EXHIBIT 10.74
LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT is dated as of January 29, 1998 and
entered into among XXXXXXXX TECHNOLOGIES OF MINNESOTA, INC. ("GTM"), a Minnesota
corporation with its principal place of business at 00000 Xxxxxxx Xxx., Xxxxxx,
Xxxxxxxxx 00000, XXXXXXXX TECHNOLOGIES OF GEORGIA, INC. ("GTG"), a Georgia
corporation with its principal place of business at 000 Xxxxxxx Xxx., Xxxxxxx,
Xxxxxxx 00000 (collectively referred to herein as "Borrowers") and XXXXXX
FINANCIAL, INC. a Delaware corporation, with offices at 000 Xxxx Xxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000 ("Lender"),.
The parties agree as follows:
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms. The following terms used in this
Agreement shall have the following meanings:
"Accounts" means all "accounts" (as defined in the UCC), accounts
receivable, contract rights and general intangibles relating thereto, notes,
drafts and other forms of obligations owed to or owned by either or both of the
Borrowers arising or resulting from the sale of goods or the rendering of
services, whether or not earned by performance.
"Affiliate" means any Person directly or indirectly controlling,
controlled by, or under common control with either or both Borrowers or which
has an officer who is also an officer of either or both Borrowers.
"Agreement" means this Loan and Security Agreement as it may be
amended, restated, supplemented or otherwise modified from time to time.
"Base Rate" means a variable rate of interest per annum equal to the
higher of (a) the rate of interest from time to time published by the Board of
Governors of the Federal Reserve System as the "Bank Prime Loan" rate in Federal
Reserve Statistical Release H.15(519) entitled "Selected Interest Rates" or any
successor publication of the Federal Reserve System reporting the Bank Prime
Loan rate or its equivalent, or (b) the Federal Funds Effective Rate. In the
event the Board of Governors of the Federal Reserve System ceases to publish a
Bank Prime Loan rate or its equivalent, the term "Base Rate" shall mean a
variable rate of interest per annum equal to the highest of the "prime rate",
"reference rate", "base rate", or other similar rate announced from time to time
by any of the three largest banks located in New York City, New York (with the
understanding that any such rate may merely be a reference rate and may not
necessarily represent the lowest or best rate actually charged to any customer
by any such bank).
"Borrowers' Accountants" means the independent certified public
accountants selected by either or both Borrowers and reasonably acceptable to
Lender, which selection shall not be modified during the term of this Agreement
without Lender's prior written consent, which consent shall not be unreasonably
withheld.
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the States of Minnesota, Illinois or
Pennsylvania, or is a day on which banking institutions located in any such
state are closed.
"Collateral" means, collectively, all of the property described in
Sections 2.9 and 2.10 hereof which is subject to the security interests granted
to Lender by either or both of Borrowers.
"Default" means a condition, act or event that, after notice or lapse
of time or both, would constitute an Event of Default if that condition, act or
event were not cured or removed within any applicable grace or cure period or
waived in writing by Lender.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of any
Loan Party or any ERISA Affiliate or (b) has at any time within the preceding
six (6) years been maintained for the employees of any Loan Party or any current
or former ERISA Affiliate.
"Environmental Claims" means claims, liabilities, investigations,
litigation, administrative proceedings, judgments or orders relating to
Hazardous Materials.
"Environmental Laws" means any present or future federal, state or
local law, rule, regulation or order relating to pollution, waste, disposal or
the protection of human health or safety, plant life or animal life, natural
resources or the environment.
"Equipment" means all "equipment" (as defined in the UCC), including,
without limitation, all furniture, furnishings, fixtures, machinery, motor
vehicles, trucks, trailers, vessels, aircraft and rolling stock and all parts
thereof and all additions and accessions thereto and replacements therefor.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute and all rules and
regulations promulgated thereunder.
"ERISA Affiliate", as applied to any Loan Party, means any Person who
is a member of a group which is under common control with any Loan Party, who
together with any Loan Party is treated as a single employer within the meaning
of Section 414(b) and (c) of the IRC.
"Excess Cash Flow" means, for any period and for each Borrower, the
greater of (A) zero (0); or (B) without duplication, the total of the following
for each of the Borrowers and their Subsidiaries on a consolidated basis, each
calculated for such period: (l) EBITDA; plus (2) tax refunds actually received;
less (3) Capital Expenditures (to the extent actually made in cash and/or due to
be made in cash within such period but in no event more than the amount
permitted by subsection 6.5 hereof); less (4) income and franchise taxes paid or
accrued excluding any provision for deferred taxes included in the determination
of net income; less (5) decreases in deferred income taxes resulting from
payments of deferred taxes accrued in prior periods; less (6) Interest Expenses
paid or accrued; less (7) scheduled amortization of Indebtedness actually paid
in cash and/or due to be paid in cash within such period and permitted under
Section 7.5; less (8) voluntary prepayments and mandatory prepayments made under
subsection 2.6 (B), but only to the extent that the transaction that
precipitated the mandatory prepayment increased EBITDA. Excess Cash Flow is
calculated separately for GTM and GTG.
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"Federal Funds Effective Rate" means, for any day, the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the
immediately following Business Day by the Board of Governors of the Federal
Reserve System as the Federal Funds Rate in Federal Reserve Statistical Release
H.15(519) entitled "Selected Interest Rates" or any successor publication of the
Federal Reserve System reporting the Federal Funds Effective Rate or its
equivalent or, if such rate is not published for any Business Day, the average
of the quotations for the day of the requested Loan received by Lender from
three Federal funds brokers of recognized standing selected by Lender.
"Hazardous Material" means all or any of the following: (a) substances
that are defined or listed in, or otherwise classified pursuant to, any
Environmental Laws or regulations as "hazardous substances", "hazardous
materials", "hazardous wastes", "toxic substances" or any other formulation
intended to define, list or classify substances by reason of deleterious
properties such as ignitability, corrosivity, reactivity, carcinogenicity, or
toxicity; (b) oil, petroleum or petroleum derived substances, natural gas,
natural gas liquids or synthetic gas and drilling fluids, produced waters and
other wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (c) any flammable substances or
explosives or any radioactive materials; and (d) asbestos in any form or
electrical equipment which contains any oil or dielectric fluid containing
polychlorinated biphenyls.
"Intellectual Property" means all present and future designs, patents,
patent rights and applications therefor, trademarks and registrations or
applications therefor, trade names, inventions, copyrights and all applications
and registrations therefor, software or computer programs, license rights, trade
secrets, methods, processes, know-how, drawings, specifications, descriptions,
and all memoranda, notes and records with respect to any research and
development, whether now owned or hereafter acquired, all goodwill associated
with any of the foregoing, and proceeds of all of the foregoing, including,
without limitation, proceeds of insurance policies thereon.
"IRC" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute and all rules and regulations promulgated
thereunder.
"Loan" or "Loans" means an advance or advances under the Revolving
Loan, the Term Loan or under any Note.
"Loan Documents" means this Agreement, all Notes, all guaranties, all
mortgages and deeds of trust, all subordination agreements or intercreditor
agreements, and all other instruments, documents, notes and agreements executed
by or on behalf of either or both Borrowers or any guarantor and delivered
concurrently herewith or at any time hereafter to or for Lender in connection
with the Loans and other transactions contemplated by this Agreement, all as
amended, restated, supplemented or modified from time to time.
"Loan Party" means Borrowers and any other Person, other than Lender,
which is or becomes a Party to any Loan Document.
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"Loan Year" means each period of twelve (12) consecutive months
commencing on the closing date and on each anniversary thereof.
"Material Adverse Effect" means a material adverse effect upon (a) the
business, operations, prospects, properties, assets or condition (financial or
otherwise) of any Loan Party or (b) the ability of any Loan Party to perform its
obligations under any Loan Document to which it is a party or of Lender to
enforce its security interests or collect any of the Obligations.
"Notes" mean all Promissory Notes made by either or both Borrowers to
the order of Lender concurrently herewith or at any time hereafter.
"Obligations" means all obligations, liabilities and indebtedness of
every nature of either or both Borrowers from time to time owed to Lender
whether under the Loan Documents or otherwise, whether primary, secondary,
direct, contingent, fixed or otherwise, heretofore, now and/or from time to time
hereafter owing, due or payable including, without limitation, all interest,
fees, cost and expenses accrued or incurred after the filing of any petition
under any bankruptcy or insolvency law.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions thereof.
"Real Property" means the parcels of real property identified in
Schedule l.1 to this Agreement.
"Revolving Loan" means the outstanding balance of all Revolving
Advances (defined in 2.1 hereof), and it includes any amounts added to the
principal balance of the Revolving Loan pursuant to this Agreement.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of stock (or equivalent ownership or controlling interest)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any Loan Party or Loan Parties or one or
more of the other Subsidiaries of any Loan Party or a combination thereof.
"Term Loan" means the aggregate, outstanding balance of the Term Loans
(defined in 2.2 hereof), and it includes any amounts added to the principal
balance of the Term Loan pursuant to this Agreement.
"UCC" means the Uniform Commercial Code as in effect on the date hereof
in the State of Illinois, as amended from time to time, and any successor
statute.
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1.2 Accounting Terms. For purposes of this Agreement, all accounting
terms (including, for example, "EBITDA", "Capital Expenditures" and "Interest
Expense") not otherwise defined herein shall have the meanings assigned to such
terms in conformity with generally accepted accounting principles ("GAAP"). When
used herein, the term "financial statements" shall include the notes and
schedules thereto. Financial statements furnished to Lender shall be prepared in
accordance with GAAP (as in effect at the time of such preparation) on a
consistent basis.
