EXHIBIT 10(A)
CREDIT AND SECURITY AGREEMENT
(REVOLVER)
CREDIT AND SECURITY AGREEMENT, dated as of July 9, 1997 (the "Agreement"),
between Astrex, Inc., a Delaware corporation, having offices at 000 Xxxxxxx
Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 (the "Borrower"), X.X. Xxxxxxx, Inc., a
Massachusetts corporation having offices at 000 Xxxxx Xxxxxx, Xxxx Xxxxxxxxxxx,
Xxxxxxxxxxxxx 00000 ("TFCI") and Fleet National Bank, a national banking
association, having offices at Xxx Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000
(the "Lender" or "Bank").
The Borrower, TFCI and the Lender, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, hereby agree as
follows:
ARTICLE 1. THE LOANS
1.1 CERTAIN DEFINITIONS. Certain capitalized terms used herein are defined
in Appendix A attached hereto.
1.2 REVOLVING CREDIT LOANS AND RESERVES. Subject to the terms and
conditions of this Agreement and in reliance on the representations and
warranties of the Borrower contained herein, the Lender agrees to make available
to the Borrower from time to time, prior to the Revolving Credit Loan
Termination Date, upon the request of the Borrower, revolving credit loans (each
a "Loan" or "Revolving Credit Loan" and collectively the "Loans" or "Revolving
Credit Loans") in an aggregate principal amount not to exceed, at any one time
outstanding, the Revolving Credit Maximum Amount. In addition to any of its
other rights hereunder, the Borrower, pursuant to said terms and subject to said
conditions, may borrow, repay and reborrow the Revolving Credit Loans up to, at
any one time outstanding, the Revolving Credit Maximum Amount. Lender shall have
the right to establish reserves in such amounts, and with respect to such
matters, as Lender shall deem necessary or appropriate in its reasonable credit
judgment, against the amount of Revolving Credit Loans which Borrower may
otherwise request hereunder. Such reserves shall be calculated (as deductions)
in determining the Borrowing Base.
1.3 THE NOTE. The Loans, and the obligation of the Borrower to repay the
Loans with interest, shall be evidenced by a revolving credit promissory note
(such promissory note is hereinafter referred to as the "Note" which defined
term shall also include such promissory note as it may be extended or otherwise
amended, supplemented, or modified from time to time and also any notes (if any)
given in extension, renewal, or substitution of such promissory note) in
substantially the form of Exhibit A attached hereto.
1.4 INTEREST. The aggregate unpaid principal balance of the Prime Rate
Revolving
-2-
Credit Portion outstanding from time to time shall bear interest at a rate per
annum equal to the Prime Rate in effect from time to time. If Borrower properly
exercises its LIBOR Option in accordance with Section 1.6(b) below, the
aggregate unpaid principal balance of the Libor Revolving Credit Portions
outstanding from time to time shall bear interest at a rate per annum equal to
the sum of (i) the Libor Rate applicable to each Libor Revolving Credit Portion
for the corresponding Interest Period plus (ii) two percent (2%) (i.e., 200
basis points). Anything contained in this Agreement to the contrary
notwithstanding, during any period in which an Event of Default is continuing,
the interest rate hereunder and under the Note shall, at the option of the
Lender, be increased to a rate per annum equal to the Revolving Credit Default
Rate and any interest accruing at such Revolving Credit Default Rate shall be
payable on demand.
All computations of interest shall be made on the basis of a three hundred
sixty (360) day year and the actual number of days elapsed.
Anything contained in this Agreement or the Note to the contrary
notwithstanding, the Lender does not intend to charge and the Borrower shall not
be required to pay interest or other charges in excess of the maximum rate
permitted by Applicable Law. Any payments in excess of such maximum shall be
refunded to Borrower or credited against principal.
1.5 PAYMENT OF PRINCIPAL AND INTEREST AND OTHER AMOUNTS. The Borrower shall
pay the unpaid principal of all Revolving Credit Loans on the Revolving Credit
Maturity Date. Interest on the Revolving Credit Loans shall be due and payable,
in arrears, on each Revolving Credit Interest Payment Date and also on the
Revolving Credit Maturity Date. (The Lender in its sole and absolute discretion
may make a Loan to cover an interest payment due on a Revolving Credit Interest
Payment Date; provided, that it is understood and agreed that the Lender shall
have no obligation to do so). All payments of principal, interest, and other
amounts due hereunder or under the Note shall be made without any deductions
whatsoever, including, but not limited to, any deduction for any set-off,
recoupment, or counterclaim. All payments shall be made in United States Dollars
and immediately available funds. Unless the Lender otherwise agrees (and subject
to Section 1.8 below), all payments shall first be applied to fees, costs and
expenses which the Borrower is obligated to pay under the Financing Documents,
then to accrued and unpaid interest and then to unpaid principal (nothing
contained herein shall limit the rights of the Lender under Section 7.4). If any
payment hereunder or under the Note or other Financing Document shall be
specified to be made upon a day which is not a Business Day, it shall (subject
to the provisions regarding Business Days in the definition of Interest Period)
be made on the next succeeding day which is a Business Day and such extension of
time shall in such case, to the extent applicable, be included in computing any
interest in connection with such payment. The records of the Lender shall be
prima facie evidence of the making of any Revolving Credit Loans, any accrued
interest thereon, the amount of Loans bearing interest at the Prime Rate or with
reference to the Libor Rate, and all principal and interest payments made in
respect thereof; provided, that no failure of the Lender to timely record any
transaction, or any error in any such recordation, shall in any way affect or
impair any liability or other obligation of the Borrower to the Lender.
-3-
1.6 NOTICE OF BORROWING; AUTHORITY FOR BORROWING; LIBOR REQUESTS. (a) The
Borrower shall give the Lender written (or, if acceptable to the Lender,
telephonic) notice of the amount and date of each Revolving Credit Loan
requested under the Revolving Credit Facility received no later than 12:00 p.m.
on the date on which the requested Revolving Credit Loan is to be made,
provided, that if all or any portion of such Loan is to be included (as of the
making of such Loan) as part (or all) of a Libor Revolving Credit Portion,
Borrower shall give the Lender at least two (2) Business Days prior notice of
such requested Revolving Credit Loan and give to Lender a LIBOR Request pursuant
to Section 1.6(b) below. Such notice shall be accompanied by a true and correct
and current Borrowing Base Certificate (if acceptable to the Lender, the
Borrowing Base Certificate can also serve as notice of the request of the Loan).
Such Notice shall specify the proposed effective date and amount of such
Revolving Credit Loan. (If requested by Lender (at its option) telephonic notice
shall be followed by written confirmation.) No failure to give any such notice
(or confirmation) or supply any such certificate shall impair the obligation of
the Borrower to repay any Loan made by the Lender.
The Lender may assume that any person whom the Lender in good faith
believes is an employee or officer of the Borrower and who requests any
Revolving Credit Loan is authorized to do so on behalf of the Borrower unless
the Lender has received prior specific written notice from the Borrower to the
contrary. Lender shall have no responsibility to verify the origin of any oral,
electronic or other communication.
(b) (i) Upon the conditions that: (1) Lender shall have received a LIBOR
Request from Borrower at least two (2) Business Days prior to the first day of
the Interest Period requested, (2) there shall have occurred no change in
Applicable Law which would make it unlawful for Lender to obtain deposits of
U.S. Dollars in the London interbank foreign currency deposits market, (3) as of
the date of the LIBOR Request and the first day of the Interest Period, there
shall exist no Default or Event of Default, (4) Lender is able to determine the
Libor Rate in respect of the requested Interest Period and (5) as of the first
date of the Interest Period, there is no more than two (2) outstanding LIBOR
Revolving Credit Portions including the LIBOR Revolving Credit Portion being
requested, then interest on the LIBOR Revolving Credit Portion requested during
the Interest Period requested will be based on the applicable LIBOR Rate. No
LIBOR Revolving Credit Portion shall be less than $500,000.00.
(ii) Each LIBOR Request shall be irrevocable and binding on Borrower.
Borrower shall indemnify Lender for any loss, penalty or reasonable expense
incurred by Lender due to failure on the part of Borrower to fulfill, on or
before the date specified in any LIBOR Request, the applicable conditions set
forth in this Agreement, or due to any other failure to make a borrowing
requested in a LIBOR Request or due to the prepayment or payment (including
without limitation any payment after acceleration) of the applicable LIBOR
Revolving Credit Portion prior to the last day of the applicable Interest
Period, including, without limitation, any loss (including loss of anticipated
profits) or expense incurred by reason of the liquidation or redeployment of
deposits or other funds acquired by Lender to fund or maintain the applicable
LIBOR Revolving Credit Portion (or requested LIBOR Revolving Credit Portion).
-4-
(iii) If any change in any Legal Requirement shall (1) make it unlawful for
Lender to fund through the purchase of U.S. Dollar deposits any LIBOR Revolving
Credit Portion or otherwise give effect to its obligations as contemplated under
this Section 1.6(b) (or other applicable provision hereof) or (2) shall impose
on Lender any additional restrictions on the amount of such a category of
liabilities or assets which Lender may hold, then, in each such case, Lender
may, by notice thereof to Borrower, terminate the LIBOR Option. If any change in
any Legal Requirement shall impose of Lender any additional costs (not already
taken into account under Eurocurrency Reserve Requirements) based on or measured
by the excess above a specified level of the amount of a category of deposits or
other liabilities of Lender which includes deposits by reference to which the
LIBOR Rate is determined as provided herein or a category of extensions of
credit or other assets of Lender which includes any LIBOR Revolving Credit
Portion or there shall be imposed on Lender or the London interbank market any
other condition (with respect to a Legal Requirement or otherwise) with respect
to this Agreement or the Loans and the result of such condition is to impose any
additional costs on the Lender (including any reduction in Lender's return),
then Borrower shall, upon demand of Lender, pay to Lender the amount of any and
all such additional costs. Also, at the Lender's option, any LIBOR Revolving
Credit Portion subject thereto shall immediately bear interest thereafter at the
rate and in the manner provided for Prime Rate Revolving Credit Portions
pursuant to Section 1.4 above. Borrower shall indemnify Lender against any loss,
penalty or expense incurred by Lender due to liquidation or redeployment of
deposits or other funds acquired by Lender to fund or maintain any LIBOR
Revolving Credit Portion that is terminated under this paragraph.
(iv) Lender shall receive payments of amounts of principal of and interest
with respect to the LIBOR Revolving Credit Portions free and clear of, and
without deduction for, any Taxes. If (1) Lender shall be subject to any Tax in
respect of any LIBOR Revolving Credit Portion or any part thereof or (2)
Borrower shall be required to withhold or deduct any Tax from any such amount,
the LIBOR Rate applicable to such LIBOR Revolving Credit Portion shall be
adjusted by Lender to reflect all additional costs incurred by Lender in
connection with the payment by Lender or the withholding by Borrower of such Tax
and Borrower shall provide Lender with a statement detailing the amount of any
such Tax actually paid by Borrower. Determination by Lender of the amount of
such costs shall, in the absence of manifest error, be conclusive. If after any
such adjustment any part of any Tax paid by Lender is subsequently recovered by
Lender, Lender shall reimburse Borrower to the extent of the amount so
recovered. A certificate of an officer of Lender setting forth the amount of
such recovery and the basis therefor shall, in the absence of manifest error, be
conclusive.
(v) Any amounts owed by Borrower under this Section 1.6(b) shall be due and
payable upon demand. The Lender shall supply a certificate(s) or statement(s) to
the Borrower setting forth any amount(s) so owed under this Section 1.6(b) and
such certificate or statement shall be conclusive and binding upon the Borrower
absent manifest error. Any amount(s) showing as owed in such certificate(s) or
statement(s) shall be due and payable by the Borrower within fifteen (15) days
after the applicable certificate or statement is sent.
-5-
(c) Lender may, in Lender's discretion, permit electronic transmittal of
instructions, authorization, agreements or reports to Lender. Unless Borrower
specifically directs Lender in writing not to accept or act upon telephonic or
electronic communications from Borrower, Lender shall have no liability to
Borrower for any loss or damage suffered by Borrower as a result of Lender's
honoring of any requests, execution of any instructions, authorizations or
agreements or reliance on any reports communicated to it telephonically or
electronically and purporting to have been sent to Lender by Borrower and Lender
shall have no duty to verify the origin of any such communication or the
authority of the person sending it.
1.7 OPTIONAL AND MANDATORY PREPAYMENTS. (a) The Borrower may optionally
prepay the principal of Loans, in whole or in part, at any time, (i) in the case
of the Prime Rate Loans, without penalty or premium and (ii) in the case of
Libor Loans, accompanied by any payment(s) required by Section 1.6 above. All
such prepayments shall first be applied to the Prime Rate Revolving Credit
Portion and then to the LIBOR Revolving Credit Portion.
(b) Borrower shall make any payments or prepayments required by Section 4.3
below or by any provision of any other applicable Financing Document.
(c) Pursuant to Section 1.8 below, all payments with respect to Receivables
or other Collateral shall be applied to the mandatory prepayment of the Loans.
All such prepayments shall first be applied to the Prime Rate Revolving Credit
Portion and then to the LIBOR Revolving Credit Portion.
(d) To the extent that at any time the aggregate unpaid principal amount of
the Loans shall exceed the Borrowing Base or otherwise shall exceed the
Revolving Credit Maximum Amount, the Borrower shall immediately prepay the Loans
(with such prepayment to be in the amount of such excess). The Borrower shall
specify in writing that a prepayment is being made pursuant to this Section
1.7(d).
(e) Amounts prepaid prior to the Revolving Credit Loan Termination Date on
account of the Loans may, upon the terms and subject to the conditions of this
Agreement, be reborrowed prior to such Date.
