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EXHIBIT 10.2
THIRD AMENDED AND RESTATED CONSOLIDATED REPLACEMENT
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CREDIT FACILITY AND SECURITY AGREEMENT
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THIS THIRD AMENDED AND RESTATED CONSOLIDATED REPLACEMENT CREDIT
FACILITY AND SECURITY AGREEMENT is made as of the 3 1 st day of March, 1997, by
and between BANK ONE, CLEVELAND, NA, a national banking association organized
and existing under the laws of the United States of America ("Lender"), with its
principal place of business located at 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxx
00000 and INTERNATIONAL TOTAL SERVICES, INC., a corporation organized and
existing under the laws of the State of Ohio ("Borrower"), with its principal
place of business and executive offices located at Crown Centre, 0000 Xxxxxxxx
Xxxx, Xxxxxxxxx, Xxxx 00000 (the "Principal Business Location").
WITNESSETH:
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WHEREAS, the Borrower, Lender, NBD Bank ("Bank") and the Lender as
agent for the Lender and the Bank ("Agent") are parties to that certain Second
Amended and Restated Replacement Credit Agreement dated as of August 11, 1995;
as amended by that certain First Amendment to Second Amended and Restated
Replacement Credit Agreement dated as of February 1, 1996; as amended by that
certain Second Amendment to Second Amended and Restated Replacement Credit
Agreement dated as of June 30, 1996; as amended by that certain Third Amendment
to Second Amended and Restated Replacement Credit Agreement dated as of August
23, 1996 and as amended by that certain Fourth Amendment to Second Amended and
Restated Replacement Credit Agreement dated as of November 5, 1996 (the "Loan
Agreement"), pursuant to which Lender has made a $900,000 Domestic Term Loan to
the Borrower evidenced by a Domestic Term Loan Promissory Note dated February 1,
1996 to Lender, the final installment of principal thereunder originally payable
on June 30, 1996, but now payable on December 31, 1997; and Lender and the Bank
have agreed to make Domestic Loans to the Borrower aggregating $6,500,000 and
the Bank has agreed to make Eurocurrency Loans to the Borrower aggregating
$1,500,000 until the Termination Date, which Eurocurrency Loans are evidenced by
an Amended and Restated Replacement International Revolving Demand Note dated
August 11, 1995 to NBD in the amount of $1,500,000 and which Domestic Loans are
evidenced by Third Amended and Restated Replacement Domestic Revolving Demand
Promissory Notes dated November 5, 1996 to the Bank and Lender in the amounts of
$2,600,000 and $3,900,000 respectively, each such Third Amended and Restated
Replacement Domestic Revolving Demand Promissory Note being payable on demand;
and
WHEREAS, the obligations and indebtedness of Borrower under the Loan
Agreement are secured by a Second Amended and Restated Replacement Security
Agreement (ITS) dated as of August II, 1995 between Borrower and Agent (the
"Borrower Security Agreement"); and
WHEREAS, Transport Security, Inc., an Ohio corporation ("Transport")
entered into an Amended and Restated Replacement Guaranty Agreement dated as of
August II, 1995 in favor of Lender, Bank and Agent, pursuant to which Transport
agreed to guaranty payment and performance of the obligations and indebtedness
of Borrower under the Loan Agreement and Amended Notes (as defined in the Loan
Agreement); and
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WHEREAS, NBC Leasing, Inc., an Ohio corporation and affiliate of
Borrower ("NBC") entered into an Amended and Restated Replacement Guaranty
Agreement dated as of August 11, 1995 in favor of Lender, Bank and Agent,
pursuant to which NBC agreed to guaranty payment and performance of the
obligations and indebtedness of Borrower under the Loan Agreement and Amended
Notes; and
WHEREAS, the entities listed on SCHEDULE 1 attached hereto and made a
part hereof (the "Affiliates") each entered into a Guaranty Agreement dated as
of August 11, 1995 in favor of Lender, Bank and Agent, pursuant to which each
Affiliate agreed to guaranty payment and performance of the obligations and
indebtedness of Borrower under the Loan Agreement and Amended Notes; and
WHEREAS, Xxxxxx X. Xxxxxxx entered into a Limited Guaranty Agreement
dated as of August 11, 1995, a Limited Guaranty Agreement dated as of February
1, 1996, each as amended and restated by an Amended and Restated Limited
Guaranty Agreement dated as of November 5, 1996 in favor of Lender, Bank and
Agent guarantying payment of the Domestic Term Loan Promissory Note and a
Limited Guaranty Agreement dated as of November 5, 1996 in favor of the Lender,
Bank and Agent guarantying payment of a portion of the Domestic Loans; and
WHEREAS, the obligations of NBC and Transport under their respective
Amended and Restated Replacement Guaranty Agreements are secured by Amended and
Restated Replacement Guarantor Security Agreements dated as of August 11, 1995
between NBC, Transport and Agent, respectively, and the obligations of each
Affiliate under its respective Guaranty Agreement are secured by a Guarantor
Security Agreement dated as of August II, 1995 between each such Affiliate and
Agent; and
WHEREAS, the Borrower and Lender have agreed to consolidate, amend and
restate the Loan Agreement and Borrower Security Agreement (i) to replace the
Eurocurrency Loans facility with a $2,000,000 six month Term Loan; (ii) to
delete the Bank and Agent as parties to the Loan Agreement and Borrower Security
Agreement and to modify certain provisions of the Loan Agreement and Borrower
Security Agreement; and (iii) to replace the Domestic Loans with a two year
$10,500,000 Revolving Loan; and
WHEREAS, NBC, Transport and the Affiliates have agreed to acknowledge,
consent and agree that their respective guarantys and security agreements
continue as valid and binding obligations of each of them in favor of Lender,
enforceable in accordance with their terms and guarantying or securing all
obligation of Borrower to Lender under the Loan Agreement and Borrower Security
Agreement, as consolidated, amended, restated and replaced by this Agreement;
and
WHEREAS, Xxxxxx X. Xxxxxxx has agreed to execute and deliver to Lender
a Limited Guaranty Agreement of even date herewith; and
WHEREAS, the Borrower has agreed to pay the Lender, one-half at closing
and one-half on July 31, 1997, a restructure and documentation fee of $120,000;
and
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WHEREAS, Borrower desires, from time to time hereafter, to borrow from
Lender, and Lender is willing and may, from time to time hereafter, be willing
to make loans to Borrower, subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, and of any extension of credit heretofore, now or hereafter made by
Lender to Borrower, the parties hereto hereby agree as follows:
1. GENERAL
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1.1 DEFINED TERMS. When used herein, the following terms shall
have the following meanings:
ACCOUNTS - All of Borrower's accounts, contracts, contract
rights, notes, bills, drafts, acceptances, general intangibles, choses in
action, and all other debts, obligations and liabilities in whatever form owing
to Borrower from any Person, whether now existing or hereafter arising, now or
hereafter received by or belonging or owing to Borrower, for goods sold or
leased or for services rendered, whether or not earned by performance and
whether or not evidenced by contracts, instruments or documents, or however
otherwise the same may have been established or created, all guarantees and
security therefor, all right, title and interest of Borrower in the merchandise
or services which gave rise thereto, including the rights of reclamation and
stoppage in transit, and all rights of an unpaid seller of merchandise or
services.
ACCOUNT DEBTOR - Any person who is or may become obligated to
Borrower under, with respect to, or on account of an Account.
AFFILIATE - The Affiliates and each Subsidiary and each
executive officer and director of the Borrower or any other Person:
(i) Which, directly or indirectly, through one or more
intermediaries controls, or is controlled by, or is under common
control with, Borrower;
(ii) Which owns or controls, on an aggregate basis, including
all beneficial ownership and ownership or control as a trustee,
guardian or other fiduciary, at least ten percent (10%) or more of any
class of the Voting Stock of Borrower; or
(iii) Ten percent (10%) or more of the Voting Stock (or in the
case of a Person which is not a corporation, ten percent (10%) or more
of the equity interest) of which is beneficially owned or held by
Borrower.
The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of Voting Stock, by contract
or otherwise.
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AGREEMENT - This Third Amended and Restated Consolidated
Replacement Credit Facility and Security Agreement, as it may be amended from
time to time pursuant to Section 13.1 hereof.
BANKRUPTCY LAWS - All statutes, rules, regulations and other
forms of law, federal, state or otherwise, including, without limitation, the
provisions of Title 11 of the United States Code, in each instance as in effect
from time to time, relating to the bankruptcy, insolvency, liquidation or
reorganization of debtors or the modification or alteration of the rights of
creditors.
BASE RATE - The Lender's Prime Rate for commercial loans, as
in effect from time to time, or such other designation announced in replacement
of such Prime Rate for commercial loans, which in either instance may not
necessarily be the most favorable or lowest or best rate offered by Lender.
CAPITAL EXPENDITURES - Amounts expended or which Borrower
becomes obligated to expend, without regard to the manner in which such amounts
or the instrument pursuant to which they are made are characterized by any
Person, (i) for the acquisition, construction or installation of properties that
are to be included as fixed assets on Borrower's books, (ii) for the lease of
any property that would be capitalized under GAAP, (iii) for the incurrence of
any other capitalized cost or (iv) for any additions to or replacements of any
of the foregoing.
CASH COLLATERAL ACCOUNT - A commercial deposit account
designated "cash collateral account" maintained by Borrower with Lender, without
liability by Lender to pay interest thereon, from which Cash Collateral Account
Lender shall have the exclusive right to withdraw funds until all Obligations
are paid, performed, satisfied, enforced and observed in full.
CODE - The Uniform Commercial Code as adopted and in force in
the State of Ohio as from time to time in effect.
COLLATERAL - The Fixed Collateral and Revolving Collateral,
collectively together with all of the Property and interests of Borrower therein
otherwise described in Section 4.1 of this Agreement and all other Properly of
the Borrower now or at any time or times hereafter subject to a Lien in favor of
Lender.
COLLATERAL LOCATION - The Principal Business Location and such
other locations as may be identified on EXHIBIT B attached hereto, if any,
together with such other locations at which any Collateral consisting of
tangible personal property may be located provided Lender has, in writing,
approved and designated such location as a Collateral Location hereunder,
subject to any conditions which Lender may designate and provided:
(i) Such location is a location as to which Borrower gives
Lender prior written notice at least forty-five (45) days prior to
using such location; and
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(ii) Such location is located within the United States of
America; and
(iii) Borrower has executed and delivered to Lender
appropriate financing statements with respect to the Collateral located
at such location showing Borrower as debtor and Lender as secured
party; and
(iv) A search of all filings made against Borrower or such
Collateral in the jurisdiction in which the location is located, made
after the filing of the financing statements referred to in (iii)
above, confirms that the Lender's security interest in the Collateral
at such location constitutes a first priority Lien on such Collateral
(subject to any Permitted Liens); and
(v) Lender has obtained a written lien waiver in favor of
Lender from each lessor, mortgagee, bailee, warehouseman or similar
Person who may, by operation of law or otherwise, have any Lien in or
upon such Collateral at such location, in such form and containing such
assurances as may be requested by Lender.
COMMITMENT - Lender's letter to Borrower dated March 21, 1997,
as accepted by Borrower on March 25, 1997.
COMMITMENT FEE - As defined in Section 2.12 of this Agreement.
CONTRACT RATE - A fluctuating rate equal to one and one-half
percentage points (1.5%) above the Base Rate; provided, however, if Borrower has
not completed an initial public offering of its stock prior to December 31,
1997, the Contract Rate shall be modified in accordance with paragraph 13 of the
Commitment.
CONTRACT YEAR - The twelve (12) month period which commences
on each anniversary of the execution of this Agreement.
CREDIT DOCUMENTS - This Agreement, the Notes, and all other
agreements, instruments and documents (including, without limitation, all
assignments, security agreements, mortgages, deeds of trust, lien waivers,
subordinations, guarantees, pledges, powers of attorney and consents)
heretofore, now or hereafter executed by Borrower or any other Person and/or
delivered to Lender in respect of the transactions contemplated by this
Agreement, in each instance as amended from time to time.
DEBT INSTRUMENTS - Any contract, agreement, instrument or
other document or arrangement under which the Borrower has (i) any indebtedness,
obligation or liability (including, without limitation, any contingent liability
under any Guaranty) for borrowed money or for the deferred portion of the
purchase price of any capital asset or for other capital financing or (ii) the
right or obligation to incur any such indebtedness, obligation or liability.
DEFAULT RATE - A fluctuating rate of interest equal to six
percentage points (6.0%) above the Contract Rate.
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DEPOSITORY ACCOUNT - As defined in Section 5.2(A) of this
Agreement.
DEPOSITORY AGREEMENT - As defined in Section 5.2(A) of this
Agreement.
DEPOSITORY BANK - As defined in Section 5.2(A) of this
Agreement.
DISTRIBUTION - In respect of Borrower means:
(i) The payment of any dividends or other distributions,
whether in cash, by transfer of property or otherwise, on capital stock
of Borrower (except distributions of such stock); and
(ii) The redemption or acquisition of any Securities of
Borrower.
DOMESTIC TERM LOAN - The Tenn Loan by Lender to Borrower
evidenced by the Domestic Term Loan Promissory Note dated January 1, 1996, in
the original principal amount of $900,000 with a current outstanding principal
amount of $400,000 due on December 31, 1997.