SECTION 2. LOANS AND COLLATERAL
2.1 Revolving Loan. Upon either or both Borrowers' request made at any
time during the term of this Agreement, Lender may, in its sole and absolute
discretion, make advances to Borrowers ("Revolving Advances") in an aggregate
amount up to the lesser of (A) 85% of the aggregate (for both Borrowers
combined), outstanding amount of Eligible Accounts; or (B) $1,700,000.00 (the
"Maximum Revolving Loan Amount").
(A) Eligible Collateral.
"Eligible Accounts" means, as at any date of determination, the
aggregate of all Accounts that Lender, in its sole judgment, deems to be
eligible for borrowing purposes. Without limiting the generality of the
foregoing, unless otherwise agreed by Lender, the following Accounts are not
Eligible Accounts:
(1) Accounts which remain unpaid for more than 60 days after
the due date specified in the original invoice or for more than 90 days after
invoice date if no due date was specified, provided, however, that until March
31, 1998, Accounts due to GTG from municipalities which remain unpaid for 90
days or less after the due date specified in the original invoice or 120 days or
less after invoice date if no due date was specified may be Eligible Accounts;
(2) Accounts due from any account debtor if more than 50% of
the aggregate amount of Accounts of such account debtor have at the time
remained unpaid for more than 60 days after due date or 90 days after invoice
date if no due date was specified, provided, however, that until March 31, 1998,
for Accounts due to GTG from municipalities, more than 50% of such Accounts may
remain unpaid for 90 days or less after the due date specified in the original
invoice or 120 days or less after invoice date if no due date was specified and
still be Eligible Accounts;
(3) Accounts with respect to which either Borrower is or may
become liable to the account debtor for goods sold or services rendered by the
account debtor to such Borrower and Accounts which are otherwise eligible with
respect to which the account debtor is owed a credit by such Borrower, but only
to the extent of such credit;
(4) Accounts due from an account debtor whose principal place
of business is located outside the United States of America, unless such Account
is backed by a letter of credit in form and substance and issued by a bank
acceptable to Lender;
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(5) Accounts due from an account debtor which Lender has
determined does not have a satisfactory credit standing;
(6) Accounts with respect to which the account debtor is the
United States of America, unless the affected Borrower has, with respect to such
accounts, complied with the Federal Assignment of Claims Act of 1940 as amended
(31 U.S.C. Section 3727 et seq.), any state or any municipality, or any
department, agency or instrumentality thereof;
(7) Accounts with respect to which the account debtor is an
Affiliate of either or both Borrowers or a director, officer, agent, stockholder
or employee of either or both Borrowers or any of their Affiliates;
(8) Accounts with respect to which there is any unresolved
dispute with the respective account debtor;
(9) Accounts with respect to which Lender does not have a
valid first priority and fully perfected security interest or Accounts that are
subject to any claim, lien, security interest or encumbrance, except those in
favor of Lender;
(10) Accounts with respect to which the account debtor is the
subject of any bankruptcy or other insolvency proceeding;
(11) Accounts due from an account debtor to the extent that
such Accounts exceed in the aggregate an amount equal to 20% of the aggregate of
all Accounts at said date for either or both Borrowers;
(12) Accounts with respect to which the account debtor's
obligation to pay is conditional or subject to a repurchase obligation or right
to return or with respect to which the goods or services giving rise to such
Account have not been delivered (or performed, as applicable) and accepted by
such account debtor, including progress xxxxxxxx, xxxx and hold sales,
guarantied sales, sale or return transactions, sales on approval or consignment
sales;
(13) Accounts with respect to which the account debtor is
located in New Jersey or Minnesota, or any other state denying creditors access
to its courts in the absence of a Notice of Business Activities Report or other
similar filing, unless the affected Borrower has either qualified as a foreign
corporation authorized to transact business in such state or has filed a Notice
of Business Activities Report or similar filing with the applicable state agency
for the then current year;
(B) Borrowing Mechanics. On any day when either or both Borrowers
desire a Revolving Advance, either Borrower shall give Lender telephonic notice
of the proposed borrowing by 11:00 a.m. Central time. While either Borrower may
give notice as set forth in this subsection, any notice received pursuant hereto
shall be automatically deemed to be notice given jointly by both Borrowers. Any
such telephonic notice shall be confirmed in writing on the same day. Lender
shall not incur any liability to Borrowers for acting upon any telephonic notice
Lender believes in good faith to have been
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given by a duly authorized officer or other person authorized to borrow on
behalf of Borrowers or for otherwise acting in good faith. Lender will not make
any Revolving Advance pursuant to any telephonic notice unless Lender has also
received the most recent Borrowing Base Certificate and all other documents
required pursuant to the Reporting Addendum by 11:00 a.m. Central time. Each
Revolving Advance shall be deposited by wire transfer in immediately available
funds in such account as Borrowers may from time to time designate to Lender in
writing, such deposits to be made on the same business day if the request is
received and the requirements are satisfied by 11:00 a.m. Central time. Requests
received after 11:00 a.m. Central time shall be funded the next business day.
(C) Notes. Borrowers shall execute and deliver to Lender such
Notes as Lender may request in its sole discretion to evidence the Obligations
relating to the Revolving Loan.
(D) Principal Payments. Borrowers shall make principal payments
consistent with the terms and conditions of this Agreement.
2.2 Term Loan. Subject to the terms and conditions of this Agreement
and in reliance on the representations and warranties of Borrowers, Lender
agrees to lend to Borrowers an amount equal to no more than $3,300,000.00 in the
aggregate (the "Term Loans") as follows:
(A) Equipment Term Loan. Lender agrees to lend to Borrowers a Term
Loan in an amount equal to the lesser of (I) 80% of the aggregate (for both
Borrowers combined), forced liquidation value of Borrowers' Equipment; or (2)
$1,900,000.00; and
(B) Real Property Term Loan. Lender agrees to lend to Borrowers a
Term Loan in an amount equal to the lesser of (1) 50% of the aggregate fair
market value of the either or both Borrowers' interest in the Real Property; or
(2) $1,400,000.00.
(C) Borrowing Mechanics. The Term Loans shall be funded in one or
two drawings as soon as practicable after the execution and delivery of the Loan
Documents. Amounts borrowed under this Section 2.2 and repaid may not be
reborrowed.
(D) Notes. Borrowers shall execute and deliver to Lender such
Notes as Lender may request in its sole discretion to evidence the Obligations
relating to the Term Loan.
(E) Principal Payments. Borrowers shall make principal payments
over a thirty-six month term based on a sixty month amortization schedule, with
all outstanding amounts due on the Term Loan due and payable as the thirty-sixth
installment. The first installment is due on the 1st day of March, 1998, and
each subsequent payment is due on that day of each subsequent month.
2.3 Interest.
(A) Rate of Interest. Except where specified to the contrary in
any Note or in any other Loan Document, the Loans and all other Obligations
shall bear interest from the date such Loans are made or such other
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Obligations become due to the date paid at a rate per annum equal to the Base
Rate plus 1.5% for the Revolving Loan and Base Rate plus 1.75% for the Term Loan
(the "Interest Rate"). After the occurrence and during the continuance of an
Event of Default, the Loans and all other Obligations shall, at the option of
Lender, bear interest at a rate per annum equal to 3.0% plus the Interest Rate
(the "Default Rate").
(B) Computation and Payment of Interest. Interest on the Loans and
all other Obligations shall be computed on the daily principal balance on the
basis of a 360 day year for the actual number of days elapsed in the period
during which it accrues and shall be payable to Lender monthly in arrears on the
first day of each month, on the date of any prepayment of Loans, and at
maturity, whether by acceleration or otherwise.
(C) Interest Laws. Notwithstanding any provision to the contrary
contained in this Agreement or any other Loan Document, Borrowers shall not be
required to pay, and Lender shall not be permitted to collect, any amount of
interest in excess of the maximum amount of interest permitted by applicable law
("Excess Interest"). If any Excess Interest is provided for or determined by a
court of competent jurisdiction to have been provided for in this Agreement or
in any other Loan Document, then in such event: (I) the provisions of this
subsection shall govern and control; (2) neither Borrowers nor any other Loan
Party shall be obligated to pay any Excess Interest; (3) any Excess Interest
that Lender may have received hereunder shall be, at Lender's option, (a)
applied as a credit against the outstanding principal balance of the Obligations
or accrued and unpaid interest (not to exceed the maximum amount permitted by
law), (b) refunded to the payor thereof, or (c) any combination of the
foregoing; (4) the interest rate(s) provided for herein shall be automatically
reduced to the maximum lawful rate allowed from time to time under applicable
law (the "Maximum Rate"), and this Agreement and the other Loan Documents shall
be deemed to have been and shall be, reformed and modified to reflect such
reduction; and (5) neither Borrowers nor any Loan Party shall have any action
against Lender for any damages arising out of the payment or collection of any
Excess Interest. Notwithstanding the foregoing, if for any period of time
interest on any Obligations is calculated at the Maximum Rate rather than the
applicable rate under this Agreement, and thereafter such applicable rate
becomes less than the Maximum Rate, the rate of interest payable on such
Obligations shall remain at the Maximum Rate until Lender shall have received
the amount of interest which Lender would have received during such period on
such Obligations had the rate of interest not been limited to the Maximum Rate
during such period.