1.8 PAYMENTS ON COLLATERAL. Upon the Borrower or TFCI (or any other
Affiliate of Borrower or of TFCI or any Person acting for or in concert with the
Borrower or TFCI) receiving any checks, notes, drafts, other instruments, cash,
other monies or any other items of payment, representing payments on or
otherwise with respect to or relating to any and all Receivables or any other
Collateral, Borrower or TFCI, as the case may be, shall receive same in trust
for the Lender and immediately upon receipt thereof shall (i) deliver same duly
endorsed by Borrower or TFCI, as the case may be, for deposit, to Lender for
immediate deposit in a cash collateral account established by the Lender (and
same shall be deposited in such account), and (ii) if requested by the
-6-
Lender, forward to the Lender, on a daily basis, copies of all such items and
deposit slips related thereto, together with a collection report in form and
substance satisfactory to the Lender. All such checks, notes, drafts, other
instruments, cash, other monies or other items of payment shall be the sole and
exclusive property of the Lender immediately upon receipt of such items by the
Borrower or TFCI and shall (at all times), until actually applied to the payment
of the Secured Obligations as hereinafter set forth, be part of the Collateral
securing the payment and performance of the Secured Obligations. After allowing
two (2) days for collection of checks and other instruments, the Lender will
credit (conditional upon final collection) all such payments to such collateral
account. Such collateral account shall be a blocked account to which the Lender
shall have sole access and sole dominion and control. The amounts in such
account shall (unless otherwise determined by the Lender) be drawn upon by the
Lender (at any time and from time to time and without the need for notice) and
applied to the (i) prepayment or payment of the Revolving Credit Loans, (ii) the
payment of interest on the Revolving Credit Loans (and any other amounts then
due hereunder), and (iii), if a Default or Event of Default is then continuing,
to the payment (or prepayment) of any other Secured Obligations; provided, that,
after such application by the Lender (and provided further, no Event of Default
then exists hereunder) the Borrower or TFCI, as the case may be, shall be
entitled to any remaining amounts in such account (provided, it is understood
that any balances in such account shall not accrue interest in favor of the
Borrower or TFCI). (Nothing contained herein shall, or shall be interpreted or
construed to, limit the unconditional obligation of the Borrower (or of any
Guarantor) to pay all Secured Obligations in full when due, and if the amount in
the collateral account is insufficient to pay all Secured Obligations then due
Borrower shall immediately pay any deficiency; and, provided, further, that the
Lender shall not be required to look to such account as its first source of
repayment.) Nothing contained in this Section 1.8 shall be construed or
interpreted to limit any right or remedy of the Lender under Section 8.15 hereof
or under any other term or provision of any of the Financing Documents. Borrower
shall pay all standard charges of the Lender for operating such account and
other related charges.
TFCI hereby agrees, notwithstanding the fact that it is a Guarantor and not
the borrower of the Loans, that all payments on account of its Receivables (and
its other applicable Collateral) shall be applied as set forth above.
At the request of the Lender, which request may be made at any time
(whether or not an Event of Default has occurred), the Borrower and TFCI shall
enter into a lockbox arrangement with the Lender and, if such lockbox
arrangements are so requested, the Borrower and TFCI shall cause each of their
account debtors and other obligers to at all times send all of their payments
directly to the lockbox. Such lockbox arrangements shall be pursuant to a
lockbox agreement, in form and substance satisfactory to the Bank, to be entered
into by the Lender, the Borrower and TFCI.
1.9 LATE CHARGES. [Intentionally Omitted]
1.10 FURTHER ASSURANCES. Each of the Borrower and TFCI hereby agrees to do
and perform any and all acts and to execute any and all further instruments from
time to time reasonably requested by the Lender to more fully effect the
purposes of this Agreement.
-7-
1.11 FEES. (a) The Borrower shall pay to the Lender a non-refundable
one-time facility fee equal to Three Thousand Dollars ($3,000) payable on or
before the Closing Date.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make the Revolving
Credit Loans, the Borrower hereby represents and warrants to the Lender that,
except as set forth in Schedule A attached hereto:
2.1 CORPORATE EXISTENCE AND POWER. The Borrower and each of its
Subsidiaries is, and will continue to be, a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and is duly qualified to do business and in good standing, and
authorized to do business, in all other jurisdictions (the "Foreign
Jurisdictions"), if any, in which the property or assets owned, leased or
operated by it or the nature of the business conducted by the Borrower requires
such qualification or authorization, except for qualifications and
authorizations the lack of which, singly or in the aggregate, has not had and
will not have a Material Adverse Effect upon the Borrower or such Subsidiary, as
the case may be. Borrower and each of its Subsidiaries has the corporate power
and authority, the legal right, and all the requisite permits, authorizations,
licenses and other general intangibles (as defined in the Connecticut UCC),
without unusual restrictions or limitations, to own, operate and lease all of
its material properties and assets, to conduct the business in which it is
presently engaged or presently proposes to be engaged, and to execute, deliver
and perform its obligations under all Financing Documents to which the Borrower
or such Subsidiary is a party, and all such permits, authorizations, licenses
and other general intangibles are in full force and effect.
2.2 CORPORATE AUTHORITY; NO CONFLICTS; BINDING AGREEMENTS. The execution,
delivery and performance by the Borrower and each Guarantor of this Agreement,
the Note and any other Financing Document to which Borrower and/or any such
Guarantor is a party, and any borrowings hereunder, have been duly authorized by
all necessary corporate and, if required, stockholder action. The execution, and
delivery and performance of this Agreement, the Note, and any other Financing
Document to which Borrower and/or any Guarantor is a party, and any borrowings
hereunder, are and will be within the Borrower's or any such Guarantor's, as the
case may be, powers, corporate and otherwise, and do not and will not (i)
violate any Applicable Law or Borrower's or such Guarantor's certificate of
incorporation, by-laws or other organizational document or (ii) result in the
breach of, conflict with, constitute a default under, or give rise to the right
of acceleration or mandatory prepayment under, any material Contract or any
judgment, decree or order which is binding upon the Borrower or any such
Guarantor or to which the Borrower or any Guarantor or any of their respective
properties may be subject, or result in the creation of any Lien (other than in
favor of the Lender) upon any property or assets of the Borrower or any
Guarantor pursuant to any Contract or any such judgment, decree or order. This
Agreement has been, and the Note and each other Financing Document to which the
Borrower and/or any
-8-
Guarantor is a party will be, duly executed and delivered on behalf of the
Borrower or such Guarantor, as the case may be. This Agreement constitutes, and
the Note and each other Financing Document to which the Borrower and/or any
Guarantor is a party when executed and delivered, will constitute, a legal,
valid and binding obligation of the Borrower or such Guarantor, as the case may
be, enforceable against the Borrower in accordance with its terms. No
Governmental Approval is or will be required in connection with the execution,
delivery and performance of this Agreement or any other Financing Document or
any borrowing hereunder.
2.3 FINANCIAL CONDITION. The Financial Statements, copies of which have
been furnished to the Lender, are true and correct in all material respects and
fairly present the financial condition of the Borrower and its Subsidiaries as
of the respective dates thereof and the results of the operations and cash flows
of the Borrower and its Subsidiaries for the periods covered thereby, all in
accordance with GAAP consistently applied (subject to normal year-end
adjustments in the case of any interim financial statements). None of the
Borrower or any Subsidiary has any material direct or contingent Liabilities not
disclosed in the Financial Statements (including any notes thereto) or in
Schedule A attached hereto other than Trade Debt arising in the ordinary course
of business since March 31, 1997.
2.4 NO ADVERSE CHANGE. Since March 31, 1997, no material, adverse change in
the business, assets or other properties, Liabilities, financial condition,
results of operations or business prospects of the Borrower or any of its
Subsidiary has occurred, no dividends, redemptions or other distributions have
been declared or made to or with respect to any stockholders of the Borrower and
no other event has occurred or failed to occur, which has had or could
reasonably be expected to have in the future, either alone or in conjunction
with all other such events and failures, a Material Adverse Effect upon the
Borrower or any of its Subsidiaries or on any Financing Document.
2.5 INFORMATION COMPLETE. Subject to any limitations stated therein or in
connection therewith, all information (whether past financial statements, the
financial statements delivered pursuant to Section 4.2 below or other
information) furnished or to be furnished by the Borrower or any of its
Subsidiaries in connection with, or pursuant to the terms hereof or any other
Financing Document is, or will be at the time the same is furnished, as the case
may be true, accurate and complete in all material respects necessary in order
to make the information furnished, in the light of the circumstances under which
such information is furnished, not misleading.
2.6 COMPLIANCE WITH APPLICABLE LAWS. The Borrower and each of its
Subsidiaries is in compliance, in all material respects, with all Applicable
Laws.
2.7 LITIGATION. There are not any actions, suits or legal, equitable,
arbitration, or administrative proceedings, pending or, to the knowledge of the
Borrower, threatened (nor, to the knowledge of the Borrower, is there any basis
therefor) against or in any other way relating to or affecting the Borrower or
any of its Subsidiaries or their respective businesses or any assets or other
properties of the Borrower or any of its Subsidiaries or any Financing Document.
-9-
2.8 BURDENSOME PROVISIONS; NO DEFAULT. None of the Borrower or any of its
Subsidiaries is a party to or bound by any Contract or Applicable Law, that,
either alone or in conjunction with any other such Contract or Applicable Law,
has had or could reasonably be expected to have in the future a Material Adverse
Effect upon the Borrower or such Subsidiary. None of Borrower or such Subsidiary
is in default or breach of any material Contract where such breach or default,
either alone or in conjunction with any other default or breach, has had or
could reasonably be expected to have in the future a Material Adverse Effect
upon the Borrower or such Subsidiary.
2.9 NO ADVERSE FACT. Except as may be set forth in the Financial Statements
(or in Schedule A), no fact or circumstance is known to the Borrower which,
either alone or in conjunction with all other such facts and circumstances, has
had or could reasonably be expected to have in the future a Material Adverse
Effect upon the Borrower or any of its Subsidiaries or on any Financing
Document.
2.10 SUBSIDIARIES; OWNERSHIP. Schedule B sets forth any and all
Subsidiaries of the Borrower. The capital stock of each such Subsidiary is owned
entirely by the Borrower. Except for such Subsidiaries, the Borrower has not
invested in the stock, common or preferred, of any other corporation, and there
are no fixed, contingent or other obligations on the part of the Borrower or any
of its Subsidiaries to issue any additional shares of its capital stock to any
Person.
2.11 EVENTS OF DEFAULT. No Event of Default or Default has occurred and/or
is continuing.
2.12 USE OF PROCEEDS. The Borrower shall use the proceeds of the Revolving
Credit Loans only for the Permitted Uses, and no part of such proceeds will be
used, in whole or in part, for the purpose of purchasing or carrying any "margin
security" as such term is defined in Regulation U of the Board of Governors of
the Federal Reserve System, or otherwise in a manner which would violate any
Regulations of such Board, including without limitation Regulations G, U, T and
X.
2.13 TITLE TO PROPERTY. The Borrower and each of its Subsidiaries has good
and marketable title to all properties and assets they respectively purport to
own, and a valid leasehold interest in, all of its assets and other properties
it purports to have a leasehold interest in. Such assets and other properties
are subject to no Liens other than Permitted Liens.
2.14 TAXES. Except for the specified Pennsylvania and Connecticut Tax
Returns, the Borrower has filed or caused to be filed all Federal, state and
local and foreign tax returns and reports required to have been filed by it or
any of its Subsidiaries and has paid or caused to be paid all taxes,
assessments, fees and other governmental charges payable by it or any of its
Subsidiaries which have become due, other than those not yet delinquent and
those due that are being contested in good faith by appropriate proceedings and
for which the Borrower or such Subsidiary shall have set aside on its books
adequate reserves in accordance with GAAP. The Borrower has paid or has
-10-
provided adequate reserves for the payment of all Federal, State, local and
foreign income taxes applicable to the Borrower or any of its Subsidiaries for
all prior fiscal years and for the current fiscal year to the date hereof. There
is no proposed tax assessment against the Borrower or any of its Subsidiaries
which would, if the assessment were made, have a Material Adverse Effect upon
the Borrower.
2.15 BUSINESS NAME; OFFICES AND LOCATIONS. The Borrower and each of its
Subsidiaries conducts its business solely in its own corporate name without the
use of a trade name or style, except for any trade name or style set forth in
Schedule C attached hereto. The chief executive offices and principal place of
business of (i) the Borrower is at the address set forth in the opening
paragraph of this Agreement, (ii) of TFCI, is at 000 Xxxxx Xxxxxx, Xxxx
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000, and (iii) of Avest, at 000 Xxxxxxx Xxxxxx,
Xxxxxxxxx, Xxx Xxxx 00000.
2.16 BORROWER'S QUESTIONNAIRE AND TFCI'S QUESTIONNAIRE. All statements in
each of the Borrower's Questionnaire and Company's Questionnaire are true and
correct as of the date of this Agreement and, except to the extent the Borrower
gives to the Bank prior written notice of any change, shall remain true and
correct. Nothing contained in this Section 2.16 shall be interpreted to limit
the Borrower's obligations, or the Lender's rights, under Section 6.5 below.
2.17 EMPLOYEE BENEFIT PLANS. Each employee benefit plan, (as such term is
defined in Section 3(3) of ERISA), if any, established, maintained or
contributed to by the Borrower, any Subsidiary or any other ERISA Affiliate
(each a "Plan") is in compliance in all material respects with the applicable
provisions of ERISA and the Code. No Plan has an Accumulated Funding Deficiency,
as such term is defined in Section 412 of the Code. No Reportable Event, as such
term is defined in ERISA, has occurred with respect to any Plan. No Plan is a
Multiemployer Plan, as such term is defined in ERISA.
2.18 ENVIRONMENTAL MATTERS. To the best of the Borrower's knowledge and
belief (i) Borrower, and each of its Subsidiaries and each of their respective
properties, operations and other activities are in compliance, in all material
respects, with all Environmental Laws, (ii) no Hazardous Material (other than
Hazardous Materials used in the ordinary business of office maintenance in
compliance with Environmental Laws) is located at, on or in, or about, to the
Borrower's or such Subsidiary's properties and none of Borrower's or such
Subsidiary's operations or other activities involve Hazardous Materials or have
resulted in the Release of any Hazardous Materials which may have damaged any
Natural Resources, and (iii) the Borrower and each of its Subsidiaries has no
liability or class of liability under any Environmental Law or with respect to
any Hazardous Material. The term "property(ies)" as used in this Section shall
mean any property(ies) owned, occupied and/or operated by the Borrower or any of
its Subsidiaries.
-11-
ARTICLE 3. CONDITIONS PRECEDENT
3.1 INITIAL REVOLVING CREDIT LOAN. The initial Revolving Credit Loan shall
be subject (in addition to the conditions precedent set forth in Section 3.2
below) to the Borrower fulfilling the following conditions precedent:
(a) DELIVERY OF VARIOUS DOCUMENTS. The Lender shall have received each
of the following, all of which shall be in form and substance satisfactory
to the Lender:
(i) originals of each of the applicable Financing Documents, all
of which shall have been duly and properly authorized, executed and
delivered by the respective party or parties thereto and in full force
and effect.
(ii) the Obligor Legal Opinion.
(iii) certificates of insurance and loss payable clauses, meeting
the requirements of Section 4.3 below and all other applicable
requirements of any other Financing Document.