ELIGIBLE ACCOUNTS - Accounts of the Borrower due and payable
within thirty (30) days from the date of billing to the extent arising out of
the completed bona fide sale or lease of goods or rendition of services by
Borrower in the ordinary course of Borrower's business and in accordance with
the terms and conditions of all purchase orders, contracts or other documents
relating thereto, subject to Lender's perfected security interest and no other
Lien or security interest except Permitted Liens, and for a liquidated without
maturing as stated in an invoice or other documentary evidence relating thereto
which has been provided, and is in form satisfactory, to Lender, provided, that,
unless Lender otherwise agrees, no such Account shall be an Eligible Account if:
(i) It arises out of a sale made by Borrower to an Affiliate
of Borrower or to a Person controlled by an Affiliate of Borrower; or
(ii) It is due or unpaid more than ninety (90) days after the
invoice date thereof, or
(iii) It is payable by an Account Debtor which, at any time
while such Account remains unpaid, is liable to Borrower in respect of
any other Account which is not other%vise deemed an Eligible Account
hereunder; or
(iv) The Account Debtor claims any right of credit, allowance
or adjustment with respect to such Account by the Account Debtor,
except a discount allowed for prompt payment, or such Account is
otherwise disputed or contingent in any respect; or
(v) The Account Debtor has returned any of the goods from the
sale of which the Account arose; or
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(vi) There exist any facts, events or circumstances which in
any way impair the validity, collectability or enforcement of such
Account or would tend to reduce the amount payable thereunder from the
face value of the invoice related thereto; or
(vii) The Account Debtor is also Borrower's creditor or
supplier or the Account otherwise is or may become subject to any right
of offset by the Account Debtor; or
(viii) The Account Debtor has commenced a voluntary case under
any Bankruptcy Laws, as now constituted or hereafter amended, or made
an assignment for the benefit of creditors, or a decree or order for
relief has been entered by a court having jurisdiction in the premises
in respect of the Account Debtor in an involuntary case under any
Bankruptcy Laws or any other petition or other application for relief
under any Bankruptcy Laws has been filed against the Account Debtor, or
the Account Debtor has failed, suspended business, ceased to be
solvent, or consented to or suffered a receiver, trustee, liquidator or
custodian to be appointed for it or for all or a significant portion of
its assets or affairs; or
(ix) The sale to the Account Debtor is on a xxxx-and-hold,
guaranteed sale, sale-and-return, sale on approval, consignment or any
other repurchase or return basis or is evidenced by chattel paper; or
(x) Lender believes that collection of such Account is
insecure or that such Account may not be paid by reason of the Account
Debtor's financial inability to pay; or
(xi) The Account Debtor is the United States of America or any
department, agency or instrumentality thereof, unless Borrower assigns
its fight to payment of such Account to Lender pursuant to the
Assignment of Claims Act of 1940, as amended; or
(xii) The goods giving rise to such Account have not been
shipped and delivered to and accepted by the Account Debtor or the
services giving rise to such Account have not been fully performed by
Borrower and accepted by the Account Debtor or the Account otherwise
does not represent a final sale; or
(xiii) The Account, when added to the aggregate balance of all
other Accounts of the Account Debtor, exceeds a credit limit determined
by Lender, in its sole discretion, to the extent such Account exceeds
such limit; or
(xiv) Lender in its reasonable credit judgment otherwise deems
such Account to be ineligible or that such Account or the Account
Debtor is unsatisfactory in any respect.
Eligible Accounts with respect to which the account debtor is
not a resident of the United States are Eligible Accounts - Foreign and Eligible
Accounts with respect to which the account debtor is a resident of the United
States are Eligible Accounts - Domestic.
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ERISA - The Employee Retirement Income Security Act of 1974,
as amended from time to time, and all rules and regulations from time to time
promulgated thereunder.
EVENT OF DEFAULT - As defined in Section I 1. I of this
Agreement.
FINANCIAL STATEMENTS - The consolidated balance sheet of the
Borrower, NBC, Transport and the Affiliates as of December 31, 1996 and the
related statements of income and cash flows for the fiscal period then ended,
copies of which are attached hereto as EXHIBIT D.
FIXED COLLATERAL - All fixed assets (including real property)
of the Borrower including, without limitation, all machinery, equipment,
furniture, furnishings, fixtures, tools, dies, molds, parts, motor vehicles,
material handling equipment, supplies of every kind and description, now or
hereafter owned by the Borrower, or in which the Borrower may have or may
hereafter acquire any interest, wheresoever located, including, without
limitation, the items of Fixed Collateral described in EXHIBIT E attached to
this Agreement.
GAAP - Generally accepted accounting principles consistently
applied.
GUARANTY - All obligations of any Person (the "guarantor")
which guarantee, or in effect guarantee, or assure the payment of, or
performance with respect to, any indebtedness, liability, or other obligation of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including but not limited to, obligations incurred by such guarantor
through an agreement, contingent or otherwise:
(i) To purchase such indebtedness, liability or obligation
or any Property or assets constituting security therefor; or
(ii) To advance or supply funds:
(a) For the purchase or payment of such
indebtedness, liability or obligation; or
(b) To maintain working capital or other balance
sheet condition or otherwise to advance or make available
funds for the purchase or payment of such indebtedness,
liability or obligations; or
(iii) To lease Property or to purchase any Security or other
Property or services primarily for the purpose of assuring the owner of
such indebtedness, liability or obligation of the ability of the
primary obligor to make payment of the indebtedness, liability or
obligations; or
(iv) Otherwise to assure the owner of the indebtedness,
liability or obligation of the primary obligor against loss in respect
thereof.
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INDEBTEDNESS - All Borrower's present and future obligations,
liabilities, debts, claims and indebtedness, contingent, fixed or otherwise,
however evidenced, created, incurred, acquired, owing or arising (whether under
written or oral agreement, by operation of law or otherwise), including, without
limitation, (i) the Obligations, (ii) any obligations or liabilities of any
Person which are secured by any Lien upon Property of the Borrower, even though
Borrower has not assumed or otherwise become liable for the payment thereof,
(iii) any obligations or liabilities created or arising under any lease
(including capitalized leases) or under any conditional sales contract or other
title retention agreement with respect to Property used or acquired by Borrower,
even though the rights and remedies of the lessor, seller or lender are limited
to repossession, (iv) any obligations or liabilities arising under any lease or
other contractual arrangement relating to security deposits, advance payments or
other prepaid funds in the hands of or held by the Borrower subject to return or
refund to any Person, (v) all unfunded pension fund obligations and liabilities
and (vi) deferred taxes of any nature.
INVENTORY - All inventory now owned or hereafter acquired by
Borrower, including without limitation, all goods, merchandise, work in process,
raw materials, finished goods, and all other materials, supplies and tangible
personal property of any kind, nature or description held for sale or lease or
for display or demonstration, or furnished or to be furnished under contracts of
service or which are or which might be used or consumed in connection with the
manufacturing, packing, shipping, advertising, selling, leasing or furnishing of
such goods, merchandise or other personal property and all documents of title or
other documents pertaining thereto.
LENDER'S ACCOUNT - As defined in Section 5.2(C) of this
Agreement.
LIEN - Any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common LAW, statute or contract, including, but not
limited to, the security interest or lien arising from a mortgage, encumbrance,
pledge, conditional sale, trust receipt or lease, consignment or bailment for
security purposes.
LOAN ACCOUNT - An account maintained by Lender on its books,
which shall evidence all advances under the Domestic Term Loan, the Revolving
Loan and the Term Loan, interest thereon, other amounts due Lender with respect
to the Domestic Term Loan, the Revolving Loan and the Term Loan, and all
payments thereof by Borrower.
LOCKBOX - As defined in Section 5.2(B) of this Agreement.
MATERIAL ADVERSE EFFECT - As to any events, occurrences or
conditions, if the result thereof would, either singly or in the aggregate, have
a material and adverse effect on (i) the Borrower's Property, business,
operations, prospects, profitability or condition (financial or otherwise), (ii)
Borrower's ability to repay the Obligations or (iii) Lender's Lien on the
Collateral or the priority thereof.
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MATERIAL AGREEMENTS - Those contracts, agreements, documents
or other arrangements required to be disclosed under the provisions of Section
7. 1 (C) of this Agreement.
NOTES - The Domestic Tenn Loan Promissory Note, the Revolving
Note, the Term Note and any other promissory note or other instrument evidencing
the Borrower's obligation to repay any Obligations.
OBLIGATIONS - All debts, liabilities and obligations of the
Borrower to Lender under this Agreement and also any and all other debts,
liabilities and obligations of Borrower to Lender of every kind and description,
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, including without limiting the generality of the
foregoing, any debt, liability or obligation of Borrower to Lender under any
Guaranty, or of Borrower to any other Person which Lender may have obtained by
assignment or otherwise and all interest, fees, charges and expenses which at
any time may be payable by Borrower to Lender.
ORIGINATION FEE - As defined in Section 2.9 of this Agreement.
PENSION PLAN - Any pension plan, retirement payment plan,
profit-sharing plan, defined benefit or contribution plan or "employee pension
benefit plan" as defined in Section 3(2) of ERISA.
PERMITTED INDEBTEDNESS - As defined in Section 8.2(C) of this
Agreement.
PERMITTED LIENS - As defined in Section 8.2(G) of this
Agreement.
PERSON - An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
PRIME RATE - The interest rate established from time to time
by Lender as the Lender's Prime Rate, whether or not publicly announced, which
may not necessarily be the most favorable or lowest or best rate offered by
Lender.
PROPERTY - Any kind of property or asset, whether real,
personal or mixed, or tangible or intangible, or any interest, including,
without limitation, any leasehold interest, held in any such properties or
assets.
RESTRICTED INVESTMENT - As defined in Section 8.2(R) of this
Agreement.
REVOLVING COLLATERAL - All of Borrower's
(i) Inventory;
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(ii) contract rights and general intangibles, including,
without limitation, goodwill, trademarks, trademark applications, trade
styles, trade names, patents, patent applications, and deposit accounts
whether now owned or hereafter created or acquired;
(iii) Accounts and other receivables, together with all
customer lists, original books and records, ledger and account cards,
computer tapes, discs, printouts and records, whether now in existence
or hereafter created; and
(iv) documents, warehouse receipts, instruments and chattel
paper, whether now owned or hereafter created.
REVOLVING LOAN - As defined in Section 2.3 of this Agreement.
REVOLVING NOTE - The revolving promissory note to be executed
by Borrower in the form attached as EXHIBIT C- I to this Agreement (with such
changes or modifications, if any, to which Lender may agree) evidencing the
Revolving Loan made by Lender pursuant to Section 2.3 of this Agreement,
together with all amendments thereto and all promissory notes issued in
substitution therefor or replacement thereof.
SECURITY - As defined in Section 2(l) of the Securities Act of
1933, as amended.
XXXXXXX - Xxxxxxx Capital Partners L.P., a Delaware limited
partnership.
STOCKHOLDER'S EQUITY - At any time, the aggregate of
Subordinated Debt plus the sum of the following amounts set forth in a balance
sheet of the Borrower, prepared in accordance with GAAP:
(i) the par or stated value of all outstanding capital
stock; and
(ii) capital surplus; and
(iii) retained earnings.
SUBORDINATED DEBT - Such Indebtedness which is subordinated
and junior in right of payment to the Obligations to the extent, in such manner,
and pursuant to an instrument evidencing such subordination, acceptable to
Lender.
SUBSIDIARY - Any corporation of which more than 50% of the
Voting Stock is at any time, directly or indirectly, owned by Borrower and/or
one or more subsidiaries.
TANGIBLE NET WORTH - At any time, Stockholder's Equity, less
the sum of:
(i) any surplus resulting from any write-up of assets of
Borrower subsequent to December 31, 1996; and
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(ii) good will, contracts and non-competition agreements,
including any amounts, however designated on a balance sheet of the
Borrower, representing the excess of the purchase price paid for assets
or stock acquired over the value assigned thereto on the books of the
Borrower; and
(iii) proprietary rights of Borrower, including all patents,
trademarks, trade names and copyrights; and
(iv) loans, including principal and accrued but unpaid
interest, and advances to stockholders, directors, officers or
employees of Borrower; and
(v) deferred expenses.
TERM LOAN - The Term Loan, as defined in Section 2.1 of this
Agreement.
TERM NOTE - The term promissory note to be executed by
Borrower in the form attached as EXHIBIT C-2 to this Agreement (with such
changes or modifications, if any, to which Lender may agree) evidencing the Term
Loan made by Lender pursuant to Section 2.1 of this Agreement, together with all
amendments thereto and all promissory notes issued in substitution therefor or
replacement thereof.
TREASURY RATE - A fixed rate equal to four hundred twenty-five
basis points over the six month Treasury Xxxx yield at the date hereof,
provided, however, that such rate shall not be lower than 9.7%.
VOTING STOCK - Securities of any class or classes of a
corporation which, at the time of reference thereto, entitle the holders to
elect a majority of the corporate directors.
1.2 ACCOUNTING TERMS. Any accounting terms used in this Agreement which
are not otherwise specifically defined shall have the meanings customarily given
them in accordance with GAAP.
1.3 OTHER TERMS. All other terms contained in this Agreement shall
have, unless the context indicates to the contrary, the meanings provided for by
the Code to the extent the same are used or defined therein.