2.4 Fees.
(A) Closing Fee. Borrowers shall pay to Lender on the closing
date, a closing fee in the amount of $50,000.00, which fee shall be fully
earned, due and payable upon the execution and delivery of this Agreement.
(B) Unused Line Fee. Borrowers shall pay to Lender, a fee in an
amount equal to 0.50% per annum multiplied by the amount equal to $1,700,000.00
less the sum of the average daily balance of the Revolving Loan during the
preceding month, such fee to be calculated on the basis of a 360 day year for
the actual number of days elapsed and to be payable monthly in arrears on the
first day of each month following the closing date during the term of this
Agreement, including all Renewal Terms.
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(C) Examination Fee. Borrowers shall pay to Lender an examination
fee for each examination equal to $650.00 per examiner per day or any portion
thereof together with out-of-pocket expenses.
(D) Collateral Management Fee. Borrowers shall pay to Lender a
collateral management fee in the amount of $2,000 per month for each month
during the Term of this Agreement.
(E) Other Fees and Expenses. Borrowers shall pay to Lender, all
charges for returned items and all other bank charges incurred by Lender, as
well as Lender's standard wire transfer charges for each wire transfer made
under this Agreement.
2.5 Borrowers' Joint and Several Liability. Borrowers are jointly
and severally liable to Lender for each and every Obligation, including,
but not limited to payment of the Revolving Loan, Term Loan, interest and
all fees due hereunder.
2.6 Payments and Prepayments.
(A) Manner and Time of Payment. Borrowers hereby authorizes
Lender, in its sole discretion, to charge interest and other amounts payable
hereunder to the Revolving Loan, all as set forth on Lender's books and records.
If Lender elects to xxxx either or both Borrowers for any amount due hereunder,
such amount shall be immediately due and payable with interest thereon as
provided herein. All payments made by either or both Borrowers with respect to
the Obligations shall be made without deduction, defense, setoff or
counterclaim. All payments to Lender hereunder shall, unless otherwise directed
by Lender, be made by wire transfer to Lender's account, ABA No. 0000-0000-0,
Account No. 0000000 at The First National Bank of Chicago, Xxx Xxxxx Xxxxxxxx
Xxxxx, Xxxxxxx, XX 00000, Reference: Xxxxxx Commercial Funding for the joint
benefit of Xxxxxxxx Technologies of Minnesota, Inc. and Xxxxxxxx Technologies of
Georgia, Inc. Proceeds remitted to Lender shall be credited to the Obligations
on the same Business Day such proceeds were received; provided however, for the
purpose of calculating interest on the Obligations, such funds shall be deemed
received on the first Business Day thereafter.
(B) Mandatory Prepayments. At any time that the Revolving Loan
exceeds the Maximum Revolving Loan Amount, Borrowers shall, immediately repay
the Revolving Loan to the extent necessary to reduce the principal balance to an
amount equal to or less than the Maximum Revolving Loan Amount.
(C) Voluntary Prepayments and Repayments. The Obligations may only
be prepaid or repaid in full and not in part (other than prepayments of the
Revolving Loan which do not terminate this Agreement or prepayments permitted
under any Note). Borrowers may, at any time upon not less than three Business
Days' prior notice to Lender, prepay the Obligations and terminate this
Agreement. If Borrowers voluntarily prepay the Obligations in full or in part
(other than prepayments of the Revolving Loan which do not terminate this
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Agreement), Borrowers, at the time of prepayment, shall pay to Lender, as
compensation for the costs of being prepared to make funds available to
Borrowers under this Agreement, and not as a penalty, an amount determined by
multiplying the applicable percentage set forth below by $5,000,000.00, 3.0%
upon a prepayment during the first Loan Year; 2.0% upon a prepayment during the
second Loan Year; and 1.0% upon a prepayment during the third Loan Year, and
during any Renewal Term (as defined below).
(D) Payments on Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, the
payment may be made on the next succeeding Business Day and such extension of
time shall be included in the computation of the amount of interest or fees due
hereunder.
2.7 Term of this Agreement. This Agreement shall be effective until
January 28, 2001 (the "Original Term") and shall automatically renew from year
to year thereafter (each such year a "Renewal Term") unless terminated by
Borrowers giving to Lender or Lender giving to either of Borrowers not less than
60 days prior written notice of its intention to terminate at the end of the
Original Term or at the end of any Renewal Term (the "Termination Date"). Upon
termination (whether on the Termination Date or otherwise) all Obligations shall
become immediately due and payable without notice or demand. Notwithstanding any
termination, until all Obligations have been fully paid and satisfied, Lender
shall be entitled to retain security interests in and liens upon all Collateral,
and even after payment of all Obligations hereunder, certain of Lender's and
Borrower's agreements and obligations shall survive such terminations as set
forth in subsection 8.6. Notwithstanding anything to the contrary contained in
this subsection, renewal pursuant hereto is only effective as to the Revolving
Loan.
2.8 Statements. Lender shall render a monthly statement of account to
each of the Borrowers within twenty (20) days after the end of each month with a
copy to Xxxxxxxx Technologies, Inc., 0 Xxxxxxx Xxxx, Xxxxxxxx X, Xxxxxxxxx, XX
00000, Attention Xxxxxxx X. Xxxxx. Such statement of account shall constitute an
account stated and Borrowers shall have fully and irrevocably waived all
objections to such statements and the contents thereof unless both Borrowers
make written objection thereto within thirty (30) days from the date such
statement is mailed to either of the Borrowers.
2.9 Grant of Security Interest-GTM. To secure the payment and
performance of the Obligations, GTM hereby grants to Lender a continuing
security interest, lien and mortgage in and to all right, title and interest of
GTM in all personal and real property of GTM whether now owned or existing or
hereafter acquired or arising and regardless of where located including, without
limitation: (A) Accounts, and all guaranties and security therefor, and all
goods and rights represented thereby or arising therefrom including the rights
of stoppage in transit, replevin and reclamation; (B) general intangibles (as
defined in the UCC); (C) documents (as defined in the UCC) or other receipts
covering, evidencing or representing goods; (D) instruments (as defined in the
UCC); (E) chattel paper (as defined in the UCC); (F) Equipment; (G) investment
property (as defined in the UCC) including, without limitation, all securities
(certificated and uncertificated), security accounts, securities entitlements,
commodity contracts and commodity accounts; (H) Intellectual Property; (I) all
deposit accounts of GTM maintained with any bank or financial institution; (J)
all cash and other monies
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and property of GTM in the possession or under the control of Lender or any
lender participant in any of the Loans; (K) all books, records, ledger cards,
files, correspondence, computer programs, tapes, disks and related data
processing software that at any time evidence or contain information relating to
any of the property described above or are otherwise necessary or helpful in the
collection thereof or realization thereon; (L) the Real Property; and (M)
proceeds, rents, profits, products and offspring of all or any of the property
described above, including, without limitation, the proceeds of any insurance
policies covering any of the above described property.
2.10 Grant of Security Interest-GTG. To secure the payment and
performance of the Obligations, GTG hereby grants to Lender a continuing
security interest, lien and mortgage in and to all right, title and interest of
GTG in all personal and real property of GTG whether now owned or existing or
hereafter acquired or arising and regardless of where located including, without
limitation: (A) Accounts, and all guaranties and security therefor, and all
goods and rights represented thereby or arising therefrom including the rights
of stoppage in transit, replevin and reclamation; (B) general intangibles (as
defined in the UCC); (C) documents (as defined in the UCC) or other receipts
covering, evidencing or representing goods; (D) instruments (as defined in the
UCC); (E) chattel paper (as defined in the UCC); (F) Equipment; (G) investment
property (as defined in the UCC) including, without limitation, all securities
(certificated and uncertificated), security accounts, securities entitlements,
commodity contracts and commodity accounts; (H) Intellectual Property; (I) all
deposit accounts of GTG maintained with any bank or financial institution; (J)
all cash and other monies and property of GTG in the possession or under the
control of Lender or any lender participant in any of the Loans; (K) all books,
records, ledger cards, files, correspondence, computer programs, tapes, disks
and related data processing software that at any time evidence or contain
information relating to any of the property described above or are otherwise
necessary or helpful in the collection thereof or realization thereon; (L) the
Real Property; and (M) proceeds, rents, profits, products and offspring of all
or any of the property described above, including, without limitation, the
proceeds of any insurance policies covering any of the above described property.
SECTION 3. CONDITIONS TO LOANS
The making of Loans by Lender on the closing date and on each funding
date of a Revolving Advance are each subject to satisfaction of all of the
conditions, agreements and covenants set forth in this Agreement and all of the
conditions set forth in the Conditions Rider, attached hereto.
SECTION 4. BORROWERS' REPRESENTATIONS, WARRANTIES
AND CERTAIN COVENANTS
To induce Lender to enter into the Loan Documents, and to make and to
continue to make Loans and/or provide other financial accommodations to or on
behalf of Borrowers, Borrowers both individually and jointly represent, warrant
and covenant (as applicable) to Lender that the following statements are and
will be true, correct and complete and shall remain so for so long as this
Agreement shall be in effect and until payment in full of all Obligations.
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4.1 Due Incorporation, Oualification and Authorization. Borrowers are
both duly organized and existing and in good standing under the laws of their
respective states of incorporation and are qualified and licensed to conduct
business in all States where such qualifications or licensing is required; the
execution, delivery and performance of this Agreement and the Loan Documents
have been duly authorized and are not in contravention of any applicable law,
Borrowers' corporate charters or by-laws or any other formation documents or any
agreements or orders by which Borrowers are bound; neither of Borrowers are, to
the best of Borrowers' knowledge, in violation of any law, ordinance, rule,
regulation, order or other requirement of any government or any instrumentality
or agency thereof.