(iv) current copies of the articles of incorporation and by-laws
of each of the Borrower and its Subsidiaries, as restated or amended
to the date of the making of such initial Revolving Credit Loan,
certified, with respect to the articles of incorporation, by the
appropriate Secretary of State, and, with respect to the by-laws, by
an appropriate officer of each of the Borrower and its Subsidiaries.
(v) certified copies of all corporate (including stockholder, if
required) action taken by each of the Borrower and its Subsidiaries to
authorize the execution, delivery and performance in accordance with
their respective terms of this Agreement, the Note, and any other
Financing Document to which Borrower and/or such Subsidiary is a
party, such resolutions to be certified by the secretary or assistant
secretary of the Borrower or such Subsidiary as of the date of
disbursement of such initial Revolving Credit Loan.
(vi) a certificate of incumbency with respect to the officers of,
as applicable, each of the Borrower and its Subsidiaries authorized to
execute and deliver this Agreement, the Note, or any other Financing
Document to which the Borrower or such Subsidiaries is a party.
(vii) current certificates of good standing for each of the
Borrower and its Subsidiaries from the applicable state of
incorporation, and, if applicable, in each of the Foreign
Jurisdictions.
(viii) a certificate, dated the date of the Loan, signed by a
Responsible
-12-
Officer of the Borrower, confirming compliance with Section 3.2(a)
hereof.
(ix) current UCC search reports with respect to the Borrower and
its Subsidiaries.
(x) acknowledgement copies of the filing of all UCC financing
statements filed in connection with the perfection of any Lien granted
in favor of the Lender pursuant to any Financing Document.
(xi) pay proceeds letter, executed by Borrower, directing and
authorizing the Lender to apply the proceeds of the initial Revolving
Credit Loan for the purposes, and in accordance with the instructions,
set forth therein and in accordance with Section 2.12 hereof.
(xii) a current title report with respect to the Plainview Real
Estate.
(xiii) postal change of address cards, letter to postmaster and
letters in blank to account debtors of Borrower and TFCI.
(xiv) the Specified Additional Closing Documents.
(b) OTHER DOCUMENTS. The Lender shall have received all such other
certificates, reports, statements, opinions of counsel, instruments,
assurances, agreements, or other documents as the Lender may reasonably
request.
(c) LEGAL MATTERS. All legal matters incident to the transactions
contemplated by this Agreement and the other Financing Documents shall be
satisfactory to the Lender and Messrs. Xxxx Xxxxx & Xxxxxxx, special
counsel for the Lender.
(d) PAYMENT OF LEGAL FEES. Borrower shall pay the legal fees and
disbursements, of Messrs. Xxxx Xxxxx & Xxxxxxx LLP ("FDH"), special counsel
to the Lender to be limited to a maximum of $4,000 plus $1,000 for
disbursements as set forth in the Commitment Letter (provided, that
Borrower shall also reimburse FDH for the costs of all UCC searches, filing
fees and corporate searches and certificates).
(e) PAYMENT OF CERTAIN EXISTING DEBT. Payment in full by the Borrower
of all Indebtedness to the Existing Lender.
(f) PAYMENT OF THE FACILITY FEE. Borrower shall pay $3,000 facility
fee referred to in Section 1.12.
3.2 ALL REVOLVING CREDIT LOANS. The making of each Revolving Credit Loan
(whether the initial Revolving Credit Loan or any subsequent Revolving Credit
Loan) shall be subject to the following additional conditions precedent:
-13-
(a) REPRESENTATIONS AND WARRANTIES TRUE AND CORRECT; NO EVENT OF
DEFAULT. (i) All of the representations and warranties made or deemed to be
made under this Agreement or any other Financing Document shall be true and
correct at the time of the disbursement of the Revolving Credit Loan
(except for the representation or warranty contained in Section 2.4 with
respect to distributions to the extent it is no longer true by reason of a
distribution made in accordance with, and permitted by, Section 5.7 below.,
with and without giving effect to the making of the Revolving Credit Loan
and the application of the proceeds thereof, and (ii) no Event of Default
or Default, shall have occurred and be continuing at such time, with and
without giving effect to the making of the such Loan and the application of
the proceeds thereof. The Lender may, without waiving this condition,
consider it fulfilled, and a representation and warranty by the Borrower to
such effect made to the Lender, if no written notice to the contrary is
received by the Lender from the Borrower prior to the making of the such
Loan.
(b) DOCUMENTS IN FULL FORCE AND EFFECT. All Financing Documents shall
remain in full force and effect and not be terminated. The Lender may,
without waiving this condition, consider it fulfilled, and a representation
and warranty by the Borrower to the Lender to such effect made, if no
written notice to the contrary is received from the Borrower prior to the
making of the applicable Loan.
(c) CORPORATE ACTIONS IN FULL FORCE AND EFFECT. The corporate actions
of the Borrower referred to in Section 3.1(a) shall remain in full force
and effect and the incumbency of officers shall be as stated in the
certificates of incumbency delivered pursuant to Section 3.1(a) or as
subsequently modified and reflected in a certificate of incumbency
delivered to the Lender. The Lender may, without waiving this condition,
consider it fulfilled, and a representation and warranty by the Borrower to
the Lender to such effect made, if no written notice to the contrary is
received from the Borrower prior to the making of the applicable Loan.
(d) NO MATERIAL ADVERSE CHANGE. There has been no material adverse
change in the business, assets, liabilities, financial condition, results
of operations or business prospects of the Borrower or any Guarantor since
the date of any financial statements delivered to the Lender prior to or
after the date of this Agreement. The Lender may, without waiving this
condition, consider it fulfilled, and a representation and warranty by the
Borrower to the Lender to such effect made, if no written notice to the
contrary is received from the Borrower prior to the making of the
applicable Loan.
(e) REQUEST AND BORROWING BASE CERTIFICATE. The Borrower shall have
requested such Revolving Credit Loan and Borrower shall have also supplied
and/or executed any other applicable documentation, including a Borrowing
Base Certificate, in accordance with the applicable terms and provisions
hereof.
(f) NOT EXCEED REVOLVING CREDIT MAXIMUM AMOUNT. Immediately prior to
and after the applicable Revolving Credit Loan is made, the sum of
outstanding Revolving Credit Loans
-14-
shall not exceed the Revolving Credit Maximum Amount. The Lender may,
without waiving this condition, consider it fulfilled, and a representation
and warranty by the Borrower to the Lender to such effect made, if no
written notice to the contrary is received from the Borrower prior to the
making of the applicable Loan.
9 3.3 WAIVER. The Lender, in its sole and absolute discretion, may waive a
condition(s) precedent with respect to a Revolving Credit Loan. The giving of a
waiver on one occasion shall not obligate the Lender to grant a waiver on any
other occasion.
ARTICLE 4. AFFIRMATIVE COVENANTS
The Borrower (and to the fullest extent applicable, TFCI) covenants and
agrees with the Lender that, until payment in full of the Revolving Credit
Loans, payment and performance by the Borrower and Guarantors of all of their
other obligations under the Financing Documents and the termination of the
Revolving Credit Facility, unless the Lender otherwise consents in writing, the
Borrower shall and shall cause its Subsidiaries to:
4.1 PRESERVATION OF EXISTENCE AND PROPERTIES; SCOPE OF BUSINESS. (a)
Preserve and maintain its corporate existence and all of its other franchises,
licenses, rights and privileges, and remain qualified to do business, and
authorized to do business, as a foreign corporation in all jurisdictions in
which the property or assets owned, leased, or operated by the Borrower or such
Subsidiary, as the case may be, or the nature of the business conducted by
Borrower or such Subsidiary, as the case may be, requires such qualification or
authorization, except for qualifications and authorizations the lack of which,
singly or in the aggregate, has not had and will not have a Material Adverse
Effect upon the Borrower or such Subsidiary, as the case may be, (b) preserve,
protect and obtain all material general intangibles, (c) preserve and maintain
in good repair, working order and condition, reasonable wear and tear excepted,
all of the Borrower's or such Subsidiary's, as the case may be, material assets
and other material properties and (d) engage only in businesses in substantially
the same fields as the businesses conducted by the Borrower or such Subsidiary,
as the case may be, on the date hereof. Avest shall conduct no business other
than the ownership, maintenance, and operation of the Plainview Real Estate.
4.2 FINANCIAL STATEMENTS.
A. Deliver to the Lender:
(i) as soon as available, but in any event within 90 days after the end of
each fiscal year of the Borrower, a copy of the consolidated and consolidating
balance sheet of the Borrower and its Subsidiaries as at the end of such year
and the related statements of operations, stockholders' equity and cash flows of
the Borrower and its Subsidiaries for such year, showing the financial condition
of the Borrower and its Subsidiaries as of the close of such fiscal year and the
results of their operations during such year, all audited by independent public
accountants selected
-15-
by Borrower and reasonably satisfactory to the Lender and accompanied by an
opinion of such accountants (which shall not be qualified in any material
respect) to the effect that such financial statements fairly present the
financial condition and results of operations of the Borrower and its
Subsidiaries in accordance with GAAP. Concurrently with the delivery of such
financial statements, Borrower shall cause such independent public accountants
to deliver a certificate stating that in making the examination necessary
therefor no actual knowledge was obtained of any Default or Event of Default,
except as may be specified in such certificate.
(ii) as soon as practicable, but in any event within thirty (30) days after
the end of each calendar month, a copy of a Borrower-prepared consolidated, and,
if requested by Lender, consolidating, financial statements including a balance
sheet, income statement, source and use of funds statement, and such other
supporting schedules as Lender may require, of the Borrower and its Subsidiaries
as at the end of such month.
(iii) as soon as practicable, but in any event within thirty (30) days
after the end of each calendar month, (aa) an accounts receivable aging (on a
form acceptable to the Lender) of the Borrower and its Subsidiaries as of the
end of such month,
(iv) within 5 days after the end of each month, a Borrowing Base
Certificate as of the end of such month, in form and substance acceptable to the
Lender.
(v) copies of all federal income tax returns filed by the Borrower or any
of its Subsidiaries, such statements to be delivered to the Lender within thirty
(30) days of the filing thereof.
(vi) copies of all filings (10-Q) made with the Securities and Exchange
Commission as soon as practicable, but in any event within ten (10) Business
Days after the applicable deadline thereof (as adjusted for taking any valid
extension thereof).
(vii) within thirty (30) days after the end of each fiscal year, management
prepared financial projections for the next fiscal year which projections shall
include consolidated balance sheets, income statements and sources and uses of
funds of the Borrower and its Subsidiaries, and other necessary supporting
schedules. Such projections shall be the good faith projections of the
Borrower's management.
The Borrower agrees and covenants with the Lender that all financial
statements referred to in subparagraph (i) and (ii) of this Section 4.2.A. will
present fairly the financial condition of the Borrower and its Subsidiaries as
of the respective dates thereof and the results of operations (and, in the case
of the annual statements, cash flows) of the Borrower and its Subsidiaries for
the periods covered by such statements in accordance with GAAP applied
consistently throughout the periods reflected therein (except as approved by
such accountants and disclosed therein).
B. Deliver to the Lender:
-16-
(a) concurrently with the delivery of the financial statements referred to
in subsection 4.2.A.(ii) above for any month ending any fiscal quarter, a
certificate of the President or Chief Financial Officer of the Borrower (i)
stating that, to the best of his or her knowledge, the Borrower during such
period has observed or performed all of its covenants and other agreements, and
satisfied every condition, contained in this Agreement and in each of the other
Financing Documents to be observed, performed or satisfied by it, and that he or
she has obtained no knowledge of any Default or Event of Default, except as may
be specified in such certificate, (ii) certifying that all such financial
statements are true and correct in all material respects and fairly present the
consolidated financial condition and results of operations of the Borrower and
its Subsidiaries (subject, in the case of interim statements, to normal year-end
audit adjustments) and have been prepared in accordance with GAAP applied
consistently throughout the periods reflected therein (except as approved by the
Borrower's independent certified public accountants and disclosed therein) and
(iii) showing in reasonable detail the calculations required to establish
whether or not Borrower was in compliance with any applicable Specified Covenant
Tests.
(b) promptly, such additional financial and other information and
certificates as the Lender may from time to time reasonably request.
4.3 GENERAL INSURANCE REQUIREMENTS. (a) Keep all of the Borrower's and each
of its Subsidiary's insurable properties (including all physical Collateral)
insured against fire and other hazards (so called "All Risk" coverage), with
financially responsible companies and in amounts reasonably satisfactory to the
Lender and, in any event, in at least such amounts and against at least such
risks as are usually insured against in the same general area(s) by companies
engaged in the same or similar business, (b) maintain public liability coverage
against claims for personal injuries, death or property damage, in amounts
reasonably satisfactory to the Lender, (c) maintain product liability insurance
in amounts reasonably satisfactory to the Lender, (d) maintain all worker's
compensation, employment or similar insurance as may be required by Applicable
Law, and (e) maintain such other insurance as may be required by Applicable Law
or reasonably required by the Lender. Such All Risk, property insurance, public
and product liability coverage shall provide for a minimum of thirty (30) days'
prior written notice from the insurer to Lender of any expiration or termination
of, or material amendment to, such insurance coverage. Such All Risk property
insurance shall name the Lender as loss payee or mortgagee, as the case may be,
and shall contain a clause specifying that the interests of Lender shall not be
impaired or invalidated by any act or neglect of Borrower (or other owner of the
property) or by the occupation of the premises for purposes more hazardous than
are permitted by said policy. The Lender shall be named as additional insured on
all such public liability and product liability policies. Borrower agrees to
deliver copies of all of the aforesaid insurance policies to the Lender. In the
event of any loss or damage to the assets or other properties of the Borrower or
its Subsidiaries, Borrower shall give immediate written notice to the Lender and
to its insurers of such loss or damage and shall promptly file its proofs of
loss with said insurers. All obligations of the Borrower, and all rights of the
Lender, with respect to insurance contained in this Section 4.3 shall be in
addition to, and not in limitation of, any other obligations and rights with
respect to insurance set forth in any other
-17-
Financing Document. Nothing contained in this Agreement or any other Financing
Document shall be interpreted or construed to impose on the Lender any
obligation or liability with respect to the insurance of the Borrower or its
Subsidiaries or the maintenance or adequacy thereof. If Borrower fails to pay
any premiums of any insurance, Lender may (but shall have no obligation to) pay
same and any payments made by Lender shall be reimbursed by the Borrower upon
demand of the Lender, and shall bear interest at the Revolving Credit Default
Rate.
