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EXHIBIT 10.37
ACCOUNTS FINANCING AGREEMENT
[SECURITY AGREEMENT]
BETWEEN
CONGRESS FINANCIAL CORPORATION
0000 XXXXXX XX XXX XXXXXXXX
XXX XXXX, XXX XXXX 00000
AND
X.X. XXXXXXX COMPANY
(NAME OF CLIENT)
00000 XXXXXX XXXXX
(XXXXXX XXXXXXX)
XXXXXXXXXXX, XXXXXXXXX 00000
(CITY) (STATE)
[LOGO] A CORESTATES COMPANY
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July 31, 1992
Congress Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
The Agreement states the terms and conditions upon which, effective as
of the date of acceptance by you, we may obtain loans and other financial
accommodations from you for our general corporate and business purposes upon
the security referred to herein. We shall be, if two or more in number, jointly
and severally bound hereunder.
Section 1. DEFINITIONS.
1.1 All terms used herein which are defined in Article 1 or Article 9
of the Uniform Commercial Code ("UCC") shall have the meanings given therein,
unless otherwise defined in this Agreement and all references to the plural
herein shall also mean the singular.
1.2 "ACCOUNTS" shall mean all of our present and future accounts,
contract rights, general intangibles, chattel paper, documents and instruments,
as such terms are defined in the UCC, including, without limitation, all
obligations for the payment of money arising out of our sale, lease or other
disposition of goods or other property or rendition of services.
1.3 "ACCOUNT DEBTOR" shall mean each debtor or obligor in any way
obligated on or in connection with any Account.
1.4 "COLLATERAL" shall have the meaning set forth in Section 4.1
hereof.
1.5 "ELIGIBLE ACCOUNTS" shall have the meaning set forth in the
Covenant Supplement hereto.
1.6 "EVENTS OF DEFAULT" shall have the meaning set forth in Section
8.1 hereof.
1.7 "MAXIMUM CREDIT" shall mean the amount of $20,000,000 minus any
payments of principal received and applied to the Term Loan (as defined in the
Covenant Supplement hereto).
1.8 "NET AMOUNT OF ELIGIBLE ACCOUNTS" shall mean the gross amount of
Eligible Accounts less sales, excise or similar taxes, and less returns,
discounts, claims, credits and allowances of any nature at any time issued,
owing, granted, outstanding, available or claimed.
1.9 "OBLIGATIONS" shall mean any and all loans, indebtedness,
liabilities and obligations of any kind owing by us to you, however evidenced,
whether as principal, guarantor or otherwise, whether arising under this
Agreement, any supplement hereto, or otherwise, whether now existing or
hereafter arising, whether director or indirect, absolute or contingent, joint
or several, due or not due, primary or secondary, liquidated or unliquidated,
secured or unsecured, original, renewed or extended, and whether arising
directly or acquired from others (including, without limitation, your
participations or interests in our obligations to others) and including,
without limitation, your charges, commissions, interest, expenses, costs and
attorneys' fees chargeable to us in connection with all of the foregoing.
1.10 "RECORDS" shall have the meaning set forth in Section 4.1(f)
hereof.
1.11 "RENEWAL DATE" shall have the meaning set forth in Section 9.1
hereof.
Section 2. LOANS.
2.1 You shall, in your discretion, make loans to us from time to time,
at our request, of up to the following percentages of the Net Amount of
Eligible Accounts (or such greater or lesser percentage as you shall in your
sole discretion determine from time to time): (a) eighty (80%) percent of the
Net Amount of Eligible Accounts arising from sales other than system or network
sales and (b) sixty-five (65%) percent of the Net Amount of Eligible Accounts
arising from system or network sales.
2.2 All loans shall be charged to a loan account in our name on your
books. You shall render to us each month a statement of our loan account which
shall be considered correct and deemed accepted by, and conclusively binding
upon, us as an account stated, except to the extent that you receive a written
notice of any specific exceptions by us thereto within thirty (30) days after
the date of such statement, absent manifest error.
2.3 Except in your sole discretion, the outstanding aggregate
principal amount of all loans by you to us hereunder, under any supplement
hereto or evidenced by any promissory note, shall not exceed the Maximum Credit
at any time. Without limiting your right to demand payment of the Obligations,
or any portion thereof, in accordance with any other terms of this Agreement,
or any supplement hereto, in the event that the outstanding aggregate principal
amount of loans by you to us exceeds the Maximum Credit or the formula set
forth in Section 2.1 hereof, we shall remain liable therefor and the entire
amount of such excess(es) shall, at your option, become immediately due and
payable, upon your demand.
2.4 At your option, all principal, interest, fees, commissions, costs,
expenses or other charges with respect to this Agreement or any supplement
hereto (all of which shall be cumulative and not exclusive) and any and all
loans and advances by you to us may be charged directly to our account
maintained by you.
2.5 All loans shall be payable at your office specified above or at
such other place as you may hereafter designate from time to time and, at your
option and upon your request, we shall execute and deliver to you one or more
promissory notes in form and substance satisfactory to you to further evidence
such loans.
Section 3. INTEREST AND FEES.
3.1 Interest shall be payable by us to you on the first day of each
month upon the closing daily balances in our loan account for each day during
the immediately preceding month, at a rate equal to two and one-half percent
(2 1/2%) per annum in excess of the prime commercial interest rate (presently
6% per annum) from time to time publicly announced by Philadelphia National
Bank, incorporated as CoreStates Bank, N.A., Philadelphia, Pennsylvania,
whether or not such announced rate is the best rate available at such bank. The
interest rate charged hereunder shall increase or decrease by an amount equal
to each increase or decrease, respectively, in said prime loan rate, effective
on the first day of the month after any change in said prime loan rate based on
the prime loan rate in effect on the last day of the month in which any such
change occurs. The rate of interest in effect hereunder on the date hereof,
expressed in terms of simple interest, is eight and one-half percent (8 1/2%)
per annum. In the event that the outstanding aggregate principal amount of
loans by you to us exceeds the Maximum Credit or the formula set forth in
Section 2.1 hereof or any other formula or sublimit set forth in any supplement
hereto, interest on the entire amount of such excess(es) shall be payable at
the rate set forth in Section 3.2 hereof (whether or not such excess(es) arise
or are made with or without your knowledge or consent).
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3.2 On and after the date of any event of default or termination or
non-renewal hereof, interest on all outstanding unpaid Obligations shall accrue
at a rate equal to two percent (2%) per annum in excess of the pre-default rate
set forth above from the date of such Event of Default or termination or
non-renewal, and all interest accruing hereunder shall thereafter be payable on
demand.
3.3 Interest shall be calculated on the basis of a 360-day year and shall
be included in each monthly statement of our loan account. You shall have the
right, at your option, to charge all interest to our loan account on the first
day of each month, and such interest shall be deemed to be paid by the first
amounts subsequently credited thereto.
3.4 In no event shall charges constituting interest, payable by us under
this Agreement, exceed the rate permitted under any applicable law or
regulation, and if any part or provision of this Agreement is in contravention
of any such law or regulation, such part or provision shall be deemed amended
to conform thereto.
3.5 If the average outstanding daily principal balance of all loans by
you to us under this Agreement or any supplement hereto in any calendar month
shall be less than the Maximum Credit, we shall pay to you on or before the
tenth (10th) day of the next succeeding calendar month an unused line fee equal
to one-half of one percent (1/2%) per annum upon the amount by which the
Maximum Credit exceeds the average outstanding daily principal balance of all
such loans in respect of such month.
3.6 We shall pay to you a facility fee in an amount equal to $300,000,
less any amounts previously paid by us to you as a commitment to provide this
credit facility, payable simultaneously with the execution hereof, which fee is
fully earned as of the date hereof.
Section 4. SECURITY INTEREST.
4.1 As security for the prompt performance, observance and payment in full
of all Obligations, we hereby grant as collateral to you a continuing security
interest in, a lien upon and a right of setoff against, and we hereby assign,
transfer, pledge and set over to you the following (which together with any of
our other personal property in which you may at any time have a security
interest or lien, whether pursuant to this Agreement or any supplement hereto,
or otherwise, are herein collectively referred to as the "Collateral"): All
present and future (a) Accounts; (b) moneys, securities and other property and
the proceeds thereof, now or hereafter held or received by, or in transit to,
you from or for us, whether for safekeeping, pledge, custody, transmission,
collection or otherwise, and all of our deposits (general or special), balances,
sums and credits with you at any time existing; (c) all of our right, title and
interest, and all of our rights, remedies, security and liens, in, to and in
respect of the Accounts and other Collateral, including, without limitation,
rights of stoppage in transit, replevin, repossession and reclamation and other
rights and remedies of an unpaid vendor, lienor or secured party, guaranties or
other contracts of suretyship with respect to the Accounts, deposits or other
security for the obligation of any Account Debtor, and credit and other
insurance; (d) all of our right, title and interest in, to and in respect of all
goods and relating to, or which by sale have resulted in, Accounts including,
without limitation, all goods described in invoices, documents, contracts or
instruments with respect to, or otherwise representing or evidencing, any
Accounts or other collateral, including without limitation, all returned,
reclaimed or repossessed goods; (e) all deposit accounts; (f) all books,
records, ledger cards, computer programs, and other property and general
intangibles evidencing or relating to the Accounts and any other Collateral or
any Account Debtor, together with the file cabinets or containers in which the
foregoing are stored ("Records"); (g) all other general intangibles of every
kind and description, including without limitation, trade names and trademarks,
and the goodwill of the business symbolized thereby, patents, copyrights,
licenses and Federal, State and local tax refund claims of all kinds and (h) all
proceeds of the foregoing in any form, including, without limitation, any claims
against third parties for loss or damage to or destruction of any or all of the
foregoing.
4.2 We shall keep and maintain, at our cost and expense, satisfactory and
complete books and records of all Accounts, all payments received or credits
granted thereof, and all other dealings therewith. At such times as you may
request, we shall deliver to you all original documents evidencing the sale and
delivery of goods or the performance of services which created any Accounts,
including but not limited to all original contracts, orders, invoices, bills of
lading, warehouse receipts, delivery tickets and shipping receipts, together
with schedules describing the Accounts and/or written confirmatory assignments
to you of each Account, in form and substance satisfactory to you and duly
executed by us, together with such other information as you may request. In no
event shall the making or the failure to make or the content of any schedule or
assignment or our failure to comply with the provisions hereof be deemed or
construed as a waiver, limitation or modification of your security interest in,
lien upon and assignment of the Collateral or our representations, warranties
or covenants under this Agreement or any supplement hereto.
Section 5. COLLECTION AND ADMINISTRATION.
5.1 Until our authority to do so is curtailed or terminated at any time
by you, we shall, at our expense and on your behalf, collect, as your property
and in trust for you, all remittances and all amounts unpaid on Accounts, and
we shall not commingle such collections with our own funds. We shall on the
day received remit all such collections to you in the form received duly
endorsed by us for deposit with you, unless you shall direct us otherwise. All
amounts collected on Accounts when received by you shall be credited to our
loan account, after adding five (5) business days for collection, clearance and
transfer of remittances, except for federal funds, as to which two (2) business
days shall be added, conditional upon final payment to you.
5.2 You or your representatives shall, during normal business hours and
after reasonable notice prior to the occurrence of an Event of Default and at
any time and from time to time after the occurrence of an Event of Default,
have free access to and right of inspection of the Collateral and have full
access to and the right to examine and make copies of our Records, to confirm
and verify all Accounts, to perform general audits and to do whatever else you
deem necessary to protect your interests. You may at any time remove from
our premises or require us or any accountants and auditors employed by us to
deliver any Records and you may, without cost or expense to you, use such of
our personnel, supplies, computer equipment and space at our places of business
as may be reasonably necessary for the handling of collections.
5.3 We shall immediately upon obtaining knowledge thereof report to you
all reclaimed, repossessed or returned goods, Account Debtor claims and any
other matter affecting the value, enforceability or collectibility of
Accounts. At your request, any goods reclaimed or repossessed by or returned
to us will be set aside, marked with your name and held by us for your account
and subject to your security interest. All claims and disputes relating to
Accounts are to be promptly adjusted within a reasonable time, at our own cost
and expense. You may, at your option, settle, adjust or compromise claims and
disputes relating to Accounts which are not adjusted by us within a reasonable
time.
5.4 We shall, in the manner requested by you from time to time, direct
that all proceeds of Accounts, letters of credit, bankers' acceptances and other
proceeds of Collateral shall be payable to a lock box or post office box
designated by you and under your control and/or deposited into a blocked
account under your control and/or deposited into an account maintained in your
name and under your control and in connection therewith shall execute such lock
box, blocked account or other agreement as you in your sole discretion shall
specify.
Section 6. REPRESENTATIONS, WARRANTIES AND COVENANTS.
We hereby represent, warrant and covenant to you the following (which
shall survive the execution and delivery of this Agreement), the truth and
accuracy of which, or compliance with, being a continuing condition of the
making of loans hereunder by you or under any supplement hereto:
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6.1 We are and shall be, with respect to all Collateral and all our
inventory now existing or hereafter acquired, the owner of such Collateral and
inventory free from any lien, security interest, claim or encumbrance of any
kind, except in your favor and as otherwise consented to in writing by you, and
we shall defend the same against the claims of all persons.
6.2 We will not directly or indirectly sell, lease, transfer,
abandon or otherwise dispose of all or substantially all of our property or
assets or consolidate or merge with or into any other entity or permit any
other entity to consolidate or merge with or into us. We will at all times
preserve, renew and keep in full force and effect our existence as a
corporation and the rights and franchises with respect thereto and continue to
engage in business of the same type as we are engaged as of the date hereof. We
shall give you thirty (30) days prior written notice of any proposed change in
our corporate name which notice shall set forth the new name.
6.3 Our Records and chief executive office are maintained at the
address referred to below. We shall not change such location without your prior
written consent and prior to making any such changes, we agree to execute any
additional financing statements or other documents or notices which you may
require, which consent shall not be unreasonably withheld.
