EXHIBIT 10.1
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (as amended, modified or supplemented
from time to time, this "AGREEMENT") made this ____ day of _____________, 2002
by and between LASALLE BANK NATIONAL ASSOCIATION, a national banking association
("LENDER"), 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000-0000, and ALLIED
HEALTHCARE PRODUCTS, INC., a Delaware corporation, having its principal place of
business at 0000 Xxxxxxxx Xxxxxx, Xx. Xxxxx, Xxxxxxxx 00000 ("BORROWER").
W I T N E S S E T H:
WHEREAS, Borrower may, from time to time, request Loans from Lender,
and the parties wish to provide for the terms and conditions upon which such
Loans or other financial accommodations, if made by Lender, shall be made;
NOW, THEREFORE, in consideration of any Loan (including any Loan by
renewal or extension) hereafter made to Borrower by Lender, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by Borrower, the parties agree as follows:
1. DEFINITIONS.
"ACCOUNT", "ACCOUNT DEBTOR", "CHATTEL PAPER", "COMMERCIAL TORT CLAIMS",
"DEPOSIT ACCOUNTS", "DOCUMENTS", "ELECTRONIC CHATTEL PAPER", "EQUIPMENT",
"FIXTURES", "GENERAL INTANGIBLES", "GOODS", "INSTRUMENTS", "INVENTORY",
"INVESTMENT PROPERTY", "LETTER-OF-CREDIT RIGHT", "PROCEEDS" and "TANGIBLE
CHATTEL PAPER" shall have the respective meanings assigned to such terms in the
Illinois Uniform Commercial Code, as the same may be in effect from time to
time.
"AFFILIATE" shall mean any Person (i) which directly or indirectly
through one or more intermediaries controls, is controlled by, or is under
common control with, Borrower, (ii) which beneficially owns or holds five
percent (5%) or more of the voting control or equity interests of Borrower, or
(iii) five percent (5%) or more of the voting control or equity interests of
which is beneficially owned or held by Borrower.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or
(i) with respect to all matters, determinations, fundings and payments in
connection with LIBOR Rate Loans, any day on which banks in London, England or
Chicago, Illinois are required or permitted to close, and (ii) with respect to
all other matters, any day that banks in Chicago, Illinois are required or
permitted to close.
"CAPITAL EXPENDITURE LOANS" shall mean the Loans made pursuant to
subsection 2(b) hereof.
"CAPITAL EXPENDITURES" shall mean with respect to any period, the
aggregate of all expenditures (whether paid in cash or accrued as liabilities
and including expenditures for capitalized lease obligations) by Borrower during
such period that are required by generally accepted accounting principles,
consistently applied, to be included in or reflected by the property, plant and
equipment or similar fixed asset accounts (or intangible accounts subject to
amortization) on the balance sheet of Borrower.
"COLLATERAL" shall mean all of the property of Borrower described in
Section 5 hereof, together with all other real or personal property of any
Obligor or any other Person now or hereafter pledged to Lender to secure, either
directly or indirectly, repayment of any of the Liabilities, other than the
Excluded Real Property Collateral.
"EBITDA" shall mean, with respect to any period, Borrower's net income
after taxes for such period (excluding any after-tax gains or losses on the sale
of assets (other than sales of Inventory in the ordinary course of business) and
excluding other after-tax extraordinary gains or losses) plus interest expense,
income tax expense, depreciation and amortization for such period, less gains
and losses
attributable to any fixed asset sales made during such period, plus or minus any
other non-cash charges or gains which have been subtracted or added in
calculating net income after taxes for such period.
"ELIGIBLE ACCOUNT" shall mean an Account owing to Borrower which is
acceptable to Lender in its sole discretion determined in good faith for lending
purposes (provided that Lender shall give Borrower written notice of any
eligibility criteria established by Lender and not set forth herein). Without
limiting Lender's discretion, Lender shall, in general, consider an Account to
be an Eligible Account if it meets, and so long as it continues to meet, the
following requirements:
(i) it is genuine and in all respects what it purports to be;
(ii) it is owned by Borrower, Borrower has the right to
subject it to a security interest in favor of Lender or assign it to
Lender and it is subject to a first priority perfected security
interest in favor of Lender and to no other claim, lien, security
interest or encumbrance whatsoever, other than Permitted Liens;
(iii) it arises from (A) the performance of services by
Borrower in the ordinary course of Borrower's business, and such
services have been fully performed and acknowledged and accepted by the
Account Debtor thereunder; or (B) the sale or lease of Goods by
Borrower in the ordinary course of Borrower's business, and (x) such
Goods have been completed in accordance with the Account Debtor's
specifications (if any) and delivered to the Account Debtor, (y) such
Account Debtor has not refused to accept, returned or offered to
return, any of the Goods which are the subject of such Account, and (z)
Borrower has possession of, or Borrower has delivered to Lender (at
Lender's reasonable request) shipping and delivery receipts evidencing
delivery of such Goods;
(iv) it is evidenced by an invoice rendered to the Account
Debtor thereunder, is due and payable within ninety (90) days after the
date of the invoice and does not remain unpaid ninety (90) days past
the invoice date thereof; provided, however, that if more than
twenty-five percent (25%) of the aggregate dollar amount of invoices
owing by a particular Account Debtor remain unpaid ninety (90) days
after the respective invoice dates thereof, then all Accounts owing by
that Account Debtor shall be deemed ineligible;
(v) it is a valid, legally enforceable and unconditional
obligation of the Account Debtor thereunder, and it shall not be an
Eligible Account to the extent of any setoff, counterclaim, credit,
allowance or adjustment by such Account Debtor, or if it is subject to
any claim by such Account Debtor denying liability thereunder in whole
or in part;
(vi) it does not arise out of a contract or order which fails
in any material respect to comply with the requirements of applicable
law;
(vii) the Account Debtor thereunder is not a director,
officer, employee or agent of Borrower, or a Subsidiary, Parent or
Affiliate;
(viii) it is not an Account with respect to which the Account
Debtor is the United States of America or any state or local
government, or any department, agency or instrumentality thereof,
unless Borrower assigns its right to payment of such Account to Lender
pursuant to, and in full compliance with, the Assignment of Claims Act
of 1940, as amended, or any comparable state or local law, as
applicable;
(ix) it is not an Account with respect to which the Account
Debtor is located in a state which requires Borrower, as a precondition
to commencing or maintaining an action in the courts of that state,
either to (A) receive a certificate of authority to do business and be
in good standing in such state; or (B) file a notice of business
activities report or similar report with such state's taxing authority,
unless (x) Borrower has taken one of the actions described in clauses
(A) or (B); (y) the failure to take one of the actions described in
either clause (A) or (B)
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may be cured retroactively by Borrower at its election; or (z) Borrower
has proven, to Lender's satisfaction, that it is exempt from any such
requirements under any such state's laws;
(x) the Account Debtor is located within the United States of
America;
(xi) it is not an Account with respect to which the Account
Debtor's obligation to pay is subject to any repurchase obligation or
return right, as with sales made on a xxxx-and-hold, guaranteed sale,
sale on approval, sale or return or consignment basis;
(xii) it is not an Account (A) with respect to which any
representation or warranty contained in this Agreement is untrue; or
(B) which violates any of the covenants of Borrower contained in this
Agreement;
(xiii) it is not an Account which, when added to a particular
Account Debtor's other indebtedness to Borrower, exceeds a credit limit
determined by Lender in its sole discretion determined in good faith
for that Account Debtor (except that Accounts excluded from Eligible
Accounts solely by reason of this clause (xiii) shall be Eligible
Accounts to the extent of such credit limit), provided that Lender
shall give Borrower written notice of any such credit limit; and
(xiv) it is not an Account with respect to which the prospect
of payment or performance by the Account Debtor is or will be impaired,
as determined by Lender in its sole discretion determined in good
faith.
"ELIGIBLE INVENTORY" shall mean Inventory of Borrower which is
acceptable to Lender in its sole discretion, determined in good faith, for
lending purposes (provided that Lender shall give Borrower written notice of any
eligibility criteria established by Lender and not set forth herein). Without
limiting Lender's discretion, Lender shall, in general, consider Inventory to be
Eligible Inventory if it meets, and so long as it continues to meet, the
following requirements:
(i) it is owned by Borrower, Borrower has the right to subject
it to a security interest in favor of Lender and it is subject to a
first priority perfected security interest in favor of Lender and to no
other claim, lien, security interest or encumbrance whatsoever, other
than Permitted Liens;
(ii) it is located on one of the premises listed on Exhibit A
(or other locations of which Lender has been advised in writing
pursuant to subsection 12(b)(i) hereof) and is not in transit;
(iii) if held for sale or lease or furnishing under contracts
of service, it is (except as Lender may otherwise consent in writing)
new and unused and free from defects which would, in Lender's sole
determination determined in good faith, affect its market value;
(iv) it is not stored with a bailee, consignee, warehouseman,
processor or similar party unless Lender has given its prior written
approval and Borrower has caused any such bailee, consignee,
warehouseman, processor or similar party to issue and deliver to
Lender, in form and substance acceptable to Lender, such Uniform
Commercial Code financing statements, warehouse receipts, waivers and
other documents as Lender shall reasonably require;
(v) Lender has determined in good faith, in accordance with
Lender's customary business practices, that it is not unacceptable due
to age, type, category or quantity; and
(vi) it is not Inventory (A) with respect to which any of the
representations and warranties contained in this Agreement are untrue;
or (B) which violates any of the covenants of Borrower contained in
this Agreement.
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"ENVIRONMENTAL LAWS" shall mean all federal, state, district, local and
foreign laws, rules, regulations, ordinances, and consent decrees relating to
health, safety, hazardous substances, pollution and environmental matters, as
now or at any time hereafter in effect, applicable to Borrower's business or
facilities owned or operated by Borrower, including laws relating to emissions,
discharges, releases or threatened releases of pollutants, contamination,
chemicals, or hazardous, toxic or dangerous substances, materials or wastes into
the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata) or otherwise relating to the
generation, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, modified or restated from time to time.
"EVENT OF DEFAULT" shall have the meaning specified in Section 15
hereof.
"EXCLUDED REAL PROPERTY COLLATERAL" shall mean any and all real
property or other property described in and securing Borrower's obligations
under the Real Estate Loan Agreement.
"FEDERAL FUNDS RATE" shall mean the rate published by the Federal
Reserve Bank of New York on the next succeeding Business Day as the "Federal
Funds Rate" or if no such rate is published for any Business Day, at the average
rate quoted for such day for such transactions from three (3) federal funds
brokers of recognized standing selected by Lender.
"FISCAL YEAR" shall mean each twelve (12) month accounting period of
Borrower, which ends on June 30 of each year.
"FIXED CHARGES" shall mean for any period, without duplication,
scheduled payments of principal during the applicable period with respect to all
indebtedness of Borrower for borrowed money, plus scheduled payments of
principal during the applicable period with respect to all capitalized lease
obligations of Borrower, plus scheduled payments of interest during the
applicable period with respect to all indebtedness of Borrower for borrowed
money including capital lease obligations, plus unfinanced Capital Expenditures
of Borrower during the applicable period, plus payments during the applicable
period in respect of income or franchise taxes of Borrower.
"HAZARDOUS MATERIALS" shall mean any hazardous, toxic or dangerous
substance, materials and wastes, including, without limitation, hydrocarbons
(including naturally occurring or man-made petroleum and hydrocarbons),
flammable explosives, asbestos, urea formaldehyde insulation, radioactive
materials, biological substances, polychlorinated biphenyls, pesticides,
herbicides and any other kind and/or type of pollutants or contaminants
(including, without limitation, materials which include hazardous constituents),
sewage, sludge, industrial slag, solvents and/or any other similar substances,
materials, or wastes and including any other substances, materials or wastes
that are or become regulated under any Environmental Law (including, without
limitation any that are or become classified as hazardous or toxic under any
Environmental Law).
"INDEMNIFIED PARTY" shall have the meaning specified in Section 18
hereof.
"INTEREST PERIOD" shall have the meaning specified in subsection
4(a)(ii) hereof.
"INTEREST RATE PROTECTION AGREEMENT" shall mean any interest rate swap,
cap, collar or similar interest rate hedging strategy or agreement now existing
or hereafter entered into by Borrower.
"INTEREST RATE PROTECTION AGREEMENT OBLIGATIONS" shall mean all
obligations, liabilities, charges, costs, expenses and other amounts payable to
Lender or its affiliates under any Interest Rate Protection Agreement between
the Borrower and Lender.
"LETTER OF CREDIT" shall mean any Letter of Credit issued on behalf of
Borrower in accordance with this Agreement.
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"LETTER OF CREDIT OBLIGATIONS" shall mean, as of any date of
determination, the sum of (i) the aggregate undrawn face amount of all Letters
of Credit, and (ii) the aggregate unreimbursed amount of all drawn Letters of
Credit not already converted to Loans hereunder.
"LIABILITIES" shall mean any and all obligations, liabilities and
indebtedness of Borrower to Lender or to any parent, affiliate or subsidiary of
Lender of any and every kind and nature, howsoever created, arising or evidenced
and howsoever owned, held or acquired, whether now or hereafter existing,
whether now due or to become due, whether primary, secondary, direct, indirect,
absolute, contingent or otherwise (including, without limitation, obligations of
performance), whether several, joint or joint and several, and whether arising
or existing under written or oral agreement or by operation of law, including,
without limitation, all Interest Rate Protection Agreement Obligations.
"LIBOR RATE" shall mean, with respect to any LIBOR Rate Loan for any
Interest Period, a rate per annum equal to (a) the offered rate for deposits in
United States dollars for a period equal to such Interest Period as it appears
on Telerate page 3750 as of 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period. "Telerate page 3750" means the display
designated as "Page 3750" on the Telerate Service (or such other page as may
replace page 3750 of that service or such other service) as may be nominated by
the British Bankers' Association as the vendor for the purpose of displaying
British Bankers' Association interest settlement rates for United States dollar
deposits) divided by (b) a number equal to 1.0 minus the maximum reserve
percentages (expressed as a decimal fraction) including, without limitation,
basic supplemental, marginal and emergency reserves under any regulations of the
Board of Governors of the Federal Reserve System or other governmental authority
having jurisdiction with respect thereto, as now and from time to time in
effect, for Eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) which are required to be maintained
by Lender by the Board of Governors of the Federal Reserve System. The LIBOR
Rate shall be adjusted automatically on and as of the effective date of any
change in such reserve percentage.
"LIBOR RATE LOANS" shall mean the Loans bearing interest with reference
to the LIBOR Rate.
"LOANS" shall mean all loans and advances made by Lender to or on
behalf of Borrower hereunder.
"LOCK BOX" and "LOCK BOX ACCOUNT" shall have the meanings specified in
subsection 8(a) hereof.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the
business, property, assets, operations or condition, financial or otherwise, of
a Person.
"MAXIMUM LOAN LIMIT" shall mean Nineteen Million and No/100 Dollars
($19,000,000.00)
"MAXIMUM REVOLVING LOAN LIMIT" shall have the meaning specified in
subsection 2(a) hereof.
"OBLIGOR" shall mean Borrower and each other Person who is or shall
become primarily or secondarily liable for any of the Liabilities.
"ORIGINAL TERM" shall have the meaning specified in Section 10 hereof.
"OTHER AGREEMENTS" shall mean all agreements, instruments and
documents, other than this Agreement, including, without limitation, guaranties,
mortgages, trust deeds, pledges, powers of attorney, consents, assignments,
contracts, notices, security agreements, leases, financing statements, any
Interest Rate Protection Agreements between the Borrower and Lender (or its
affiliates) and all other writings heretofore, now or from time to time
hereafter executed by or on behalf of Borrower or any other Person and delivered
to Lender or to any parent, affiliate or subsidiary of Lender in connection with
the
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Liabilities or the transactions contemplated hereby, as each of the same may be
amended, modified or supplemented from time to time.
"PARENT" shall mean any Person now or at any time or times hereafter
owning or controlling (alone or with any other Person) at least a majority of
the issued and outstanding equity of Borrower.
"PBGC" shall have the meaning specified in subsection 12(b)(v) hereof.