4.2 Financial Condition. All financial statements concerning Borrowers
and all Subsidiaries which have been or may hereafter be furnished by Borrowers
and such Subsidiaries to Lender have been or will be prepared in accordance with
GAAP consistently applied throughout the periods involved and do or will present
fairly both financial condition of Borrowers and such Subsidiaries as at the
dates thereof and the results of its operations for the periods then ended.
4.3 Account Warranties and Covenants. As to each Account that, at the
time of its creation, the Account is a valid, bona fide account, representing an
undisputed indebtedness incurred by the named account debtor for goods actually
sold and delivered or for services completely rendered; there are no rights of
cancellation, setoffs, offsets or counterclaims, genuine or otherwise, against
the Account; the Account does not represent a sale to an Affiliate or a
consignment, sale or return or a xxxx and hold transaction; no agreement exists
permitting any return, deduction or discount (other than the discount stated on
the invoice); either GTM or GTG are the lawful owner of the Account and has the
right to assign the same to Lender; the Account is free of all security
interests, liens, claims and encumbrances other than those in favor of Lender,
and the Account is due and payable in accordance with its terms. No credits or
allowances will be issued, granted or allowed by either Borrower to account
debtors and no returns will be accepted without Lender's prior written consent;
provided however, until the earlier of (i) the occurrence of a Default or Event
of Default or (ii) such time as Lender notifies Borrowers to the contrary,
Borrowers may presume consent. Borrowers will immediately notify Lender in the
event that an account debtor alleges any dispute or claim with respect to an
Account or of any other circumstances known to either or both Borrowers that may
impair the validity or collectibility of an Account. Lender shall have the
right, at any time or times hereafter, to verify the validity, amount or any
other matter relating to an Account, by mail, telephone or in person. After the
occurrence of a Default or an Event of Default, neither Borrower may, without
the prior consent of Lender, adjust, settle or compromise the amount or payment
of any Account, or release wholly or partly any account debtor or obligor
thereof, or allow any credit or discount thereon.
4.4 Names and Locations. Borrowers currently conduct business or during
the past five years conducted business under the following names, trade names,
fictitious names and business names. The location of Borrowers' principal places
of business, the locations of Borrowers' books and records, the locations of all
other offices of Borrowers and all Collateral locations are as set forth below:
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Locations
Principal Place of Business: Xxxxxxxx Technologies, Inc.
0 Xxxxxxx Xxxx, Xxxxxxxx X
Xxxxxxxxx, XX 00000
Books and Records: Same as principal place of business
Other: Xxxxxxxx Technologies of Minnesota, Inc.
00000 Xxxxxxx Xxx.
Xxxxxx, XX 00000
Xxxxxxxx Technologies of Georgia, Inc.
000 Xxxxxxx Xxx.
Xxxxxxx, XX 00000
Tradenames
Previous Names: BFI Tire Recyclers of Minnesota, Inc.
BFI Tire Recyclers of Georgia, Inc.
Such locations are Borrowers' sole locations for their business and the
Collateral. Borrowers and each Subsidiary will give Lender at least 30 days
advance written notice of: (a) any change of name or of any new trade name or
fictitious business name, (b) any change of principal place of business, (c) any
change in the location of such party's books and records or the Collateral, or
(d) any new location for such Person's books and records or the Collateral.
4.5 Title; Liens; Operation of Business. Borrowers have and will
continue to have good, marketable and legal title to the Collateral, free and
clear of all liens, claims, security interests or encumbrances, except for the
security interests granted to Lender by Borrowers, those disclosed in writing by
either or both Borrowers to Lender as of the closing date (including the
security interest granted by Borrowers to affiliates of Xxxxxxxx-Xxxxxx
Industries which security interests will be discharged with the proceeds of the
Loans) and any security interest which either or both Borrowers have disclosed
in writing to Lender and to which Lender has given its written consent prior to
being granted by either or both Borrowers. Borrowers maintain and shall continue
to maintain complete and accurate records with respect to all of their assets.
Borrowers maintain and shall continue to maintain all licenses, permits,
franchises, approvals and consents as are required in the conduct of their
business and the ownership and operation of their properties.
4.6 Litigation; Adverse Facts. There are no judgments outstanding
against or affecting Borrowers, their officers, directors or Affiliates or any
of either or both Borrowers' property and there are no actions, charges, claims,
demands, suits, proceedings, or governmental investigations now pending or
threatened against either or both Borrowers or any of either or both Borrowers'
property.
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4.7 Payment of Taxes. All material tax returns and reports of Borrowers
and each Subsidiary required to be filed by any of them have been timely filed
and are complete and accurate in all material respects. All taxes, assessments,
fees and other governmental charges which are due and payable by Borrowers and
each Subsidiary have been paid when due. Borrowers will make timely payment or
deposit of all F.I.C.A. payments and withholding taxes and will, upon request,
furnish Lender with proof satisfactory to Lender that Borrowers have made such
required payments or deposits. As of the closing date, none of the income tax
returns of Borrowers or any Subsidiaries are under audit. No tax liens have been
filed against Borrowers or any Subsidiaries. The charges, accruals and reserves
on the books of Borrowers and each Subsidiary in respect of any taxes or other
governmental charges are in accordance with GAAP. GTM's federal tax
identification number is 47-18779940. GTG's federal tax identification number is
00-0000000.
4.8 Employee Benefit Plans. Borrowers, each Subsidiary and each ERISA
Affiliate is in compliance, and will continue to remain in compliance, in all
material respects with all applicable provisions of ERISA, the IRC and all other
applicable laws and the regulations and interpretations thereof with respect to
all Employee Benefit Plans. No material liability has been incurred by either
Borrower, any Subsidiaries or any ERISA Affiliates which remains unsatisfied for
any funding obligation, taxes or penalties with respect to any Employee Benefit
Plan. Neither Borrower nor any Subsidiaries shall establish any new Employee
Benefit Plan or amend any existing Employee Benefit Plan if the liability or
increased liability resulting from such establishment or amendment shall have a
Material Adverse Effect.
4.9 Environmental Compliance. Each Loan Party has been, is currently,
and will continue to remain in compliance with all applicable Environmental
Laws. There are no claims, liabilities, liens, investigations, litigation,
administrative proceedings, whether pending or threatened, or judgments or
orders relating to any Hazardous Materials asserted or threatened against any
Loan Party or relating to any real property currently or formerly owned, leased
or operated by any Loan Party.
4.10 Ability to Pay Debts. Borrowers are now and shall be at all times
hereafter able to pay each of their joint and individual debts as they become
due and shall have sufficient capital to enable them to operate their
businesses.
4.11 Disclosure. There is no event that has occurred nor any fact known
by either or both Borrowers but not furnished to Lender, which will have or
reasonably be expected to have a Material Adverse Effect.
4.12 Insurance. Borrowers maintain, and will continue to maintain
adequate insurance policies for public liability, property damage for their
business and properties, product liability, and business interruption with
respect to their business and properties against loss or damage of the kinds
customarily carried or maintained by corporations of established reputation
engaged in similar businesses and in amounts acceptable to Lender. Borrowers
shall cause Lender to be named as loss payee on all insurance policies relating
to any Collateral and shall cause Lender to be named as additional insured under
all liability policies, in each case pursuant to appropriate endorsements in
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form and substance satisfactory to Lender and shall collaterally assign to
Lender as security for the payment of the Obligations all business interruption
insurance of Borrowers. No notice of cancellation has been received with respect
to such policies and Borrowers are in compliance with all conditions contained
in such policies. Borrowers shall apply any proceeds received from any policies
of insurance relating to any Collateral to the Obligations. In the event either
Borrower fails to provide Lender with evidence of the insurance coverage
required by or this Agreement, Lender may, but is not required to, purchase
insurance at Borrowers' expense to protect Lender's interests in the Collateral.
This insurance may, but need not, protect Borrowers' interests. The coverage
purchased by Lender may not pay any claim made by Borrowers or any claim that is
made against Borrowers in connection with the Collateral. Borrowers may later
cancel any insurance purchased by Lender, but only after providing Lender with
evidence that Borrowers have obtained insurance as required by this Agreement.
If Lender purchases insurance for the Collateral, Borrowers will be responsible
for the costs of that insurance, including interest and other charges imposed by
Lender in connection with the placement of the insurance, until the effective
date of the cancellation or expiration of the insurance. The costs of the
insurance may be added to the Obligations. The costs of the insurance may be
more than the cost of insurance that Borrowers are able to obtain on their own.
4.13 Accounting Methods; Access to Accountants. Subject to the
Conditions Rider attached hereto, Borrowers shall maintain their current methods
of accounting, as of the closing date, without modification. Borrowers authorize
Lender to discuss the financial condition and financial statements of Borrowers
with the affected Borrower's Accountants, and authorize such Accountants to
respond to all of Lender's inquiries, and Borrowers hereby waives the right to
assert a confidential relationship, if any, that either of them may have with
such Accountants in connection with any information requested by Lender pursuant
to or in accordance with this Agreement.
4.14 Inspection. Lender shall have the right at any time during normal
business hours to visit and inspect any of the properties of Borrowers or any
Subsidiaries, and, in conjunction with such inspection, to make copies and take
extracts from any of their books and records therefrom.