1.4 USE OF PLURAL FORM. All definitions shall be equally applicable to
both the singular and plural forms of the defined terms.
2. LOANS AND ADVANCES
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Subject to the terms and conditions of this Agreement and each of the
other Credit Documents, and otherwise provided that no loans or advances need be
made by Lender if, at the date of any request for a loan or advance hereunder by
Borrower, an Event of Default or event or condition which, with notice, lapse of
time or both, would constitute an Event of Default then
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exists, Lender will provide the credit facility described in this Section 2 for
the account of Borrower.
2.1 TERM LOAN.
Lender will make a term loan (the "Term Loan") to Borrower in
the principal amount of Two Million Dollars ($2,000,000). The Tenn Loan shall be
subject to repayment in accordance with, and bear interest as provided in
Section 2.2 of this Agreement and shall otherwise be evidenced by, and repayable
in accordance with, the Term Note.
2.2 Payment Terms of Term Loan.
(A) INTEREST. The Term Loan shall bear interest on the unpaid
principal balance until the date paid at the Treasury Rate, such interest being
payable monthly on the I st day of each month, commencing May 1, 1997. Interest
on the Tenn Loan shall be computed on a 360- day year basis based upon the
actual number of days elapsed.
(B) FIXED PRINCIPAL INSTALLMENTS. Subject otherwise to the
terms and provisions of the Term Note, the principal balance of the Term Loan
shall be payable in six (6) consecutive equal monthly principal installments of
Forty-One Thousand Six Hundred Sixty-Seven Dollars ($41,667.00) each, commencing
May 1, 1997, and continuing on the 1st day of each month thereafter, and a final
principal installment of One Million Seven Hundred Forty-Nine Thousand Nine
Hundred Ninety-Eight Dollars ($1,749,998) on November 1, 1997.
2.3 REVOLVING LOAN.
(A) REVOLVING LOAN. Subject at all times to the terms hereof,
the Lender will, from and after April 1, 1997 until March 31, 1999 make such
loans to the Borrower as from time to time the Borrower requests (the "Revolving
Loan") consisting of advances made by Lender against the value of Eligible
Accounts-Domestic and Eligible Accounts-Foreign. Subject to the provisions of
Subsection (B) of this Section 2.3, the aggregate unpaid principal of the
Revolving Loan outstanding at any one time shall not exceed the lesser of (a)
the line of credit approved for Borrower, which is currently Ten Million Five
Hundred Thousand Dollars ($10,500,000), less the outstanding principal balance
of the Domestic Tenn Loan, one-half the outstanding principal balance of the
Term Loan and the face amount of all outstanding Letters of Credit issued by
Lender for the account of Borrower or (b) the sw-n of (i) eighty percent (80%)
of the unpaid face amount of Eligible Accounts Domestic (or such other
percentages of Eligible Accounts-Domestic as may from time to time be fixed by
the Lender upon notice to the Borrower) and (ii) the lesser of fifty percent
(50%) of the unpaid face amount of Eligible Accounts-Foreign (or such other
percentages of Eligible Accounts Foreign as may from time to time be fixed by
the Lender upon notice to the Borrower) or Three Hundred Fifteen Thousand
Dollars ($315,000) (or such other dollar amount as may from time to time be
fixed by the Lender upon notice to the Borrower).
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(B) MAXIMUM BORROWINGS AVAILABLE UNDER REVOLVING LOAN.
Notwithstanding anything to the contrary contained in this Section 2.3, at no
time shall the loans outstanding at any time under the Revolving Loan exceed Ten
Million Five Hundred Thousand Dollars ($10,500,000).
(C) PAYMENT. The Revolving Loan shall be payable on March 31,
1999 and bear interest as provided in Section 2.3(D) of this Agreement and shall
otherwise be evidenced by, and repayable in accordance with, the Revolving Note,
but in the absence of such revolving promissory note shall be evidenced by the
Lender's record of disbursements and repayments.
(D) INTEREST ON REVOLVING LOAN. The Revolving Loan shall bear
interest on the unpaid principal balance from time to time outstanding until the
date paid at a rate per annum equal to the Contract Rate, such interest being
payable monthly on the I st day of each month, commencing May 1, 1997, and at
maturity. Any increase or decrease in the interest rate resulting from a change
in the Base Rate shall become effective on the date of such change. Interest
shall be computed on a 360-day year basis based upon the actual number of days
elapsed.
2.4 LETTERS OF CREDIT. Prior to the maturity of the Revolving Loan,
Borrower may request letters of credit ("Letters of Credit") be issued by the
Lender not to exceed the aggregate maximum face amount of One Million Five
Hundred Thousand Dollars ($1,500,000) at any one time outstanding, subject to
the following terms and conditions:
(A) Lender will issue a requested Letter of Credit if such
request is approved by the Lender, in its sole discretion, and no Default or
Event of Default shall then exist.
(B) Borrower shall pay to the Lender a letter of credit fee
equal to one and one-quarter percent (1.25%) per annum for each Letter of Credit
issued based upon the face amount thereof. Such fee shall be paid by Borrower
upon the issuance of any such Letter of Credit and upon any extension, renewal
or amendment of such Letter of Credit. Borrower shall execute and deliver to
Lender its standard form(s) pertaining to applications for Letters of Credit and
such other documents as the Lender in its sole discretion may from time to time
require (in form and substance satisfactory to the Lender) in issuing such
Letter of Credit.
(C) (i) No Letter of Credit will have an expiry date later
than three (3) days prior to the maturity of the Revolving Loan in effect at the
date of issuance of such Letter of Credit, and (ii) no Letter of Credit will
provide for any draft to be paid after the maturity of the Revolving Loan in
effect at the date of issuance of such Letter of Credit.
(D) All Letters of Credit issued hereunder will, except to the
extent otherwise expressly provided, be governed by the Uniform Customs and
Practice for Documentary Credits, International Chamber of Commerce Publication
No. 500 (effective January 1994), and any subsequent revisions thereof.
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(E) In no event shall a Letter of Credit be issued hereunder
if, after giving effect to such issuance, the aggregate principal amount of the
Revolving Loan outstanding and the face amount of all issued and outstanding
Letters of Credit shall exceed the lesser of (i) the amount of the Revolving
Loan or (ii) the amount of the Revolving Loan available to Borrower under
Section 2.3(A)(b) hereof.
(F) Each Letter of Credit issued hereunder shall automatically
reduce the then aggregate unused amount of the Revolving Loan available to
Borrower under Section 2.3 (A)(a) hereof throughout the duration of such Letter
of Credit by an amount equal to the face amount of such Letter of Credit.
2.5 OPTIONAL CHARGE AGAINST REVOLVING LOAN. To the extent Borrower does
not remit, when due, any payments of interest or, in the case of loans other
than the Revolving Loan, any payment of principal, or any other payment required
to be made by Borrower to the Lender pursuant to the terms of any of the Credit
Documents, the Lender may, at its option, make such payment by increasing the
outstanding principal balance of the Revolving Loan in order to prevent such
amount from becoming past due, but it is expressly acknowledged and agreed that
Lender shall be under no obligation to do so.
2.6 LOAN ACCOUNT. Lender shall debit to the Loan Account the amount of
each advance under the Revolving Loan, all interest on the Revolving Loan and
the amount of all other compensation or fees payable to Lender in respect of the
Revolving Loan and shall credit to the Loan Account the amount of each payment
of principal and interest on the Revolving Loan and the amount of all payments
of any other amounts payable under the Revolving Loan by appropriate entries.
Any accounting rendered by the Lender to the Borrower shall be deemed correct
and presumptively binding upon the Borrower unless the Borrower notifies the
Lender by certified mail, return receipt requested, within thirty (30) calendar
days after the date when each such accounting is mailed or otherwise delivered
to the Borrower.
2.7 ALL ADVANCES TO CONSTITUTE ONE LOAN. The Revolving Loan, the Term
Loan, the Domestic Term Loan, and all other sums owed by Borrower to Lender
under this Agreement, whether or not evidenced by the Notes, shah constitute one
obligation of Borrower, secured by Lender's lien on and security interest in all
of the Collateral. Borrower shall be liable to Lender for all Obligations
hereunder, regardless of whether such Obligations arise as a result of advances
made directly to Borrower, it being stipulated and agreed that all monies
advanced by Lender hereunder inure to the benefit of Borrower, and that Lender
is relying on the liability of Borrower in extending credit and otherwise making
advances hereunder.
2.8 EARLY TERMINATION FEE. In the event that the Domestic Term Loan,
the Revolving Loan and/or the Tenn Loan are paid in full (other than as a result
of payment of the Domestic Tenn Loan or the Term Loan at maturity, or scheduled
reductions of the Tenn Loan by way of payments in accordance with the Tenn Note,
or the expiration of the Revolving Loan at maturity) as a result of a
refinancing, or in the event of any intentional noncompliance by Borrower with
any provisions of this Agreement which results in a termination of the Credit
Facility by Lender pursuant to Sections 11.2 or 11.4 hereof, Borrower will pay
Lender an early
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termination fee of Two Hundred Forty Thousand Dollars ($240,000), in order to
compensate Lender for its reliance expenses and loss of anticipated profits. It
is acknowledged that this fee shall be deemed to be liquidated damages for loss
of a bargain and not a penalty and the same is acknowledged by Borrower to be an
integral part of the consideration for Lender to extend the Credit Facility
hereunder.
2.9 ORIGINATION FEE. In order to compensate Lender for its services in
preparing and reviewing this Agreement and the other Credit Documents and the
documentation relating thereto in connection with this Credit Facility, Borrower
shall pay to Lender an origination fee (the "Origination Fee") of One Hundred
Twenty Thousand Dollars ($120,000), payable one-half on the date of this
Agreement and one-half on July 31, 1997.
2.10 PREPAYMENT. Borrower shall have the right to prepay the Domestic
Ten-n Loan, Revolving Loan and Term Loan, in whole or in part, at any time
without fee or premium other than the Early Termination Fee. Any such prepayment
shall be applied to the installments of principal of the Domestic Term Loan and
Term Loan, as applicable, in the inverse order of their maturities.
2.11 CAPITAL ADEQUACY REQUIREMENT.
(A) In the event that Lender shall have determined that the
adoption of any law, rule or regulation regarding capital adequacy after the
date of this Agreement, or any change therein or in the interpretation or
application thereof after the date of this Agreement or compliance by Lender
with any request or directive regarding capital adequacy (whether or not having
the force of law) from any central bank or governmental authority after the date
of this Agreement does or shall have the effect of reducing the rate of return
on Lender's capital as a consequence of its obligations under this Agreement to
a level below that which Lender could have achieved but for such adoption,
change or compliance (taking into consideration Lender's policies with respect
to capital adequacy) by an amount deemed by Lender, in its sole discretion, to
be material, then from time to time, after submission by Lender to Borrower of a
written demand therefor, Borrower shall pay to Lender such additional amount or
amounts as will compensate Lender for such reduction.
(B) A certificate of Lender claiming entitlement to payment as
set forth above shall be conclusive in the absence of manifest error. Such
certificate shall set forth the nature of the occurrence giving rise to such
payment, the additional amount or amounts to be paid to Lender, and the method
by which such amounts were determined. In determining such amount Lender may use
any averaging and attribution method.
(C) In no contingency or event whatsoever shall the aggregate
of all amounts payable by Borrower to Lender pursuant to this Section 2.11 and
the other sections of this Agreement exceed the highest rate of interest
permissible under any law which a court of competent jurisdiction shall, in a
final determination, deem applicable hereto. To the fullest extent permitted
under applicable law, Borrower and Lender shall characterize any payments made
pursuant to this Section 2.11 as an expense, fee or premium rather than as
interest.
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2.12 COMMITMENT FEE. Borrower shall pay to Lender, quarterly in
arrears, on April 1, July 1, October 1 and January 1 of each calendar year and
at maturity of the Revolving Loan, and, if the Revolving Loan is hereafter
renewed, on the date of renewal and annually thereafter if renewed for a period
of more than one (1) year, a commitment fee (the "Commitment Fee") of one-fifth
of one percentage point (0.20%) of the daily average unused amount of the
maximum borrowings available under the Revolving Loan pursuant to Section 2.3(C)
of this Agreement, whether the Borrower shall be entitled to request such amount
pursuant to Section 2.3(A) of this Agreement or not.
3. DEFAULT INTEREST
----------------
Upon and after the occurrence of an Event of Default, and during the
continuation thereof, unless Lender otherwise agrees, the Obligations shall bear
interest, calculated daily on the basis of a three hundred and sixty (360) day
year, for the actual days elapsed, at the Default Rate.