"PERMITTED LIENS" shall mean (i) statutory liens of landlords,
carriers, warehousemen, processors, mechanics, materialmen or suppliers incurred
in the ordinary course of business and securing amounts not yet due or declared
to be due by the claimant thereunder or amounts which are being contested in
good faith and by appropriate proceedings and for which Borrower has maintained
adequate reserves; (ii) liens or security interests in favor of Lender; (iii)
zoning restrictions and easements, licenses, covenants and other restrictions
affecting the use of real property that do not individually or in the aggregate
have a material adverse effect on Borrower's ability to use such real property
for its intended purpose in connection with Borrower's business; (iv) liens in
connection with purchase money indebtedness and capitalized leases otherwise
permitted pursuant to this Agreement, provided, that such liens attach only to
the assets the purchase of which was financed by such purchase money
indebtedness or which is the subject of such capitalized leases; (v) liens set
forth on Schedule 1; (vi) liens specifically permitted by Lender in writing;
(vii) liens granted pursuant to the Real Estate Loan Agreement or any other
document, instrument or agreement entered into by Borrower in connection with
any refinancing permitted pursuant to this Agreement, provided that such liens
attach only to the property described in and securing Borrower's obligations
under the Real Estate Loan Agreement; and (viii) involuntary liens securing
amounts less than $100,000.00 and which are released or for which a bond
acceptable to Lender in its sole discretion, determined in good faith, has been
posted within ten (10) days of its creation.
"PERSON" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, entity, party or foreign or United
States government (whether federal, state, county, city, municipal or
otherwise), including, without limitation, any instrumentality, division,
agency, body or department thereof.
"PLAN" shall have the meaning specified in subsection 12(b)(v) hereof.
"PRIME RATE" shall mean Lender's publicly announced prime rate (which
is not intended to be Lender's lowest or most favorable rate in effect at any
time) in effect from time to time.
"PRIME RATE LOANS" shall means the Loans bearing interest with
reference to the Prime Rate.
"REAL ESTATE LOAN AGREEMENT" shall mean that certain Deed of Trust,
Assignment of Rents and Security Agreement and Promissory Note entered into by
and between Borrower, Xxxxxx X. Hipshind, Jr., as Trustee and LaSalle Bank
National Association f/k/a LaSalle National Bank dated August 7, 1998. For
purposes of this paragraph, termination shall include the giving of notice of
termination of said agreement by either Borrower, Xxxxxx X. Hipshind, Jr., as
Trustee or LaSalle Bank National Association f/k/a/ LaSalle National Bank.
"RENEWAL TERM" shall have the meaning specified in Section 10 hereof.
"REVOLVING LOAN LIMIT" shall have the meaning specified in subsection
2(a) hereof.
"REVOLVING LOANS" shall have the meaning specified in subsection 2(a)
hereof.
"SUBSIDIARY" shall mean any corporation of which more than fifty
percent (50%) of the outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether at the time stock of any other class of such corporation shall have or
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might have voting power by reason of the happening of any contingency) is at the
time, directly or indirectly, owned by Borrower, or any partnership, joint
venture or limited liability company of which more than fifty percent (50%) of
the outstanding equity interests are at the time, directly or indirectly, owned
by Borrower or any partnership of which Borrower is a general partner.
"TANGIBLE NET WORTH" shall have the meaning specified in subsection
14(a) hereof.
"TAX" shall mean, in relation to any LIBOR Rate Loans and the
applicable LIBOR Rate, any tax, levy, impost, duty, deduction, withholding or
charges of whatever nature required to be paid by Lender and/or (ii) to be
withheld or deducted from any payment otherwise required hereby to be made by
Borrower to Lender; provided, that the term "Tax" shall not include any taxes
imposed upon the net income of Lender.
2. LOANS.
(a) REVOLVING LOANS.
Subject to the terms and conditions of this Agreement and the Other
Agreements, during the Original Term and any Renewal Term, Lender shall, absent
the occurrence of an Event of Default, make revolving loans and advances (the
"REVOLVING LOANS") in an amount up to the sum of the following sublimits (the
"REVOLVING LOAN LIMIT"):
(i) Up to eighty percent (80%) of the face amount (less maximum
discounts, credits and allowances which may be taken by or granted to Account
Debtors in connection therewith in the ordinary course of Borrower's business)
of Borrower's Eligible Accounts; plus
(ii) Up to fifty percent (50%) of the lower of cost or market value of
Borrower's Eligible Inventory or Eight Million and No/100 Dollars
($8,000,000.00), whichever is less; minus
(iii) such reserves as Lender elects, in its reasonable discretion,
exercised in good faith, to establish from time to time, including, without
limitation, a reserve with respect to Interest Rate Protection Agreement
Obligations;
provided, that the Revolving Loan Limit shall in no event exceed Fifteen Million
and No/100 Dollars ($15,000,000.00) (the "MAXIMUM REVOLVING LOAN LIMIT") except
as such amount may be decreased by Lender following the occurrence of an Event
of Default.
The aggregate unpaid principal balance of the Revolving Loans shall not
at any time exceed the lesser of the (i) Revolving Loan Limit minus the Letter
of Credit Obligations and (ii) the Maximum Revolving Loan Limit minus the Letter
of Credit Obligations. If at any time the outstanding Revolving Loans exceeds
either the Revolving Loan Limit or the Maximum Revolving Loan Limit, in each
case minus the Letter of Credit Obligations, or any portion of the Revolving
Loans and Letter of Credit Obligations exceeds any applicable sublimit within
the Revolving Loan Limit, Borrower shall immediately, and without the necessity
of demand by Lender, pay to Lender such amount as may be necessary to eliminate
such excess and Lender shall apply such payment to the Revolving Loans to
eliminate such excess.
Amounts borrowed pursuant to this subsection 2(a) may be repaid by
Borrower, and, subject to the terms and conditions of this Agreement and the
Other Agreements, reborrowed at any time during the Original Term and any
Renewal Term.
Borrower hereby authorizes Lender, in its sole discretion, to charge
any of Borrower's accounts or advance Revolving Loans to make any payments of
principal, interest, fees, costs or expenses required to be made under this
Agreement or the Other Agreements.
A request for a Revolving Loan shall be made or shall be deemed to be
made, each in the following manner: Borrower shall give Lender same day notice,
no later than 10:30 A.M. (Chicago time) for such day, of its request for a
Revolving Loan as a Prime Rate Loan, and at least three (3)
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Business Days prior notice of its request for a Revolving Loan as a LIBOR Rate
Loan, in which notice Borrower shall specify the amount of the proposed
borrowing and the proposed borrowing date; provided, however, that no such
request may be made at a time when there exists an Event of Default or an event
which, with the passage of time or giving of notice, will become an Event of
Default. In the event that Borrower maintains a controlled disbursement account
at Lender, each check presented for payment against such controlled disbursement
account and any other charge or request for payment against such controlled
disbursement account shall constitute a request for a Revolving Loan as a Prime
Rate Loan. As an accommodation to Borrower, Lender may permit telephone requests
for Revolving Loans and electronic transmittal of instructions, authorizations,
agreements or reports to Lender by Borrower. Unless Borrower specifically
directs Lender in writing not to accept or act upon telephonic or electronic
communications from Borrower, Lender shall have no liability to Borrower for any
loss or damage suffered by Borrower as a result of Lender's honoring of any
requests, execution of any instructions, authorizations or agreements or
reliance on any reports communicated to it telephonically or electronically and
purporting to have been sent to Lender by Borrower and Lender shall have no duty
to verify the origin of any such communication or the authority of the Person
sending it, except in the event of Lender's willful misconduct or gross
negligence.
Borrower hereby irrevocably authorizes Lender to disburse the proceeds
of each Revolving Loan requested by Borrower, or deemed to be requested by
Borrower, as follows: the proceeds of each Revolving Loan requested under
Section 2(a) shall be disbursed by Lender in lawful money of the United States
of America in immediately available funds, in the case of the initial borrowing,
in accordance with the terms of the written disbursement letter from Borrower,
and in the case of each subsequent borrowing, by wire transfer or Automated
Clearing House (ACH) transfer to such bank account as may be agreed upon by
Borrower and Lender from time to time, or elsewhere if pursuant to a written
direction from Borrower.
(b) CAPITAL EXPENDITURE LOANS.
Subject to the terms and conditions of this Agreement and the Other
Agreements, from time to time after the initial Loans are advanced hereunder,
Lender shall make advances to Borrower up to eighty percent (80%) of the
purchase price (exclusive of sales taxes, delivery charges and other "soft"
costs related to such purchase) of Equipment to be purchased with the proceeds
of such advances, (including, without limitation, Equipment purchased since June
30, 2001) which Equipment is acceptable to Lender in its sole discretion, and
upon which Lender shall have a first priority perfected security interest;
provided, that (i) the aggregate amount advanced for such purchases shall not
exceed Four Million and No/100 Dollars ($4,000,000.00), (ii) at least five (5)
Business Days prior to any such advance hereunder, Borrower shall have furnished
to Lender an invoice and acceptance letter for the Equipment being purchased and
shall have executed such documents and taken such other actions as Lender shall
reasonably require to assure that Lender has a first priority perfected security
interest in such Equipment, and (iii) all such advances hereunder shall occur on
or before the date that is six (6) months after the date hereof.
(c) REPAYMENTS.
The Liabilities shall be repaid as follows:
(i) Repayment of Revolving Loans. The Revolving Loans and all other
Liabilities (other than the Capital Expenditure Loans) shall be repaid on the
last day of the Original Term or any Renewal Term if this Agreement is renewed
pursuant to Section 10 hereof.
(ii) Repayment of Capital Expenditure Loans. The Capital Expenditure
Loans shall be repaid in sixty (60) equal monthly installments of principal in
an amount sufficient to pay such Capital Expenditure Loan in full by the final
payment, payable commencing on the date that is six (6) months from the date
hereof, and on the corresponding day of each month thereafter (or if there is no
corresponding day, on the last day of each month); provided that any remaining
outstanding principal balance of the Capital Expenditure Loans shall be repaid
at the end of the Original Term or any Renewal Term if this Agreement is renewed
pursuant to Section 10 hereof. If any such payment due date is not a Business
Day, then such
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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 and fees due
hereunder.
(iii) Mandatory Prepayments of the Capital Expenditure Loans.
Sales of Assets. Upon receipt of the proceeds of the sale or other
disposition of any Equipment of Borrower purchased with the proceeds of any
Capital Expenditure Loan, or if any such Equipment is damaged, destroyed or
taken by condemnation in whole or in part, the proceeds thereof shall be paid by
Borrower to Lender as a mandatory prepayment of the Capital Expenditure Loans
which were advanced against the value of such asset, such payment to be applied
against the remaining installments of principal in the inverse order of their
maturities until such Capital Expenditure Loans are repaid in full, and then
against the other Liabilities, as determined by Lender, in its sole discretion.
(iv) Voluntary Prepayment. Borrower may prepay the Capital Expenditure
Loans in whole or in part at any time, or from time to time, by paying the
principal amount to be paid together with all accrued and unpaid interest
thereon to and including the date of payment, without penalty or the payment of
any other fee or charge. Any prepayment shall be applied in the inverse order of
maturity and shall not reduce the amount of any succeeding installment of
principal.
(d) NOTES.
The Loans shall, in Lender's sole discretion, be evidenced by one or
more promissory notes in form and substance satisfactory to Lender. However, if
such Loans are not so evidenced, such Loans may be evidenced solely by entries
upon the books and records maintained by Lender.
3. LETTERS OF CREDIT.
(a) GENERAL TERMS.
Subject to the terms and conditions of the Agreement and the Other
Agreements, during the Original Term or any Renewal Term, Lender shall, from
time to time issue, upon Borrower's request, commercial and/or standby Letters
of Credit; provided, that the aggregate undrawn face amount of all such Letters
of Credit shall at no time exceed Five Million and No/100 Dollars
($5,000,000.00). Payments made by Lender to any Person on account of any Letter
of Credit shall constitute Loans hereunder and Borrower agrees that each payment
made by Lender in respect of a Letter of Credit shall constitute a Loan
hereunder. Borrower shall remit to Lender a Letter of Credit fee equal to one
and one-half percent (1-1/2%) per annum on the aggregate undrawn face amount of
all Letters of Credit outstanding, which fee shall be payable monthly in arrears
on the last Business Day of each month. Borrower shall also pay on demand the
normal and customary administrative charges of the Lender for issuance,
amendment, negotiation, renewal or extension of any Letter of Credit.
(b) REQUESTS FOR LETTERS OF CREDIT.
Borrower shall make requests for Letters of Credit in writing at least
two (2) Business Days prior to the date such Letter of Credit is to be issued.
Each such request shall specify the date such Letter of Credit is to be issued,
the amount thereof, the name and address of the beneficiary thereof and a
description of the transaction to be supported thereby. Any such notice shall be
accompanied by the form of Letter of Credit requested and any application or
reimbursement agreement required by the issuer of such Letter of Credit. If any
term of such application or reimbursement agreement is inconsistent with this
Agreement, then the provisions of this Agreement shall control to the extent of
such inconsistency.
(c) OBLIGATIONS ABSOLUTE.
Borrower shall be obligated to reimburse Lender, for any payments made
in respect of any Letter of Credit, which obligation shall be unconditional and
irrevocable and shall be paid regardless of: (i) any lack of validity or
enforceability of any Letter of Credit, (ii) any amendment or waiver of or
consent or departure from all or any provisions of any Letter of Credit, this
Agreement or any Other Agreement,
9
(iii) the existence of any claim, set off, defense or other right which Borrower
or any other Person may have against any beneficiary of any Letter of Credit or
Lender, (iv) any draft or other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid, or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect, (v) any payment
under any Letter of Credit against presentation of a draft or other document
that does not comply with the terms of such Letter of Credit, and (vi) any other
act or omission to act or delay of any kind by the Lender or any other Person or
any other event or circumstance that might otherwise constitute a legal or
equitable discharge of Borrower's obligations hereunder. It is understood and
agreed by Borrower that Lender may accept documents that appear on their face to
be in order without further investigation or inquiry, regardless of any notice
or information to the contrary.
(d) EXPIRATION DATES OF LETTERS OF CREDIT.
The expiration date of each Letter of Credit shall be no later than the
earlier of (i) one (1) year from the date of issuance, and (ii) the thirtieth
(30th) day prior to the end of the Original Term or any Renewal Term.
Notwithstanding the foregoing, a Letter of Credit may provide for automatic
extensions of its expiration date for one or more one (1) year periods, so long
as the issuer thereof has the right to terminate the Letter of Credit at the end
of each one (1) year period and no extension period extends past the thirtieth
(30th) day prior to the end of the Original Term or any Renewal Term.
4. INTEREST, FEES AND CHARGES.
Subject to the terms and conditions set forth below, the Loans shall
bear interest at the per annum rate of interest set forth in subsection (i),
(ii) or (iii) below:
(i) The greater of (A) the Prime Rate in effect from time to time,
payable on the last Business Day of each month in arrears; provided that upon
Lender's receipt of each of Borrower's unaudited quarterly financial statements
for each of the first three (3) quarters of Borrower's fiscal year and each of
Borrower's audited fiscal year end financial statements, commencing with
Borrower's June 30, 2002 financial statement, in the event that no Event of
Default is then in existence (x) such financial statements reflect a Fixed
Charge Coverage Ratio (calculated in accordance with subsection 14(b) hereof) of
greater than 1.0 to 1.0 but less than 1.25 to 1.0, then the rate of interest on
the Prime Rate Loans shall be the rate of one-fourth of one percent (1/4th of
1%) per annum in excess of the Prime Rate in effect from time to time; and (y)
such financial statements reflect a Fixed Charge Coverage Ratio (calculated in
accordance with subsection 14(b) hereof) of greater than 1.25 to 1.0 but less
than 2.0 to 1.0 then the rate of interest on Prime Rate Loans shall be the Prime
Rate in effect from time to time; or (z) such financial statements reflect a
Fixed Charge Coverage Ratio (calculated in accordance with subjection 14(b)
hereof) of greater than 2.0 to 1.0, then the rate of interest on Prime Rate
Loans shall be the Prime Rate in effect from time to time. Said rate of interest
shall increase or decrease by an amount equal to each increase or decrease in
the Prime Rate effective on the effective date of each such change in the Prime
Rate; and (B) one-half of one percent (1/2 of 1%) per annum in excess of the
Federal Funds Rate in effect from time to time, payable on the last Business Day
of each month in arrears. Said rate of interest shall increase or decrease by an
amount equal to each increase or decrease in the Federal Funds Rate effective on
the effective date of each such change in the Federal Funds Rate.
