH ERISA. Borrower shall not with respect to any
"employee pension benefit plans" maintained by Borrower or any of its ERISA
Affiliates:
(a) (i) terminate any of such employee pension benefit plans so
as to incur any liability to the Pension Benefit Guaranty Corporation
established pursuant to ERISA, (ii) allow or suffer to exist any prohibited
transaction involving any of such employee pension benefit plans or any trust
created thereunder which would subject Borrower or such ERISA Affiliate to a tax
or penalty or other liability on prohibited transactions imposed under Section
4975 of the Code or ERISA, (iii) fail to pay to any such employee pension
benefit plan any contribution which it is obligated to pay under Section 302 of
ERISA, Section 412 of the Code or the terms of such plan, (iv) allow or suffer
to exist any accumulated funding deficiency, whether or not waived, with respect
to any such employee pension benefit plan, (v) allow or suffer to exist any
occurrence of a reportable event or any other event or condition which presents
a material risk of termination by the Pension Benefit Guaranty Corporation of
any such employee pension benefit plan that is a single employer plan, which
termination could result in any liability to the Pension Benefit Guaranty
Corporation or (vi) incur any withdrawal liability with respect to any
multiemployer pension plan.
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(b) As used in this Section 9.13, the term "employee pension
benefit plans", "employee benefit plans", "accumulated funding deficiency" and
"reportable event" shall have the respective meanings assigned to them in ERISA,
and the term "prohibited transaction" shall have the meaning assigned to it in
Section 4975 of the Code and ERISA.
9.14 COSTS AND EXPENSES. Borrower shall pay to Lender on demand all
reasonable costs, expenses, filing fees and taxes paid or payable in connection
with the preparation, negotiation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense of the
Obligations, Lender's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including, but not limited to: (a) all reasonable costs and expenses of
filing or recording (including UCC financing statement filing taxes and fees,
documentary taxes, intangibles taxes and mortgage recording taxes and fees, if
applicable); (b) reasonable costs and expenses and fees for insurance premiums,
environmental audits, surveys, assessments, engineering reports and inspections,
appraisal fees and search fees; (c) reasonable costs and expenses of remitting
loan proceeds, collecting checks and other items of payment, and establishing
and maintaining the Blocked Accounts, together with Lender's customary charges
and fees with respect thereto; (d) reasonable costs and expenses of preserving
and protecting the Collateral; (e) reasonable costs and expenses paid or
incurred in connection with obtaining payment of the Obligations, enforcing the
security interests and liens of Lender, selling or otherwise realizing upon the
Collateral, and otherwise enforcing the provisions of this Agreement and the
other Financing Agreements or defending any claims made or threatened against
Lender arising out of the transactions contemplated hereby and thereby
(including, without limitation, preparations for and consultations concerning
any such matters); and (f) the fees and disbursements of counsel (including
legal assistants) to Lender in connection with any of the foregoing.
9.15 FURTHER ASSURANCES. At the request of Lender at any time and
from time to time, Borrower shall, at its expense, duly execute and deliver, or
cause to be duly executed and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts as may be necessary or
proper to evidence, perfect, maintain and enforce the security interests and the
priority thereof in the Collateral and to otherwise effectuate the provisions or
purposes of this Agreement or any of the other Financing Agreements. Lender may
at any time and from time to time request a certificate from an officer of
Borrower representing that all conditions precedent to the making of Loans
contained herein are satisfied. In the event of such request by Lender, Lender
may, at its option, cease to make any further Loans until Lender has received
such certificate and, in addition, Lender has determined in good faith that such
conditions are satisfied. Where permitted by law, Borrower hereby authorizes
Lender to execute and file one or more UCC financing statements signed only by
Lender.
9.16 PAYMENTS TO KEMIRA PIGMENTS, INC. Notwithstanding payments
pursuant to, or distributions to its General Partner for payments pursuant to,
the terms set forth in SECTION 9.11 hereof, any payments to Kemira Pigments,
Inc. or any affiliate thereof for raw materials purchased in the ordinary course
of business shall not be made until at least forty-five (45) days after the date
of the original invoice evidencing the request for any such purchase.