Pursuant to Section 6.1 and the definition of "Collateral", the Lender has
been assigned and granted a security interest in any and all proceeds of all
insurance policies covering or otherwise relating to any Collateral. Each of the
Borrower and TFCI authorizes and empowers the Lender (i) after the occurrence
and during the continuance of any Event of Default to adjust or compromise any
loss under such policies and (ii) prior to or after the occurrence of any Event
of Default, to collect and receive all such proceeds. If an Event of Default is
not continuing, the Borrower or TFCI, as the case may be, shall have the right
to adjust or compromise any loss under such policies, provided, that the
Borrower shall not agree to any such adjustment or compromise without the prior
written consent of the Lender if the loss is involved in excess of $75,000,
which consent shall not be unreasonably withheld. Each of the Borrower and TFCI
hereby authorizes and directs each insurance company to pay all such proceeds
directly and solely to the Lender and not to Borrower or TFCI, as the case may
be, and the Lender jointly. Borrower and TFCI authorize and empower the Lender
to execute and endorse in Borrower's or TFCI's name (at all times) all proofs of
loss, drafts, checks and any other documents or instruments necessary to
accomplish such collection, and any Persons making payments to the Lender under
the terms of this paragraph are hereby relieved absolutely from any obligation
or responsibility to see to the application of any sums so paid. After deduction
from any such proceeds of all costs and expenses (including reasonable
attorney's fees) incurred by the Lender in the collection and handling of such
proceeds, the net proceeds shall be applied as follows. If no Event of Default
shall have occurred and then be continuing, such net proceeds may be applied, at
Borrower's or TFCI's option, either toward replacing or restoring the applicable
Collateral (provided such replacement or restoration is practicable), in a
manner and on terms reasonably satisfactory to the Lender, or as a credit
against the Secured Obligations, whether matured or unmatured. In the event that
Borrower or TFCI may and does elect to replace or restore as aforesaid, then
such net proceeds shall be deposited in a segregated account at the Lender
subject to the sole order of the Lender and shall be disbursed therefrom by the
Lender in such manner and at such times as the Lender reasonably deems
appropriate to complete such replacement or restoration; provided, however, that
if any Event of Default shall occur and be continuing at any time before or
after replacement or restoration has commenced, then thereupon the Lender shall
have the option, at its sole discretion, to apply all remaining net proceeds
either toward replacing or restoring the applicable Collateral, in a manner and
on terms satisfactory to the Lender, or as a credit against such of the Secured
Obligations, whether matured or unmatured, as the Lender shall determine in its
sole discretion. If an Event of Default shall have occurred and be continuing
(including an Event of Default occurring prior to such deposit of the net
proceeds), the Lender may, in its sole discretion, apply such net proceeds
either toward replacing or restoring the Collateral, in a manner and on terms
satisfactory to the Lender, or as a credit against the Secured Obligations,
whether matured or unmatured. Notwithstanding the foregoing provisions of this
paragraph but
-18-
without otherwise limiting the rights of the Lender under this paragraph, at all
times that no Event of Default is continuing, if the loss involved is $75,000 or
less, the Lender shall, at the request of the Borrower rather than deposit the
net proceeds for such loss in such a segregated account, promptly pay over such
proceeds to the Borrower or TFCI, as the case may be, provided that the Borrower
or TFCI, as the case may be, shall promptly apply such proceeds to the
replacement or restoration of the applicable Collateral, if practicable.
If there shall have occurred a Default, but not at such time an Event of
Default, the Lender shall have the right to hold all insurance proceeds in an
account at the Lender (subject to the sole order of the Lender) until such time
as the event or condition constituting such Default is either timely cured or
waived in accordance the terms and provisions hereof or becomes an Event of
Default, so as to be able to determine which of the procedures with respect to
the application of insurance proceeds set forth in the immediately preceding
paragraph should be used.
4.4 COMPLIANCE WITH LAWS; PAYMENT OF TAXES. (a) Comply with all Applicable
Laws and all obligations under all Contracts except to the extent that failure
to comply therewith could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Borrower or any of its
Subsidiaries; and (b) pay all (i) taxes, assessments, governmental charges or
levies, and (ii) claims for labor, supplies, rent and other obligations made
against it or its property which, if unpaid, might become a lien or charge
against the Borrower or such Subsidiary or its respective properties, except, in
the case of (b)(i) or (b)(ii), liabilities being contested by the Borrower or
such Subsidiary in good faith by appropriate proceedings and against which the
Borrower shall set up adequate reserves on its books in conformity with GAAP.
4.5 INSPECTION. Permit representatives (whether or not officers or
employees) of the Lender, from time to time, as often as may be reasonably
requested, but only during normal business hours and upon reasonable prior
notice (provided, however, that prior notice need not be given for the audits
referred to in the immediately succeeding sentence or, if an Event of Default
has occurred and is continuing), to (a) visit and inspect any offices, assets or
other properties of the Borrower or any of its Subsidiaries, (b) inspect, audit
and make extracts from the Borrower's or such Subsidiary's books and records,
and (c) discuss with Borrower's or such Subsidiary's principal officers, and its
independent accountants, the Borrower's or such Subsidiary's businesses, assets
and other properties, liabilities, financial condition, results of operations
and business prospects. As part of the Lender's rights under the immediately
preceding sentence, the Lender shall, at any time and from time to time, have
the right to perform audits with respect to the Borrower and its books, records
and assets and other properties (including assets in any warehouse). The
Borrower shall pay for the costs of such audits which fees will be $500 for each
man day plus out-of-pocket expenses; provided, that, as long as no Event of
Default shall have occurred, the aggregate amount the Borrower shall be
obligated to pay for such audits in any calendar year, commencing with the
calendar year 1997, shall not exceed $4,000 (per year).
4.6 NOTICE OF DEFAULT; LITIGATION, ETC. Furnish to the Lender prompt
written notice of any of the following: (i) the occurrence of any Event of
Default or Default; (ii) the commencement
-19-
of any actions, suits or proceedings or investigations in any court or before
any arbitrator of any kind or by or before any governmental or non-governmental
body against or in any other way relating adversely to, or affecting, the
Borrower or any of its Subsidiaries or their respective businesses or
properties, which, singly or in the aggregate, have an amount involved in excess
of $50,000; (iii) any material amendment of the certificate of incorporation,
by-laws, or other organizational document of the Borrower or any of its
Subsidiaries; (iv) any change with respect to the business, assets or other
properties, liabilities, financial condition, results of operations or business
prospects of the Borrower or any of its Subsidiaries other than changes in the
ordinary course of business which, singly or in the aggregate, have not had a
Material Adverse Effect on the Borrower or any of its Subsidiaries.
4.7 EMPLOYEE BENEFIT PLAN. Cause each Plan to comply in all material
respects with the applicable provisions of ERISA and the Code. The Borrower
shall promptly give written notice to the Lender of the details of (i) any
Reportable Event (as such term is defined in ERISA) with respect to a Plan, (ii)
any Accumulated Funding Deficiency (as such term is defined in Section 412 of
the Code) with respect to a Plan, (iii) the material modification or termination
(or proposed termination) of any Plan or (iv) the establishment or agreement to
maintain or make contributions to any new Plan. Neither the Borrower nor any
ERISA Affiliate will establish, maintain or make contributions to any
Multiemployer Plan (as such term is defined in ERISA).
4.8 ENVIRONMENTAL COMPLIANCE. (i) Comply with, and cause all of the
Borrower's and each of its Subsidiary's properties, operations and other
activities to comply with all Environmental Laws except for non-compliance which
could not reasonably be expected to have a Material Adverse Effect on Borrower
or any of its Subsidiaries; (ii) not Release any Hazardous Materials which
Release damages or threatens to damage any Natural Resources in any material
manner; (iii) not engage in the handling, use, storage or transportation of
Hazardous Materials (except for the storage and use of Hazardous Materials used
in normal office maintenance and except for the use of any such materials
normally used in the assembly and distribution of connectors for original
equipment manufacturers, in compliance in all material respects with
Environmental Laws); and (iv) promptly notify the Lender of any material notice
received by the Borrower or any of its Subsidiaries with respect to (aa) any
alleged material violation by the Borrower of any Environmental Law, (bb) any
liability or class of liability under any Environmental Law, or (cc) any Lien
imposed or threatened to be imposed on any of the Borrower's or such
Subsidiary's properties pursuant to any Environmental Law.
4.9 OPERATING ACCOUNTS. To the fullest extent permitted under Applicable
Law, maintain all of Borrower's and TFCI's operating accounts with Lender.
ARTICLE 5. NEGATIVE COVENANTS
The Borrower (and, to the fullest extent applicable, TFCI) covenants and
agrees with the Lender that, until payment in full of all Revolving Credit
Loans, payment and performance by the Borrower and Guarantors of all of their
other obligations under the Financing Documents and the
-20-
termination of the Revolving Credit Facility, unless the Lender otherwise
consents in writing, the Borrower shall not, and shall cause its Subsidiaries
not to, (directly or indirectly):
5.1 ENCUMBRANCES. Create, incur, assume or suffer to exist any Lien against
any of the Borrower's or such Subsidiary's assets or other properties, whether
now existing or hereafter acquired, except: (a) Liens in favor of the Lender or
(b) Permitted Liens.
5.2 LIMITATION ON INDEBTEDNESS. Create, incur, assume, suffer to exist any
Indebtedness except for Permitted Indebtedness.
5.3 CONTINGENT LIABILITIES. Assume, guarantee, endorse or otherwise become
liable upon or otherwise become obligated with respect to, any liability or
other obligation of any other Person, except for endorsements of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business.
5.4 CONSOLIDATION OR MERGER; ACQUISITION OR SALE OF ASSETS. (a) Dissolve or
liquidate or discontinue its normal operations with intent to liquidate; (b)
merge or consolidate with any other Person; (c) acquire by purchase, lease or
otherwise all or a material portion of the properties or assets of any other
Person; or (d) sell, transfer, lease or otherwise dispose of any of its assets
or other properties (whether tangible or intangible) except that the Borrower or
TFCI (or, in the case of clause (ii) below, Avest), so long as no Event of
Default shall have occurred and be continuing or would result therefrom, may (i)
sell inventory (as defined in the Connecticut UCC) in the ordinary course of
business for value received and (ii) replace, in the ordinary course of
business, equipment (as defined in the Connecticut UCC) which has become worn
out or obsolete, with equipment of at least comparable value.
5.5 TRANSACTIONS WITH AFFILIATES. Enter into, or be a party to, any
transaction with any Affiliate of the Borrower or any of its Subsidiaries
(including, without limitation, transactions involving the purchase, sale or
exchange of assets or properties or the rendering of services), except in the
ordinary course of business pursuant to the reasonable requirements of the
Borrower or such Subsidiary and upon fair and reasonable terms no less favorable
to the Borrower of such Subsidiary than Borrower or such Subsidiary would obtain
in a comparable arm's-length transaction with a Person other than an Affiliate.
Without limiting the generality of the immediately preceding sentence, such
sentence shall apply to transactions between the Borrower and its Subsidiaries,
PROVIDED, however, that intercompany charges between the Borrower and its
Subsidiaries may be made in accordance with the prior practices of such parties.
5.6 LOANS, ADVANCES, INVESTMENTS. Purchase or otherwise acquire any shares
of stock or obligations of, make any loans or advances to, make a capital
contribution to, or make any other investments in, any Person other than
investments in direct obligations of the United States of America, or commercial
paper rated the highest grade by two or more national credit rating agencies, or
deposit or time accounts of Lender or, subject to Section 4.9 hereof, any other
United States bank and which account is insured by the Federal Deposit Insurance
Corporation.
-21-
5.7 ACQUISITION OF STOCK OF BORROWER; DIVIDENDS. (i) Purchase, acquire,
redeem or retire, or make any commitment to purchase, acquire, redeem or retire,
any of the capital stock of the Borrower, whether now or hereafter outstanding,
provided, however, that the Borrower and/or TFCI shall be permitted to purchase,
acquire, redeem or retire the capital stock of the Borrower so long as (x) the
aggregate amount of the capital stock thus purchased, acquired redeemed or
retired does not exceed $100,000 and (y) neither at the time of such purchase,
acquisition, redemption or retirement nor as a result thereof no Default or
Event of Default exists or occurs or (ii) pay any dividends on, or otherwise
make any distributions with respect to, any capital stock of the Borrower if at
the time of such dividend or other distribution an Event of Default or Default
exists or if an Event of Default or Default shall result from such payment.
5.8 [INTENTIONALLY OMITTED.]
5.9 SUBSIDIARIES. Acquire (other than, in the case of the Borrower, TFCI
and Avest), form or dispose of any Subsidiary.
5.10 CURRENT RATIO. Permit the ratio of Consolidated Current Assets to
Consolidated Current Liabilities, as of the end of any fiscal quarter
(commencing with the fiscal quarter ending September 30, 1997), (i) for any such
fiscal quarter ending prior to June 30, 1998, to be less than 1.00 to 1.00 and
(ii) for any such fiscal quarter ending on or after June 30, 1998, to be less
than 1.25 to 1.00.
5.11 DEBT SERVICE COVERAGE. Permit the ratio of (a) Consolidated EBITDA
less Cash Capital Expenditures to (b) Interest Expense plus CMTLD, for any
Elapsed Fiscal Year (commencing with the Elapsed Fiscal Period ending September,
1997), to be less than 1.25 to 1.00.
5.12. MINIMUM INTEREST COVERAGE. Permit the Interest Coverage Ratio for any
Elapsed Fiscal Year (commencing with the Elapsed Fiscal Period ending September,
1997), to be less than 1.50 to 1.00.
5.13. LIABILITIES TO TANGIBLE NET WORTH RATIO. Permit the ratio of
Consolidated Liabilities to Consolidated Tangible Net Worth, as of the end of
any fiscal quarter (commencing with the fiscal quarter ending September 30,
1997), to exceed 1.50 to 1.00.
5.14 LEASE OBLIGATIONS. Incur, create, or assume any commitment to make any
Lease Payments (as defined below) if the aggregate amount payable thereunder in
any one fiscal year (commencing with the fiscal year ending March 31, 1997)
would exceed $175,000. "Lease Payments" means any direct or indirect payment or
payments, whether as rent or otherwise, exclusive of, however, any rent payments
to Avest made pursuant to that certain lease of the property at the Plainview
Site between Avest, as lessor, and Astrex, as lessee, dated June 30, 1989,
including fees or service or finance charges, under any lease, rental or other
agreement for the use of the property of any Person other than the Borrower
whether or not such agreement contains an
-22-
option to purchase.