6.4 We shall maintain our shipping forms, invoices and other
related documents in a form satisfactory to you and shall maintain our books,
records and accounts in accordance with generally accepted accounting
principles consistently applied. We agree to furnish you monthly with accounts
receivable agings, inventory reports (if requested by you), and interim
financial statements (including balance sheet, statement of income and surplus
account, and cash flow statements), and to furnish you, at any time or from
time to time with such other information regarding our business affairs and
financial condition as you may reasonably request, including, without
limitation, balance sheets, statements of profit and loss, financial
statements, cash flow and other projections, earnings forecasts, schedules,
agings and reports. We hereby irrevocably authorize and direct all accountants
or auditors to deliver to you, at our expense, copies of our financial
statements, paper related thereto, and other accounting records of any nature
in their possession and to disclose to you any information they may have
regarding our business affairs and financial conditions. We shall furnish you
with audited financial statements on an annual basis certified by independent
public accountants selected by us and acceptable to you. All such statements
and information shall fairly present our financial condition as of the dates
and the results of our operations for the periods, for which the same are
furnished. Any document, schedules, invoices or other papers delivered to you
may be destroyed or otherwise disposed of by you one (1) year after the date
the same are delivered to you, unless we make written request therefor and pay
all expenses attendant to their return, in which event you shall return same
when your actual or anticipated need therefor has ceased.
6.5 Each Eligible Account represents a valid and legally
enforceable indebtedness based upon an actual and bona fide sale and delivery
of goods or rendition of services in the ordinary course of our business which
we have no reason to believe has not been finally accepted by the Account
Debtor and for which the Account Debtor is unconditionally liable to make
payment of the amount stated in such invoice, document or instrument evidencing
the Eligible Account is in accordance with the terms thereof, without offset,
defense or counterclaim and which we have no reason to believe will not be paid
in full at maturity.
6.6 All statements made and all unpaid balances appearing in the
invoices, documents and instruments evidencing each Eligible Account are true
and correct and are in all respects what they purport to be to the best of our
knowledge and all signatures and endorsements that appear thereon are genuine
and to the best of our knowledge all signatories and endorsers have full
capacity to contract and to the best of our knowledge each Account Debtor is
solvent and financially able to pay in full the Eligible Account when it
matures. None of the transactions underlying or giving rise to any account shall
violate any state or federal laws or regulations, and all documents relating to
the Accounts shall be legally sufficient under such laws or regulations and
shall be legally enforceable in accordance with their terms and all recording,
filing and other requirements of giving public notice under any applicable law
have been duly complied with to the best of our knowledge.
6.7 We shall be liable for any tax or penalty imposed upon any
transaction under this Agreement or any supplement hereto or giving rise to
the Accounts or any other Collateral or which you may be required to withhold
or pay for any reason and we agree to indemnify and hold you harmless with
respect thereto, and to repay to you on demand the amount thereof, and until
paid by us such amount shall be added to and deemed part of your loans to us.
6.8 Except as otherwise disclosed to you in writing, there is no
present investigation by any governmental agency pending, to our knowledge, or
threatened against us and there is no action, suit, proceeding or claim pending
or threatened against us or our assets or goodwill, or affecting any
transactions contemplated by this Agreement, or any supplement hereto, or any
agreements, instruments or documents delivered in connection herewith or
therewith before any court, arbitrator, or governmental or administrative body
or agency which if adversely determined with respect to us would result in any
material adverse change in our business, properties, assets, goodwill or
condition, financial or otherwise.
6.9 The execution, delivery and performance of this Agreement, any
supplement hereto, or any agreements, instruments and documents executed and
delivered in connection herewith, are within our corporate powers, have been
duly authorized, are not in contravention of law or the terms of our Charter,
By-Laws or other incorporation papers, or of any indenture, agreement or
undertaking to which we are a party or by which we are bound.
6.10 We shall, at our expense, duly execute and deliver, or shall
cause to be duly executed and delivered, such further agreements, instruments
and documents, including, without limitation, additional security agreements,
mortgages, deeds of trust, deeds to secure debt, collateral assignments, Uniform
Commercial Code financing statements or amendments or continuations thereof,
landlord's or mortgagee's waivers of liens and consents to the exercise by you
of all your rights and remedies hereunder, under any supplement hereto or
applicable law with respect to the Collateral, and do or cause to be done such
further acts as may be necessary or proper in your opinion to evidence,
perfect, maintain and enforce your security interest and the priority thereof
in the Collateral and to otherwise effectuate the provisions of this Agreement
or any supplement hereto. Where permitted by law, we hereby authorize you to
execute and file one or more Uniform Commercial Code financing statements
signed only by you; provided, that, you agree to send us copies of any such
Uniform Commercial Code financing statements executed and filed by you pursuant
to this Section 6.10.
Section 7. SPECIFIC POWERS
7.1 We hereby constitute you and your agent and any designee, as our
attorney-in-fact, at our own cost and expense, to exercise at any time all or
any of the following powers which, being coupled with an interest, shall be
irrevocable until all Obligations have been paid in full: (a) to receive, take,
endorse, assign, deliver, accept and deposit, in your or our name, any and all
checks, notes, drafts, remittances and other instruments and documents relating
to the Collateral; (b) on or after the occurrence of an Event of Default, to
receive, open and dispose of all mail addressed to us and to notify postal
authorities to change the address for delivery thereof to such address as you
may designate; (c) on or after the occurrence of an Event of Default, to
transmit to Account Debtors notice of your interest in the Accounts; (d) to
request from such Account Debtors at any time, in our name or that of your
designee, information concerning the Accounts and the amounts owing thereon; (e)
on or after the occurrence of an Event of Default, to notify Account Debtors to
make payment directly to you; (f) on or after the occurrence of an Event of
Default, to take or bring, in your or our name, all steps, actions, suits or
proceedings deemed by you necessary or desirable to effect collection of the
Collateral; and (g) to execute in our name and on our behalf any UCC financing
statements or amendments thereto; provided, that, you agree to send us copies of
any such UCC financing statements executed and filed by you pursuant to this
Section 7.1(g). We hereby release you and your officers, employees and
designees, from any liability arising from any act or acts under this Agreement
or in furtherance thereof, whether of omission or commission, and whether based
upon any error of judgment or mistake of law or fact, except for your gross
negligence or wilful misconduct as determined pursuant to a final nonappealable
order of a court of competent jurisdiction.
Section 8. EVENTS OF DEFAULT AND REMEDIES.
8.1 All Obligations shall be, at your option, immediately due and
payable without notice or demand (notwithstanding any deferred or installment
payments allowed, if any, by any instrument evidencing or relating to the
Obligations) and any provision of this Agreement or any
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supplement hereto, as to future loans and advances by you shall, at your
option, terminate forthwith, upon the termination or non-renewal of this
Agreement or upon the occurrence of any Event of Default as defined in the
Covenant Supplement hereto.
8.2 Upon the occurrence of any Event of Default and at any time
thereafter, you shall have the right (in addition to any other rights you may
have under this Agreement, any supplement hereto or otherwise) without further
notice to us, to appropriate set off and apply to the payment of any or all of
the Obligations, any or all Collateral, in such manner as you shall in your
sole discretion determine, to enforce payment of any Collateral, to settle,
compromise or release in whole or in part, any amounts owing on the Collateral,
to prosecute any action, suit or proceeding with respect to the Collateral, to
extend the time of payment of any and all Collateral, to make allowances and
adjustments with respect thereto, to issue credits in your or our name, to
sell, assign and deliver the Collateral (or any part thereof), at public or
private sale, at broker's board, for cash, upon credit or otherwise, at your
sole option and discretion, and you may bid or become purchaser at any such
sale, if public, free from any right of redemption which is hereby expressly
waived.
8.3 In the event you seek to take possession of all or any portion of
the Collateral by judicial process, we irrevocably waive: (a) the posting of
any bond, surety or security with respect thereto which might otherwise be
required, (b) any demand for possession prior to the commencement of any suit
or action to recover the Collateral, and (c) any requirement that you retain
possession and not dispose of any Collateral until after trial or final
judgment.
8.4 We agree that the giving of five (5) business days notice by you,
sent by ordinary mail, postage prepaid, to our address set forth below,
designating the place and time of any public sale or of the time after which
any private sale or other intended disposition of the Collateral is to be made,
shall be deemed to be reasonable notice thereof and we waive any other notice
with respect thereto.
8.5 The net cash proceeds resulting from the exercise of any of the
foregoing rights or remedies shall be applied by you to the payment of the
Obligations in such order as you may elect, and we shall remain liable to you
for any deficiency. Without limiting the generality of the foregoing, if you
enter into any credit transaction, directly or indirectly, in connection with
the disposition of any Collateral, you shall have the option, at any time, in
your sole discretion, to reduce the Obligations by the principal amount of such
credit transaction or to defer the reduction thereof until actual receipt by
you of cash or other immediately available funds in connection therewith.
8.6 The enumeration of the foregoing rights and remedies is not
intended to be exclusive, and such rights and remedies are in addition to and
not by way of limitation of any other rights or remedies you may have under the
UCC or other applicable law. You shall have the right, in your sole discretion,
to determine which rights and remedies, and in which order any of the same, are
to be exercised, and to determine which Collateral is to be proceeded against
and in which order, and the exercise of any right or remedy shall not preclude
the exercise of any others, all of which shall be cumulative.
8.7 No act, failure or delay by you shall constitute a waiver of any of
your rights and remedies. No single or partial waiver by you of any provision
of this Agreement or any supplement hereto, or breach or default thereunder, or
of any right or remedy which you may have shall operate as a waiver of any
other provision, breach, default, right or remedy or of the same provision,
breach, default, right or remedy on a future occasion.
8.8 We waive presentment, notice of dishonor, protest and notice of
protest of all instruments included in or evidencing any of the Obligations or
the Collateral and any and all notices or demands whatsoever (except as
expressly provided herein). You may, at all times, proceed directly against us
to enforce payment of the Obligations and shall not be required to take any
action of any kind to preserve, collect or protect your or our rights in the
Collateral.
Section 9. EFFECTIVE DATE; TERMINATION; COSTS.
9.1 This Agreement shall become effective upon acceptance by you and
shall continue in full force and effect for a term ending three (3) years from
the date hereof (the "Renewal Date") and from year to year thereafter, unless
sooner terminated pursuant to the terms hereof. Either party may terminate this
Agreement on the Renewal Date or on the anniversary of the Renewal Date in any
year by giving the other party at least sixty (60) days prior written notice by
registered or certified mail, return receipt requested, and, in addition, you
shall have the right to terminate this Agreement immediately at any time upon
the occurrence of an Event of Default. No termination of this Agreement,
however, shall relieve or discharge us of our duties, obligations and covenants
hereunder until all Obligations have been paid in full, and your continuing
security interest in the Collateral shall remain in effect until such
Obligations have been fully discharged.
9.2 If you terminate this Agreement upon the occurrence of an Event of
Default or at our request, in view of the impracticability and extreme
difficulty of ascertaining actual damages and by mutual agreement of the
parties as to a reasonable calculation of your lost profits as a result
thereof, we hereby agree that we shall pay to you, upon the effective date of
such termination, an early termination fee in an amount equal to (a) three (3%)
percent of the Maximum Credit if such termination occurs on or prior to the
first anniversary of this Agreement; (b) two (2%) percent of the Maximum Credit
if such termination occurs after the first anniversary of this Agreement but on
or prior to the second anniversary of this Agreement; or (c) one (1%) percent
of the Maximum Credit if you have exercised your option as provided in
paragraph 9.1 above and such termination occurs after the second anniversary of
this Agreement but prior to the third anniversary of this Agreement. Such
termination fee shall be presumed to be the amount of damages sustained by said
early termination and we agree that it is reasonable under the circumstances
currently existing. The early termination fee provided for in this paragraph
9.2 shall be deemed included in the Obligations.
9.3 This Agreement, any supplement hereto, and any agreements,
instruments or documents delivered or to be delivered in connection herewith
represent our entire agreement and understanding concerning the subject matter
hereof and thereof, and supersede all other prior and contemporaneous
agreements, understandings, negotiations and discussions, representations,
warranties, commitments, offers, contracts, whether oral or written.
9.4 No provision hereof shall be modified or amended orally or by
course of conduct but only by a written instrument expressly referring hereto
signed by both parties.
9.5 Upon your request we shall pay to you, or reimburse you for, all
out of pocket sums, costs and expenses which you may pay or incur in connection
with or related to the negotiation, preparation, consummation, administration
and enforcement of this Agreement, any supplement hereto, and
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all other agreements, instruments and documents in connection herewith and
therewith, and the transactions contemplated hereunder and thereunder, together
with any amendments, supplements, consent or modifications which may be
hereafter made or entered into in respect hereof or thereof, and all efforts
made to defend, protect or enforce the security interest granted herein or
therein or in enforcing payment of the Obligations, including without
limitation, appraisal fees, filing fees and taxes, title insurance premiums,
recording taxes, expenses for searches, expenses heretofore incurred by you and
from time to time hereafter during the course of periodic field examinations of
the collateral and our operations, wire transfer fees, check dishonor fees, the
reasonable fees and disbursements of counsel to you, all fees and expenses for
the service and filing of papers, premiums on bonds and undertakings, fees of
marshals, sheriffs, custodians, auctioneers and others, travel expenses and all
court costs and collection charges, all of which shall be part of the
Obligations and shall accrue interest after demand thereof at a rate equal to
the highest rate then payable on any of the Obligations.
Section 10. NOTICES.
10.1 All notices, requests and demands to or upon the respective
parties hereto shall be deemed to have been duly given or made: if by hand,
telex, telegram or facsimile, immediately upon receipt (if received during
normal business hours), if by Federal Express, Express Mail or any other
overnight delivery service, one (1) business day after dispatch; and if mailed
by certified mail, return receipt requested, five (5) business days after
mailing. All notices, requests and demands are to be given or made to the
respective parties at the address (or to such other addresses as either party
may designate by notice in accordance with the provisions of this paragraph)
set forth herein.