9.17 PERMITTED PAYMENTS TO NORD RESOURCES. Borrower shall not make
any payments or other distributions to or for the benefit of Nord Resources
except for Permitted Support Services Payments, Permitted NRC Debt Payments and
Permitted Tax Distributions.
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9.18 SECURITY INTERESTS OF KEMIRA PIGMENTS, INC.. Borrower shall
deliver to Lender no later than 30 days after the date hereof (i) evidence of
the termination of all security interests of Kemira Pigments, Inc. in any and
all assets of Borrower, including copies of duly executed and filestamped
termination statements relating to all UCC financing statements filed by Kemira
Pigments, Inc. against Borrower and (ii) copies of duly executed and
file-stamped UCC financing statements and fixture filings filed by Nord
Resources Corporation to evidence, perfect and maintain its security interests
against Borrower in the offices of the (A) County Clerk of Xxxxxx County, (B)
Xxxxxx County Recorder, (C) Washington County Recorder and (D) Xxxxxxxxx County
Recorder.
9.19 INSURANCE POLICIES. Borrower shall, no later than 14 days after
the date hereof, (i) deliver to Lender copies of all casualty, business
interruption and liability insurance policies under which Borrower or Norplex,
Inc. is a named insured, (ii) make its best effort to provide Lender a lender's
loss payable endorsement on terms and conditions reasonably satisfactory to
Lender and duly executed by the insurer and (iii) deliver to Lender a
certificate of insurance naming Lender as an additional insured with respect to
all liability policies under which Borrower or Norplex, Inc. is a named insured.
9.20 CONSIGNED INVENTORY. Borrower covenants and agrees that, within
30 days from the date hereof, it shall (i) take any and all actions necessary to
protect, preserve and perfect any and all of Borrower's rights as a consignor of
any Inventory sold on consignment including, without limitation, causing all
necessary UCC financing statements to be filed in all appropriate jurisdictions
naming the applicable customer as consignee, Borrower as consignor and Lender as
assignee, (ii) filing all necessary UCC financing statements in all such
jurisdictions naming Borrower as debtor and Lender as secured party, (iii)
conduct UCC lien searches against any proposed consignee in each jurisdiction in
which consigned goods are to be situated and follow all procedures under Section
9-114 of the Uniform Commercial Code to create, preserve and protect the
perfection and senior priority of Borrower's and Lender's rights in any such
goods to be consigned PRIOR TO delivery of such goods to the applicable
consignee and (iv) provide Congress with copies of all underlying consignment
agreements as well as evidence of compliance with the requirements of clauses
(i), (ii) and (iii) above. With respect to any future sales of Inventory of
Borrower on consignment, Borrower shall be required to obtain written consent of
Lender and comply with all requirements of this Section 9.20 BEFORE permitting
any Inventory to be delivered to any such proposed consignee.
9.21 RESOLUTIONS AND CONSENTS OF NORPLEX, INC. Borrower shall cause
Norplex, Inc. to deliver to Lender no later than 21 days after the date hereof
such consents and resolutions by the board of directors of Norplex, Inc. as
Lender may deem necessary to ratify, confirm and approve all of the Financing
Agreements executed by Norplex, Inc., including, without limitation, the
Guarantee and Guarantor General Security Agreement dated contemporaneously
herewith and any UCC financing statements.
9.22 ACCOUNTANT'S RELIANCE LETTER. Borrower shall make its best
effort to obtain, within 30 days from the date hereof, an accountant's reliance
letter from Deloitte & Touche L.L.P. on behalf of Borrower and Norplex, Inc. on
terms and conditions reasonably satisfactory to Lender.
