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EXHIBIT 10.17
REVOLVING CREDIT AND TERM LOAN AGREEMENT
THIS REVOLVING CREDIT AND TERM LOAN AGREEMENT (this
"Agreement") is made and entered into this 5th day of October, 1995, by and
between FALCONITE, INC., an Illinois corporation whose address is 0000 Xxxxx
Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000 (the "Borrower"), and CITIZENS BANK &
TRUST COMPANY OF PADUCAH, whose address is 000 Xxxxxxxx, Xxxxxxx, Xxxxxxxx
00000 (the "Lender").
W I T N E S S E T H:
WHEREAS, Borrower has requested that Lender provide Borrower
with a revolving credit facility and a term loan facility and Lender is willing
to provide such facilities to Borrower upon the terms and subject to the
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises herein
contained and for other valuable consideration, Borrower and Lender hereby
agree as follows:
ARTICLE I
DEFINITION OF TERMS
Section 1.01. Definitions. For the purposes of this
Agreement, unless the context otherwise requires, the following terms shall
have the respective meanings assigned to them in this Article I or in the
section or recital referred to below:
"Account Debtor" shall mean any Person who is and/or may
become obligated to Borrower under or on account of any of the Accounts of the
Borrower.
"Accounts" shall have the meaning assigned to such term in the UCC.
"Adjusted Net Income" shall mean, with respect to any period,
net earnings (after income taxes) of Borrower for such period, determined in
accordance with Generally Accepted Accounting Principles, but excluding (i) any
gain or loss arising from the sale of capital assets, (ii) any gain arising
from any write-up of assets and (iii) any gain arising from the acquisition of
any securities of Borrower.
"Affiliate" of any Person shall mean any other Person (i)
which directly or indirectly (through one or more intermediaries), controls, is
controlled by or is under common control with, such Person, (ii) which directly
or indirectly (through one or more intermediaries), beneficially owns or holds
or has the power to direct the voting power of Five Percent (5%) or more of any
class of capital stock (or other equity interests) of such Person, (iii) which
directly or indirectly (through one or more intermediaries), has Five Percent
(5%) or more of any class of capital stock (or, in the case of a Person that is
not a corporation, Five Percent (5%)
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or more of its equity interest) beneficially owned or held by, such Person or
(iv) who is a shareholder, director, officer, employee or agent of such Person.
For the purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or by contract
or otherwise.
"Agreement" shall have the meaning assigned to such term in
the preamble hereof.
"Borrower" shall have the meaning assigned to such term in
the preamble hereof.
"Borrower's Operating Account" shall have the meaning assigned
to such term in Section 2.02(a).
"Borrowing Base" shall mean, as of any date, the sum of (i)
the lesser of (A) Sixty-Five Percent (65%) of the aggregate face amount of
Eligible Accounts of Borrower or (B) One Million Two Hundred Thousand Dollars
($1,200,000.00), plus (ii) Eighty Percent (80%) of the aggregate value of all
Eligible Inventory of Borrower minus (iii) the then outstanding principal
balance of the Term Note. Lender retains the right in its sole discretion to
reduce the allowable percentage of the Eligible Accounts and Eligible Inventory
(the "Eligible Collateral") to be used in calculating the Borrowing Base based
upon (i) the Eligible Collateral changing in character (i.e., type or category)
from the Eligible Collateral originally presented to and agreed upon between
Borrower and Lender prior to signing this Agreement and/or (ii) the present or
projected operating or financial condition of Borrower.
"Borrowing Base Certificate" shall have the meaning assigned
to such term in Section 8.01(c).
"Business Day" shall mean a day on which Lender is open for
business in the Commonwealth of Kentucky.
"Capital Expenditure" shall mean any expenditure by a Person
for an asset which will be used in a year or years subsequent to the year in
which the expenditure is made and which asset is properly classifiable in
relevant financial statements of such Person as equipment, real property or
improvements, fixed assets or a similar type of capitalized asset in accordance
with Generally Accepted Accounting Principles.
"Capital Lease" shall mean, as of any date, any lease of
property, real or personal, which would be capitalized on a balance sheet of
the lessee prepared as of such date in accordance with Generally Accepted
Accounting Principles, together with any other
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lease by such lessee which is in substance a financing lease, including,
without limitation, any lease under which (i) such lessee has or will have an
option to purchase the property subject thereto at a nominal amount or an
amount less than a reasonable estimate of the fair market value of such
property as of the date such lease is entered into or (ii) the term of the
lease approximates or exceeds the expected useful life of the property leased
thereunder.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
References to sections of the Code shall be construed to also refer to any
successor sections.
"Commitment Period" shall mean the period beginning on the
date hereof and ending on the earlier of (i) the Commitment Termination Date or
(ii) the date on which Lender terminates its Revolving Credit Commitment after
the occurrence of an Event of Default.
"Commitment Termination Date" shall mean June 30, 1996, or, if
such date is not a Business Day, the Business Day next preceding such date.
"Consolidated Tangible Net Worth" shall mean, as of any date,
the total shareholder's equity (including capital stock, additional paid-in
capital and retained earnings after deducting treasury stock) which would
appear on a consolidated balance sheet of Borrower and its Subsidiaries
prepared as of such date in accordance with Generally Accepted Accounting
Principles, minus the aggregate book value of Intangible Assets shown on such
balance sheet plus the aggregate principal amount of Subordinated Indebtedness
of Borrower shown on such balance sheet.
"Continuing Guaranty" shall mean that certain Continuing
Guaranty dated the date hereof and executed by the Guarantors in favor of
Lender (an unexecuted copy of which is attached hereto as Exhibit F), as the
same may from time to time be amended, modified, extended or renewed.
"Controlled Group" shall mean (i) the controlled group of
corporations as defined in Section 1563 of the Code or (ii) the group of trades
or businesses under common control as defined in Section 414(c) of the Code, of
which Borrower is a part or may become a part.
"Current Assets" shall mean, as of any date, the current
assets which would be reflected on a balance sheet of Borrower prepared as of
such date in accordance with Generally Accepted Accounting Principles, and
including in any event the net book value of all Inventory of Borrower.
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"Current Liabilities" shall mean, as of any date, the current
liabilities which would be reflected on a balance sheet of Borrower prepared as
of such date in accordance with Generally Accepted Accounting Principles, but
excluding the balloon payment on the Term Note which is due on the Maturity
Date.
"Current Maturities of Debt" shall mean, for any period, the
aggregate current portion of all principal payments required, scheduled or
anticipated to be made during such period on account of all Debt (other than
principal payments on the Revolving Credit Loans and the balloon payment on the
Term Note which is due on the Maturity Date) which would be reflected on a
balance sheet of Borrower prepared as of any date in accordance with Generally
Accepted Accounting Principles.
"Debt" of Borrower shall mean, as of the date of determination
thereof, the sum of (i) all Indebtedness of Borrower for borrowed money or
which has been incurred in connection with the purchase or other acquisition of
property or assets, plus (ii) all Capital Lease obligations of Borrower plus
(iii) all Guaranties by Borrower of Debt of others.
"Debtor Laws" shall mean all applicable liquidation,
conservatorship, bankruptcy, moratorium, arrangement, receivership, insolvency,
reorganization or similar laws from time to time in effect affecting the rights
of creditors generally.
"Default" shall mean any of the events specified in Article X,
regardless of whether there shall have occurred any passage of time or giving
of notice or both that would be necessary in order to constitute such event an
Event of Default.
"Dividends", in respect of any corporation, shall mean (i)
cash distributions or any other distributions on, or in respect of, any class
of capital stock of such corporation, except for distributions made solely in
shares of stock of the same class and (ii) any and all funds, cash or other
payments made in respect of the redemption, repurchase or acquisition of such
stock, unless such stock shall be redeemed or acquired through the exchange of
such stock with stock of the same class.
"Dollars" and the sign "$" shall refer to currency of the
United States of America.
"Eligible Accounts" shall mean, at the time of any
determination thereof, each Account as to which the following requirements have
been fulfilled to the reasonable satisfaction of Lender:
(i) Borrower has lawful and absolute title to such Account;
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(ii) such Account arose from a transaction in the ordinary
course of business of Borrower;
(iii) such Account is a valid, legally enforceable obligation
of the Account Debtor for goods or services previously sold, leased, rented or
rendered to such Account Debtor;
(iv) such Account is evidenced by an invoice rendered to the
Account Debtor and such Account is not evidenced by any chattel paper,
promissory note or other instrument;
(v) such Account does not represent a progress billing. For
the purposes of this definition, "progress billing" shall mean any invoice for
goods or services sold or services rendered under contract or agreement
pursuant to which the Account Debtor's obligation to pay such invoice is
conditioned upon Borrower's completion of any further performance under the
contract or agreement;
(vi) such Account is not conditional such as those accounts
commonly known as "xxxx and hold accounts" or accounts of a similar or like
arrangement;
(vii) such Account did not arise from a transaction whereby it
is subject to a "consignment sale", a "sale on approval" or a "sale or return"
arrangement;
(viii) such Account does not remain unpaid for more than
ninety (90) days from the invoice date and such Account is not due and payable
more than ninety (90) days from the invoice date;
(ix) no Account Debtor in respect to such Account, if it is
owing to Borrower on any Accounts that have remain unpaid for more than ninety
(90) from the invoice date, has more than Twenty Percent (20%) of the aggregate
dollar value of such Accounts remaining unpaid for more than ninety (90) days
from the invoice date;
(x) such Account is not subject to any dispute, offset,
counterclaim, discount (except for prompt payment discounts that do not exceed
Two Percent (2%) of the invoice amount) or other claim or defense on the part
of the Account Debtor or to any claim on the part of the Account Debtor denying
liability under such Account;
(xi) Borrower has not extended the time for payment of such
Account;
(xii) in respect to an Account owing by an Account Debtor
located in New Jersey, Minnesota or West Virginia, Borrower has filed all
legally required Notice of Business Activities Reports with the New Jersey
Division of Taxation, the Minnesota Department of Revenue or the West Virginia
Tax Commissioner, as the case may
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be, or Borrower is otherwise exempt from such reporting requirements under the
laws of such State(s);
(xiii) no Account Debtor in respect of such Account is (A)
conducting business in any jurisdiction located outside the United States of
America, (B) an Affiliate of Borrower, (C) any Governmental Authority, domestic
or foreign or (D) the subject of a proceeding under any Debtor Laws;
(xiv) Borrower has the full and unqualified right to assign
and grant a security interest in such Account to Lender as security for the
Obligations;
(xv) such Account is subject to a fully perfected first
priority security interest in favor of Lender pursuant to the Security
Agreement, prior to the rights of, and enforceable as such against, any other
Person;
(xvi) such Account is not subject to any Lien in favor of any
Person other than the Lien of Lender pursuant to the Security Agreement; and
(xvii) Lender has not otherwise advised Borrower that such
Account (or Account Debtor) is, in its sole discretion, ineligible.
"Eligible Collateral" shall have the meaning assigned to such
term in Section 1.01 under the defined term "Borrowing Base".
"Eligible Inventory" shall mean, at the time of any
determination thereof, each item of Inventory valued (in accordance with
Generally Accepted Accounting Principles) at the lower of (i) cost minus
accumulated depreciation (determined in accordance with method of depreciation
used by Borrower in the preparation of its December 31, 1994, audited financial
statements, but in no event shall such depreciation method exceed, unless
otherwise approved by Lender in writing, (A) for cranes, the 15-year straight
line depreciation method with no salvage value, (B) for boom lifts, scissor
lifts, back hoes, forklifts, skid steers and personnel lifts, the 10-year
straight line depreciation method with no salvage value, (C) for air
compressors, the 7-year straight line depreciation method with no salvage value
and (D) for all other types of Inventory, the 7-year straight line depreciation
method with no salvage value) or (ii) market, as to which the following
requirements have been fulfilled to the reasonable satisfaction of Lender:
(i) Borrower has lawful and absolute title to such Inventory;
(ii) such Inventory consists of new or used machinery or
equipment held for sale, lease or rent by Borrower in the ordinary
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course of its business;
(iii) such Inventory is not obsolete. For the purposes of
this definition, "obsolete" shall mean Inventory in which Borrower does not
intend to sell, lease or rent and/or cannot sell, lease or rent in the ordinary
course of business at regularly listed prices;
(iv) such Inventory is not more than five (5) years old,
except for Inventory classified as "cranes" which shall not be more than seven
(7) years old;
(v) such Inventory is not in the process of being
refurbished in a manner requiring more than forty (40) hours of service;
(vi) such Inventory is not unacceptable to Lender due to type,
category and/or quantity;
(vii) such Inventory is located at 0000 Xxxxx Xxxxxxxx Xxxxx,
Xxxxxxx, Xxxxxxxx 00000, one of the other offices of Borrower listed on Exhibit
A to the Security Agreement or one of the jurisdictions listed on Exhibit B to
the Security Agreement or such other addresses and locations approved in
writing by Lender;
(viii) such Inventory is subject to a fully perfected first
priority security interest in favor of Lender pursuant to the Security
Agreement, prior to the rights of, and enforceable as such against, any other
Person;
(ix) such Inventory is not subject to any Lien in favor of any
Person other than the Lien of Lender pursuant to the Security Agreement; and
(x) Lender has not otherwise advised Borrower that such
Inventory is, in its sole discretion, ineligible.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, together with all regulations issued pursuant thereto.
"Event of Default" shall have the meaning assigned to such
term in Section 10.01.
"Floor Balance" shall have the meaning assigned to such term
in Section 2.02(a).
"FLSA" shall have the meaning assigned to such term in Section
7.21.
"Generally Accepted Accounting Principles" shall mean those
generally accepted accounting principles and practices which
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are recognized as such by the American Institute of Certified Public
Accountants acting through its Accounting Principles Board or by the Financial
Accounting Standards Board or through other appropriate boards or committees
thereof and which are consistently applied for all periods after the date
hereof so as to properly reflect the financial condition, and the results of
operations and changes in financial position, of Borrower, except that any
accounting principle or practice required to be changed by the said Accounting
Principles Board or Financial Accounting Standards Board (or other appropriate
board or committee of the said Boards) in order to continue as a generally
accepted accounting principle or practice may so be changed. In the event of a
change in Generally Accepted Accounting Principles, Lender and Borrower will
thereafter negotiate in good faith to revise any covenants of this Agreement
affected thereby in order to make such covenants consistent with Generally
Accepted Accounting Principles then in effect.
"Governmental Authority" shall mean any government (or any
political subdivision or jurisdiction thereof), court, bureau, agency or other
governmental or regulatory authority having jurisdiction over Borrower or any
of its businesses, operations or properties.
