Exhibit 4-B
Revolving and Term Loan Credit Agreement
THIS AGREEMENT (the "Agreement"), dated as of June 18, 2001, between FARREL
CORPORATION, a Delaware corporation, and FARREL LIMITED, a corporation organized
under the laws of England and Wales (individually and collectively, as the
context may require, "Borrower"), and FIRST UNION NATIONAL BANK, a national
banking association ("Bank");
W I T N E S S E T H:
In consideration of the premises and of the mutual covenants herein contained
and to induce Bank to extend credit to Borrower, the parties agree as follows:
1. Definitions. Capitalized terms that are not otherwise defined herein shall
have the meanings set forth in Exhibit 1 hereto.
2. The Revolving Loan and the Term Loan.
2.1. Revolving Loan Credit Facility.
(a) Revolving Credit Advances. Bank agrees, on the terms and conditions
set forth in this Agreement, to make Advances under the Revolving Note (the
"Revolving Loan") in an aggregate amount not to exceed the Maximum Loan Amount
of the Revolving Loan, subject to the following monetary limits:
(i) Advances to Farrel Limited shall not exceed, at any one time
outstanding, the Farrel Limited Borrowing Base; and
(ii) Advances to Farrel Corporation shall not exceed, at any one
time outstanding, the Farrel Corporation Borrowing Base.
(b) Direct Advance Sublimit. Notwithstanding the foregoing, the
aggregate amount of Advances of cash proceeds made by Bank shall not exceed:
(i) with respect to Farrel Limited, the Farrel Limited Direct
Advance Sub-Limit; and
(ii) with respect to Farrel Corporation, the Farrel Corporation
Direct Advance Sub-Limit.
Within the foregoing limit, Borrower may borrow, prepay and reborrow Advances
under the Revolving Note at any time during the Revolving Credit Period.
2.2. Revolving Note. The Revolving Loan shall be evidenced by a promissory note
in the face amount of the Maximum Loan Amount of the Revolving Loan dated of
even date herewith (the "Revolving Note") and shall be payable in accordance
with the terms of the Revolving Note and this Agreement.
2.3. Intentionally Deleted.
2.4. Intentionally Deleted.
2.5. Advances of the Revolving Loan.
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(a) Bank, in its discretion, may require from Borrower a signed written request
for an Advance of cash proceeds under the Revolving Note in form satisfactory to
Bank, which request shall be delivered to Bank no later than 12:00 noon (local
time in Stamford, Connecticut for requests presented at the Bank in the United
States, or London, England time for requests presented at the Bank in the United
Kingdom) on the date of the requested Advance, and shall set forth the
calculation of the Farrel Corporation Borrowing Base or the Farrel Limited
Borrowing Base, as the case may be, and a reconciliation to the previous request
or Borrowing Base Certificate, specify the date (which shall be a Business Day)
and the amount of the proposed Advance and provide such other information as
Bank may reasonably require. Bank's acceptance of such a request shall be
indicated by its making the Advance requested. Such an Advance of cash proceeds
shall be made available to Borrower in immediately available funds by crediting
the Borrower's account.
(b) Notwithstanding the foregoing, Bank may, in its sole and absolute
discretion, make or permit to remain outstanding Advances under the Revolving
Loan in excess of the original principal amount of the Revolving Note, and all
such excess amounts shall (i) be part of the Indebtedness evidenced by the
Revolving Note, (ii) bear interest as provided herein, (iii) be payable upon
demand by Bank, and (iv) be entitled to all rights and security as provided
under the Loan Documents.
2.6 Term Loan Facility. Bank agrees, on the terms and conditions set forth in
this Agreement, to make a term loan to Borrower (the "Term Loan", and
collectively with the Revolving Loan, the "Loan") in an amount not to exceed the
Maximum Loan Amount of the Term Loan.
2.7 Term Note. The Term Loan shall be evidenced by a promissory note in the face
amount of the Maximum Loan Amount of the Term Loan dated of even date herewith
(the "Term Note" and collectively with the Revolving Note, the "Note") and shall
be payable in accordance with the terms of the Term Note and this Agreement.
2.8. Repayment of Loan.
(a) Interest on the Loan shall accrue and be payable as set forth in the Note.
The Loan shall mature, and the principal amount thereof and all accrued and
unpaid interest, fees, expenses and other amounts payable under the Loan
Documents shall be due and payable, on the Termination Date.
(b) Bank may debit the Demand Deposit Account and/or make Advances to Borrower
(whether or not in excess of the lesser of the applicable Maximum Loan Amount
and the sum of the Farrel Corporation Borrowing Base and the Farrel Limited
Borrowing Base) and apply such amounts to the payment of interest, fees,
expenses and other amounts to which Bank may be entitled from time to time and
Bank is hereby irrevocably authorized to do so without the consent of Borrower.
(c) Borrower shall make each payment of principal and interest on the Loan and
fees hereunder not later than 12:00 noon (local time in Stamford, Connecticut
for payments made to the Bank in the United States, or local time in London,
England time for payments made to the Bank in the United Kingdom) on the date
when due, without set off, counterclaim or other deduction, in immediately
available funds to Bank at its address referred to in Section 10.4. Whenever any
payment of principal of, or interest on, the Loan or of fees shall be due on a
day which is not a Business Day, the date for payment thereof shall be extended
to the next succeeding Business Day. If the date for any payment of principal is
extended by operation of law or otherwise, interest thereon shall be payable for
such extended time.
(d) To the extent that the aggregate amount of all Advances exceeds the Farrel
Corporation Borrowing Base or the Farrel Limited Borrowing Base, as the case may
be, the amount of such excess will be paid immediately to Bank upon Bank's
demand (or letters of credit cancelled or cash collateralized).
2.9. Overdue Amounts. Any payments not made as and when due shall bear interest
from the date due until paid at the Default Rate, in Bank's discretion.
2.10. Calculation of Interest. All interest under the Note or hereunder shall be
calculated on the basis of the Actual/360 and in the case of Sterling 365
Computation, as defined in the Note.
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2.11. Sales Tax. Borrower shall notify Bank if any Account includes any sales or
other similar tax and Bank may, but shall not be obligated to, remit any such
taxes directly to the taxing authority and make Advances or charge the Demand
Deposit Account therefor. In no event shall Bank be liable for any such taxes.
2.12. Letters of Credit; Bankers Acceptances; Guarantees.
(a) Bank shall from time to time issue, extend or renew letters of credit,
bankers acceptances and guarantees for the account of Borrower or its
Subsidiaries subject to (i) the monetary limitations set forth in Section 2.1
hereof, (ii) the underlying transaction for which the letter of credit, bankers
acceptance or guarantee has been issued being deemed legal by Bank in its
reasonable discretion, and (iii) the Bank's reasonable determination that such
underlying transaction is not in breach of international/OFAC sanctions.
Borrower shall complete and sign such applications and supplemental agreements
and provide such other documentation as Bank may reasonably require. The form
and substance of all letters of credit, bankers acceptances and guarantees,
including expiration dates, shall be subject to Bank's reasonable approval. Bank
may charge fees in accordance with Section 2.13 hereof for issuance, renewal or
extension of letters of credit, bankers acceptances and guarantees. Farrel
Corporation unconditionally guarantees all obligations of any Subsidiary of
Borrower with respect to letters of credit issued by Bank for the account of
such Subsidiary and all acceptances and guarantees of any Subsidiary's drafts.
Upon an Event of Default, Borrower shall, on demand, deliver to Bank good funds
equal to 105% of Bank's maximum liability under all outstanding letters of
credit, bankers acceptances and guarantees, to be held as cash collateral for
Borrower's reimbursement obligations and other Indebtedness.