5.15 FISCAL YEAR. Cause its fiscal year to end on any date other than March
31.
5.16 DOUBLE NEGATIVE PLEDGE. Enter into or suffer to exist, or permit any
of Borrower's Subsidiaries to enter into or suffer to exist, other than in favor
of the Lender, any agreement prohibiting (or restricting) the creation or
assumption of any Lien upon any property(ies) or assets of the Borrower or any
of its Subsidiaries.
ARTICLE 6. COLLATERAL.
6.1. SECURITY INTEREST. To secure the due and punctual payment and
performance of all of the Secured Obligations, each of the Borrower and TFCI do
hereby each pledge and assign all of the Collateral to the Lender, and grant to
the Lender a present and continuing security interest in and lien upon all of
its respective Collateral.
6.2. CONTINUED PRIORITY OF SECURITY INTEREST. Borrower and TFCI represent,
warrant and covenant that (i) the Security Interest is and shall at all times be
a valid and perfected security interest enforceable against the Borrower, TFCI
and all third parties and securing, in accordance with the terms of this
Agreement, the Secured Obligations, and (ii) the Collateral shall not at any
time be subject to any Liens that are prior to, on a parity with or junior to
the Security Interest other than Permitted Liens.
6.3. FILING; VERIFICATION.
(a) The Borrower and TFCI shall, at their sole cost and expense, take or
cause to be taken all action which may be necessary or desirable, or that the
Lender may reasonably request, in order to assure that the Security Interest
will at all times comply with the provisions of Section 6.2 and the other
provisions of the Financing Documents and to enable the Lender to exercise or
enforce its rights hereunder and under the other Financing Documents, including,
but not limited to, (i) executing, delivering and, where applicable, filing
financing statements, continuation statements, pledges, designations, mortgages,
hypothecation, notices and assignments, in each case in form and substance
satisfactory to the Lender, (ii) causing to be executed and delivered (a)
landlord's waivers and (b) postal change of address cards, letters to
postmasters and pre-signed letters to account debtors under Accounts of the
Borrower and/or TFCI, all in form and substance satisfactory to the Lender,
(iii) delivering to the Lender, endorsed or accompanied by such instruments of
assignment as the Lender may specify, any and all chattel paper, securities,
instruments, letters of credit and advices thereof and documents evidencing or
forming a part of the Collateral. The Borrower and TFCI shall xxxx their books
and records as may be necessary or appropriate to evidence, protect and perfect
the Security Interest.
(b) A carbon, photographic or other reproduction of this Agreement or of
any financing
-23-
statement shall be sufficient as a financing statement.
(c) The Lender shall have the right at any time and by any reasonable means
(including by mail, telephone, telecopy or otherwise), in the name of the Lender
or the Borrower or its Subsidiaries (or other name), to verify (or require the
Borrower or TFCI to verify) the validity, ownership, amount or any other matter
relating to any Collateral. Borrower and its Subsidiaries shall cooperate in
connection with same.
6.4. CERTAIN COVENANTS AS TO COLLATERAL. So long as any of the Secured
Obligations are outstanding and unpaid or the Revolving Credit Facility exists
and unless the Lender shall otherwise consent in writing:
(a) The Borrower and TFCI will:
(i) at all times be the sole owner of each and every item of
Collateral respectively owned by it;
(ii) discharge all Liens other than Permitted Liens and otherwise
defend the Security Interest and its title to the Collateral at its own
expense;
(iii) endeavor to make collection of the Receivables of Borrower and
TFCI, provided, that nothing contained in this sentence shall, or shall be
interpreted to, limit any right of the Lender to collect any Receivable
upon the occurrence or continuance of any Event of Default (or any other
right or remedy of the Lender).
(iv) at all times keep, in all material respects, accurate and
complete records of the Collateral;
(v) (A) for purposes of computing the Borrowing Base, and not in
limitation of any of the provisions of Section 4.2 above, furnish to the
Lender information and documentation adequate to identify Receivables at
times and in form and substance as may be required by the Lender and from
time to time, as determined by the Lender, provide the Lender with aging
schedules describing all Receivables created or acquired by Borrower or
TFCI, (B) together with each such schedule, upon the request of the Lender,
provide the Lender with copies of customers' invoices or the equivalent,
original shipping and delivery receipts and such other documents as the
Lender shall specify, (C) upon the request of the Lender from time to time,
execute and deliver confirmatory written assignments of any Receivables or
other Collateral to the Lender, but any failure by the Borrower or TFCI to
execute and deliver such schedules and other materials or assignments shall
not limit or otherwise affect the Security Interest or the Lender's other
rights in and to the Collateral, (D) upon the request of the Lender, from
time to time, (i) a current listing of inventory of the Borrower and (ii) a
listing of the inventory of TFCI based upon (x) the current annual physical
inventory count or (y) at any time other than when the annual physical
inventory
-24-
count is taken, estimates derived from a gross profit roll forward method
of inventory calculation, and (E) upon request of the Lender, from time to
time, provide such information with respect to any collateral or the
operations of the Borrower or TFCI as shall in good faith be requested by
the Lender;
(vi) maintain all physical property that constitutes Collateral in
good condition and repair, reasonable wear and tear excepted, make all
necessary repairs thereto and all replacement of parts thereof so that the
value and operating efficiency thereof shall at all times be maintained and
preserved, reasonable wear and tear excepted, and exercise proper custody
over all such property;
(vii) upon Borrower or TFCI becoming aware of such matter or event,
give prompt notice to the Lender of (A) any matter or event which has
resulted in, or may result in, the actual or reasonably foreseeable
potential diminution in the value of, or reasonably foreseeable potential
offsets to, any of the Collateral in excess of $50,000 in the aggregate,
(B) any fact which would render any Receivables in the aggregate in excess
of $50,000 invalid or uncollectible, (C) any dispute with respect to any
Receivable, provided, however, that notice need only be given if the
aggregate amount of Receivables in dispute is in excess of $50,000, (D) all
returns, repossessions and recoveries in excess of $50,000 per month or
which are otherwise material, (E) Borrower's or TFCI's failure or inability
to perform on accounts over $50,000 in the aggregate, and (F) any
information relating to the material adverse change in the financial
condition of any account debtor or other obligor owing, at the applicable
time, an aggregate of $50,000 or more to the Borrower or TFCI; and
(viii) (A) upon the Lender's request, verify the amount, quantity,
ownership, value or any other documentation or matter relating to any of
the Collateral and (B) furnish to the Lender, upon the Lender's request,
such other information and documentation with respect to the Collateral as
the Lender may in good faith request from time to time, including, without
limitation, a master address list with respect to the Receivables of
Borrower or TFCI, a price list (setting forth both cost and proposed retail
price) of and physical listings and schedules of Inventory, a schedule of
Equipment setting forth each of the items of Equipment and any details with
respect thereto as the Lender may in good faith request, and schedules of
General Intangibles, all in form and substance reasonably satisfactory to
the Lender; and
(b) Borrower and TFCI represent, warrant and covenant that (i) all
Receivables that are Eligible Receivables or otherwise material Accounts shall
at all times represent bona fide transactions, and at all times shall be
complete and require no further act under any circumstances on the Borrower's or
TFCI's part to make such Receivables payable by the account debtors thereunder,
(ii) no Receivable or Receivables that is or are Eligible Receivables shall at
any time be subject to any defense or dispute or to any present, future or
contingent offset or counterclaim or any contract prohibiting assignment thereof
or requiring notice of or consent to assignment, or
-25-
represent a xxxx-and-hold sale, consignment sale, guaranteed sale,
sale-or-return or other similar understanding, and (iii) none of the
transactions underlying or giving rise to any Receivable shall at any time
violate any Applicable Law in a manner affecting the validity or enforceability
of the Receivable (including, without limitation, access to the courts of any
State to enforce such Receivable) and all such Receivables shall be legal, valid
and binding on the applicable obligor and fully enforceable by the Borrower or
TFCI, as the case may be; provided, that the failure of any Receivable or other
Collateral to comply with the terms of any of the provisions of any Financial
Document shall in no way impair the Lender's Security Interest therein.
(c) Neither the Borrower nor TFCI shall:
(i) rescind or cancel any obligation evidenced by any Receivable or
modify any term thereof or make any adjustment with respect thereto, or
extend or renew the same, or compromise or settle any dispute, claim, suit
or legal proceeding relating thereto, without the prior written consent of
the Lender, except that, if no Event of Default shall then exist (or result
therefrom), and subject to the rights of the Lender under Section 6.6, the
Borrower or TFCI, as the case may be, may, with respect to any Receivable,
but only in the ordinary course of its business and in accordance with
commercially reasonable business judgment and its customary collection
practices (aa) extend the time of payment thereof, (bb) in the case of an
Account that represents the right to payment for goods sold or leased,
grant a refund or credit with respect thereto for returned, damaged or
non-complying merchandise and (cc) settle the same for an amount less than
the then unpaid balance thereof; or
(ii) sell, assign, transfer or otherwise dispose of any Collateral to
anyone other than the Lender, provided, however, that, notwithstanding the
foregoing, so long as no Event of Default exists or would exist after
giving effect to such sale or disposition, (A) Inventory may be sold by the
Borrower or TFCI in the ordinary course of business and (B) Equipment which
is, in the reasonable commercial business judgment of the Borrower or TFCI,
obsolete or no longer useful in the conduct of the Borrower's or TFCI's
business may be sold or disposed of by the Borrower or TFCI provided that
the Lender is given prompt notice thereof. The sale proceeds of any such
sale or other disposition shall, subject to the other rights of the Lender
hereunder (including Section 6.6) be applied as set forth in Section 1.8
hereof. The inclusion of "proceeds" of the Collateral under the Security
Interest shall not be deemed a consent by the Lender to any sale or other
disposition of any part or all of the Collateral.
(d) Borrower shall duly fulfill any obligations on its part to be fulfilled
under or in connection with the Receivables and other Collateral and shall do
nothing to impair the rights of the Lender therein.
(e) Neither the Borrower nor TFCI shall attach or affix any material
Collateral to any real estate without the prior written consent of the Lender.
(f) If any Inventory (or other property of the Borrower or TFCI) is in the
possession or
-26-
control of any of the Borrower's or TFCI's agents or processors, the Borrower or
TFCI, as the case may be, shall, after the occurrence and during the continuance
of any Event of Default, if requested by the Lender, instruct such Person to
hold all such Inventory (and other property) for the account of the Lender and
subject to the instructions of the Lender and in all events the Borrower shall
cooperate with the Lender in taking possession of any such Inventory. Nothing
contained herein shall be interpreted to limit the provisions of Section 6.5
below.
6.5 LOCATION OF COLLATERAL; CHANGE OF NAME, ETC. Each of the Borrower and
TFCI represents, warrants and covenants that:
(a) The Borrower's Questionnaire was and is true, complete and correct in
all respects when originally given and as of the date hereof.
(b) The Company's Questionnaire was and is true, complete and correct in
all respects when originally given and as of the date hereof.
(c) Neither the Borrower nor TFCI, without giving the Lender thirty days'
prior notice thereof, and subject to any other additional restrictions set forth
in this Agreement or any other Financing Document, will (i) move its chief
executive office and, if different from its chief executive office, any office
where the books and records relating to any Receivables or General Intangibles
are kept, (ii) change the location of any other place of business or open any
new place of business, (iii) change its name, identity or corporate structure or
(iv) do any business under any name, trade name or trade style not listed on the
Borrower's Questionnaire or the Company's Questionnaire, as the case may be. In
addition, (i) the Borrower will not move its chief executive office outside of
Nassau County, New York without the written consent of the Lender and (ii) TFCI
will not move its chief executive office outside of West Springfield,
Massachusetts (unless such office is moved to Nassau County, New York with
proper notice given to Lender under clause (i) above) without the written
consent of Lender.
(d) (i) Borrower shall not move the location of any Inventory, Equipment or
other tangible Collateral without the prior written consent of the Lender and
(ii) TFCI shall not move the location of any Inventory, Equipment or other
tangible collateral to any location other than the Plainview Site without the
prior written consent of the Bank; provided, that the Borrower and TFCI may each
sell Inventory, and replace equipment, in the ordinary course as permitted by
Section 5.4 above.
6.6. NOTICE TO ACCOUNT DEBTORS OR OTHER OBLIGORS; POSSESSION OF COLLATERAL.
Upon the occurrence and any time during the continuance of any Event of Default,
the Lender may do any or all of the following:
(i) The Lender may notify (in the Lender's name and/or in the
Borrower's or TFCI's name), and/or require the Borrower or TFCI to notify,
in writing any account debtor or other obligor with respect to any one or
more of the Receivables or other Collateral to
-27-
make payment to the Lender, or any agent or designee of the Lender, at such
address as may be specified by the Lender or its agent or designee, as the
case may be, and the Lender or such agent or designee shall have the right
to receive all such payments; thereupon, the Borrower and/or TFCI, as the
case may be, shall no longer have any right to collect the affected
Receivables or other Collateral. If, notwithstanding the giving of any
notice, any account debtor or other obligor shall make payment to the
Borrower or TFCI's, the Borrower or TFCI, as the case may be, shall hold
all such payments it receives in trust for the Lender and shall deliver the
same to the Bank, or any such agent or designee, immediately upon receipt
by the Borrower or TFCI, as the case may be, in the identical form
received, together with any necessary endorsements. Anything contained in
this Agreement to the contrary notwithstanding, the Lender may, upon the
occurrence and at any time during the continuance of any Event of Default,
in its or the Borrower's or TFCI's name, (i) demand, xxx for, collect or
receive any payment with respect to, (ii) settle or adjust any disputes or
claims with respect to, (iii) file any proof of claim or similar document
with respect to, or (iv) extend, compromise, renew, discharge, release or
otherwise modify any of the terms of, the Receivables and other Collateral,
and otherwise exercise any of Borrower's or TFCI's rights, as the case may
be in, to or under or otherwise related to the Receivables or other
Collateral.
Anything herein contained to the contrary notwithstanding,
neither the Lender, nor any such agent or designee shall be required
or obligated, to (A) make any demand, or to make an inquiry as to the
nature or sufficiency of any payment received by it, or to present or
file any claim or notice or take any action with respect to any
Receivable or other Collateral or the monies due or to become due
thereunder, (B) to take any steps necessary to preserve any rights
against prior parties, or (C) notify the Borrower or TFCI of any
decline in the value of any of the Collateral or, except as required
by Applicable Law, take any steps to protect the value of any
collateral. Neither the Lender nor its agents or designees shall have
any liability to the Borrower or TFCI, as the case may be, for actions
or omissions or any error of judgment or mistake of fact or law made
in connection with this Agreement or any other Financing Document,
other than those occasioned by its or their gross negligence or
willful misconduct.