(ii) Two hundred twenty-five (225) basis points in excess of the LIBOR
Rate for the applicable Interest Period, such rate to remain fixed for such
Interest Period; provided that upon Lender's receipt of each of Borrower's
unaudited quarterly financial statements for each of the first three (3)
quarters of Borrower's fiscal year and each of Borrower's audited fiscal year
end financial statements, commencing with Borrower's June 30, 2002 financial
statement, in the event that no Event of Default is then in existence (x) such
financial statements reflect a Fixed Charge Coverage Ratio (calculated in
accordance with subsection 14(b) hereof) of greater than 1.0 to 1.0 but less
than 1.25 to 1.0, then the rate of interest on LIBOR Rate Loans shall be two
hundred fifty (250) basis points in excess of the LIBOR Rate; and (y) such
financial statements reflect a Fixed Charge Coverage Ratio (calculated in
accordance with subsection 14(b) hereof) of greater than 1.25 to 1.0 but less
than 2.0 to 1.0 than the rate of interest on LIBOR Rate Loans shall be two
hundred twenty-
10
five (225) basis points in excess of the LIBOR Rate for the applicable Interest
Period, such rate to remain fixed for such Interest Period; or (z) such
financial statements reflect a Fixed Charge Coverage Ratio (calculated in
accordance with subsection 14(b) hereof) of greater than 2.0 to 1.0, then the
rate of interest on LIBOR Rate Loans shall be reduced to two hundred (200) basis
points in excess of the LIBOR Rate for the applicable Interest Period, such rate
to remain fixed for such Interest Period. "Interest Period" shall mean any
continuous period of thirty (30), sixty (60), ninety (90) or one hundred eighty
(180) days, as selected from time to time by Borrower by irrevocable notice (in
writing, by telecopy, telex, electronic mail, or cable) given to Lender not less
than three (3) Business Days prior to the first day of each respective Interest
Period; provided that: (A) each such period occurring after such initial period
shall commence on the day on which the immediately preceding period expires; (B)
the final Interest Period shall be such that its expiration occurs on or before
the end of the Original Term or any Renewal Term; and (C) if for any reason
Borrower shall fail to timely select a period, then such Loans shall continue
as, or revert to, Prime Rate Loans. Interest shall be payable on the last
Business Day of each month in arrears and on the last Business Day of the
applicable Interest Period, provided that with respect to Interest Periods of
one hundred eighty (180) days, interest shall also be payable on the ninetieth
(90th) day of such period.
(iii) Upon the occurrence of an Event of Default and during the
continuance thereof, the Loans shall bear interest at the rate of two percent
(2.0%) per annum in excess of the interest rate otherwise payable thereon, which
interest shall be payable on demand. All interest shall be calculated on the
basis of a 360-day year.
(b) OTHER LIBOR PROVISIONS.
(i) Subject to the provisions of this Agreement, Borrower shall have
the option (A) as of any date, to convert all or any part of the Prime Rate
Loans to, or request that new Loans be made as, LIBOR Rate Loans of various
Interest Periods, (B) as of the last day of any Interest Period, to continue all
or any portion of the relevant LIBOR Rate Loans as LIBOR Rate Loans; (C) as of
the last day of any Interest Period, to convert all or any portion of the LIBOR
Rate Loans to Prime Rate Loans; and (D) at any time, to request new Loans as
Prime Rate Loans; provided, that Loans may not be continued as or converted to
LIBOR Rate Loans, if the continuation or conversion thereof would violate the
provisions of subsections 4(b)(ii) or 4(b)(iii) of this Agreement or if an Event
of Default has occurred.
(ii) Lender's determination of the LIBOR Rate as provided above shall
be conclusive, absent manifest error. Furthermore, if Lender determines, in good
faith (which determination shall be conclusive, absent manifest error), prior to
the commencement of any Interest Period that (A) U.S. Dollar deposits of
sufficient amount and maturity for funding the Loans are not available to Lender
in the London Interbank Eurodollar market in the ordinary course of business, or
(B) by reason of circumstances affecting the London Interbank Eurodollar market,
adequate and fair means do not exist for ascertaining the rate of interest to be
applicable to the Loans requested by Borrower to be LIBOR Rate Loans or the
Loans bearing interest at the rates set forth in subsection 4(a)(ii) of this
Agreement shall not represent the effective pricing to Lender for U.S. Dollar
deposits of a comparable amount for the relevant period (such as for example,
but not limited to, official reserve requirements required by Regulation D to
the extent not given effect in determining the rate), Lender shall promptly
notify Borrower and (1) all existing LIBOR Rate Loans shall convert to Prime
Rate Loans upon the end of the applicable Interest Period, and (2) no additional
LIBOR Rate Loans shall be made until such circumstances are cured.
(iii) If, after the date hereof, the introduction of, or any change in
any applicable law, treaty, rule, regulation or guideline or in the
interpretation or administration thereof by any governmental authority or any
central bank or other fiscal, monetary or other authority having jurisdiction
over Lender or its lending offices (a "REGULATORY CHANGE"), shall, in the
opinion of counsel to Lender, make it unlawful for Lender to make or maintain
LIBOR Rate Loans, then Lender shall promptly notify Borrower and (A) the LIBOR
Rate Loans shall immediately convert to Prime Rate Loans on the last Business
Day of the then existing Interest Period or on such earlier date as required by
law and (B) no additional LIBOR Rate Loans shall be made until such circumstance
is cured.
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(iv) If, for any reason, a LIBOR Rate Loan is paid prior to the last
Business Day of any Interest Period or if a LIBOR Rate Loan does not occur on a
date specified by Borrower in its request (other than as a result of a default
by Lender), Borrower agrees to indemnify Lender against any loss (including any
loss on redeployment of the deposits or other funds acquired by Lender to fund
or maintain such LIBOR Rate Loan) cost or expense incurred by Lender as a result
of such prepayment.
(v) If any Regulatory Change (whether or not having the force of law)
shall (A) impose, modify or deem applicable any assessment, reserve, special
deposit or similar requirement against assets held by, or deposits in or for the
account of or loans by, or any other acquisition of funds or disbursements by,
Lender; (B) subject Lender or the LIBOR Rate Loans to any Tax or change the
basis of taxation of payments to Lender of principal or interest due from
Borrower to Lender hereunder (other than a change in the taxation of the overall
net income of Lender); or (C) impose on Lender any other condition regarding the
LIBOR Rate Loans or Lender's funding thereof, and Lender shall determine (which
determination shall be conclusive, absent any manifest error) that the result of
the foregoing is to increase the cost to Lender of making or maintaining the
LIBOR Rate Loans or to reduce the amount of principal or interest received by
Lender hereunder, then Borrower shall pay to Lender, on demand, such additional
amounts as Lender shall, from time to time, determine are sufficient to
compensate and indemnify Lender from such increased cost or reduced amount.
(vi) Lender shall receive payments of amounts of principal of and
interest with respect to the LIBOR Rate Loans free and clear of, and without
deduction for, any Taxes. If (A) Lender shall be subject to any Tax in respect
of any LIBOR Rate Loans or any part thereof or, (B) Borrower shall be required
to withhold or deduct any Tax from any such amount, the LIBOR Rate applicable to
such LIBOR Rate Loans shall be adjusted by Lender to reflect all additional
costs incurred by Lender in connection with the payment by Lender or the
withholding by Borrower of such Tax and Borrower shall provide Lender with a
statement detailing the amount of any such Tax actually paid by Borrower.
Determination by Lender of the amount of such costs shall be conclusive, absent
manifest error. If after any such adjustment any part of any Tax paid by Lender
is subsequently recovered by Lender, Lender shall reimburse Borrower to the
extent of the amount so recovered. A certificate of an officer of Lender setting
forth the amount of such recovery and the basis therefor shall be conclusive,
absent manifest error.
(vii) Each request for LIBOR Rate Loans shall be in an amount not less
than One Million and No/100 Dollars ($1,000,000.00), and in integral multiples
of, One Hundred Thousand and No/100 Dollars ($100,000.00).
(viii) Unless otherwise specified by Borrower, all Loans shall be Prime
Rate Loans.
(ix) No more than five (5) Interest Periods may be in effect with
respect to outstanding LIBOR Rate Loans at any one time.
(c) FEES AND CHARGES.
(i) Unused Line Fee: Borrower shall pay to Lender an unused line fee of
one-fourth of one percent (1/4th of 1%) per annum of the difference between the
Maximum Revolving Loan Limit and the average daily balance of the Revolving
Loans plus the Letter of Credit Obligations for each month, which fee shall be
fully earned by Lender on the first day of each month and payable quarterly.
Said fee shall be calculated on the basis of a 360 day year.
(ii) Commitment Fee: Borrower shall pay to Lender a commitment fee of
one-fourth of one percent (1/4th of 1%) of the Maximum Loan Limit, which fee
shall be fully earned by Lender and payable on the date that Lender makes its
initial disbursement of Loans under this Agreement.
(iii) Costs and Expenses: Borrower shall reimburse Lender for all costs
and expenses, including, without limitation, legal expenses and reasonable
attorneys' fees, incurred by Lender in connection with the (i) documentation and
consummation of this transaction and any other transactions between Borrower and
Lender, including, without limitation, Uniform Commercial Code and other public
record searches and filings, overnight courier or other express or messenger
delivery, appraisal costs, surveys, title
12
insurance and environmental audit or review costs; (ii) collection, protection
or enforcement of any rights in or to the Collateral; (iii) collection of any
Liabilities; and (iv) administration and enforcement of any of Lender's rights
under this Agreement or any Other Agreement or any Other Agreement.
(iv) Borrower shall also pay all normal service charges with respect to
all accounts maintained by Borrower with Lender and any additional services
requested by Borrower from Lender. All such costs, expenses and charges shall
constitute Liabilities hereunder, shall be payable by Borrower to Lender on
demand, and until paid, shall bear interest at the highest rate then applicable
to Loans hereunder.
(v) Capital Adequacy Charge. If Lender shall have determined that the
adoption of any law, rule or regulation regarding capital adequacy, or any
change therein or in the interpretation or application thereof, or compliance by
Lender with any request or directive regarding capital adequacy (whether or not
having the force of law) from any central bank or governmental authority enacted
after the date hereof, does or shall have the effect of reducing the rate of
return on such party's capital as a consequence of its obligations hereunder to
a level below that which Lender could have achieved but for such adoption,
change or compliance (taking into consideration Lender's policies with respect
to capital adequacy) by a material amount, then from time to time, after
submission by Lender to Borrower of a written demand therefor ("CAPITAL ADEQUACY
DEMAND") together with the certificate described below, Borrower shall pay to
Lender such additional amount or amounts ("CAPITAL ADEQUACY CHARGE") as will
compensate Lender for such reduction, such Capital Adequacy Demand to be made
with reasonable promptness following such determination. A certificate of Lender
claiming entitlement to payment as set forth above shall be conclusive in the
absence of manifest error. Such certificate shall set forth the nature of the
occurrence giving rise to such reduction, the amount of the Capital Adequacy
Charge to be paid to Lender, and the method by which such amount was determined.
In determining such amount, Lender may use any reasonable averaging and
attribution method, applied on a non-discriminatory basis.
(d) MAXIMUM INTEREST.
It is the intent of the parties that the rate of interest and other
charges to Borrower under this Agreement and the Other Agreements shall be
lawful; therefore, if for any reason the interest or other charges payable under
this Agreement are found by a court of competent jurisdiction, in a final
determination, to exceed the limit which Lender may lawfully charge Borrower,
then the obligation to pay interest and other charges shall automatically be
reduced to such limit and, if any amount in excess of such limit shall have been
paid, then such amount shall be refunded to Borrower.
5. COLLATERAL.
(a) GRANT OF SECURITY INTEREST TO LENDER.
As security for the payment of all Loans now or in the future made by
Lender to Borrower hereunder and for the payment or other satisfaction of all
other Liabilities, Borrower hereby assigns to Lender and grants to Lender a
continuing security interest in the following property of Borrower (but shall
not include the Excluded Real Property Collateral), whether now or hereafter
owned, existing, acquired or arising and wherever now or hereafter located: (a)
all Accounts (whether or not Eligible Accounts) and all Goods whose sale, lease
or other disposition by Borrower has given rise to Accounts and have been
returned to, or repossessed or stopped in transit by, Borrower; (b) all Chattel
Paper, Instruments, Documents and General Intangibles (including, without
limitation, all patents, patent applications, trademarks, trademark
applications, trade names, trade secrets, goodwill, copyrights, copyright
applications, registrations, licenses, software, franchises, customer lists, tax
refund claims, claims against carriers and shippers, guarantee claims, contract
rights, payment intangibles, security interests, security deposits and rights to
indemnification); (c) all Inventory (whether or not Eligible Inventory); (d) all
Goods (other than Inventory), including, without limitation, Equipment, vehicles
and Fixtures; (e) all Investment Property; (f) all Deposit Accounts, bank
accounts, deposits and cash; (g) all Letter-of-Credit Rights; (h) Commercial
Tort Claims listed on Exhibit C hereto; (i) any other property of Borrower now
or hereafter in the possession, custody or control of Lender or any agent or any
parent, affiliate or subsidiary of Lender or any participant with Lender in the
Loans, for any purpose (whether for safekeeping, deposit,
13
collection, custody, pledge, transmission or otherwise); and (j) all additions
and accessions to, substitutions for, and replacements, products and Proceeds of
the foregoing property, including, without limitation, proceeds of all insurance
policies insuring the foregoing property, and all of Borrower's books and
records relating to any of the foregoing and to Borrower's business.
(b) OTHER SECURITY.
Lender, in its sole discretion, without waiving or releasing any
obligation, liability or duty of Borrower under this Agreement or the Other
Agreements or any Event of Default, may at any time or times hereafter, but
shall not be obligated to, pay, acquire or accept an assignment of any security
interest, lien, encumbrance or claim asserted by any Person in, upon or against
the Collateral, provided, that Lender may take such actions with respect to
Permitted Liens only after the occurrence and during the continuance of an Event
of Default. All sums paid by Lender in respect thereof and all costs, fees and
expenses including, without limitation, reasonable attorney fees, all court
costs and all other charges relating thereto incurred by Lender shall constitute
Liabilities, payable by Borrower to Lender on demand and, until paid, shall bear
interest at the highest rate then applicable to Loans hereunder.
(c) POSSESSORY COLLATERAL.
Immediately upon Borrower's receipt of any portion of the Collateral
evidenced by an agreement, Instrument or Document, including, without
limitation, any Tangible Chattel Paper and any Investment Property consisting of
certificated securities, Borrower shall deliver the original thereof to Lender
together with an appropriate endorsement or other specific evidence of
assignment thereof to Lender (in form and substance acceptable to Lender). If an
endorsement or assignment of any such items shall not be made for any reason,
Lender is hereby irrevocably authorized, as Borrower's attorney and
agent-in-fact, to endorse or assign the same on Borrower's behalf.
(d) ELECTRONIC CHATTEL PAPER.
To the extent that Borrower obtains or maintains any Electronic Chattel
Paper, Borrower shall create, store and assign the record or records comprising
the Electronic Chattel Paper in such a manner that (i) a single authoritative
copy of the record or records exists which is unique, identifiable and except as
otherwise provided in clauses (iv), (v) and (vi) below, unalterable, (ii) the
authoritative copy identifies Lender as the assignee of the record or records,
(iii) the authoritative copy is communicated to and maintained by the Lender or
its designated custodian, (iv) copies or revisions that add or change an
identified assignee of the authoritative copy can only be made with the
participation of Lender, (v) each copy of the authoritative copy and any copy of
a copy is readily identifiable as a copy that is not the authoritative copy and
(vi) any revision of the authoritative copy is readily identifiable as an
authorized or unauthorized revision.