"Guarantors" shall mean Xxxxxxx X. Xxxxxxxxx, Xxxxxx X.
Xxxxxxxxx and Xxxxx X. Xxxxxxxxx.
"Guaranty" of any Person shall mean any contract, agreement or
understanding of such Person pursuant to which such Person guarantees, or in
effect guarantees, any Indebtedness of any other Person (the "Primary Obligor")
in any manner, whether directly or indirectly, including, without limitation,
agreements: (i) to purchase such Indebtedness or any property constituting
security therefor, (ii) to advance or supply funds (A) for the purchase or
payment of such Indebtedness or (B) to maintain net worth or working capital or
other balance sheet conditions, or otherwise to advance or make available funds
for the purchase or payment of such Indebtedness, (iii) to purchase property,
securities or service primarily for the purpose of assuring the holder of such
Indebtedness of the ability of the Primary Obligor to make payment of the
Indebtedness or (iv) otherwise to assure the holder of the Indebtedness of the
Primary Obligor against loss in respect thereof; except that "Guaranty" shall
not include the endorsement by Borrower in the ordinary course of business of
negotiable instruments or documents for deposit or collection.
"Indebtedness" shall mean, with respect to any Person, all
indebtedness, obligations and liabilities of such Person, including, without
limitation: (i) all "liabilities" which would be reflected on a balance sheet
of such Person, prepared in accordance with Generally Accepted Accounting
Principles, (ii) all obligations of such Person in respect of any Guaranty,
(iii) all obligations of such Person in respect of any Capital Lease, (iv) all
obligations,
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indebtedness and liabilities secured by any Lien or any security interest on
any property or assets of such Person and (v) all redeemable preferred stock of
such Person valued at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends.
"Intangible Assets" of any Person shall mean those assets of
such Person which are (i) deferred assets, other than prepaid insurance and
prepaid taxes, (ii) patents, copyrights, trademarks, tradenames, franchises,
goodwill, experimental expenses and other similar assets which would be
classified as intangible assets on a balance sheet of such Person, prepared in
accordance with Generally Accepted Accounting Principles, (iii) unamortized
debt discount and expense, (iv) all amounts due from any Affiliate, (v) assets
located, and notes and receivables due from obligors domiciled, outside of the
United States of America, (vi) all write-ups in the book value of any asset
owned resulting from a revaluation thereof subsequent to the date of this
Agreement and (vii) any Investment in any other Person (other than Permitted
Investments of the types set forth in clauses (i) through (iv) of the
definition of Permitted Investments and such other "cash equivalent"
investments as Lender may from time to time approve).
"Interest Payment Date" shall mean (i) with respect to each
Revolving Credit Loan, (A) the last Business Day of each calendar month
commencing on the first of such days to occur after such Loan is made and (B)
the Commitment Termination Date and (ii) with respect to the Term Loan, (A) the
last day of each calendar month commencing on the first of such days to occur
after such Loan is made and (B) the Maturity Date.
"Inventory" shall have the meaning assigned to such term in
the UCC.
"Investment" in any Person shall mean any investment, whether
by means of share purchase, loan, advance, extension of credit, capital
contribution or otherwise, in or to such Person, the Guaranty of any
Indebtedness of such Person or the subordination of any claim against such
Person to other Indebtedness of such Person.
"Lender" shall have the meaning assigned to such term in the
preamble hereof.
"Letter of Credit" and "Letters of Credit" shall have the
meanings assigned to such term in Section 4.01(a).
"Letter of Credit Application" shall mean an Application and
Authorization for Irrevocable Letter of Credit in the form of Exhibit C
attached hereto and incorporated herein by reference (or in such other form as
Lender may then be using as its standard form for letter of credit
applications) executed by Borrower, as account
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party, and delivered to Lender pursuant to Section 4.01(a), as the same may
from time to time be amended, modified, extended or renewed.
"Letter of Credit Commitment Fee" shall have the meaning
assigned to such term in Section 4.01(d).
"Letter of Credit Issuance Fee" shall have the meaning
assigned to such term in Section 4.01(d).
"Letter of Credit Loan" shall have the meaning assigned to
such term in Section 4.01(c).
"Letter of Credit Request" shall have the meaning assigned to
such term in Section 4.01(a).
"Lien" shall mean any lien, mortgage, security interest, tax
lien, pledge, encumbrance, conditional sale or title retention arrangement, or
any other interest in property designed to secure the repayment of
Indebtedness, whether arising by agreement or under any statute or law or
otherwise.
"Life Insurance Assignment" shall mean that certain Assignment
of Life Insurance Policy as Collateral dated the date hereof and executed by
Xxxxxxx X. Xxxxxxxxx in favor of Lender (an unexecuted copy of which is
attached hereto as Exhibit G), as the same may from time to time be amended,
modified, extended or renewed.
"Loan" shall mean each Revolving Credit Loan, each Letter of
Credit Loan and the Term Loan and "Loans" shall mean any or all of the
foregoing.
"Loan Documents" shall mean this Agreement, the Notes, the
Letter of Credit Application(s), the Security Agreement, the Continuing
Guaranty, the Life Insurance Assignment and any and all other agreements,
documents, instruments and/or certificates executed or delivered pursuant to
the terms of this Agreement, all as the same may from time to time be amended,
modified, extended or renewed.
"Material Adverse Effect" shall mean any (i) material adverse
effect whatsoever upon the validity, performance or enforceability of any of
the Loan Documents, (ii) material adverse effect on the properties, assets,
liabilities, business, operations, prospects, income or condition (financial or
otherwise) of Borrower, (iii) material impairment of Borrower's ability to
perform any of its obligations under this Agreement, any of the Notes, any of
the Letter of Credit Applications, the Security Agreement or any of the other
Loan Documents or (iv) material impairment of the enforceability of the rights
of, or benefits available to, Lender under this Agreement, any of the Notes,
any of
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the Letter of Credit Applications, the Security Agreement or any of the other
Loan Documents.
"Maturity Date" shall mean June 30, 1996, or, if such date is
not a Business Day, the Business Day next preceding such date.
"Net Cash Flow" of Borrower shall mean, for any period, the
sum of the following: (i) the amount of Adjusted Net Income for such period
plus (ii) all non-cash charges (such as deferred taxes, depreciation and
amortization of goodwill) which, in determining Adjusted Net Income for such
period, were deducted from the gross income of Borrower for such period.
"Notes" shall mean the Revolving Credit Note and the Term
Note.
"Obligations" shall mean:
(i) all present and future indebtedness, obligations and
liabilities of Borrower to Lender arising pursuant to this Agreement,
regardless of whether such indebtedness, obligations and liabilities are
direct, indirect, fixed, contingent, joint, several or joint and several;
(ii) all present and future indebtedness, obligations and
liabilities of Borrower to Lender arising pursuant to or represented by the
Notes and all interest accruing thereon;
(iii) all present and future indebtedness, obligations and
liabilities of Borrower evidenced by or arising pursuant to any of the other
Loan Documents (including, without limitation, reimbursement obligations with
respect to standby letters of credit issued by Lender for the account of
Borrower pursuant to any of the Letter of Credit Applications);
(iv) all costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) incurred by Lender to collect such
indebtedness, liabilities and obligations, to obtain, preserve, perfect and/or
enforce the liens and security interests securing payment of such indebtedness,
liabilities and obligations and/or to maintain, preserve and collect the
property in which Lender has been granted a Lien to secure payment of such
indebtedness, liabilities and obligations, or any part thereof, including but
not limited to, taxes, assessments, insurance premiums, repairs, rent, storage
charges, advertising costs, brokerage fees and expenses of sale; and
(v) all amendments, modifications, extensions and renewals of
the indebtedness, liabilities and obligations referred to in the foregoing
clauses, or any part thereof.
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"PBGC" shall mean the Pension Benefit Guaranty Corporation,
and any successor to all or any of the Pension Benefit Guaranty Corporation's
functions under ERISA.
"Permitted Investments" shall mean the following types of
Investments (i) direct obligations of the United States of America or any
agency thereof, or obligations fully guaranteed by the United States of America
or any agency thereof, provided that such obligations mature within twelve (12)
months of the date of acquisition thereof by Borrower, (ii) commercial paper
rated in the highest grade by two or more national credit rating agencies and
which matures not more than two hundred seventy (270) days from the date of
creation thereof, (iii) time deposits with, and certificates of deposit and/or
banker's acceptances issued by, Lender or any other bank or trust company
organized under the laws of the United States of America or any state thereof
having capital surplus and undivided profits aggregating at least
$50,000,000.00, (iv) repurchase agreements, which shall be collateralized for
at least 102% of face value, issued by Lender or any other bank or trust
company organized under the laws of the United States of America or any state
thereof having capital surplus and undivided profits aggregating at least
$50,000,000.00, (v) Investments existing as of the date hereof as described in
Exhibit L attached hereto, and any future retained earnings in respect thereof,
(vi) loans or advances in the usual and ordinary course of business to officers
and/or employees of Borrower for business expenses in the aggregate principal
amount of up to $50,000.00 at any one time outstanding, (vii) loans to the
Xxxxxx X. Xxxxxxxxx and Xxxxx X. Xxxxxxxxx Irrevocable Trust U/T/A dated
September 7, 1994, solely to allow such trust to pay insurance premiums on life
insurance policies on the life of Xxxxxx X. Xxxxxxxxx and on the life of Xxxxx
X. Xxxxxxxxx and (viii) demand deposits which constitute the normal operating
checking accounts of the Borrower.
"Permitted Liens" shall mean: (i) Liens (if any) granted to
Lender to secure the Obligations, (ii) Liens for taxes, assessments and
governmental charges or levies imposed upon a Person or upon such Person's
income or profits or property, if the same are not yet due and payable or if
the same are being contested in good faith and as to which adequate cash
reserves have been provided in accordance with Generally Accepted Accounting
Principles, (iii) Liens imposed by mandatory provisions of law such as
materialmen's, mechanics', warehousemen's and other like Liens arising in the
ordinary course of business, securing Indebtedness whose payment is not yet
due, (iv) pledges or deposits made to secure payment of worker's compensation
insurance (or to participate in any fund in connection with worker's
compensation insurance), unemployment insurance, pensions or social security
programs, (v) Liens arising from good faith deposits in connection with
tenders, leases, real estate bids or contracts (other than contracts involving
the borrowing of money or the purchase or other acquisition of property),
pledges or deposits to secure public or
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statutory obligations and deposits to secure (or in lieu of) surety, stay,
appeal or customs bonds and deposits to secure the payment of taxes,
assessments, customs duties or other similar charges, (vi) encumbrances
consisting of zoning restrictions, easements or other restrictions on the use
of real property, provided that such items do not impair the use of such
property for the purposes intended, and none of which is violated by existing
or proposed structures or land use, (vii) Liens existing as of the date of this
Agreement and described on Exhibit K attached hereto and (viii) purchase money
Liens on any property (other than Inventory) hereafter acquired or the
assumption of any Lien on property (other than Inventory) existing at the time
of such acquisition (and not created in contemplation of such acquisition), or
a Lien incurred in connection with any conditional sale or other title
retention agreement or a finance lease, provided that (A) any property subject
to any such purchase money Lien is acquired by Borrower in the ordinary course
of its business and the Lien on any such property is created contemporaneously
with any such acquisition, (B) the Indebtedness secured by any purchase money
Lien so created, assumed or existing shall not exceed the lesser of cost or
fair market value as of the time of acquisition of the property covered thereby
by Borrower, (C) each such purchase money Lien shall attach only to the
property so acquired and fixed improvements thereon and (D) the total
Indebtedness secured by all such purchase money Liens shall not exceed
$750,000.00 in the aggregate at any one time outstanding.
"Person" shall include an individual, a sole proprietorship, a
general or limited partnership, a joint venture, a trust, an unincorporated
organization, an association, a corporation, a limited liability company, an
institution, a government or any agency or political subdivision thereof, or
any other form of legal entity.
"Plan" shall mean an employee benefit plan or other plan
maintained by Borrower for employees of Borrower and covered by Title IV of
ERISA, or subject to the minimum funding standards under Section 412 of the
Code.
"Primary Obligor" shall have the meaning assigned to such term
in Section 1.01 under the defined term "Guaranty".
"Prime Rate" shall mean the highest annual rate of interest
identified as the "Prime Rate" as published from time to time in the "Money
Rates" section (or such other section title or caption) of The Wall Street
Journal. In the event that The Wall Street Journal, during the term hereof,
shall abolish or abandon the practice of publishing a Prime Rate, or should the
same become unascertainable, Lender shall designate a comparable reference rate
which shall be deemed to be the Prime Rate for purposes hereof. With respect
to the Term Loan, the Letter of Credit Loans and all of the other Obligations
of Borrower other than the Revolving
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14
Credit Loans, the Prime Rate shall be subject to adjustment daily (without
prior notice to Borrower) based on the Prime Rate on such day and shall
fluctuate as and when said Prime Rate shall change. With respect to the
Revolving Credit Loans, the Prime Rate shall be subject to adjustment monthly
(without prior notice to Borrower) on the first day after the last Business Day
of every calendar month based on the Prime Rate on such day.
"Process Agent" shall mean Xxxxxxx X. Xxxxxxxxx, whose address
is 0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000.
"Regulation G" shall mean Regulation G of the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 207, or any successor
or other regulation relating to reserve requirements applicable to member banks
of the Federal Reserve System.
"Regulation U" shall mean Regulation U promulgated by the
Board of Governors of the Federal Reserve System, 12 C.F.R. Part 221, or any
successor or other regulation hereafter promulgated by said Board to replace
the prior Regulation U and having substantially the same function.
"Regulation X" shall mean Regulation X promulgated by the
Board of Governors of the Federal Reserve System, 12 C.F.R. Part 224, or any
successor or other regulation hereafter promulgated by said Board to replace
the prior Regulation X and having substantially the same function.
"Rentals" of any Person shall mean, as of any date, the
aggregate amount of the obligations and liabilities (including future
obligations and liabilities not yet due and payable) of such Person to make
payments under all leases, subleases and similar arrangements for the use of
real, personal or mixed property, other than leases which are Capital Leases.
"Reportable Event" shall have the meaning assigned to such
term in Title IV of ERISA.
"Revolving Credit Commitment" shall mean the sum of Seven
Million Dollars ($7,000,000.00).
"Revolving Credit Loan" and "Revolving Credit Loans" shall
have the meaning assigned to such terms in Section 2.01.
"Revolving Credit Note" shall have the meaning assigned to
such term in Section 2.03.