4.15 Collection of Accounts. Upon the occurrence of a Default or an
Event of Default, Lender may, at any time, with or without notice to either
Borrower, notify all account debtors of both Borrowers that the Accounts have
been assigned to Lender, and that Lender has a security interest in same;
collect the Accounts directly, and add the collection costs and expenses to
Borrowers' loan account. Unless and until Lender collects the Accounts directly
or gives either or both Borrowers written instructions, Borrowers shall collect
all Accounts for Lender, receive, as the sole and exclusive property of Lender
all payments thereon as Lender's trustee and immediately deliver said payments
to Lender in their original form as received from the account debtor.
SECTION 5. REPORTING AND OTHER AFFIRMATIVE COVENANTS
Borrowers covenant and agree that, during the term of this Agreement
and until payment in full of all Obligations, Borrowers shall perform all of the
following:
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5.1 Financial Statements and Other Reports. Borrowers will deliver to
Lender the financial statements and other reports listed on the Reporting
Addendum attached hereto on the dates and in the manner set forth in such
Reporting Addendum.
5.2 Appraisals. From time to time, upon the request of Lender,
Borrowers will obtain and deliver to Lender, at Borrowers' expense, appraisal
reports in form and substance and from appraisers satisfactory to Lender,
stating the then current fair market and forced liquidation values of all or any
portion of the Collateral; provided however, so long as no Default or Event of
Default is continuing, Lender shall not request an appraisal as to any
particular category of Collateral to be performed more than once every Loan Year
at Borrowers' expense.
5.3 Government Notices. Borrowers will deliver to Lender promptly after
receipt copies of all notices, requests, subpoenas, inquiries or other writings
received from any governmental agency concerning any Employee Benefit Plan, the
violation or alleged violation of any Environmental Laws, the storage, use or
disposal of any Hazardous Material, the violation or alleged violation of the
Fair Labor Standards Act or Borrowers' payment or non-payment of any taxes
including any tax audit.
5.4 Maintenance of Properties. Borrowers will maintain or cause to be
maintained in good repair, working order and condition all material properties
used in the business of Borrowers and Subsidiaries and will make or cause to be
made all appropriate repairs, renewals and replacements thereof.
5.5 Compliance with Laws. Borrowers will, and will cause each
Subsidiary to, comply with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority as now in effect and which
may be imposed in the future in all jurisdictions in which Borrowers or any
Subsidiaries are now doing business or may hereafter be doing business.
5.6 Further Assurances. Borrowers shall, and shall cause each
Subsidiary to, from time to time, execute such guaranties, financing or
continuation statements, documents, security agreements, reports and other
documents or deliver to Lender such instruments, certificates of title,
mortgages, deeds of trust, or other documents as Lender at any time may
reasonably request to evidence, perfect or otherwise implement the guaranties
and security for repayment of the Obligations provided for in the Loan
Documents.
5.7 Use of Proceeds and Margin Security. Borrowers shall use the
proceeds of all Loans for proper business purposes consistent with all
applicable laws, statutes, rules and regulations. No portion of the proceeds of
any Loan shall be used by Borrowers or any Subsidiaries for the purpose of
purchasing or carrying margin stock within the meaning of Regulation G or
Regulation U, or in any manner that might cause the borrowing or the application
of such proceeds to violate Regulation T or Regulation X or any other regulation
of the Board of Governors of the Federal Reserve System or to violate the
Exchange Act.
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SECTION 6. NEGATIVE COVENANTS
Borrowers covenant and agree that, during the term of this Agreement
and until payment in full of all Obligations, Borrowers shall not:
6.1 Book Net Worth. Permit Borrowers' combined book net worth, at any
time, to be less than $650,000.00.
6.2 Capital Expenditure Limits. Except as provided in the Conditions
Rider, make or incur any plant or fixed capital expenditure, or any commitment
therefor, or purchase or lease any real or personal property or replacement
equipment in excess of $300,000.00 per Borrower in the aggregate for any fiscal
year.
6.3 Compensation. Pay total compensation, including salaries,
withdrawals, fees, bonuses, commissions, drawing accounts, management fees or
other payments, whether directly or indirectly, in money or otherwise, during
any fiscal year to all of either or both Borrowers' executives, officers,
shareholders, affiliates, and directors (or any relatives of each of the
foregoing) in an aggregate amount in excess of l 20% of those paid in the prior
fiscal year.
6.4 Indebtedness and Liabilities. Directly or indirectly create, incur,
assume, guaranty, or otherwise become or remain directly or indirectly liable,
on a fixed or contingent basis, with respect to any indebtedness outside of the
ordinary course of Borrower's business as presently conducted, except for
renewals or extension of existing indebtedness (previously disclosed to Lender);
provided however, in no event shall Borrowers prepay any indebtedness owing to
any third party, other than the Obligations pursuant to subsection 2.6(C).
6.5 Transfers, Negative Pledges and Related Matters.
(A) Transfers. Sell, lease, consign, assign or otherwise dispose
of, or grant any option with respect to any of the assets of Borrowers, except
that Borrowers may sell inventory in the ordinary course of business as
presently conducted and Borrowers may, with Lender's prior written consent and
in the ordinary course of business, sell or trade any item of Equipment so long
as Borrower replaces such Equipment with Equipment of equal or greater value.
(B) No Negative Pledges. Enter into or assume any agreement (other
than the Loan Documents) prohibiting the creation or assumption of any lien,
claim, security interest or encumbrance upon their properties or assets, whether
now owned or hereafter acquired.
6.6 Investments and Loans. Make or permit to exist investments in or
loans to any other Person, except loans to employees for moving, entertainment,
travel and other similar expenses in the ordinary course of business in an
aggregate outstanding amount not in excess of $ l 0,000.00 per Borrower at any
time.
6.7 Distributions. Make any distribution or declare or pay any
dividends (in cash or in stock) on, or purchase, acquire, redeem or retire any
of Borrowers' capital stock, of any class, whether now or hereafter outstanding;
provided however, that one year from the date hereof, Borrowers
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may pay dividends of Excess Cash Flow after reserving a minimum of twelve loan
payments of the Term Loan.
6.8 Restriction on Fundamental Changes. (a) Enter into any transaction
of merger or consolidation; (b) liquidate, wind-up, dissolve either Borrowers,
or cease or suspend either Borrowers' businesses; (c) make any change in either
Borrowers' financial structure or in any of its business operations; (d) acquire
by purchase or otherwise all or any substantial part of the business or assets
of, or stock or other beneficial ownership of, any Person; (e) establish, create
or acquire any new Subsidiary; or (f) change Borrowers' fiscal year or change
their tax entity designation under the IRC.
6.9 Transactions with Affiliates. Directly or indirectly, enter into or
permit to exist any transaction (including the purchase, sale or exchange of
property or the rendering of any service) with any Affiliate or with any
officer, director or employee of any Loan Party, except for transactions in the
ordinary course of either Borrower's business, as presently conducted, and upon
fair and reasonable terms which are fully disclosed to Lender and which are no
less favorable to Borrowers than they would obtain in a comparable arm's length
transaction with an unaffiliated Person.
6.10 Bank Accounts. Establish any new bank accounts, or amend or
terminate any blocked account or lockbox agreement without Lender's prior
written consent.
SECTION 7. DEFAULT, RIGHTS AND REMEDIES
7.1 Events of Default. The occurrence or existence of any one or more
of the following events (each, an "Event of Default"):
(A) Payment. Failure to make payment of any of the Obligations
when due or declared due; or
(B) Failure to Perform. Failure of Borrowers or any Loan Party to
perform or comply with any term, condition, provision, covenant or agreement
contained in the Loan Documents; or
(C) Default in Other Agreements. The existence of a default in any
material agreement to which either Borrower is a party or by which either
Borrower or either Borrower's property or assets are bound; or
(D) Breach of Warranty. Any representation, warranty,
certification, report or other statement made by any Loan Party in any Loan
Document or in any statement, certificate or report at any time given by such
Person in writing pursuant or in connection with any Loan Document is false in
any material respect on the date made; or
(E) Change in Control. Any change, direct or indirect in
Borrowers' capital ownership in excess of 10%; or
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(F) Material Adverse Effect. Any event which creates a Material
Adverse Effect; or
(G) Involuntary Bankruptcy; Appointment of Receiver, etc. (l) A
court enters a decree or order for relief with respect to any guarantor of the
Obligations, Borrowers or any Subsidiaries in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect; or (2) a receiver, liquidator, sequestrator, trustee, custodian or other
fiduciary having similar powers over any guarantor of the Obligations, Borrowers
or any Subsidiaries, or over all or a substantial part of their respective
property, is appointed; or
(H) Voluntary Bankruptcy; Appointment of Receiver, etc. Borrowers
or any Subsidiaries, or any guarantor of the Obligations, commences a voluntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect; consents to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial part of their
property; or makes any assignment for the benefit of creditors; or
(I) Levy. Any lien, levy or assessment is filed or recorded with
respect to or otherwise imposed upon all or any part of Borrowers' assets by the
United States or any department or instrumentality thereof or by any state,
county, municipality or other governmental agency; or
(J) Judgment and Attachments. Any money judgment, writ or warrant
of attachment, levy, or similar process is entered or filed against either or
both Borrowers or any of their assets in an amount in any individual case in
excess of $10,000 or an amount in the aggregate at any time in excess of
$50,000; or
(K) Dissolution; Injunction. Any order, judgment or decree is
entered against either Borrower decreeing the dissolution or split up of such
Borrower, or enjoining, restraining or in any way preventing such Borrower from
conducting all or any material part of its business; or
(L) Loss of Guarantor. Any guarantor of the Obligations dies or
terminates its guaranty or gives notice of termination of its guaranty and a new
guarantor acceptable to Lender, in Lender's sole discretion, is not substituted
within thirty (30) days; or
(M) Failure of Security. Lender does not have or ceases to have a
valid and perfected first priority security interest in the Collateral, or any
of the Loan Documents ceases to be in full force and effect or is declared to be
null and void; or
(N) Subordinated Debt Payments. Borrowers make any payment on
account of indebtedness which has been subordinated to the Obligations, except
to the extent such payment is allowed under any subordination agreement entered
into with Lender.