Section 11. WAIVER OF JURY TRIAL; JURISDICTION; CHOICE OF LAW.
11.1 We and you each hereby waive all rights to a trial by jury in any
action or proceeding of any kind arising out of or relating to this Agreement,
any supplement hereto, the Obligations, the Collateral or any such other
transaction. We hereby waive rights of setoff and rights to interpose
counterclaims (except compulsory counterclaims) in the event of any litigation
with respect to any matter connected with this Agreement, any supplement
hereto, the Obligations, the Collateral or any other transaction between the
parties and we hereby irrevocably consent and submit tot the non-exclusive
jurisdiction of the Supreme Court of the State of New York and the United
States District Court for the Southern District of New York in connection with
any action or proceeding of any kind arising out of or relating to this
Agreement, any supplement hereto, the Obligations, the Collateral or any such
other transaction.
11.2 In any such litigation we waive personal service of any summons,
complaint or other process and agree that service thereof may be made by
certified or registered mail directed to us at our address set forth below.
Within thirty (30) days after such mailing, we shall appear in answer to such
summons, complaint or other process, failing which we shall be deemed in
default and judgment may be entered by you against us for the amount of the
claim and other relief requested therein.
11.3 This Agreement and all transactions thereunder shall be deemed to
be consummated in the State of New York and shall be governed by and
interpreted in accordance with the laws of that State. If any part or provision
of this Agreement is invalid or in contravention of any applicable law or
regulation, such part or provision shall be severable without affecting the
validity of any other part or provision of this Agreement.
Very truly yours,
X.X. XXXXXXX COMPANY
By: /s/ XXXXXXX XXXXXX
--------------------------------
Title: CHAIRMAN
Address:
00000 XXXXXX XXXXXX
XXXXXXXXXXX, XXXXXXXXX 00000
Accepted at New York, New York
on July 31, 1992
CONGRESS FINANCIAL CORPORATION
By: /s/ XXXXXX XXXXX
---------------------------
Title: VP
-5-
7
[A CoreStates Company LOGO]
TRADE FINANCING AGREEMENT
SUPPLEMENT TO ACCOUNTS FINANCING AGREEMENT
[SECURITY AGREEMENT]
Congress Financial Corporation ( )
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
This Trade Financing Agreement ("Supplement") is a supplement to the
Accounts Financing Agreement [Security Agreement] between us dated July 31, 1992
(the "Agreement"). This Supplement is (a) hereby incorporated into the
Agreement, (b) made a part thereof and (c) subject to the other terms,
conditions, covenants and warranties thereof. All terms, including capitalized
terms, used herein shall have the meanings ascribed to them respectively in the
Agreement, unless otherwise defined in this Supplement.
This Supplement will confirm the terms and conditions upon which you
may, from time to time in your sole discretion, assist us in establishing or
opening foreign or domestic letters of credit and extend other financial
accommodations for our account. Accordingly, each of us hereby agrees as
follows:
SECTION 1. CREDIT ACCOMMODATIONS
1.1. You may, in your sole discretion, from time to time, for our
account, at our request, provide one or more of the following financial
accommodations to us or our designee(s): (a) issue, open, or cause the issuance
or opening of letters of credit or purchase or other guaranties for the purchase
of goods and services in the ordinary course of our or any such designee's
business or for any other purpose approved by you ("Import Credits"), (b) assist
us in establishing or opening letters of credit for such purposes by
indemnifying the issuer thereof or guaranteeing our payment or performance to
such issuer in connection therewith, (c) make payments for our or such
designee's account in connection with such purchases. All such letters of credit
or purchase or other guaranties and other financial accommodations are referred
to herein individually as a "Credit" and collectively as "Credits".
1.2. The opening or issuance of any Credit shall at all times and in
all respects be in your sole discretion. The amount and extent of any Credit
and the terms, conditions and provisions thereof shall in all respects be
determined solely by you and shall be subject to change, modification and
revision by you, in your sole discretion, at any time and from time to time.
The maturity of each Credit shall not exceed one hundred and eighty (180)
days after opening or issuance, except in your sole discretion.
1.3. Our loan availability under the Agreement and any other
Supplements thereto shall be reduced (i) in the case of Import Credits, 50% of
the amount of all of such outstanding import credits, or (ii) in the case of
all other credits, 100% of the amount of all outstanding credits, or (iii) such
lesser amounts as you may elect in your ? [**]
1.4. All outstanding Credits shall be secured by all collateral in
which you are now or hereafter granted a security interest by us or any
guarantor of our Obligations. All outstanding Credits shall be deemed loans for
purposes of determining whether the Maximum Credit has been exceeded.
1.5. Except in your sole discretion, the amount of all Credits and
all other commitments and obligations made or incurred by you for our account in
connection therewith shall not exceed $4,000,000 in the aggregate at any time
outstanding.
1.6. All indebtedness, liabilities, expenses and obligations of any
kind paid, arising or incurred by you in connection with this Supplement, any
Credit or any documents, drafts and acceptances thereunder, whether present or
future, whether arising or incurred before or after termination or nonrenewal
of this Agreement shall be incurred solely as an accommodation to us and for
our account and constitute part of the Obligations, including without
limitation: (a) all amounts due or which may become due under any Credit or any
drafts or acceptances thereunder; (b) all amounts charged or chargeable to you
or us by any bank or other issuer of any Credit or any correspondent which
opens, issues or is otherwise involved with any Credit, including without
limitation, all fees, expenses and commissions; (c) your fees, expenses and
commissions; (d) duties, freight, taxes, costs, insurance and all such other
charges and expenses which may pertain directly or indirectly to any
Obligations or to the Credits or goods or documents relating thereto; and
(e) all other indebtedness and obligations owed by us to you pursuant to, in
connection with or arising from this Supplement, the Credits or any drafts or
acceptances relating thereto.
1.7. All such Obligations shall accrue interest at the rate provided
for in the Agreement, commencing on the date any payment is made, or
non-contingent obligation incurred, by you and all such Obligations shall,
together with interest thereon and other sums owed by us to you hereunder, be
payable and evidenced as provided in the Agreement.
1.8. In addition to all other fees, charges and expenses payable
under the Agreement, this Supplement, and to any bank or other issuer or
correspondent in connection with any Credit, we agree to pay to you the
following commissions for your services hereunder, which shall be due and
payable on the opening or issuance of each Credit or, if the original term is
extended, on the extension thereof; a charge of 50/100 of one percent (50%) of
the face amount of any Credit (other than drafts or acceptances) for up to the
initial sixty (60) days of the term thereof and an additional charge of 25/100
of one percent (25%) of such face amount for each additional thirty (30) days,
or any portion thereof, of the original term or any extension thereof ? . We
also agree to pay to you, your and any bank's, other issuer's or correspondent's
customary charges for amendments, extensions and administration relating to any
Credit, which charges shall be due and payable on the first day of the month
following the date of incurrence and, at your option may be charged to any of
our account(s) maintained by you.
1.9. Nothing contained herein shall be deemed or construed to grant
us any right, power or authority to pledge your credit in any manner. You shall
have no liability of any kind with respect to any Credit opened or issued by a
bank or other issuer or any draft or acceptance with respect thereto unless and
until you shall have first duly executed and delivered your guarantee or
indemnification in writing with respect thereto, as provided herein.
SECTION 2. ADDITIONAL SECURITY INTEREST
2.1. As additional security for the prompt performance, observance
and payment in full of all Obligations, we hereby grant to you a continuing
security interest in, a lien upon, and a right to set off against, and we hereby
assign, transfer, pledge and set over to you all of the following property
acquired by us in connection with any Credit or otherwise owned, by us, whether
now owned or hereafter acquired (which, is and shall be deemed a part of the
Collateral as defined and used in the Agreement): (a) all raw materials,
work-in-process, finished goods and all other inventory and goods of whatsoever
kind or nature, wherever located, including inventory or goods in transit
("Inventory"), including without limitation, all wrapping, packaging,
advertising and shipping materials, and all other goods consumed in our
business, all labels and other devices, names or marks affixed or to be affixed
thereto for purposes of selling or of identifying the same or the seller or
manufacturer thereof and all of our right, title and interest therein and
thereto; (b) documents of payment, transport and title or the equivalent
thereof, including with-
8
out limitation, original contracts, orders, invoices, checks, drafts, notes,
letters of credit, documents, warehouse receipts, bills of lading, shipping
receipts, dock receipts, delivery tickets and documents made available to us
for the purpose of ultimate sale or exchange of Inventory or for the purpose of
loading, unloading, storing, shipping, transhipping, manufacturing, processing
or otherwise dealing with Inventory in a manner preliminary to their sale or
exchange; (c) all books, records, other property and general intangibles
relating to the foregoing; and (d) all products and proceeds of the foregoing
in any form, including without limitation, insurance proceeds and any claims
against third parties for loss or damage to or destruction of any or all of the
foregoing.
2.2. We hereby recognize and admit that until all of the Obligations
have been fully and indefeasibly paid and discharged, you may be deemed to have
absolute ownership in and unqualified right to the possession and disposal of
the following: (a) all property shipped under or pursuant to or in connection
with any Credit or in any way related thereto and, including, but not limited
to, the documents, drafts or acceptances drawn thereunder, whether or not
released to us, (b) in and to all shipping documents, warehouse receipts,
policies, or certificates of insurance and other documents accompanying or
relative to documents, drafts or acceptances drawn under or relating to any
Credit, and (c) all proceeds of each of the foregoing.
2.3. You may, on or after occurrence of any Event of Default, exercise
any or all of your rights of ownership, including the rights of possession and
sale or other disposition, with or without notice to us, without liability to
you and entirely at our expense and without relieving us from any Obligations.
SECTION 3. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS.
We hereby represent, warrant and covenant to you the following (which
shall survive the execution and delivery of this Supplement), the truth and
accuracy of which, or compliance with, being a continuing condition of the
making of loans by you under the Agreement or any supplement thereto and the
extension by you of each Credit and other financial accommodations pursuant
hereto:
3.1. All sales of any Inventory shall be made by us only in the
ordinary course of business and the Accounts arising from such sales and
proceeds thereof shall be and are hereby transferred and assigned to you and we
confirm that your lien and security interest extends and attaches to those
Accounts and proceeds.
3.2. Except as you may otherwise specifically consent in writing prior
to the opening or issuance of any Credit, all Credits shall be opened or issued
to cover the actual purchase and delivery of Inventory solely for our account.
3.3. All shipments made under any Credit are in accordance with the
governmental laws and regulations of the countries in which the shipments
originate and terminate, and are not prohibited by any such laws and
regulations.
3.4. We assume all risk, liability and responsibility for, and agree
to pay and discharge, all present and future local, state, federal or foreign
taxes, duties, or levies. Any embargo, restriction, laws, customs or
regulations of any country, state, city, or other political subdivision, where
the Collateral is or may be located, or wherein payments are to be made, or
wherein drafts may be drawn, negotiated, accepted, or paid, shall be solely our
risk, liability and responsibility.
3.5. All documents, instruments, notices and statements relating to
any Credit and/or the Collateral, if any, shall at your request, be promptly
delivered to you.
3.6. We shall procure promptly, or cause to be procured, any necessary
licenses for the shipping of goods and comply or cause any drawer under, or
beneficiary of, any Credit (or any transferee or assignee thereof), to comply
with all foreign and domestic governmental laws and regulations in regard to
the shipping of the Inventory, the financing thereof or payment therefor,
including governmental laws and regulations pertaining to transactions
involving designated foreign countries or their nationals and to furnish such
certificates in that respect as you or any bank or other issuer or
correspondent may at any time require.
3.7. The only locations of any Collateral are those addresses listed
on Schedule A annexed hereto and made a part hereof. Schedule A sets forth the
owner and/or operator of the premises at such addresses, for all locations
which we do not own and operate and all mortgages, if any, with respect to the
premises. We shall not remove any Collateral from such locations, without your
prior written consent, except for sales of Inventory in the ordinary course of
our business.
3.8. We shall at all times maintain, with financially sound and
reputable insurers, casualty and hazard insurance with respect to the
Collateral for not less than its full market value and against all risks to
which it may be exposed. All such insurance policies shall be in such form,
substance, amounts and coverage as may be satisfactory to you and shall provide
for ten (10) days' minimum prior cancellation notice in writing to you. You may
act as attorney for us in obtaining, adjusting, settling, amending and
cancelling such insurance. We shall promptly (a) obtain endorsements to all
existing and future insurance policies with respect to the Collateral
specifying that the proceeds of such insurance shall be payable to you as your
interests may appear and further specifying that you shall be paid regardless
of any act, omission or breach of warranty by us, (b) deliver to you an
original executed copy of, or executed certificate of the insurance carrier with
respect to, such endorsement and, at your request, the original or a certified
duplicate copy of the underlying insurance policy and (c) deliver to you such
other evidence which is satisfactory to you of compliance with the provisions
hereof.
3.9. We shall promptly notify you in writing of the details of any
loss, damage, investigation, action, suit, proceeding or claim relating to the
Collateral or which would result in any material adverse change in our
business, assets, goodwill or condition, financial or otherwise.
3.10. At your option, you may apply any insurance monies received at
any time to the cost of repairs to or replacement for the Inventory and/or to
payment of any of the Obligations, whether or not due, in any order and in such
manner as you, in your sole discretion, may determine.
3.11. Upon your request, at any time and from time to time, we shall,
at our sole cost and expense, execute and deliver to you written reports or
appraisals as to the Inventory listing all locations, items and categories
thereof, describing the condition of same and setting forth the lower of cost
or fair market value thereof, in such form as is satisfactory to you.
3.12. We shall (a) use, store and maintain the Inventory with all
reasonable care and caution and (b) use the Inventory for lawful purposes only
and in conformity with applicable laws, ordinances, regulations and insurance
policies.
3.13. We assume all responsibility and liability arising from or
relating to the use, sale or other disposition of the Inventory and other
Collateral.