4. COLLATERAL: GENERAL TERMS
-------------------------
4.1 GRANT OF SECURITY INTEREST. To secure the prompt payment and
performance of the Obligations, and in addition to any other Collateral securing
the Obligations, Borrower hereby grants to Lender a continuing security interest
in and to all of the following Property of Borrower, whether now owned or
existing or hereafter acquired or arising and wheresoever located:
(A) all Fixed Collateral;
(B) all Revolving Collateral;
(C) any and all deposits or other sums at any time credited by
or due from Lender to Borrower, whether in a Depository Account or other
account, together with any and all instruments, documents, policies and
certificates of insurance, securities, goods, Accounts, choses in action,
general intangibles, chattel paper, cash or other Property, and the proceeds of
each of the foregoing, to the extent owned by the Borrower or in which Borrower
has an interest and which now or hereafter are at any time in the possession or
control of the Lender or in transit by mail or carrier to or from Lender or in
the possession of any Person acting on Lender's behalf, without regard to
whether Lender received the same in pledge, for safekeeping, as agent for
collection or transmission or otherwise or whether Lender had conditionally
released the same, and any and all balances, sums, proceeds and credits of
Borrower with, and any claims of Borrower against, Lender;
(D) All accessions to, substitutions for and all replacements,
products and proceeds of the Property described in Subsections (A), (B) and (C)
above, including, without limitation, proceeds of insurance policies insuring
such Property; and
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(E) All books, records and other property (including without
limitation, credit files, programs, printouts and other materials and records)
of Borrower pertaining to any of the Property described in Subsections (A), (B),
(C) or (D) above.
4.2 REPRESENTATIONS, WARRANTIES AND COVENANTS -- COLLATERAL. Borrower
represents, warrants and covenants to Lender that, except as otherwise permitted
herein or in any of the other Credit Documents:
(A) The Collateral is now, and so long as Borrower is
obligated to Lender will be, owned solely by Borrower and no other Person has or
will have any right, title, interest, claim or Lien therein, thereon, or
thereto, whether by assignment or otherwise pursuant to any Lien, encumbrance or
security interest, other than pursuant to Liens constituting Permitted Liens
hereunder;
(B) Borrower shall pay and discharge when due all taxes,
levies, and other charges upon the Collateral and shall defend Lender against
and save Lender and the Collateral harmless from all claims of any Person with
respect thereto; and
(C) Borrower will at all times keep accurate and complete
records of all Collateral.
4.3 PERFECTION OF LENDER'S SECURITY INTEREST IN COLLATERAL. Borrower
agrees to execute such financing statements provided for by applicable law, and
to otherwise take such other action, and execute such assignments or other
instruments or documents, in each case as Lender may request, to evidence,
perfect or record Lender's security interest in the Collateral. Borrower hereby
authorizes Lender to execute and file any such financing statement or
continuation statement on Borrower's behalf if Borrower fails to do the same
promptly upon Lender's request. The parties agree that a carbon, photographic or
other reproduction of this Agreement shall be sufficient as a financing
statement.
4.4 LOCATION OF COLLATERAL. Borrower warrants and covenants that,
except for Inventory in transit and as otherwise approved by Lender in writing,
all Collateral is, and will remain, at all times, at a Collateral Location.
4.5 INSURANCE. Borrower will cause to be kept adequately insured,
either by (i) financially secure and reputable insurers or (ii) through self
insurance, all of its properties (both real and personal) with coverage similar
to that which is usually maintained by persons and/or businesses engaged in the
same or similar business as Borrower, as the case may be (but in no event less
than full insurable value thereof), against loss or damage resulting from fire
and other risks, and maintain in full force and effect public liability
insurance against claims for personal injury, death or property damage occurring
upon, in or about any property occupied or controlled by Borrower or arising in
any manner out of business carried on by Borrower in such amounts as Borrower
shall reasonably determine, naming the Lender as a co-insured or loss payee; and
Borrower shall provide the Lender with a certificate thereof. In addition,
Borrower will maintain policies of insurance issued by companies approved by the
Lender insuring the
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Collateral against loss caused by reasonably anticipated perils normally covered
by an extended coverage endorsement in an amount equal to the full insurable
replacement cost thereof or such other amount as Lender may approve. Such
policies shall name the Lender as an insured and shall have an endorsement
making loss payable directly to the Lender. Such policies shall provide that may
not be cancelled without at least 30 days' prior written notice to the Lender.
Borrower shall provide the Lender with a certificate of such coverage on demand.
Except during the continuance of a Default or an Event of Default proceeds of
property damage insurance (i) less than $25,000 shall be delivered to the
Borrower, (ii) in excess of $25,000 shall be paid directly to the Lender to be
either, (a) delivered to the Borrower for the purpose of preparing, replacing or
restoring the damaged or destroyed property or (b) applied to any of the
Obligations, whether or not such Obligation are due and payable. During the
continuance of a Default of Event of Default all proceeds from insurance
policies shall be delivered to the Lender and shall be applied by the Lender to
the Obligations, whether or not such Obligations are due and payable. Borrower
hereby appoints the Lender its attorney in fact to make proofs of loss, to
receipt for any sums collected under said policies and to endorse Borrower's
name to any draft in payment thereof and to take such further steps on behalf of
Borrower as may be necessary to realize such a claim.
4.6 PROTECTION OF COLLATERAL REIMBURSEMENT. All insurance expenses and
all expenses of protecting, storing, warehousing, insuring, handling,
maintaining, and shipping any Collateral, any and all excise, property, sales,
use or other taxes imposed by any state, federal or local authority on any of
the Collateral, or in respect of the sale thereof, or otherwise in respect of
Borrower's business operations which, if unpaid, could result in the imposition
of any Lien upon the Collateral, shall be borne and paid by Borrower. If
Borrower fails to promptly pay any portion thereof when due, except as may
otherwise be permitted hereunder or under any of the other Credit Documents,
Lender may, at its option, but shall not be required to, pay the same. All sums
so paid or incurred by Lender for any of the foregoing and any and all other
sums for which Borrower may become liable hereunder and al I costs and expenses
(including attorneys' fees, legal expenses, and court costs) which Lender may
incur in enforcing or protecting its Lien on or rights and interest in the
Collateral or any of its rights or remedies under this or any other agreement
between the parties hereto or in respect of any of the transactions to be had
hereunder shall be repayable on demand and, until paid by Borrower to Lender
with interest thereon at the Contract Rate, shall be additional Obligations
hereunder secured by the Collateral. Lender shall not be liable or responsible
in any way for the safekeeping of any of the Collateral or for any loss or
damage thereto or for any diminution in the value thereof, except gross
negligence or willful misconduct on the part of Lender while the Collateral is
in the possession of or under the control of Lender, or for any act or default
of an warehouseman, carrier, forwarding agency, or other Person whomsoever.
4.7 INSPECTION. Lender (by any of its officers, employees, agents or
representatives) shall have the right to inspect the Collateral, the premises
upon which any of the Collateral is located, and any and all books, records,
journals, orders, receipts or other correspondence (and to make extracts or
copies thereof as Lender may desire) to verify the amount, quality, quantity,
value and condition of, or any other matter relating to, the Collateral or the
financial condition of Borrower.
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5. PROVISIONS RELATING TO ACCOUNTS
-------------------------------
5.1 CONDITIONS. With respect to Borrower's Accounts, Lender may rely,
in determining which Accounts are Eligible Accounts, on all reports, statements
or representations made by Borrower with respect to any such Account or
Accounts. In the event any Account is or becomes ineligible, Borrower shall
promptly notify Lender upon obtaining knowledge of the same and, in any event,
if any such report, statement or representation by Borrower is breached or
otherwise proves untrue, regardless of Borrower's knowledge thereof, Lender may
deem such Accounts ineligible, but Lender shall retain its security interest in
all Accounts, eligible and ineligible, until all Obligations are paid and
satisfied in full.
5.2 COLLECTION OF ACCOUNTS.
(A) All checks, drafts, cash and other proceeds realized from
the sale of any Inventory or otherwise from the sale or other disposition of any
of the other Collateral, including, without limitation, all proceeds realized
from the collection of the Accounts or otherwise pursuant to any contract right,
note, xxxx, draft, acceptance, chose in action and other like forms of general
intangibles, and all remittances received by Borrower in respect to the
foregoing, shall, upon receipt by the Borrower, be held by Borrower as trustee
of an express trust for Lender's sole benefit and subject to immediate deposit
(in their original form duly endorsed in blank) in the Cash Collateral Account
or in a special account over which Lender has the sole right and power of
withdrawal, maintained at a financial institution acceptable to Lender (such
financial institution and account being herein referred to as the "Depository
Bank" and "Depository Account" respectively). The Depository Account shall be
subject to the written agreement of the Depository Bank to waive any right of
setoff it might otherwise claim to have against any funds in the Depository
Account and to otherwise charge any costs relative to the Depository Account to
Borrower or such other account(s) as Borrower may maintain with the Depository
Bank, such agreement (the "Depository Agreement") to be in form and substance
acceptable to Lender. Lender assumes no responsibility for any claim of accord
and satisfaction or release with respect to funds which have been deposited in
the Depository Account.
(B) Borrower shall instruct all Account Debtors to mail their
payments directly to a designated post office lockbox (a "Lockbox") maintained
at Borrower's expense, with respect to which only Lender or, should Lender so
agree, a designated financial institution shall have the right of access and all
payments so received shall be subject to immediate deposit into the Depository
Account or Cash Collateral Account.
(C) All funds held in the Depository Account shall be subject
to transfer to the Cash Collateral Account, an account designated by the Lender
(the "Lender's Account") as set forth in the Depository Agreement or as
otherwise designated by Lender. The application of any funds to the payment of
the Obligations shall not occur until Lender's receipt of such funds in cleared
federal funds in the Cash Collateral Account or in Lender's Account. Lender
agrees that all funds received by Lender by wire transfer for the Borrower's
account prior to 10:00 a.m. on any business day of Lender shall be deemed
cleared federal funds in the Cash Collateral Account. Funds received by Lender
by wire transfer for the Borrower's account after
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10:00 a.m. on any business day of Lender shall be deemed cleared federal funds
in the Cash Collateral Account on the next business day of Lender. The order and
method of application of such payment shall be in the sole discretion of Lender.
(D) Lender reserves the right to notify Account Debtors and
other Persons indebted to Borrower of Lender's interest in any such amounts
payable to Borrower and to instruct such Account Debtors and other Persons to
remit the same directly to Lender and upon collection of the same and deposit in
the Cash Collateral Account, or in Lender's Account of all funds arising
therefrom (less any costs of collection and other charges or expenses incurred
in connection therewith as hereinafter provided) in cleared federal funds, the
same shall be subject to application to the Obligations.
5.3 VERIFICATION OF ACCOUNTS. Any of Lender's officers, employees, or
agents shall have the right, at any time or times hereafter, in the name of
Lender, any designee of Lender or in the name of Borrower, to verify the
validity, amount or any other matter relating to any Accounts by mail,
telephone, telegraph, or otherwise.
5.4 ASSIGNMENTS, RECORDS AND SCHEDULES OF ACCOUNTS. Borrower shall
execute and deliver to Lender, on forms supplied by Lender and no less
frequently than once a week, written assignments of all of its Accounts after
shipment of the subject goods, together with copies of invoices and/or invoice
registers related thereto as Lender may from time to time request and, on or
before the last day of each month from and after the date hereof, Borrower shall
deliver to Lender, in form and substance acceptable to Lender, a detailed aged
trial balance, dated as of the last day of the preceding month, of all then
existing Accounts specifying the names, face value and dates of invoices for
each Account Debtor obligated on an Account so listed. Borrower shall also
provide Lender on or before the 10th day of each month, a monthly reconciliation
of unbilled Accounts for the preceding month, and on or before the 30th day of
each month, a monthly reconciliation between Accounts as shown on its General
Ledger and all Borrowing Certificates for the preceding month, each in form
acceptable to Lender and including such detail as Lender shall require. In
addition, Borrower shall, upon Lender's request, furnish Lender with copies of
proof of delivery and the original copy of all documents relating to the
Accounts, including, without limitation, repayment histories and present status
reports, relating to the Accounts and such other matters and information
relating to the status of then existing Accounts as Lender shall reasonably
request.
6. PROVISIONS RELATING TO INVENTORY
--------------------------------
6.1 RETURNED INVENTORY. Borrower shall execute and deliver to Lender,
on forms supplied by Lender and no less frequently than once a week, a report of
all returns of any Inventory and as requested by Lender, provide to Lender
copies of any credit memorandums to the Account Debtor issued in respect
thereof. In all cases, Lender shall be promptly notified of all returns of
Inventory, the reason for such return and the location of such returned
Inventory.
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6.2 INVENTORY REPORTS. Borrower shall furnish Lender with such reports
regarding Inventory as Lender may request at least once each month. Such reports
shall be on forms requested or provided by Lender and shall contain such
detailed information satisfactory to Lender. Borrower shall otherwise conduct a
physical count of its Inventory at such reasonable intervals as Lender may
request, supplying Lender with a copy of such counts accompanied by a report of
the value (at the lower of cost or market value) thereof.
7. REPRESENTATIONS AND WARRANTIES
------------------------------
7.1 GENERAL REPRESENTATIONS AND WARRANTIES. As an inducement to Lender
to make advances hereunder, Borrower, on its own behalf and on behalf of NBC,
Transport and each Affiliate (Borrower, NBC, Transport and the Affiliates
sometimes referred to as an "Obligor" and collectively as the "Obligors" in this
Section 7), warrants, represents and covenants to Lender that:
(A) ORGANIZATION AND QUALIFICATION. Each Obligor is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation and has duly qualified and is authorized to do
business and is in good standing as a foreign corporation in each other state or
jurisdiction where the character of its Property or the nature of its activities
makes such qualification necessary, or in which the failure of Obligors to be so
qualified would have a Material Adverse Effect.