6. PRESERVATION OF COLLATERAL AND PERFECTION OF SECURITY INTERESTS
THEREIN.
Borrower shall, at Lender's request, at any time and from time to time,
authenticate, execute and deliver to Lender such financing statements, documents
and other agreements and instruments (and pay the cost of filing or recording
the same in all public offices deemed necessary or desirable by Lender) and do
such other acts and things or cause third parties to do such other acts and
things as Lender may deem necessary or desirable in its sole discretion in order
to establish and maintain a valid, attached and perfected security interest in
the Collateral in favor of Lender (free and clear of all other liens, claims,
encumbrances and rights of third parties whatsoever, whether voluntarily or
involuntarily created, except Permitted Liens) to secure payment of the
Liabilities, and in order to facilitate the collection of the Collateral.
Borrower irrevocably hereby makes, constitutes and appoints Lender (and all
Persons designated by Lender for that purpose) as Borrower's true and lawful
attorney and agent-in-fact to execute and file such financing statements,
documents and other agreements and instruments and do such other acts and things
as may be necessary to preserve and perfect Lender's security interest in the
Collateral. Borrower further agrees that a carbon, photographic, photostatic or
other reproduction of this Agreement or of a financing statement shall be
sufficient as a financing statement. Borrower further
14
ratifies and confirms the prior filing by Lender of any and all financing
statements which identify the Borrower as debtor, Lender as secured party and
any or all Collateral as collateral.
7. POSSESSION OF COLLATERAL AND RELATED MATTERS.
Until otherwise notified by Lender following the occurrence and the
continuance of an Event of Default, Borrower shall have the right, except as
otherwise provided in this Agreement, in the ordinary course of Borrower's
business, to (a) sell, lease or furnish under contracts of service any of
Borrower's Inventory normally held by Borrower for any such purpose; (b) use and
consume any raw materials, work in process or other materials normally held by
Borrower for such purpose; and (c) dispose of obsolete or unuseful Equipment so
long as all of the proceeds thereof are paid to Lender for application to the
Liabilities (except for such proceeds which are required to be delivered to the
holder of a Permitted Lien which is prior in right of payment); provided,
however, that a sale in the ordinary course of business shall not include any
transfer or sale in satisfaction, partial or complete, of a debt owed by
Borrower , provided that a sale of Inventory to a creditor of Borrower resulting
in a valid Account owing to Borrower by such creditor shall not constitute a
transfer or sale in satisfaction, partial, or complete, of a debt owed by
Borrower.
8. COLLECTIONS.
(a) Borrower shall direct all of its Account Debtors to make all
payments on the Accounts directly to a post office box (the "LOCK BOX")
designated by, and under the exclusive control of, Lender, at a financial
institution acceptable to Lender. Borrower shall establish an account (the "LOCK
BOX ACCOUNT") in Lender's name with a financial institution acceptable to
Lender, into which all payments received in the Lock Box shall be deposited, and
into which Borrower will immediately deposit all payments received by Borrower
on Accounts in the identical form in which such payments were received, whether
by cash or check. If Borrower, any Affiliate or Subsidiary, any shareholder,
officer, director, employee or agent of Borrower or any Affiliate or Subsidiary,
or any other Person acting for or in concert with Borrower shall receive any
monies, checks, notes, drafts or other payments relating to or as Proceeds of
Accounts or other Collateral, Borrower and each such Person shall receive all
such items in trust for, and as the sole and exclusive property of, Lender and,
immediately upon receipt thereof, shall remit the same (or cause the same to be
remitted) in kind to the Lock Box Account. The financial institution with which
the Lock Box Account is established shall acknowledge and agree, in a manner
satisfactory to Lender, that the amounts on deposit in such Lock Box Account are
the sole and exclusive property of Lender, that such financial institution will
follow the instructions of Lender with respect to disposition of funds in the
Lock Box and Lock Box Account without further consent from Borrower, that such
financial institution has no right to setoff against the Lock Box Account or
against any other account maintained by such financial institution into which
the contents of the Lock Box Account are transferred, and that such financial
institution shall wire, or otherwise transfer in immediately available funds to
Lender in a manner satisfactory to Lender, funds deposited in the Lock Box
Account on a daily basis as such funds are collected. Borrower agrees that all
payments made to such Lock Box Account or otherwise received by Lender, whether
in respect of the Accounts or as Proceeds of other Collateral or otherwise
(except for proceeds of Collateral which are required to be delivered to the
holder of a Permitted Lien which is prior in right of payment), will be applied
on account of the Liabilities in accordance with the terms of this Agreement;
provided, that so long as no Event of Default has occurred, payments received by
Lender shall not be applied to the unmatured portion of the LIBOR Rate Loans,
but shall be held in a cash collateral account maintained by Lender, until the
earlier of (i) the last Business Day of the Interest Period applicable to such
LIBOR Rate Loan and (ii) the occurrence of an Event of Default; provided
further, that so long as no Event of Default has occurred and is continuing, the
immediately available funds in such cash collateral account may be disbursed, at
Borrower's discretion, to Borrower so long as after giving effect to such
disbursement, Borrower's availability under subsection 2(a) hereof at such time,
equals or exceeds the outstanding Revolving Loans at such time. Borrower agrees
to pay all customary fees, costs and expenses in connection with opening and
maintaining the Lock Box and Lock Box Account. All of such fees, costs and
expenses if not paid by Borrower, may be paid by Lender and in such event all
amounts paid by Lender shall constitute Liabilities hereunder, shall be payable
to Lender by Borrower upon demand, and, until paid, shall bear interest at the
highest rate then applicable to Loans
15
hereunder. All checks, drafts, instruments and other items of payment or
Proceeds of Collateral shall be endorsed by Borrower to Lender, and, if that
endorsement of any such item shall not be made for any reason, Lender is hereby
irrevocably authorized to endorse the same on Borrower's behalf. For the purpose
of this section, Borrower irrevocably hereby makes, constitutes and appoints
Lender (and all Persons designated by Lender for that purpose) as Borrower's
true and lawful attorney and agent-in-fact (i) to endorse Borrower's name upon
said items of payment and/or Proceeds of Collateral and upon any Chattel Paper,
Document, Instrument, invoice or similar document or agreement relating to any
Account of Borrower or Goods pertaining thereto; (ii) to take control in any
manner of any item of payment or Proceeds thereof and (iii) to have access to
any lock box or postal box into which any of Borrower's mail is deposited, and
open and process all mail addressed to Borrower and deposited therein.
(b) Lender may, at any time and from time to time after the occurrence
and during the continuance of an Event of Default, whether before or after
notification to any Account Debtor and whether before or after the maturity of
any of the Liabilities, (i) enforce collection of any of Borrower's Accounts or
other amounts owed to Borrower by suit or otherwise; (ii) exercise all of
Borrower's rights and remedies with respect to proceedings brought to collect
any Accounts or other amounts owed to Borrower; (iii) surrender, release or
exchange all or any part of any Accounts or other amounts owed to Borrower, or
compromise or extend or renew for any period (whether or not longer than the
original period) any indebtedness thereunder; (iv) sell or assign any Account of
Borrower or other amount owed to Borrower upon such terms, for such amount and
at such time or times as Lender deems advisable; (v) prepare, file and sign
Borrower's name on any proof of claim in bankruptcy or other similar document
against any Account Debtor or other Person obligated to Borrower; and (vi) do
all other acts and things which are necessary, in Lender's sole discretion,
exercised in good faith to fulfill Borrower's obligations under this Agreement
and the Other Agreements and to allow Lender to collect the Accounts or other
amounts owed to Borrower. In addition to any other provision hereof, Lender may
at any time, after the occurrence and during the continuance of an Event of
Default, at Borrower's expense, notify any parties obligated on any of the
Accounts to make payment directly to Lender of any amounts due or to become due
thereunder.
(c) For purposes of calculating interest and fees, Lender shall, within
two (2) Business Days after receipt by Lender at its office in Chicago, Illinois
of (i) checks and (ii) cash or other immediately available funds from
collections of items of payment and Proceeds of any Collateral, apply the whole
or any part of such collections or Proceeds against the Liabilities in such
order as Lender shall determine in its sole discretion. For purposes of
determining the amount of Loans available for borrowing purposes, checks and
cash or other immediately available funds from collections of items of payment
and Proceeds of any Collateral shall be applied in whole or in part against the
Liabilities, in such order as Lender shall determine in its sole discretion, on
the day of receipt, subject to actual collection.
(d) On a monthly basis, Lender shall deliver to Borrower an account
statement showing all Loans, charges and payments, which shall be deemed final,
binding and conclusive upon Borrower unless Borrower notifies Lender in writing,
specifying any error therein, within thirty (30) days of the date such account
statement is sent to Borrower and any such notice shall only constitute an
objection to the items specifically identified.
9. COLLATERAL, AVAILABILITY AND FINANCIAL REPORTS AND SCHEDULES.
(a) DAILY REPORTS.
Borrower shall deliver to Lender an executed daily loan report and
certificate in Lender's then current form on each day on which Borrower requests
a Revolving Loan, and in any event at least once each week, which shall be
accompanied by copies of Borrower's sales journal, cash receipts journal and
credit memo journal for the relevant period. Such report shall reflect the
activity of Borrower with respect to Accounts for the immediately preceding
week, and shall be in a form and with such specificity as is satisfactory to
Lender and shall contain such additional information concerning Accounts and
Inventory as may be requested by Lender including, without limitation, but only
if specifically requested by Lender, copies of all invoices prepared in
connection with such Accounts.
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(b) MONTHLY REPORTS.
Borrower shall deliver to Lender, in addition to any other reports, as
soon as practicable and in any event: (i) within thirty (30) days after the end
of each month, (A) a detailed trial balance of Borrower's Accounts aged per
invoice date, in form and substance reasonably satisfactory to Lender including,
without limitation, the names and addresses of all Account Debtors of Borrower,
and (B) a summary and detail of accounts payable (such Accounts and accounts
payable divided into such time intervals as Lender may require in its sole
discretion), including a listing of any held checks; and (ii) within ten (10)
days after the end of each month, the general ledger inventory account balance,
a perpetual inventory report and Lender's standard form of Inventory report then
in effect or the form most recently requested from Borrower by Lender, for
Borrower by each category of Inventory, together with a description of the
monthly change in each category of Inventory.
(c) FINANCIAL STATEMENTS.
Borrower shall deliver to Lender the following financial information,
all of which shall be prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited financial statements, for the lack
of footnotes and being subject to year-end adjustments) consistently applied,
and shall be accompanied by a compliance certificate in the form of Exhibit B
hereto, which compliance certificate shall include a calculation of all
financial covenants contained in this Agreement: (i) no later than thirty (30)
days after each calendar month, copies of unaudited internally prepared
consolidated and consolidating financial statements, including, without
limitation, balance sheets and statements of income, retained earnings and cash
flow of Borrower for such calendar month, certified by the Chief Financial
Officer of Borrower; (ii) no later than forty-five (45) days after the end of
each of the first three quarters of Borrower's Fiscal Year, copies of unaudited
consolidated and consolidating internally prepared financial statements
including, without limitation, balance sheets, statements of income, retained
earnings, cash flows and reconciliation of surplus of Borrower for such calendar
quarter, certified by the Chief Financial Officer of Borrower and (iii) no later
than one hundred twenty (120) days after the end of each of Borrower's Fiscal
Years, audited annual consolidated and consolidating financial statements for
such Fiscal Year with an unqualified opinion by independent certified public
accountants selected by Borrower and reasonably satisfactory to Lender, which
financial statements shall be accompanied by (A) a letter from such accountants
acknowledging that they are aware that Lender is relying upon such financial
statements in connection with the exercise of its rights hereunder, provided,
that Borrower shall only be required to use its reasonable efforts exercised in
good faith to obtain such letter; and (B) copies of any management letters sent
to the Borrower by such accountants;
(d) ANNUAL PROJECTIONS.
As soon as practicable and in any event no later than one hundred
twenty (120) days after the end of each Fiscal Year, Borrower shall deliver to
Lender projected balance sheets, statements of income and cash flow for
Borrower, for each of the twelve (12) months during the Fiscal Year in which
such projections are provided and the two (2) immediately succeeding Fiscal
Years, which shall include the assumptions used therein, together with
appropriate supporting details as reasonably requested by Lender.
(e) EXPLANATION OF BUDGETS AND PROJECTIONS.
In conjunction with the delivery of the annual presentation of
projections or budgets referred to in subsection 9(d) above, Borrower shall
deliver a letter signed by the President or a Vice President of Borrower and by
the Treasurer or Chief Financial Officer of Borrower, describing, comparing and
analyzing, in detail, all changes and developments between the anticipated
financial results included in such projections or budgets and the historical
financial statements of Borrower.
(f) PUBLIC REPORTING.
Promptly upon the filing thereof, Borrower shall deliver to Lender
copies of all registration statements and annual, quarterly, monthly or other
regular reports which Borrower or any of its
17
Subsidiaries files with the Securities and Exchange Commission, as well as
promptly providing to Lender copies of any reports and proxy statements
delivered to its shareholders.
(g) OTHER INFORMATION.
Promptly following request therefor by Lender, such other business or
financial data, reports, appraisals and projections as Lender may reasonably
request.
10. TERMINATION; AUTOMATIC RENEWAL.
THIS AGREEMENT SHALL BE IN EFFECT FROM THE DATE HEREOF UNTIL APRIL 24,
2005 (THE "ORIGINAL TERM") AND SHALL AUTOMATICALLY RENEW ITSELF FROM YEAR TO
YEAR THEREAFTER (EACH SUCH ONE-YEAR RENEWAL BEING REFERRED TO HEREIN AS A
"RENEWAL TERM") UNLESS (A) THE DUE DATE OF THE LIABILITIES IS ACCELERATED
PURSUANT TO SECTION 16 HEREOF; OR (B) BORROWER OR LENDER ELECTS TO TERMINATE
THIS AGREEMENT AT THE END OF THE ORIGINAL TERM OR AT THE END OF ANY RENEWAL TERM
BY GIVING THE OTHER PARTY WRITTEN NOTICE OF SUCH ELECTION AT LEAST NINETY (90)
DAYS PRIOR TO THE END OF THE ORIGINAL TERM OR THE THEN CURRENT RENEWAL TERM IN
WHICH CASE BORROWER SHALL PAY ALL OF THE LIABILITIES IN FULL ON THE LAST DAY OF
SUCH TERM. If one or more of the events specified in clauses (A) and (B) occurs,
then (i) Lender shall not make any additional Loans on or after the date
identified as the date on which the Liabilities are to be repaid; and (ii) this
Agreement shall terminate on the date thereafter that the Liabilities are paid
in full. At such time as Borrower has repaid all of the Liabilities and this
Agreement has terminated, (x) Borrower shall deliver to Lender a release in the
form attached as Schedule 10 hereto and made a part hereof, of all obligations
and liabilities of Lender and its officers, directors, employees, agents,
parents, subsidiaries and affiliates to Borrower, and if Borrower is obtaining
new financing from another lender, Borrower shall deliver such lender's
indemnification of Lender, in form and substance satisfactory to Lender, for
checks which Lender has credited to Borrower's account, but which subsequently
are dishonored for any reason or for automatic clearinghouse or wire transfers
not yet posted to Borrower's account; and (y) Lender shall execute and deliver
to Borrower releases and terminations of all liens and security interest granted
hereunder. If, during the term of this Agreement, Borrower prepays all of the
Liabilities and this Agreement is terminated, Borrower shall not be required to
pay to Lender a prepayment fee.
11. REPRESENTATIONS AND WARRANTIES.
Borrower hereby represents and warrants to Lender, which
representations and warranties (whether appearing in this Section 11 or
elsewhere) shall be true at the time of Borrower's execution hereof and the
closing of the transactions described herein or related hereto, shall remain
true until the repayment in full and satisfaction of all the Liabilities and
termination of this Agreement, and shall be remade by Borrower at the time each
Loan is made pursuant to this Agreement, provided, that representations and
warranties made as of a particular date shall be true and correct as of such
date.
(a) FINANCIAL STATEMENTS AND OTHER INFORMATION.