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SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 EVENTS OF DEFAULT. The occurrence or existence of any one or
more of the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) Borrower fails to pay when due any of the Obligations or
fails to perform any of the terms, covenants, conditions or provisions contained
in any or all of Sections 9.1, 9.2, 9.5, 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.13,
9.14, 9.16, 9.17, 9.18, 9.19, 9.20, 9.21 or 9.22 hereof;
(b) Borrower fails to perform any or all of the terms,
covenants, conditions or provisions contained in any or all of Sections 9.3,
9.4, 9.6, or 9.15 and/or any other Financing Agreement (other than those of the
type described in any or all of Section 10.1(a) hereof) and such failure shall
continue unremedied for five (5) or more days after the earlier to occur of (i)
Borrower's knowledge of such failure or (ii) Borrower's receipt of written
notice from Lender of such failure;
(c) any representation, warranty or statement of fact made by
Borrower to Lender in this Agreement, the other Financing Agreements or any
other agreement, schedule, confirmatory assignment or otherwise shall when made
or deemed made be false or misleading in any material respect,
(d) any Obligor revokes, terminates or fails to perform any of
the terms, covenants, conditions or provisions of any guarantee, endorsement or
other agreement of such party in favor of Lender and in the event of any such
failure to perform, any applicable notice or grace period has expired;
(e) any judgment for the payment of money is rendered against
Borrower or any Obligor in excess of $100,000 in any one case or in excess of
$250,000 in the aggregate (after deducting therefrom all amounts for which, in
the reasonable opinion of Lender, applicable insurance coverage is then
payable), and shall remain undischarged, unbonded or unvacated for a period in
excess of thirty (30) days or execution shall at any time not be effectively
stayed, or any judgment other than for the payment of money, or injunction,
attachment, garnishment or execution is rendered against Borrower or any
Obligator or any of their assets, which could reasonably have a materially
adverse effect on Borrower or its operations, business or assets;
(f) any Obligor (being a natural person or a general partner of
an Obligor which is a partnership) dies or Borrower or any Obligor, which is a
partnership or corporation, dissolves or suspends or discontinues doing
business;
(g) Borrower or any Obligor becomes insolvent (however defined
or evidenced), makes an assignment for the benefit of creditors, makes or sends
notice of a bulk transfer or calls a meeting of its creditors or principal
creditors;
(h) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed against Borrower or any Obligor or all or any part of its
properties and such petition or application is not dismissed within thirty (30)
days after the date of
30
its filing or Borrower or any Obligor shall file any answer admitting or not
contesting such petition or application or indicates its consent to,
acquiescence in or approval of, any such action or proceeding or the relief
requested is granted sooner;
(i) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by Borrower or any Obligor or for all or any part of its
property; or
(j) except for those matters set forth on SCHEDULE 8.4, any
default by Borrower or any Obligor under any agreement, document or instrument
relating to any indebtedness for borrowed money owing to any person other than
Lender, or any capitalized lease obligations, contingent indebtedness in
connection with any guarantee, letter of credit, indemnity or similar type of
instrument in favor of any person other than Lender, in any case in an amount
in excess of $100,000, which default continues for more than the applicable cure
period, if any, with respect thereto, or any default by Borrower or any Obligor
under any material contract, lease, license or other obligation to any person
other than Lender, which default continues for more than the applicable cure
period, if any, with respect thereto;
(k) any change (x) in the partnership of Borrower including, but
not limited to, dissolution, changes in partnership interests, or any
modification or amendment of the Partnership Agreement or (y) in the controlling
ownership of Norplex Inc.;
(l) the indictment or threatened indictment of Borrower or any
Obligor under any criminal statute, or commencement or threatened commencement
of criminal or civil proceedings against Borrower or any Obligor, pursuant to
which statute or proceedings the penalties or remedies sought or available
include forfeiture of any Collateral or any substantial part of the property of
Borrower or such Obligor;
(m) there shall be a material adverse change in the business,
assets or prospects of Borrower or any Obligor after the date hereof; or
(n) there shall be a breach or default under any of the other
Financing Agreements and any applicable notice or grace period has expired.