(B) CORPORATE POWERS. Each Obligor has the right and power and
is duly authorized and empowered to enter into, execute, deliver and perform
this Agreement, the Notes, and each of the other Credit Documents to which it is
a party. This Agreement, the Notes, and each of the other Credit Documents to
which any Obligor is a party have each been duly authorized and approved by the
Board of Directors of such Obligor, and are the legal, valid and binding
obligations of such Obligor, enforceable against such Obligor in accordance with
their respective terms. The execution, delivery and performance of this
Agreement and each of the other Credit Documents to which it is a party will not
conflict with or result in any breach of any of the provisions of, or constitute
a default under, or result in the creation of any Lien (other than Permitted
Liens) upon any Property of such Obligor under the provisions of, the Articles
of Incorporation or Code of Regulations of such Obligor or any Material
Agreement.
(C) MATERIAL AGREEMENTS. Except as disclosed on EXHIBIT F
hereto, no Obligor is a party to nor is any Obligor or any of its Property bound
by (i) any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality, (ii) any Debt Instrument, (iii) any
security agreement, mortgage, deed of trust, pledge, assignment or other
document or arrangement whereby any Lien upon any of such Obligor's Property
exists in favor of any Person other than Lender, (iv) any material lease
(capital, operating or otherwise), whether as lessee or lessor thereunder, (v)
any contract, commitment, agreement or other arrangement involving the purchase
or sale of any Inventory by such Obligor, or the license of any right to or by
such Obligor, which, if terminated for any reason, could result in a Material
Adverse Effect, (vi) any contract, commitment, agreement or other arrangement
with any Affiliate, (vii) any written management or employment contract or
contract for personal services
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with any Person, not otherwise an Affiliate, which is not otherwise terminable
at will or on less than ninety (90) days notice without liability, (viii) any
collective bargaining agreement, (ix) any Pension Plan or (x) any other
contract, agreement, understanding or arrangement which, if violated, could have
a Material Adverse Effect.
(D) GENERAL MATTERS. Except as disclosed on EXHIBIT G hereto,
each Obligor (i) has not, during the preceding five (5) years, been known as or
operated under or otherwise used any other corporate or fictitious name, trade
name or tradestyle, (ii) has not, during the preceding five (5) years, been the
surviving corporation of any merger or consolidation and has no Affiliates,
except for its officers and directors, (iii) has no lawsuits, actions,
investigations or other proceedings pending or currently threatened against it
of any nature whatsoever in any court or before any governmental authority,
arbitration board or other tribunal, (iv) holds all permits, certificates,
licenses, orders, registrations, franchises, authorizations and other approvals
from all federal, state, local and foreign governmental and regulatory bodies
necessary for the conduct of its business operations in compliance with
applicable law, (v) has fully complied with all applicable statutes, rules,
regulations and orders, federal, state, local or foreign, including, without
limitation, those relating to environmental protection, occupational safety and
health and equal employment practices, (vi) is not in violation of or in default
under any Material Agreement, (vii) has not received any notice to the effect
that it is not in full compliance with any of the requirements of ERISA or
(viii) has no grievances, disputes or controversies outstanding with any union
or other organization of its employees or threats of work stoppage, strike or
pending demands for collective bargaining.
(E) USE OF PROCEEDS. Borrower's uses of the proceeds of the
Domestic Term Loan, the Term Loan and the Revolving Loan made by Lender to
Borrower pursuant to this Agreement will be in accordance with the Commitment
and are, and will continue to be, legal and proper corporate uses, duly
authorized by the Board of Directors of Borrower, and such uses are and will
continue to be consistent with the Commitment and all applicable laws and
statutes, as in effect from time to time. Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of any regulation of the Board of Governors of the
Federal Reserve System), and no part of the proceeds of the Domestic Tenn Loan,
Term Loan and Revolving Loan to Borrower will be used to purchase or carry (or
refinance any borrowing, the proceeds of which were used to purchase or carry)
any margin stock, or to extend credit to others for the purpose of purchasing or
carrying margin stock.
(F) PATENTS AND TRADEMARKS. Each Obligor owns or possesses all
the patents, trademarks, service marks, copyrights, licenses, and rights with
respect to the foregoing necessary for the conduct of its business without any
known conflict with the rights of others. All such patents, trademarks, service
marks, trade names, copyrights, licenses and other similar intellectual property
rights are listed on EXHIBIT H attached hereto.
(G) SOLVENT FINANCIAL CONDITION. As of the date hereof, and
after giving effect to the transactions contemplated by this Agreement, (i) the
fair saleable value of Borrower's assets is greater than the amount required to
pay its total liabilities, (ii) Borrower is able to pay
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its debts as they mature and is not otherwise insolvent in any respect and (iii)
Borrower's capital is sufficient and not unreasonably small for the business and
transactions in which Borrower is engaged or about to engage.
(H) TITLE TO PROPERTIES. Each Obligor has good, indefeasible
and marketable title to and ownership of all Property it purports to own, which,
in the case of the Collateral, is free and clear of all Liens, except those in
favor of Lender and any Permitted Liens.
(I) FINANCIAL STATEMENTS. The Financial Statements have each
been prepared in accordance with GAAP, consistently applied, and present fairly
the financial position of Obligors at such date and the results of Obligors
operations for such period. There has been no change in the condition, financial
or otherwise, of Obligors as shown on the Financial Statements and no change in
the aggregate value of machinery and equipment owned by Obligors, except changes
in the ordinary course of business, none of which individually or in the
aggregate will have a Material Adverse Effect.
(J) FULL DISCLOSURE. Neither this Agreement, nor any written
statement made by Obligors in connection herewith, contains any untrue statement
of a material fact or omits a material fact necessary to make the statements
contained therein or herein not misleading. There is no fact which any Obligor
has not disclosed to Lender which has, or will have, a Material Adverse Effect.
(K) TAX RETURNS. Each Obligor has filed all federal, state and
local tax returns and other reports it is required by law to file and has,
except as otherwise permitted herein, paid all taxes, assessments, fees and
other governmental charges that are due and payable. The provision for taxes on
the books of each Obligor is adequate for all years not closed by applicable
statutes and for its current fiscal year.
(L) SECURITIES LAWS. Each Obligor's execution and delivery of
this Agreement, the Notes, and each of the other Credit Documents to which it is
a party will not directly or indirectly violate or result in a violation of
Section 7 of the Securities Exchange Act of 1934, as amended, or any regulations
issued pursuant thereto.
(M) O.S.H,A. AND ENVIRONMENTAL MATTERS. Each Obligor has duly
complied with, and its facilities, business, assets, property, leaseholds and
equipment are in compliance in all respects with, the provisions of the Federal
Occupational Safety and Health Act as amended, the Environmental Protection Act
as amended, the Resource Conservation and Recovery Act as amended, the
Comprehensive Environmental Response Compensation and Liability Act of 1980 as
amended and all rules and regulations thereunder and all similar federal, state
and local laws, rules and regulations having jurisdiction over such Obligor's
business and there have been no outstanding citations, notices or orders of
non-compliance issued to such Obligor's or relating to its respective
facilities, business, assets, property, leaseholds or equipment under any such
laws, rules or regulations. Each Obligor has been issued all required federal,
state and local licenses, certificates or permits relating to such Obligor's
business and facilities, and each Obligor and its facilities, business, assets,
property, leaseholds and equipment
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are in compliance in all respects with, all applicable federal, state and local
laws, rules and regulations relating to air emissions, water discharge, noise
emissions, solid or liquid waste disposal, hazardous waste or materials, or
other environmental, health or safety matters. Borrower hereby agrees to
indemnify and hold Lender harmless from and against any liability, loss, damage,
suit, action or proceeding pertaining to solid or hazardous waste materials or
other waste-like or toxic substances, including, but not limited to, claims of
any federal, state or municipal government or quasi-governmental agency or any
third person, whether arising under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 as amended, the Resource Conservation
and Recovery Act as amended, or any other federal, state or municipal law or
regulation, or tort, contract or common law.
(N) TRADE RELATIONS. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship of Obligors and any customer or any group of customers
whose purchases individually or in the aggregate are material to the business of
Obligors, or with any material supplier, and there exists no present condition
or state of facts or circumstances which would have a Material Adverse Effect on
Obligors in any respect or prevent Obligors from conducting such business after
the consummation of the transactions contemplated by this Agreement in
substantially the same manner which it has heretofore been conducted.
(O) FIXED COLLATERAL. All Fixed Collateral is in good
operating condition and repair and all necessary replacements of and repairs to
the same have been made so that the value and operating efficiency thereof has
been maintained and preserved, reasonable wear and tear excepted. None of the
Fixed Collateral is an accession to any other personal property not otherwise a
part of the Collateral.
7.2 REAFFIRMATION. Each request for a loan or an advance made by
Borrower pursuant to this Agreement shall, unless Lender is otherwise notified
in writing prior to the time of such loan or advance, constitute (1) an
automatic representation and warranty by Borrower to Lender that there does not
then exist an Event of Default or any event or condition which, with notice,
lapse of time and/or the making of such loan or advance, would constitute an
Event of Default, and (ii) a reaffirmation as of the date of said request of all
of the representations and warranties of Borrower contained in this Agreement or
any of the other Credit Documents.
7.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower covenants,
warrants and represents to Lender that all representations and warranties of
Borrower contained in this Agreement and each of the other Credit Documents
shall be true at the time of Borrower's execution of this Agreement and such
other Credit Documents, and shall survive the execution, delivery and acceptance
thereof by Lender and the parties thereto and the closing of the transactions
described therein or related thereto.
8. COVENANTS AND CONTINUING AGREEMENTS
-----------------------------------
8.1 AFFIRMATIVE COVENANTS. So long as any Obligations remain
unsatisfied, Borrower covenants that, unless otherwise consented to by Lender in
writing, it will:
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(A) Pay to Lender, on demand, any and all fees, costs or
expenses which Borrower has agreed to pay to Lender, or which Borrower has
agreed to reimburse Lender for, under this Agreement and all fees, costs or
expenses which Lender pays to a bank or other similar institution arising out of
or in connection with (i) the forwarding by Lender to Borrower or any other
Person on behalf of Borrower of any proceeds of loans made by Lender pursuant to
this Agreement or, (ii) the depositing for collection, by Lender, of any check
or item of payment received and/or delivered to Lender on account of the
Obligations.
(B) Preserve and maintain its separate corporate existence and
all rights, privileges, and franchises in connection therewith, and maintain its
qualification and good standing in all states in which such qualification is
necessary in order for Borrower to conduct its business in such states or in
which the failure to so qualify would have a Material Adverse Effect.
(C) File all federal, state and local tax returns and other
reports Borrower is required by law to file, maintain adequate reserves for the
payment of all taxes, assessments, governmental charges, and levies imposed upon
it, its income, or its profits, or upon any Property belonging to it, and pay
and discharge all such taxes, assessments, governmental charges and levies prior
to the date on which penalties attach thereto, PROVIDED, HOWEVER, that Borrower
shall not be required to pay any such taxes, assessments, charges or claims so
long as the validity thereof shall be contested in good faith in a proceeding
promptly commenced and diligently prosecuted, if reserves adequate to cover the
amount thereof with penalties, interest and costs shall have been set aside on
the Borrower's books and the continuance of such contest shall neither result in
any property of the Borrower being made the subject of any proceeding in
foreclosure, or of any levy or execution, which shall not have been stayed or
dismissed, or the subject of any seizure or other loss, nor prevent the Lender
from acquiring a first priority security interest in such property.
(D) Maintain its Property in good condition and make all
necessary renewals, repairs, replacements, additions and improvements thereto so
as to maintain the value and operating efficiency thereof.
(E) Comply with all laws, ordinances, governmental rules and
regulations to which it is subject and obtain all licenses, permits, franchises,
or other governmental authorizations necessary to the ownership of its
Properties or to the conduct of its business.
(F) At all times make prompt payment of any and all
contributions required to meet the minimum funding standards set forth in
Sections 302 and 305 of ERISA with respect to each Pension Plan, if any,
maintained by Borrower and otherwise in regard thereto to (i) furnish Lender
with any annual report required to be filed pursuant to Section 103 of ERISA in
connection with each Pension Plan and any other employee benefit plan of
Borrower or its Affiliates subject to said Section; (ii) notify Lender as soon
as practicable of any "Reportable Event" (as defined under ERISA) and of any
additional act or condition arising in connection with any Pension Plan which
might constitute grounds for the termination thereof by the Pension Benefit
Guaranty Corporation or for the appointment by the appropriate United States
District
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Court of a trustee to administer the Pension Plan; and (iii) furnish to Lender,
promptly upon Lender's request therefor, such additional information concerning
any such Pension Plan or any other such employee benefit plan as may be
reasonably requested.
(G) Promptly upon, but in no event later than three (3)
business days after, learning thereof, (i) inform Lender, in writing, of the
assertion of any claims, offsets or counterclaims by any Account Debtor and of
any allowances, credits and/or other monies granted by it to any Account Debtor
not otherwise disclosed to Lender; and (ii) furnish to and inform Lender of all
material adverse information relating to the financial condition of any Account
Debtor.
(H) Keep adequate records and books of account with respect to
its business activities in which proper entries are made in accordance with GAAP
reflecting all its financial transactions and permit the Lender, in its
discretion, to conduct bimonthly field examinations and quarterly audits as set
forth in the Commitment, at Borrower's expense.