SECTION 4. INDEMNIFICATION AND RELEASE.
4.1. We shall and do hereby indemnify you and hold you harmless from
and against, and agree to pay you on demand the amount of, any and all losses,
costs, claims, demands, causes of action, liabilities or expenses (collectively,
"Liabilities") which you may suffer or incur arising from or in connection with
any transactions or occurrences relating to any Credit, the Collateral and any
documents, drafts or acceptances thereunder or relating thereto, including, but
not limited to, Liabilities due to any action taken by any bank or other issuer
or correspondent with respect to any Credit. We further agree to and do hereby
release and hold you harmless for any acts, waivers, errors, delays or
omissions, whether caused by you, by any bank or other issuer or correspondent
or otherwise with respect to or relating to any Credit. Our unconditional
obligation to you hereunder shall not be modified or diminished for any reason
or in any manner whatsoever. Any fees, commissions or other charges made to you
with respect to any Credit or other Obligations by any bank or other issuer or
correspondent thereof shall be conclusive and may be charged by you to any of
our account(s) maintained by you.
4.2. The drawer under or beneficiary of any Credit (or any assignee or
transferee thereof) shall be deemed our agent and we assume all risk, loss,
liabilities, charges and expenses with respect to their acts or omissions.
9
4.3. If any Credit provides that payment is to be made by any bank,
other issuer or correspondent, you shall not be responsible for the failure of
any of the documents specified in any Credit to come into your possession or for
any delay in connection therewith, and our obligation to make reimbursement
shall not be affected by such failure or delay in the receipt by you of any such
documents.
4.4. We agree that any action taken by you, or any action taken by
any bank or other issuer or correspondent under or in connection with any
Credit, the Collateral and any documents, drafts, or acceptances thereunder,
shall, notwithstanding any judgment or instructions we may or may not express to
the contrary or inconsistent therewith, be conclusive and binding on us and
shall not create any resulting liability to you, except for your own willful
misconduct or gross negligence. In furtherance thereof, you shall have the full
and sole right and authority to: (a) clear and resolve any questions of
non-compliance of documents; (b) give any instructions as to acceptance or
rejection of any documents or goods; (c) execute any and all applications for
steamship or airway guaranties, indemnities or delivery orders; (d) grant any
extensions of the maturity modifications, changes or cancellations of any of the
terms or conditions of any of the applications, Credits, or documents, drafts or
acceptances thereunder or any letters of credit included in the Collateral; all
in your sole name, and any bank or other issuer or correspondent shall be
entitled to comply with and honor any and all such documents or instruments
executed by or received solely from you, all without any notice to or any
consent from us.
4.5. Without your express consent and endorsement in writing, we
agree not to: (a) approve or resolve any questions of non-compliance of
documents; (b) give any instructions as to acceptance or rejection of any
documents or goods; (c) execute any and all applications for steamship or airway
guaranties, indemnities or delivery orders; (d) grant any extensions of the
maturity of, time of payment for, or time of presentation of, any drafts,
acceptances or documents; or (e) agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions of any
of the applications, Credits, or documents, drafts or acceptances thereunder.
4.6. Any rights, remedies, duties or obligations granted or
undertaken by us to any bank or other issuer or correspondent in any application
for any Credit, or any outstanding agreement relating to the opening or issuance
of any Credit or acceptances or otherwise, shall be deemed to have been granted
to you and apply in all respects to you and shall be in addition to any rights,
remedies, duties or obligations contained herein.
4.7. Any duties or obligations undertaken by you to any bank or other
issuer or correspondent in any application for or in connection with any Credit,
including any outstanding agreement relating to the opening or issuance of any
Credit or otherwise, shall be deemed to have been undertaken by us and apply in
all respects to us and shall be in addition to the duties or obligations
contained herein.
SECTION 5. ADDITIONAL REMEDIES.
Upon the occurrence of any Event of Default and at any time thereafter,
you shall have the right (in addition to any other rights you may have under the
Agreement, this Supplement or otherwise), without notice to us, at any time and
from time to time, in your discretion, with or without judicial process or the
aid or assistance of others and without cost to you:
5.1. To enter upon any premises on or in which any of the Inventory
may be located and, without resistance or interference by us, take possession
of the Inventory;
5.2. To complete processing, manufacturing, repair and shipment to
customers of all or any portion of the Inventory;
5.3. To sell, foreclose or otherwise dispose of any part or all of
the Inventory on or in any of our premises or premises of any other party;
5.4. To require us, at our expense, to assemble and make available
to you any part or all of the Inventory at any place and time designated by you;
5.5. To remove any or all of the Inventory from any premises on or
in which the same may be located, for the purpose of effecting the sale,
foreclosure or other disposition thereof or for any other purpose (and if any
of the Inventory consists of motor vehicles, you may use our registrations and
license plates).
IN WITNESS WHEREOF, we have caused these presents to be duly executed
this 18th day of March, 1993.
X.X. Xxxxxxx
By: /s/ XXXXX X. XXXXXXXX
--------------------------------
Title: VICE PRESIDENT, FINANCE
SCHEDULE A
LOCATIONS OF COLLATERAL
10
COVENANT SUPPLEMENT TO
ACCOUNTS FINANCING AGREEMENT
[SECURITY AGREEMENT]
July 31, 1992
Congress Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
This Covenant Supplement ("Supplement") is a supplement to the Accounts
Financing Agreement (Security Agreement] between X.X. Xxxxxxx Company, a
Minnesota corporation (as survivor by merger with EFJ Acquisition Corp., a
Delaware Corporation, together with its successors and assigns, "Borrower") and
Congress Financial Corporation, a California corporation (together with its
successors and assigns, "Congress"), dated of even date herewith (the "Accounts
Agreement", and together with this Supplement, any and all other supplements
thereto, and all other agreements, documents and instruments now or at any time
hereafter executed and/or delivered in connection therewith or related thereto,
as the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, individually and collectively, the
"Financing Agreements"). This Supplement is (a) hereby incorporated into the
Accounts Agreement, (b) made a part thereof and (c) subject to the terms,
conditions, covenants and warranties thereof. All terms (including capitalized
terms) used herein shall have the meanings ascribed to them respectively in the
Accounts Agreement, unless otherwise defined in this Supplement.
Section 1. ADDITIONAL DEFINITIONS
As used herein:
1.1 "Affiliate" shall mean, with respect to a specified Person, any
other Person which directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with such Person, and
without limiting the generality of the foregoing, includes (a) any Person which
beneficially owns or holds five (5%) percent or more of any class of voting
securities of such Person or other equity interests in such Person or (b) any
Person of which such Person beneficially owns or holds five (5%) percent or more
of any class of voting securities or in which such Person beneficially owns or
holds five (5%) percent or more of the equity interest. For the purposes of this
definition, the term "control" (including with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, means the
11
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise. In no event shall
the term "Affiliate" as used herein include Xxxx.
1.2 "AmeriCom" shall mean AmeriCom Corporation, a Georgia corporation
and its successors and assigns.
1.3 "Arkla" shall mean Arkla, Inc., a Delaware corporation and its
successors and assigns.
1.4 "Arkla Blockage Event" shall mean either: (a) the maturity of the
Indebtedness of Borrower to Congress by lapse of time, acceleration or
otherwise, or (b) the default by Borrower in the payment of the Indebtedness of
Borrower to Congress when due or (c) the occurrence of an Event of Default
(other than a default by Borrower in the payment of any Indebtedness of Borrower
to Congress when due).
1.5 "Arkla Subordination Agreement" shall mean the Subordination
Agreement, dated of even date herewith, by and among Arkla, Congress and
Borrower, as the same now exists or may 'hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.6 "Arkla Subordinated Notes" shall mean, individually and
collectively, the $10,000,000 Note, the $800,000 Note, the $500,000 Note and the
Exchange Notes.
1.7 "Xxxx" shall mean C. Xxxxx Xxxx, III and his successors, assigns,
heirs, executors and administrators.
1.8 "Xxxx Agreements" shall mean, individually and collectively, the
following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) the Note Purchase
Agreement, dated of even date herewith, between Borrower and Xxxx, (b) the
ZeroCoupon Note, (c) the Limited Guaranty and Pledge Agreement, dated of even
date herewith, between EJF Holding and Xxxx and (d) all related agreements,
documents and instruments executed by EFJ Holding, Borrower and/or Xxxx or any
Affiliate or Subsidiary of any of them.
1.9 "Xxxx Intercreditor Agreement" shall mean the Intercreditor
Agreement, dated of even date herewith, by and between Xxxx and Congress, as
acknowledged and agreed to by Borrower, as the same now exists or may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced.
1.10 "Capital Expenditures" shall mean all expenditures for, or
contracts for expenditures for, any fixed assets or improvements, or for
replacements, substitutions or additions thereto,
- 2 -
12
which have a useful life of more than one (1) year, including, but not limited
to, the direct or indirect acquisition of such assets by way of increased
product service charges, offset items or otherwise, and shall include
capitalized lease payments.
1.11 "Consolidated Net Worth" shall mean, as to any Person, at any time,
in accordance with GAAP, on a consolidated basis for such Person and its
Subsidiaries, the amount equal to the difference between: (a) the aggregate net
book value of all assets of such Person and its Subsidiaries, calculating the
book value of inventory for this purpose on a first-in-first-out basis, after
deducting from such book values all appropriate reserves (including all reserves
for doubtful receivables, obsolescence, depreciation and amortization) and (b)
the aggregate Indebtedness of such Person and its Subsidiaries (including tax
and other proper accruals); provided, that for purposes of this definition,
Indebtedness shall not include Indebtedness permitted under Section 4.6(e)
hereof.
1.12 "Consolidated Working Capital" shall mean, as to any Person, at any
time, on a consolidated basis for such Person and its Subsidiaries, the amount
equal to the difference between: (a) the aggregate net book value of all assets
of such Person and its Subsidiaries, on a consolidated basis, calculating the
book value of inventory for this purpose on a first-in-first-out basis, which
would, in accordance with GAAP, be classified as current assets and (b) all
Indebtedness of such Person and its Subsidiaries, on a consolidated basis, which
would in accordance with GAAP, be classified as current liabilities.
1.13 "EFJ Acquisition" shall mean EFJ Acquisition Corp., a Delaware
corporation and its successors and assigns.
1.14 "EFJ Holding" shall mean EFJ Holding Corp., a Delaware corporation
and its successors and assigns.
1.15 "Eligible Accounts" shall mean Accounts created by Borrower in the
ordinary course of its business arising out of the sale of goods or rendition of
services, which are and at all times shall continue to be acceptable to Congress
in all respects. Standards of eligibility may be fixed and revised from time to
time solely by Congress in its exclusive judgment. In determining eligibility,
Congress may, but need not, rely on agings, reports and schedules of Accounts
furnished to Congress by Borrower, but reliance by Congress thereon from time to
time shall not be deemed to limit Congress' right to revise standards of
eligibility at any time as to both present and future Accounts. In general, an
Account shall not be deemed eligible unless: (a) the Account Debtor on such
Account is at all times and continues to be acceptable to Congress, (b) such
Account complies in all respects with the representations, covenants and
warranties set forth herein and in the other Financing Agreements, (c) no more
than ninety (90) days have elapsed since
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13
the invoice date of such Account, (d) if it is a Foreign Account, such Foreign
Account is secured or payable by a letter of credit or acceptance issued by a
bank and on terms acceptable to Congress (the original of which has been
delivered to Congress and the issuer of which has been notified of the
assignment thereof to Congress) or the Foreign Account is subject to credit
insurance payable to Congress issued by an insurer and on terms and in an amount
acceptable to Congress, (e) if it is a Government Account, Borrower shall have
complied in all respects with the Federal Assignment of Claims Act of 1940, as
amended, and any state or local equivalent in a manner satisfactory to Congress
with respect to such Account and (f) the Account is not owed by an Account
Debtor who has or whose Affiliates have more than fifty (50%) percent of its and
their Accounts outstanding and unpaid more than ninety (90) days past the
invoice date thereof. Any accounts which Congress determines to be ineligible or
unacceptable for availability purposes at any time shall nevertheless be and
remain at all times part of the Collateral.
1.16 "Excess Availability" shall mean the amount, as determined by
Congress, calculated at any time, equal to:
(a) the amount of the loans which Congress would at such time make
available to Borrower based on the lending formulas and subject to
the sublimits and reserves from time to time established by Congress
hereunder and subject to the Maximum Credit,
minus
(b) the sum of: (i) the amount of all then outstanding and unpaid
Obligations, including the initial loans under the Accounts
Agreement made by Congress to Borrower as of the date hereof, plus
(ii) the aggregate amount of all trade payables past due as of such
time.
1.17 "Financing Agreements" shall have the meaning set forth in the first
paragraph hereof.
1.18 "Foreign Account" shall mean an Account arising out of the sale of
goods to an Account Debtor which: (a) does not maintain its chief executive
office in the United States, Puerto Rico or the U.S. Virgin Islands, (b) is not
organized under the laws of the United States or any state thereof or Puerto
Rico or the U.S. Virgin Islands, or (c) is the government of any foreign country
or sovereign state, or of any state, province, municipality or other political
subdivision thereof, or of any
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department, agency, public corporation or other instrumentality thereof.
1.19"GAAP" shall mean generally accepted accounting principles as in
effect on the date hereof consistently applied.
1.20 "Government Account" shall mean any Account at any time owing by an
Account Debtor which is: (a) the United States, (b) any State of the United
States or a local municipality or other political subdivision thereof or (c) any
body, department, authority, agency, public corporation or instrumentality of
any of the foregoing.
1.21 "Xxxxxx Street" shall mean Xxxxxx Street Capital Corporation, a
Delaware corporation and its successors and assigns.