(ii) All amounts received or deposited with the Lender pursuant
to paragraph (i) of this Section 6.6 representing the proceeds of
Receivables and other Collateral shall be applied to the payment of
the Secured Obligations (whether or not matured) in such order as the
Lender shall in its sole discretion determine.
6.7. APPOINTMENT AS ATTORNEY AND AGENT FOR THE BORROWER WITH RESPECT TO
SECURITY INTEREST. To the fullest extent permitted by Applicable Law, each of
the Borrower and TFCI hereby irrevocably appoints the Lender as its true and
lawful attorney and agent, with full power of substitution, to execute and
deliver, on behalf of and in the name of the Borrower and TFCI, such financing
statements, assignments, notices, pledges and other documents and agreements,
and to take such other action as the Lender may reasonably deem necessary for
the purpose of the creation,
-28-
perfection, maintenance or continuation of the Security Interest, under any
Applicable Law, and the Lender is hereby authorized to file on behalf of and in
the name of the Borrower and TFCI, at the Borrower's expense, such financing
statements, assignments, notices, pledges and other documents and agreements in
any appropriate governmental office. The right is expressly granted to the
Lender in its discretion, in those jurisdictions where the same is permitted, to
file one or more financing statements (including amendments thereof) under the
Uniform Commercial Code signed only by the Bank, naming the Borrower or TFCI as
debtor and naming the Lender as secured party and indicating therein the types,
or describing the items, of the Collateral.
6.8. APPOINTMENT TO ACT FOR THE BORROWER. Each of the Borrower and TFCI
hereby:
(a) irrevocably authorizes the Lender to perform any and all of the acts
that the Lender is permitted to perform under any provision of this Agreement;
(b) constitutes and appoints the Lender as each of the Borrower's and
TFCI's true and lawful attorney and agent, with full power of substitution, in
the place and stead of the Borrower and TFCI and either in its own name or in
the name of the Borrower or of TFCI, to take the actions described below, (x)
with respect to any action described in clauses (i) and (ii) below, at any time,
and (y) with respect to any action described in clauses (iii)-(vi) below, if any
Event of Default shall occur and be continuing:
(i) to endorse the Borrower's or TFCI's name on any checks, notes,
acceptances, money orders, drafts or other forms of payment or security
that may come into the Lender's possession;
(ii) to sign and endorse the Borrower's or TFCI's name on any invoice,
storage or warehouse receipt, express xxxx or xxxx of lading relating to
any Receivables, on drafts against customers, on schedules and assignments
of Receivables, on notices of assignment, financing and continuation
statements and other public records, on verifications of accounts, on
notices to or from customers and on any and all documents necessary to
effectuate drawings under letters of credit and all other instruments or
documents relating to any of the foregoing items referred to in this
subparagraph (ii);
(iii) to notify the post office authorities to change the address for
delivery of the Borrower's and TFCI's mail to an address designated by the
Bank;
(iv) to receive, open and dispose of all mail addressed to the
Borrower or TFCI;
(v) to exercise any right, remedy or power of the Lender hereunder or
any other Financing Document (including without limitation Sections 6.6 or
7.3 hereof); and
(vi) to do all things necessary or in the Lender's judgment desirable
to carry out this Agreement or other Financing Document to which Borrower
or TFCI is a party;
-29-
(c) agrees to execute from time to time, upon request of the Lender,
letters of authorization in the form of Exhibit D attached hereto for use by the
Lender and related postal change of address cards, and letters to the account
debtors of the Borrower and TFCI (the actual use by the Lender of a letter of
authorization, change of address cards and letters to account debtors to be upon
the occurrence or anytime during the continuance of any Event of Default); and
(d) agrees that neither the Lender nor any other Person or Persons
designated by the Lender to exercise any of the foregoing powers of attorney
will be liable for any acts or omissions or for any error of judgment or mistake
of fact or law other than those occasioned by its or their gross negligence or
willful misconduct. Any power of attorney granted hereunder shall be deemed
coupled with an interest and shall be irrevocable until the Secured Obligations
have been fully satisfied and this Agreement is terminated (including the
revolving credit facility hereunder). The Lender may appoint such persons, firms
or corporations as, in its sole discretion, it may determine, for the purpose of
exercising any powers and taking any action permitted to be exercised or taken
by the Lender under or pursuant to any of the provisions of this Agreement.
6.9 DAMAGE TO OR LOSS OF COLLATERAL. Reference is made to Section 4.3 above
with respect to damage or loss of any Collateral.
ARTICLE 7. EVENTS OF DEFAULT
7.1 EVENTS OF DEFAULT. Any of the following shall constitute an Event of
Default, whatever the reason for such event or circumstance and whether
voluntary or involuntary and whether an event or circumstance is mentioned once
or more than once:
(a) Borrower shall fail to make any payment of any interest or
principal, when any of same shall become due under this Agreement
or any other Financing Document (whether due at maturity or by
reason of acceleration or demand or as part of any prepayment or
otherwise); PROVIDED, HOWEVER, that with respect to payments of
interest only, Borrower shall have two (2) Business Days after
such payment has become due in which to make such payment to
Lender in full before such overdue payment shall constitute an
Event of Default hereunder.
(b) Borrower or any other Person shall fail to make any payment of
any other monetary liability or other monetary obligation under
the Note, this Agreement or any other Financing Document and such
failure shall continue for a period of seven (7) calendar days
after written notice of such failure shall have been given to the
Borrower or such other person by the Lender.
(c) Borrower or TFCI shall default in the due performance or
observance of:
-30-
(i) any agreement or covenant contained in Sections 1.8,
4.1(a) (insofar as such Section requires the preservation of the
corporate existence of the Borrower and its Subsidiaries),
4.1(d), or 4.6 hereof or Articles 5 or 6 hereof ; or
(ii) any other agreement or covenant contained in this
Agreement (other than a covenant or agreement a default in the
performance or observance of which is elsewhere in this Section
7.1 specifically dealt with) and such default (in the case of
this subparagraph (ii)) shall have continued unremedied for a
period of, in the case of Section 4.5, two (2) Business Days
after, and, in the case of any such other agreement or covenant,
thirty (30) calendar days after written notice of such default
shall have been given to Borrower or TFCI by Lender.
(d) Any other "Event of Default" (after any other applicable cure
period) or "event of default" (after any other applicable cure
period) shall occur under any other Financing Document or, if the
term "Event of Default" or "event of default" is not defined
therein, any material breach of any such Financing Document by a
Person other than the Lender shall occur or any Financing
Document is terminated (except by reason of the Secured
Obligations being paid in full and this Agreement being
terminated).
(e) Any financial report or statement, certificate, statement,
representation or warranty at any time furnished or made by or on
behalf of Borrower, its Subsidiaries or any other Guarantor to
Lender, including, without limitation, any representation or
warranty made or deemed to be made in any Financing Document,
proves to have been incorrect, untrue or misleading in any
material respect when made.
(f) There shall occur any loss, theft, destruction, or damage of or
to all or a material portion of the assets or other properties of
the Borrower or its Subsidiaries except that such loss, theft,
destruction, or damage shall not be an Event of Default if same
is covered, in all material respects, by insurance issued by a
financially responsible insurance company which has not denied
coverage.
(g) Borrower or any Guarantor shall (i) fail to pay, when due, any
liability or other obligation, whether present or future,
absolute or contingent, to the Lender under any instrument or
agreement not constituting a Financing Document beyond the period
of grace, if any, provided in such instrument or agreement, or
(ii) default in the due observance or performance of any other
covenant or agreement relating to any such liability or
obligation or contained in any instrument or agreement
evidencing, governing, securing or otherwise relating thereto, or
any other event shall occur or condition exist, the effect of
which default or other event or condition is to cause, or permit
the Lender to cause, with the giving of notice if required, such
liability or obligation to become due prior to its stated
maturity or, in the case of an
-31-
obligation under a guaranty, endorsement or the like, to become
payable.
(h) Borrower or any Guarantor shall (i) fail to make, when due, any
payment with respect to any Indebtedness owed to any Person other
than the Lender or with respect to any guarantee, endorsement, or
other obligation relating to any Liability of any other Person
(other than a Liability owed to the Lender), which Indebtedness
and/or such Liability(ies), individually or in the aggregate,
exceed $50,000, beyond the period of grace, if any, applicable
thereto, (ii) default in the due observance or performance of any
other covenant or agreement relating to any such Indebtedness or
such guarantee, endorsement or other obligation, or contained in
any instrument or agreement evidencing, governing, securing or
otherwise relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or
condition is to cause, or permit the holder(s) thereof to cause,
with the giving of notice if required, such Indebtedness to
become due prior to its stated maturity or, in the case of any
such guaranty, endorsement or such other obligation, to become
payable, or (iii) fail to pay, within 90 days of the due date
thereof, any Trade Debt which individually or in the aggregate
exceeds the Trade Debt Default Amount.
(i) Borrower or any Guarantor shall cease doing business as a going
concern, make an assignment for the benefit of creditors,
generally not pay its debts as they become due or admit in
writing its inability to pay its debts as they become due, file a
petition commencing a voluntary case under any chapter of the
Bankruptcy Code, 11 U.S.C.ss.101 ET SEQ. (the "Bankruptcy Code"),
be adjudicated an insolvent, file a petition seeking any
reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar arrangement under the
Bankruptcy Code or any other present or future statute, law, rule
or regulation, or file an answer admitting the material
allegations of a petition filed against Borrower or such
Guarantor, as the case may be, in any such case or proceeding,
consent to the filing of such a petition or apply for or
acquiesce in the appointment of a trustee, receiver, custodian or
other similar official for Borrower or such Guarantor, as the
case may be, or of all or any substantial part of Borrower's or
such Guarantor's, as the case may be, assets or other properties,
or take any action looking to Borrower's or such Guarantor's, as
the case may be, dissolution or liquidation.
(j) A case, proceeding or other action shall be instituted against
Borrower or any Guarantor seeking the entry of an order for
relief against Borrower or any Guarantor as a debtor, to
adjudicate Borrower or any Guarantor as a bankrupt or insolvent,
or seeking reorganization, arrangement, readjustment,
liquidation, dissolution or similar relief against Borrower or
any Guarantor under the Bankruptcy Code or other present or
future statute, law, rule or regulation, which case, proceeding
or other action either (i) results in such entry, or
adjudication, or relief or issuance or entry of any other order
or judgment having a similar effect or (ii) remains undismissed
for sixty (60) calendar days, or within sixty (60) calendar days
after the
-32-
appointment without Borrower's or any Guarantor's consent or
acquiescence of any trustee, receiver, custodian or other similar
official for Borrower or such Guarantor or of all or any
substantial part of Borrower's or such Guarantor's assets and
other properties, and such appointment shall not be vacated.
(k) (i) A writ of execution, attachment, foreign attachment,
garnishment, replevin or any similar process shall be issued or
levied with respect to (aa) any deposits of the Borrower with the
Lender or any other property of the Borrower in which the Lender
has a lien or right of set-off or (bb) any other property which
individually or in the aggregate exceeds $100,000 or (ii) any
final order, judgment or decree shall be entered against Borrower
or any Guarantor by a court of competent jurisdiction which,
together with other outstanding orders, judgments, and decrees
against Borrower or such Guarantor, as the case may be, exceed
$100,000 (exclusive of amounts actually insured against by
adequate liability insurance policies issued by financially
responsible companies who have not denied coverage), and any such
execution, attachment, foreign judgment, garnishment, replevin,
similar process, or judgment(s) shall continue in effect for any
period of ten (10) consecutive calendar days or more without
being released or a stay of execution.
(l) There shall occur any material adverse change with respect to the
Borrower's or any of its Subsidiary's business, assets,
liabilities, financial condition, results of operations, or
business prospects (a "Material Adverse Change"), and the Lender
shall reasonably believe that as a result of such Material
Adverse Change the prospects for the Borrower's or any
Guarantor's payment of the Secured Obligations or performance of
any material covenant or agreement hereunder or under any other
Financing Document shall be impaired. A Material Adverse Change
shall be determined with reference to the business, assets,
liabilities, financial condition, results of operations or
business prospects, as the case may be, of the Borrower or such
Subsidiary as of March 31, 1997 (i.e., a Material Adverse Change
will be a material adverse change in the Borrower's or any of its
Subsidiary's business, assets, liabilities, financial condition,
results of operations or business prospects, as the case may be,
as compared to the Borrower's or any of its Subsidiary's
business, assets, liabilities, financial condition, results of
operations or business prospects, as the case may be, as of March
31, 1997).
(m) There shall occur, for any reason (voluntary or involuntary), any
change in senior management of the Borrower and (i) a period of
60 (calendar) days shall expire after the date of any such change
and (ii) the Lender shall not consent in writing, within such
sixty day period, to any proposed replacement of the person who
formerly held the applicable senior management position, it being
understood that the Lender may withhold its consent in its
absolute (but good faith) discretion.
7.2 ACCELERATION. Upon the occurrence and at any time during the
continuance of any
-33-
Event of Default, the Lender, by written notice to the Borrower, may (i)
terminate the right of the Borrower to borrow any further Revolving Credit Loans
under the Revolving Credit Facility, and/or (ii) declare the entire unpaid
principal balance of the Note and all Revolving Credit Loans and any or all
other Secured Obligations, and all accrued and unpaid interest under the Note
and on all Revolving Credit Loans, to be due and payable immediately, and upon
any such declaration the entire unpaid principal balance of the Note and all
Revolving Credit Loans and all accrued and unpaid interest under the Note and on
all Revolving Credit Loans (and any other Secured Obligations so declared by the
Lender) shall become and be immediately due and payable, without the need for
presentment, demand for payment, protest, notice of dishonor or protest or other
notice of any kind all of which are expressly waived by the Borrower; provided,
however, that upon the occurrence of any of the events specified in
subparagraphs (i) and (j) above, (i) the right of the Borrower to borrow under
the Revolving Credit Facility shall automatically be terminated and (ii) the
entire unpaid principal balance of the Revolving Credit Loans and the Note, and
all unpaid and accrued interest under the Note and all Revolving Credit Loans
and all other Secured Obligations, shall be immediately due and payable without
any notice whatsoever, and all without the need for presentment, demand for
payment, protest, notice of dishonor or protest or other notice of any kind all
of which are hereby expressly waived by the Borrower. Lender shall have, upon
the occurrence and during the continuance of any Event of Default, all other
rights, remedies, and powers provided to the Lender under the Financing
Documents, any other agreement, instrument or other document or Applicable Law.