Notwithstanding anything contained in this Section 7 to the contrary,
Lender shall refrain from exercising its rights and remedies and an Event of
Default shall not be deemed to have occurred by reason of the occurrence of any
of the events set forth in subsections 7.1 (G), 7. l (I), and 7.1(J) of this
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Agreement if, within 30 days from the date thereof, the same is released,
discharged, dismissed, bonded against or satisfied.
7.2 Suspension of Loans. Upon the occurrence of any Default or Event of
Default, notwithstanding any grace period or right to cure, Lender without
notice or demand, may immediately cease making additional Loans or advances
under this Agreement or any other agreement between Borrowers and Lender. The
foregoing shall in no way affect, limit, or waive Lender's sole and absolute
discretion to make advances under this Agreement.
7.3 Acceleration. Upon the occurrence of any Event of Default described
in the foregoing subsections 7.1(G) or 7.1(H), all Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by Borrowers, and this Agreement shall thereupon terminate; provided
however, such termination shall not affect Lender's rights and security interest
in the Collateral or the Obligations. Upon the occurrence and during the
continuance of any other Event of Default, Lender may, by written notice to
either or both Borrowers, declare all or any portion of the Obligations to be,
and the same shall forthwith become, immediately due and payable and Lender may
terminate this Agreement; provided however, such termination shall not affect
Lender's rights and security interest in the Collateral or the Obligations.
7.4 Remedies. Upon the occurrence of an Event of Default, in addition
to and not in limitation of any other rights or remedies available to Lender at
law or in equity, Lender may exercise in respect of the Collateral, all the
rights and remedies of a secured party on default under the UCC and may also (a)
require Borrowers to, and Borrowers hereby agrees that they will, at their
expense and upon request of Lender forthwith, assemble all or part of the
Collateral as directed by Lender and make it available to Lender at a place to
be designated by Lender; (b) require Borrowers to hold all returned Inventory in
trust for Lender, segregate all returned Inventory from all other Inventory of
Borrowers or in Borrowers' possession and conspicuously label said returned
Inventory as Lender's property; (c) withdraw all cash in any blocked account and
apply such monies in payment of the Obligations; and (d) without notice or
demand or legal process, enter upon any premises of Borrowers and take
possession of the Collateral. Borrowers agree that, to the extent notice of sale
of the Collateral or any part thereof shall be required by law, ten days notice
to Borrowers of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification. At any
sale of the Collateral (whether public or private), if permitted by law, Lender
may bid (which bid may be, in whole or in part, in the form of cancellation of
indebtedness) for the purchase of the Collateral or any portion thereof for the
account of Lender. Lender shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. Borrowers shall remain liable
for any deficiency. Lender may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. To the extent permitted by law, Borrowers hereby specifically waive
all rights of redemption, stay or appraisal which it has or may have under any
law now existing or hereafter enacted. Lender shall not be required to proceed
against any Collateral but may proceed against Borrowers and/or any Loan Party
directly.
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7.5 Appointment of Attorney-in-Fact. Borrowers hereby constitute and
appoint Lender as Borrowers' attorney-in-fact with full authority in the place
and stead of Borrowers and in the name of either or both Borrowers, Lender or
otherwise, from time to time in Lender's discretion to take any action and to
execute any instrument that Lender may deem necessary or advisable to accomplish
the purposes of this Agreement, including: (a) to ask, demand, collect, xxx for,
recover, compound, receive and give acquittance and receipts for moneys due and
to become due under or in respect of any of the Collateral; (b) upon the
occurrence of a Default or an Event of Default, to adjust, settle or compromise
the amount or payment of any Account, or release wholly or partly any account
debtor or obligor thereunder or allow any credit or discount thereon; (c) to
receive, endorse, and collect any drafts or other instruments, documents and
chattel paper, in connection with clause (a) above; (d) to file any claims or
take any action or institute any proceedings that Lender may deem necessary or
desirable for the collection of or to preserve the value of any of the
Collateral or otherwise to enforce the rights of Lender with respect to any of
the Collateral; (e) to sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, assignments, verifications and
notices in connection with Accounts and other documents relating to the
Collateral; (f) to notify the postal authorities to change the address for
delivery of Borrowers' mail to an address designated by Lender to receive and
open all mail addressed to either Borrower and to retain all mail relating to
the Collateral and forward all other mail to either Borrower; (g) to make,
settle and adjust all claims and make all determinations and decisions with
respect to Borrowers' insurance policies. The appointment of Lender as
Borrowers' attorney-in-fact and Lender's rights and powers are coupled with an
interest and are irrevocable until indefeasible payment in full and complete
performance of all of the Obligations.
7.6 Limitation on Duty of Lender with Respect to Collateral. Beyond the
safe custody thereof, Lender shall have no duty with respect to any Collateral
in its possession or control (or in the possession or control of any agent or
bailee) or with respect to any income thereon or the preservation of rights
against prior parties or any other rights pertaining thereto. Lender shall be
deemed to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which Lender accords its own property. Lender shall
not be liable or responsible for any loss or damage to any of the Collateral, or
for any diminution in the value thereof, by reason of the act or omission of any
warehouseman, carrier, forwarding agency, consignee, broker or other agent or
bailee selected by Borrowers or selected by Lender in good faith.
7.7 License of Intellectual Property. Borrowers hereby assign, transfer
and convey to Lender, effective upon the occurrence of any Event of Default
hereunder, the non-exclusive right and license to use all Intellectual Property
owned or used by Borrowers together with any goodwill associated therewith, all
to the extent necessary to enable Lender to realize on the Collateral and any
successor or assign to enjoy the benefits of the Collateral. This right and
license shall inure to the benefit of all successors, assigns and transferees of
Lender and its successors, assigns and transferees, whether by voluntary
conveyance, operation of law, assignment, transfer, foreclosure, deed in lieu of
foreclosure or otherwise. Such right and license is granted free of charge,
without requirement that any monetary payment whatsoever be made to Borrowers by
Lender.
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7.8 Waivers, Non-Exclusive Remedies. No failure on the part of Lender
to exercise, and no delay in exercising and no course of dealing with respect
to, any right under this Agreement or the other Loan Documents shall operate as
a waiver thereof; nor shall any single or partial exercise by Lender of any
right under this Agreement or any other Loan Document preclude any other or
further exercise thereof or the exercise of any other right. The rights in this
Agreement and the other Loan Documents are cumulative and shall in no way limit
any other remedies provided by law.
7.9 Demand; Protest. Borrowers waive demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, and notice of nonpayment at maturity, and agrees that Lender may
compromise, settle or release without notice to Borrowers any accounts,
documents, instruments, chattel paper and/or guaranties at any time held by
Lender on which either or both Borrowers may in any way be liable. Borrowers
agree to any extensions of time of payment or partial payment at, before or
after termination of this Agreement.
7.10 Marshaling; Payments Set Aside. Lender shall not be under any
obligation to marshal any assets in favor of any Loan Party or any other party
or against or in payment of any or all of the Obligations. To the extent that
any Loan Party makes a payment or payments to Lender or Lender enforces its
security interests or exercise its rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then to the
extent of such recovery, the Obligations or part thereof originally intended to
be satisfied, and all liens, security interests, rights and remedies therefor,
shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or setoff had not occurred.
SECTION 8 MISCELLANEOUS
8.1 Set Off. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, Lender, each assignee of Lender's interest,
and each participant is hereby authorized by Borrowers at any time or from time
to time, without notice to Borrowers or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and to apply any
and all balances held by it at any of its offices for the account of Borrowers
or any Subsidiaries (regardless of whether such balances are then due to
Borrowers or Subsidiaries) and any other property at any time held or owing by
that Lender or assignee to or for the credit or for the account of Borrowers
against and on account of any of the Obligations then outstanding; provided
however, no participant shall exercise such right without the prior written
consent of Lender.