10.2 REMEDIES.
(a) At any time an Event of Default exists or has occurred and
is continuing, Lender shall have all rights and remedies provided in this
Agreement, the other Financing Agreements, the Uniform Commercial Code and other
applicable law, all of which rights and remedies may be exercised without notice
to or consent by Borrower or any Obligor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Lender hereunder, under any of the other
Financing Agreements, the Uniform Commercial Code or other applicable law, are
cumulative, not exclusive and enforceable, in Lender's discretion,
alternatively, successively, or concurrently on any one or more occasions, and
shall include, without limitation, the right to apply to a court of equity for
an injunction to restrain a breach or threatened breach by Borrower of this
Agreement or any of the
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other Financing Agreements. Lender may, at any time or times, proceed directly
against Borrower or any Obligor to collect the Obligations without prior
recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of
Default exists or has occurred and is continuing, Lender may, in its discretion
and without limitation, (i) accelerate the payment of all Obligations and demand
immediate payment thereof to Lender (PROVIDED, THAT, upon the occurrence of any
Event of Default described in Sections 10.1(h) and 10.1(i), all Obligations
shall automatically become immediately due and payable), (ii) with or without
judicial process or the aid or assistance of others, enter upon any premises on
or in which any of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (iii) require Borrower, at Borrower's expense, to
assemble and make available to Lender any part or all of the Collateral at any
place and time designated by Lender, (iv) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral, (v) remove any or
all of the Collateral from any premises on or in which the same may be located
for the purpose of effecting the sale, foreclosure or other disposition thereof
or for any other purpose, (vi) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including, without limitation,
entering into contracts with respect thereto, public or private sales at any
exchange, broker's board, at any office of Lender or elsewhere) at such prices
or terms as Lender may deem reasonable, for cash, upon credit or for future
delivery, with the Lender having the right to purchase the whole or any part of
the Collateral at any such public sale, all of the foregoing being free from any
right or equity of redemption of Borrower, which right or equity of redemption
is hereby expressly waived and released by Borrower and/or (vii) terminate this
Agreement. If any of the Collateral is sold or leased by Lender upon credit
terms or for future delivery, the Obligations shall not be reduced as a result
thereof until payment therefor is finally collected by Lender. If notice of
disposition of Collateral is required by law, five (5) days prior notice by
Lender to Borrower designating the time and place of any public sale or the time
after which any private sale or other intended disposition of Collateral is to
be made, shall be deemed to be reasonable notice thereof and Borrower waives any
other notice. In the event Lender institutes an action to recover any
Collateral or seeks recovery of any Collateral by way of prejudgment remedy,
Borrower waives the posting of any bond which might otherwise be required.
(c) Lender may apply the cash proceeds of Collateral actually
received by Lender from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such order
as Lender may elect, whether or not then due. Borrower shall remain liable to
Lender for the payment of any deficiency with interest at the highest rate
provided for herein and all reasonable costs and expenses of collection or
enforcement, including attorneys' fees and legal expenses.
(d) Without limiting the foregoing, upon the occurrence of an
Event of Default or an event which with notice or passage of time or both would
constitute an Event of Default, Lender may, at its option, without notice, (i)
cease making Loans or reduce the lending formulas or amounts of Revolving Loans
available to Borrower and/or upon an Event of Default, (ii) terminate any
provision of this Agreement providing for any future Loans to be made by Lender
to Borrower.
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SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY TRIAL
WAIVER.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of Illinois
(without giving effect to principles of conflicts of law).
(b) Borrower and Lender irrevocably consent and submit to the
non-exclusive jurisdiction of the State of Illinois located in Chicago, Illinois
and the United States District Court for the Northern District of Illinois and
waive any objection based on venue or FORUM NON CONVENIENS with respect to any
action instituted therein arising under this Agreement or any of the other
Financing Agreements or in any way connected with or related or incidental to
the dealings of the parties hereto in respect of this Agreement or any of the
other Financing Agreements or the transactions related hereto or thereto, in
each case whether now existing or hereafter arising, and whether in contract,
tort, equity or otherwise, and agree that any dispute with respect to any such
matters shall be heard only in the courts described above (except that Lender
shall have the right to bring any action or proceeding against Borrower or its
property in the courts of any other jurisdiction which Lender deems necessary or
appropriate in order to realize on the Collateral or to otherwise enforce its
rights against Borrower or its property).
(c) Borrower hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth on
the signature pages hereof with a copy, if notice is to Borrower, to:
Xxxxxxx & Xxxxxxx, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: X. Xxxxxxxx
Fax: (000) 000-0000
and service so made shall be deemed to be completed five (5) days after the same
shall have been so deposited in the U.S. mails, or, at Lender's option, by
service upon Borrower in any other manner provided under the rules of any such
courts. Within thirty (30) days after such service, Borrower shall appear in
answer to such process, failing which Borrower shall be deemed in default and
judgment may be entered by Lender against Borrower for the amount of the claim
and other relief requested.