(b) Any letter of credit issued hereunder shall be governed by the Uniform
Customs of Practice for Documentary Credit (1993 Rev.), International Chamber of
Commerce Publication No. 500, as revised from time to time, except to the extent
that the terms of such publication would limit or diminish rights granted to
Bank hereunder or in any other Loan Document.
2.13. Fees.
(a) Borrower shall pay to Bank a non-refundable facility fee in the amount of
(pound)4,000 with respect to the Term Loan and $25,000 with respect to the
Revolving Loan, both of which shall be payable on the date of this Agreement.
(b) Borrower shall pay to Bank quarterly in arrears an availability fee, equal
to 0.375% per annum on the average daily unused principal under the Revolving
Note (without taking into account availability under the Farrel Corporation
Borrowing Base or the Farrel Limited Borrowing Base, as the case may be) for the
preceding calendar quarter or portion thereof.
(c) Borrower shall pay to Bank, at such times as Bank shall require, Bank's
standard fees in connection with letters of credit and guarantees, as in effect
from time to time, and in addition, a fee equal to 1.25% per annum on the face
amount of each such letter of credit and guarantee for the period of time the
same will be outstanding, payable annually up-front.
(d) If Borrower elects to terminate this Agreement in full and prepay all
Indebtedness prior to the Termination Date as provided in Section 2.15 hereof,
or if Borrower makes any payment, prepayment or conversion of the Loan on a date
other than the last day of an Interest Period, as defined in the Revolving Note
or the Term Note, as the case may be, or if Bank terminates this Agreement as
provided for in Section 2.15 hereof, Borrower shall, on the date of such
termination, pay to Bank the Early Termination Fee, which Early Termination Fee
shall be deemed liquidated damages to compensate Bank for its loss of the
benefits of this Agreement and shall not be deemed a penalty.
2.14. Statement of Account. If Bank provides Borrower with a loan statement of
account on a periodic basis, such statement will be presumed complete and
accurate and will be definitive and binding on Borrower absent manifest
mathematical error, unless objected to with specificity by Borrower in writing
within forty-five (45) days after receipt.
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2.15. Termination. Upon at least thirty (30) days prior written notice to Bank,
Borrower may, at its option, terminate this Agreement and the Loan facility;
provided, in connection with the termination hereof prior to the Termination
Date, Borrower shall pay to Bank, as liquidated damages for Bank's loss of the
benefits of this Agreement and not as a penalty, the Early Termination Fee. Bank
may terminate the Loan facility hereunder at any time, without notice, upon or
after the occurrence of an Event of Default.
3. Conditions Precedent to Borrowing.
3.1. Conditions Precedent to Initial Advance. In addition to any other
requirement set forth in this Agreement, Bank will not make the Term Loan or the
initial Advance under the Revolving Loan unless and until the following
conditions shall have been satisfied in the sole reasonable opinion of Bank and
its counsel:
(a) Loan Documents. Borrower and each other party to any Loan Document, as
applicable, shall have executed and delivered this Agreement, the Term Note, the
Revolving Note, and other required Loan Documents, all in form and substance
satisfactory to Bank.
(b) Supporting Documents. Borrower shall cause to be delivered to Bank the
following documents:
(i) A copy of the governing instruments of Borrower and each Subsidiary, and a
good standing certificate of Borrower and each Subsidiary, certified by the
appropriate official of its country and state of incorporation and the State of
Connecticut, if different;
(ii) Incumbency certificate and certified resolutions of the board of directors
(or other appropriate Persons) of Borrower and each other Person executing any
Loan Documents, signed by the Secretary or another authorized officer of
Borrower or such other Person, authorizing the execution, delivery and
performance of the Loan Documents;
(iii) The legal opinion of Borrower's and any Guarantor's legal counsel
addressed to Bank regarding such matters as Bank and its counsel may request;
(iv) A satisfactory Borrowing Base Certificate duly completed by Farrel
Corporation or Farrel Limited, as the case may be, together with all supporting
statements, schedules and reconciliations as required by Bank;
(v) Satisfactory evidence of payment of all fees due and reimbursement of all
costs incurred by Bank, and evidence of payment to other parties of all fees or
costs which Borrower is required under this Agreement to pay (including without
limitation reasonable attorneys' fees) by the date of the initial Advance;
(vi) UCC-11 searches and other Lien searches showing no existing security
interests in or Liens on the any of Borrower's assets other than Permitted
Liens;
(vii) Any lien waivers requested by Bank pursuant to section 5.13(c) hereof.
(c) Insurance. Borrower shall have delivered to Bank satisfactory evidence of
insurance meeting the requirements of Section 5.3.
(d) Additional Documents. Borrower shall have delivered to Bank all additional
opinions, documents, certificates and other assurances that Bank or its counsel
may require.
3.2. Conditions Precedent to Each Advance. The following conditions, in addition
to any other requirements set forth in this Agreement, shall have been met or
performed, in the sole opinion of Bank and its counsel, by the Advance Date with
respect to any Advance Request and each Advance Request (whether or not a
written Advance Request is required) shall be deemed to be a representation that
all such conditions have been satisfied:
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(a) Advance Request. Borrower shall have delivered to Bank an Advance Request
and other information, as required under Section 2.5(a), unless the procedures
described in Section 2.4 are in effect.
(b) No Event of Default. No Event of Default shall have occurred and be
continuing or could occur upon the making of the Advance in question and, if
Borrower is required to deliver a written Advance Request, Borrower shall have
delivered to Bank an officer's certificate to such effect, which may be
incorporated in the Advance Request.
(c) Correctness of Representations. All representations and warranties made by
Borrower and any Guarantor herein or otherwise in writing in connection herewith
shall be true and correct in all material respects with the same effect as
though the representations and warranties had been made on and as of the
proposed Advance Date (except where such representations and warranties were
intended to apply only to a specific prior date), and, if Borrower is required
to deliver a written Advance Request, Borrower shall have delivered to Bank an
officer's certificate to such effect, which may be incorporated in the Advance
Request.
(d) No Change. There shall have been no change since the date of the most recent
financial statements of Borrower, any Subsidiary or any Guarantor delivered to
Bank from time to time which could reasonably be anticipated to have a Material
Adverse Effect.
(e) Limitations Not Exceeded. The proposed Advance shall be in compliance with
the monetary limitations set forth in Section 2.1 hereof. If Borrower is
required to deliver a written Advance Request, Bank shall have received a
current Accounts Receivable Report (as required by Section 5.6) sufficient in
form and substance to calculate and verify the Farrel Corporation Borrowing Base
and the Farrel Limited Borrowing Base, as the case may be.
(f) Further Assurances. Borrower shall have delivered such further documentation
or assurances as Bank may reasonably require.
4. Representations and Warranties. In order to induce Bank to enter into this
Agreement and to make the Loan provided for herein, Borrower makes the following
representations and warranties, all of which shall survive the execution and
delivery of the Loan Documents. Unless otherwise specified, such representations
and warranties shall be deemed made as of the date hereof and as of the Advance
Date of any Advance by Bank to Borrower:
4.1. Valid Existence and Power. Each of Borrower and each Subsidiary is a
corporation or limited partnership, as the case may be, duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and is duly qualified or licensed to transact business in all
places where the failure to be so qualified would have a Material Adverse Effect
on it. Each of Borrower and each other Person which is a party to any Loan
Document (other than Bank) has the power to make and perform the Loan Documents
executed by it and all such instruments will constitute the legal, valid and
binding obligations of such Person, enforceable in accordance with their
respective terms, subject only to bankruptcy and similar laws affecting
creditors' rights generally.