8.2 Expenses and Attorneys' Fees. Borrowers shall promptly pay all
fees, costs and expenses incurred by Lender in connection with any matters
contemplated by or arising out of this Agreement or the other Loan Documents
including the following, and all such fees, costs and expenses shall be part of
the Obligations, payable on demand and secured by the Collateral: (a) fees,
costs and expenses (including attorneys' fees, allocated costs of internal
counsel and fees of environmental consultants, accountants and other
professionals retained by Lender) incurred in connection with (i)
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the examination, review, due diligence investigation, documentation and closing
of the financing arrangements evidenced by the Loan Documents, and (ii) the
review, negotiation, preparation, documentation, execution and administration of
the Loan Documents, the Loans, and any amendments, waivers, consents,
forbearances and other modifications relating thereto or any subordination or
intercreditor agreements; (b) fees, costs and expenses incurred in creating,
perfecting and maintaining perfection of Lender's rights in and to the
Collateral; (c) fees, costs and expenses incurred in connection with forwarding
to Borrowers the proceeds of Loans including Lender's standard wire transfer
fee; (d) fees, costs, expenses and bank charges, including bank charges for
returned checks, incurred by Lender in establishing, maintaining and handling
lock box accounts, blocked accounts or other accounts for collection of the
Collateral; (e) fees, costs, expenses (including attorneys' fees and allocated
costs of internal counsel) and costs of settlement incurred in collecting upon
or enforcing rights against the Collateral or incurred in any action to enforce
this Agreement or the other Loan Documents or to collect any payments due from
Borrowers or any other Loan Party under this Agreement or any other Loan
Document or incurred in connection with any refinancing or restructuring of the
credit arrangements provided under this Agreement, whether in the nature of a
"workout" or in connection with any insolvency or bankruptcy proceedings or
otherwise.
8.3 Indemnity. In addition to the payment of expenses pursuant to
subsection 8.2, Borrowers shall indemnify, pay and hold Lender and the officers,
directors, employees, agents, consultants, auditors, persons engaged by Lender
to evaluate or monitor the Collateral, affiliates and attorneys of Lender and
such holders (collectively called the "Indemnitees") harmless from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including the fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such Indemnitee shall be
designated a party thereto) that may be imposed on, incurred by, or asserted
against that Indemnitee, in any manner relating to or arising out of this
Agreement or the other Loan Documents, the consummation of the transactions
contemplated by this Agreement, the statements contained in the commitment
letters, if any, delivered by Lender, Lender's agreement to make the Loans
hereunder, the use or intended use of the proceeds of any of the Loans or the
exercise of any right or remedy hereunder or under the other Loan Documents (the
"Indemnified Liabilities"); provided however, Borrowers shall have no obligation
to an Indemnitee hereunder with respect to Indemnified Liabilities arising from
the gross negligence or willful misconduct of that Indemnitee as determined by a
court of competent jurisdiction.
8.4 Amendments and Waivers. No amendment, modification, termination or
waiver of any provision of this Agreement or of the other Loan Documents, or
consent to any departure by Borrowers or any Loan Party therefrom, shall be
effective unless the same shall be in writing and signed by Lender. Each
amendment, modification, termination or waiver shall be effective only in the
specific instance and for the specific purpose for which it was given.
8.5 Notices. Unless otherwise specifically provided herein, all notices
shall be in writing addressed to the respective party as set forth below and may
be personally served, telecopied or sent by overnight courier service or United
States mail and shall be deemed to have been given: (a) if delivered
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in person, when delivered; (b) if delivered by telecopy, on the date of
transmission if transmitted on a Business Day before 4:00 p.m. Central time or,
if not, on the next succeeding Business Day; (c) if delivered by overnight
courier, two (2) days after delivery to such courier properly addressed; or (d)
if by U.S. Mail, four (4) Business Days after depositing in the United States
mail, with postage prepaid and properly addressed.
If to Borrower: XXXXXXXX TECHNOLOGIES OF MINNESOTA, INC.
00000 Xxxxxxx Xxx.
Xxxxxx, Xxxxxxxxx 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
XXXXXXXX TECHNOLOGIES OF GEORGIA, INC.
000 Xxxxxxx Xxx.
Xxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to Lender: XXXXXX FINANCIAL, INC.
Attn: Portfolio Manager,
Xxxxxx Commercial Funding
000 X. Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telephone No.: (312) 441 -7000
Telecopy No.: (000) 000-0000
or to such other address as the party addressed shall have previously designated
by written notice to the serving party, given in accordance with this subsection
8.5.
8.6 Survival of Representations and Warranties and Certain Agreements.
All agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement and the making of the Loans hereunder.
Notwithstanding anything in this Agreement or implied by law to the Contrary,
the agreements of Borrowers and Lender set forth in subsections 8.2. 8.3 8.11,
8.14 and 8.15 (including, without limitation, Borrowers' agreement to pay fees,
agreement to indemnify Lender, agreement as to choice of law and jurisdiction
and Borrowers' and Lender's waiver of a jury trial) shall survive the payment of
the Loans and the termination of this Agreement.
8.7 Indulgence Not Waiver. No failure or delay on the part of Lender in
the exercise of any power, right or privilege shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or
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privilege preclude other or further exercise thereof or of any other right,
power or privilege.
8.8 Entire Agreement. This Agreement and the other Loan Documents
embody the entire agreement among the parties hereto and supersede all prior
commitments, agreements, representations, and understandings, whether written or
oral, relating to the subject matter hereof, and may not be contradicted or
varied by evidence of prior, contemporaneous, or subsequent oral agreements or
discussions of the parties hereto.
8.9 Severability of Provisions. Each provision of this Agreement shall
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
8.10 Headings. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
8.11 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
8.12 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, except that Borrowers may not assign their rights or obligations
hereunder without the prior written consent of Lender. Lender may assign its
rights and delegate its obligations under this Agreement and further may assign,
or sell participations in, all or any part of the Loans, or any other interest
herein to an affiliate or to another Person. Lender shall be relieved of its
obligations hereunder with respect to the assigned portion thereof. Borrowers
hereby acknowledge and agree that any assignment will give rise to a direct
obligation of Borrowers to the assignee and that the assignee shall be
considered to be a "Lender". Lender may furnish any information concerning
Borrowers and Subsidiaries in its possession from time to time to assignees and
participants (including prospective assignees and participants).
8.13 No Fiduciary Relationship; Limitation of Liabilities.
(A) No provision in this Agreement or in any of the other Loan
Documents and no course of dealing between the parties shall be deemed to create
any fiduciary duty by Lender to Borrowers.
(B) Neither Lender, nor any affiliate, officer, director,
shareholder, employee, attorney, or agent of Lender shall have any liability
with respect to, and Borrowers hereby waive, release, and agree not to xxx any
of them upon, any claim for any special, indirect, incidental, or consequential
damages suffered or incurred by Borrowers in connection with, arising out of, or
in any way related to, this Agreement or any of the other Loan Documents, or any
of the transactions
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contemplated by this Agreement or any of the other Loan Documents. Borrowers
hereby waive, release, and agree not to xxx Lender or any of Lender's
affiliates, officers, directors, employees, attorneys, or agents for punitive
damages in respect of any claim in connection with, arising out of, or in any
way related to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the transactions
contemplated hereby.
8.14 CONSENT TO JURISDICTION AND WAIVER OF PERSONAL SERVICE. BORROWERS
HEREBY CONSENT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN
THE COUNTY OF XXXX, STATE OF ILLINOIS AND IRREVOCABLY AGREES THAT, SUBJECT TO
LENDER'S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS.
BORROWERS EXPRESSLY SUBMIT AND CONSENT TO THE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. BORROWERS HEREBY WAIVE
PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE UPON BORROWER BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED, ADDRESSED TO BORROWER, AT THE ADDRESS SET FORTH IN THIS
AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS
BEEN POSTED.
8.15 WAIVER OF JURY TRIAL. BORROWERS AND LENDER HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. BORROWERS AND LENDER
ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON
THE WAIVER IN THEIR RELATED FUTURE DEALINGS. BORROWERS AND LENDER FURTHER
WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH THEIR LEGAL
COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES THEIR JURY TRIAL RIGHTS.
8.16 Construction. Borrowers and Lender each acknowledge that they has
had the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement and the other Loan Documents with their
legal counsel and that this Agreement and the other Loan Documents shall be
construed as if jointly drafted by Borrower and Lender.
8.17 Counterparts; Effectiveness. This Agreement and any amendments,
waivers, consents, or supplements 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, but all of which
counterparts together shall constitute but one and the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto. Delivery of an executed counterpart of a signature
page to this Agreement, any amendments,
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waivers, consents or supplements, or to any other Loan Document by telecopier
shall be as effective as delivery of a manually executed counterpart thereof.
8.18 Confidentiality. Lender shall hold all nonpublic information
obtained pursuant to the requirements hereof and identified as such by Borrowers
in accordance with such its customary procedures for handling confidential
information of this nature and in accordance with safe and sound business
practices and in any event may make disclosure to such of its respective
affiliates, officers, directors, employees, agents and representatives as need
to know such information in connection with the Loans. If Lender or any of its
affiliates is otherwise a creditor of Borrowers, Lender or such affiliate may
use the information in connection with its other credits. Lender may also make
disclosure reasonably required by a bona fide offeree or assignee (or
participation), or as required or requested by any Governmental Authority or
representative thereof, or pursuant to legal process, or to its accountants,
lawyers and other advisors, and shall require any such offeree or assignee (or
participant) to agree (and require any of its offerees, assignees or
participants to agree) to comply with this subsection 8.18. In no event shall
Lender be obligated or required to return any materials furnished by Borrowers.
Witness the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
XXXXXX FINANCIAL, INC. XXXXXXXX TECHNOLOGIES OF
MINNESOTA, INC.
By: /s/ Xxxxxxx X. XxXxxx By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxxx X. XxXxxx Name: Xxxxxx X. Xxxxx
Title: Vice President Title: Executive Vice President
FEIN: 47-18779940
XXXXXXXX TECHNOLOGIES OF
GEORGIA, INC.