(d) BORROWER AND LENDER EACH HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT
OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER AND
LENDER EACH HEREBY
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AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT BORROWER OR LENDER MAY FILE AN
ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
(e) Lender shall not have any liability to Borrower (whether in
tort, contract, equity or otherwise) for losses suffered by Borrower in
connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Agreement, or any act, omission or event
occurring in connection herewith, unless it is determined by a final and
nonappealable judgment or court order binding on Lender, that the losses were
the result of acts or omissions constituting gross negligence or willful
misconduct. In any such litigation, Lender shall be entitled to the benefit of
the rebuttable presumption that it acted in good faith and with the exercise of
ordinary care in the performance by it of the terms of this Agreement.
11.2 WAIVER OF NOTICES. Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations or the Collateral, and any and all other demands and notices
of any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or demand on Borrower which Lender may elect to give shall entitle Borrower
to any other or further notice or demand in the same, similar or other
circumstances.
11.3 AMENDMENTS AND WAIVERS. Neither this Agreement nor any provision
hereof shall be amended, modified or discharged orally or by course of conduct,
but only by a written agreement signed by an authorized officer of Lender and
Borrower. Lender shall not, by any act, delay, omission or otherwise be deemed
to have expressly or impliedly waived any of its rights, powers and/or remedies
unless such waiver shall be in writing and signed by an authorized officer of
Lender. Any such waiver shall be enforceable only to the extent specifically
set forth therein. A waiver by Lender of any right, power and/or remedy on any
one occasion shall not be construed as a bar to or waiver of any such right,
power and/or remedy which Lender would otherwise have on any future occasion,
whether similar in kind or otherwise.
11.4 WAIVER OF COUNTERCLAIMS. Borrower waives all rights to interpose
any claims, deductions, setoffs or counterclaims of any nature (other then
compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
11.5 INDEMNIFICATION. Borrower shall indemnify and hold Lender, and
its directors, agents, employees and counsel, harmless from and against any and
all losses, claims, damages, liabilities, reasonable costs or expenses imposed
on, incurred by or asserted against any of them in connection with any
litigation, investigation, claim or proceeding commenced or threatened related
to the negotiation, preparation, execution, delivery, enforcement, performance
or administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto,
including, without limitation, amounts paid in settlement, court costs, and the
reasonable fees and expenses of counsel, except to the extent they arise from
the gross negligence or willful misconduct of any of such indemnities. To the
extent that the undertaking to indemnify, pay and hold harmless set forth in
this Section may be unenforceable because it violates any law or public
34
policy, Borrower shall pay the maximum portion which it is permitted to pay
under applicable law to Lender in satisfaction of indemnified matters under this
Section. The foregoing indemnity shall survive the payment of the Obligations
and the termination or non-renewal of this Agreement.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
12.1 TERM.
(a) This Agreement and the other Financing Agreements shall
become effective as of the date set forth on the first page hereof and shall
continue in full force and effect for a term ending on the date three (3) years
from the date hereof (the "Renewal Date"), unless sooner terminated pursuant to
the terms hereof; provided, that, Lender and Borrower may agree, in writing, to
extend the Renewal Date to the date four (4) years from the date hereof at least
sixty (60) days prior to the third anniversary of this Agreement, for a renewal
fee payable by Borrower to Lender on the effective date of such extension equal
to the greater of (i) $15,000 or (ii) one-quarter of one percent (.25%) of the
Maximum Credit. Upon the effective date of termination or non-renewal of the
Financing Agreements, Borrower shall pay to Lender, in full, all outstanding
and unpaid Obligations and shall furnish cash collateral to Lender in such
amounts as Lender determines are reasonably necessary to secure Lender from
loss, cost, damage or expense, including attorneys' fees and legal expenses, in
connection with any contingent Obligations, and checks or other payments
provisionally credited to the Obligations and/or as to which Lender has not yet
received final and indefeasible payment. Such cash collateral shall be remitted
by wire transfer in Federal funds to such bank account of Lender, as Lender may,
in its discretion, designate in writing to Borrower for such purpose. Interest
shall be due until and including the next business day, if the amounts so paid
by Borrower to the bank account designated by Lender are received in such bank
account later than 12:00 noon, Chicago time.
(b) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge Borrower of its respective duties,
obligations and covenants under this Agreement or the other Financing
Agreements until all Obligations have been fully and finally discharged and
paid, and Lender's continuing security interest in the Collateral and the rights
and remedies of Lender hereunder, under the other Financing Agreements and
applicable law, shall remain in effect until all such Obligations have been
fully and finally discharged and paid.