4.2. Authority. The execution, delivery and performance thereof by Borrower and
each other Person (other than Bank) executing any Loan Document have been duly
authorized by all necessary action of such Person, and do not and will not
violate any provision of law or regulation, or any writ, order or decree of any
court or governmental or regulatory authority or agency or any provision of the
governing instruments of such Person, and do not and will not, with the passage
of time or the giving of notice, result in a breach of, or constitute a default
or require any consent under, or result in the creation of any Lien upon any
property or assets of such Person pursuant to, any law, regulation, instrument
or agreement to which any such Person is a party or by which any such Person or
its respective properties may be subject, bound or affected.
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4.3. Financial Condition. Other than as disclosed in financial statements
delivered on or prior to the date hereof to Bank, neither Borrower nor any
Subsidiary nor (to the knowledge of Borrower) any Guarantor has any direct or
contingent obligations or liabilities as of the date hereof (including any
guarantees or leases) or any material unrealized or anticipated losses from any
commitments of such Person except as described on Exhibit 4.3 (if any). All such
financial statements have been prepared in accordance with GAAP and fairly
present the financial condition of Borrower, Subsidiary or Guarantor, as the
case may be, as of the date thereof. Borrower is not aware of any material
adverse fact (other than facts which are generally available to the public and
not particular to Borrower, such as general economic or industry trends)
concerning the conditions or future prospects of Borrower or any Subsidiary or
any Guarantor which has not been fully disclosed to Bank, including any adverse
change in the operations or financial condition of such Person since the date of
the most recent financial statements delivered to Bank. Borrower is Solvent, and
after consummation of the transactions set forth in this Agreement and the other
Loan Documents, Borrower will be Solvent.
4.4. Litigation. Except as disclosed on Exhibit 4.4 (if any) and on reports
filed with the Securities and Exchange Commission, there are no suits or
proceedings pending, or to the knowledge of Borrower threatened, before any
court or by or before any governmental or regulatory authority, commission,
bureau or agency or public regulatory body against or affecting Borrower, any
Subsidiary or (to Borrower's knowledge) any Guarantor, or their assets, which if
adversely determined would have a Material Adverse Effect on the financial
condition or business of Borrower, such Subsidiary or such Guarantor.
4.5. Agreements, Etc. Except as disclosed on reports filed with the Securities
and Exchange Commission, neither Borrower nor any Subsidiary is a party to any
agreement or instrument or subject to any court order, governmental decree or
any charter or other corporate restriction which could reasonably be anticipated
to have a Material Adverse Effect, nor is any such Person in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument to which it is a party, or
any law, regulation, decree, order or the like, which could reasonably be
anticipated to have a Material Adverse Effect.
4.6. Authorizations. All authorizations, consents, approvals and licenses
required under applicable law or regulation for the ownership or operation of
the property owned or operated by Borrower or any Subsidiary or for the conduct
of any business in which it is engaged have been duly issued and are in full
force and effect, and it is not in default, nor has any event occurred which
with the passage of time or the giving of notice, or both, would constitute a
default, under any of the terms or provisions of any part thereof, or under any
order, decree, ruling, regulation, closing agreement or other decision or
instrument of any governmental commission, bureau or other administrative agency
or public regulatory body having jurisdiction over such Person, which default
would have a Material Adverse Effect on such Person. Except as noted herein, no
approval, consent or authorization of, or filing or registration with, any
governmental commission, bureau or other regulatory authority or agency is
required with respect to the execution, delivery or performance of any Loan
Document.
4.7. Title. Each of Borrower and each Subsidiary has good title to all of the
material assets shown in its financial statements free and clear of all Liens,
except Permitted Liens.
4.8. Intentionally Deleted.
4.9. Location. The chief executive office of Borrower where Borrower's business
records are located, all of Borrower's other places of business and any other
places where any of its material assets are kept, are all located at the
addresses indicated on Exhibit 4.9. The material assets of Borrower are located
and shall at all times be kept and maintained only at Borrower's location or
locations as described on Exhibit 4.9 herein except for sales and in-transit
Inventory in the ordinary course. No such assets are attached or affixed to any
real property so as to be classified as a fixture unless Bank has otherwise
agreed in writing.
4.10. Taxes. Borrower and each Subsidiary have filed all federal and state
income and other tax returns which are required to be filed, and have paid all
taxes as shown on said returns and all taxes, including withholding, FICA and ad
valorem taxes, shown on all assessments received by it to the extent that such
taxes have become due. Neither Borrower nor any Subsidiary is subject to any
federal, state or local tax Liens nor has such Person received any notice of
deficiency or other official notice to pay any taxes which are past due, other
than those taxes being actively contested in good faith. Borrower and each
Subsidiary have paid all sales and excise taxes payable by it.
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4.11. Labor Law Matters. No goods or services have been or will be produced by
Borrower or any Subsidiary in violation of any applicable labor laws or
regulations or any collective bargaining agreement or other labor agreements or
in violation of any minimum wage, wage-and-hour or other similar laws or
regulations.
4.12. Accounts. To the best of Borrower's knowledge, each Account which is used
to calculate the Farrel Corporation Borrowing Base or the Farrel Limited
Borrowing Base, (a) is genuine and enforceable in accordance with its terms
except for such limits thereon arising from bankruptcy and similar laws relating
to creditors' rights; (b) is not subject to any deduction or discount (other
than as stated in the invoice and disclosed to Bank), defense, set off, claim or
counterclaim of a material nature against Borrower except as to which Borrower
has notified Bank in writing; (c) is not subject to any other circumstances that
would impair the validity, enforcability or amount of such asset except as to
which Borrower has notified Bank in writing; (d) arises from a bona fide
delivery of goods or services in the ordinary course and in accordance with the
terms and conditions of any applicable purchase order, contract or agreement;
(e) is free of all Liens other than Permitted Liens; and (f) is for a liquidated
amount maturing as stated in the invoice therefor.
4.13. Judgment Liens. As of the date hereof, neither Borrower nor any
Subsidiary, nor any of their assets, are subject to any unpaid judgments
(whether or not stayed) or any judgment liens in any jurisdiction.
4.14. Subsidiaries. If Borrower has any Subsidiaries, they are listed on Exhibit
4.14.
4.15. Environmental. Except as disclosed on Exhibit 4.15, neither Borrower, nor
to Borrower's best knowledge any other previous owner or operator of any real
property currently owned or operated by Borrower, has generated, stored or
disposed of any Regulated Material on any portion of such property, or
transferred any Regulated Material from such property to any other location in
violation of any applicable Environmental Laws. Except as disclosed on Exhibit
4.15 or in compliance with all Environmental Laws, no Regulated Material has
been generated, stored or disposed of on any portion of the real property
currently owned or operated by Borrower by any other Person, or is now located
on such property. Except as disclosed on Exhibit 4.15, Borrower is in material
compliance with all applicable Environmental Laws and Borrower has not been
notified of any action, suit, proceeding or investigation which calls into
question compliance by Borrower with any Environmental Laws or which seeks to
suspend, revoke or terminate any license, permit or approval necessary for the
generation, handling, storage, treatment or disposal of any Regulated Material.