(I) Cause to be prepared and furnished to Lender the following
(which in the case of any financial statements shall consist of a balance sheet,
income statement and statement of cash flow kept and prepared in accordance with
GAAP, unless Borrower's certified public accountants concur in any changes
therein and such changes are disclosed to Lender and are consistent with then
generally accepted accounting principles):
(i) As soon as possible, but not later than ninety (90) days
after the close of each fiscal year of Borrower, NBC, Transport, and
the Affiliates audited annual financial statements of Borrower, NBC,
Transport, and the Affiliates as of the end of each such fiscal year,
prepared by a firm of independent certified public accountants of
recognized standing, selected by Borrower and acceptable to Lender;
(ii) As soon as possible, but not later than thirty (30) days
after the end of each month hereafter, unaudited interim financial
statements of Borrower, NBC, Transport, and the Affiliate as of the end
of such month and of the portion of Borrower's, NBC'S, Transport's, and
the Affiliate's fiscal year then elapsed certified by the president and
chief financial officer of Borrower as prepared in accordance with GAAP
(without footnotes) and fairly presenting the financial position and
results of operations of Borrower, NBC, Transport, and the Affiliate
for such month and period;
(iii) Concurrently with the delivery of the financial
statements described in Subsections (i) and (ii) above, certificates
from the chief financial officer and president of Borrower certifying
to Lender that to the best of their knowledge, Borrower, NBC,
Transport, and the Affiliates have kept, observed, performed and
fulfilled each and every covenant obligation and agreement binding upon
Borrower, NBC, Transport, and the Affiliates contained in this
Agreement or the Credit Documents, and that no Event of Default, or any
event which with the giving of notice or lapse of time or both, would
constitute an Event of Default has occurred or specifying any such
Event of Default, together with a financial covenant compliance
worksheet, in form satisfactory to Lender,
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reflecting the computation of the financial covenants set forth in
Sections 8.1 and 8.2 hereof as of the end of the period covered by such
financial statements;
(iv) Concurrently with the sending or filing thereof, as the
case may be, copies of any definitive proxy statements, financial
statements or reports which Borrower has made available to its
shareholders and copies of any regular periodic or special reports,
schedules, registration statements or other documents (including,
without limitation, all forms 8-K, 10-Q or 10-K) which Borrower files
with the Securities and Exchange Commission or any governmental
authority which may be substituted therefor, or any national securities
exchange or self-regulatory securities organization, including the
National Association of Securities Dealers, Inc.;
(v) Concurrently with each request for an advance under the
Revolving Loan, and monthly on the last day of each month, a
certificate prepared by the chief financial officer or president of
Borrower in the form attached hereto as EXHIBIT A, which certificate
may be delivered to Lender by telecopy and on the first business day of
each week Borrower shall submit to Lender a certificate (certified by
the President or Chief Financial Office of Borrower as of the last day
of the preceding week) that all payroll taxes for which Borrower is
obligated through and as of the date of the certificate have been paid
in full or remitted when due. The Borrower shall also provide to Lender
on or before the 10th day of each month, a monthly reconciliation of
unbilled Accounts Receivable for the preceding month and, on or before
the 30th day of each month, a monthly reconciliation between Accounts
Receivable as shown on its General Ledger and Borrowing Certificates
for the preceding month, each in form acceptable to Lender and
including such detail as the Lender shall require.
(vi) Such other data and information (financial and otherwise)
as Lender, from time to time, may request bearing upon or related to
the Collateral or the financial condition and/or results of operations
of Borrower, NBC, Transport, or the AFFILIATE.
(J) Notify Lender in writing:
(i) Quarterly, on a calendar quarter basis on the I st day of
March, June, September and December of each year, or more frequently at
Lender's discretion, of the institution of any suit, action or
administrative proceeding against Borrower, NBC, Transport, or the
Affiliates or relating to any of their Property, whether or not the
claim is considered by Borrower to be covered by insurance;
(ii) At least sixty (60) days prior thereto, of the opening of
any new office or place of business or the closing of any existing
office or place of business of Borrower, NBC, Transport, or the
Affiliates;
(iii) Promptly upon Borrower's learning thereof, of any labor
dispute to which Borrower, NBC, Transport, or the Affiliates may become
a party, any strikes or walkouts relating to any of its plants or other
facilities, and the expiration of any labor
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contract to which Borrower, NBC, Transport, or the Affiliates is a
party or by which Borrower, NBC, Transport, or the Affiliates is
bound;
(iv) Within three (3) business days after the occurrence
thereof, of Borrower's, NBC'S, Transport's, or the Affiliate's default
under any Material Agreement; and
(v) Promptly upon the occurrence thereof, of any default by
any obligor under any note or other evidence of debt payable to
Borrower, NBC, Transport, or the Affiliates.
(K) Provide Lender with all warehouse receipts respecting any
Inventory and copies of all agreements between Borrower, NBC, Transport, or the
Affiliates and any bailee, warehousemen or similar party with whom Inventory may
from time to time be stored.
(L) If any of the Accounts arise out of a contract with the
United States of America, or any department, agency, subdivision or
instrumentality thereof, promptly notify Lender thereof in writing and execute
any instruments and take any other action required or requested by Lender to
perfect Lender's security interest in such Accounts under the provisions of the
Assignment of Claims Act of 1940.
(M) Deliver to Lender, upon demand, any and all evidence of
ownership of Fixed Collateral, inclusive of any certificates of title or
applications therefor, -and maintain accurate, itemized records describing the
kind, type, quantity and value of all Fixed Collateral, a summary of which shall
be provided to Lender on at least an annual basis and more frequently if
requested by Lender.
(N) In the event any Account is or becomes evidenced by any
note, trade acceptance or other instrument, promptly notify Lender of such fact
and, upon Lender's request deliver the same to Lender, appropriately endorsed to
Lender's order and, regardless of the form of such endorsement Borrower hereby
waives presentment demand, notice of dishonor, protest and notice of protest and
all other notices with respect thereto.
(O) Maintain a Tangible Net Worth equal to or greater than One
Million Two Hundred Seventy Thousand Dollars ($1,270,000) at March 31, 1998 and
thereafter, such covenant to be calculated annually in accordance with GAAP
based on Borrower's fiscal year-end financial statements. Borrower's existing
Tangible Net Worth at the date hereof shall increase by at least $800,000 at
September 30, 1997 and by an additional $800,000 at December 31, 1997.
(P) Maintain Debt Coverage (as defined herein) not less than
2.0 to 1.0 at March 3 1, 1997 and thereafter. "Debt Coverage" as used in this
Section 8.1(P) means the ratio of Borrower's net income, plus depreciation and
amortization and net interest paid to Lender, to the amount of all principal and
interest payable to Lender calculated quarterly in accordance with GAAP based
upon Borrower's quarterly and fiscal year-end financial statements.
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(Q) Maintain a ratio of total unsubordinated liabilities
(including deferred liabilities and/or deferred income), computed in accordance
with GAAP, to Tangible Net Worth equal to or less than 9.5 to 1.0 at March 3,
1998 and thereafter, and a ratio of employable assets (current assets plus gross
fixed assets) in relation to current liabilities plus senior funded bank debt of
1.1 to 1.0 through March 30, 1998 and 1.2 to 1.0 thereafter to be tested
quarterly beginning June 30, 1997, such covenant to be calculated in accordance
with GAAP based on Borrower's quarterly and fiscal year-end financial
statements.
8.2 NEGATIVE COVENANTS. So long as Borrower shall have any Obligations
to Lender under this Agreement, Borrower covenants that, unless Lender has first
consented thereto in writing, it will not:
(A) Merge or consolidate with or acquire all or any
substantial portion of the assets or capital stock of any Person, except that if
no Default or Event of Default then exists or will exist immediately thereafter,
Borrower may acquire another entity by means of merger or consolidation, if
after such acquisition Borrower has a Tangible Net Worth equal to or greater
than its Tangible Net Worth prior to the acquisition.
(B) Make any loans or other advances of money, or grant
extensions of credit (other than normal extensions of trade credit in the
ordinary course of business and reasonable salary, travel or relocation
advances, advances against commissions and other similar advances in the
ordinary course of business) to any Person.
(C) Create, incur, assume, or suffer to exist any
Indebtedness, except the Obligations and the following (herein referred to as
"Permitted Indebtedness"):
(i) Trade payables and other current liabilities incurred in
the ordinary course of business;
(ii) Subordinated Debt;
(iii) Such other Indebtedness as described on EXHIBIT I
hereto or as hereafter approved by Lender in writing.
(D) Enter into, or be a party to, any transaction with any
Affiliate, except in the ordinary course of, and pursuant to the reasonable
requirements of, Borrower's business and upon fair and reasonable terms which
are fully disclosed to Lender and which are no less favorable to Borrower than
Borrower would obtain in a comparable arm's length transaction with a Person not
an Affiliate.
(E) Permit or agree to any material extension or modification
with respect to, or compromise or settle any Account, other than as reflected in
the schedules of accounts submitted to Lender pursuant to Section 5.4 hereof.
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(F) Become or be liable in respect of any Guaranty except by
endorsement of instruments or items of payment in the ordinary course of
business for deposit or collection.
(G) Permit or suffer to exist any Lien in or upon any of the
Collateral, except the following (herein referred to as "Permitted Liens"):
(i) Those security interests granted in favor of Lender
pursuant to this Agreement and the other Credit Documents;
(ii) Purchase money liens relating to Capital Expenditures
which do not violate Section 8.2(K) below; and
(iii) Such other Liens as described on EXHIBIT J hereto or as
hereafter approved by Lender in writing.
(H) Make any Distributions without Lender's prior consent.
(I) Divest itself of any material assets or business
theretofore conducted by transferring the same to any Affiliate or any
partnership, joint venture, or similar arrangement.
(J) Subcontract any operations to any Affiliate, except with
the prior written consent of Lender.
(K) Make Capital Expenditures during any fiscal year of
Borrower which, in the aggregate, exceed Seven Hundred Fifty Thousand Dollars
($750,000).
(L) Transfer its executive offices, or maintain records with
respect to Accounts at any locations other than the Principal Business Location,
except with Lender's prior written consent.
(M) Except with respect to transactions otherwise permitted
hereunder, make deposits to or withdrawals from any of Borrower's deposit
accounts for the benefit of any of its Affiliates.
(N) Sell, lease, transfer or otherwise dispose of any of its
Property having a market value exceeding Ten Thousand Dollars ($10,000), other
than Inventory sold in the ordinary course of business.
(O) Use any corporate name (other than its own) or any
fictitious name, trade name, tradestyle or"d/b/a" except for the names disclosed
on EXHIBIT G attached hereto and made a part hereof.
(P) Make a sale to any customer on approval, consignment,
xxxx-and-hold, guaranteed sale, sale and return or any other repurchase basis,
unless such sale is specifically
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identified on the written assignments of Accounts delivered to Lender pursuant
to Section 5.4 hereof.
(Q) Own, purchase or acquire (or enter into any contract to
purchase or acquire) any "margin security" as defined by any regulation of the
Federal Reserve Board as now in effect or as the same may hereafter be in effect
unless, prior to any such purchase or acquisition or entering into any such
contract, Lender shall have received an opinion of counsel satisfactory to
Lender to the effect that such purchase or acquisition will not cause this
Agreement or the Notes to violate Regulation G or any other regulation of the
Federal Reserve Board then in effect.
(R) Make or have any Restricted Investment, which for purposes
of this Agreement shall mean any investment in cash or by delivery of Property
to any Person, whether by acquisition of stock, indebtedness or other obligation
or Security, or by loan, advance or capital contribution, or otherwise, in any
Property except the following:
(i) Property to be used in the ordinary course of business;
(ii) Current assets arising from the sale of goods and
services in the ordinary course of business of Borrower;
(iii) Investments in direct obligations of the United States
of America, or any agency thereof or obligations guaranteed by the
United States of America, provided that such obligations mature within
one (1) year from the date of acquisition thereof;
(iv) Investments in certificates of deposit maturing within
one (1) year from the date of acquisition issued by a bank or trust
company organized under the laws of the United States or any state
thereof having capital surplus and undivided profits aggregating at
least One Hundred Million Dollars ($100,000,000.00); and
(v) Investments in commercial paper given the highest rating
by a national credit rating agency and maturing not more than two
hundred seventy (270) days from the date of creation thereof.
(S) Enter into any arrangement with any Person providing for
the leasing by Borrower of Property which has been or is to be sold or
transferred by Borrower to such person if funds have been or are to be advanced
by such Person on the security of such Property or rental obligations of
Borrower.
9. SURVIVAL OF OBLIGATIONS UPON TERMINATION OF AGREEMENT
-----------------------------------------------------
Except as otherwise expressly provided for in this Agreement and in any
of the other Credit Documents, no termination or cancellation (regardless of
cause or procedure) of this Agreement or any of the other Credit Documents shall
in any way affect or impair the powers, obligations, duties, rights, and
liabilities of Borrower or Lender in any way or respect relating
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to (i) any transaction or event occurring prior to such termination or
cancellation or (ii) any of the undertakings, agreements, covenants, warranties
and representations of Borrower or Lender contained in this Agreement or the
other Credit Documents. All such undertakings, agreements, covenants, warranties
and representations shall survive such termination or cancellation and Lender
shall retain its Lien on the Collateral and all of its rights and remedies under
this Agreement, notwithstanding such termination or cancellation, until all
Obligations of Borrower to Lender have been fully paid and satisfied and this
Agreement is terminated.