"Security Agreement" shall have the meaning assigned to such
term in Section 5.01.
"Solvent" means, with respect to any Person on a particular
date, that on such date (i) the fair value of the
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15
property of such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person, (ii) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured, (iii) such Person is able to
realize upon its assets and pay its debts and other liabilities, contingent
obligations and other commitments as they mature in the normal course of
business, (iv) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature and (v) such Person is not engaged in business or
a transaction, and is not about to engage in business or a transaction, for
which such Person's property would constitute unreasonably small capital after
giving due consideration to the prevailing practice in the industry in which
such Person is engaged. In computing the amount of contingent liabilities at
any time, it is intended that such liabilities will be computed at the amount
which, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"Subordinated Indebtedness" shall mean, as of the date of any
determination thereof, the aggregate principal amount of all Indebtedness of
Borrower outstanding as of such date which is subordinated in writing (either
by its terms or pursuant to a subordination agreement) to the payment and
priority of all of the Borrower's Obligations in form and substance
satisfactory to Lender.
"Subsidiary" shall mean any corporation Fifty Percent (50%) or
more of the Voting Shares of which is owned, directly or indirectly, by
Borrower.
"Tangible Net Worth" shall mean, as of any date, the total
shareholder's equity (including capital stock, additional paid-in capital and
retained earnings after deducting treasury stock) which would appear on a
balance sheet of Borrower prepared as of such date in accordance with Generally
Accepted Accounting Principles, minus the aggregate book value of Intangible
Assets shown on such balance sheet plus the aggregate principal amount of
Subordinated Indebtedness shown on such balance sheet.
"Term Loan" shall have the meaning assigned to such term in
Section 3.01.
"Term Loan Commitment" shall mean the sum of Seven Million
Dollars ($7,000,000.00).
"Term Note" shall have the meaning assigned to such term in
Section 3.02.
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"Total Outstandings" shall mean, as of any date, the sum of
(i) the aggregate principal amount of all Revolving Credit Loans outstanding as
of such date, plus (ii) the aggregate principal amount of all Letter of Credit
Loans outstanding as of such date plus (iii) the aggregate undrawn face amount
of all Letters of Credit outstanding as of such date.
"UCC" shall mean the Uniform Commercial Code in effect in the
Commonwealth of Kentucky, as amended, except as the Uniform Commercial Code of
other states may govern lien perfection in those states.
"Voting Shares" of any corporation shall mean shares of any
class or classes (however designated) having ordinary voting power for the
election of at least a majority of the members of the Board of Directors (or
other governing bodies) of such corporation, other than shares having such
power only by reason of the happening of a contingency.
Section 1.02. Other Definitional Provisions.
(a) All terms defined in this Agreement shall have such
meanings when used in the other Loan Documents, unless the context therein
shall otherwise require.
(b) Defined terms used herein in the singular shall import the
plural and vice-versa.
(c) The words "hereof," "herein," "hereunder" and similar
terms when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement.
(d) Except as otherwise specified in this Agreement, all
accounting terms used in this Agreement shall be interpreted, all accounting
determinations under this Agreement shall be made and all financial statements
required to be delivered under this Agreement shall be prepared in accordance
with Generally Accepted Accounting Principles as in effect from time to time,
applied on a basis consistent (except for changes approved by Lender and by
Borrower's independent certified public accountants) with the most recent
audited financial statements of Borrower delivered to Lender. Notwithstanding
the foregoing, the financial covenants contained in this Agreement (including,
without limitation, the financial covenants contained in Sections 9.14(a),
9.14(b), 9.14(c), 9.14(d) and 9.15 of this Agreement but excluding the
financial covenant contained in Section 9.14(e) of this Agreement) shall be
determined for Borrower only on a stand alone basis and not for Borrower and
its Subsidiaries on a consolidated basis. The financial covenant contained in
Section 9.14(e) of this Agreement shall be determined for Borrower and its
Subsidiaries on a consolidated basis.
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ARTICLE II
THE REVOLVING CREDIT LOANS
Section 2.01. Lender's Revolving Credit Commitment. Subject
to the terms and conditions of this Agreement and so long as no Default or
Event of Default under this Agreement has occurred, during the Commitment
Period, Lender hereby agrees to loan funds to Borrower as Borrower may from
time to time request pursuant to Section 2.02(a) (individually, a "Revolving
Credit Loan" and collectively, the "Revolving Credit Loans"). The aggregate
principal amount of Revolving Credit Loans which Lender shall be required to
have outstanding hereunder at any one time shall not exceed the sum of (a) the
lesser of (i) the Lender's Revolving Credit Commitment or (ii) the Borrowing
Base, minus (b) the aggregate principal amount of all outstanding Letter of
Credit Loans minus (c) the aggregate undrawn face amount of all outstanding
Letters of Credit. Within the limits set forth herein, Borrower may borrow,
repay and reborrow such sums.
If at any time the Borrowing Base as shown on the most recent
Borrowing Base Certificate submitted to Lender pursuant to Section 8.01(c)
should be less than the Total Outstandings, Borrower shall be automatically
required (without demand or notice of any kind by Lender, all of which are
hereby expressly waived by Borrower) to immediately either (i) reduce the Total
Outstandings to an amount less than or equal to the most recent Borrowing Base
or (ii) pledge cash or cash equivalents with Lender as additional collateral
for the Total Outstandings in an amount at least equal to the difference
between the Total Outstandings and the Borrowing Base.
If at any time the Total Outstandings are greater than the
amount of the Lender's Revolving Credit Commitment, Borrower shall be
automatically required (without demand or notice of any kind by Lender, all of
which are hereby expressly waived by Borrower) to immediately reduce the Total
Outstandings to an amount less than or equal to the amount of the Lender's
Revolving Credit Commitment.
Section 2.02. Manner of Borrowing.
(a) Borrowings; Prepayments. Upon fulfillment of all
applicable conditions set forth herein and so long as no Default or Event of
Default has occurred hereunder, Borrower hereby irrevocably requests and
authorizes Lender, without any other request or authorization from Borrower and
without any notice to Borrower, to automatically make a Revolving Credit Loan
to Borrower at the end of each Business Day on which the collected balance in
Borrower's operating account with Lender, identified as Account No. 000-0000-0
("Borrower's Operating Account"), is below the amount set forth in a cash
management agreement executed herewith by and
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between Borrower and Lender, as the same may from time to time be amended (the
"Floor Balance"), by crediting the amount of such Revolving Credit Loan, which
shall be in an amount sufficient to bring such collected balance back up to the
Floor Balance, to Borrower's Operating Account. In addition, Borrower hereby
irrevocably requests and authorizes Lender to automatically apply any collected
balance in Borrower's Operating Account with Lender at the end of any Business
Day in excess of the Floor Balance to the prepayment of the Revolving Credit
Loans.
(b) Revolving Credit Loan Irrevocable. Each Revolving Credit
Loan made in accordance with Section 2.02(a) shall be irrevocable and binding
on Borrower, and Borrower shall indemnify Lender and hold Lender harmless from
and against any and all claims, demands, damages, liabilities, costs, losses or
expenses (including, without limitation, reasonable attorneys' fees and
expenses) relating to or arising out of or in connection with making Revolving
Credit Loans or repayments hereunder.
Section 2.03. Revolving Credit Note. The Revolving Credit
Loans made under Section 2.01 hereof by Lender shall be evidenced by a
Revolving Credit Note of Borrower dated the date hereof and payable to the
order of Lender in a principal amount equal to Lender's Revolving Credit
Commitment in the form attached hereto as Exhibit A and incorporated herein by
reference (as the same may from time to time be amended, modified, extended or
renewed, the "Revolving Credit Note"). Notwithstanding the principal amount of
the Revolving Credit Note as stated on the face thereof, the amount of
principal actually owing on such Revolving Credit Note at any given time shall
be the aggregate principal amount of all Revolving Credit Loans theretofore
made by Lender to Borrower hereunder less all payments of principal theretofore
actually received hereunder by Lender.
Section 2.04. Interest Rates. Each Revolving Credit Loan
shall bear interest prior to maturity at a rate per annum equal to the Prime
Rate, fluctuating as described in the definition of "Prime Rate". From and
after the maturity of the Revolving Credit Note, whether by reason of
acceleration or otherwise, the unpaid principal balance of each Revolving
Credit Loan shall bear interest payable on demand until paid at a rate per
annum equal to Two Percent (2%) over and above the Prime Rate, fluctuating as
aforesaid. Interest shall be computed with respect to all Revolving Credit
Loans on an actual day, 360-day year basis.
Section 2.05. Principal Payments. The unpaid principal
amount of the Revolving Credit Note shall be due and payable on the Commitment
Termination Date.
Section 2.06. Payment of Interest on the Revolving Credit
Note. Interest upon the Revolving Credit Note shall be due and payable on each
Interest Payment Date. Borrower hereby
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irrevocably requests and authorizes Lender to automatically debit Borrower's
Operating Account on each Interest Payment Date for all interest payments due
under the Revolving Credit Note on such Interest Payment Date.
Section 2.07. Prepayment. Borrower shall have the right to
prepay all at any time or any portion from time to time of the unpaid principal
of any Revolving Credit Loan prior to maturity, without penalty or premium.
All prepayments shall be applied solely to the payment of principal.
Section 2.08. Manner and Application of Payments. All
payments and prepayments of principal of, interest on and fees and other
amounts relating to the Revolving Credit Note to or for the account of Lender
shall be made by Borrower to Lender before 4:00 p.m. (Central Standard Time),
in immediately available funds in Dollars at Lender's principal banking office
in Paducah, Kentucky. Any payment or prepayment received by Lender after 4:00
p.m. (Central Standard Time) shall be deemed to have been received by Lender
on the next succeeding Business Day. All payments (other than prepayments)
made on the Revolving Credit Note shall be allocated among the principal,
interest, late fees, collection costs and expenses and other amounts due under
the Revolving Credit Note in such order and manner as Lender shall elect.
Section 2.09. Revolving Credit Fee. Upon execution hereof,
Borrower shall pay to Lender as consideration for the Revolving Credit
Commitment to be made in accordance herewith, a revolving credit fee of
$5,000.00. Said fee shall not be subject to reduction and shall not be
refundable.
Section 2.10. Use of Proceeds. The proceeds of each
Revolving Credit Loan shall be used for the general corporate purposes of
Borrower.
ARTICLE III
THE TERM LOAN
Section 3.01. Term Loan Commitment. Subject to the terms and
conditions of this Agreement and so long as no Default or Event of Default
under this Agreement has occurred, Lender agrees to make Borrower a term loan
on or about the date of this Agreement in an amount equal to the Term Loan
Commitment (the "Term Loan").
Section 3.02. Term Note. The Term Loan made under Section
3.01 hereof by Lender shall be evidenced by a Term Loan Promissory Note of
Borrower dated the date hereof and payable to the order of Lender in a
principal amount equal to Lender's Term Loan Commitment in the form attached
hereto as Exhibit B and incorporated herein by reference (as the same may from
time to time be amended, modified, extended or renewed, the "Term Note").
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Section 3.03. Interest Rates. The Term Loan shall bear
interest prior to maturity at a rate per annum equal to the Prime Rate,
fluctuating as described in the definition of "Prime Rate". From and after the
maturity of the Term Note, whether by reason of acceleration or otherwise, the
unpaid principal balance of the Term Loan shall bear interest payable on demand
until paid at a rate per annum equal to Two Percent (2%) over and above the
Prime Rate, fluctuating as aforesaid. Interest shall be computed with respect
to the Term Loan on an actual day, 360-day year basis.
Section 3.04. Principal Payments. Principal on the Term Note
shall be due and payable in nine (9) consecutive monthly installments as
follows: eight (8) equal consecutive monthly installments in the amount of One
Hundred Sixteen Thousand Six Hundred Sixty-Six and 67/100 Dollars ($116,666.67)
each, due and payable on the last day of each calendar month commencing October
31, 1995, with the ninth (9th) and final installment in the amount of the then
outstanding and unpaid principal balance of the Term Note due and payable on
the Maturity Date.
Section 3.05. Payment of Interest on the Term Note. Interest
upon the Term Note shall be due and payable on each Interest Payment Date.
Section 3.06. Prepayment. Borrower shall have the right to
prepay all at any time or any portion from time to time of the unpaid principal
balance of the Term Note prior to maturity, without penalty or premium,
provided that: (i) partial prepayments shall be applied to installments of
principal under the Term Note in the inverse order of their stated maturities;
and (ii) on each prepayment date, Borrower shall pay to the order of Lender all
accrued and unpaid interest on the principal portion of the Term Note being
prepaid to and including the date of such prepayment.
Section 3.07. Manner and Application of Payments. All
payments and prepayments of principal of, interest on and fees and other
amounts relating to the Term Note to or for the account of Lender shall be made
by Borrower to Lender before 11:00 a.m. (Central Standard Time), in immediately
available funds in Dollars at Lender's principal banking office in Paducah,
Kentucky. Any payment or prepayment received by Lender after 11:00 a.m.
(Central Standard Time) shall be deemed to have been received by Lender on the
next succeeding Business Day. Should the principal of or interest on the Term
Note become due and payable on a day other than a Business Day, the due date
thereof shall be extended to the next succeeding Business Day. All payments
made on the Term Note shall be allocated among the principal, interest, late
fees, collection costs and expenses and other amounts due under the Term Note
in such order and manner as Lender shall elect.
Section 3.08. Use of Proceeds. The proceeds of the Term Loan
shall be used for the general corporate purposes of Borrower.
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ARTICLE IV
LETTERS OF CREDIT
Section 4.01. Letter of Credit Commitment. (a) Subject to
the terms and conditions of this Agreement and so long as no Default or Event
of Default under this Agreement has occurred, during the Commitment Period,
Lender hereby agrees to issue irrevocable standby letters of credit for the
account of Borrower (individually, a "Letter of Credit" and collectively, the
"Letters of Credit") in an amount and for the term specifically requested by
Borrower by notice in writing to Lender in the form of Exhibit D attached
hereto and incorporated herein by reference (a "Letter of Credit Request") at
least three (3) Business Days prior to the requested issuance thereof;
provided, however, that:
(i) Borrower shall have executed and delivered to Lender a
Letter of Credit Application with respect to such Letter of Credit;
(ii) the term of any such Letter of Credit shall not extend
beyond the date one (1) year after the date of issuance thereof;
(iii) any Letter of Credit may only be utilized to guaranty
the payment of obligations of Borrower;
(iv) the Total Outstandings shall not at any one time exceed
the lesser of (A) the Lender's Revolving Credit Commitment or (B) the Borrowing
Base;
(v) the sum of (A) the aggregate undrawn face amount of all
outstanding Letters of Credit plus (B) the aggregate principal amount of all
outstanding Letter of Credit Loans shall not at any one time exceed the sum of
Seven Hundred Fifty Thousand Dollars ($750,000.00); and
(vi) the text of any such Letter of Credit is provided to
Lender no less than three (3) Business Days prior to the requested issuance
date, which text must be acceptable to Lender in its sole and absolute
discretion.