4.16. ERISA. Borrower has furnished to Bank true and complete copies of the
latest annual report required to be filed pursuant to Section 104 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), with
respect to each employee benefit plan or other plan maintained for employees of
Borrower or any Subsidiary and covered by Title IV of ERISA (a "Plan"), and no
Termination Event (as hereinafter defined) with respect to any Plan has occurred
and is continuing. For the purposes of this Agreement, a "Termination Event"
shall mean a "reportable event" as defined in Section 4043(b) of ERISA, or the
filing of a notice of intent to terminate under Section 4041 of ERISA. Neither
Borrower nor any Subsidiary has any unfunded liability with respect to any such
Plan.
4.17. Investment Company Act. Neither Borrower nor any Subsidiary is an
"investment company" as defined in the Investment Company Act of 1940, as
amended.
4.18. Names. Borrower currently conducts all business only under its legal name
as set forth above in the introductory section of this Agreement. Except as
disclosed on Exhibit 4.18, during the preceding five (5) years Borrower has not
(i) been known as or used any other corporate, fictitious or trade name, (ii)
been the surviving entity of a merger or consolidation or (iii) acquired all or
substantially all of the assets of any Person.
4.19. Insider. Borrower is not, and no Person having "control" (as that term is
defined in 12 U.S.C. Β§ 375(b)(5) or in regulations promulgated pursuant thereto)
of Borrower is, an "executive officer," "director," or "principal shareholder"
(as those terms are defined in 12 U.S.C. Β§ 375(b) or in regulations
promulgated pursuant thereto) of Bank, of a bank holding company of which Bank
is a subsidiary, or of any subsidiary of a bank holding company of which Bank is
a subsidiary.
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4.20. Compliance with Covenants; No Event of Default. Borrower is, and upon
funding of the Loan will be, in compliance with all of the covenants hereof. No
Default has occurred, and the execution, delivery and performance of the Loan
Documents and the funding of the Loan will not cause an Event of Default.
4.21. Full Disclosure. There is no material fact which is known or which should
be known by Borrower that Borrower has not disclosed to Bank which could
reasonably be anticipated to have a Material Adverse Effect. No Loan Document,
nor any agreement, document, certificate or statement delivered by Borrower to
Bank, contains any untrue statement of a material fact.
5. Affirmative Covenants of Borrower. Borrower covenants and agrees that from
the date hereof and until payment in full of the Indebtedness and the formal
termination of this Agreement, Borrower and each Subsidiary:
5.1. Use of Loan Proceeds. Shall use the proceeds of the Loan only for working
capital to be used in the operation of Borrower's business and to refinance
existing indebtedness, and shall furnish Bank all evidence that it may
reasonably require with respect to such use.
5.2. Maintenance of Business and Properties. Shall at all times maintain,
preserve and protect all of its material property used or useful in the conduct
of its business, and keep the same in good repair, working order and condition,
and from time to time make, or cause to be made, all material needful and proper
repairs, renewals, replacements, betterments and improvements thereto so that
the business carried on in connection therewith may be conducted properly and in
accordance with standards generally accepted in businesses of a similar type and
size at all times, and maintain and keep in full force and effect all licenses
and permits necessary to the proper conduct of its business.
5.3. Insurance. Shall maintain such liability insurance, workers' compensation
insurance, business interruption insurance and casualty insurance as may be
required by law, customary and usual for prudent businesses in its industry and
shall insure and keep insured all of its properties in good and responsible
insurance companies. All liability insurance shall name and directly insure
Bank as additional insured, and shall not be terminable except upon 30 days'
written notice to Bank. Borrower shall furnish to Bank evidence of existence of
all such policies.
5.4. Notice of an Event of Default. Shall provide to Bank immediate notice of
(a) the occurrence of an Event of Default and what action (if any) Borrower is
taking to correct the same, (b) any material litigation or material changes in
existing litigation or any judgment against it or its assets, (c) any material
damage or loss to property, (d) any notice from taxing authorities as to claimed
material deficiencies or any material tax lien or any notice relating to alleged
material ERISA violations, (e) any Reportable Event, as defined in ERISA, (f)
any rejection, return, offset, dispute, loss or other circumstance with respect
to Accounts which could reasonably be anticipated to have a Material Adverse
Effect, (g) the cancellation or termination of, or any default under, any
material agreement to which Borrower is a party or by which any of its
properties are bound, or any acceleration of the maturity of any material Debt
of Borrower; and (h) any loss or threatened loss of material licenses or
permits.
5.5. Inspections. Shall permit inspections of its assets and the records of such
Person pertaining thereto and verification of the Accounts upon reasonable prior
notice, at such times and in such manner as may be reasonably required by Bank
and shall further permit such inspections, reviews and field examinations of its
other records and its properties (with such reasonable frequency and at such
reasonable times as Bank may desire) by Bank as Bank may deem necessary or
desirable from time to time.
5.6. Financial Information. Shall maintain books and records in accordance with
GAAP and shall furnish to Bank the following periodic financial information:
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(a) Periodic Borrowing Base Information. Within fifteen (15) days of the end of
each month, Farrel Corporation and Farrel Limited shall each furnish to Bank a
completed Borrowing Base Certificate in the form attached hereto as Exhibit
5.6(a) (collectively, a "Borrowing Base Certificate"). Each Borrower shall
attach to the applicable Borrowing Base Certificate, which shall be certified by
the chief financial officer or president of Farrel Corporation to be accurate
and complete and in compliance with the terms of the Loan Documents, a backlog
certificate, in the form attached hereto as Exhibit 5.6(a).
(b) Accounts Receivable Report. Within fifteen (15) days after the end of each
quarter, a report listing all Accounts of Borrower as of the last Business Day
of such quarter (an "Accounts Receivable Report") which shall include the amount
and age of each Account, the name and mailing address of each Account Debtor, a
detailing of all credits due such Account Debtor by Borrower stated in the
number of days which have elapsed since the date each such credit was issued by
Borrower, and such other information as Bank may reasonably require in order to
verify such Accounts, all in reasonable detail and in form acceptable to Bank.
(c) Interim Statements. Within forty-five (45) days after the end of each of the
first three (3) fiscal quarters of each year, a consolidated and consolidating
unaudited management-prepared financial statement, including, without
limitation, a balance sheet of Borrower and its Subsidiaries at the end of that
period and a consolidated and consolidating income statement and a consolidated
statement of cash flows for the portion of the fiscal year ending with such
period, together with all supporting schedules, setting forth in comparative
form the figures for the same period of the preceding fiscal year, and certified
by the chief financial officer of Borrower as true and correct and fairly
representing the financial condition of Borrower and its Subsidiaries and that
such statements are prepared in accordance with GAAP, except without footnotes
and subject to normal year-end audit adjustments (notwithstanding anything set
forth herein to the contrary, Borrower shall not be required to deliver such
Interim Statements in a form which varies from the form supplied to the
Securities and Exchange Commission);
(d) Annual Statements. Within ninety (90) days after the end of each fiscal
year, a detailed audited financial report of Borrower and its Subsidiaries
containing a consolidated balance sheet at the end of that period and a
consolidated income statement and statement of cash flows for that period,
setting forth in comparative form the figures for the preceding fiscal year,
together with all supporting schedules and footnotes, and containing an audit of
independent certified public accountants acceptable to Bank that the financial
statements were prepared in accordance with GAAP. Any management letter,
supplemental letter, or other document accompanying the report will also be
provided to Bank. In addition, promptly upon receipt, one copy of each written
report submitted to Borrower by independent accountants for any other annual,
quarterly or special audit will be provided to Bank (notwithstanding anything
set forth herein to the contrary, Borrower shall not be required to deliver such
Annual Statements in a form which varies from the form supplied to the
Securities and Exchange Commission);
(e) No Event of Default Certificates. Together with each report required by
Subsections (c) and (d), a compliance certificate of its president or chief
financial officer that no Event of Default then exists or if an Event of Default
exists, the nature and duration thereof and Borrower's intention with respect
thereto.