10. CONDITIONS PRECEDENT
--------------------
Notwithstanding any other provision of this Agreement or any of the
other Credit Documents, and without affecting in any manner the rights of Lender
under the other Sections of this Agreement, it is understood and agreed that
Lender shall have no obligation at any time under Section 2 of this Agreement
unless and until the following conditions have been and continue to be
satisfied, all in form and substance satisfactory to Lender and its counsel:
10.1 CONDITIONS. The following conditions shall have been and shall
continue to be satisfied, in the sole discretion of Lender:
(A) No legal action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain, or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement or any of the other Credit Documents or the consummation of the
transactions contemplated hereby or thereby, or which, in Lender's opinion would
make it inadvisable to consummate the transactions contemplated by this
Agreement.
(B) The representations and warranties of the Borrower herein
are true and correct in all respects and no Event of Default or condition which,
with notice, lapse of time or both would constitute an Event of Default then
exists.
(C) No event, occurrence or condition shall then exist which
might have a Material Adverse Effect.
10.2 DOCUMENTATION. Lender shall have received the following documents,
each to be in form and substance satisfactory to Lender and its counsel:
(A) Certified copies of Borrower's casualty insurance policies
evidencing the existence of the insurance coverage required pursuant to this
Agreement, together with loss payable endorsements thereto naming Lender as a
loss payee or additional insured in form and substance satisfactory to Lender.
(B) Copies of all filing receipts or acknowledgments issued by
any governmental authority to evidence any filing or recordation necessary to
perfect the Liens of Lender in the Collateral and evidence, in a form acceptable
to Lender, that such Liens constitute valid and first priority perfected Liens,
subject only to any Permitted Liens.
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(C) A Certificate of the secretary or an assistant secretary
of Borrower, dated as of the date Lender makes its initial advance of loan
proceeds pursuant hereto, certifying (i) that attached thereto is a true and
complete copy of the Code of Regulations of Borrower, as in effect on the date
of such certification, (ii) that attached thereto is a true and complete copy of
resolutions, in form satisfactory to Lender, adopted by the Board of Directors
of Borrower, authorizing the execution, delivery and performance of this
Agreement, the Notes, and each of the other Credit Documents to which it is a
party and the consummation of the transactions contemplated hereby and thereby,
and (iii) as to the incumbency and genuineness of the signature of each officer
of Borrower executing this Agreement, the Notes, or any of the other Credit
Documents to which Borrower is a party.
(D) A copy of the Articles of Incorporation of Borrower, and
all amendments thereto, certified by the Secretary of State of the Borrower's
state of incorporation.
(E) A good standing certificate for Borrower issued by the
Secretary of State of Borrower's state of incorporation and the Secretary of
State of each other jurisdiction in which Borrower's qualification is required
hereunder.
(F) A certificate signed by the president and chief financial
officer of Borrower and dated as of the date Lender makes its initial advance of
loan proceeds pursuant hereto, stating that (i) the representations and
warranties set forth in Section 7 hereof are true and correct on and as of such
date, (ii) Borrower is on such date in compliance with all the terms and
provisions set forth in this Agreement, and (iii) on such date no event or
condition has occurred or is continuing which, with the giving of notice, the
lapse of time, or both, would constitute an Event of Default.
(G) Duly executed written lien waivers in favor of Lender from
each lessor, bailee, warehouseman, mortgagee or similarly situated Person who
may, with respect to any location at which any of the Collateral is to be
located or stored, by operation of law or otherwise, have any Lien in or upon
such Collateral.
(H) Duly executed subordination agreements in respect of all
Subordinated Debt, specifically including, but not limited to an Acknowledgment,
Consent and Agreement or Amended and Restated Subordination Agreement from
Xxxxxxx, evidencing the agreement of the holder of such Subordinated Debt to
subordinate the same in right of payment (and waive the priority of any
Permitted Liens on Collateral) to the Obligations to the extent and in such
manner acceptable to Lender.
(I) If required by Lender, a duly executed Depository
Agreement with the Depository Bank at which any Depository Account is to be
established and, such other agreements, in form and substance acceptable to
Lender as to the collection and/or servicing of Accounts and the operation of
any lockbox required by Lender, all in form satisfactory to the Lender.
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(J) Written instructions from Borrower directing the
disbursement of the loan proceeds pursuant to this Agreement.
(K) The written opinion of legal counsel to Borrower as to the
enforceability of this Agreement, the Notes, and each of the other Credit
Documents, and covering such other issues thereunder and in connection with the
transactions contemplated by this Agreement requested by Lender and its counsel,
in form and substance satisfactory to Lender.
(L) The Revolving Note, Domestic Term Loan Promissory Note and
Term Note, duly executed by Borrower, and such other agreements, instruments and
documents, including, without limitation, assignments, security agreements,
mortgages, deeds of trust, pledges, guaranties and consents, which Lender may
require to be executed in connection herewith, including, but not limited to the
following:
(i) Duly executed UCC-1 Financing Statements from Borrower, in
recordable form, in form and substance satisfactory to Lender and its
counsel.
(ii) Duly executed Acknowledgments, Consents and Agreements
from NBC, Transport and the Affiliates, in form and substance
satisfactory to Lender and its counsel.
(iii) A duly executed Limited Contract of Guaranty from
Xxxxxx X. Xxxxxxx, in form and substance satisfactory to Lender and
its counsel.
10.3 WAIVER OF CONDITIONS PRECEDENT. If Lender makes an initial advance
of loan proceeds hereunder prior to the fulfillment of any of the conditions
precedent set forth in Sections 10.1 and 10.2 hereof, the making of such initial
advance of loan proceeds shall constitute only an extension of time for the
fulfillment of such condition and not a waiver thereof, and Borrower shall
thereafter use its best efforts to fulfill each such condition promptly.
11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
-------------------------------------------------
11.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
(A) Failure by Borrower to make payment of principal, interest
or any other sum on any Note, any other Debt Instrument, or any Material
Agreement on the due date thereof, or failure to pay any other Obligation on the
due date thereof, or failure by Borrower to remit or deposit funds as required
by the terms of this Agreement or any other Credit Document to which Borrower is
a party.
(B) Any warranty, representation, or other statement made or
furnished to Lender by or on behalf of Borrower or any guarantor of the
Obligations in this Agreement or in any of the other Credit Documents or in any
instrument furnished in compliance with or in reference to this Agreement or any
of the other Credit Documents proves to have been false or inaccurate in any
respect when made or furnished.
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(C) Borrower or any guarantor of the Obligations fails or
neglects to perform, keep or observe any other term, provision, condition,
covenant, warranty or representation contained in this Agreement or in any of
the other Credit Documents, which is required to be performed, kept or observed
by Borrower or any such guarantor.
(D) The occurrence of any default or event of default on the
part of Borrower (other than due to nonpayment) under any Debt Instrument or
Material Agreement.
(E) Any statement, report, financial statement, or certificate
made or delivered by Borrower, or any of its officers, employees or agents, or
any guarantor of the Obligations to Lender is not true and correct in any
respect.
(F) The loss, theft, substantial damage or destruction of any
portion of the Collateral to the extent not fully covered by insurance (as
required by this Agreement and subject to such deductibles as Lender shall have
agreed to in writing), or the sale, lease, encumbrance or other disposition of
any of the Collateral, except in all cases as may be specifically permitted by
other provisions of this Agreement.
(G) Any material adverse change in the value of the Collateral
or the financial condition or operating results of Borrower or any guarantor of
the Obligations, or otherwise in the event the Lender deems itself insecure.
(H) The dissolution, termination of existence, insolvency
(failure to pay its debts as they mature or where the fair saleable value of its
assets is not in excess of its liabilities) or business failure of the Borrower
or any guarantor of the Obligations, or the appointment of a receiver, trustee,
custodian or similar fiduciary for the Borrower or any guarantor of the
Obligations or any of their respective assets, or the assignment for the benefit
of the creditors of Borrower or any such guarantor or the making by Borrower or
any such guarantor of any offer of settlement, extension or composition to its
unsecured creditors generally.
(I) The commencement of any proceedings under any Bankruptcy
Laws by Borrower or any guarantor of the Obligations.
(J) The commencement of any proceedings under any Bankruptcy
Laws against Borrower or any guarantor of the Obligations to the extent such
proceedings are not dismissed within sixty (60) days after the filing thereof.
(K) Borrower ceases to conduct all or any part of its business
or is enjoined, restrained or in any way prevented by court, governmental or
administrative order from conducting all or any part of its business affairs.
(L) The entry by a court of any judgment in excess of
$150,000.00 requiring the payment of money against the Borrower, which judgment
is not paid, discharged, stayed, vacated or set aside within thirty (30) days of
its entry unless the same is being contested or
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appealed in good faith by Borrower and a bond is posted by the shareholders of
Borrower in at least the amount of the judgment and interest and the cost of the
bond is paid out of capital contributions of the shareholders of Borrower made
specifically for such purpose, and further provided that the obligation to
reimburse the bonding company shall not be an obligation of the Borrower.
(M) A notice of any Lien, levy, attachment or assessment is
filed of record with respect to all or any of the Collateral by any Person,
including, without limitation, the United States, any department, agency or
instrumentality thereof, or by any state, county, municipal or other
governmental agency, or if any tax or assessment owing at any time or times
hereafter becomes a Lien upon the Collateral or any other of Borrower's assets
and, except as otherwise permitted by Lender, the same is not effectively
stayed, bonded or released within thirty (30) days after the same becomes a
Lien, or in the case of ad valorem taxes, prior to the last date when payment
may be made without penalty.
(N) The revocation of any Guaranty of the Obligations.
11.2 ACCELERATION OF THE OBLIGATIONS. In addition to any of the
remedies otherwise available to Lender (a) upon and after an Event of Default
specified in Sections I 1. I (1) and (J) hereof, and without notice by Lender to
Borrower, and (b) upon and after an Event of Default (other than an Event of
Default specified in Sections 11.1(I) and (J) hereof, upon notice by Lender to
Borrower in the manner set forth in Section 13.10 hereof, the Revolving Loan
shall be terminated and all of the Obligations due or to become due from
Borrower to Lender, whether under this Agreement, any Note or otherwise, shall,
at the option of Lender become at once due and payable, anything in the Notes or
other evidence of the Obligations or in any of the other Credit Documents to the
contrary notwithstanding.
11.3 REMEDIES. Upon and after the occurrence of an Event of Default,
Lender shall have, to the extent permitted by applicable law, and in addition to
any other right or remedy provided for in this Agreement or the other Credit
Documents, the following rights and remedies:
(A) All of the rights and remedies of a secured party under
the Code or under other applicable law, and all other legal and equitable rights
to which Lender may be entitled, all of which rights and remedies shall be
cumulative, and none of which shall be exclusive, to the extent permitted by
law, in addition to any other rights or remedies contained in this Agreement or
in any of the other Credit Documents.
(B) The right to take immediate possession of the Collateral,
and (i) require Borrower to assemble the Collateral, at Borrower's expense, and
make it available to Lender at a place to be designated by Lender which is
reasonably convenient to both parties, and (ii) enter any of the premises of
Borrower or wherever any Collateral shall be located and to keep and store the
same on said premises until sold (and if said premises be the property of
Borrower, Borrower agrees not to charge Lender for storage thereof for a period
of at least ninety (90) days after sale or disposition of the Collateral).
Lender is hereby granted a non-exclusive license or
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other right to use, without charge, Borrower's labels, patents, copyrights,
rights of use of any name, trade secrets, trade names, trademarks and
advertising matter, or any property of a similar nature, as it pertains to the
Collateral, in advertising for sale and selling any Collateral and Borrowers's
rights under all licenses and all franchise agreements shall inure to Lender's
benefit.
(C) The right to foreclose the Liens created under this
Agreement and each of the other Credit Documents or under any other agreement
relating to the Collateral.
(D) The right to sell or to otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, wholesale dispositions,
or sales pursuant to one or more contracts, with such notice as may be required
by law, in lots or in bulk, for cash or on credit, all as Lender, in its sole
discretion, may deem advisable. Borrower agrees that ten (10) days prior written
notice to Borrower of the date any public sale will take place or the date after
which any private sale or other disposition of Collateral will take place shall
be reasonable notice thereof, and such sale may be at such locations as Lender
shall designate in said notice. Lender shall have the fight to conduct such
sales on Borrower's premises, without charge therefor, and such sales may be
adjourned from time to time in accordance with applicable law without further
requirement of notice to Borrower. Lender shall have the right to bid or credit
bid at any such sale on its own behalf.
(E) The right to sell, lease or otherwise dispose of the
Collateral, or any part thereof, for cash, credit or any combination thereof,
and Lender may purchase all or any part of the Collateral at public or private
sale and, in lieu of actual payment of such purchase price, may set off the
amount of such price against the Obligations. Subject to the rights of the
holders of any Permitted Lien having priority over the Liens of Lender, if any,
the proceeds realized from the sale of any Collateral shall be applied first to
the reasonable costs, expenses and attorneys' fees and expenses incurred by
Lender for collection and for acquisition, completion, protection, removal,
storage, sale and delivery of the Collateral; second, to interest due upon any
of the Obligations; and third, to the principal of the Obligations. If any
deficiency shall arise, Borrower shall remain liable to Lender therefor.