(b) The acceptance or payment of drafts under each Letter
of Credit shall be made in accordance with the terms thereof and, in that
connection, Lender shall be entitled to honor any drafts and accept any
documents presented to it by the beneficiary of such Letter of Credit in
accordance with the terms of such Letter of Credit and believed in good faith
by Lender to be genuine. Lender shall not have any duty to inquire as to the
accuracy or authenticity of any draft or other drawing document that may be
presented to it other than the duties contemplated by the applicable Letter of
Credit Application. If Lender shall have
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received documents that in its good faith judgment constitute all of the
documents that are required to be presented before payment or acceptance of a
draft under a Letter of Credit, it shall be entitled to pay or accept such
draft provided such documents conform on their face to the requirements of such
Letter of Credit.
(c) In the event of any payment by Lender of a draft
presented or accepted under a Letter of Credit, Borrower agrees to pay to
Lender in immediately available funds at the time of such drawing an amount
equal to the sum of such drawing plus Lender's customary negotiation,
processing and other fees related thereto. Borrower hereby authorizes Lender
to charge or cause to be charged Borrower's Operating Account to the extent
there are balances of immediately available funds therein, in an amount equal
to the sum of such drawing plus Lender's customary negotiation, processing and
other fees related thereto, and Borrower agrees to pay the amount of any such
drawing (and/or Lender's customary negotiation, processing and other fees
related thereto) not so charged prior to the close of business of Lender on the
day of such drawing. In the event any payment under a Letter of Credit is made
by Lender prior to receipt of payment from Borrower, such payment by Lender
shall constitute a loan (a "Letter of Credit Loan") by Lender to Borrower,
payable on demand of Lender. Borrower agrees to pay interest on demand of
Lender on any unpaid Letter of Credit Loan at a rate per annum equal to Two
Percent (2%) over and above the Prime Rate (fluctuating as described in the
definition of "Prime Rate") until such Letter of Credit Loan is paid in full,
calculated on an actual day, 360-day year basis.
(d) Borrower hereby further agrees to pay to the order of
Lender with respect to each Letter of Credit:
(i) a nonrefundable issuance fee in the amount of One Hundred
Dollars ($100.00) (the "Letter of Credit Issuance Fee"), which Letter of Credit
Issuance Fee shall be due and payable on the date of issuance of each such
Letter of Credit;
(ii) a nonrefundable commitment fee in an amount equal to One
and One-Half Percent (1-1/2%) per annum (calculated on an actual day, 360-day
year basis) of the face amount (taking into account any scheduled increases or
decreases therein during the period in question) of such Letter of Credit (the
"Letter of Credit Commitment Fee"), which Letter of Credit Commitment Fee shall
be due and payable annually in advance on the date of issuance of each such
Letter of Credit; and
(iii) such other fees as may be charged by Lender from time
to time in accordance with Lender's published schedule of fees in effect from
time to time, which fees shall be due and payable on demand by Lender.
Section 4.02. Replacement or Collateralization of
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Letters of Credit. Notwithstanding any provision contained in this Agreement
or any of the Letter of Credit Applications to the contrary: (a) if any of the
Letters of Credit remain outstanding on the last day of the Commitment Period,
Borrower shall, on or before 11:00 a.m. (Central Standard time) on the last day
of the Commitment Period, (i) surrender the originals of the applicable
Letter(s) of Credit to Lender for cancellation or (ii) provide Lender with cash
collateral (or other collateral acceptable to Lender in its sole and absolute
discretion) in an amount at least equal to the aggregate undrawn face amount of
all Letter(s) of Credit which remain outstanding at such time and execute and
deliver to Lender such agreements as Lender may require to grant Lender a first
priority perfected security interest in such cash or other collateral; and (b)
upon the occurrence of any Event of Default under this Agreement (including,
without limitation, Borrower's failure to comply with the requirements of
clause (a) above), at Lender's option and without demand or further notice to
Borrower, an amount equal to the aggregate undrawn face amount of all Letter(s)
of Credit then outstanding shall be deemed (as between Lender and Borrower) to
have been paid or disbursed by Lender (notwithstanding that such amounts may
not in fact have been so paid or disbursed by Lender), and a Letter of Credit
Loan to Borrower in such amount to have been made and accepted by Borrower,
which Letter of Credit Loan shall be immediately due and payable. In lieu of
the foregoing, at the election of Lender, Borrower shall, upon Lender's demand,
deliver to Lender cash, or other collateral acceptable to Lender in its sole
and absolute discretion, having a value, as determined by Lender, at least
equal to the aggregate undrawn face amount of all outstanding Letters of
Credit. Any such collateral and/or any amounts received by Lender in payment
of the Letter of Credit Loan made pursuant to this Section 4.02 shall be held
by Lender in a separate account at Lender appropriately designated as a cash
collateral account in relation to this Agreement and the Letters of Credit and
retained by Lender as collateral security for the payment of the Borrower's
Obligations. Cash amounts delivered to Lender pursuant to the foregoing
requirements of this Section 4.02 shall be invested, at the request and for the
account of Borrower, in investments of a type and nature and with a term
acceptable to Lender. Such amounts, including in the case of cash amounts
invested in the manner set forth above, any investment realized thereon, shall
not be used by Lender to pay any amounts drawn or paid under or pursuant to any
Letter of Credit, but may be applied to reimburse Lender for drawings or
payments under or pursuant to the Letters of Credit which Lender has paid, or
if no such reimbursement is required to the payment of such other of Borrower's
Obligations as Lender shall determine. Any amounts remaining in any cash
collateral account established pursuant to this Section 4.02 after the payment
in full of all of the Borrower's Obligations and the expiration or cancellation
of all of the Letters of Credit shall be returned to Borrower (after deduction
of Lender's expenses, if any).
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ARTICLE V
SECURITY
Section 5.01. Security Agreement. In order to secure the
payment when due of the Borrower's Obligations, Borrower shall grant Lender a
security interest in the Collateral (as defined in the Security Agreement),
which security interest shall be a first and prior interest in all such items
except for those Uniform Commercial Code security interests described on
Exhibit K attached hereto. Said security interest shall be evidenced by a
Security Agreement dated the date hereof and executed by Borrower in favor of
Lender in the form attached hereto as Exhibit E and incorporated herein by
reference (as the same may from time to time be amended, modified, extended or
renewed, the "Security Agreement"). Borrower further covenants and agrees to
execute and deliver to Lender any and all financing statements, continuation
statements and such other documentation as may from time to time be requested
by Lender in order to create, perfect and continue said security interest.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01. Initial Loan or Letter of Credit. The
obligation of Lender to make its initial Loan hereunder or to issue its initial
Letter of Credit hereunder is subject to the condition precedent that Lender
shall have received the following in form and substance satisfactory to Lender:
(a) Notes. The duly executed Revolving Credit Note and
the Term Note completed with appropriate insertions.
(b) Opinion of Borrower's Counsel. A favorable opinion
of Xxxxxx & Xxxxxx L.L.P., legal counsel for Borrower and the Guarantors, in
the form of Exhibit H attached hereto.
(c) Officer's Certificate. A certificate in the form of
Exhibit N attached hereto signed by a duly authorized officer of Borrower,
stating that (to the best knowledge and belief of such officer, after
reasonable and due investigation and review of matters pertinent to the subject
matter of such certificate): (i) all of the representations and warranties
contained in this Agreement and in the other Loan Documents are true and
correct as of the date of the initial Loan or the initial Letter of Credit, as
the case may be; (ii) no event has occurred and is continuing, or would result
from the Loan or the Letter of Credit, as the case may be, which constitutes a
Default or an Event of Default; and (iii) no litigation, investigation or
proceeding before or by an arbitrator or Governmental Authority is continuing
or threatened against Borrower (A) with respect to this Agreement, any of the
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Notes, any of the Letter of Credit Applications, the Security Agreement or any
of the other Loan Documents, or any of the transactions contemplated hereby or
thereby or (B) which could have a Material Adverse Effect.
(d) Resolutions of Borrower. Resolutions of Borrower
approving the execution, delivery and performance of this Agreement, the Notes,
the Letter of Credit Applications, the Security Agreement, the other Loan
Documents and the transactions contemplated herein and therein, duly adopted by
Borrower's Board of Directors and accompanied by a certificate of the Secretary
or Assistant Secretary of Borrower stating that such resolutions are true and
correct, have not been altered or repealed and are in full force and effect.
(e) Incumbency Certificate of Borrower. A signed
certificate of the Secretary or Assistant Secretary of Borrower which shall
certify the names of the officers of Borrower authorized to sign each of the
Loan Documents to be executed by such Person and the other documents or
certificates to be delivered by such Person pursuant to the Loan Documents,
together with the true signatures of each of such officers. Lender may
conclusively rely on the certificate of Borrower until Lender shall receive a
further certificate of the Secretary or Assistant Secretary of Borrower
canceling or amending the prior certificate and submitting the signatures of
the officers named in such further certificate.
(f) Certificates. A certified copy of the Articles of
Incorporation (including any amendments thereto) of Borrower and a certificate
of good standing for Borrower issued by the Secretary of State of the State of
Illinois, and certificates of qualification and good standing (or other similar
instruments) for Borrower issued by the Secretary of State of each of the
states wherein Borrower is qualified or required to be qualified to do business
as a foreign corporation, each dated within twenty (20) days of the initial
Loan.
(g) By-Laws. A copy of the By-Laws of Borrower, and all
amendments thereto, certified by the Secretary or Assistant Secretary of
Borrower, as appropriate, as being true, correct and complete as of the date of
such certification.
(h) Financial Information. Copies of the financial
statements referred to in Section 7.06.
(i) Security Agreement. The Security Agreement duly
executed by Borrower. Each document (including, without limitation, any
Uniform Commercial Code financing statement) required by the Security Agreement
or under law or requested by Lender to be filed, registered or recorded in
order to create, in favor of Lender, a perfected first Lien on the collateral
described therein shall have been properly filed, registered or recorded in
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each jurisdiction or such other place in which the filing, registration or
recordation thereof is so required or requested, and Lender shall have received
(i) an acknowledgment copy, or other evidence satisfactory to it, of each such
filing, registration or recordation, (ii) evidence satisfactory to Lender of
the payment by Borrower of any necessary fee, tax or expense relating thereto
and (iii) evidence satisfactory to Lender of Lender's Lien priority (including,
without limitation, evidence of the release of all Liens other than Permitted
Liens).
(j) Guaranty. The Continuing Guaranty, duly executed by
the Guarantors.
(k) Litigation. A summary and analysis of all litigation
in which Borrower is involved and an opinion of Borrower's counsel, in form and
substance acceptable to Lender, to the effect that no litigation in which
Borrower is involved could, in the event of an adverse determination, have a
Material Adverse Effect.
(l) Insurance. Evidence satisfactory to Lender that
Borrower has obtained the insurance policies required by this Agreement and the
Security Agreement.
(m) Borrowing Base Certificate. The initial Borrowing
Base Certificate.
(n) Payment of Fees, Costs and Expenses. Payment of all
fees, costs and expenses specified in this Agreement and the other Loan
Documents.
(o) Field Audit Report. The results of the field audit
of the Collateral (as defined in the Security Agreement) conducted by Lender.
(p) Participation Agreements. A participation agreement
in form and substance satisfactory to Lender executed by PNC Bank, Kentucky,
Inc. whereby PNC Bank, Kentucky, Inc. purchases a Fifty Percent (50%)
participation interest in the Term Loan and a participation agreement in form
and substance satisfactory to Lender executed by NBD Bank whereby NBD Bank
purchases a Fifty Percent (50%) participation interest in the Term Loan.
(q) Life Insurance Assignment. The Life Insurance
Assignment, duly executed by Xxxxxxx X. Xxxxxxxxx and duly acknowledged by The
Northwestern Mutual Life Insurance Company.
(r) Additional Information. Such other information,
agreements, documents, instruments and certificates as may reasonably be
required by Lender and Lender's counsel.
Section 6.02. All Revolving Credit Loans and Term Loan.
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Notwithstanding any provision contained herein to the contrary, Lender shall
have no obligation to make any Revolving Credit Loan or the Term Loan hereunder
unless:
(a) Lender shall have received a current Borrowing Base
Certificate;
(b) on the date of and immediately after such Loan, no
Default or Event of Default under this Agreement shall have occurred and be
continuing;
(c) no material adverse change in the properties, assets,
liabilities, business, operations, prospects, income or condition (financial or
otherwise) of Borrower shall have occurred since the date of this Agreement and
be continuing;
(d) all of the representations and warranties of Borrower
contained in this Agreement and in the other Loan Documents shall be true and
correct in all material respects on and as of the date of such Loan as if made
on and as of the date of such Loan (and for purposes of this Section 6.02(d),
the representations and warranties made by Borrower in Section 7.06 shall be
deemed to refer to the most recent financial statements of Borrower delivered
to Lender pursuant to Section 8.01); and
(e) no proceeding or case under the United States
Bankruptcy Code or similar law or any other reorganization, receivership or
liquidation proceedings shall have been commenced by or against Borrower or any
of the Guarantors.
Each request for a Loan by Borrower hereunder shall be deemed
to be a representation and warranty by Borrower on the date of such Loan as to
the facts specified in clauses (b), (c), (d) and (e) of this Section 6.02.
Section 6.03. All Letters of Credit. Notwithstanding any
provision contained herein to the contrary, Lender shall have no obligation to
issue any Letter of Credit hereunder unless:
(a) Lender shall have received a current Borrowing Base
Certificate;
(b) Lender shall have received a Letter of Credit Request
for such Letter of Credit as required by Section 4.01(a);
(c) Lender shall have received a Letter of Credit
Application for such Letter of Credit as required by Section 4.01(a), duly
executed by an authorized officer of Borrower as account party;
(d) Borrower shall have complied with all of the
procedures and requirements set forth in Section 4.01;
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28
(e) on the date of and immediately after the issuance of
such Letter of Credit, no Default or Event of Default under this Agreement
shall have occurred and be continuing;
(f) no material adverse change in the properties, assets,
liabilities, business, operations, prospects, income or condition (financial or
otherwise) of Borrower shall have occurred since the date of this Agreement and
be continuing;
(g) all of the representations and warranties of Borrower
contained in this Agreement and in the other Loan Documents shall be true and
correct in all material respects on and as of the date of the issuance of such
Letter of Credit as if made on and as of the date of the issuance of such
Letter of Credit (and for purposes of this Section 6.03(g), the representations
and warranties made by Borrower in Section 7.06 shall be deemed to refer to the
most recent financial statements of Borrower delivered to Lender pursuant to
Section 8.01);
(h) no proceeding or case under the United States
Bankruptcy Code or similar law or any other reorganization, receivership or
liquidation proceedings shall have been commenced by or against Borrower or any
of the Guarantors; and
(i) Lender shall have received such other documents,
certificates and agreements as it may reasonably request.