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Executive Vice President
FEIN: 58-224483
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CONDITIONS RIDER
This Conditions Rider is attached to and made a part of that certain
Loan and Security Agreement dated as of January 29, 1998 and entered into among
Xxxxxxxx Technologies of Minnesota, Inc., Xxxxxxxx Technologies of Georgia, Inc.
and Xxxxxx Financial, Inc.
(A) Closing Deliveries. Lender shall have received, in form and
substance satisfactory to Lender, all documents, instruments and information and
all other agreements, notes, certificates, orders, authorizations, financing
statements, mortgages and other documents which Lender may at any time request,
including, but not limited to guarantees of Xxxxxxxx Technologies, Inc., Xxxxxxx
Xxxxxxx, Xxxxxx Xxxxx and Xxxxxx Xxxxxxxx, a release of liens from Xxxxxxxx
Xxxxxx Industries, and other agreements or documents referenced in this Rider.
(B) Security Interests. Lender shall have received satisfactory
evidence that all security interests and liens granted to Lender pursuant to
this Agreement or the other Loan Documents have been duly perfected and
constitute first priority liens on the Collateral, and that all security
interests, liens and other claims of Xxxxxxxx Xxxxxx Industries have been
released or subordinated to Lender's satisfaction.
(C) Closing Date Availability. After giving effect to the consummation
of the transactions contemplated hereunder on the closing date and the payment
by Borrower of all costs, fees and expenses relating thereto, the Maximum
Revolving Loan Amount on the closing date shall exceed the requests for
Revolving Advances on such date by at least $170,000.00.
(D) Representations and Warranties. The representations and warranties
contained in this Conditions Rider and in the Loan Documents shall be true,
correct and complete in all material respects on and as of each funding date of
the Loans to the same extent as though made on and as of that date, except for
any representation or warranty limited by its terms to a specific date and
taking into account any disclosures made by Borrowers to Lender after the
closing date and approved by Lender.
(E) Fees. On the closing date or any funding date of a Revolving
Advance, Borrowers shall have paid to Lender all fees due on or prior to such
dates.
(F) No Default. No event shall have occurred and be continuing or would
result from the consummation of the requested borrowing that would constitute an
Event of Default or a Default.
(G) Performance of Agreements. Each Loan Party shall have performed in
all material respects all agreements and satisfied all conditions which any Loan
Document provides shall be performed by it on or before that funding date of any
Loan.
(H) No Prohibition. No order, judgment or decree of any court,
arbitrator or governmental authority shall purport to enjoin or restrain Lender
from making any Loans.
(I) No Litigation. There shall not be pending or, to the knowledge of
Borrowers, threatened, any action, charge, claim, demand, suit, proceeding,
petition, governmental investigation
or arbitration by, against or affecting any Loan Party or any of its
Subsidiaries or any property of any Loan Party or any of its Subsidiaries that
has not been disclosed to Lender by Borrowers in writing, and there shall have
occurred no development in any such action, charge, claim, demand, suit,
proceeding, petition, governmental investigation or arbitration that, in the
opinion of Lender, would reasonably be expected to have a Material Adverse
Effect.
(J) Accounting Controls. Borrowers shall implement accounting controls
as are required by Lender, including, but not limited to (1) providing for
Lender's CAMG unit to account, process and collect Borrowers' Accounts during
the term of this Agreement, for which service Borrowers shall pay to Lender
one-half of one percent (0.5%) of the total volume of Borrowers' Accounts
processed, and (2) acquiring, implementing and/or hiring such accounting
programs, systems and personnel as Lender deems effective, reliable and
competent.
(K) Capital Contribution to Borrowers. Borrowers' parent company and/or
officers of such company shall have contributed a minimum of $1,000,000 to
Borrowers, which contribution shall take the form of an equity contribution or a
loan subordinated to the claims of Borrowers' creditors, including the claims of
Lender, but excluding only claims of Borrowers' Affiliates.
(L) Capital Contribution to Borrowers' Parent Company. A minimum of
$1,000,000 shall have been contributed to Borrowers' parent company, which
contribution shall take the form of an equity contribution or a loan
subordinated to the claims of such company's creditors, including the claims of
Lender, but excluding claims of its Affiliates. This contribution must be made
in addition to the capital contribution required under subsection (K) of this
Rider. Such contribution may not be withdrawn from such company during the term
of this Agreement without Lender's written consent. Such contribution shall only
be used to fund the ordinary business operations of such company, and may not be
used to any extraordinary expenditures (e.g. funding of a merger, acquisition,
winding down or insolvency proceeding) without Lender's written consent.
(M) Real Property Term Loan. The Real Property Term Loan referenced in
Section 2.2 of the Agreement is further conditioned upon (1) the receipt by
Lender of first priority mortgage liens on the Real Property insured by a title
insurance company acceptable to Lender with such coverages as are Lender
requires and subject only to such exceptions as Lender accepts, and (2) phase II
environmental studies for the Real Property which report results that are
acceptable to Lender or an environmental indemnity from and an escrow with
Xxxxxxxx-Xxxxxx Industries and Borrowers, in form and substance satisfactory to
Lender.
(N) Equipment Term Loan. The Equipment Term Loan referred in Section
2.2 of the Agreement is further conditioned upon a satisfactory inspection
report of Lender's auditors.
REPORTING ADDENDUM
This Reporting Addendum is attached and made a part of that certain
Loan and Security Agreement, dated as of January 29, 1998 and entered into among
Xxxxxxxx Technologies of Minnesota, Inc., Xxxxxxxx Technologies of Georgia, Inc.
and Xxxxxx Financial, Inc.
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(A) Collateral Reports. Borrowers shall execute and deliver to Lender,
no later than the 15th day of each month, or more frequently if requested by
Lender, a detailed aging of the Accounts, a reconciliation statement and a
summary aging, by vendor, of all accounts payable and any book overdraft.
Borrowers shall deliver to Lender not less than twice per week, or more
frequently if requested by Lender, collection reports, sales journals and
invoices. Borrowers shall also deliver to Lender at Lender's request, original
delivery receipts, account debtors' purchase orders, shipping instructions,
bills of lading and other documentation respecting shipment arrangements. Absent
such a request by Lender, copies of all such documentation shall be held by
Borrowers as custodians for Lender.
(B) Returns. Returns and allowances, if any, as between Borrowers and
any of either of their account debtors, shall be permitted by Borrowers on the
same basis and in accordance with the usual customary practices of Borrowers as
they exist at the time of the execution and delivery of this Agreement. If at
any time prior to the occurrence of an Event of Default any account debtor
returns any inventory to either Borrower, such Borrower shall promptly determine
the reason for such return and, if such Borrower accepts such return, issue a
credit memorandum (with a copy to be sent to Lender) in the appropriate amount
to such account debtor. Borrowers shall promptly notify Lender of all returns
and recoveries and of all disputes and claims.
(C) Financial Statements, Reports Certificates. Borrowers agree to
deliver to Lender: (a) as soon as available, but in any event within 90 days
after the end of each month during each of Borrowers' fiscal years, a company
prepared balance sheet and profit and loss statement covering Borrowers'
operations during such period; and (b) as soon as available, but in any event
within 90 days after the end of each of Borrowers' fiscal years, financial
statements of both Borrower for each such fiscal period, reviewed by independent
certified public accountants acceptable to Lender. Such financial statements
shall include a balance sheet and profit and loss statement and the accountants'
letter to management. Together with the above, Borrowers shall also deliver
Borrowers' Form 10-Qs, 10-Ks or 8-Ks, if any, as soon as the same become
available, and any other report reasonably requested by Lender relating to the
Collateral and the financial condition of Borrowers and a certificate signed by
the chief financial officer of each Borrower to the effect that all reports,
statements or computer prepared information of any kind or nature delivered or
caused to be delivered to Lender fairly present the financial condition of
Borrowers and that there exists on the date of delivery of such certificate to
Lender no condition or event which constitutes an Event of Default.
(D) Tax Returns. Receipts. Borrowers agree to deliver to Lender copies
of each of Borrowers' future federal income tax returns, and any amendments
thereto, within 90 days of the filing thereof with the Internal Revenue Service.
Borrowers further agree to promptly deliver to Lender, upon request,
satisfactory evidence of Borrowers' payment of all federal withholding taxes
required to be paid by Borrowers.
(E) Guarantor Reports. Borrowers agree to cause any guarantor of any of
the Obligations to deliver its annual financial statements, Form 10-Qs, 10-Ks or
8-Ks, if any, and copies of all federal income tax returns as soon as the same
are available and in any event no later than 90 days after the same are required
to be filed by law.
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(F) Borrowing Base Certificates. Registers and Journals. On each
Business Day upon which Borrowers request a Revolving Advance, but in no event
less than twice during any week, Borrowers shall deliver to Lender for such
Business Day: (1) a Borrowing Base Certificate in the form prescribed by Lender;
(2) an invoice register or sales journal describing all sales of Borrowers, in
form and substance satisfactory to Lender, and, if Lender so requests, copies of
invoices evidencing such sales and proofs of delivery relating thereto; (3) a
cash receipts journal; (4) a credit memo journal; and (5) an adjustment journal,
setting forth all adjustments to Borrowers' accounts receivable.
(G) Appraisals. Appraisals as set forth in subsection 5.2.
(H) Projections. As soon as available and in any event no later than
the last day of Borrowers' fiscal year, Borrower will deliver consolidated and
consolidating projections of Borrowers and Subsidiaries for the forthcoming
fiscal year, month by month.
(I) Other Information. With reasonable promptness, Borrowers will
deliver such other information and data as Lender may reasonably request from
time to time.
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