11.4 APPLICATION OF COLLATERAL; TERMINATION OF FINANCING. Upon the
occurrence of any Event of Default, Lender may also, with or without proceeding
with sale or foreclosure or demanding payment of the Obligations, without notice
except as required by law, terminate Lender's further performance under this
Agreement, the other Credit Documents, or any other agreement or agreements
between Lender and Borrower, without further liability or obligation by Lender,
and may also, at any time, appropriate and apply on any Obligations any and all
Collateral in the possession of Lender. No such termination shall absolve,
release or otherwise affect the liability of Borrower in respect of transactions
had prior to such termination, nor affect any of the Liens, rights, powers, and
remedies of Lender, but they shall, in all events, continue until all
Obligations of Borrower to Lender are satisfied.
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11.5 REMEDIES CUMULATIVE. All covenants, conditions, provisions,
warranties, guaranties, indemnities, and other undertakings of Borrower
contained in this Agreement, each of the other Credit Documents or in any
document referred to herein or therein or contained in any agreement
supplementary hereto or thereto or in any schedule or report given to Lender, or
contained in any other agreement between Lender and Borrower, heretofore,
concurrently, or hereafter entered into or delivered, shall be deemed cumulative
and not in derogation or substitution of any of the terms, covenants,
conditions, or agreements of Borrower herein contained.
12. APPOINTMENT OF LENDER AS BORROWER'S LAWFUL ATTORNEY
---------------------------------------------------
Borrower hereby irrevocably designates, makes, constitutes and appoints
Lender (and all persons designated by Lender) as Borrower's true and lawful
attorney (and agent-in-fact) and Lender, or Lender's agent, may, at such time or
times as Lender or said agent, in its sole discretion, may determine, upon the
occurrence of an Event of Default hereunder, in Borrower's or Lender's name: (i)
demand payment of the Accounts; (ii) enforce payment of the Accounts, by legal
proceedings or otherwise; (iii) exercise all of Borrower's rights and remedies
with respect to the collection of the Accounts and any other Collateral; (iv)
settle, adjust, compromise, extend or renew the Accounts; (v) settle, adjust or
compromise any legal proceedings brought to collect the Accounts; (vi) if
permitted by applicable law, sell or assign the Accounts and other Collateral
upon such terms, for such amounts and at such time or times as Lender deems
advisable; (vii) discharge and release the Accounts and any other Collateral;
(viii) take control, in any manner, of any item of payment or proceeds relating
to any Collateral; (ix) prepare, file and sign Borrower's name on a proof of
claim in bankruptcy or similar document against any Account Debtor; (x) prepare,
file and sign Borrower's name on any notice of Lien, assignment or satisfaction
of Lien or similar document in connection with the Accounts; (xi) do all acts
and things necessary, in Lender's sole discretion, to fulfill Borrower's
obligations under this Agreement; (xii) endorse the name of Borrower upon any of
the items of payment or proceeds relating to any Collateral and deposit the same
to the account of Lender on account of the Obligations; (xiii) endorse the name
of Borrower upon any chattel paper, document, instrument, invoice, freight xxxx,
xxxx of lading or similar document or agreement relating to the Accounts,
Inventory and any other Collateral; (xiv) use Borrower's stationery and sign the
name of Borrower to verifications of the Accounts and notices thereof to Account
Debtors; (xv) use the information recorded on or contained in any data
processing equipment and computer hardware and software relating to the
Accounts, Inventory and any other Collateral to which Borrower has access; and
(xvi) notify post office authorities to change the address for delivery of
Borrower's mail to an address designated by Lender and receive and open all mail
addressed to Borrower, and after removing all remittances and other proceeds of
Collateral, forwarding the mail to Borrower.
13. MISCELLANEOUS
-------------
13.1 MODIFICATION OF AGREEMENTS SALE OF INTEREST. This Agreement,
the Notes and each of the other Credit Documents to which Borrower is a party
may not be modified, altered or amended, except by an agreement in writing
signed by Borrower and Lender. Borrower may
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not sell, assign or transfer this Agreement, or any of the other Credit
Documents or any portion thereof, including, without limitation, Borrower's
rights, title, interests, remedies, powers, and/or duties hereunder or
thereunder. Borrower hereby consents to Lender's participation, sale,
assignment, transfer or other disposition, at any time or times hereafter, of
this Agreement, the Notes, or any of the other Credit Documents, or of any
portion hereof or thereof, including, without limitation, Lender's rights,
title, interests, remedies, powers, and/or duties hereunder or thereunder.
13.2 ATTORNEYS' FEES AND EXPENSES. If, at any time or times, whether
prior or subsequent to the date hereof, regardless of the existence of an Event
of Default, Lender employs counsel for advice or other representation or incurs
legal and/or other costs and expenses in connection with:
(A) The preparation of this Agreement, the Notes, and the
other Credit Documents, or the preparation of any other documentation requested
by Lender in connection with the transactions contemplated thereby or any
amendment of or modification of this Agreement, the Notes, any of the other
Credit Documents or any other such documentation.
(B) The administration of this Agreement, the Notes and each
of the other Credit Documents or any other documentation requested by Lender and
the transactions contemplated hereby and thereby.
(C) Any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Lender, Borrower or any other Person) in any way
relating to the Collateral, this Agreement, the Notes, any of the other Credit
Documents or Borrower's affairs.
(D) Any attempt to enforce any rights of Lender against any
Person, other than the Borrower, which may be obligated to Lender by virtue of
this Agreement, the Notes or any of the other Credit Documents, including,
without limitation, any guarantor of the Obligations and any Account Debtors.
(E) Any attempt to inspect, verify, protect, collect, sell,
liquidate or otherwise dispose of the Collateral.
(F) The filing and recording of all documents required by
Lender to perfect Lender's Liens in the Collateral, including without
limitation, any documentary stamp tax or any other taxes incurred because of
such filing or recording;
Then, in any such event, the attorneys' fees reasonably
incurred and necessary expenses arising from such services and all expenses,
costs, charges and other fees of such counsel or of Lender or relating to any of
the events or actions described in this Section 13.2 shall be payable, on
demand, by Borrower to Lender and shall be additional Obligations hereunder
secured by the Collateral. Without limiting the generality of the foregoing,
such expenses, costs, charges and fees may include accountants' fees, costs and
expenses; court costs and expenses; photocopying and duplicating expenses; court
reporter fees, costs and expenses;
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long distance telephone charges; air express charges; telegraph charges;
secretarial overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal services.
Additionally, if any taxes shall be payable on account of the execution or
delivery of this Agreement, the Notes or the execution, delivery, issuance or
recording of any of the other Credit Documents, or the creation of any of the
Obligations hereunder, by reason of any existing or hereafter enacted federal or
state statute, Borrower will pay all such taxes, including, but not limited to,
any interest and/or penalty thereon, and will indemnify and hold Lender harmless
from and against liability in connection therewith.
13.3 WAIVER BY LENDER. Lender's failure, at any time or times
hereafter, to require strict performance by Borrower of any provision of this
Agreement, the Notes or any of the other Credit Documents shall not waive,
affect or diminish any right of Lender thereafter to demand strict compliance
and performance therewith. Any suspension or waiver by Lender of an Event of
Default by Borrower under this Agreement, the Notes or any of the other Credit
Documents shall not suspend, waive or affect any other Event of Default by
Borrower under this Agreement, the Notes or any of the other Credit Documents,
whether the same is prior or subsequent thereto and whether of the same or of a
different type. None of the undertakings, agreements, warranties, covenants and
representations of Borrower contained in this Agreement, the Notes or any of the
other Credit Documents and no Event of Default by Borrower under this Agreement,
the Notes or any of the other Credit Documents shall be deemed to have been
suspended or waived by Lender, unless such suspension or waiver is by an
instrument in writing specifying such suspension or waiver and is signed by a
duly authorized representative of Lender and directed to Borrower.
13.4 SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
13.5 PARTIES. This Agreement, the Notes and the other Credit Documents
shall be binding upon and inure to the benefit of the successors and assigns of
Borrower and Lender. This provision, however, shall not be deemed to modify
Section 13.1 hereof.
13.6 CONFLICT OF TERMS. The provisions of the Commitment, the Notes and
each of the other Credit Documents and any exhibit or schedule hereto or thereto
are incorporated in this Agreement by this reference thereto. Except as
otherwise provided in this Agreement, and except as otherwise provided in the
Commitment, the Notes and any of the other Credit Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in conflict with, or inconsistent with, any
provision in the Commitment the Notes and any of the other Credit Documents, the
provision contained in this Agreement shall govern and control.
13.7 WAIVERS BY BORROWER INCLUDING RIGHT TO JURY TRIAL). EXCEPT AS
OTHERWISE PROVIDED FOR IN THIS AGREEMENT OR AS REQUIRED
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BY APPLICABLE LAW, BORROWER WAIVES (1) PRESENTMENT, DEMAND AND PROTEST AND
NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NONPAYMENT, MATURITY, RELEASE,
COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER,
ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES
AT ANY TIME HELD BY LENDER ON WHICH BORROWER MAY IN ANY WAY BE LIABLE, (11)
NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL WHICH MIGHT BE
REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF LENDER'S
REMEDIES AND (111) ITS RIGHT TO A JURY TRIAL IN THE EVENT OF ANY LITIGATION
INSTITUTED IN RESPECT OF THIS AGREEMENT, THE NOTES OR ANY OF THE OTHER CREDIT
DOCUMENTS. BORROWER ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY COUNSEL OF ITS
CHOICE WITH RESPECT TO THIS AGREEMENT AND THE TRANSACTIONS EVIDENCED BY THIS
AGREEMENT.
13.8 AUTHORIZATION. Lender is authorized to make loans in the name of
Borrower under the terms of this Agreement upon the request, either written or
oral, of the president or chief financial officer of the Borrower, or such other
persons, from time to time, holding the offices or positions with Borrower as
designated in any separate borrowing or banking resolutions delivered by
Borrower to Lender and all loans made by Lender to Borrower or for its account
under this Agreement shall be conclusively deemed to have been authorized by
Borrower and to have been made pursuant to duly authorized requests therefor.
13.9 GOVERNING LAW. This Agreement has been accepted by Lender at and
shall be deemed to have been made at Cleveland, Ohio. The loans provided for
herein are to be funded and repaid at Cleveland, Ohio and this Agreement shall
be interpreted, and the rights and liabilities of the parties hereto determined,
in accordance with the laws of the State of Ohio. As part of the consideration
for new value received, Borrower hereby consents to the jurisdiction of any
state or federal court located within the State of Ohio and consents that all
such service of process be made by registered or certified mail directed to
Borrower at the address stated in Section 13.10(B) below and service so made
shall be deemed to be completed upon actual receipt thereof. Borrower waives any
objection to jurisdiction and venue of any action instituted hereunder and
agrees not to assert any defense based on lack of jurisdiction or venue. Nothing
contained herein shall affect the right of Lender to serve legal process in any
other manner permitted by law or affect the right of Lender to bring any action
or proceeding against Borrower or its property in the courts of any other
jurisdiction.
13.10 NOTICES. Except as otherwise provided herein, any notice required
hereunder shall be in writing, and shall be deemed to have been validly served,
given or delivered upon deposit
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in the United States mails, with proper postage prepaid, and addressed to the
party to be notified as follows:
(A) If to Lender, at:
Bank One, Cleveland, NA
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: Xxxxx X. Xxxxxxxx,
Vice President and Manager,
Asset-Based Lending
Telephone: 216/000-0000
Telecopy: 216/781-4485
With a copy to:
Porter, Wright, Xxxxxx & Xxxxxx
0000 Xxxxxxxxxx Xxxxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telephone: 216/000-0000
Telecopy: 216/443-9011
(B) If to Borrower, at:
International Total Services, Inc.
0000 Xxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx
President
Telephone: 216/000-0000
Telecopy: 216/642-4539
or to such other address as each party may designate for itself by like notice
given in accordance with this Section 13.10.
Whenever any party to this Agreement shall be required to provide
notice hereunder or to deliver certificates and/or documentation pursuant to the
terms of this Agreement or as otherwise requested by a party to this Agreement,
such notices, certificates and/or documentation may be transmitted by telecopy
or other facsimile transmission; provided, however, that the originals or
counterparts of all such notices, certificates and/or documentation shall be
furnished as promptly as practicable thereafter, including all original
signatures thereto as applicable.
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13.11 SECTION TITLES. The section titles contained in this Agreement
are and shall be without substantive meaning and content of any kind whatsoever
and are not a part of the agreement between the parties hereto.
13.12 EFFECTIVENESS OF AGREEMENT. This Agreement shall be effective
only upon Lender's acceptance hereof.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year specified at the beginning hereof.
INTERNATIONAL TOTAL SERVICES, INC.
("Borrower")
By________________________________________
Name: __________________________________
Its: ___________________________________
Accepted at Cleveland, Ohio as of
the date first above written.
BANK ONE, CLEVELAND, NA ("LENDER")
By________________________________________
Name: __________________________________
Its: ___________________________________
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