Each request for the issuance of a Letter of Credit by
Borrower hereunder shall be deemed to be a representation and warranty by
Borrower on the date of the issuance of such Letter of Credit as to the facts
specified in clauses (e), (f), (g) and (h) of this Section 6.03.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
To induce Lender to make the Revolving Credit Loans and the
Term Loan and to issue the Letters of Credit hereunder, Borrower represents and
warrants to Lender that:
Section 7.01. Organization and Good Standing. Borrower is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Illinois, is duly qualified as a foreign corporation and
in good standing in all states in which it is doing business or is otherwise
required to be qualified, has the corporate power and authority to own its
properties and assets and to transact the business in which it is engaged and
is or will be qualified in those states wherein it proposes to transact
business in the future.
Section 7.02. Authorization and Power. Borrower has the
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corporate power and requisite authority to execute, deliver and perform the
Loan Documents to be executed by Borrower. Borrower is duly authorized to, and
has taken all corporate action necessary to, authorize the execution, delivery
and performance by Borrower of the Loan Documents executed by Borrower.
Borrower is and will continue to be duly authorized to perform the Loan
Documents executed by Borrower.
Section 7.03. No Conflicts or Consents. Neither the
execution and delivery of the Loan Documents, nor the consummation of any of
the transactions therein contemplated, nor compliance with the terms and
provisions thereof, will contravene or conflict with any provision of law,
statute or regulation to which Borrower is subject or any judgment, license,
order or permit applicable to Borrower, or any indenture, loan agreement,
mortgage, deed of trust, or other agreement, document or instrument to which
Borrower is a party or by which Borrower may be bound, or to which Borrower may
be subject, or violate any provision of the Articles of Incorporation or
By-Laws of Borrower. No consent, approval, authorization or order of any court
or governmental authority or third party is required in connection with the
execution and delivery by Borrower of the Loan Documents or to consummate the
transactions contemplated hereby or thereby.
Section 7.04. Enforceable Obligations. The Loan Documents
have been duly executed and delivered by Borrower and constitute the legal and
binding obligations of Borrower, enforceable against Borrower in accordance
with their respective terms, except as such enforceability may be limited by
Debtor Laws.
Section 7.05. No Liens. Except for Permitted Liens, all of
the properties and assets of Borrower are free and clear of all Liens and other
adverse claims of any nature, and Borrower has good and marketable title to all
such properties and assets.
Section 7.06. Financial Condition. Borrower has delivered to
Lender copies of the balance sheet of Borrower as of December 31, 1994, and the
related statements of income, changes in stockholders' equity and cash flows
for the year ended such date, certified by D. Xxxxxx Xxxxxxx, P.S.C.,
independent certified public accountants; such financial statements are true
and correct, fairly represent the financial condition of Borrower as of such
date and have been prepared in accordance with Generally Accepted Accounting
Principles applied on a basis consistent with that of prior periods; as of the
date hereof, there are no obligations, liabilities or Indebtedness (including
contingent and indirect liabilities and obligations) of Borrower which are
(separately or in the aggregate) material and are not reflected in such
financial statements; no changes having a Material Adverse Effect have occurred
since the date of such financial statements.
Section 7.07. Full Disclosure. There is no material
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fact that Borrower has not disclosed to Lender which could have a Material
Adverse Effect on the properties, business, prospects or condition (financial
or otherwise) of Borrower. Neither the financial statements referenced in
Section 7.06 hereof, nor any certificate or statement delivered herewith or
heretofore by Borrower to Lender in connection with negotiations of this
Agreement, contains any untrue statement of a material fact or omits to state
any material fact necessary to keep the statements contained herein or therein
from being misleading.
Section 7.08. No Default. No event has occurred and is
continuing which constitutes a Default or an Event of Default.
Section 7.09. Material Agreements. Borrower is not in
default under any contract, lease, loan agreement, indenture, mortgage,
security agreement or other material agreement or obligation to which it is a
party or by which any of its properties is bound.
Section 7.10. No Litigation. Except as disclosed to Lender
pursuant to Section 6.01(k), there are no actions, suits or legal, equitable,
arbitration or administrative proceedings pending, or to the knowledge of
Borrower threatened, against Borrower that could, if adversely determined, have
a Material Adverse Effect. There has been no change since the date of this
Agreement in the status of any of the actions, suits, investigations,
litigation or proceedings referred to in the litigation disclosed to Lender
pursuant to Section 6.01(k) that is materially adverse to Borrower or to any
transactions contemplated by any of the Loan Documents.
Section 7.11. Burdensome Contracts. Borrower is not a party
to, or bound by, any contract which is a burdensome contract having a Material
Adverse Effect.
Section 7.12. Use of Proceeds; Margin Stock. The proceeds of
the Revolving Credit Loans and the Term Loan will be used by Borrower solely
for the purposes specified in Sections 2.10 and 3.08. None of such proceeds
will be used for the purpose of purchasing or carrying any "margin stock" as
defined in Regulation U, Regulation X or Regulation G, or for the purpose of
reducing or retiring any Indebtedness which was originally incurred to purchase
or carry a "margin stock" or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of such Regulation U,
Regulation X or Regulation G. Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stocks.
Neither Borrower nor any Person acting on behalf of Borrower has taken or will
take any action which might cause the Notes or any of the other Loan Documents,
including this Agreement, to violate Regulation U, Regulation X or Regulation G
or any other regulations of the Board of Governors of the Federal Reserve
System or to violate Section 8
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31
of the Securities Exchange Act of 1934 or any rule or regulation thereunder, in
each case as now in effect or as the same may hereinafter be in effect.
Borrower owns no "margin stock" except for that described in the financial
statements referred to in Section 7.06 hereof and, as of the date hereof, the
aggregate value of all "margin stock" owned by Borrower does not exceed 25% of
the value of all of the assets of Borrower.
Section 7.13. No Financing of Corporate Takeovers. No
proceeds of any of the Loans will be used to acquire any security in any
transaction which is subject to Sections 13 or 14 of the Securities Exchange
Act of 1934, including particularly (but without limitation) Sections 13(d) and
14(d) thereof.
Section 7.14. Taxes. All tax returns required to be filed by
Borrower in any jurisdiction have been filed and all taxes (including mortgage
recording taxes), assessments, fees and other governmental charges upon
Borrower or upon any of its properties, income or franchises have been paid
prior to the time that such taxes could give rise to a Lien thereon. There is
no proposed tax assessment against Borrower and there is no basis for such
assessment.
Section 7.15. Principal Office, Etc. The principal office,
chief executive office and principal place of business of Borrower is located
at 0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000. Borrower maintains its
principal books and records at such address.
Section 7.16. ERISA. If applicable, (a) no Reportable Event
has occurred and is continuing with respect to any Plan; (b) PBGC has not
instituted proceedings to terminate any Plan; (c) neither the Borrower, any
member of the Controlled Group, nor any duly-appointed administrator of a Plan
(i) has incurred any liability to PBGC with respect to any Plan other than for
premiums not yet due or payable or (ii) has instituted or intends to institute
proceedings to terminate any Plan under Sections 4041 or 4041A of ERISA or
withdraw from any Multi-Employer Pension Plan (as that term is defined in
Section 3(37) of ERISA); (d) each Plan of Borrower has been maintained and
funded in all material respects in accordance with its terms and with all
provisions of ERISA and the Code applicable thereto; (e) Borrower and all
members of any Controlled Group have complied with all applicable minimum
funding requirements of ERISA and the Code with respect to each Plan; (f) no
member of any Controlled Group has ever been required to contribute to a
Multi-Employee Pension Plan; (g) there are no unfunded benefit liabilities (as
defined in Section 4001(a)(18) of ERISA) with respect to any Plan of Borrower
or any member of the Controlled Group which pose a risk of causing a lien to be
created in the assets of Borrower; and (h) no material prohibited transaction
under the Code or ERISA has occurred with respect to any Plan of Borrower or a
member of the Controlled Group.
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Section 7.17. Compliance with Law. Borrower is in compliance
with all laws, rules, regulations, orders and decrees which are applicable to
Borrower or its properties.
Section 7.18. Government Regulation. Borrower is not subject
to regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act (as any of the preceding acts have been
amended) or any other law which regulates the incurring by Borrower of
Indebtedness, including but not limited to laws relating to common contract
carriers or the sale of electricity, gas, steam, water or other public utility
services.
Section 7.19. Insider. Borrower is not, and no Person having
"control" (as that term is defined in 12 U.S.C. Section(s) 375(b)(5) or in
regulations promulgated pursuant thereto) of Borrower is, an "executive
officer", "director" or "principal shareholder" (as those terms are defined in
12 U.S.C. Section(s) 375(b) or in regulations promulgated pursuant thereto) of
Lender, of a bank holding company of which Lender is a subsidiary, or of any
subsidiary of a bank holding company of which Lender is a subsidiary, or of any
bank at which Lender maintains a "correspondent account" (as such term is
defined in such statute or regulations) or of any bank which maintains a
correspondent account with Lender.
Section 7.20. Subsidiaries. Borrower does not have any
Subsidiaries other than Xxxxxxxx Equipment Co., a Missouri corporation.
Section 7.21. Fair Labor Standards Act. Borrower has
complied with, and will continue to comply with, the provisions of the Fair
Labor Standards Act of 1938, 29 U.S.C. Section(s) 200, et seq., as amended from
time to time (the "FLSA"), including specifically, but without limitation, 29
U.S.C. Section(s) 215(a). This representation and warranty, and each
re-confirmation hereof, shall constitute written assurance from Borrower, given
as of the date hereof and as of the date of each re-confirmation, that Borrower
has complied with the requirements of the FLSA, in general, and Section
15(a)(1), 29 U.S.C. Section(s) 15(a)(1), thereof, in particular.
Section 7.22. Casualties. Neither the business nor the
properties of Borrower are affected by any environmental hazard, fire,
explosion, accident, strike, lockout or other labor dispute, drought, storm,
hail, flood, earthquake, embargo, act of God or other casualty (whether or not
covered by insurance), which could have a Material Adverse Effect.
Section 7.23. Investment Company Act. Borrower is not an
"investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended, and is not
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controlled by such a company.
Section 7.24. Sufficiency of Capital. Borrower is, and after
consummation of this Agreement and after giving effect to all Indebtedness
incurred and Liens created by Borrower in connection herewith will be, Solvent.
Section 7.25. Hazardous Substances. All real property owned,
leased or operated by Borrower is free from "hazardous substances" as defined
by the Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. Section(s) 9601 et seq., as amended, and the regulations
promulgated pursuant thereto, and no portion of any such real property is
subject to federal, state or local regulation or liability because of the
presence of stored, leaked or spilled petroleum products, waste materials or
debris, "PCB's" or PCB items (as defined in 40 C.F.R. Section(s) 761.3),
underground storage tanks, "asbestos" (as defined in 40 C.F.R. Section(s)
763.63) or the past or present accumulation, spillage or leakage of any such
substance.
Section 7.26. Security Agreement; Description of Collateral.
The Security Agreement contains a description of all of the personal property
owned by Borrower sufficient to grant to Lender a perfected security interest
therein pursuant to applicable law. Upon the filing by Lender of Uniform
Commercial Code financing statements in XxXxxxxxx County, Kentucky and with the
Secretaries of State of the States of Tennessee, Illinois, Missouri, Indiana,
Arkansas, Alabama and Mississippi, Lender will have a perfected first priority
security interest in all of the "Collateral" (as defined in the Security
Agreement) but excluding any portion of the Collateral consisting of "Fixtures"
(as defined in the Security Agreement), subject only to Permitted Liens.
Section 7.27. Corporate Name. Borrower has not, during the
preceding five (5) years, been known as or used any other corporate, fictitious
or tradenames except as disclosed on Exhibit M. Except as set forth on Exhibit
M, Borrower has not, during the preceding five (5) years, been the surviving
corporation of a merger or consolidation or acquired all or substantially all
of the assets of any Person.
Section 7.28. Non-Owned Assets. Borrower does not own or
have any right, title or interest in or to any of the assets listed on Exhibit
P attached hereto and incorporated herein by reference.
Section 7.29. Representations and Warranties. Each Loan made
in accordance with Section 2.01(a) and/or Section 3.01 and each Letter of
Credit issued in accordance with Section 4.01 shall constitute, without the
necessity of specifically containing a written statement, a representation and
warranty by Borrower that no Default or Event of Default exists and that all
representations
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and warranties of Borrower contained in this Agreement or in any of the other
Loan Documents are true and correct on and as of the date the requested Loan is
made or the requested Letter of Credit is issued, as the case may be, as if
made on and as of the date such Loan is made or such Letter of Credit is
issued.
Section 7.30. Survival of Representations and Warranties.
All representations and warranties by Borrower herein shall survive delivery of
the Notes, the making of the Loans and the issuance of the Letter of Credit,
and any investigation at any time made by or on behalf of Lender shall not
diminish Lender's right to rely thereon.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as (i) Lender has
any obligation to make any Loan hereunder or to issue any Letter of Credit
hereunder, (ii) any Letter of Credit remains outstanding or (iii) any of
Borrower's Obligations remain unpaid:
Section 8.01. Financial Statements, Reports and Documents.