The financial statements and other information delivered or to be
delivered by Borrower to Lender at or prior to the date of this Agreement fairly
present in all material respects the financial condition of Borrower, and there
has been no material adverse change in the financial condition, the operations
or any other status of Borrower since the date of the financial statements
delivered to Lender most recently prior to the date of this Agreement. All
written information now or heretofore furnished by Borrower to Lender is true
and correct as of the date with respect to which such information was furnished.
(b) LOCATIONS.
The office where Borrower keeps its books, records and accounts (or
copies thereof) concerning the Collateral, Borrower's principal place of
business and all of Borrower's other places of
18
business, locations of Collateral and post office boxes and locations of bank
accounts are as set forth in Exhibit A and at other locations within the
continental United States of which Lender has been advised by Borrower in
accordance with subsection 12(b)(i). The Collateral, including, without
limitation, the Equipment (except any part thereof which Borrower shall have
advised Lender in writing consists of Collateral normally used in more than one
state) is kept, or, in the case of vehicles, based, only at the addresses set
forth on Exhibit A, and at other locations within the continental United States
of which Lender has been advised by Borrower in writing in accordance with
subsection 12(b)(i) hereof.
(c) LOANS BY BORROWER.
Borrower has not made any loans or advances to any Affiliate or other
Person except for advances authorized hereunder to employees, officers and
directors of Borrower for travel and other expenses arising in the ordinary
course of Borrower's business and loans permitted pursuant to subsection 13(f)
hereof.
(d) ACCOUNTS AND INVENTORY.
Each Account or item of Inventory which Borrower shall, expressly or by
implication, request Lender to classify as an Eligible Account or as Eligible
Inventory, respectively, shall, as of the time when such request is made,
conform in all respects to the requirements of such classification as set forth
in the respective definitions of "ELIGIBLE ACCOUNT" and "ELIGIBLE INVENTORY" as
set forth herein and as otherwise established by Lender from time to time.
(e) LIENS.
Borrower is the lawful owner of all Collateral now purportedly owned or
hereafter purportedly acquired by Borrower, free from all liens, claims,
security interests and encumbrances whatsoever, whether voluntarily or
involuntarily created and whether or not perfected, other than the Permitted
Liens.
(f) ORGANIZATION, AUTHORITY AND NO CONFLICT.
Borrower is duly organized, validly existing and in good standing in
the State of Delaware, its state organizational identification number is 884062
and Borrower is duly qualified and in good standing in all states where the
nature and extent of the business transacted by it or the ownership of its
assets makes such qualification necessary or, if Borrower is not so qualified,
Borrower may cure any such failure without losing any of its rights, incurring
any liens or material penalties, or otherwise affecting Lender's rights.
Borrower has the right and power and is duly authorized and empowered to enter
into, execute and deliver this Agreement and the Other Agreements and perform
its obligations hereunder and thereunder. Borrower's execution, delivery and
performance of this Agreement and the Other Agreements does not conflict with
the provisions of the organizational documents of Borrower, any statute,
regulation, ordinance or rule of law, or any agreement, contract or other
document which may now or hereafter be binding on Borrower, except for conflicts
with agreements, contracts or other documents which would not have a Material
Adverse Effect on Borrower, and Borrower's execution, delivery and performance
of this Agreement and the Other Agreements shall not result in the imposition of
any lien or other encumbrance upon any of Borrower's property (other than
Permitted Liens) under any existing indenture, mortgage, deed of trust, loan or
credit agreement or other agreement or instrument by which Borrower or any of
its property may be bound or affected.
(g) LITIGATION.
Except as disclosed to Lender on Schedule 11(g) hereto, there are no
actions or proceedings which are pending or, to the best of Borrower's
knowledge, threatened against Borrower which is, in the determination of Lender,
reasonably likely to have a Material Adverse Effect on Borrower, and Borrower
shall, promptly upon becoming aware of any such pending or threatened action or
proceeding, give written notice thereof to Lender. Borrower has no Commercial
Tort Claims pending other than those set forth on Exhibit C hereto as Exhibit C
may be amended from time to time.
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(h) COMPLIANCE WITH LAWS AND MAINTENANCE OF PERMITS.
Borrower has obtained all governmental consents, franchises,
certificates, licenses, authorizations, approvals and permits, the lack of which
would have a Material Adverse Effect on Borrower. Borrower is in compliance in
all material respects with all applicable federal, state, local and foreign
statutes, orders, regulations, rules and ordinances (including, without
limitation, Environmental Laws and statutes, orders, regulations, rules and
ordinances relating to taxes, employer and employee contributions and similar
items, securities, ERISA or employee health and safety) the failure to comply
with which would have a Material Adverse Effect on Borrower.
(i) AFFILIATE TRANSACTIONS.
Except as set forth on Schedule 11(i) hereto or as permitted pursuant
to subsection 11(c) hereof, Borrower is not conducting, permitting or suffering
to be conducted, transactions with any Affiliate other than transactions with
Affiliates for the purchase or sale of Inventory or services in the ordinary
course of business pursuant to terms that are no less favorable to Borrower than
the terms upon which such transactions would have been made had they been made
to or with a Person that is not an Affiliate.
(j) NAMES AND TRADE NAMES.
Borrower's name has always been as set forth on the first page of this
Agreement and Borrower uses no trade names, assumed names, fictitious names or
division names in the operation of its business, except as set forth on Schedule
11(j) hereto.
(k) EQUIPMENT.
Except for Permitted Liens, Borrower has good and indefeasible and
merchantable title to and ownership of all Equipment. No Equipment is a Fixture
to real estate unless such real estate is owned by Borrower and is subject to a
mortgage in favor of Lender, or if such real estate is leased, is subject to a
landlord's agreement in favor of Lender on terms acceptable to Lender, or an
accession to other personal property unless such personal property is subject to
a first priority lien in favor of Lender.
(l) ENFORCEABILITY.
This Agreement and the Other Agreements to which Borrower is a party
are the legal, valid and binding obligations of Borrower and are enforceable
against Borrower in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer,
redemption, moratorium, reorganization or similar laws affecting the enforcement
of creditors' rights generally.
(m) SOLVENCY.
Borrower is, after giving effect to the transactions contemplated
hereby, solvent, able to pay its debts as they become due, has capital
sufficient to carry on its business, now owns property having a value both at
fair valuation and at present fair saleable value greater than the amount
required to pay its debts, and will not be rendered insolvent by the execution
and delivery of this Agreement or any of the Other Agreements or by completion
of the transactions contemplated hereunder or thereunder.
(n) INDEBTEDNESS.
Except as set forth on Schedule 11(n) hereto, Borrower is not obligated
(directly or indirectly), for any loans or other indebtedness for borrowed money
other than the Loans.
(o) MARGIN SECURITY AND USE OF PROCEEDS.
Borrower does not own any margin securities, and none of the proceeds
of the Loans hereunder shall be used for the purpose of purchasing or carrying
any margin securities or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase any margin
20
securities or for any other purpose not permitted by Regulation U of the Board
of Governors of the Federal Reserve System as in effect from time to time.
(p) PARENT, SUBSIDIARIES AND AFFILIATES.
Except as set forth on Schedule 11(p) hereto, Borrower has no Parents,
Subsidiaries or other Affiliates or divisions, nor is Borrower engaged in any
joint venture or partnership with any other Person.
(q) NO DEFAULTS.
Borrower is not in default under any material contract, lease or
commitment to which it is a party or by which it is bound, nor does Borrower
know of any dispute regarding any contract, lease or commitment which would have
a Material Adverse Effect on Borrower.
(r) EMPLOYEE MATTERS.
There are no controversies pending or, to the best of Borrower's
knowledge, threatened between Borrower and any of its employees, agents or
independent contractors other than employee grievances arising in the ordinary
course of business which would not, in the aggregate, have a Material Adverse
Effect on Borrower, and Borrower is in compliance with all federal and state
laws respecting employment and employment terms, conditions and practices except
for such non-compliance which would not have a Material Adverse Effect on
Borrower.
(s) INTELLECTUAL PROPERTY.
Borrower possesses adequate licenses, patents, patent applications,
copyrights, service marks, trademarks, trademark applications, tradestyles and
tradenames to continue to conduct its business as heretofore conducted by it,
except to the extent that the failure to possess such items would not have a
Material Adverse Effect on Borrower.
(t) ENVIRONMENTAL MATTERS.
Borrower has not generated, used, stored, treated, transported,
manufactured, handled, produced or disposed of any Hazardous Materials, on or
off its premises (whether or not owned by it) in any manner which at any time
violates in any material respect any Environmental Law or any license, permit,
certificate, approval or similar authorization thereunder and the operations of
the Borrower comply in all material respects with all Environmental Laws and all
licenses, permits, certificates, approvals and similar authorizations
thereunder. There has been no investigation, proceeding, complaint, order,
directive, claim, citation or notice by any governmental authority or any other
Person, nor is any pending or to the best of the Borrower's knowledge threatened
with respect to any non-compliance with or violation of the requirements of any
Environmental Law by the Borrower or the release, spill or discharge, threatened
or actual, of any Hazardous Materials or the generation, use, storage,
treatment, transportation, manufacture, handling, production or disposal of any
Hazardous Materials or any other environmental, health or safety matter, which
affects the Borrower or its business, operations or assets or any properties at
which the Borrower has transported, stored or disposed of any Hazardous
Materials. Borrower has no material liability (contingent or otherwise) in
connection with a release, spill or discharge, threatened or actual, of any
Hazardous Materials or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials.
(u) ERISA MATTERS.
Borrower has paid and discharged all obligations and liabilities
arising under ERISA of a character which, if unpaid or unperformed, would
reasonably be likely to result in the imposition of a lien against any of its
properties or assets.
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12. AFFIRMATIVE COVENANTS.
Until payment and satisfaction in full of all Liabilities and
termination of this Agreement, unless Borrower obtains Lender's prior written
consent waiving or modifying any of Borrower's covenants hereunder in any
specific instance, Borrower covenants and agrees as follows:
(a) MAINTENANCE OF RECORDS.
Borrower shall at all times keep accurate and complete books, records
and accounts in all material respects with respect to all of Borrower's business
activities, in accordance with sound accounting practices and generally accepted
accounting principles consistently applied, and shall keep such books, records
and accounts, and any copies thereof, only at the addresses indicated for such
purpose on Exhibit A;
(b) NOTICES.
Borrower shall:
(i) Locations. Promptly (but in no event less than ten (10) days prior
to the occurrence thereof) notify Lender of the proposed opening of any new
place of business or new location of Collateral, the closing of any existing
place of business or location of Collateral, any change of in the location of
Borrower's books, records and accounts (or copies thereof), the opening or
closing of any post office box, the opening or closing of any bank account or,
if any of the Collateral consists of Goods of a type normally used in more than
one state, the use of any such Goods in any state other than a state in which
Borrower has previously advised Lender that such Goods will be used.
(ii) Eligible Accounts and Inventory. Promptly upon becoming aware
thereof, notify Lender if any Account or Inventory identified by Borrower to
Lender as an Eligible Account or Eligible Inventory becomes ineligible for any
reason.
(iii) Litigation and Proceedings. Promptly upon becoming aware thereof,
notify Lender of any actions or proceedings which are pending or threatened
against Borrower which might have a Material Adverse Effect on Borrower and of
any Commercial Tort Claims of Borrower which may arise, which notice shall
constitute Borrower's authorization to amend Exhibit C to add such Commercial
Tort Claim.
(iv) Names and Trade names. Notify Lender within ten (10) days of the
change of its name or the use of any trade name, assumed name, fictitious name
or division name not previously disclosed to Lender in writing.
(v) ERISA Matters. Promptly notify Lender of (x) the occurrence of any
"reportable event" (as defined in ERISA) which might result in the termination
by the Pension Benefit Guaranty Corporation (the "PBGC") of any employee benefit
plan ("PLAN") covering any officers or employees of the Borrower, any benefits
of which are, or are required to be, guaranteed by the PBGC, (y) receipt of any
notice from the PBGC of its intention to seek termination of any Plan or
appointment of a trustee therefor or (z) its intention to terminate or withdraw
from any Plan.
(vi) Environmental Matters. Immediately notify Lender upon becoming
aware of any investigation, proceeding, complaint, order, directive, claim,
citation or notice with respect to any non-compliance with or violation of the
requirements of any Environmental Law by Borrower or the generation, use,
storage, treatment, transportation, manufacture handling, production or disposal
of any Hazardous Materials or any other environmental, health or safety matter
which affects Borrower or its business operations or assets or any properties at
which Borrower has transported, stored or disposed of any Hazardous Materials
unless, the foregoing could not reasonably be expected to have a Material
Adverse Effect on Borrower.
(vii) Default; Material Adverse Change. Promptly advise Lender of any
material adverse change in the business, property, assets, prospects, operations
or condition, financial or otherwise, of
22
Borrower, the occurrence of any Event of Default hereunder or the occurrence of
any event which, if uncured, will become an Event of Default after notice or
lapse of time (or both).
All of the foregoing notices shall be provided by Borrower to Lender in writing.
(c) COMPLIANCE WITH LAWS AND MAINTENANCE OF PERMITS.
Borrower shall maintain all governmental consents, franchises,
certificates, licenses, authorizations, approvals and permits, the lack of which
would have a Material Adverse Effect on Borrower and Borrower shall remain in
compliance with all applicable federal, state, local and foreign statutes,
orders, regulations, rules and ordinances (including, without limitation,
Environmental Laws and statutes, orders, regulations, rules and ordinances
relating to taxes, employer and employee contributions and similar items,
securities, ERISA or employee health and safety) the failure with which to
comply would have a Material Adverse Effect on Borrower. Following any
determination by Lender that there is non-compliance, or any condition which
requires any action by or on behalf of Borrower in order to avoid
non-compliance, with any Environmental Law, at Borrower's expense cause an
independent environmental engineer acceptable to Lender to conduct such tests of
the relevant site(s) as are appropriate and prepare and deliver a report setting
forth the results of such tests, a proposed plan for remediation and an estimate
of the costs thereof.
(d) INSPECTION AND AUDITS.
Borrower shall permit Lender, or any Persons designated by it, to call
at Borrower's places of business at any reasonable times, and, without hindrance
or delay, to inspect the Collateral and to inspect, audit, check and make
extracts from Borrower's books, records, journals, orders, receipts and any
correspondence and other data relating to Borrower's business, the Collateral or
any transactions between the parties hereto, and shall have the right to make
such verification concerning Borrower's business as Lender may consider
reasonable under the circumstances. Borrower shall furnish to Lender such
information relevant to Lender's rights under this Agreement and the Other
Agreements as Lender shall at any time and from time to time request. Lender,
through its officers, employees or agents shall have the right, at any time and
from time to time, in Lender's name, to verify the validity, amount or any other
matter relating to any of Borrower's Accounts, by mail, telephone, telecopy,
electronic mail, or otherwise, provided, that prior to the occurrence of an
Event of Default, Lender shall conduct such verification in the name of a
nominee of Lender or in Borrower's name. Borrower authorizes Lender to discuss
the affairs, finances and business of Borrower with any officers, employees or
directors of Borrower or with its Parent or any Affiliate or the officers,
employees or directors of its Parent or any Affiliate, and to discuss the
financial condition of Borrower with Borrower's independent public accountants.
Any such discussions shall be without liability to Lender or to Borrower's
independent public accountants. Borrower shall pay to Lender all customary fees
and all costs and out-of-pocket expenses incurred by Lender in the exercise of
its rights hereunder, and all of such fees, costs and expenses shall constitute
Liabilities hereunder, shall be payable on demand and, until paid, shall bear
interest at the highest rate then applicable to Loans hereunder;
(e) INSURANCE.