1.22 "Xxxxxx Street Sale/Leaseback Agreements" shall mean, individually
and collectively, the following (as the same new exist or may hereafter be
amended, modified, supplemented, extended, renewed or replaced): (a) the
Purchase and Sale Agreement For Improved Real Property, dated of even date
herewith, by and between Borrower and Xxxxxx Street with respect to the Waseca
Premises, (b) the Agreement of Lease, dated of even date herewith, by and
between Xxxxxx Street, as landlord, and Borrower, as tenant, with respect to the
Waseca Premises and (c) all related agreements, documents and instruments
executed by Xxxxxx Street and/or Borrower (as in effect on the date hereof).
1.23 "Indebtedness" shall mean, as to any Person, all items which, in
accordance with GAAP, would be included in determining total liabilities shown
on the liability side of its balance sheet as at the date such Indebtedness is
to be calculated and, in any event, shall include any liabilities secured by any
mortgage, pledge, lien or security interest existing on such person's owned or
acquired property.
1.24 "Merger" shall mean the merger of EFJ Acquisition with and into
Borrower with Borrower as the surviving corporation pursuant to the terms of the
Merger Agreements.
1.25 "Merger Agreements" shall mean, collectively, the Agreement of
Merger, dated of even herewith, by and between EFJ Acquisition and Borrower, the
Plan of Merger, dated of even date herewith, by and between EFJ Acquisition and
Borrower, the Articles of Merger of EFJ Acquisition and Borrower, the
Certificate of Merger of EFJ Acquisition and Borrower and all related
agreements, documents and instruments.
1.26 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including a business trust), unincorporated
association, joint stock corporation,
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trust, joint venture or other entity or government or any agency or
instrumentality or political subdivision thereof.
1.27 "Preferred Stock" shall mean the eighty thousand (80,000) shares of
preferred stock of Borrower, having a par value per share of $100, directly and
beneficially owned and held by Arkla on the date hereof and received by Arkla as
part of the consideration for the purchase by EFJ Acquisition of the Purchased
Stock in accordance with the Purchase-Agreements (as in effect on the date
hereof).
1.28 "Purchase Agreements" shall mean, individually and collectively, the
following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) the Stock Purchase
Agreement and all other agreements of transfer as are referred to therein and
all side letters with respect thereto, (b) the Arkla Subordinated Notes and (c)
all other related agreements, documents and instruments executed by EFJ
Acquisition, Borrower and/or Arkla and any Affiliate or Subsidiary of each of
the foregoing.
1.29 "Purchased Stock" shall mean all of the issued and outstanding shares
of common stock of Borrower.
1.30 "Stock Purchase Agreement" shall mean the Stock Purchase Agreement,
dated as of Xxxxx 00, 0000, xxxxxxx Xxxxx xxx XXX Acquisition, as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.31 "Subsidiary" or "subsidiary" shall mean any corporation, association
or organization, active or inactive, as to which more than fifty (50%) percent
of the outstanding voting stock or shares or interests shall now or hereafter be
owned or controlled, directly or indirectly by any Person, any Subsidiary of
such Person, or any Subsidiary of such Subsidiary.
1.32 "Term Loan" shall mean the outstanding Obligations owed to Congress
by Borrower consisting of the secured term loan made by Congress to Borrower as
provided for in Section 3.2 hereof and evidenced by the Term Note.
1.33 "Term Note" shall mean the Term Promissory Note, dated of even date
herewith, made by Borrower payable to Congress in the original principal amount
of $4,500,000, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.34 "Tradestyle" shall have the meaning set forth in Section 4.2 hereof.
1.35 "Waseca premises" shall mean the real property located at 000 Xxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxx and 206 Second
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Xxxxxx X.X., Xxxxxx, Xxxxxxxxx conveyed by Borrower to Xxxxxx Street on the date
hereof and immediately thereafter leased back by Borrower from Xxxxxx Street.
1.36 "Weksel" shall mean Xxxxxxx Xxxxxx and his successors, assigns,
heirs, executors and administrators.
1.37 "Zero Coupon Note" shall mean the Zero Coupon Note due July 31, 1997
in the face amount of up to $5,000,000 issued by Borrower payable to Xxxx, as
the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.38 "$10,000,000 Note" shall mean the 9.79% Senior Subordinated Note, due
July 31, 1997, dated of even date herewith, issued by Borrower payable to the
order of Arkla in the original principal amount of $10,000,000, as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.39 "$800,000 Note" shall mean the Promissory Note, dated of even date
herewith, issued by Borrower payable to the order of Arkla in the original
principal amount of $800,000, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
1.40 "$500,000 Note" shall mean the Promissory Note, dated of even date
herewith, issued by Borrower payable to the order of Arkla in the original
principal amount of $500,000, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
Section 2. ADDITIONAL CONDITIONS PRECEDENT
Each of the following is an additional condition precedent to Congress
making any loans to Borrower pursuant to the Accounts Agreement, this Agreement
and any other supplement thereto and the other Financing Agreements, including
the making of the initial and any other and future loans (including the Term
Loan), advances and other financial accommodations contemplated hereunder and
thereunder:
2.1 Congress shall have received, in form and substance satisfactory to
Congress and its counsel, evidence that the Purchase Agreements have been duly
executed and delivered by and to the appropriate parties therein and the
transactions contemplated under the terms of the Purchase Agreements have been
consummated prior to or contemporaneously with the execution of this Agreement;
2.2 Congress shall have received, in form and substance satisfactory to
Congress and its counsel, evidence that the
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certificates of Merger with respect to the Merger have been filed with the
Secretary of State of the State of Minnesota and the Secretary of State of State
of Delaware and the Merger is valid and effective in accordance with the terms
and provisions of the Merger Agreements and the General Corporation Law of the
State of Delaware and the Business Corporation Act of the State of Minnesota;
2.3 Congress shall have received, in form-and substance satisfactory to
Congress and its counsel: (a) evidence that Borrower has received cash from EFJ
Holding or EFJ Acquisition as a cash equity contribution to Borrower of not less
than $1,000,000, (b) evidence that Borrower has received cash from Xxxxxx Street
in the aggregate amount of not less than $2,000,000 pursuant to the Xxxxxx
Street Sale/Leaseback Agreements and (c) evidence that Borrower has received
cash from Xxxx in the aggregate amount of not less than $1,000,000 pursuant to
the Xxxx Agreements;
2.4 Congress shall have received, in form and substance satisfactory to
Congress and its counsel, evidence that the $4,000,000 consisting of (a)
$1,000,000 cash received by Borrower from EFJ Holding or EFJ Acquisition
(immediately prior to the Merger) as an equity contribution, (b) $2,000,000 cash
received by Borrower from Xxxxxx Street pursuant to the Xxxxxx Street
Sale/Leaseback Agreements and (c) $1,000,000 cash received by Borrower from Xxxx
pursuant to the Xxxx Agreements has been applied as partial payment of the cash
portion of the purchase price for the Purchased Stock;
2.5 Congress shall have received, the duly authorized and executed
Acknowledgment and Consent to the Assignment of Indemnification Rights and
Remedies by Arkla, in form and substance satisfactory to Congress, consenting to
the collateral assignment by Borrower to Congress of all of the rights and
remedies and claims for damages or other relief under the Purchase Agreements of
Borrower (as successor pursuant to the Merger) and granting Congress such other
rights as Congress may require;
2.6 Congress shall have received, in form and substance satisfactory to
Congress and its counsel, a limited guarantee of payment of the Obligations duly
executed and delivered by Weksel;
2.7 Congress shall have received, in form and substance satisfactory to
Congress and its counsel, an absolute and unconditional guarantee of payment of
the Obligations, a general security agreement with respect to all of its assets
and related UCC financing statements, each duly authorized, executed and
delivered by AmeriCom;
2.8 Congress shall have received, (a) in form and substance satisfactory
to Congress and its counsel, a junior participation
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agreement between Congress and Weksel, duly executed and delivered by Weksel and
(b) not less than $500,000 in cash from Weksel representing the purchase price
paid for the junior participation purchased by Weksel pursuant to such junior
participation agreement;
2.9 Congress shall have received, in form and substance satisfactory to
Congress and its counsel, the Xxxx Intercreditor Agreement and the Arkla
Subordination Agreement--each in favor of Congress, duly authorized, executed
and delivered by Xxxx and Arkla, respectively;
2.10 Congress shall have received, in form and substance satisfactory to
Congress and its counsel, a consolidated pro-forma balance sheet of Borrower
reflecting the initial transactions contemplated hereunder, including, but not
limited to, the transactions contemplated by the Purchase Agreements, the Merger
Agreements, the Xxxxxx Street Sale/Leaseback Agreements and the Xxxx Agreements,
the loans, advances and other accommodations provided by Congress to Borrower on
the date hereof (including, but not limited to, the Term Loan) and the use of
the proceeds of the initial loans and advances and other accommodations as
provided herein accompanied by a certificate, dated of even date herewith, of
the vice chairman of the board of directors of Borrower, acceptable to Congress
stating that such pro-forma balance sheet represents the reasonable, good faith
opinion of such officer as to the subject matter thereof as of the date of such
certificate;
2.11 Borrower shall have Excess Availability, as determined by Congress as
of the date hereof, in an amount not less than $2,000,000;
2.12 Congress shall have received, in form and substance satisfactory to
Congress, all consents, waivers, acknowledgements and other agreements from
third persons which Congress may deem necessary or desirable in order to permit,
protect and perfect its security interests in and liens upon the Collateral or
to effectuate the provisions or purposes of this Agreement and the other
Financing Agreements, including, without limitation, (a) waivers by lessors,
owners and/or mortgagees of any security interests, liens or other claims by
such persons in and to the Collateral, and agreements by such persons permitting
Congress access to the premises to exercise its rights and remedies and
otherwise deal with the Collateral and (b) acknowledgements by processors,
consignees and warehousemen at any time in possession of any of the Collateral
of the security interests and liens of Congress, waivers by such persons of any
security interests, liens or other claims by such persons in and to the
Collateral, and agreements by such persons to follow the directions of Congress
with respect to the release and delivery of any Collateral at any time in their
possession;
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2.13 Congress shall have received evidence of insurance and loss payee
endorsements required hereunder and under the other Financing Agreements, in
form and substance satisfactory to Congress, and certificates of insurance
policies and/or endorsements naming Congress as loss payee, all at Borrower's
cost and expense;
2.14 Congress shall have received, in form and substance satisfactory to
Congress and its counsel, such opinion letters of counsel to Borrower and each
guarantor with respect to the Financing Agreements, including, but not limited
to, the legality, validity, binding effect and enforceability of the guarantees
to be executed and delivered by AmeriCom in favor of Congress with respect to
the Obligations, the transactions contemplated by the Purchase Agreements and
the Merger Agreements and such other matters as Congress may request;
2.15 the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to
Congress, in form and substance satisfactory to Congress;
2.16 all representations and warranties contained herein and in the other
Financing Agreements shall be true and correct in all material respects; and
2.17 no Event of Default shall have occurred and no event shall have
occurred or condition be existing which, with notice or passage of time or both,
would constitute an Event of Default.
Section 3. ADDITIONAL LOAN PROVISIONS
3.1 Termination. Notwithstanding anything to the contrary contained in
Section 9 of the Accounts Agreement, the Accounts Agreement may not be
terminated by Borrower pursuant to Section 9.1 or at Borrower's request pursuant
to Section 9.2 thereof unless each of the other Financing Agreements is
terminated simultaneously therewith in accordance with their terms. No
termination of the Financing Agreements shall relieve or discharge Borrower of
its duties, obligations and covenants until all Obligations have been
indefeasibly paid in full and Congress' continuing security interests shall
remain in effect until such Obligations have been so discharged.
3.2 Term Loan. Subject to, and upon the terms and conditions contained
herein, Congress shall make the Term Loan to Borrower in the original principal
amount of Four Million Five Hundred Thousand ($4,500,000) Dollars. The Term Loan
shall be (a) evidenced by the Term Note, (b) repaid, together with interest and
other amounts due thereunder, in accordance with the terms and provisions of the
Term Note, this Agreement and the
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other Financing Agreements and (c) secured by all of the collateral.
3.3 Reserves. Without limiting any other rights or remedies of Congress
under this Agreement or any of the other Financing Agreements, all loans,
advances and other financial accommodations otherwise available to Borrower
pursuant to the lending formulas, the lending statements and the Maximum Credit
shall be subject to Congress' continuing right, in its discretion, to establish
a reserve reducing the amount of the loan otherwise available to Borrower
pursuant to the lending formulas, lending statements and Maximum Credit, and to
increase and decrease such reserve from time to time, if and to the extent that,
in Congress' discretion, Congress believes such reserve is necessary to protect
Congress against possible non-payment for any reason by any Account Debtor,
possible non-payment of any Indebtedness owed by Borrower to third parties, or
in respect of any state of facts which does or would, with the passage of time
or notice or both, constitute an Event of Default under any of the Financing
Agreements or for any other reason.
3.4 Use of Proceeds. A portion of the initial proceeds of the loans and
advances made by Congress to or for the account of Borrower on the date hereof
shall be used to pay the remaining cash balance owed to Arkla pursuant to the
Purchase Agreements after the application to such purchase price of the proceeds
of the $4,000,000 cash received by Borrower from (a) the equity capital
contribution in the amount of $1,000,000, (b) the sale of certain real property
to Xxxxxx Street in the amount of $2,000,000 and (c) the issuance of the Zero
Coupon Note in the amount of $1,000,000. All other loans, advances, and other
financial accommodations provided by Congress to or for the account of Borrower
pursuant to the Accounts Agreements, this Agreement and any other supplement
thereto and the other Financing Agreements shall be used by Borrower for general
operating and working capital purposes of Borrower and such other lawful and
proper corporate purposes not otherwise prohibited by the terms hereof.
Section 4. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
In addition to the representations, warranties and covenants contained in
the Accounts Agreement and the other Financing Agreements, Borrower hereby
represents, warrants and covenants to Congress the following, the truth and
accuracy of which are, and compliance with being, a continuing condition of the
making of loans to Borrower by Congress under the Accounts Agreement or under
any supplement thereto:
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4.1 Subsidiaries.