Borrower shall deliver or cause to be delivered to Lender each of the
following:
(a) Monthly Statements of Borrower. As soon as available and
in any event within thirty (30) days after the end of each monthly fiscal
period of each fiscal year of Borrower, copies of the unaudited balance sheet
of Borrower as of the end of such monthly fiscal period, and unaudited
statements of income, changes in stockholders' equity and cash flows of
Borrower for that monthly fiscal period and for the portion of the fiscal year
ending with such period, in each case setting forth in comparative form the
figures for the corresponding period of the preceding fiscal year, all in
reasonable detail, and certified by the chief financial officer or chief
executive officer of Borrower as being true and correct and as having been
prepared in accordance with Generally Accepted Accounting Principles, subject
to year-end audit adjustments;
(b) Annual Statements of Borrower. As soon as available and
in any event within ninety (90) days after the close of each fiscal year of
Borrower, copies of the audited consolidated and consolidating balance sheets
of Borrower and its Subsidiaries as of the close of such fiscal year and the
related audited consolidated and consolidating statements of income, changes in
stockholders' equity and cash flows of Borrower and its Subsidiaries for such
fiscal year, in each case setting forth in comparative form the figures for the
preceding fiscal year, all in reasonable detail and accompanied by an opinion
thereon (which shall not be qualified by reason of any limitation imposed by
Borrower) of D. Xxxxxx Xxxxxxx,
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P.S.C., or of other independent public accountants selected by Borrower and
satisfactory to Lender, to the effect that such financial statements have been
prepared in accordance with Generally Accepted Accounting Principles
consistently maintained and applied (except for changes in which such
accountants concur) and that the examination of such accountants in connection
with such financial statements has been made in accordance with generally
accepted auditing standards and, accordingly, includes such tests of the
accounting records and such other auditing procedures as were considered
necessary in the circumstances;
(c) Borrowing Base Certificates. As soon as available and in
any event within fifteen (15) days after the end of each monthly fiscal period
of each fiscal year of Borrower, or more frequently if requested by Lender, a
Borrowing Base Certificate, executed by the chief financial officer or chief
executive officer of Borrower, dated as of the end of the preceding fiscal
month, in the form of Exhibit I attached hereto (the "Borrowing Base
Certificate"), setting forth (i) the Borrowing Base and its components as of
the end of the immediately preceding month, and (ii) the difference, if any,
between the Borrowing Base and the Total Outstandings;
(d) Aging Reports; Schedules of Accounts. As soon as
available and in any event within fifteen (15) days after the end of each
quarterly fiscal period of each fiscal year of Borrower, or more frequently if
requested by Lender, a detailed aging report of Borrower's Accounts, in a form
and detail acceptable to Lender, which detail shall include, at a minimum,
complete addresses and telephone numbers for each of Borrower's Account
Debtors;
(e) Inventory Reports. As soon as available and in any event
within fifteen (15) days after the end of each quarterly fiscal period of each
fiscal year of Borrower, or more frequently if requested by Lender, a detailed
report of Borrower's Inventory, in a form and detail acceptable to Lender
(including, if requested by Lender, information relating to the "Leases" and
the "Account Debtors" (as defined in the Security Agreement) and the location
of the Inventory);
(f) Aging Reports; Schedules of Accounts Payable. As soon as
available and in any event within fifteen (15) days after the end of each
quarterly fiscal period of each fiscal year of Borrower, or more frequently if
requested by Lender, a detailed aging report of Borrower's accounts payable, in
a form and detail acceptable to Lender;
(g) Audit Reports. Promptly upon receipt thereof, one copy of
each written report submitted to Borrower by independent accountants in any
annual, quarterly or special audit made, it being understood and agreed that
all audit reports which are furnished to Lender pursuant to this Article VIII
shall be treated
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as confidential, but nothing herein contained shall limit or impair Lender's
right to disclose such reports to any appropriate Governmental Authority, or to
use such information to the extent pertinent to an evaluation of the
Obligations, or to enforce compliance with the terms and conditions of this
Agreement, or to take any lawful action which Lender deems necessary to protect
its interests under this Agreement;
(h) Compliance Certificate. Within thirty (30) days after the
end of each fiscal month of Borrower hereafter, a certificate in the form of
Exhibit O attached hereto executed by the chief financial officer or chief
executive officer of Borrower, stating that a review of the activities of
Borrower during such fiscal month has been made under his supervision and that
Borrower has observed, performed and fulfilled each and every obligation and
covenant contained herein and is not in default under any of the same or, if
any such default shall have occurred, specifying the nature and status thereof,
and setting forth a computation in reasonable detail as of the end of the
period covered by such statements, of compliance with Sections 9.14 and 9.15
hereof;
(i) Accountant's Certificates. Within the period provided in
paragraph (b) above, a certificate of the accountants who render an opinion
with respect to such financial statements, stating that they have reviewed this
Agreement and stating further whether, in making their audit, such accountants
have become aware of any condition or event which would constitute a Default or
an Event of Default under any of the terms or provisions of this Agreement
(insofar as any such terms or provisions pertain to accounting matters) and, if
any such condition or event then exists, specifying the nature and period of
existence thereof;
(j) Monthly Statements of Xxxxxxxx Equipment Co. As soon as
available and in any event within thirty (30) days after the end of each
monthly fiscal period of each fiscal year of Xxxxxxxx Equipment Co., a Missouri
corporation, copies of the unaudited balance sheet of Xxxxxxxx Equipment Co. as
of the end of such monthly fiscal period, and unaudited statements of income,
changes in stockholders' equity and cash flows of Xxxxxxxx Equipment Co. for
that monthly fiscal period and for the portion of the fiscal year ending with
such period, in each case setting forth in comparative form the figures for the
corresponding period of the preceding fiscal year, all in reasonable detail,
and certified by the chief financial officer or chief executive officer of
Xxxxxxxx Equipment Co. as being true and correct and as having been prepared in
accordance with Generally Accepted Accounting Principles, subject to year-end
audit adjustments;
(k) Monthly Statements of M&M Properties, Inc. As soon as
available and in any event within thirty (30) days after the end of each
monthly fiscal period of each fiscal year of M&M Properties, Inc., an Alabama
corporation, copies of the unaudited
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37
balance sheet of M&M Properties, Inc. as of the end of such monthly fiscal
period, and unaudited statements of income, changes in stockholders' equity and
cash flows of M&M Properties, Inc. for that monthly fiscal period and for the
portion of the fiscal year ending with such period, in each case setting forth
in comparative form the figures for the corresponding period of the preceding
fiscal year, all in reasonable detail, and certified by the chief financial
officer or chief executive officer of M&M Properties, Inc. as being true and
correct and as having been prepared in accordance with Generally Accepted
Accounting Principles, subject to year-end audit adjustments;
(l) Annual Statements of M&M Properties, Inc. As soon as
available and in any event within ninety (90) days after the close of each
fiscal year of M&M Properties, Inc., copies of the audited balance sheet of M&M
Properties, Inc. as of the close of such fiscal year and the related audited
statements of income, changes in stockholders' equity and cash flows of M&M
Properties, Inc. for such fiscal year, in each case setting forth in
comparative form the figures for the preceding fiscal year, all in reasonable
detail and accompanied by an opinion thereon (which shall not be qualified by
reason of any limitation imposed by M&M Properties, Inc.) of Xxxxxx, Cutter &
Xxxxxx, P.C., or of other independent public accountants selected by M&M
Properties, Inc. and satisfactory to Lender, to the effect that such financial
statements have been prepared in accordance with Generally Accepted Accounting
Principles consistently maintained and applied (except for changes in which
such accountants concur) and that the examination of such accountants in
connection with such financial statements has been made in accordance with
generally accepted auditing standards and, accordingly, includes such tests of
the accounting records and such other auditing procedures as were considered
necessary in the circumstances; and
(m) Other Information. Such other information concerning the
business, properties or financial condition of Borrower, any Subsidiary of
Borrower or M&M Properties, Inc. as Lender shall from time to time reasonably
request.
Section 8.02. Compliance with Loan Documents. Borrower shall
timely comply with any and all covenants and provisions of the Loan Documents
executed by Borrower.
Section 8.03. Payment of Taxes and Other Indebtedness.
Borrower shall pay and discharge (i) all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits, or upon any
property belonging to it, before delinquent, (ii) all lawful claims (including
claims for labor, materials and supplies), which, if unpaid, might give rise to
a Lien upon any of its property and (iii) all of its other Indebtedness, except
as prohibited hereunder; provided, however, that Borrower shall not be required
to pay any such tax,
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assessment, charge or levy if and so long as the amount, applicability or
validity thereof shall currently be contested in good faith by appropriate
proceedings and appropriate accruals and cash reserves therefor have been
established in accordance with Generally Accepted Accounting Principles.
Section 8.04. Maintenance of Existence and Rights; Conduct of
Business. Borrower shall preserve and maintain its corporate existence and all
of its rights, privileges and franchises necessary or desirable in the normal
conduct of its business, and conduct its business in an orderly and efficient
manner consistent with good business practices and in accordance with all
applicable regulations and orders of any Governmental Authority.
Section 8.05. Compliance with Material Agreements. Borrower
shall comply with all material agreements, indentures, mortgages or documents
binding on it or affecting its properties or business.
Section 8.06. Operations and Properties. Borrower shall act
prudently and in accordance with customary industry standards in managing or
operating its assets, properties, business and investments. Borrower shall
keep in good working order and condition, ordinary wear and tear excepted, all
of its assets and properties which are necessary to the conduct of its
business. Borrower shall maintain all real property which it owns, leases,
occupies or controls free from hazardous substances. Borrower shall indemnify
Lender and hold Lender harmless from and against any loss, cost or expense
(including, without limitation, reasonable attorneys' fees and expenses)
relating to or arising out of or in connection with any pollution, hazardous
substances or contamination of any property owned, leased, occupied or
controlled by Borrower.
Section 8.07. Compliance with Law. Borrower shall comply
with all applicable laws, rules, regulations and all orders of any Governmental
Authority applicable to it or any of its property, business operations or
transactions, a breach of which could have a Material Adverse Effect.
Section 8.08. Insurance. Borrower shall maintain worker's
compensation insurance, liability insurance and insurance on its properties,
assets and business, now owned or hereafter acquired, against such casualties,
risks and contingencies, and in such types and amounts, as are consistent with
customary practices and standards of companies engaged in similar businesses.
Section 8.09. Authorizations and Approvals. Borrower shall
promptly obtain, from time to time at its own expense, all such governmental
licenses, authorizations, consents, permits and approvals as may be required to
enable it to comply with its
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obligations hereunder and under the other Loan Documents.
Section 8.10. ERISA Compliance. Borrower shall (i) at all
times, make prompt payment of all contributions required under all Plans and
required to meet the minimum funding standard set forth in ERISA with respect
to its Plans, (ii) within thirty (30) days after the filing thereof, furnish to
Lender copies of each annual report/return (Form 5500 Series), as well as all
schedules and attachments required to be filed with the Department of Labor
and/or the Internal Revenue Service pursuant to ERISA, and the regulations
promulgated thereunder, in connection with each of its Plans for each Plan
year, (iii) notify Lender immediately of any fact, including, but not limited
to, any Reportable Event arising in connection with any of its Plans, which
might constitute grounds for termination thereof by the PBGC or for the
appointment by the appropriate United States District Court of a trustee to
administer such Plan, together with a statement, if requested by Lender, as to
the reason therefor and the action, if any, proposed to be taken with respect
thereto and (iv) furnish to Lender, upon its request, such additional
information concerning any of its Plans as may be reasonably requested.
Section 8.11. Notice of Default. Borrower shall furnish to
Lender, immediately upon becoming aware of the existence of any condition or
event which constitutes a Default or would become a Default or an Event of
Default, written notice specifying the nature and period of existence thereof
and the action which Borrower is taking or proposes to take with respect
thereto.
Section 8.12. Other Notices. Borrower shall promptly notify
Lender of (i) any material adverse change in its financial condition or its
business, (ii) any default under any material agreement, contract or other
instrument to which it is a party or by which any of its properties are bound,
or any acceleration of the maturity of any Indebtedness owing by Borrower,
(iii) any material adverse claim against or affecting Borrower or any of its
properties and (iv) the commencement of, and any material determination in, any
litigation with any third party or any proceeding before any Governmental
Authority affecting Borrower.
Section 8.13. Books and Records; Access. Borrower shall give
any representative of Lender access during all business hours to, and permit
such representative to, examine, copy or make excerpts from, any and all books,
records and documents in the possession of Borrower and relating to its
affairs, and to inspect any of the properties of Borrower. Borrower shall
maintain complete and accurate books and records of its transactions in
accordance with good accounting practices.
Section 8.14. Further Assurances. Borrower shall make,
execute or endorse, and acknowledge and deliver or file or cause the same to be
done, all such vouchers, invoices, notices,
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40
certifications and additional agreements, undertakings, conveyances, deeds of
trust, mortgages, transfers, assignments, financing statements or other
assurances, and take any and all such other action, as Lender may, from time to
time, deem reasonably necessary or proper in connection with any of the Loan
Documents, the obligations of Borrower thereunder, or for better assuring and
confirming unto Lender all or any part of the security for any of such
obligations, or for granting to Lender any security for the Obligations which
Lender may request from time to time.
Section 8.15. Operating Account. Borrower shall, at all
times, maintain Borrower's Operating Account with Lender.
Section 8.16. Indemnity by Borrower. Borrower shall
indemnify, save and hold harmless Lender and its directors, officers, agents,
attorneys, and employees (collectively, the "indemnitees") from and against:
(i) any and all claims, demands, actions or causes of action that are asserted
against any indemnitee by any Person if the claim, demand, action or cause of
action directly or indirectly relates to a claim, demand, action or cause of
action that the Person asserts or may assert against Borrower or any Affiliate
of Borrower, (ii) any and all claims, demands, actions or causes of action that
are asserted against any indemnitee if the claim, demand, action or cause of
action directly or indirectly relates to the Revolving Credit Commitment, the
Term Loan Commitment, the use of proceeds of the Revolving Credit Loans or the
Term Loan or the relationship of Borrower and Lender under this Agreement or
any transaction contemplated pursuant to this Agreement, (iii) any
administrative or investigative proceeding by any Governmental Authority
directly or indirectly related to a claim, demand, action or cause of action
described in clauses (i) or (ii) above and (iv) any and all liabilities,
losses, costs or expenses (including attorneys' fees and disbursements) that
any indemnitee suffers or incurs as a result of any of the foregoing; provided,
however, that Borrower shall have no obligation under this Section to Lender
with respect to any of the foregoing arising out of the gross negligence or
willful misconduct of Lender or the breach by Lender of this Agreement. Any
obligation or liability of Borrower to any indemnitee under this Section shall
survive the expiration or termination of this Agreement and the repayment of
the Obligations.
Section 8.17. Mortgagee's Consent. Borrower will deliver to
Lender on or before November 15, 1995, a Mortgagee's Consent in form and
substance satisfactory to Lender duly executed by The Kentucky Development
Finance Authority relating to the existing mortgage on the Borrower's office
located at 0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000.