Borrower shall:
(i) Keep the Collateral properly housed and insured for the full
insurable value thereof against loss or damage by fire, theft, explosion,
sprinklers, collision (in the case of motor vehicles) and such other risks as
are customarily insured against by Persons engaged in businesses similar to that
of Borrower, with such companies, in such amounts, with such deductibles, and
under policies in such form, as shall be satisfactory to Lender. Original (or
certified) copies of such policies of insurance have been or shall be, within
ninety (90) days of the date hereof, delivered to Lender, together with evidence
of payment of all premiums therefor, and shall contain an endorsement, in form
and substance acceptable to Lender, showing loss under such insurance policies
payable to Lender. Such endorsement, or an independent instrument furnished to
Lender, shall provide that the insurance company shall give Lender at least
thirty (30) days written notice before any such policy of insurance is altered
or canceled and that no act, whether willful or negligent, or
23
default of Borrower or any other Person shall affect the right of Lender to
recover under such policy of insurance in case of loss or damage. In addition,
Borrower shall cause to be executed and delivered to Lender an assignment of
proceeds of its business interruption insurance policies. Borrower hereby
directs all insurers under all policies of insurance to pay all proceeds payable
thereunder directly to Lender. Borrower irrevocably makes, constitutes and
appoints Lender (and all officers, employees or agents designated by Lender) as
Borrower's true and lawful attorney (and agent-in-fact) for the purpose of
making, settling and adjusting claims under such policies of insurance,
endorsing the name of Borrower on any check, draft, instrument or other item of
payment for the proceeds of such policies of insurance and making all
determinations and decisions with respect to such policies of insurance,
provided, however, that if no Event of Default shall have occurred and is
continuing, Borrower may make, settle and adjust claims involving less than
$250,000.00 in the aggregate without Lender's consent.
(ii) Maintain, at its expense, such public liability and third party
property damage insurance as is customary for Persons engaged in businesses
similar to that of Borrower with such companies and in such amounts, with such
deductibles and under policies in such form as shall be satisfactory to Lender
and original (or certified) copies of such policies have been or shall be,
within ninety (90) days after the date hereof, delivered to Lender, together
with evidence of payment of all premiums therefor; each such policy shall
contain an endorsement showing Lender as additional insured thereunder and
providing that the insurance company shall give Lender at least thirty (30) days
written notice before any such policy shall be altered or canceled.
If Borrower at any time or times hereafter shall fail to obtain or maintain any
of the policies of insurance required above or to pay any premium relating
thereto, then Lender, without waiving or releasing any obligation or default by
Borrower hereunder, may (but shall be under no obligation to) obtain and
maintain such policies of insurance and pay such premiums and take such other
actions with respect thereto as Lender deems advisable upon notice to Borrower.
Such insurance, if obtained by Lender, may, but need not, protect Borrower's
interests or pay any claim made by or against Borrower with respect to the
Collateral. Such insurance may be more expensive than the cost of insurance
Borrower may be able to obtain on its own and may be cancelled only upon
Borrower providing evidence that it has obtained the insurance as required
above. All sums disbursed by Lender in connection with any such actions,
including, without limitation, court costs, expenses, other charges relating
thereto and reasonable attorneys' fees, shall constitute Loans hereunder, shall
be payable on demand by Borrower to Lender and, until paid, shall bear interest
at the highest rate then applicable to Loans hereunder.
(f) COLLATERAL.
Borrower shall keep the Collateral in good condition, repair and order
and shall make all necessary repairs to the Equipment and replacements thereof
so that the operating efficiency and the value thereof shall at all times be
preserved and maintained in all material respects. Borrower shall permit Lender
to examine any of the Collateral at any time and wherever the Collateral may be
located and, Borrower shall, immediately upon request therefor by Lender,
deliver to Lender any and all evidence of ownership of any of the Equipment
including, without limitation, certificates of title and applications of title.
Borrower shall, at the request of Lender, indicate on its records concerning the
Collateral a notation, in form satisfactory to Lender, of the security interest
of Lender hereunder.
(g) USE OF PROCEEDS.
All monies and other property obtained by Borrower from Lender pursuant
to this Agreement shall be used solely for business purposes of Borrower.
(h) TAXES.
Borrower shall file all required tax returns and pay all of its taxes
when due, subject to any extensions granted by the applicable taxing authority,
including, without limitation, taxes imposed by federal, state or municipal
agencies, and shall cause any liens for taxes to be promptly released; provided,
that Borrower shall have the right to contest the payment of such taxes in good
faith by appropriate proceedings so long as (i) the amount so contested is shown
on Borrower's financial
24
statements; (ii) the contesting of any such payment does not give rise to a lien
for taxes; (iii) Borrower keeps on deposit with Lender (such deposit to be held
without interest) or a reserve is maintained against Borrower's availability to
borrow money under subsection 2(a), in either case, in an amount of money which,
in the sole judgment of Lender, is sufficient to pay such taxes and any interest
or penalties that may accrue thereon; and (iv) if Borrower fails to prosecute
such contest with reasonable diligence, Lender may apply the money so deposited
in payment of such taxes. If Borrower fails to pay any such taxes and in the
absence of any such contest by Borrower, Lender may (but shall be under no
obligation to) advance and pay any sums required to pay any such taxes and/or to
secure the release of any lien therefor, and any sums so advanced by Lender
shall constitute Loans hereunder, shall be payable by Borrower to Lender on
demand, and, until paid, shall bear interest at the highest rate then applicable
to Loans hereunder.
(i) INTELLECTUAL PROPERTY.
Borrower shall maintain adequate licenses, patents, patent
applications, copyrights, service marks, trademarks, trademark applications,
tradestyles and trade names to continue its business as heretofore conducted by
it or as hereafter conducted by it unless, the foregoing could not reasonably be
expected to have a Material Adverse Effect on Borrower.
(j) CHECKING ACCOUNT.
Borrower shall maintain its general checking and controlled
disbursement accounts with Lender. Normal charges shall be assessed thereon.
Although no compensating balance is required, Borrower must keep monthly
balances in order to merit earnings credits which will cover Lender's service
charges for demand deposit account activities.
(k) INTEREST RATE PROTECTION.
Borrower may enter into Interest Rate Protection Agreements
satisfactory to the Lender which shall in no event exceed Four Million and
No/100 Dollars ($4,000,000.00) of the Liabilities, for a period expiring no
sooner than the Original Term or any Renewal Term.
(l) COLLATERAL OF GUARANTORS.
In the event Lender does not receive evidence of the dissolution of (i)
Life Support Products, Inc. and (ii) Allied HSI (f/k/a Hospital Systems, Inc.),
(collectively, the "Guarantor Subsidiaries") within one hundred twenty (120)
days of the date hereof, Borrower shall execute and deliver to Lender and cause
the Guarantor Subsidiaries to execute and deliver to Lender such documents,
financing statements and other agreements and instruments as Lender may deem
necessary in its sole discretion in order for Lender to establish a prior
perfected security interest in substantially all of the property of such
Persons. All such documents, financing statements, other agreements and
instruments shall be in form and substance satisfactory to Lender in its sole
discretion.
13. NEGATIVE COVENANTS.
Until payment and satisfaction in full of all Liabilities and
termination of this Agreement, unless Borrower obtains Lender's prior written
consent waiving or modifying any of Borrower's covenants hereunder in any
specific instance, Borrower agrees as follows:
(a) GUARANTIES.
Borrower shall not assume, guarantee or endorse, or otherwise become
liable in connection with, the obligations of any Person, except by endorsement
of instruments for deposit or collection or similar transactions in the ordinary
course of business.
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(b) INDEBTEDNESS.
Borrower shall not create, incur, assume or become obligated (directly
or indirectly), for any loans or other indebtedness of borrowed money other than
the Loans, except that Borrower may (i) borrow money from a person other than
Lender on an unsecured and subordinated basis if a subordination agreement in
favor of Lender and in form and substance satisfactory to Lender is executed and
delivered to Lender relative thereto; (ii) maintain its present indebtedness
listed on Schedule 11(n) hereto; (iii) incur unsecured indebtedness to trade
creditors in the ordinary course of business; (iv) incur purchase money
indebtedness or capitalized lease obligations in connection with Capital
Expenditures permitted pursuant to subsection 14(d) hereof; (v) incur operating
lease obligations requiring payments not to exceed $900,000.00 in the aggregate
during any Fiscal Year of Borrower; and (vi) enter into Interest Rate Protection
Agreements with Lender or any of its affiliates in the ordinary course of
business (and not for speculative purposes) with risk exposure (as determined in
accordance with Lender's or its affiliate's customary practice on the date of
such Interest Rate Protection Agreement) not to exceed $4,000,000.00 as of the
date such Interest Rate Protection Agreement becomes effective; and (vii) incur
indebtedness in connection with any amendment, modification, extension or
refunding of Borrower's obligations under the Real Estate Loan Agreement or any
refinancing or replacement, up to the sum of the then outstanding principal of
Borrower's obligations under the Real Estate Loan Agreement plus all costs
associated therewith including broker's fees and reasonable attorney's fees.
(c) LIENS.
Borrower shall not grant or permit to exist (voluntarily or
involuntarily) any lien, claim, security interest or other encumbrance
whatsoever on any of its assets, other than Permitted Liens.
(d) MERGERS, SALES, ACQUISITIONS, SUBSIDIARIES AND OTHER TRANSACTIONS
OUTSIDE THE ORDINARY COURSE OF BUSINESS.
Borrower shall not (i) enter into any merger or consolidation; (ii)
change the state of Borrower's organization or enter into any transaction which
has the effect of changing Borrower's state of organization (iii) sell, lease or
otherwise dispose of any of its assets other than in the ordinary course of
business; (iv) purchase the stock, other equity interests or all or a material
portion of the assets of any Person or division of such Person; or (v) enter
into any other transaction outside the ordinary course of Borrower's business,
including, without limitation, any purchase, redemption or retirement of any
shares of any class of its stock or any other equity interest, and any issuance
of any shares of, or warrants or other rights to receive or purchase any shares
of, any class of its stock or any other equity interest. Borrower shall not form
any Subsidiaries or enter into any joint ventures or partnerships with any other
Person.
(e) DIVIDENDS AND DISTRIBUTIONS.
Borrower shall not declare or pay any dividend or other distribution
(whether in cash or in kind) on any class of its stock (if Borrower is a
corporation) or on account of any equity interest in Borrower (if Borrower is a
partnership, limited liability company or other type of entity).
(f) INVESTMENTS; LOANS.
Borrower shall not purchase or otherwise acquire, or contract to
purchase or otherwise acquire, the obligations or stock of any Person, other
than direct obligations of the United States, obligations insured by the Federal
Deposit Insurance Corporation and obligations unconditionally guaranteed by the
United States; nor shall Borrower lend or otherwise advance funds to any Person
except for advances made to employees, officers and directors for travel and
other expenses arising in the ordinary course of business and loans to employees
not exceeding Twenty-Five Thousand and No/100 Dollars ($25,000.00) in the
aggregate outstanding for all Persons at any one time.
26
(g) FUNDAMENTAL CHANGES, LINE OF BUSINESS.
Borrower shall not amend its organizational documents or change its
Fiscal Year or enter into a new line of business materially different from
Borrower's current business, unless (i) such actions would not have a Material
Adverse Effect on the Borrower, (ii) such actions would not affect the
obligations of Borrower to Lender, (iii) such actions would not affect the
interpretation of any of the terms of this Agreement or the Other Agreements and
(iv) Lender has received ten (10) days prior written notice of such amendment or
change.
(h) EQUIPMENT.
Borrower shall not (i) permit any Equipment to become a Fixture to real
property unless such real property is owned by Borrower and is subject to a
mortgage in favor of Lender, or if such real estate is leased, is subject to a
landlord's agreement in favor of Lender on terms acceptable to Lender, or (ii)
permit any Equipment to become an accession to any other personal property
unless such personal property is subject to a first priority lien in favor of
Lender.
(i) AFFILIATE TRANSACTIONS.
Except as set forth on Schedule 11(i) hereto or as permitted pursuant
to subsection 11(c) hereof, Borrower shall not conduct, permit or suffer to be
conducted, transactions with Affiliates other than transactions for the purchase
or sale of Inventory or services in the ordinary course of business pursuant to
terms that are no less favorable to Borrower than the terms upon which such
transactions would have been made had they been made to or with a Person that is
not an Affiliate.
(j) SETTLING OF ACCOUNTS.
Borrower shall not settle or adjust any Account identified by Borrower
as an Eligible Account or with respect to which the Account Debtor is an
Affiliate without the consent of Lender, provided, that following the occurrence
and during the continuance of an Event of Default, Borrower shall not settle or
adjust any Account without the consent of Lender.
14. FINANCIAL COVENANTS.
Borrower shall maintain and keep in full force and effect each of the
financial covenants set forth below:
(a) TANGIBLE NET WORTH.
Borrower's Tangible Net Worth shall not at any time be less than the
Minimum Tangible Net Worth; "MINIMUM TANGIBLE NET WORTH" being defined for
purposes of this subsection as (i) $15,600,000.00 at all times from the date
hereof through June 30, 2002 and (ii) thereafter, from the first day of each
Fiscal Year of Borrower through the last day of such Fiscal Year of Borrower,
the Minimum Tangible Net Worth during the immediately preceding period plus
$1,000,000.00; and "TANGIBLE NET WORTH" being defined for purposes of this
subsection as Borrower's shareholders' equity (including retained earnings) less
the book value of all intangible assets as determined solely by Lender on a
consistent basis plus the amount of any LIFO reserve plus the amount of any debt
subordinated to Lender, all as determined under generally accepted accounting
principles applied on a basis consistent with the financial statement dated
February 28, 2002 except as set forth herein;
(b) FIXED CHARGE COVERAGE.
As of the last day of each month, for the twelve (12) month period
ending on such date, Borrower shall not permit the ratio of its EBITDA to Fixed
Charges to be less than 1.0 to 1.0.
27
(c) EBITDA.
Borrower shall not permit EBITDA to be less than (i) $2,500,000.00 for
the twelve (12) month period ending June 30, 2002; (ii) $3,500,000.00 for the
twelve (12) month period ending on September 30 2002; and (iii) $4,100,000.00
for the twelve (12) month period ending on December 31, 2002. Thereafter, as of
the last day of each fiscal quarter for the twelve (12) month period ending on
each such date, commencing on March 31, 2003, Borrower shall not permit EBITDA
to be less than $5,100,000.00.
(d) CAPITAL EXPENDITURE LIMITATIONS.
Borrower shall not make any Capital Expenditures if, after giving
effect to such Capital Expenditure, the aggregate cost of all such fixed assets
purchased or otherwise acquired would exceed (i) $5,000,000.00 through June 30,
2002; (ii) $2,000,000 for Fiscal Year ending June 30 2003; and (iii) thereafter
$1,000,000.00 during any Fiscal Year.
15. DEFAULT.
The occurrence of any one or more of the following events shall
constitute an "EVENT OF DEFAULT" by Borrower hereunder:
(a) PAYMENT.
The failure of any Obligor to pay when due, declared due, or demanded
by Lender, any of the Liabilities.
(b) BREACH OF THIS AGREEMENT AND THE OTHER AGREEMENTS.
The failure of any Obligor to perform, keep or observe any of the
covenants, conditions, promises, agreements or obligations of such Obligor under
this Agreement or any of the Other Agreements; provided that any such failure by
Borrower under subsections 12(b)(i), (iv), (v), (vi), 12(c) and 12(i) of this
Agreement shall not constitute an Event of Default hereunder until the fifteenth
(15th) day following the occurrence thereof.
(c) BREACHES OF OTHER OBLIGATIONS.
The failure of any Obligor to perform, keep or observe (after any
applicable notice and cure period) any of the covenants, conditions, promises,
agreements or obligations of such Obligor under any other agreement with any
Person if such failure might have a Material Adverse Effect on such Obligor.
(d) BREACH OF REPRESENTATIONS AND WARRANTIES.
The making or furnishing by any Obligor to Lender of any
representation, warranty, certificate, schedule, report or other communication
within or in connection with this Agreement or the Other Agreements or in
connection with any other agreement between such Obligor and Lender, which is
untrue or misleading in any material respect as of the date made.
(e) LOSS OF COLLATERAL.
The loss, theft, damage or destruction of any of the Collateral in an
amount in excess of $500,000.00 in the aggregate for all such events during any
year of the Original Term or any Renewal Term as determined by Lender in its
sole discretion determined in good faith, or (except as permitted hereby) sale,
lease or furnishing under a contract of service of, any of the Collateral.
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(f) LEVY, SEIZURE OR ATTACHMENT.
The making or any attempt by any Person to make any levy, seizure or
attachment upon any of the Collateral.