(a) Borrower does not have any Subsidiaries as of the date hereof
except as set forth on Exhibit A hereto.
(b) Borrower shall not form or acquire any Subsidiaries without the
prior written consent of Congress, which consent shall not be unreasonably
withheld. In the event Congress so consents, promptly upon such formation or
acquisition, Borrower will execute and deliver, or will cause any such
Subsidiary to execute and deliver, to Congress, in form and substance
satisfactory to Congress and its counsel: (i) an absolute and unconditional
guarantee of payment of any and all present and future Obligations of Borrower
to Congress, (ii) a general security agreement granting to Congress a first and
only lien (except as otherwise consented to by Congress in writing) upon all of
such Subsidiary's assets, (iii) related Uniform Commercial Code Financing
Statements, and (iv) such other agreements, documents and instruments as
Congress may require, including, but not limited to, supplements and amendments
hereto and other loan agreements or instruments evidencing the obligations and
Indebtedness of such new Subsidiary to Congress.
4.2 Acquisition of Purchased Stock.
(a) The Purchase Agreements and the transactions contemplated
thereunder have been duly executed, delivered and performed in accordance with
their terms for the respective parties thereto in all respects, including the
fulfillment (not merely the waiver) of all conditions precedent set forth
therein and giving effect to the terms of the Purchase Agreements and the
assignments to be executed and delivered by Arkla (or any of its affiliates or
subsidiaries) thereunder, EFJ Acquisition acquired and as a result of the Merger
EFJ Holding now has good and marketable title to the Purchased Stock.
(b) All actions and proceedings required by the Purchase Agreements,
applicable law or regulation (including, but not limited to, compliance with the
Xxxx-Xxxxx-Xxxxxx Anti-Trust Improvements Act of 1976, as amended) have been
taken and the transactions required thereunder have been duly and validly taken
and consummated.
(c) No court of competent jurisdiction has issued any injunction,
restraining order or other order which prohibits consummation of the
transactions described in the Purchase Agreements and no governmental or other
action or proceeding has been threatened or commenced, seeking any injunction,
restraining order or other order which seeks to void or otherwise modify the
transactions described in the Purchase Agreements.
(d) Borrower has delivered, or caused to be delivered, to Congress,
true, correct and complete copies of the Purchase
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Agreements. Set forth in Exhibit B hereto is a correct and complete list of the
Purchase Agreements and all other agreements, documents and instruments existing
as of the date hereof between Borrower, any of its Affiliates, Arkla and any of
Arkla's affiliates.
4.3 Merger.
(a) The Merger is valid and effective in accordance with the terms
of the Merger Agreements, and the General Corporation Law of the State of
Delaware and the Business Corporation Act of the State of Minnesota and Borrower
is the surviving corporation pursuant to the Merger.
(b) All actions and proceedings required by the Merger Agreements'
applicable law and regulation have been taken and the transactions required
thereunder had been duly and validly taken and consummated.
(c) No court of competent jurisdiction has issued any injunction,
restraining order or other order which prohibits consummation of the
transactions described in the Merger Agreements and no governmental action or
proceeding has been threatened or commenced seeking any injunction, restraining
order or other order which seeks to void or otherwise modify the transactions
described in the Merger Agreements.
(d) Borrower has delivered, or caused to be delivered, to Congress,
true, correct and complete copies of the Merger Agreements.
4.4 Capitalization.
(a) All of the issued and outstanding shares of capital stock of
Borrower are directly and beneficially owned and held by EFJ Acquisition
immediately prior to the Merger and by EFJ Holding immediately upon the
effectiveness of the Merger (except for the Preferred Stock issued to Arkla
pursuant to the Purchase Agreements) and all of such shares have been duly
authorized and are fully paid and non-accessible, free and clear of all claims,
liens, pledges and encumbrances of any kind, except for the pledge by EFJ
Holding of certain shares of the common stock to Xxxx as collateral security for
the guaranty by EFJ Holding of all of the Indebtedness of Borrower to Xxxx.
(b) EFJ Acquisition or EFJ Holding has, on or before the date
hereof, made a cash equity contribution to Borrower in the amount of $1,000,000
as consideration for shares of capital stock of Borrower consisting of common
stock, and such amounts have been applied, contemporaneously herewith, to a
portion of the purchase price for the Purchased Stock.
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(c) Borrower has sufficient capital to carry on all businesses and
transactions in which it now engages or proposes to engage in, is solvent and
will continue to be solvent after the creation of the Obligations and the
security interests in favor of Congress and is able to pay its debts as they
mature.
4.5 Trade Names. Some of Borrower's invoices may from time to time be
rendered to customers under the trade names or tradestyles listed on Exhibit C
hereto (which, together with any new trade names or tradestyles used after the
date hereof are referred to collectively as the "Tradestyles" and individually,
as a "Tradestyle"). As to the Tradestyles used by it, and the related Accounts,
Borrower hereby agrees that:
(a) Each Tradestyle is a trade name and style (and not an
independent corporation or other legal entity) by which Borrower may identify
and sell or lease certain of its goods or services and conduct a portion of its
business.
(b) All Accounts and proceeds thereof (including any returned
merchandise) which arise from the sale or lease of goods or rendition of
services invoiced under the Tradestyle shall be owned solely by Borrower and
shall be subject to the security interests of Congress and other terms of the
Accounts Agreement and the other Financing Agreements.
(c) All assignments or confirmatory schedules of Accounts delivered
to Congress by Borrower or Borrower's Eligible Subsidiary, whether in the name
of any of the Tradestyles or Borrower, shall be executed by Borrower or
Borrower's Eligible Subsidiary, as the case may be, as owner of such assigned
Accounts.
(d) New Tradestyles may be used by Borrower, but only if (i)
Congress is given at least thirty (30) days prior written notice of the intended
use of any new Tradestyle, which notice shall set forth the proposed new
Tradestyle and (ii) such supplemental financing statements as Congress shall
request shall be executed and delivered by Borrower for filing by Congress prior
to the use of such new Tradestyle.
4.6 Indebtedness. Borrower will not, and will not permit any Subsidiary
to, create, incur, assume or permit to exist, contingently or otherwise, any
Indebtedness, except:
(a) Indebtedness to Congress;
(b) Indebtedness consisting of unsecured current liabilities
incurred in the ordinary course of its business which are not more than ninety
(90) days past due;
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(c) Indebtedness incurred in the ordinary course of its business
secured only by liens permitted under Sections 4.7(b) and 4.7(c);
(d) Indebtedness of Borrower to Arkla pursuant to the Arkla
Subordinated Notes as in effect as of the date hereof in the aggregate principal
amount of $11,300,000 which Indebtedness is unsecured and subject to and
subordinate in right of payment to the right of Congress to receive the prior
indefeasible payment in full of all of the Obligations pursuant to the terms of
the Arkla Subordination Agreement; provided, that: (i) Borrower shall not,
directly or indirectly, make any payments in respect of such Indebtedness,
including, but not limited to, any prepayments or other non-mandatory payments
or any payments pursuant to the purported acceleration thereof, except that
unless and until the occurrence of an Arkla Blockage Event, Borrower may make
regularly scheduled payments of principal and interest in respect of such
Indebtedness to the extent permitted in the Arkla Subordination Agreement; (ii)
Borrower shall not, directly or indirectly, (A) amend, modify, alter or change
the terms of the Purchase Agreements or (B) redeem, retire, decease, purchase or
otherwise acquire such Indebtedness, or set aside or otherwise deposit or invest
any sums for such purpose; and (iii) Borrower shall furnish to Congress all
notices, demands or other materials concerning such Indebtedness either received
by Borrower from Arkla, any of its Affiliates, or on its or their behalf,
promptly after receipt thereof, or sent by Borrower, any of its Affiliates or on
its or their behalf, to Arkla or any of its Affiliates, concurrently with the
sending thereof, as the case may be;
(e) contingent Indebtedness of Borrower to Arkla pursuant to the
rights of Arkla under the terms of the Preferred Stock (as in effect on the date
hereof) to exchange any shares of the Preferred Stock on the last day of any
June or December for senior subordinated notes of Borrower maturing on the fifth
(5th) anniversary of the date of issuance of such notes and otherwise having the
same terms as the $10,000,000 Note, which Indebtedness shall be unsecured and
subject to and subordinate in right of payment to the right of Congress to
receive the prior indefeasible payment in full of all of the Obligations
pursuant to the terms of the Arkla Subordination Agreement; provided, that: (i)
the maximum amount of any such notes issued by Borrower in any fiscal quarter
may not exceeded the amount by which the Consolidated Net Worth of Borrower
exceeds $10,000,000 as of the end of the immediately preceding fiscal quarter;
(ii) Borrower shall not directly or indirectly, make any payments in respect of
such Indebtedness, including, but not limited to, any prepayments or other
non-mandatory payments or any payments pursuant to the purported acceleration
thereof, except that unless and until the occurrence of an Arkla Blockage Event,
Borrower may make regularly scheduled payments of principal and interest in
respect of such Indebtedness to the extent permitted
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under the Arkla Subordination Agreement; (iii) Borrower shall not, directly or
indirectly, (A) amend, modify, alter or change the terms of the Preferred Stock
with respect to the issuance of such notes or once issued, the terms of any of
such notes or (B) redeem, retire, defease, purchase or otherwise acquire such
Indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose; and (iii) Borrower shall furnish to Congress all notices, demands or
other materials concerning such Indebtedness either received by Borrower from
Arkla, any of its Affiliates, or on its or their behalf, promptly after receipt
thereof, or sent by Borrower, any of its Affiliates on or its or their behalf,
to Arkla or any of its Affiliates, concurrently with the sending thereof, as the
case may be;
(f) Indebtedness of Borrower to Xxxx pursuant to the Zero Coupon
Note as in effect as of the date hereof in the principal amount of up to
$5,000,000 which is secured only by the capital stock of Borrower owned by EFJ
Holding and subject to certain restrictions on the enforcement of Xxxx'x rights
and remedies under the Xxxx Agreements pursuant to the terms of the Xxxx
Intercreditor Agreement; provided, that: (i) Borrower shall not, directly or
indirectly, (A) amend, modify, alter or change the terms of the Xxxx Agreements
or (B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness,
or set aside or otherwise deposit or invest any sums for such purpose; and (ii)
Borrower shall furnish to Congress all notices, demands or other materials
concerning such Indebtedness either received by Borrower from Xxxx, any of its
Affiliates, or on its or their behalf, promptly after receipt thereof, or sent
by Borrower, any of its Affiliates or on its or their behalf, to Xxxx or any of
its Affiliates, concurrently with the sending thereof, as the case may be;
(g) Indebtedness of AmeriCom to Borrower arising pursuant to the
loans by Borrower to AmeriCom permitted under Section 4.8(b) below;
(h) Indebtedness existing on the date hereof which is described on
Exhibit E hereto, provided, that: (i) Borrower and its Subsidiaries may only
make regularly scheduled payments of principal and interest in respective of
such Indebtedness as set forth on Exhibit E, (ii) Borrower will not, directly or
indirectly, (A) make any pre-payments or other non-mandatory payments in respect
of any such Indebtedness or (B) redeem, retire, decease, purchase or otherwise
acquire such Indebtedness, or set aside or otherwise deposit or invest any sums
for such purpose or (C) amend, modify, alter or change the terms of the
arrangements relating thereto or any agreement or instrument evidencing such
Indebtedness, and (iii) Borrower and its Subsidiaries will furnish to Congress
all notices, demands or other materials concerning such Indebtedness, promptly
after receipt thereof or concurrently with the sending thereof, as the case may
be.
- 16 -
26
4.7 Limitation on Liens. Borrower will not, and will not permit any
Subsidiary to, create or suffer to exist any mortgage, pledge, security
interest, lien, encumbrance, defect in title or restriction upon the use of
their real or personal properties, whether now owned or hereafter acquired,
except:
(a) the liens or security interests in favor of Congress;
(b) tax, mechanics and other like statutory liens arising in the
ordinary course of Borrower's or its Subsidiary's respective businesses to the
extent (i) such liens secure Indebtedness which is not overdue or (ii) until
foreclosure or similar proceedings shall have been commenced, such liens secure
Indebtedness relating to claims or liabilities which are being contested in good
faith by appropriate proceedings available to Borrower or its Subsidiaries prior
to the commencement of foreclosure or other similar proceedings and are
adequately escrowed for or reserved against in Congress' judgment;
(c) purchase money mortgages or other purchase money liens or
security interests upon any specific fixed assets hereafter acquired, or
mortgages, liens or security interests existing on any such future fixed assets
at the time of acquisition thereof (including, without limitation, capitalized
or finance leases), provided, that, (i) no such purchase money or other
mortgage, lien or security interest (or capitalized or finance lease, as the
case may be) with respect to specific future fixed assets shall extend to or
cover any other property, other than the specific fixed assets so acquired, or
acquired subject to such mortgage, lien or security interest (or lease) and the
proceeds thereof, (ii) such mortgage, lien or security interest only secures the
obligation to pay the purchase price of such specific fixed assets only (or the
obligations under the capitalized or finance lease), and (iii) the principal
amount secured thereby shall not exceed one hundred (100%) percent of the cost
of the fixed assets so acquired;
(d) the existing liens, encumbrances or security interests described
on Exhibit F hereto.