ARTICLE IX
NEGATIVE COVENANTS
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41
Borrower covenants and agrees that, so long as (i) Lender has
any obligation to make any Loan hereunder or to issue any Letter of Credit
hereunder, (ii) any Letter of Credit remains outstanding or (iii) any of the
Borrower's Obligations remain unpaid, unless the prior written consent of
Lender is obtained:
Section 9.01. Limitation on Indebtedness; Guaranties; Leases;
Sale and Leaseback. Borrower shall not:
(i) incur, create, contract, waive, assume, have outstanding,
guarantee or otherwise be or become, directly or indirectly, liable in respect
of any Indebtedness, except (A) Indebtedness arising out of this Agreement, (B)
Indebtedness secured by the Permitted Liens, (C) current liabilities for taxes
and assessments incurred in the ordinary course of business, (D) Indebtedness
in respect of current accounts payable or accrued (other than for borrowed
funds or purchase money obligations) and incurred in the ordinary course of
business, provided that all such liabilities, accounts and claims shall be
promptly paid and discharged when due or in conformity with customary trade
terms, (E) Indebtedness of Borrower as reflected on the attached Exhibit J and
(F) Indebtedness not otherwise permitted by this Section 9.01(i) in an amount
not exceeding $250,000.00 in the aggregate at any time outstanding;
(ii) become or be liable in respect of any Guaranty except for
the Guaranties in existence on the date of this Agreement and listed on Exhibit
J attached hereto and any renewals or extensions thereof;
(iii) become or be liable to pay Rentals during any 12-month
period which in the aggregate exceed $700,000.00; or
(iv) enter into any arrangement with any Person (including,
without limitation, any insurance company, bank or trustee) pursuant to which
Borrower will lease, as lessee, any property which it owned as of the date
hereof and which it sold, transferred or otherwise disposed of to such other
Person.
Section 9.02. Negative Pledge. Borrower shall not create,
incur, permit or suffer to exist any Lien upon any of its property or assets,
now owned or hereafter acquired, except for Permitted Liens.
Section 9.03. Liquidation, Mergers, Consolidations, Purchase
and Dispositions of Substantial Assets. Borrower shall not dissolve or
liquidate, or become a party to any merger or consolidation, or acquire by
purchase, lease or otherwise all or substantially all of the assets or capital
stock of any other Person, or sell, assign, convey, exchange, transfer, lease
or otherwise dispose of all or any substantial part of its properties,
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42
rights, assets or business, whether now owned or hereafter acquired, except for
sales or leases of Inventory in the ordinary course of business, or sell,
assign or discount any Accounts.
The term "substantial part" as used herein shall mean Ten
Percent (10%) or more of such property or assets of Borrower.
Section 9.04. Lines of Business. Borrower shall not,
directly or indirectly, engage in any business other than those in which it is
presently engaged, or discontinue any of its existing lines of business or
substantially alter its method of doing business.
Section 9.05. Alteration of Material Agreements. Borrower
shall not consent to or permit any alteration, amendment, modification,
release, waiver or termination of any material agreement to which it is a
party.
Section 9.06. Change in Management. Borrower shall not make
any significant change in its executive management.
Section 9.07. Name, Fiscal Year and Accounting Method.
Borrower shall not employ a trade name or assumed name, change its name or
change its fiscal year or method of accounting except as required by Generally
Accepted Accounting Principles; provided, however, Borrower may employ a trade
name or assumed name or change its name if Borrower has given Lender thirty
(30) days prior written notice of such trade name or assumed name or such name
change and taken such action as Lender deems necessary to continue the
perfection of the Liens securing payment of the Obligations.
Section 9.08. No Amendments. Borrower shall not amend its
Articles of Incorporation or its By-Laws.
Section 9.09. Restrictions on Dividends. Borrower shall not
directly or indirectly declare or make, or incur any liability to make, any
Dividend.
Section 9.10. Prepayments on Subordinated Indebtedness.
Borrower shall not directly or indirectly make any payment of any Subordinated
Indebtedness which would violate the terms of such Subordinated Indebtedness or
any subordination agreement applicable to such Subordinated Indebtedness.
Section 9.11. Limitation on Investments. Borrower shall not
make or have outstanding any Investments in any Person, except for Permitted
Investments and such other "cash equivalent" investments as Lender may from
time to time approve.
Section 9.12. Affiliate Transactions. Borrower shall not
enter into any transaction with, or pay any management fees to, any Affiliate;
provided, however, that Borrower may enter into
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43
transactions with Affiliates upon terms no less favorable to Borrower than
would be obtainable at the time in comparable transactions by Borrower in arms
length dealings with Persons other than Affiliates.
Section 9.13. Subsidiaries. Borrower shall not create, form
or acquire any new Subsidiaries.
Section 9.14. Financial Covenants.
(a) Minimum Current Ratio. Borrower shall not permit its
ratio of Current Assets to Current Liabilities, as of any date, to be less than
1.7 to 1.0.
(b) Minimum Tangible Net Worth. Borrower shall not permit its
Tangible Net Worth to be less than (i) $5,500,000.00 at any time during the
period commencing on the date of this Agreement and ending December 30, 1995,
or (ii) $6,250,000.00 at any time on or after December 31, 1995.
(c) Maximum Indebtedness to Tangible Net Worth. Borrower
shall not permit the ratio of the Indebtedness of Borrower, determined in
accordance with Generally Accepted Accounting Principles consistently applied
but excluding the Indebtedness and Guaranties of Borrower listed on Exhibit J
attached hereto and marked with an asterisk or a double asterisk, to Tangible
Net Worth to be greater than (i) 2.75 to 1.0 at any time during the period
commencing on the date of this Agreement and ending December 30, 1995, or (ii)
2.25 to 1.0 at any time on or after December 31, 1995.
(d) Net Cash Flow to Current Maturities of Debt. Borrower
shall not permit the ratio of Net Cash Flow for any fiscal year of Borrower to
the Current Maturities of Debt for the next succeeding fiscal year of Borrower
to be less than 1.5 to 1.0. For the purposes of this Section, Borrower's "Net
Cash Flow" shall be that shown on the annual officer's certificate delivered
with respect to such fiscal year unless Lender makes an independent, good faith
determination of Net Cash Flow for such fiscal year.
If Lender's determination of Net Cash Flow for any fiscal year
end is less than Net Cash Flow as stated in the applicable officer's
certificate: (i) such determination by Lender shall be, if determined in
accordance with the foregoing provision and the definition of "Net Cash Flow"
in this Agreement, conclusive for purposes hereof and (ii) Lender shall
promptly advise Borrower of its determination.
(e) Maximum Consolidated Indebtedness to Consolidated Tangible
Net Worth. Borrower shall not permit the ratio of the Indebtedness of Borrower
and its Subsidiaries, determined on a consolidated basis and in accordance with
Generally Accepted
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44
Accounting Principles consistently applied but excluding the Indebtedness and
Guaranties of Borrower listed on Exhibit J attached hereto and marked with a
double asterisk, to Consolidated Tangible Net Worth to be greater than 4.5 to
1.0 as of December 31, 1995.
Section 9.15. Limitation on Capital Expenditures. Borrower
will not make any Capital Expenditure (excluding Capital Expenditures for
Inventory) if the sum of the aggregate amount of all Capital Expenditures
(including the Capital Expenditure in question) made by Borrower during any
fiscal year of Borrower would exceed $350,000.00.
Section 9.16. Calculation of Depreciation on Inventory.
Borrower will not change the methods or salvage value percentages used to
calculate depreciation on any of its Inventory from the methods and salvage
value percentages used in the preparation of Borrower's December 31, 1994,
audited financial statements.
Section 9.17. Limits on Guaranties. Borrower will not cause
or permit (i) any of the existing Guaranties executed by Borrower with respect
to Indebtedness of M&M Properties, Inc. to cover any Indebtedness incurred by
M&M Properties, Inc. on or after the date of this Agreement or (ii) the
aggregate outstanding principal amount of Indebtedness of Xxxxxxxx Equipment
Co. to Southwest Bank of St. Louis which is guaranteed by Borrower to exceed
$6,250,000.00 at any one time.
ARTICLE X
EVENTS OF DEFAULT
Section 10.01. Events of Default. An "Event of Default"
shall exist if any one or more of the following events (herein collectively
called "Events of Default"):
(a) Borrower shall fail or refuse to pay when due any
principal of, or interest on, any of the Notes or any of the other Obligations
or shall fail to pay when due any fee, expense or other payment required
hereunder;
(b) any representation or warranty made under this Agreement,
or any of the other Loan Documents, or in any certificate or statement
furnished or made to Lender pursuant hereto or in connection herewith or with
the Loans or Letters of Credit hereunder, shall prove to be untrue or
inaccurate in any material respect as of the date on which such representation
or warranty is made;
(c) Borrower shall fail or refuse to perform or observe any of
the terms, covenants, agreements or conditions contained in Sections 2.01,
2.10, 8.01(c), 8.01(e), 8.08, 8.11, 8.12, 8.13,
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45
8.14, 8.15 or 8.17 or Article IX herein;
(d) Borrower shall fail or refuse to perform or observe any of
the other terms, covenants, agreements or conditions contained in this
Agreement (other than those specified in Subsections 10.01(a), 10.01(b) or
10.01(c) above) or any of the other Loan Documents and any such failure or
refusal shall remain unremedied for fifteen (15) days after the earlier of (i)
written notice of default is given to Borrower by Lender or (ii) any officer of
Borrower obtaining knowledge of such default;
(e) default shall occur in the payment of any material
Indebtedness of Borrower or any of the Guarantors (other than the Obligations)
or default shall occur in respect of any note, loan agreement or credit
agreement relating to any such Indebtedness and such default shall continue for
more than the period of grace, if any, specified therein; or any such
Indebtedness shall become due before its stated maturity by acceleration of the
maturity thereof or shall become due by its terms and shall not be promptly
paid or extended;
(f) any of the Loan Documents shall cease to be legal, valid
and binding agreements enforceable against the Person executing the same in
accordance with the respective terms thereof or shall in any way be terminated
or become or be declared ineffective or inoperative or shall in any way
whatsoever cease to give or provide the respective liens, security interests,
rights, titles, interests, remedies, powers or privileges intended to be
created thereby;
(g) Borrower or any of the Guarantors shall (i) apply for or
consent to the appointment of a receiver, trustee, custodian, intervenor or
liquidator of itself or of all or a substantial part of such Person's assets,
(ii) file a voluntary petition in bankruptcy, admit in writing that such Person
is unable to pay such Person's debts as they become due or generally not pay
such Person's debts as they become due, (iii) make a general assignment for the
benefit of creditors, (iv) file a petition or answer seeking reorganization of
an arrangement with creditors or to take advantage of any bankruptcy or
insolvency laws, (v) file an answer admitting the material allegations of, or
consent to, or default in answering, a petition filed against such Person in
any bankruptcy, reorganization or insolvency proceeding or (vi) take corporate
or other action for the purpose of effecting any of the foregoing;
(h) an involuntary petition or complaint shall be filed
against Borrower or any of the Guarantors seeking bankruptcy or reorganization
of such Person or the appointment of a receiver, custodian, trustee, intervenor
or liquidator of such Person, or all or substantially all of such Person's
assets, and such petition or complaint shall not have been dismissed within
thirty (30) days of the filing thereof; or an order, order for relief, judgment
or
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46
decree shall be entered by any court of competent jurisdiction or other
competent authority approving a petition or complaint seeking reorganization of
Borrower or any of the Guarantors or appointing a receiver, custodian, trustee,
intervenor or liquidator of such Person, or of all or substantially all of such
Person's assets;
(i) any final judgment(s) for the payment of money shall be
rendered against Borrower or any of the Guarantors and such judgment or
judgments shall not be satisfied or discharged at least ten (10) days prior to
the date on which any of its assets could be lawfully sold to satisfy such
judgment;
(j) both the following events shall occur: (i) either (x)
proceedings shall have been instituted to terminate, or a notice of termination
shall have been filed with respect to, any Plan (other than a Multi-Employer
Pension Plan as that term is defined in Section 3(37) of ERISA) by Borrower,
any of the Guarantors, any member of the Controlled Group, PBGC or any
representative of any thereof, or any such Plan shall be terminated, in each
case under Section 4041 or 4042 of ERISA, or (y) a Reportable Event, the
occurrence of which would cause the imposition of a lien under Section 4068 of
ERISA, shall have occurred with respect to any Plan (other than a
Multi-Employer Pension Plan as that term is defined in Section 3(37) of ERISA)
and be continuing for a period of sixty (60) days; and (ii) the sum of the
estimated liability to PBGC under Section 4062 of ERISA and the currently
payable obligations of Borrower or any of the Guarantors to fund liabilities
(in excess of amounts required to be paid to satisfy the minimum funding
standard of Section 412 of the Code) under the Plan or Plans subject to such
event shall exceed Ten Percent (10%) of Tangible Net Worth at such time;
(k) any or all of the following events shall occur with
respect to any Multi-Employer Pension Plan (as that term is defined in Section
3(37) of ERISA) to which Borrower contributes or contributed on behalf of its
employees: (i) Borrower or any of the Guarantors incurs a withdrawal liability
under Section 4201 of ERISA; or (ii) any such plan is "in reorganization" as
that term is defined in Section 4241 of ERISA; or (iii) any such Plan is
terminated under Section 4041A of ERISA and Lender determine in good faith that
the aggregate liability likely to be incurred by Borrower or any of the
Guarantors, as a result of all or any of the events specified in Subsections
(i), (ii) and (iii) above occurring, shall have a Material Adverse Effect;
(l) there shall occur any change in the condition (financial
or otherwise) of Borrower or any of the Guarantors which, in the reasonable
opinion of Lender, has a Material Adverse Effect;
(m) the death or incompetence of any of the Guarantors;
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47
(n) any "Event of Default" (as defined therein) shall occur
under or within the meaning of the Security Agreement;
(o) the Continuing Guaranty shall at any time for any reason
cease to be in full force and effect or shall be declared to be null and void
by a court of competent jurisdiction, or if the validity or enforceability
thereof shall be contested or denied by any of the Guarantors, or if any of the
Guarantors shall deny that he or she has any further liability or obligation
thereunder or if any of the Guarantors shall fail to comply with or observe any
of the terms, provisions or conditions contained in the Guaranty;
(p) the Life Insurance Assignment shall at any time for any
reason cease to be in full force and effect or shall be declared to be null and
void by a court of competent jurisdiction, or if the validity or enforceability
thereof shall be contested or denied by Xxxxxxx X. Xxxxxxxxx, or if Xxxxxxx X.