(f) Auditor's Management Letters. Promptly upon receipt thereof, copies of each
report submitted to Borrower by independent public accountants in connection
with any annual, interim or special audit made by them of the books of Borrower
including, without limitation, each report submitted to Borrower concerning its
accounting practices and systems and any final comment letter submitted by such
accountants to management in connection with the annual audit of Borrower; and
(g) Other Information. Such other information reasonably requested by Bank from
time to time concerning the business, properties or financial condition of
Borrower, Guarantor and their respective Subsidiaries.
5.7. Maintenance of Existence and Rights. Borrower will preserve and maintain
its corporate existence, authorities to transact business, rights and
franchises, trade names, patents, trademarks and permits necessary to the
conduct of its business.
5.8. Payment of Taxes, Etc. Shall pay before delinquent all of its debts and
taxes, except if being actively contested in accordance with law (provided that
Bank may require bonding or other assurances).
Page 9
5.9. Compliance; Hazardous Materials. Shall strictly comply with all laws,
regulations, ordinances and other legal requirements, specifically including,
without limitation, ERISA, all securities laws and all laws relating to
hazardous materials and the environment. Unless approved in writing by Bank,
neither Borrower nor any Subsidiary shall engage in the storage, manufacture,
disposition, processing, handling, use or transportation of any hazardous or
toxic materials, except in compliance with applicable laws and regulations.
5.10 Compliance with Assignment Laws. Shall if reasonably required by Bank
comply with the Federal Assignment of Claims Act and any other applicable law
relating to assignment of government contracts.
5.11 Further Assurances. Shall take such further action and provide to Bank such
further assurances as may be reasonably requested to ensure compliance with the
intent of this Agreement and the other Loan Documents.
5.12 Intentionally Deleted.
6. Negative Covenants of Borrower. Borrower covenants and agrees that from the
date hereof and until payment in full of the Indebtedness and the formal
termination of this Agreement, Borrower and each Subsidiary:
6.1 Negative Pledge. Shall not create, assume, or permit to exist any Lien on
any of its assets whether now owned or hereafter acquired, other than: (i) liens
for taxes contested in good faith; (ii) liens accruing by law for employee
benefits; (iii) liens pursuant to capital lease obligations and/or purchase
money loans for business equipment and (iv) Permitted Liens. Neither Borrower
nor any Subsidiary shall grant any such negative pledge to any other party.
6.2. Transfer/Acquisition of Assets by Subsidiaries. Other than office equipment
and payment for marketing services, shall not permit any tangible or intangible
assets to be transferred to or acquired by the following subsidiaries of Farrel
Corporation: (i) Xxxxxx Xxxx Ltd., (ii) Farrel Europe BV, (iii) Farrel Asia Ltd.
(other than office equipment), (iv) Farrel GmbH, or (v) Farrel Srl. Borrower
hereby represents that except as noted herein, as of the date hereof, none of
the foregoing subsidiaries have any ownership interest in any such tangible or
intangible assets.
6.3. Default on Other Contract or Obligations. Shall not default on any contract
with or obligation when due to a third party or default in the performance of
any obligation to a third party incurred for money borrowed in an amount in
excess of $100,000.00, which defaults could reasonably be anticipated to have a
Material Adverse Effect.
6.4. Judgment Entered. Shall not permit the entry of any monetary judgment or
the assessment against, the filing of any tax lien against, or the issuance of
any writ of garnishment or attachment against any property of or debts due
Borrower in an amount in excess of $100,000.00 that is not discharged or
execution is not stayed within thirty (30) days of entry (except judgments
validly covered by insurance with a deductible of not more than $10,000).
6.5 Guarantees. Shall not guarantee or otherwise become responsible for
obligations of any other person or persons in an aggregate amount in excess of
$100,000.00 per fiscal year, other than the endorsement of checks and drafts for
collection in the ordinary course of business.
6.6. Change in Business. Shall not enter into any business which is
substantially different from the business in which it is presently engaged.
6.7. Accounts. (a) Shall not sell, assign or factor any of its Accounts, Chattel
Paper or any promissory notes held by it; and (b) shall notify Bank promptly in
writing of any material discount, offset or other deductions not shown on the
face of an Account invoice and any dispute over an Account, and any information
relating to an adverse change in any Account Debtor's financial condition or
ability to pay its obligations, which could reasonably be anticipated to have a
Material Adverse Effect.
6.8. No Change in Name, Offices; Removal of Assets. Shall not, unless it shall
have given 60 days' advance written notice thereof to Bank, (a) change its name
or the location of its chief executive office or other office where books or
records are kept or (b) permit any material Inventory or other tangible assets
to be located at any location other than as specified in Section 4.9 .
Page 10
6.9. Margin Stock. Shall not use any proceeds of the Loan to purchase or carry
any margin stock (within the meaning of Regulation U of the Board of Governors
of Federal Reserve System) or extend credit to others for the purpose of
purchasing or carrying any margin stock.
6.10. Tangible Assets. Shall not, except as otherwise provided herein, and
except for Inventory of customers located at Borrower's facilities for
rebuilding or refurbishing, allow any Inventory or other tangible assets to be
commingled with, or become an accession to or part of, any property of any other
Person; nor allow any tangible assets to become a fixture unless Bank shall have
given its prior written authorization.
6.11. Subsidiaries. Shall not acquire, form or dispose of any Subsidiaries or
permit any Subsidiary to issue capital stock except to its parent.
6.12. Change of Name. Shall give Bank thirty (30) days prior written notice of
any change of name or any new trade or fictitious name. Borrower's use of any
trade or fictitious name shall be in compliance with all laws regarding the use
of such names.
6.13. Liquidation, Mergers, Consolidations and Dispositions of Substantial
Assets. Shall not dissolve or liquidate, or become a party to any merger or
consolidation, or acquire by purchase, lease or otherwise, all or a substantial
part (more than 10% in the aggregate during the term hereof) of the assets of
any Person, or sell, transfer, lease or otherwise dispose of all or a
substantial part (more than 10% in the aggregate during the term hereof) of its
property or assets, except for the sale of Inventory in the ordinary course of
business, or sell or dispose of any equity ownership interests in any
Subsidiary.
6.14. Change of Fiscal Year or Accounting Methods. Shall not change its
accounting methods except in compliance with GAAP, or its fiscal year.
7. Financial Covenants. Borrower covenants and agrees that from the date hereof
and until payment in full of the Indebtedness and the formal termination of this
Agreement, Borrower and each Subsidiary shall comply with the following
financial covenants:
7.1. End-of-Month Backlog. Consolidated End-of-Month Backlog will not be less
than $20,000,000 for more than two consecutive months. This covenant shall be
tested monthly upon receipt of backlog certificate.
7.2. Current Position. Consolidated Current Position will not decrease by more
than $1,250,000 during any trailing four-quarter period. This covenant shall be
tested quarterly upon Bank's receipt of interim, or annual, financial
statements, as applicable, commencing with the trailing four quarter period
ending on December 31, 2001. Current Position means Adjusted Current Assets
minus Adjusted Current Liabilities. Adjusted Current Assets means the sum of (i)
cash and cash equivalents, (ii) accounts receivable and (iii) inventory.
Adjusted Current Liabilities means all current liabilities in accordance with
GAAP plus obligations arising from Advances of cash proceeds of the Revolving
Loan that are classified as long-term.