(c) If for any reason this Agreement is terminated prior to the
end of the then current term or renewal term of this Agreement, in view of the
impracticality and extreme difficulty of ascertaining actual damages and by
mutual agreement of the parties as to a reasonable calculation of Lender's lost
profits as a result thereof, Borrower agrees to pay to Lender, upon the
effective date of such termination, an early termination fee in the amount set
forth below if such termination is effective in the period indicated:
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Amount Period
------ ------
(i) 2.O% of Maximum Credit Prior to and including the date one
year from the date set forth on the
first page hereof.
(ii) 1.5% of Maximum Credit From the date one year from the
date set forth on the first page
hereof to and including the date
two years from the date set forth
on the first page hereof.
(iii) 1.0% of Maximum Credit From the date two years from the
date hereof until the date 60 days
prior to the date three years from
the date set forth on the first
page hereof, or from year to year
thereafter prior to 60 days prior
to the anniversary of a Renewal
Date.
Such early termination fee shall be presumed to be the amount of damages
sustained by Lender as a result of such early termination and Borrower agrees
that it is reasonable under the circumstances currently existing. The early
termination fee provided for in this Section 12.1 shall be deemed included in
the Obligations.
12.2 NOTICES. All notices, requests and demands hereunder shall be in
writing and (a) made to Lender at its address set forth below and to Borrower at
its chief executive office set forth below, with a copy to:
Xxxxxxx & Xxxxxxx, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: X. Xxxxxxxx
Fax: (000) 000-0000
or to such other address as either party may designate by written notice to the
other in accordance with this provision, and (b) deemed to have been given or
made: if delivered in person, immediately upon delivery; if by telex, telegram
or facsimile transmission, immediately upon sending and upon confirmation of
receipt; if by nationally recognized overnight courier service with instructions
to deliver the next business day, one (1) business day after sending; and if by
certified mail, return receipt requested, five (5) days after mailing.
12.3 PARTIAL INVALIDITY. If any provision of this Agreement is held
to be invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
36
12.4 SUCCESSORS. This Agreement, the other Financing Agreements and
any other document referred to herein or therein shall be binding upon and inure
to the benefit of and be enforceable by Lender, Borrower and their respective
successors and assigns, except that Borrower may not assign its rights under
this Agreement, the other Financing Agreements and any other document referred
to herein or therein without the prior written consent of Lender. Lender may,
after notice to Borrower, assign its rights and delegate its obligations under
this Agreement and the other Financing Agreements and further may assign, or
sell participations in, all or any part of the Loans or any other interest
herein to another financial institution or other person, in which event, the
assignee or participant shall have, to the extent of such assignment or
participation, the same rights and benefits as it would have if it were the
Lender hereunder, except as otherwise provided by the terms of such assignment
or participation. In the event of a partial assignment or sale of a
participation, only one party included within the Lender group will have
authority to act, send notices and receive notices on behalf of such group.
12.5 ENTIRE AGREEMENT. This Agreement, the other Financing
Agreements, any supplements hereto or thereto, and any instruments or documents
delivered or to be delivered in connection herewith or therewith represents the
entire agreement and understanding concerning the subject matter hereof and
thereof between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written.
[signature page follows]
37
IN WITNESS WHEREOF. Lender and Borrower have caused these presents to be
duly executed as of the day and year first above written.
LENDER BORROWER
CONGRESS FINANCIAL CORPORATION NORD KAOLIN COMPANY, a Georgia
(CENTRAL) limited partnership
By: /s/ [ILLEGIBLE] By: NORPLEX, INC., a Georgia
-------------------------------- corporation. as the sole
General Partner
Title: Vice President
-----------------------------
ADDRESS By: /s/ [ILLEGIBLE]
---------------------------
000 X. Xxxxxx Xxxxx
Xxxxx 0000 Title: Assistant Secretary
Xxxxxxx, Xxxxxxxx 00000 ------------------------
CHIEF EXECUTIVE OFFICE:
X.X. Xxx 000
X.X. Xxxxxxx 00
Xxxxxxxxxxxxxx, XX 00000
S-1