Xxxxxxxxx shall deny that he has any further liability or obligation thereunder
or if Xxxxxxx X. Xxxxxxxxx shall fail to comply with or observe any of the
terms, provisions or conditions contained in the Life Insurance Assignment; or
(q) Lender, in good faith, deems itself insecure.
Section 10.02. Remedies Upon Event of Default. If an Event
of Default shall have occurred and be continuing, then Lender shall and may
exercise any one or more of the following rights and remedies, and any other
remedies provided in any of the Loan Documents, as Lender in its sole
discretion, may deem necessary or appropriate: (i) terminate Lender's
commitment to lend hereunder, (ii) declare the principal of, and all interest
then accrued on, the Notes and all of the other Obligations hereunder to be
forthwith due and payable, whereupon the same shall forthwith become due and
payable without presentment, demand, protest, notice of default, notice of
acceleration or of intention to accelerate or other notice of any kind, all of
which Borrower hereby expressly waives, anything contained herein or in the
Notes to the contrary notwithstanding, (iii) reduce any claim to judgment
and/or (iv) without notice of default or demand, pursue and enforce any of
Lender's rights and remedies under the Loan Documents, or otherwise provided
under or pursuant to any applicable law or agreement; provided, however, that
if any Event of Default specified in Sections 10.01 (g) and/or (h) shall occur,
the principal of, and all interest on, the Notes and all of the other
Obligations hereunder shall thereupon become due and payable concurrently
therewith, and Lender's obligations to lend shall immediately terminate
hereunder, without any further action by Lender and without presentment,
demand, protest, notice of default, notice of acceleration or of intention to
accelerate or other notice of any kind, all of which Borrower hereby expressly
waives.
Section 10.03. Performance by Lender. Should Borrower
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48
fail to perform any covenant, duty or agreement contained herein or in any of
the Loan Documents, Lender may perform or attempt to perform such covenant,
duty or agreement on behalf of Borrower. In such event, Borrower shall, at the
request of Lender, promptly pay any amount expended by Lender in such
performance or attempted performance to Lender at its principal office in
Paducah, Kentucky, together with interest thereon at a rate per annum equal to
Two Percent (2%) over and above the Prime Rate (fluctuating as described in the
definition of "Prime Rate") from the date of such expenditure until paid.
Notwithstanding the foregoing, it is expressly understood that Lender does not
assume any liability or responsibility for the performance of any duties of
Borrower hereunder or under any of the Loan Documents or other control over the
management and affairs of Borrower.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Strict Compliance. If any action or failure
to act by Borrower violates any covenant or obligation of Borrower contained
herein, then such violation shall not be excused by the fact that such action
or failure to act would otherwise be required or permitted by any covenant (or
exception to any covenant) other than the covenant violated.
Section 11.02. Modification. All modifications, consents,
amendments or waivers of any provision of any Loan Document, or consent to any
departure by Borrower therefrom, shall be effective only if the same shall be
in writing by Lender and then shall be effective only in the specific instance
and for the purpose for which given.
Section 11.03. Accounting Terms and Reports. All accounting
terms not specifically defined in this Agreement shall be construed in
accordance with Generally Accepted Accounting Principles consistently applied
on the basis used by Borrower in prior years. All financial reports furnished
by Borrower to Lender pursuant to this Agreement shall be prepared in such form
and such detail as shall be satisfactory to Lender, shall be prepared on the
same basis as those prepared by Borrower in prior years and shall be the same
financial reports as those furnished to Borrower's officers and directors. All
financial projections furnished by Borrower to Lender pursuant to this
Agreement shall be satisfactory to Lender and shall be prepared on the same
basis as the financial reports furnished by Borrower to Lender.
Section 11.04. Waiver. No failure to exercise, and no delay
in exercising, on the part of Lender, any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right. The
rights of Lender hereunder
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49
and under the Loan Documents shall be in addition to all other rights provided
by law. No modification or waiver of any provision of this Agreement, the
Notes or any of the other Loan Documents, nor consent to departure therefrom,
shall be effective unless in writing and no such consent or waiver shall extend
beyond the particular case and purpose involved. No notice or demand given in
any case shall constitute a waiver of the right to take other action in the
same, similar or other instances without such notice or demand.
Section 11.05. Payment of Expenses. Borrower agrees to pay
all costs and expenses of Lender (including, without limitation, the reasonable
attorneys' fees and expenses of Lender's legal counsel) incurred by Lender in
connection with the preservation and enforcement of and Lender's rights under
this Agreement, the Notes and/or the other Loan Documents, and all reasonable
costs and expenses of Lender (including, without limitation, the reasonable
fees and expenses of Lender's legal counsel) in connection with the
negotiation, preparation, execution and delivery of this Agreement, the Notes
and the other Loan Documents and any and all amendments, modifications and
supplements thereof or thereto.
Section 11.06. Notices. Except for telephonic notices
permitted herein, any notices or other communications required or permitted to
be given by this Agreement or any other documents and instruments referred to
herein must be given in writing and personally delivered, deposited with a
nationally recognized courier for overnight delivery, or mailed by prepaid
certified or registered mail to the party to whom such notice of communication
is directed, to the address of such party as follows:
(a) Borrower:
Falconite, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
(Attention: Xxxxxxx X. Xxxxxxxxx); and
(b) Lender: at its address shown below its name on
the signature page(s) hereof with a copy to Xxxxx X. Xxxxxx, Esq., Xxxxxxxx &
Xxxxxxxx, Xxx Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xx. Xxxxx, Xxxxxxxx 00000. Any
notice to be mailed or personally delivered may be mailed or delivered to the
principal offices of the party to whom such notice is addressed. Any such
notice or other communication shall be deemed to have been given (whether
actually received or not) on the day it is mailed or personally delivered as
aforesaid. Any party may change its address for purposes of this Agreement by
giving notice of such change to the other parties pursuant to this Section
11.06.
Section 11.07. Governing Law. This Agreement has been
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prepared, is being executed and delivered and is intended to be performed in
the Commonwealth of Kentucky, and the substantive laws of such state and the
applicable federal laws of the United States of America shall govern the
validity, construction, enforcement and interpretation of this Agreement and
all of the other Loan Documents.
Section 11.08. Choice of Forum; Consent to Service of Process
and Jurisdiction. Any suit, action or proceeding against Borrower with respect
to this Agreement, the Notes or any judgment entered by any court in respect
thereof, may be brought in the courts of the Commonwealth of Kentucky, County
of XxXxxxxxx, or in the United States courts located in the Commonwealth of
Kentucky, as Lender in its sole discretion may elect and Borrower hereby
submits to the non-exclusive jurisdiction of such courts for the purpose of any
such suit, action or proceeding. Borrower hereby agrees that service of all
writs, process and summonses in any such suit, action or proceeding brought in
the Commonwealth of Kentucky may be brought upon the Process Agent, and
Borrower hereby irrevocably appoints the Process Agent as its true and lawful
attorney-in-fact in the name, place and stead of Borrower to accept such
service of any and all such writs, process and summonses, and agrees that the
failure of Process Agent to give any notice of such service of process to it
shall not impair or affect the validity of such service or of any judgment
based thereon. Borrower hereby irrevocably consents to the service of process
in any suit, action or proceeding in said court by the mailing thereof by
Lender by registered or certified mail, postage prepaid, to Borrower's address
set forth in Section 11.06 hereof. Borrower hereby irrevocably waives any
objections which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement or any
of the Notes brought in the courts located in the Commonwealth of Kentucky,
County of XxXxxxxxx, and hereby further irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in
any inconvenient forum.
Section 11.09. Invalid Provisions. If any provision of any
Loan Document is held to be illegal, invalid or unenforceable under present or
future laws during the term of this Agreement, such provision shall be fully
severable; such Loan Document shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of such
Loan Document; and the remaining provisions of such Loan Document shall remain
in full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from such Loan Document.
Furthermore, in lieu of each such illegal, invalid or unenforceable provision,
a provision mutually agreeable to Borrower and Lender shall be added as part of
such Loan Document as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
In the event Borrower and Lender are unable to agree
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upon a provision to be added to the Loan Document within a period of ten (10)
Business Days after a provision of the Loan Document is held to be illegal,
invalid or unenforceable, then a provision acceptable to Lender as similar in
terms to the illegal, invalid or unenforceable provision as may be possible and
be legal, valid and enforceable shall be added automatically to such Loan
Document. In either case, the effective date of the added provision shall be
the date upon which the prior provision was held to be illegal, invalid or
unenforceable.
Section 11.10. Conflicting Provisions. All of the terms,
covenants, agreements and conditions contained in this Agreement and the other
Loan Documents shall be given independent effect so that if a particular
action, event or condition is prohibited by any one of such terms, covenants,
agreements or conditions, the fact that it would be permitted by an exception
to, or otherwise be in compliance within the provisions of, another term,
covenant, agreement or condition shall not avoid the occurrence of a Default or
an Event of Default if such action is taken, such event occurs or such
condition exists.
Section 11.11 Confidentiality. Lender agrees to hold any
Confidential Information which it may receive from Borrower pursuant to this
Agreement in confidence, except for disclosure (i) to legal counsel,
accountants and other professional advisors, (ii) to regulatory officials,
(iii) as required by law or legal process or in connection with any legal
proceeding and (iv) to another financial institution in connection with a
disposition or proposed disposition (whether by way of assignment,
participation or otherwise) of any of Lender's interests hereunder or under the
Notes or any of the other Loan Documents. For purposes of this Section 11.11,
"Confidential Information" shall mean all documents, materials and information
concerning Borrower which are furnished, made available or otherwise disclosed
to Lender by or on behalf of Borrower other than information which (i) was or
becomes generally available to the public other than as a result of a
disclosure by Lender or its agents or representatives, (ii) was available to
Lender on a nonconfidential basis prior to its disclosure by Borrower or (iii)
becomes available to Lender on a nonconfidential basis from an independent
source, provided that such source was not itself bound by an obligation of
confidentiality owed to Borrower and known to Lender.
Section 11.12. Nonliability of Lender. The relationship
between Borrower and Lender is, and shall at all times remain, solely that of
borrower and lender, and Lender neither undertakes nor assumes any
responsibility or duty to Borrower to review, inspect, supervise, pass judgment
upon or inform Borrower of any matter in connection with any phase of
Borrower's business, operations or condition, financial or otherwise. Borrower
shall rely entirely upon its own judgment with respect to such matters, and any
review, inspection, supervision, exercise of judgment or
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information supplied to Borrower by Lender in connection with any such matter
is for the protection of Lender, and neither Borrower nor any third party is
entitled to rely thereon.
Section 11.13. Offset. Borrower hereby grants to Lender the
right of offset, to secure repayment of the Obligations, upon any and all
moneys, securities or other property of Borrower and the proceeds therefrom,
now or hereafter held or received by or in transit to Lender, or any of its
agents, from or for the account of Borrower, whether for safekeeping, custody,
pledge, transmission, collection or otherwise, and also upon any and all
deposits (general or special) and credits of Borrower, and any and all claims
of Borrower against Lender at any time existing.
Section 11.14. Binding Effect. The Loan Documents shall be
binding upon and inure to the benefit of Borrower and Lender and their
respective successors, assigns and legal representatives; provided, however,
that Borrower may not, without the prior written consent of Lender, assign or
delegate any of its rights, powers, duties or obligations thereunder.
Section 11.15. Entirety. The Loan Documents embody the
entire agreement between the parties and supersede all prior agreements and
understandings, if any, relating to the subject matter hereof and thereof.
Section 11.16. Headings. Section headings are for
convenience of reference only and shall in no way affect the interpretation of
this Agreement.
Section 11.17. Survival. All representations and warranties
made by Borrower herein shall survive delivery of the Notes and the making of
the Loans.
Section 11.18. Loan Participations and Transfers. In
addition to its rights to assign duties and rights hereunder pursuant to
Section 11.14 hereof, Lender shall have the right to enter into one or more
participation agreements with any other creditor(s) with respect to the Notes
or transfer its rights and duties hereunder and the other Loan Documents to any
other creditor(s) and thereafter have no further responsibility hereunder.
Section 11.19. No Third Party Beneficiary. The parties do
not intend the benefits of this Agreement to inure to any third party, nor
shall this Agreement be construed to make or render Lender liable to any
materialman, supplier, contractor, subcontractor, purchaser or lessee of any
property owned by Borrower, or for debts or claims accruing to any such persons
against Borrower. Notwithstanding anything contained herein, in the Notes or
in any other Loan Document, or any conduct or course of conduct by any or all
of the parties hereto, before or after
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signing this Agreement neither this Agreement nor any other Loan Document shall
be construed as creating any right, claim or cause of action against Lender or
any of its officers, directors, agents or employees, in favor of any
materialman, supplier, contractor, subcontractor, purchaser or lessee of any
property owned by Borrower nor to any other person or entity other than
Borrower.
Section 11.20. Multiple Counterparts. This Agreement may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart.
Section 11.21. Resurrection of Borrower's Obligations. To the
extent that Lender receives any payment on account of any of Borrower's
Obligations, and any such payment(s) or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, subordinated
and/or required to be repaid to a trustee, receiver or any other Person under
any bankruptcy act, state or federal law, common law or equitable cause, then,
to the extent of such payment(s) received, Borrower's Obligations or part
thereof intended to be satisfied and any and all Liens upon or pertaining to
any property or assets of Borrower and theretofore created and/or existing in
favor of Lender as security for the payment of such Borrower's Obligations
shall be revived and continue in full force and effect, as if such payment(s)
had not been received by Lender and applied on account of Borrower's
Obligations.
SECTION 11.22. WAIVER OF TRIAL BY JURY. BORROWER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY
BORROWER MAY HAVE IN ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH
THE LOAN DOCUMENTS. BORROWER CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF
LENDER OR LENDER'S COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT LENDER
WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF THE
JURY TRIAL PROVISION. BORROWER ACKNOWLEDGES THAT LENDER HAS BEEN INDUCED TO
EXECUTE THE LOAN DOCUMENTS IN PART BY THE PROVISIONS OF THIS WAIVER.
IN WITNESS WHEREOF, Borrower and Lender have executed this
Revolving Credit and Term Loan Agreement as of the day and year first above
written.
BORROWER:
FALCONITE, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
-----------------------------------------
Title: President
----------------------------------------
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LENDER:
------
CITIZENS BANK & TRUST COMPANY
OF PADUCAH
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------------
Name: Xxxxx X. Xxxxxxx
----------------------------------------------
Title: Vice President
---------------------------------------------
Address for Notice:
000 Xxxxxxxx
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Commercial Banking
Department
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