7.3 OTHER REMEDIES. If an Event of Default shall have occurred and be
continuing, the Lender may, without presentment, demand, protest or other notice
of any kind (except as may be specifically required by this Agreement), all of
which are hereby expressly waived, exercise all of the rights and remedies of a
secured party under the Uniform Commercial Code upon a default (whether or not
the Uniform Commercial Code is in effect in the jurisdiction where such rights
and remedies are exercised) or other Applicable Law. In addition, the Borrower
agrees that the Lender may exercise any or all of the following rights and
remedies:
(i) The Lender may exercise any and all of its rights and remedies
hereunder or under any other Financing Document or other applicable
agreement, instrument or other document or Applicable Law;
(ii) The Lender may at any time and from time to time do any of the
following: (aa) with or without judicial process or the aid or assistance
of others, enter upon any premises (including without limitation any
premises of the Borrower or TFCI) in which any Collateral may be located
and take physical possession of any items of Collateral and maintain such
possession on such premises and/or move the same or any part thereof to
such other places as the Lender shall choose (the Lender shall not be
liable to the Borrower or TFCI on account of any losses, damage or
depreciation that may occur as a result thereof so long as the Lender shall
act in good faith), (bb) dispose of all or any part of the Collateral on
any premises of the Borrower or TFCI (or on or at any other location), (cc)
require the
-34-
Borrower or TFCI (at their expense) to assemble the Collateral and maintain
or deliver the Collateral into the possession of the Lender or any other
Person designated by the Lender at such place or places as the Lender (or
such other Person) may designate and as are reasonably convenient to both
the Lender and the Borrower, (dd) cause any or all of the Collateral to be
placed in or removed from any public, private or field warehouse, (ee)
remove all or any part of the Collateral from any premises (including
without limitation any premises of the Borrower or TFCI or any warehouse)
in which any such Collateral may be located for the purpose of effecting
sale or other disposition thereof and (ff) take delivery of any Collateral.
The Lender may exercise any or all of its rights and remedies under this
paragraph (ii) or any of its other rights and remedies under any of the
Financing Documents or Applicable Law (1) without payment of any rent,
license fee or compensation of any kind to Borrower or TFCI and (2) for the
account and at the expense of the Borrower and TFCI. Borrower and TFCI will
not resist or interfere with any such exercise. The Borrower and TFCI
hereby agree to cooperate with the Lender in the Lender's exercise of any
of the foregoing rights and remedies (and the other rights and remedies of
the Lender).
Unless the Collateral is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, the
Lender will give the Borrower or TFCI, as the case may be, at least ten
(10) Business Days prior written notice of the time and place of any public
sale thereof or of the time after which any private sale or any other
intended disposition is to be made. The Borrower and TFCI agree that such
ten (10) Business Day period is a reasonable time for such notice. Any sale
or other disposition by the Bank of any Collateral may be for cash or
credit or any combination thereof (and the Bank shall not assume any credit
risk). (To the fullest extent permitted by Applicable Law, the Bank may, at
its discretion, adjourn any such sale (or other dispositions).) The Bank
may sell or dispose of the Collateral in whole or in part or parts at any
time and from time to time as it, in its sole discretion, may deem
advisable. If the Bank purchases any Collateral at any sale, it may, in
lieu of actual payment of the purchase price, set-off the amount of such
price against the Secured Obligations (or portion thereof). The Bank, if it
is in possession of the Collateral, shall be deemed to have exercised
reasonable care in the custody, preservation and management of the
Collateral if it takes such action for those purposes as the Borrower or
TFCI, as the case may be, shall request in writing, provided, however, that
the Lender shall not be required to take any such action. No omission on
the part of the Lender to take any action, whether or not requested, shall
of itself be deemed a failure to exercise reasonable care; and
(iii) without the same having the effect of releasing any or all of
the Collateral or otherwise prejudicing any rights of the Lender hereunder,
the Lender may (A) sell or cause to be sold or otherwise dispose of such of
the Collateral as it may in its sole discretion deem desirable without
being required simultaneously or later similarly to sell or dispose of the
balance of the Collateral or any other property or other security at the
time available to it and without being required to resort to any other
security or sources of reimbursement which may at the time be available to
it; and (B) apply to the Secured Obligations the
-35-
proceeds of the Collateral or any portion thereof, or any other amount
received on account of the Collateral or any portion thereof, by the
exercise of any right or remedy permitted hereunder, without resorting to
and without regard to other security or sources of reimbursement which may
at the time be available to it.
(iv) Lender is hereby granted a license or other right to use, without
charge, Borrower's and TFCI's labels, patents, copyrights, rights of use of
any name, trade secrets, tradenames, 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 Borrower's and TFCI's
rights under all licenses and all franchise agreements (and other rights)
shall inure to Lender's benefit.
(v) The Lender may require the Borrower to cause Avest to grant a
mortgage to the Lender (in form and substance satisfactory to Lender) with
respect to the Plainview Real Property to secure the Secured Obligations
and Borrower or Avest shall pay all mortgage, recording an other taxes,
fees or charges in connection with such mortgage.
7.4. APPLICATION OF PROCEEDS. All proceeds from each sale of, or other
realization upon, all or any part of the Collateral following an Event of
Default and all other payments during the continuance of an Event of Default
shall be applied or paid over as follows:
First: To the payment of all costs and expenses incurred in connection
with such sale or other realization (including all costs and expenses of
collecting, retaking, completing, protecting, removing, storing,
advertising for sale, selling and/or delivering, any Collateral), including
reasonable attorneys' fees and disbursements (all such costs and expenses
shall constitute Secured Obligations);
Second: To the payment of the other Secured Obligations (with the
Borrower and all applicable Guarantors remaining jointly and severally
liable for any deficiency) in any order which the Lender may elect; and
Third: The balance (if any) of such proceeds to the Borrower or TFCI,
as the case may be, subject to applicable law and to any duty to pay such
balance to the holder of any subordinate Lien in the Collateral.
ARTICLE 8. MISCELLANEOUS
8.1 CERTAIN WAIVERS. Each of Borrower and TFCI waives presentment,
diligence, protest, demand, notice of demand, notice of acceptance of or
reliance, notice of all non-payment, notice of dishonor, notice of protest, and
all other notices (except for those expressly provided for herein) to parties in
connection with the delivery, acceptance, performance, default or enforcement
-36-
of any Financing Document or any collateral or security. Lender shall have no
obligation to preserve rights against prior parties.
8.2. SEVERABILITY. Any provision of this Agreement or other Financing
Document which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or thereof
in such jurisdiction, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
8.3. PARAGRAPH HEADINGS. The paragraph headings used in this Agreement are
for purposes of convenience of reference only and shall not affect the
construction hereof or be taken into consideration in the interpretation hereof.
8.4. NO WAIVER; CUMULATIVE REMEDIES. (a) The Lender shall not by any act
(except by a written instrument executed and delivered in accordance with
subparagraph (b) of this Section), delay, indulgence, omission or otherwise be
deemed to have waived any right, remedy or other power hereunder or under any
other Financing Document or to have acquiesced in any Default or Event of
Default. No failure to exercise, nor any delay in exercising, on the part of the
Lender, any right, remedy or other power shall preclude any other or further
exercise thereof or the exercise of any other right, remedy or other power. No
single or partial exercise of any right, remedy, or power hereunder or under any
other Financing Document shall preclude any other or further exercise thereof or
the exercise of any other right, remedy or power. A waiver by the Lender of any
right, remedy or power hereunder or under any other Financing Document on any
one occasion shall not be construed as, or constitute a bar to, any right,
remedy or other power which the Lender would otherwise have on any future
occasion. The rights, remedies and powers provided to the Lender herein or in
any other Financing Document are cumulative, may be exercised singly or
concurrently and are not exclusive of and shall be in addition to all other
rights, remedies, or powers provided by Applicable Law or any other agreement,
instrument or other document. Lender may exercise any or all such rights,
remedies and powers at any time(s) in any order which Lender chooses in its
discretion.
(b) No waiver, amendment, supplement or other modification of any of the
terms or provisions of this Agreement shall be effective unless set forth in a
writing executed and delivered by the party sought to be charged (except that a
waiver, amendment, supplement or other modification executed and delivered by
Borrower or TFCI, as the case may be, shall be binding upon the other) .
8.5. SUCCESSORS AND ASSIGNS; SALE, ASSIGNMENT OR PARTICIPATION. (a) This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors, assigns, heirs, and representatives, except
that neither the Borrower nor TFCI may not, without the prior written consent of
the Lender, assign or transfer any of its rights or obligations under this
Agreement, the Note or other Financing Document, and no such assignment or
transfer of any obligation shall relieve either the Borrower or TFCI thereof
unless the Lender shall have consented
-37-
to such release in a writing specifically referring to the obligation from which
the Borrower or TFCI is to be released.
(b) The Lender may from time to time sell or assign, in whole or in part,
or grant participation in some or all of the Financing Documents and/or the
Revolving Credit Loans and other Liabilities of Borrower or TFCI evidenced
thereby. The holder/transferee of any such sale, assignment or participation, if
and to the extent the applicable agreement between the Lender and such holder so
provides, (i) shall be entitled to all of the rights, obligations and benefits
of the Lender (provided, that, in the case of a participation, it is understood
and agreed that, except to the extent such agreement otherwise provides,
vis-a-vis the Borrower and TFCI the Lender shall (aa) remain the holder of the
Note and all rights, obligations and benefits of the Lender hereunder and under
the other Financing Documents, and (bb) the Borrower and TFCI shall continue to
deal solely and directly with the Lender with respect to such rights,
obligations and benefits, and (ii) shall be deemed to hold and may exercise the
rights of setoff or banker's lien with respect to any and all obligations of
such holder/transferee to the Borrower, in each case as fully as though the
Borrower were directly indebted to such holder/transferee (whether or not
Borrower is, in fact, so directly indebted). The Lender may in its discretion,
give notice to the Borrower of such sale, assignment or participation; however,
the failure to give such notice shall not affect any of the Lender's or such
holder/transferee's rights hereunder. In the event of any assignment by the
Lender of any obligations of the Lender under any of the Financing Documents,
the Lender shall not be liable to the Borrower for the performance of any such
obligations so assigned, to the extent same are to be performed after the
effective date of the sale or assignment and it shall be solely the obligation
of the assignee to perform same. Each of the Borrower and TFCI authorizes the
Lender to provide information concerning the Borrower and/or TFCI or other
Subsidiary of the Borrower to any prospective purchaser, assignee or
participant, provided, that the recipient, with respect to any information that
consists of Proprietary Information (as defined below), shall agree to keep such
Proprietary Information confidential and not make any use thereof other than for
purposes of evaluating Borrower's or such Subsidiary's credit (and/or to
exercise any rights or remedies under any of the Financing Documents or
otherwise in connection with same) except for disclosure (a) as required by
Applicable Law, (b) to its attorneys and accountants and (c) to bank regulatory
authorities or other governmental authorities if required (in the case of such
other governmental authorities) by lawful order, summons or subpoena. For
purposes of this Agreement, the term "Proprietary Information" shall mean all
written information about the Borrower and/or TFCI or other Subsidiary of the
Borrower which has been furnished to the Lender before or after the date hereof,
provided, however that proprietary information does not include information
which (x) is or becomes publicly available (other than as a result of a breach
of this Agreement), (y) was possessed by or available to the Lender on a
nonconfidential basis prior to its disclosure to the Lender or such recipient by
the Borrower and/or TFCI or any of its Subsidiaries or (z) becomes available to
the Lender or such recipient on a nonconfidential basis from a Person which, to
the knowledge of the Lender, is not bound by a confidentiality agreement with
the Borrower or TFCI and is not otherwise prohibited from transmitting such
information. The information provided may include, but is not limited to,
amounts, terms, balances, payment history, return item history and any financial
or other information about the Borrower or any of its Subsidiaries. Each of the
Borrower
-38-
and TFCI agrees to indemnify, defend, release the Lender, and hold the Lender
harmless, at the Borrower's cost and expense, from and against any and all
lawsuits, claims, actions, proceedings, or suits against the Lender or against
the Borrower and/or TFCI and the Lender, arising out of or relating to the
Lender's reporting or disclosure of such information.
8.6. NOTICES. Except as may otherwise be expressly provided herein, all
notices, requests and demands to or upon the respective parties hereto shall be
in writing (including by telecopy), and shall be deemed to have been duly given
or made when delivered by hand, or one Business Day after being sent by
overnight mail by Federal Express or other nationally recognized overnight
courier service, or four Business Days after being deposited in the mail, first
class postage prepaid, or, in the case of telecopy notice, when sent,
confirmation of receipt received (which may include electronic confirmation),
addressed as follows, or to such other address as may be hereafter notified by
the respective parties hereto and any future holder(s) of the Note:
The Borrower or TFCI: Astrex, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
Telecopy No.: 000 000-0000
With a copy to: Xxxx X. Xxxxxx, Esq.