7.3. Adjusted Net Worth. Consolidated Adjusted Net Worth will not be less than
$22,500,000. This covenant shall be tested quarterly upon Bank's receipt of
interim, or annual, financial statements, as applicable, commencing with the
trailing four quarter period ending on June 30, 2001. Consolidated Adjusted Net
Worth means Borrower's consolidated stockholders' equity, in accordance with
GAAP, exclusive of any amount arising from the cumulative foreign currency
translation adjustment that would be reported in Borrower's consolidated
statement of stockholders' equity.
Page 11
7.4. Debt Coverage Ratio. Consolidated Debt Coverage Ratio will not be less than
1.25 to 1.00 for any trailing four-quarter period. This covenant shall be tested
quarterly upon Bank's receipt of interim, or annual, financial statements, as
applicable, commencing with the trailing four quarter period ending on June 30,
2001. Debt Coverage Ratio means Funds Flow divided by the current maturities of
long term debt as of the test date. Funds Flow means, for a given trailing
four-quarter period, the sum of (i) net income, (ii) depreciation expense and
(iii) amortization expense. For purposes of this covenant, the current
maturities of long-term debt will be in accordance with GAAP but will exclude
obligations arising from the Direct Advance Sub-Limit of the Revolving Loan that
are classified as short-term.
7.5. Dividends. In no event shall Borrower declare or pay a dividend or
make any other distribution or withdrawal if there shall exist an Event of
Default or a condition which, upon the giving of notice or lapse of time or
both, would become an Event of Default under the Loan Documents.
7.6. Limitation on Debt. Borrower shall not, without the prior written consent
of Bank, directly or indirectly, create, incur, assume or become liable for any
Debt, whether contingent or direct, except for equipment lease financing and/or
purchase money equipment financing, and other Permitted Debt.
7.7. Loans and Advances. Borrower shall not, without the prior written consent
of Bank, during any fiscal year, make loans or advances, except in the ordinary
course of business, to any person or entity other than another Borrower.
7.8. Deposit Relationship. Borrower shall maintain its primary depository
account and cash management account with Bank, into which Advances may be
credited and from which monthly payments will be automatically deducted.
8. Event of Default.
8.1. Events of Default. Each of the following shall constitute an Event of
Default:
(a) There shall occur any default by Borrower in the payment, when due, of any
principal of or interest on the Note, any amounts due hereunder or any other
Loan Document, or any other Indebtedness or any default of any Financial
Covenant set forth in Section 7 hereof; or
(b) There shall occur any default by Borrower or any other party to any Loan
Document (other than Bank) in the performance of any agreement, covenant or
obligation contained in this Agreement or such Loan Document not provided for
elsewhere in this Section 8 beyond thirty (30) days from the date Borrower or
such other party has actual or constructive knowledge of such default, other
than with respect to a payment default or default of any Financial Covenant
referenced in Section 8.1(a) hereof; or
(c) Any representation or warranty made by Borrower or any other party to any
Loan Document (other than Bank) herein or therein or in any certificate or
report furnished in connection herewith or therewith shall prove to have been
untrue or incorrect in any material respect when made; or
(d) Any other obligation now or hereafter owed by Borrower or any Subsidiary to
Bank shall be in default and not cured within the grace period, if any, provided
therein, or any such Person shall be in default under any obligation in excess
of $100,000 owed to any other obligee, which default entitles the obligee to
accelerate any such obligations or exercise other remedies with respect thereto,
provided that with respect to any Subsidiary, the foregoing shall only
constitute an Event of Default if such event would have a Material Adverse
Effect on Borrower; or
(e) Borrower or any Subsidiary shall (A) voluntarily dissolve, liquidate or
terminate operations or apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of such
Person or of all or of a substantial part of its assets, (B) admit in writing
its inability, or be generally unable, to pay its debts as the debts become due,
(C) make a general assignment for the benefit of its creditors, (D) commence a
voluntary case under the federal Bankruptcy Code (as now or hereafter in
effect), (E) file a petition seeking to take advantage of any other law relating
to bankruptcy, insolvency, reorganization, winding-up, or composition or
adjustment of debts, (F) fail to controvert in a timely and appropriate manner,
or acquiesce in writing to, any petition filed against it in an involuntary case
under Bankruptcy Code, or (G) take any corporate action for the purpose of
effecting any of the foregoing, provided that with respect to any Subsidiary,
the foregoing shall only constitute an Event of Default if such event would have
a Material Adverse Effect on Borrower; or
Page 12
(f) An involuntary petition or complaint shall be filed against Borrower or any
Subsidiary seeking bankruptcy relief or reorganization or the appointment of a
receiver, custodian, trustee, intervenor or liquidator of Borrower or any
Subsidiary, of all or substantially all of its assets, and such petition or
complaint shall not have been dismissed within sixty (60) days of the filing
thereof; or an order, order for relief, judgment or decree shall be entered by
any court of competent jurisdiction or other competent authority approving or
ordering any of the foregoing actions, provided that with respect to any
Subsidiary, the foregoing shall only constitute an Event of Default if such
event would have a Material Adverse Effect on Borrower; or
(g) A judgment in excess of $100,000 shall be rendered against the Borrower or
any Subsidiary and shall remain undischarged, undismissed and unstayed for more
than thirty days (except judgments validly covered by insurance with a
deductible of not more than $10,000) or there shall occur any levy upon, or
attachment, garnishment or other seizure of, any material portion of the assets
of Borrower or any Subsidiary by reason of the issuance of any tax levy,
judicial attachment or garnishment or levy of execution, provided that with
respect to any Subsidiary, the foregoing shall only constitute an Event of
Default if such event would have a Material Adverse Effect on Borrower; or
(h) Borrower or any Subsidiary shall fail to pay, within a reasonable time after
demand, any returned or dishonored draft, check, or other item which has been
deposited to the Demand Deposit Account or otherwise presented to Bank and for
which Borrower has received provisional credit; or
(i) There shall occur any change in the condition (financial or otherwise) of
Borrower and/or any Subsidiary which, in the reasonable opinion of Bank, could
have a Material Adverse Effect.
8.2. Remedies. If any Event of Default shall occur, Bank may, without notice to
Borrower, at its option, withhold further Advances to Borrower. If an Event of
Default shall have occurred and be continuing, Bank may declare any or all
Indebtedness to be immediately due and payable (if not earlier demanded),
terminate its obligation to make Advances to Borrower, bring suit against
Borrower to collect the Indebtedness, exercise any remedy available to Bank
hereunder or at law and take any action or exercise any remedy provided herein
or in any other Loan Document or under applicable law. No remedy shall be
exclusive of other remedies or impair the right of Bank to exercise any other
remedies.
8.3. Receiver. In addition to any other remedy available to it, Bank shall have
the absolute right, upon the occurrence of an Event of Default, to seek and
obtain the appointment of a receiver to take possession of and operate and/or
dispose of the business and assets of Borrower and any costs and expenses
incurred by Bank in connection with such receivership shall bear interest at the
Default Rate, at Bank's option.
8.4. Deposits; Insurance. After the occurrence of an Event of Default, Borrower
authorizes Bank to collect and apply against the Indebtedness when due any cash
or deposit accounts in its possession, and any refund of insurance premiums or
any insurance proceeds payable on account of the loss or damage to any of
Borrower's assets and irrevocably appoints Bank as its attorney-in-fact to
endorse any check or draft or take other action necessary to obtain such funds.