4.8 Loans, Investments, Guaranties, Etc. Borrower will not, and will not
permit any Subsidiary to, directly or indirectly, make any loans or advance
money or property to any Person, or invest in (by capital contribution or
otherwise) or purchase or repurchase the stock or Indebtedness or all or
substantially all of the assets or property of any Person, or guarantee, assume,
endorse, or otherwise be or become responsible for (directly or indirectly) the
Indebtedness, performance, obligations or dividends of any Person or agree to do
any of the foregoing, except:
- 17 -
27
(a) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(b) intercompany loans by Borrower to AmeriCom; provided, that, (i)
no Event of Default exists or has occurred, (ii) the Indebtedness of AmeriCom to
Borrower arising pursuant to such intercompany loans shall be evidenced by, and
repaid in accordance with, the Revolving Note, dated May 30, 1990, issued by
AmeriCom payable to Borrower, which note has-been pledged, endorsed and
delivered to Congress as part of the Collateral, and (iii) the total aggregate
principal amount of such loans shall not exceed $7,000,000 at any time
outstanding;
(c) after written notice thereof to Congress, investments in the
following instruments, which shall be pledged and delivered to Congress upon
Congress' request, (i) marketable obligations issued or guaranteed by the United
States of America or an instrumentality or agency thereof, maturing not more
than one (1) year after the date of acquisition thereof, (ii) certificates of
deposit or other obligations maturing not more than one (1) year after the date
of acquisition thereof issued by any bank or trust company organized under the
laws of and located in the United States of America or any State thereof and
having capital, surplus and undivided profits of at least $100,000,000, and
(iii) open market commercial paper with a maturity not in excess of two hundred
seventy (270) days from the date of acquisition thereof which have the highest
credit rating by either Standard & Poor's Corporation or Xxxxx'x Investors
Service, Inc.
4.9 Transactions with Affiliates. Borrower will not, and will not permit
any Subsidiary to, directly or indirectly:
(a) purchase, acquire or lease any property or receive any services
from, or sell, transfer or lease any property or services to, any Affiliate of
Borrower, except for such transactions on prices and terms no less favorable
than would have been obtained in an arm's length transaction with a
non-affiliated Person; except, as to the administrative services provided by
Borrower to AmeriCom pursuant to the Services Agreement, dated July 1, 1992,
between Borrower and AmeriCom in accordance with the terms thereof; or
(b) make any payment of management or other fees or of the principal
amount of or interest on any Indebtedness owing to any shareholder, officer,
director or Affiliate of Borrower; except: (i) AmeriCom may make payments to
Borrower in respect of the Indebtedness of AmeriCom to Borrower described in
Section 4.6(g) hereof and (ii) Borrower may make payments to Weksel, Davies &
Co., Inc. for fees for executive management and financial consulting services
rendered by Weksel, Davies & Co., Inc. to Borrower in accordance with the
Executive Management Services Agreement, dated of even date herewith, between
Borrower
- 18 -
28
and Weksel, Davies & Co., Inc. (as in effect on the date hereof); provided,
that, (A) in no event shall the amount of such fees paid by Borrower to Weksel,
Davies & Co., Inc. exceed $250,000 per annum, payable in twelve (12) equal
monthly installments and (B) no Event of Default or act, condition or event
which with notice or passage of time or both would constitute an Event of
Default shall exist or have occurred and (iii) Borrower may reimburse Weksel,
Davies & Co., Inc. for all reasonable out-of-pocket expenses incurred in
connection with the services provided by Weksel, Davies & Job., Inc. as
described in Section 4.9(b)(ii) above based on statements furnished by Weksel,
Davies & Co., Inc. to Borrower.
4.10 Dividends, Etc. Borrower shall not, and shall not permit any
Subsidiary to, directly or indirectly, during any fiscal year, commencing with
the current fiscal year, declare or pay any dividends on account of any shares
of any class of capital stock of Borrower or its Subsidiaries now or hereafter
outstanding, or set aside or otherwise deposit or invest any sums for such
purpose, or redeem, retire, decease, purchase or otherwise acquire any shares of
any class of capital stock (or set aside or otherwise deposit or invest any sums
for such purpose) for any consideration other than stock or apply or set apart
any sums, or make any other distribution (by reduction of capital or otherwise)
in respect of any such shares or agree to do any of the foregoing, except:
(a) dividends may be declared and paid to Borrower and other
distributions may be made to Borrower by its Subsidiaries on any class of
capital stock or any other interest in, or measured by its profit, owned by
Borrower or any Subsidiary of Borrower, in each case out of legally available
funds therefor and otherwise in accordance with applicable law; and
(b) dividends may be declared and paid by Borrower to Arkla in
respect of the Preferred Stock to the extent permitted under the Arkla
Subordination Agreement, in each case out of legally available funds therefor
and otherwise in accordance with applicable law.
4.11 Environmental Compliance.
(a) Except as set forth on Exhibit G, Borrower and its Subsidiaries
have not generated, used, stored, treated, transported, manufactured, handled,
produced or disposed of any hazardous substances on or off its premises (whether
or not owned by it) in any manner which violates any applicable statute, rule or
regulation relating to environmental pollution and employee health and safety,
or any license, permit, certificate, approval or similar authorization
thereunder and the operations of Borrower and its Affiliates comply in all
material respects with all such statutes, rules and regulations and all
licenses,
- 19 -
29
permits, certificates, approvals and similar authorizations thereunder.
(b) Except as set forth on Exhibit G, there is no outstanding
investigation, proceeding, complaint, order, directive, claim, citation or
notice by any governmental authority or any other person nor is any pending or
threatened, with respect to any non-compliance with or violation of the
requirements of any statute, rule or regulation-relating to environmental
pollution and employee health and safety, by Borrower or any of its Subsidiaries
or the release, spill or discharge, threatened or actual, of any hazardous
substance or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any substances materials or any
other environmental, health or safety matter, which affects Borrower or its
Subsidiaries or their businesses, operations or assets or any properties at
which Borrower or its Subsidiaries transported, stored or disposed of any
substances.
(c) Except as set forth on Exhibit G, Borrower and its Subsidiaries
have no material liability (contingent or otherwise) in connection with
hazardous substances or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any hazardous substances.
(d) Except as set forth on Exhibit G, Borrower and its Subsidiaries
have all licenses, permits, certificates, approvals or similar authorizations
required to be obtained or filed in connection with the operations of Borrower
and its Affiliates under any statute, rule or regulation relating to
environmental pollution and employee health and safety, and all of such
licenses, permits, certificates, approvals or similar authorizations are valid
and in full force and effect.
4.12 Compliance with Laws, Regulations, Etc. Borrower shall, and shall
cause each Subsidiary to, at all times comply in all material respects with all
applicable provisions of laws, rules, regulations, licenses, permits, approvals
and orders and duly observe all requirements, of any foreign, federal, state or
local governmental authority, including, without limitation, the Employee
Retirement Income Security Act of 1974, as amended, the Internal Revenue Code of
1986, as amended, the occupational Safety and Health Act of 1970, as amended,
the Fair Labor Standards Act of 1938, as amended and the rules and regulations
thereunder and all other statutes, rules, regulations, orders, permits and
stipulations relating to environmental pollution and employee health and safety,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended and the Resource Conservation
and Recovery Act of 1976 and any similar state or local statutes with respect
thereto.
- 20 -
30
4.13 Payment of Taxes. Borrower shall, and shall cause each Subsidiary and
each member of any consolidated group with Borrower for purposes of filing any
tax returns to, duly pay and discharge all taxes, assessments, contributions and
governmental charges upon or against them or their properties or assets, except
for taxes which are being contested in good faith and with all due diligence by
appropriate proceedings and which are adequately reserved against in the
reasonable opinion of Lender, prior to the date on which penalties attach
thereto.
4.14 Net Worth. Borrower shall, at all times, maintain a Consolidated Net
Worth of not less than the greater of: (a) $5,000,000 or (b) the amount equal
to: (i) the Consolidated Net Worth as set forth in the opening balance sheet of
Borrower minus (ii) $2,000,000.
4.15 Working Capital. Borrower shall, at all times, maintain a
Consolidated Working Capital of not less than the greater of: (a) $8,000,000 or
(b) the amount equal to: (i) the Consolidated Working Capital as set forth in
the consolidated opening balance sheet of Borrower minus (ii) $2,000,000.
4.16 Capital Expenditures. Borrower and its subsidiaries, shall not,
directly or indirectly, make or commit to make, whether through purchase,
capital leases or otherwise, Capital Expenditures on a non-cumulative basis
(such that expenditures not made or committed to be made in any one fiscal year
may not be made or committed to be made in any following fiscal year), in excess
of $2,500,000 in any fiscal year of Borrower.
4.17 Opening Balance Sheet. Borrower shall deliver, or cause to be
delivered, within ninety (90) days hereof opening balance sheets prepared by
independent certified public accountants which accountants shall be a nationally
recognized independent certified public accounting firm selected by Borrower and
reasonably acceptable to Congress, and certified by such accountants to the
effect that such opening balance sheets have been prepared in accordance with
GAAP and present fairly the financial condition of Borrower and its Subsidiaries
as of such date.
Section 5. EVENTS OF DEFAULT AND REMEDIES
5.1 The occurrence of any one or more of the following (each an "Event of
Default") shall constitute an Event of Default hereunder,
(a) Borrower shall be in default in the payment of any of the
Obligations when due, which default shall continue for three (3) business days;
(b) Borrower shall fail to observe or perform any covenant or
agreement contained in Sections 6.4 and 6.7 of the
- 21 -
31
Accounts Agreements, Sections 2.8, 2.9 and 2.11 of the Inventory and Equipment
Security Agreement Supplement to the Accounts Agreement, or Sections 4.6 (but
only to the extent of Indebtedness other than for borrowed money), 4.7 (but only
to the extent of nonconsensual security interests, liens, claims or
encumbrances), 4.12, 4.13, 4.14 and 4.15 hereof and such default shall continue
uncured for a period of thirty (30) days; provided, that, such thirty (30) day
cure period shall not apply in the case of:
(i) intentional breach on the part of management of Borrower
of any of such covenants or agreements; or
(ii) failure to observe or perform any such covenants or
agreements, other than an intentional breach, which is not capable of being
cured at all or within such thirty (30) day cure period, or which has been the
subject of a prior failure within a six (6) month period;
Provided, further, that the foregoing cure periods shall neither (A) impair
Congress' exercise during such cure periods of any rights contained herein or in
the other Financing Agreements, other than any rights which it has only upon or
after the occurrence of an Event of Default, nor (B) impair Congress' exercise
of any default remedies immediately if, at the commencement of or at any time
during such cure period there exists or occurs any Event of Default not subject
to the foregoing cure period, whether based on the same or other circumstances
or events; or
(c) Borrower shall fail to observe or perform any covenants or
agreements contained in this Agreement, the other Financing Agreements or in any
other document or instrument referred to herein or therein, other than as
described in Section 5.1(a) and Section 5.1(b) above;
(d) any guarantor, endorser or other person liable on the
Obligations shall terminate or breach any of the terms, covenants, conditions or
provisions of any guarantee, endorsement or other agreement of such person with,
or in favor of, Congress; or
(e) any representation, warranty or statement of fact when made to
Congress at any time by or on behalf of Borrower is false or misleading in any
material respect; or
(f) Borrower or any guarantor, endorser or other person liable on
the Obligations shall become insolvent, generally unable to pay its debts as
they mature, call a meeting of creditors or have a creditors' committee
appointed, make a general assignment for the benefit of creditors, suspend or
discontinue doing business for any reason, or shall commence any action or
proceeding for the appointment of any trustee,
- 22 -
32
receiver, custodian or liquidator of it or all or any part of its properties or
assets; or
(g) a judgment is rendered against Borrower or any guarantor,
endorser, or other person liable on the obligations in excess of $100,000 in any
one case or in excess of $250,000 in the aggregate and the same shall remain
undischarged for a period in excess of thirty (30) days or execution shall at
any time not be effectively stayed; or
(h) Borrower or any guarantor, endorser or other person liable on
the obligations shall commence any action or proceeding for relief under the
Bankruptcy Code or any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under the Bankruptcy Code or any
other present or future statute, law or regulation or shall take any corporate
action to authorize any of such actions or proceedings; or
(i) Borrower or any guarantor, endorser or other person liable on
the Obligations shall have commenced against it any action or proceeding for
relief under the Bankruptcy Code or any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under the
Bankruptcy Code or any other present or future statute, law or regulation or for
the appointment of any trustee, receiver, custodian or liquidator of it or all
or any part of its properties or assets, which action or proceeding is not
dismissed within thirty (30) days of its commencement, or Borrower, any
guarantor, endorser or such other person shall file any answer admitting or not
contesting the allegations of a petition filed against it in any such action or
proceeding or by any act or omission indicates its consent to, acquiescence in
or approval of, any such action or proceeding or if the relief requested is
granted sooner; or
(j) there shall be a material adverse change in the business, assets
or condition (financial or otherwise) of Borrower from the date hereof; or
(k) there is any change in the majority control or ownership of
Borrower;
(l) at any time, Congress shall, in its discretion, consider the
Obligations insecure or all or any part of the Collateral unsafe, insecure or
insufficient and Borrower shall not on Congress' demand furnish other Collateral
or make payment on account, reasonably satisfactory to Congress; or
(m) Borrower or any guarantor, endorser or other person liable on
the Obligations shall default in the payment of any amounts at any time due on
any Indebtedness owed by it or in the performance of any of the other terms or
covenants of any evidence of such Indebtedness or of any material mortgage,
- 23 -
33
security agreement, indenture, pledge or other agreement relating thereto or
securing such Indebtedness or with respect to any material contract, lease,
license or other agreement with any person other than Congress, including,
without limitation, the Purchase Agreements, the Xxxxxx Street Sale/Leaseback
Agreements, and the Xxxx Agreements, which default continues for more than the
applicable cure period, if any, with respect thereto; or
(n) the occurrence of an event of default under any other
agreement, document or instrument at any time executed and/or delivered to, with
or in favor of Congress or any of its Affiliates by Borrower, any of its
Subsidiaries or Affiliates or any other person liable on the Obligations,
including, but not limited to, the other Financing Agreements.