000 X. Xxxxxx Xxxx Xxxx
Xxxxx X0
Xxxxxxx, Xxxxxxxx 00000
Telecopy No.: 000-000-0000
The Lender: Fleet National Bank
Commercial Banking Group
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xx. Xxxxxxx X. XxXxxxxxx
Telecopy No.: (000) 000-0000
With a copy to: Xxxx Xxxxx & Xxxxxxx LLP
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telecopy No: (000) 000-0000
-39-
8.7 COSTS AND EXPENSES; INDEMNIFICATION. The Borrower and TFCI jointly and
severally agree (a) to pay or reimburse the Lender for all its out-of-pocket
costs and expenses incurred in connection with the preparation and execution of,
and any amendment, supplement or other modification to, this Agreement, the Note
or any other Financing Document and any other documents prepared in connection
herewith or therewith, and the consummation of the transactions contemplated
hereby and thereby, professional fees and disbursements and all costs of any
appraisals, environmental studies and of any audits of Borrower's or its
Subsidiaries' books and records or properties, including without limitation the
fees and disbursements of legal counsel to the Lender (limited to, with respect
to the preparation of the initial Financing Documents, $4,000 plus all
disbursements associated herewith up to a maximum of $1,000 (plus reimbursement
of UCC searches and filings and other costs); (b) to pay or reimburse the Lender
for all its costs and expenses (including without limitation all reasonable fees
and disbursements of legal counsel (whether outside counsel or in-house counsel)
and all other professional fees and disbursements and all costs of any
appraisals, environmental studies and of any audits of Borrower's or any of its
Subsidiaries books and records or properties) incurred by the Lender in
connection with the preservation, defense, protection, exercise or enforcement
(including without limitation collection and/or realization on any collateral or
other security), or attempted preservation, defense, protection, exercise or
enforcement (including without limitation collection and/or realization on any
collateral or other security) of this Agreement, the Note or any other Financing
Document or any of the Lender's rights, remedies or powers hereunder or
thereunder, and (c) to pay, indemnify, and hold the Lender and Lender's
employees, officers, directors and agents harmless from and against any and all
liabilities, obligations, losses, damages, penalties, fines, claims, actions,
judgments, suits, cost recovery actions, response costs, compliance costs,
costs, expenses or disbursements of any kind or nature whatsoever (including
without limitation attorneys' fees and disbursements) arising out of or
otherwise related to or connected with (i) this Agreement, the Note or any of
the other Financing Documents; (ii) the exercise by the Lender of any of its
rights, remedies or powers hereunder, the Note or any of the other Financing
Documents; (iii) any misrepresentation, inaccuracy, or breach of any
representation, warranty, covenant, or agreement contained or referred to herein
or any other Financing Document; or (iv) any Hazardous Material at, on, in,
under, or about all or any portion any property owned, occupied and/or operated
by the Borrower and/or its Subsidiaries or any Release of any Hazardous
Materials by the Borrower and/or its Subsidiaries or any violation by the
Borrower and/or its Subsidiaries of, or liability of the Borrower under, any
Environmental Laws (all the foregoing under this subparagraph (c), collectively,
the "indemnified liabilities"), and, in addition, at Lender's discretion,
Borrower and TFCI shall defend (with counsel satisfactory to the Lender) Lender
against those indemnified liabilities which the Lender shall choose Borrower and
TFCI to defend Lender against (provided, that, it is understood and agreed that
all reasonable costs and expenses of counsel incurred by Lender in defending
itself any indemnified liability shall be indemnified liabilities for which
Borrower or TFCI is responsible for payment under this subparagraph (c));
PROVIDED that neither the Borrower nor TFCI shall have any obligation hereunder
to the Lender with respect to indemnified liabilities to the extent that such
liabilities are determined by a final and non-appealable decision of
-40-
a court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of the Lender. The agreements in this Section shall survive
any payment of the Note or any other amounts payable hereunder or under any
other Financing Document and/or any termination of any Financing Document or the
release of any collateral. All amounts payable under this Section shall be
payable by the Borrower and TFCI on demand by the Lender. The Borrower and its
Subsidiaries, for themselves and their successors and assigns, hereby, to the
fullest extent permitted by applicable law, forever waive, release and covenant
not to bring any demand, claim, cost recovery action or lawsuit they may now or
hereafter have or accrue against the Lender or its officers, directors,
employees or agents arising from the same facts or circumstances as any
indemnified liability.
8.8. INTEGRATION. This Agreement and the other Financing Documents
represent the agreement of the Borrower and TFCI and the Lender with respect to
the subject matter hereof and thereof and supersede all negotiations and prior
writings with respect to the subject matter hereof and thereof (including the
Commitment Letter), AND THERE ARE NO PROMISES, UNDERTAKINGS, REPRESENTATIONS OR
WARRANTIES BY THE LENDER RELATIVE TO SUBJECT MATTER HEREOF OR THEREOF THAT ARE
NOT EXPRESSLY SET FORTH OR REFERRED TO HEREIN OR IN THE OTHER FINANCING
DOCUMENTS.
8.9. GENDER AND NUMBER; "INCLUDING" NO RULE OF STRICT CONSTRUCTION.
Whenever the context herein so requires, the neuter gender includes the
masculine or feminine, and the singular number includes the plural, and
vice-versa. The word "including", whenever used in any Financing Document, shall
mean "including, but not limited to," whether or not the phrase ", but not
limited to," or similar phrase, accompanies such word.
(b) Borrower and TFCI acknowledge that Borrower and TFCI and their counsel
have had an opportunity to review and negotiate the terms and provisions of this
Agreement and the other Financing Documents and no rule of strict construction
shall be used against the Lender with respect to any of the Financing Documents.
8.10. PAYMENTS SURRENDERED. If, after receipt of any payment of all or any
part of any Loan, or with respect to any other obligation under any of the
Financing Documents, the Lender is compelled or required or agrees, for
settlement purposes, to surrender such payment to any Person for any reason
(including, without limitation, a determination that such payment is void or
voidable as a preference or fraudulent conveyance, an impermissible setoff, or a
diversion of trust funds), then this Agreement and the other Financing Documents
shall continue in full force and effect, and the Borrower and Guarantors shall
be fully liable for, and shall indemnify, defend and hold harmless the Lender
with respect to the full amount so surrendered.
8.11 COMPLIANCE. The determination of the Borrower's (or TFCI's) compliance
with the Specified Covenant Tests, all other applicable covenants in Article 5
hereof and any other applicable provisions hereof shall be based upon GAAP
applied on a basis consistent with that used in preparing the Financial
Statements unless otherwise subsequently and specifically agreed to in writing
by the Lender.
-41-
8.12 STAMP TAX. The Borrower will pay any stamp or other tax which becomes
payable in respect of the Note or this Agreement or other Financing Document.
8.13 SCHEDULES, EXHIBITS, APPENDICES AND ANNEXES. Any and all schedules,
exhibits, appendices and annexes to this Agreement shall constitute a part of
this Agreement for all purposes.
8.14 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made herein, in the other Financing Documents and in any document,
certificate or statement delivered pursuant hereto or thereto or in connection
herewith or therewith shall survive the execution and delivery of this Agreement
and the Note or any other Financing Document and any investigation by the
Lender.
8.15 SET-OFF; LIEN. (a) In addition to any other rights, remedies and
powers of the Lender provided by Applicable Law or any agreement, instrument or
other document (including this Agreement), the Lender, upon the occurrence and
during the continuance of any Event of Default or any Default (or if any order
(or the like) for any garnishment, attachment, levy or lien on any deposit
account of the Borrower or TFCI with the Lender is issued) shall have the right
(and is hereby authorized) at any time or from time to time, without the need
for prior notice to the Borrower or TFCI, any such notice being expressly waived
by the Borrower and TFCI to the fullest extent permitted by Applicable Law, to
set-off and apply any and all deposits (general or special, time or demand,
provisional or final, and including, without limitation, any and all bank
accounts and certificates of deposit) and any other monies, cash, credits,
indebtedness or claims, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the Lender to or
for the credit of the account of the Borrower or TFCI against any and all of the
Liabilities of the Borrower or TFCI to the Lender, whether now or hereafter
existing and whether or not arising under any Financing Document, irrespective
of whether or not the Lender shall have made any demand under this Agreement or
the Note and whether or not any or all such Liabilities are matured, even if
affecting such set-off or application results in a loss or reduction of interest
or the imposition of a penalty applicable to the early withdrawal of time
deposits. Lender agrees promptly to notify the Borrower or TFCI, as the case may
be, after any such set-off and application made by Lender; PROVIDED that the
failure to give such notice shall not affect the validity of such set-off and
application.
8.16 COUNTERPARTS. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts, each of which
shall be considered an original but all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
8.17 LOSS, THEFT, ETC. OF NOTE. Upon receipt by the Borrower of reasonably
satisfactory evidence of the loss, theft, mutilation or destruction of the Note,
and in the case of any such loss, theft or destruction upon delivery of a bond
of indemnity in such form and amount as shall be reasonably satisfactory to the
Borrower, or in the event of such mutilation upon surrender and
-42-
cancellation of the Note, the Borrower will execute and deliver without expense
to the holder thereof, a new Note, of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Note; provided, however that if any Institutional Holder
is the then owner of any such lost, stolen or destroyed Note, then the affidavit
of an authorized officer of such owner, setting forth the fact of loss, theft or
destruction and of its ownership of such Note at the time of such loss, theft or
destruction shall be accepted as reasonably satisfactory evidence thereof and no
further indemnity shall be required as a condition to the execution and delivery
of a new Note other than the written agreement of such owner to indemnify the
Borrower.
8.18 SUBMISSION TO JURISDICTION; WAIVER OF PUNITIVE OR CONSEQUENTIAL
DAMAGES. Each of the Borrower and TFCI hereby irrevocably and unconditionally:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING ARISING OUT OF OR OTHERWISE RELATED TO OR CONNECTED WITH THIS
AGREEMENT OR ANY OF THE OTHER FINANCING DOCUMENTS, OR FOR RECOGNITION AND
ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE
PERSONAL JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN THE STATE OF
CONNECTICUT;
(b) consents that any such action or proceeding may be brought in such
courts, and waives any objection that Borrower or TFCI may now or hereafter
have to the venue of any such action or proceeding in any such court or
that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Borrower or TFCI, as the case may be, at its address set forth in Section
8.6 or at such other address of which the Lender shall have been notified
pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right of the Lender (or its successors or assigns) to bring any legal
action or proceeding in any other jurisdiction;
(e) agrees that, notwithstanding the foregoing, any action brought by
the Borrower and/or its Subsidiaries against the Lender shall be commenced
and maintained only in a state or federal court located in Connecticut; and
(f) waives, to the fullest extent permitted under Applicable Law, any
right Borrower and/or TFCI may have to claim or recover in any legal action
or proceeding arising out of or otherwise related to or connected with this
Agreement, the Note or any other Financing Document any special, exemplary,
punitive or consequential damages, except to the extent such damages are
caused by the willful misconduct of the Lender.
-43-
8.19 CERTAIN ACKNOWLEDGEMENTS. Each of the Borrower and TFCI hereby
acknowledges that:
(a) Each of them has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the Note and the other
Financing Documents;
(b) the Lender does not have any fiduciary relationship to the
Borrower and/or its Subsidiaries and the relationship between Lender on the
one hand, and the Borrower and its Subsidiaries on the other hand, is
solely that of creditor and debtor;
(c) no joint venture exists among the Borrower, its Subsidiaries and
the Lender; and
(d) each of the Borrower and TFCI has made its own independent
determination and decision (i) to borrow hereunder and to enter into this
Agreement and any other Financing Document to which it is a party and (ii)
that it can comply with the terms and provisions hereof and thereof.
8.20. GOVERNING LAW; JURY TRIAL AND CHAPTER 903A WAIVERS. (a) THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE LENDER AND THE BORROWER AND TFCI
UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CONNECTICUT, REGARDLESS OF ANY
PRINCIPLES OF CONFLICTS OF LAWS THEREUNDER.
(B) THE BORROWER AND TFCI HEREBY KNOWINGLY AND VOLUNTARILY WAIVE TRIAL
BY JURY AND THE RIGHT THERETO IN ANY ACTION OR PROCEEDING OF ANY KIND, ARISING
UNDER OR OUT OF, OR OTHERWISE RELATED TO OR OTHERWISE CONNECTED WITH THIS
AGREEMENT OR ANY OTHER FINANCING DOCUMENT.
(C) EACH OF THE BORROWER AND TFCI ACKNOWLEDGES THAT THE TRANSACTION OF
WHICH THIS AGREEMENT IS A PART IS A "COMMERCIAL TRANSACTION" WITHIN THE MEANING
OF CHAPTER 903A OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED, AND THAT ANY
MONIES, PROPERTY OR SERVICES WHICH ARE THE SUBJECT OF SUCH TRANSACTION ARE NOT
FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES. THE BORROWER AND TFCI HEREBY
VOLUNTARILY AND KNOWINGLY WAIVE ANY RIGHT WHICH THE BORROWER OR TFCI MIGHT HAVE
TO A NOTICE AND HEARING UNDER SECTIONS 52-278A TO 52-278G, INCLUSIVE, OF THE
CONNECTICUT GENERAL STATUTES, AS AMENDED, OR OTHER APPLICABLE FEDERAL OR STATE
LAW, IN THE EVENT THAT THE LENDER (OR ITS SUCCESSORS OR ASSIGNS) SEEKS ANY
PREJUDGMENT REMEDY IN CONNECTION WITH THIS AGREEMENT, THE NOTE OR ANY OTHER
FINANCING
-44-
DOCUMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to
be duly executed and delivered as of the day
-45-
and year first above written.
WITNESS: ASTREX, INC.
/s/ Xxxxxx X. Xxxxx By: /s/ Xxxxx Xxxxxx
--------------------------------------------------------------------------------
Name: Xxxxxx X. Xxxxx Name: Xxxxx Xxxxxx
Title: Vice President
X.X. XXXXXXX, INC.
/s/ Xxxxxx X. Xxxxx By: /s/ Xxxxx Xxxxxx
--------------------------------------------------------------------------------
Name: Xxxxxx X. Xxxxx Name: Xxxxx Xxxxxx
Title: Vice President
FLEET NATIONAL BANK
/s/ Xxxxxx X. Xxxxx By /s/ Xxxxxxx XxXxxxxxx
--------------------------------------------------------------------------------
Name: Xxxxxx X. Xxxxx Name: Xxxxxxx XxXxxxxxx
Title: Assistant Vice-President
-46-
STATE OF CONNECTICUT)
) ss: Stamford
COUNTY OF FAIRFIELD )
The foregoing instrument was acknowledged before me this 9th day of July,
1997 by Xxxxx Xxxxxx, the Vice President of ASTREX, INC., a Delaware
corporation, on behalf of the corporation.
/s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
Notary Public
My Commission Expires 2/28/2000
-47-
STATE OF CONNECTICUT)
) ss: Stamford
COUNTY OF FAIRFIELD )
The foregoing instrument was acknowledged before me this 9th day of July,
1997 by Xxxxxxx XxXxxxx, the President of X.X. XXXXXXX, Inc., a Massachusetts
corporation, on behalf of the corporation.
/s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
Notary Public
My Commission Expires 2/28/2000
[SEAL]
STATE OF CONNECTICUT)
) ss: Stamford
COUNTY OF FAIRFIELD )
The foregoing instrument was acknowledged before me this 9th day of July,
1997 by Xxxxxxx XxXxxxxxx, an Assistant Vice-President of Fleet National Bank, a
national banking association, on behalf of the corporation.
/s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Notary Public
My Commission Expires 2/28/2000
[SEAL]
-48-
EXHIBITS
--------
A - Form of Promissory Note
B - Borrowing Base Certificate
C - Letter of Authorization to Postmaster
SCHEDULES
---------
A - Exceptions
B - Subsidiaries
C - Trade Names
APPENDIX
--------
A - Definitions
Schedule A
None.