9. Bank's Additional Right.
9.1. Other Rights. Borrower authorizes Bank without affecting Borrower's
obligations hereunder or under any other Loan Document from time to time (i) to
take from any party and hold collateral or guaranties for the payment of the
Indebtedness or any part thereof, and to exchange, enforce or release such
collateral or guaranty of payment of the Indebtedness or any part thereof and to
release or substitute any endorser or guarantor or any party who has given any
security interest in any collateral as security for the payment of the
Indebtedness or any part thereof or any party in any way obligated to pay the
Indebtedness or any part thereof; and (ii) upon the occurrence of any Event of
Default to direct the manner of the disposition of such collateral and the
enforcement of any endorsements, guaranties, letters of credit or other security
relating to the Indebtedness or any part thereof as Bank in its sole discretion
may determine.
Page 13
9.2 Waiver of Marshaling. Borrower hereby waives any right it may have to
require marshaling of its assets.
10. Miscellaneous.
10.1. No Waiver, Remedies Cumulative. No failure on the part of Bank or the
Borrower to exercise, and no delay in exercising, any right hereunder or under
any other Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and are in addition to any other remedies provided by
law, any Loan Document or otherwise.
10.2. Survival of Representations. All representations and warranties made
herein shall survive the making of the Loan hereunder and the delivery of the
Note, and shall continue in full force and effect so long as any Indebtedness is
outstanding, there exists any commitment by Bank to Borrower, and until this
Agreement is formally terminated in writing.
10.3. Indemnity By Borrower; Expenses. In addition to all other Indebtedness,
Borrower agrees to defend, protect, indemnify and hold harmless Bank and its
Affiliates and all of their respective officers, directors, employees,
attorneys, consultants and agents from and against any and all losses, damages,
liabilities, obligations, penalties, fees, costs and expenses (including,
without limitation, reasonable attorneys' and paralegals' fees, costs and
expenses) incurred by such indemnitees, whether prior to or from and after the
date hereof, as a result of or arising from or relating to (i) the due diligence
effort (including, without limitation, public record search, recording fees,
examinations and investigations of the properties of Borrower and Borrower's
operations), negotiation, preparation, execution and/or performance of any of
the Loan Documents or of any document executed in connection with the
transactions contemplated thereby, maintenance of the Loan by Bank, and any and
all amendments, modifications, and supplements of any of the Loan Documents or
restructuring of the Indebtedness, (ii) any suit, investigation, action or
proceeding by any Person (other than Borrower), whether threatened or initiated,
asserting a claim for any legal or equitable remedy against any Person under any
statute, regulation or common law principle, arising from or in connection with
Bank's furnishing of funds to Borrower under this Agreement, (iii) Bank's
preservation, administration and enforcement of its rights under the Loan
Documents and applicable law, including the reasonable fees and disbursements of
counsel for Bank in connection therewith, whether suit be brought or not and
whether incurred at trial or on appeal, (iv) periodic field exams, audits and
appraisals performed by Bank; and/or (v) any matter relating to the financing
transactions contemplated by the Loan Documents or by any document execution in
connection with the transactions contemplated thereby, other than for such loss,
damage, liability, obligation, penalty, fee, cost or expense arising from such
indemnitee's gross negligence or willful misconduct. If Borrower should fail to
pay any tax or other amount required by this Agreement to be paid or which may
be reasonably necessary to protect or preserve any assets of Borrower or
Borrower's or Bank's interests therein, Bank may make such payment and the
amount thereof shall be payable on demand, shall bear interest at the Default
Rate from the date of demand until paid and shall be deemed to be Indebtedness
entitled to the benefit and security of the Loan Documents. In addition,
Borrower agrees to pay and save Bank harmless against any liability for payment
of any state documentary stamp taxes, intangible taxes or similar taxes
(including interest or penalties, if any) which may now or hereafter be
determined to be payable in respect to the execution, delivery or recording of
any Loan Document or the making of any Advance, whether originally thought to be
due or not, and regardless of any mistake of fact or law on the part of Bank or
Borrower with respect to the applicability of such tax. Borrower's obligation
for indemnification for all of the foregoing losses, damages, liabilities,
obligations, penalties, fees, costs and expenses of Bank shall be part of the
Indebtedness, chargeable against Borrower's loan account, and shall survive
termination of this Agreement.
10.4. Notices. Any notice or other communication hereunder or under the Note to
any party hereto or thereto shall be by hand delivery, overnight delivery,
facsimile, or registered or certified mail and unless otherwise provided herein
shall be deemed to have been given or made when delivered or faxed (and
confirmed) or as shown on the receipt for such registered or certified mail,
addressed to the party at its address specified below (or at any other address
that the party may hereafter specify to the other parties in writing):
Page 14
Bank: First Union National Bank
000 Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Assistant Vice President
Fax # 000-000-0000
With a copy to:
Xxxxxx, Xxxxx & Segaloff, P.C.
00 Xxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Fax #: 000-000-0000
Borrower: Farrel Corporation
00 Xxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxxxxx, President and CEO
Fax #: 000-000-0000
With a copy to:
Xxxxxxxx & Xxxxxxxx
Four Stamford Plaza
Stamford, CT 06904
Attn: Xxxxxx Xxxxxxx, Esq.
Fax: 000-000-0000
10.5. Governing Law. This Agreement and the Loan Documents shall be deemed
contracts made under the laws of the State of Connecticut and shall be governed
by and construed in accordance with the laws of said state (excluding its
conflict of laws provisions if such provisions would require application of the
laws of another jurisdiction).
10.6. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of Borrower and Bank, and their respective successors and
assigns; provided, that Borrower may not assign any of its rights hereunder
without the prior written consent of Bank, and any such assignment made without
such consent will be void.
10.7. Counterparts. This Agreement may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original and all of which when taken
together shall constitute but one and the same instrument.
10.8. No Usury. Regardless of any other provision of this Agreement, the Note or
in any other Loan Document, if for any reason the effective interest should
exceed the maximum lawful interest, the effective interest shall be deemed
reduced to, and shall be, such maximum lawful interest, and (i) the amount which
would be excessive interest shall be deemed applied to the reduction of the
principal balance of the Note and not to the payment of interest, and (ii) if
the Loan evidenced by the Note has been or is thereby paid in full, the excess
shall be returned to the party paying same, such application to the principal
balance of the Note or the refunding of excess to be a complete settlement and
acquittance thereof.
10.9. Powers. All powers of attorney granted to Bank are coupled with an
interest and are irrevocable.
10.10. Approvals. If this Agreement calls for the approval or consent of Bank,
such approval or consent may be given or withheld in the discretion of Bank
unless otherwise specified herein.
10.11. Binding Arbitration; Preservation of Remedies.
Page 15
(a) Binding Arbitration. Upon demand of any party hereto, whether made before or
after institution of any judicial proceeding, any claim or controversy arising
out of, or relating to the Loan Documents ("Disputes") between the parties
hereto (a "Dispute") shall be resolved by binding arbitration conducted under
and governed by the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association (the "AAA") and the
Federal Arbitration Act. Disputes may include, without limitation, tort claims,
counterclaims, disputes as to whether a matter is subject to arbitration, claims
brought as class actions, or claims arising from documents executed in the
future. A judgment upon the award may be entered in any court having
jurisdiction. Notwithstanding the foregoing, this arbitration provision does not
apply to disputes under or related to swap agreements.
(b) Special Rules. All arbitration hearings shall be conducted in the city in
which the office of Bank first stated above is located. A hearing shall begin
within 90 days of demand for arbitration and all hearings shall be concluded
within 120 days of demand for arbitration. These time limitations may not be
extended unless a party shows cause for extension and then for no more than a
total of 60 days. The expedited procedures set forth in Rule 51 et seq. of the
Arbitration Rules shall be applicable to claims of less than $1,000,000.