(g) BANKRUPTCY OR SIMILAR PROCEEDINGS.
The commencement of any proceedings in bankruptcy by or against any
Obligor or for the liquidation or reorganization of any Obligor, or alleging
that such Obligor is insolvent or unable to pay its debts as they mature, or for
the readjustment or arrangement of any Obligor's debts, whether under the United
States Bankruptcy Code or under any other law, whether state or federal, now or
hereafter existing, for the relief of debtors, or the commencement of any
analogous statutory or non-statutory proceedings involving any Obligor;
provided, however, that if such commencement of proceedings against such Obligor
is involuntary, such action shall not constitute an Event of Default unless such
proceedings are not dismissed within forty-five (45) days after the commencement
of such proceedings.
(h) APPOINTMENT OF RECEIVER.
The appointment of a receiver or trustee for any Obligor, for any of
the Collateral or for any substantial part of any Obligor's assets or the
institution of any proceedings for the dissolution, or the full or partial
liquidation, or the merger or consolidation, of any Obligor which is a
corporation, limited liability company or a partnership; provided, however, that
if such appointment or commencement of proceedings against such Obligor is
involuntary, such action shall not constitute an Event of Default unless such
appointment is not revoked or such proceedings are not dismissed within
forty-five (45) days after the commencement of such proceedings.
(i) JUDGMENT.
The entry of any judgments or orders for the payment of money in
amounts aggregating in excess of $300,000.00 against any Obligor which remains
unsatisfied or undischarged and in effect for thirty (30) days after such entry
without a stay of enforcement or execution.
(j) DEATH OR DISSOLUTION OF OBLIGOR.
The death of any Obligor who is a natural Person, or of any general
partner who is a natural Person of any Obligor which is a partnership, or any
member who is a natural Person of any Obligor which is a limited liability
company or the dissolution of any Obligor which is a partnership, limited
liability company, corporation or other entity; provided, that any Obligor that
is a Subsidiary of Borrower may dissolve and liquidate, with Lender's prior
approval (which shall not be unreasonably withheld), and distribute its assets
to Borrower, and such event shall not be an Event of Default.
(k) DEFAULT OR REVOCATION OF GUARANTY.
The occurrence of an event of default under, or the revocation or
termination of, other than a termination pursuant to the specific provisions
thereof, any agreement, instrument or document executed and delivered by any
Person to Lender pursuant to which such Person has guaranteed to Lender the
payment of all or any of the Liabilities or has granted Lender a security
interest in or lien upon some or all of such Person's real and/or personal
property to secure the payment of all or any of the Liabilities.
(l) CRIMINAL PROCEEDINGS.
The institution in any court of a criminal proceeding against any
Obligor which would have a Material Adverse Effect on such Obligor, or the
indictment of any Obligor for any crime other than traffic and boating tickets
and misdemeanors not punishable by jail terms.
29
(m) CHANGE OF MANAGEMENT.
If Xxxx X. Xxxxxxxx shall cease to be the Chief Executive Officer and
President of Borrower at any time, and Borrower fails to appoint a replacement
reasonably satisfactory to Lender within thirty (30) days thereafter.
(n) MATERIAL ADVERSE CHANGE.
Any material adverse change in the Collateral, business, property,
assets, operations or condition, financial or otherwise of any Obligor, as
determined by Lender in its sole judgment or the occurrence of any event which,
in Lender's sole judgment, could have a Material Adverse Effect.
16. REMEDIES UPON AN EVENT OF DEFAULT.
(a) Upon the occurrence and during the continuance of an Event of
Default described in subsection 15(g) hereof, all of the Liabilities shall
immediately and automatically become due and payable, without notice of any
kind. Upon the occurrence of any other Event of Default, all Liabilities may, at
the option of Lender, and without demand, notice or legal process of any kind,
be declared, and immediately shall become, due and payable.
(b) Upon the occurrence and during the continuance of an Event of
Default, Lender may exercise from time to time any rights and remedies available
to it under the Uniform Commercial Code and any other applicable law in addition
to, and not in lieu of, any rights and remedies expressly granted in this
Agreement or in any of the Other Agreements and all of Lender's rights and
remedies shall be cumulative and non-exclusive to the extent permitted by law.
In particular, but not by way of limitation of the foregoing, Lender may,
without notice, demand or legal process of any kind, take possession of any or
all of the Collateral (in addition to Collateral of which it already has
possession), wherever it may be found, and for that purpose may pursue the same
wherever it may be found, and may enter onto any of Borrower's premises where
any of the Collateral may be, and search for, take possession of, remove, keep
and store any of the Collateral until the same shall be sold or otherwise
disposed of, and Lender shall have the right to store the same at any of
Borrower's premises without cost to Lender. At Lender's request, Borrower shall,
at Borrower's expense, assemble the Collateral and make it available to Lender
at one or more places to be designated by Lender and reasonably convenient to
Lender and Borrower. Borrower recognizes that if Borrower fails to perform,
observe or discharge any of its Liabilities under this Agreement or the Other
Agreements, no remedy at law will provide adequate relief to Lender, and agrees
that Lender shall be entitled to temporary and permanent injunctive relief in
any such case without the necessity of proving actual damages. Any notification
of intended disposition of any of the Collateral required by law will be deemed
to be a reasonable authenticated notification of disposition if given at least
ten (10) days prior to such disposition and such notice shall (i) describe
Lender and Borrower, (ii) describe the Collateral that is the subject of the
intended disposition, (iii) state the method of the intended disposition, (iv)
state that Borrower is entitled to an accounting of the Liabilities and state
the charge, if any, for an accounting and (v) state the time and place of any
public disposition or the time after which any private sale is to be made.
Lender may disclaim any warranties that might arise in connection with the sale,
lease or other disposition of the Collateral and has no obligation to provide
any warranties at such time. Any Proceeds of any disposition by Lender of any of
the Collateral may be applied by Lender to the payment of expenses in connection
with the Collateral, including, without limitation, legal expenses and
reasonable attorneys' fees, and any balance of such Proceeds may be applied by
Lender toward the payment of such of the Liabilities, and in such order of
application, as Lender may from time to time elect.
17. CONDITIONS PRECEDENT.
The obligation of Lender to fund the Capital Expenditure Loans, to fund
the initial Revolving Loan, and to issue or cause to be issued the initial
Letter of Credit, is subject to the satisfaction or waiver on or before the date
hereof of the following conditions precedent:
30
(a) Lender shall have received each of the agreements, opinions,
reports, approvals, consents, certificates and other documents set forth on the
closing document list attached hereto as Schedule 17(a) (the "CLOSING DOCUMENT
LIST");
(b) Since January 18, 2002, no event shall have occurred which has had
or could reasonably be expected to have a Material Adverse Effect on any
Obligor, as determined by Lender in its sole discretion determined in good
faith;
(c) Lender shall have received payment in full of all fees and expenses
payable to it by Borrower or any other Person in connection herewith, on or
before disbursement of the initial Loans hereunder;
(d) The Obligors shall have executed and delivered to Lender all such
other documents, instruments and agreements which Lender determines are
reasonably necessary to consummate the transactions contemplated hereby.
18. INDEMNIFICATION.
Borrower agrees to defend (with counsel satisfactory to Lender),
protect, indemnify and hold harmless Lender, each affiliate or subsidiary of
Lender, and each of their respective officers, directors, employees, attorneys
and agents (each an "INDEMNIFIED PARTY") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature (including,
without limitation, the disbursements and the reasonable fees of counsel for
each Indemnified Party in connection with any investigative, administrative or
judicial proceeding, whether or not the Indemnified Party shall be designated a
party thereto), which may be imposed on, incurred by, or asserted against, any
Indemnified Party (whether direct, indirect or consequential and whether based
on any federal, state or local laws or regulations, including, without
limitation, securities laws and regulations, Environmental Laws and commercial
laws and regulations, under common law or in equity, or based on contract or
otherwise) in any manner relating to or arising out of this Agreement or any
Other Agreement, or any act, event or transaction related or attendant thereto,
the making or issuance and the management of the Loans or any Letters of Credit
or the use or intended use of the proceeds of the Loans or any Letters of
Credit; provided, however, that Borrower shall not have any obligation hereunder
to any Indemnified Party with respect to matters caused by or resulting from the
willful misconduct or gross negligence of such Indemnified Party. To the extent
that the undertaking to indemnify set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, Borrower
shall satisfy such undertaking to the maximum extent permitted by applicable
law. Any liability, obligation, loss, damage, penalty, cost or expense covered
by this indemnity shall be paid to each Indemnified Party on demand, and,
failing prompt payment, shall, together with interest thereon at the highest
rate then applicable to Loans hereunder from the date incurred by each
Indemnified Party until paid by Borrower, be added to the Liabilities of
Borrower and be secured by the Collateral. The provisions of this Section 18
shall survive the satisfaction and payment of the other Liabilities and the
termination of this Agreement.
19. NOTICE.
All written notices and other written communications with respect to
this Agreement shall be sent by ordinary, certified or overnight mail, by
telecopy or delivered in person, and in the case of Lender shall be sent to it
at 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000-0000, attention: Xxxx
Xxxxxxx, facsimile number: (000) 000-0000, and in the case of Borrower shall be
sent to it at its principal place of business set forth on Exhibit A hereto or
as otherwise directed by Borrower in writing, with a copy sent to its attorney
at Xxxxxxxxxxxx, Xxxxxx & Xxxx, P.C., 00 X. Xxxxxxxx, Xxxxx 0000, Xx. Xxxxx,
Xxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxx, Esq., fax number (000) 000-0000.
All notices shall be deemed received upon actual receipt thereof or refusal of
delivery.
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20. CHOICE OF GOVERNING LAW; CONSTRUCTION; FORUM SELECTION.
This Agreement and the Other Agreements are submitted by Borrower to
Lender for Lender's acceptance or rejection at Lender's principal place of
business as an offer by Borrower to borrow monies from Lender now and from time
to time hereafter, and shall not be binding upon Lender or become effective
until accepted by Lender, in writing, at said place of business. If so accepted
by Lender, this Agreement and the Other Agreements shall be deemed to have been
made at said place of business. THIS AGREEMENT AND THE OTHER AGREEMENTS SHALL BE
GOVERNED AND CONTROLLED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS AS TO
INTERPRETATION, ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT, AND IN ALL OTHER
RESPECTS, INCLUDING, WITHOUT LIMITATION, THE LEGALITY OF THE INTEREST RATE AND
OTHER CHARGES, BUT EXCLUDING PERFECTION OF THE SECURITY INTERESTS IN COLLATERAL
LOCATED OUTSIDE OF THE STATE OF ILLINOIS, WHICH SHALL BE GOVERNED AND CONTROLLED
BY THE LAWS OF THE RELEVANT JURISDICTION IN WHICH SUCH COLLATERAL IS LOCATED. If
any provision of this Agreement shall be held to be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or remaining provisions of this Agreement.
To induce Lender to accept this Agreement, Borrower irrevocably agrees
that, subject to Lender's sole and absolute election, ALL ACTIONS OR PROCEEDINGS
IN ANY WAY, MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO THIS
AGREEMENT, THE OTHER AGREEMENTS OR THE COLLATERAL SHALL BE LITIGATED IN COURTS
HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS. BORROWER HEREBY
CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURTS
LOCATED WITHIN SAID CITY AND STATE. Borrower hereby irrevocably appoints and
designates the Secretary of State of Illinois, whose address is Springfield,
Illinois (or any other person having and maintaining a place of business in such
state whom Borrower may from time to time hereafter designate upon ten (10) days
written notice to Lender and whom Lender has agreed in its sole discretion in
writing is satisfactory and who has executed an agreement in form and substance
satisfactory to Lender agreeing to act as such attorney and agent), as
Borrower's true and lawful attorney and duly authorized agent for acceptance of
service of legal process. Borrower agrees that service of such process upon such
person shall constitute personal service of such process upon Borrower. Lender
agrees to endeavor to provide a copy of such process to the law firm of
Xxxxxxxxxxxx, Xxxxxx & Xxxx, P.C. by mail at the address of 00 Xxxxx Xxxxxxxx,
Xxxxx 0000, Xx. Xxxxx, Xxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxx, Esq., or
by facsimile transmission at facsimile number (000) 000-0000. Failure of Lender
to provide a copy of such process shall not impair Lender's rights hereunder.
BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF
ANY LITIGATION BROUGHT AGAINST BORROWER BY LENDER IN ACCORDANCE WITH THIS
SECTION.
21. MODIFICATION AND BENEFIT OF AGREEMENT.
This Agreement and the Other Agreements may not be modified, altered or
amended except by an agreement in writing signed by Borrower or such other
Person who is a party to such Other Agreement and Lender. Borrower may not sell,
assign or transfer this Agreement, or the Other Agreements or any portion
thereof, including, without limitation, Borrower's rights, titles, interest,
remedies, powers or duties hereunder and thereunder. Borrower hereby consents to
Lender's sale, assignment, transfer or other disposition, at any time and from
time to time hereafter, of this Agreement, or the Other Agreements, or of any
portion thereof, or participations therein, including, without limitation,
Lender's rights, titles, interest, remedies, powers and/or duties and agrees
that it shall execute and deliver such documents as Lender may request in
connection with any such sale, assignment, transfer or other disposition.
22. HEADINGS OF SUBDIVISIONS.
The headings of subdivisions in this Agreement are for convenience of
reference only, and shall not govern the interpretation of any of the provisions
of this Agreement.
32
23. POWER OF ATTORNEY.
Borrower acknowledges and agrees that its appointment of Lender as its
attorney and agent-in-fact for the purposes specified in this Agreement is an
appointment coupled with an interest and shall be irrevocable until all of the
Liabilities are satisfied and paid in full and this Agreement is terminated.
24. CONFIDENTIALITY.
Borrower and Lender hereby agree and acknowledge that any and all
information relating to Borrower which is (i) furnished by Borrower (or any
officer, director, employee, agent or other representative of Borrower) to
Lender (or to any affiliate of Lender); and (ii) non-public, confidential or
proprietary in nature, shall be kept confidential by Lender or such affiliate in
accordance with applicable law; provided, however, that such information and
other credit information relating to Borrower may be distributed by Lender or
such affiliate to Lender's or such affiliate's directors, officers, employees,
attorneys, affiliates, assignees, participants, auditors, agents and regulators,
and upon the order of a court or other governmental agency having jurisdiction
over Lender or such affiliate, to any other party. Borrower and Lender further
agree that this provision shall survive the termination of this Agreement.
Notwithstanding the foregoing, Borrower hereby consents to Lender publishing a
tombstone or similar advertising material relating to the financing transaction
contemplated by this Agreement.
25. COUNTERPARTS.
This Agreement, any of the Other Agreements, 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 agreement.
26. ELECTRONIC SUBMISSIONS.
Upon not less than thirty (30) days' prior written notice (the
"APPROVED ELECTRONIC FORM NOTICE"), Lender may permit or require that any of the
documents, certificates, forms, deliveries or other communications, authorized,
required or contemplated by this Agreement or the Other Agreements, be submitted
to Lender in "APPROVED ELECTRONIC FORM" (as hereafter defined), subject to any
reasonable terms, conditions and requirements in the applicable Approved
Electronic Form Notice. For purposes hereof "ELECTRONIC FORM" means e-mail,
e-mail attachments, data submitted on web-based forms or any other communication
method that delivers machine readable data or information to Lender, and
"APPROVED ELECTRONIC FORM" means an Electronic Form that has been approved in
writing by Lender (which approval has not been revoked or modified by Lender)
and sent to Borrower in an Approved Electronic Form Notice. Except as otherwise
specifically provided in the applicable Approved Electronic Form Notice, any
submissions made in an applicable Approved Electronic Form shall have the same
force and effect that the same submissions would have had if they had been
submitted in any other applicable form authorized, required or contemplated by
this Agreement or the Other Agreements.
27. WAIVER OF JURY TRIAL; OTHER WAIVERS.
(a) BORROWER AND LENDER EACH HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY
IN ANY ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS
AGREEMENT, ANY OF THE OTHER AGREEMENTS, THE LIABILITIES, THE COLLATERAL, ANY
ALLEGED TORTIOUS CONDUCT BY BORROWER OR LENDER OR WHICH, IN ANY WAY, DIRECTLY OR
INDIRECTLY, ARISES OUT OF OR RELATES TO THE RELATIONSHIP BETWEEN BORROWER AND
LENDER. IN NO EVENT SHALL LENDER BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL OR
CONSEQUENTIAL DAMAGES.
(b) Borrower hereby waives demand, presentment, protest and notice of
nonpayment, and further waives the benefit of all valuation, appraisal and
exemption laws.
33
(c) Borrower hereby waives the benefit of any law that would otherwise
restrict or limit Lender or any affiliate of Lender in the exercise of its
right, which is hereby acknowledged and agreed to, to set-off against the
Liabilities, without notice at any time hereafter, any indebtedness, matured or
unmatured, owing by Lender or such affiliate of Lender to Borrower, including,
without limitation any deposit account at Lender or such affiliate.
(d) BORROWER HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY KIND
PRIOR TO THE EXERCISE BY LENDER OF ITS RIGHTS TO REPOSSESS THE COLLATERAL OF
BORROWER WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON SUCH
COLLATERAL, PROVIDED THAT IN THE EVENT THAT LENDER SEEKS TO ENFORCE ITS RIGHTS
HEREUNDER BY JUDICIAL PROCESS OR SELF HELP, LENDER SHALL PROVIDE BORROWER WITH
SUCH NOTICES AS ARE REQUIRED BY LAW.
(e) Lender's failure, at any time or times hereafter, to require strict
performance by Borrower of any provision of this Agreement or any of the Other
Agreements shall not waive, affect or diminish any right of Lender thereafter to
demand strict compliance and performance therewith. Any suspension or waiver by
Lender of an Event of Default under this Agreement or any default under any of
the Other Agreements shall not suspend, waive or affect any other Event of
Default under this Agreement or any other default under any of the Other
Agreements, whether the same is prior or subsequent thereto and whether of the
same or of a different kind or character. No delay on the part of Lender in the
exercise of any right or remedy under this Agreement or any Other Agreement
shall preclude other or further exercise thereof or the exercise of any right or
remedy. None of the undertakings, agreements, warranties, covenants and
representations of Borrower contained in this Agreement or any of the Other
Agreements and no Event of Default under this Agreement or default under any of
the Other Agreements shall be deemed to have been suspended or waived by Lender
unless such suspension or waiver is in writing, signed by a duly authorized
officer of Lender and directed to Borrower specifying such suspension or waiver.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
ALLIED HEALTHCARE PRODUCTS, INC. LASALLE BANK NATIONAL ASSOCIATION
By By
--------------------------------- ---------------------------------
Title Title
------------------------------ ------------------------------
34
REVOLVING NOTE
Executed as of the 24th day of ID: Allied Healthcare
April, 2002 at Chicago, Illinois.
Amount $15,000,000.00
FOR VALUE RECEIVED, the Undersigned (jointly and severally, if more
than one) promises to pay to the order of LASALLE BANK NATIONAL ASSOCIATION
(hereinafter, together with any holder hereof, called "BANK"), at the main
office of the Bank, the principal sum of Fifteen Million and No/100 Dollars
($15,000,000.00) plus the aggregate unpaid principal amount of all advances made
by Bank to the Undersigned (or any one of them, if more than one) pursuant to
and in accordance with Subsection 2(a) of the Loan Agreement (as hereinafter
defined) in excess of such amount, or, if less, the aggregate unpaid principal
amount of all advances made by Bank to the Undersigned (or any one of them, if
more than one) pursuant to and in accordance with Subsection 2(a) of the Loan
Agreement. The Undersigned (jointly and severally, if more than one) further
promises to pay interest on the outstanding principal amount hereof on the dates
and at the rates provided in the Loan Agreement from the date hereof until
payment in full hereof.
This Note is referred to in and was delivered pursuant to that certain
Loan and Security Agreement, as it may be amended from time to time, together
with all exhibits thereto, dated April 24, 2002, between Bank and the
Undersigned (the "LOAN AGREEMENT"). All terms which are capitalized and used
herein (which are not otherwise defined herein) shall have the meaning ascribed
to such term in the Loan Agreement.
The outstanding principal balance of the Undersigned's liabilities to
the Bank under this Note shall be payable pursuant to the terms of the Loan
Agreement.
The Undersigned (and each one of them, if more than one) hereby
authorizes the Bank to charge any account of the Undersigned (and each one of
them, if more than one) for all sums due hereunder. If payment hereunder becomes
due and payable on a Saturday, Sunday or legal holiday under the laws of the
United States or the State of Illinois, the due date thereof shall be extended
to the next succeeding business day, and interest shall be payable thereon at
the rate specified during such extension. Credit shall be given for payments
made in the manner and at the times provided in the Loan Agreement. It is the
intent of the parties that the rate of interest and other charges to the
Undersigned under this Note shall be lawful; therefore, if for any reason the
interest or other charges payable hereunder are found by a court of competent
jurisdiction, in a final determination, to exceed the limit which Bank may
lawfully charge the Undersigned, then the obligation to pay interest or other
charges shall automatically be reduced to such limit and, if any amount in
excess of such limit shall have been paid, then such amount shall be refunded to
the Undersigned.
The principal and all accrued interest hereunder may be prepaid by the
Undersigned, in part or in full, at any time without payment of a prepayment fee
as provided in the Loan Agreement.
The Undersigned (and each one of them, if more than one) waives the
benefit of any law that would otherwise restrict or limit Bank in the exercise
of its right, which is hereby acknowledged, to set-off against the Liabilities,
without notice and at any time hereafter after the occurrence of an Event of
Default, any indebtedness matured or unmatured owing from Bank to the
Undersigned (or any one of them). The Undersigned (and each one of them, if more
than one) waives every defense, counterclaim (other than any claim which, if not
made as a counterclaim, would be waived by Undersigned) or setoff which the
Undersigned (or any one of them) may now have or hereafter may have to any
action by Bank in enforcing this Note and/or any of the other Liabilities, or in
enforcing Bank's rights in the Collateral and ratifies and confirms whatever
Bank may do pursuant to the terms hereof and of the Loan Agreement and with
respect to the Collateral and agrees that Bank shall not be liable for any error
in judgment or mistakes of fact or law except with respect to acts of gross
negligence or wilful misconduct.
The Undersigned, any other party liable with respect to the Liabilities
and any and all endorsers and accommodation parties, and each one of them, if
more than one, waive any and all
presentment, demand, notice of dishonor, protest, and all other notices and
demands in connection with the enforcement of Bank's rights hereunder.
The loan evidenced hereby has been made and this Note has been
delivered at Chicago, Illinois. THIS NOTE SHALL BE GOVERNED AND CONTROLLED BY
THE INTERNAL LAWS OF THE STATE OF ILLINOIS AS TO INTERPRETATION, ENFORCEMENT,
VALIDITY, CONSTRUCTION, EFFECT, AND IN ALL OTHER RESPECTS, INCLUDING WITHOUT
LIMITATION, THE LEGALITY OF THE INTEREST RATE AND OTHER CHARGES, and shall be
binding upon the Undersigned (and each one of them, if more than one) and the
Undersigned's heirs, legal representatives, successors and assigns (and each of
them, if more than one). If this Note contains any blanks when executed by the
Undersigned (or any one of them, if more than one), the Bank is hereby
authorized, without notice to the Undersigned (or any one of them, if more than
one) to complete any such blanks according to the terms upon which the loan or
loans were granted. Wherever possible, each provision of this Note shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Note shall be prohibited by or be invalid under
such law, such provision shall be severable, and be ineffective to the extent of
such prohibition or invalidity, without invalidating the remaining provisions of
this Note. If more than one party shall execute this Note, the term
"UNDERSIGNED" as used herein shall mean all parties signing this Note, and each
one of them, and all such parties, their respective heirs, executors,
administrators, successors and assigns, shall be jointly and severally obligated
hereunder.
To induce the Bank to make the loan evidenced by this Note, the
Undersigned (and each one of them, if more than one) (i) irrevocably agrees
that, subject to Bank's sole and absolute election, all actions arising directly
or indirectly as a result or in consequence of this Note or any other agreement
with the Bank, or the Collateral, shall be instituted and litigated only in
courts having situs in the City of Chicago, Illinois; (ii) hereby consents to
the exclusive jurisdiction and venue of any State or Federal Court located and
having its situs in said city; and (iii) waives any objection based on forum
non-conveniens. IN ADDITION, BANK AND THE UNDERSIGNED (OR ANY ONE OF THEM, IF
MORE THAN ONE) HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING WHICH
PERTAINS DIRECTLY OR INDIRECTLY TO THIS NOTE, THE LIABILITIES, THE COLLATERAL,
ANY ALLEGED TORTIOUS CONDUCT BY THE UNDERSIGNED OR BANK OR WHICH IN ANY WAY,
DIRECTLY OR INDIRECTLY, ARISES OUT OF OR RELATES TO THE RELATIONSHIP BETWEEN THE
UNDERSIGNED AND BANK. In addition, the Undersigned agrees that all service of
process shall be made as provided in the Loan Agreement.
As used herein, all provisions shall include the masculine, feminine,
neuter, singular and plural thereof, wherever the context and facts require such
construction and in particular the word "Undersigned" shall be so construed.
IN WITNESS WHEREOF, each of the Undersigned, if more than one, has
executed this Note on the date above set forth.
ALLIED HEALTHCARE PRODUCTS, INC.
By
--------------------------------------------
Name
------------------------------------------
Title
-----------------------------------------
Address:
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
================================================================================
FOR BANK USE ONLY
Officer's Initials:
----------
Approval:
-----------
-2-
CAPITAL EXPENDITURES NOTE
Executed as of the 24th day of ID: Allied Healthcare
April, 2002 at Chicago, Illinois.
Amount $4,000,000.00
FOR VALUE RECEIVED, the Undersigned (jointly and severally, if more
than one) promises to pay to the order of LASALLE BANK NATIONAL ASSOCIATION
(hereinafter, together with any holder hereof, called "BANK"), at the main
office of the Bank, the principal sum of Four Million and No/100 Dollars
($4,000,000.00), or if less, the aggregate unpaid principal amount of all
advances made by Bank to the Undersigned. The Undersigned (jointly and
severally, if more than one) further promises to pay interest on the outstanding
principal amount hereof on the dates and at the rates provided in the Loan
Agreement from the date hereof until payment in full hereof.
This Note was delivered pursuant to that certain Loan and Security
Agreement, as it may be amended from time to time, together with all exhibits
thereto, dated April 24, 2002, between Bank and the Undersigned (the "LOAN
AGREEMENT"). All terms which are capitalized and used herein (which are not
otherwise defined herein) shall have the meaning ascribed to such term in the
Loan Agreement.
The outstanding principal balance of the Undersigned's liabilities to
the Bank under this Note shall be payable pursuant to the terms of the Loan
Agreement.
The Undersigned (and each one of them, if more than one) hereby
authorizes the Bank to charge any account of the Undersigned (and each one of
them, if more than one) for all sums due hereunder. If payment hereunder becomes
due and payable on a Saturday, Sunday or legal holiday under the laws of the
United States or the State of Illinois, the due date thereof shall be extended
to the next succeeding business day, and interest shall be payable thereon at
the rate specified during such extension. Credit shall be given for payments
made in the manner and at the times provided in the Loan Agreement. It is the
intent of the parties that the rate of interest and other charges to the
Undersigned under this Note shall be lawful; therefore, if for any reason the
interest or other charges payable hereunder are found by a court of competent
jurisdiction, in a final determination, to exceed the limit which Bank may
lawfully charge the Undersigned, then the obligation to pay interest or other
charges shall automatically be reduced to such limit and, if any amount in
excess of such limit shall have been paid, then such amount shall be refunded to
the Undersigned.
The principal and all accrued interest hereunder may be prepaid by the
Undersigned, in part or in full, at any time without payment of a prepayment fee
as provided in the Loan Agreement.
The Undersigned (and each one of them, if more than one) waives the
benefit of any law that would otherwise restrict or limit Bank in the exercise
of its right, which is hereby acknowledged, to set-off against the Liabilities,
without notice and at any time hereafter after the occurrence of an Event of
Default, any indebtedness matured or unmatured owing from Bank to the
Undersigned (or any one of them). The Undersigned (and each one of them, if more
than one) waives every defense, counterclaim (other than any claim which, if not
made as a counterclaim, would be waived by Undersigned) or setoff which the
Undersigned (or any one of them) may now have or hereafter may have to any
action by Bank in enforcing this Note and/or any of the other Liabilities, or in
enforcing Bank's rights in the Collateral and ratifies and confirms whatever
Bank may do pursuant to the terms hereof and of the Loan Agreement and with
respect to the Collateral and agrees that Bank shall not be liable for any error
in judgment or mistakes of fact or law except with respect to acts of gross
negligence or wilful misconduct.
The Undersigned, any other party liable with respect to the Liabilities
and any and all endorsers and accommodation parties, and each one of them, if
more than one, waive any and all presentment, demand, notice of dishonor,
protest, and all other notices and demands in connection with the enforcement of
Bank's rights hereunder.
The loan evidenced hereby has been made and this Note has been
delivered at Chicago, Illinois. THIS NOTE SHALL BE GOVERNED AND CONTROLLED BY
THE INTERNAL LAWS OF THE STATE OF ILLINOIS AS TO INTERPRETATION, ENFORCEMENT,
VALIDITY, CONSTRUCTION, EFFECT, AND IN ALL OTHER RESPECTS, INCLUDING WITHOUT
LIMITATION, THE LEGALITY OF THE INTEREST RATE AND OTHER CHARGES, and shall be
binding upon the Undersigned (and each one of them, if more than one) and the
Undersigned's heirs, legal representatives, successors and assigns (and each of
them, if more than one). If this Note contains any blanks when executed by the
Undersigned (or any one of them, if more than one), the Bank is hereby
authorized, without notice to the Undersigned (or any one of them, if more than
one) to complete any such blanks according to the terms upon which the loan or
loans were granted. Wherever possible, each provision of this Note shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Note shall be prohibited by or be invalid under
such law, such provision shall be severable, and be ineffective to the extent of
such prohibition or invalidity, without invalidating the remaining provisions of
this Note. If more than one party shall execute this Note, the term
"UNDERSIGNED" as used herein shall mean all parties signing this Note, and each
one of them, and all such parties, their respective heirs, executors,
administrators, successors and assigns, shall be jointly and severally obligated
hereunder.
To induce the Bank to make the loan evidenced by this Note, the
Undersigned (and each one of them, if more than one) (i) irrevocably agrees
that, subject to Bank's sole and absolute election, all actions arising directly
or indirectly as a result or in consequence of this Note or any other agreement
with the Bank, or the Collateral, shall be instituted and litigated only in
courts having situs in the City of Chicago, Illinois; (ii) hereby consents to
the exclusive jurisdiction and venue of any State or Federal Court located and
having its situs in said city; and (iii) waives any objection based on forum
non-conveniens. IN ADDITION, BANK AND THE UNDERSIGNED (OR ANY ONE OF THEM, IF
MORE THAN ONE) HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING WHICH
PERTAINS DIRECTLY OR INDIRECTLY TO THIS NOTE, THE LIABILITIES, THE COLLATERAL,
ANY ALLEGED TORTIOUS CONDUCT BY THE UNDERSIGNED OR BANK OR WHICH IN ANY WAY,
DIRECTLY OR INDIRECTLY, ARISES OUT OF OR RELATES TO THE RELATIONSHIP BETWEEN THE
UNDERSIGNED AND BANK. In addition, the Undersigned agrees that all service of
process shall be made as provided in the Loan Agreement.
As used herein, all provisions shall include the masculine, feminine,
neuter, singular and plural thereof, wherever the context and facts require such
construction and in particular the word "Undersigned" shall be so construed.
IN WITNESS WHEREOF, each of the Undersigned, if more than one, has
executed this Note on the date above set forth.
ALLIED HEALTHCARE PRODUCTS, INC.
By
--------------------------------------------
Name
------------------------------------------
Title
-----------------------------------------
Address:
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
================================================================================
FOR BANK USE ONLY
Officer's Initials:
----------
Approval:
-----------
-2-