Arbitrators shall be licensed attorneys selected from the Commercial Financial
Dispute Arbitration Panel of the AAA. The parties do not waive applicable
Federal or state substantive law except as provided herein.
(c) Preservation and Limitation of Remedies. Notwithstanding the preceding
binding arbitration provisions, the parties agree to preserve, without
diminution, certain remedies that any party may exercise before or after an
arbitration proceeding is brought. The parties shall have the right to proceed
in any court of proper jurisdiction or by self-help to exercise or prosecute the
following remedies, as applicable: (i) all rights to foreclose against any real
or personal property or other security by exercising a power of sale or under
applicable law by judicial foreclosure including a proceeding to confirm the
sale; (ii) all rights of self-help including peaceful occupation of real
property and collection of rents, set-off, and peaceful possession of personal
property; (iii) obtaining provisional or ancillary remedies including injunctive
relief, sequestration, garnishment, attachment, appointment of receiver and
filing an involuntary bankruptcy proceeding; and (iv) when applicable, a
judgment by confession of judgment. Any claim or controversy with regard to the
parties' entitlement to such remedies is a Dispute.
(d) No Punitive Damages. Each party agrees that it shall not have a remedy of
punitive or exemplary damages against the other in any Dispute and hereby waives
any right or claim to punitive or exemplary damages it may have now or which may
arise in the future in connection with any Dispute, whether the Dispute is
resolved by arbitration or judicially.
(e) Waiver of Jury Trial. The parties acknowledge that by agreeing to binding
arbitration they have irrevocably waived any right they may have to a jury trial
with regard to a Dispute.
10.12. Participations. Bank shall have the right to enter into one or more
participation with other lenders with respect to the Indebtedness. Upon prior
notice to Borrower of such participation, Borrower shall thereafter furnish to
such participant any information furnished by Borrower to Bank pursuant to the
terms of the Loan Documents. Nothing in this Agreement or any other Loan
Document shall prohibit Bank from pledging or assigning this Agreement and
Bank's rights under any of the other Loan Documents, including collateral
therefor, to any Federal Reserve Bank in accordance with applicable law.
Page 16
10.13. Dealings with Multiple Borrowers. All Indebtedness, representations,
warranties, covenants and indemnities set forth in the Loan Documents of Farrel
Corporation are solely the obligation of Farrel Corporation, and Farrel Limited
shall have no liability to Bank with respect to such obligations of Farrel
Corporation. All Indebtedness, representations, warranties, covenants and
indemnities set forth in the Loan Documents of Farrel Limited are the joint and
several obligation of Farrel Corporation and Farrel Limited, and both Borrowers
shall be fully liable with respect to such obligations of Farrel Limited. Bank
shall have the right to deal with any individual of any Borrower with regard to
all matters concerning the rights and obligations of Bank hereunder and pursuant
to applicable law with regard to the transactions contemplated under the Loan
Documents. All actions or inactions of the officers, managers, members and/or
agents of any Borrower with regard to the transactions contemplated under the
Loan Documents shall be deemed with full authority and binding upon all
Borrowers hereunder. Each Borrower hereby appoints each other Borrower as its
true and lawful attorney-in-fact, with full right and power, for purposes of
exercising all rights of such Person hereunder and under applicable law with
regard to the transactions contemplated under the Loan Documents. The foregoing
is a material inducement to the agreement of Bank to enter into the terms hereof
and to consummate the transactions contemplated hereby.
10.14. Waiver of Certain Defenses. To the fullest extent permitted by applicable
law, upon the occurrence of any Event of Default, neither Borrower nor anyone
claiming by or under Borrower will claim or seek to take advantage of any law
requiring Bank to attempt to realize upon any assets of Borrower or collateral
of any surety or guarantor, or any appraisement, evaluation, stay, extension,
homestead, redemption or exemption laws now or hereafter in force in order to
prevent or hinder the enforcement of this Agreement. Borrower, for itself and
all who may at any time claim through or under Borrower, hereby expressly waives
to the fullest extent permitted by law the benefit of all such laws. All rights
of Bank and all obligations of Borrower hereunder shall be absolute and
unconditional irrespective of (i) any change in the time, manner or place of
payment of, or any other term of, all or any of the Indebtedness, or any other
amendment or waiver of or any consent to any departure from any provision of the
Loan Documents, (ii) any exchange, release or non-perfection of any other
collateral given as security for the Indebtedness, or any release or amendment
or waiver of or consent to departure from any guaranty for all or any of the
Indebtedness, or (iii) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, Borrower or any third party, other than
payment and performance in full of the Indebtedness.
10.15. Other Provisions. Any other or additional terms and conditions set forth
in Exhibit 10.15 (if any) are hereby incorporated herein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
FIRST UNION NATIONAL BANK FARREL CORPORATION
By /s/ Xxxx X Xxxxxx By /s/ Xxxx X Xxxxxxxxxxxx
Xxxx X. Xxxxxx Xxxx X. Xxxxxxxxxxxx
Its Vice President Its President and CEO
FARREL LIMITED
By /s/ Xxxx X Xxxxxxxxxxxx
Xxxx X. Xxxxxxxxxxxx
Its Director
Page 17
STATE OF CONNECTICUT)
) ss: New Haven, June 15, 2001
COUNTY OF NEW HAVEN )
Personally appeared this date, Xxxx X. Xxxxxx, vice president of First
Union National Bank, a national banking association, signer and sealer of the
foregoing instrument and acknowledged the same to be her free act and deed as
such officer, and the free act and deed of said banking corporation, before me.
Xxxxxx Xxxxxxx
Commissioner of the Superior Court
STATE OF CONNECTICUT)
) ss: New Haven, June 15, 2001
COUNTY OF NEW HAVEN )
Personally appeared this date, Xxxx X. Xxxxxxxxxxxx, president and CEO
of Farrel Corporation, a Delaware corporation, signer and sealer of the
foregoing instrument and acknowledged the same to be his free act and deed as
such officer, and the free act and deed of said corporation, before me.
Xxxxxx Xxxxxxx
Commissioner of the Superior Court
STATE OF CONNECTICUT)
) ss: New Haven, June 15, 2001
COUNTY OF NEW HAVEN )
Personally appeared this date, Xxxx X. Xxxxxxxxxxxx, director of Farrel
Limited, a corporation organized under the laws of England and Wales, signer and
sealer of the foregoing instrument and acknowledged the same to be his free act
and deed as such officer, and the free act and deed of said corporation, before
me.
Xxxxxx Xxxxxxx
Commissioner of the Superior Court
Page 18
SCHEDULE OF EXHIBITS
(If any exhibit is omitted, the information called for therein
shall be considered "None" or "Not Applicable")
Exhibit Section Reference Title
1 1 ("Definitions") Definitions
1.1C 1.1 ("Permitted Debt") Permitted Debt
1.1D 1.1 ("Permitted Liens") Permitted Liens
1.2 1.2 Financial Terms
4.3 4.3 ("Financial Condition") Contingent Liabilities
4.4 4.4 ("Litigation") Litigation
4.9 4.9 ("Location") Offices of Borrower
4.14 4.14 ("Subsidiaries") List of Subsidiaries
4.15 4.15 ("Environmental") Environmental Disclosures
4.18 4.18 ("Names") Names; Mergers; Acquisitions
4.22 4.22 ("Additional Representations") Additional Representations
5.6(a) 5.6(a)("Periodic Borrowing Base
Information") Borrowing Base/Backlog Certificate
10.15 10.15 ("Other Provisions") Additional Terms
Page 19