5.2 Without limiting any rights or remedies of Congress at any time on or
after an Event of Default pursuant to this Supplement or the other Financing
Agreements or applicable law, Congress may, at its option, cure any default by
Borrower or any of its Affiliates under any agreement, law, regulation, permit,
license or approval with, or issued or promulgated by, any Person, which
constitutes, or with notice or passage or both would constitute an Event of
Default hereunder or under any of the other Financing Agreements, or pay or bond
on appeal any judgment, order, directive, claim or citation entered or made
against Borrower (irrespective of the amount of said judgment or the time
elapsed since entry thereof) and charge Borrower's account therefor, such
amounts to be repayable by Borrower to Congress on demand, together with
interest thereon at the rate of interest then payable by Borrower under the
Accounts Agreement; provided, however, Congress shall be under no obligation to
effect such cure, payment or bonding and shall not, by making any payment for
Borrower's account, be deemed to have assumed any obligation or liability of
Borrower or any such Affiliate.
6. Miscellaneous
6.1 Fees
(a) Notwithstanding anything to the contrary contained in Section
3.2 or Section 9.2 of the Accounts Agreement, if Congress shall declare an Event
of Default based on Section 5.1(1) hereof and no other Event of Default exists
or has occurred, (i) Borrower shall not be required to pay interest at the rate
provided in Section 3.2 of the Accounts Agreement so long as the Event of
Default under Section 5.1(1) is the only Event of Default which exists or has
occurred and is continuing and (ii) in the event the Accounts Agreement and the
other Financing Agreements are terminated, after the date of the notice from
Congress to Borrower of an Event of Default under Section 5.1(1) hereof (which
notice is not rescinded by Congress), Borrower shall have no liability for the
early termination fee
- 24 -
34
provided for in Section 9.2 of the Accounts Agreement so long as the Event of
Default under Section 5.1(1) is the only Event of Default which exists or has
occurred and continuing.
(b) Borrower shall pay to Congress all of its customary charges and
fees in connection with (i) any payment, claim or refund relating to the
dishonor of any checks or other items of Borrower or Account Debtors, and (ii)
wire transfers to Borrower.
(c) Borrower shall pay to Congress a charge of $500 per person per
day for Congress' field examiners, in addition to the reimbursement of their
out-of-pocket expenses in connection with the periodic field examinations of the
Collateral and the operations of Borrower by Congress. The foregoing shall not
be construed to limit any other provisions of the Financing Agreements regarding
costs and expenses to be paid by Borrower.
6.2 Confidentiality. Congress agrees to use reasonable efforts in
accordance with its customary business practices to keep confidential the
Information (hereinafter defined) and all copies thereof, extracts therefrom and
analyses or other materials based thereon, except that Congress shall be
permitted to disclose Information (a) to such of its respective officers,
directors, employees, agents and representatives who, in accordance with
Congress' usual business practices, customarily have access to such information,
(b) to the participants with Congress in the financing arrangements with
Borrower and such of their respective officers, directors, employees, agents and
representatives who, in accordance with the participant's usual practices
customarily have access to such information, (c) to the extent required by
applicable laws and regulations or by any subpoena or similar legal process, or
(d) to the extent such Information (i) becomes publicly available other than as
a result of a breach of this Section 6.2 by Congress, or (ii) becomes available
to Congress on a non-confidential basis from a source other than Borrower or any
Affiliate of Borrower. For the purposes of this Section 6.2, "Information" shall
mean all financial statements and other financial information, which are
received from the Borrower or any of its Affiliates which relate to the
Borrower.
6.3 Successors. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Congress, Borrower and their respective
successors and assigns, except that Borrower may not assign its rights under
this Agreement, the other Financing Agreements and any other document referred
to herein or therein without the prior written consent of Congress. Congress may
assign its rights and delegate its obligations under this Agreement and the
other Financing Agreements and further may assign, or sell participations in,
all or any part of the loans or any other interest herein to another
- 25 -
35
bank or other person, in which event, the assignee or participant shall have, to
the extent of such assignment or participation, the same rights and benefits as
it would have if it were the lender hereunder, except as otherwise provided by
the terms of such assignment or participation. Congress may furnish any
information concerning Borrower in the possession of Congress from time to time
to assignees and participants or prospective assignees and participants. If a
participant shall at any time participate with Congress in the financing
arrangements provided by Congress to Borrower, Borrower hereby grants to such
participant and such participant shall have and is hereby given, a continuing
lien on and security interest in any money, securities and other property of
Borrower in the custody or possession of the participant, including the right of
setoff, to the extent of the participant's participation in the Obligations, and
such Participant shall be deemed to have the same right of setoff to the extent
of its participation in the Obligations, as it would have if it were a direct
lender.
Very truly yours,
X.X. XXXXXXX COMPANY
By: [SIG]
---------------------------------
Title: VICE CHAIRMAN
---------------------------------
ACCEPTED:
CONGRESS FINANCIAL CORPORATION
By: [SIG]
--------------------------------
Title: VP
--------------------------------
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36
EXHIBIT A
to
COVENANT SUPPLEMENT
List of Subsidiaries
AmeriCom Corporation
(see annexed chart of capital structure).
37
Attachment
to
Exhibit A
AMERICOM CAPITAL STRUCTURE SCHEDULE
AUTHORIZED MINORITY TOTAL
SECURITY SHARES SHAREHOLDERS THE COMPANY OUTSTANDING
--------------------- ---------- ------------ ----------- -----------
COMMON SHARES 50,000,000 282,592 7,595,060 7,877,652
(par value $.01)
PREFERRED A SHARES 5,000 0 5,000 5,000
(par value $100.00)
PREFERRED B SHARES 2,550 315 1,786 2,101
(Par value $100.00)
PREFERRED C SHARES 14,600 567 13,214 13,781
(Par value $100.00)
PREFERRED D SHARES 40,000 4,426 27,101 31,527
(Par value $100.00)
WARRANTS 26,356 190,454 216,810
DEBENTURES* $169,400 $0 $169,400
INCENTIVE STOCK
OPTIONS ** 18,400 18,400
----------
* At face amount; does not include accrued interest.
** Estimated based on employee information as of June 19, 1992.
38
EXHIBIT B
to
COVENANT SUPPLEMENT
Agreements between Borrower or its
Affiliates and Arkla or its Affiliates
1. Stock Purchase Agreement ("Agreement") dated as of March 20, 1992 between
Arkla and EFJ, as modified by that certain Letter Agreement dated June 11,
1992 between Arkla and EFJ.
2. 9.79% Senior Subordinated Note of even date herewith by Borrower to Arkla.
3. Subordination Agreement dated of even date herewith among Arkla, Congress
and Borrower.
4. Executive Management Services Agreement of even date herewith between
Borrower and Weksel, Davies & Co., Inc.
5. Services Agreement dated July 1, 1992 between AmeriCom and Borrower.
6. Agreement dated July 31, 1992 between Minnegesco, a Division of Arkla, and
Borrower.
7. Statement of Working Capital dated July 31, 1992.
8. Officer's Certificate of even date herewith by Arkla attesting that the
Statement of Working Capital is true and accurate.
9. Officer's Certificate of even date herewith, by Arkla, attesting that the
representations and warranties contained in the Agreement are true and
correct.
10. Officer's Certificate of even date herewith, by Borrower, attesting that
the representations and warranties contained in the Agreement are true and
correct.
39
EXHIBIT C
to
COVENANT SUPPLEMENT
Trade Names and Tradestyles Used on Invoices
1. X.X. Xxxxxxx Company
2. X.X. Xxxxxxx
3. X.X. Xxxxxxx Co.
4. Xxxxxxx
5. EFJ
40
EXHIBIT D
to
COVENANT SUPPLEMENT
Intentionally Omitted
41
EXHIBIT E
to
COVENANT SUPPLEMENT
Existing Debt
1. Promissory Note dated December 12, 1985, made by AmeriCom in favor of Xxxx
X. Xxxxxxx in the principal amount of $20,000.
2. AmeriCom Subordinated Convertible Debenture dated December 31, 1988,
issued to J&R Capital Company in the principal amount of $57,750.
3. AmeriCom Subordinated Convertible Debenture dated December 31, 1988,
issued to W&J Capital Company in the principal amount of $57,750.
4. AmeriCom Subordinated Convertible Debenture dated December 31, 1988,
issued to Xxxxxxxx X. Xxxxxxx in the principal amount of $53,900.
5. Contingent Indebtedness of Borrower to the General Insurance Company of
America pursuant to the General Agreement of Indemnity dated February 21,
1991 relating to bid bond for Borrower.
6. The obligations to pay rent or other amounts under the Agreement of Lease,
dated July 31, 1992, between Borrower, as lessee and Xxxxxx Street Capital
Corporation, as lessor.
42
EXHIBIT F
to
COVENANT SUPPLEMENT
Existing Liens
1. Lien set forth in lease, dated 5/3/90 between X.X. Xxxxxxx and Xxxxxxx
Xxxxxx Miami Airport Limited Partnership upon all property of tenant now
or subsequently located on premises located at Suite No. G2, 0000
Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx, Xxxxxxx 00000.
2. Lien set forth in lease, dated 2/10/86 between X.X. Xxxxxxx and Travelers
Insurance Company upon all property now or subsequently on the premises
located at 00000 Xxxxxx Xxxxx, Xxxx Xxxxxxx, Xxxxxxxxx 00000.
Filed With/ Filing Property
Secured Party Date Filed Number Description
------------- ---------- ------ -----------
3. AB Financial FL, SOS 89-0000283771 Specific equipment;
Resources, Inc. 10/26/89 Assignment filed on
8/27/90 assigning secure
interest to Datronic
Equipment Fund XVII, L.P.
4. Xerox Xxxxxxxxxxx XX, XXX 000000 Specific equipment
11/9/88
5. Polychrome MN, SOS 1341332 Specific equipment
Corporation 7/2/90
6. Hewlett Packard MN, SOS 1348325 Specific equipment
Company 8/2/90
7. Hewlett Packard MN, SOS 1378610 Specific equipment
Company 12/14/90
8. Hewlett Packard MN, SOS 1503399 Specific equipment
Company 5/20/92
9. Equitable Life MN, SOS 751269 Specific equipment;
Leasing Corporation 6/4/84 UCC-3 continuation filed
("Equitable") on 5/10/89
10. Xxxxxxxxx XX, XXX 000000 Specific equipment; UCC-
6/22/84 continuation filed on
5/10/89
43
11. Equitable MN, SOS 756505 Specific equipment; UCC
7/2/84 Amendment filed on
7/16/84 adding serial
numbers to collateral descriptions;
UCC-3 continuation
filed on 5/18/89
12. Equitable MN, SOS 780880 Specific equipment; UCC-
11/15/84 continuation filed on
5/18/89
13. NorWest Financial MN, SOS 988052400 Specific equipment; UCC-
Leasing, Inc. 9/11/87 continuation filed on
6/8/92
14. Haringer, Inc. MN, SOS 1270132 Specific equipment
9/14/89
15. Hewlett Packard MN, SOS 1287446 Specific equipment
Company 11/27/89
16. Hewlett Packard MN, SOS 1290599 Specific equipment
Company 12/8/89
17. Mid-Continental MN, SOS 1337971 Specific equipment
Leasing 6/18/90
Assignment to:
First Bank
Southeast, N.A.
44
EXHIBIT G
to
COVENANT SUPPLEMENT
Environmental Compliance
1. All items disclosed in the following reports: (a) ENSR Phase I Due
Diligence Investigations at X.X. Xxxxxxx Company Properties, 000 Xxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxx, dated June 1992; (b) ENSR Phase I Due Diligence
Investigations at Two X.X. Xxxxxxx Company Properties, Second Avenue
Southwest, Waseca, Minnesota, dated June 1992; and (c) Final Phase II Due
Diligence Investigations at X.X. Xxxxxxx Company Properties, 000 Xxxxxxx
Xxxxxx, Xxxxxx Xxxxxxxxx.
2. The Waseca Site contains five underground storage tanks, all of which were
used to store petroleum products, one of which is still used for that
purpose. Four of the underground storage tanks were emptied of petroleum,
cleaned and filled with water but were not removed from the ground.
3. Prior to EFJ Acquisition Corp.'s ("EFJ") acquisition, Borrower submitted
periodic reports on its effluent discharges at the Property in compliance
with its NPDES permit. The reports were prepared by Borrower's laboratory
which had not been certified by the MDOH. Borrower advised EFJ it did not
believe such certification was required, but that it was aware that
representatives of the MDOH have stated their general belief that
laboratories preparing such reports must be certified. Neither the MDOH
nor any other governmental agency nor any other person had claimed that
Borrower or EFJ has failed to comply with its NPDES permit or the statutes
or regulations governing it.
4. There is encapsulated friable asbestos located around certain pipes and
steam lines at the Operations Center at the 000 Xxxxxxx Xxxxxx facility.
5. There are two drums containing contaminated soils which were excavated
from certain areas located in the vicinity of the east wall of the
Operations Center at the 000 Xxxxxxx Xxxxxx facility. These drums are
currently stored at the Operations Center until disposal.
6. There are four areas of contaminated soil at the Waseca Site in the
vicinity of the east wall of the 000 Xxxxxxx Xxxxxx facility described
more fully in the reports identified in paragraph 1 of this Exhibit G.
45
7. The 000 00xx Xxxxxx X.X. facility was listed in the Comprehensive
Environmental Response Compensation and Liability Information System but
has been noted as requiring No Further Remedial Action. See appendix G to
ENSR Phase I Due Diligence Investigations at 000 Xxxxxxx Xxxxxx dated June
1992.
46
AMENDMENT NO. 1 TO FINANCING AGREEMENTS
January 26, 1993
Congress Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
Congress Financial Corporation, a California corporation (together with
its successors and assigns, "Congress") and X.X. Xxxxxxx Company, a Minnesota
corporation (as survivor by merger with EFJ Acquisition Corp., a Delaware
corporation together with its successors and assigns, "Borrower") have entered
into certain financing arrangements pursuant to the Accounts Financing Agreement
[Security Agreement], dated as of July 31, 1992, between Congress and Borrower
(together with the various supplements thereto, the "Accounts Agreement") and
other agreements, documents and instruments at any time executed and/or
delivered in connection therewith or related thereto (together with the Accounts
Agreement, as the same are amended hereby and may hereafter be further amended,
modified, supplemented, extended, renewed, restated or replaced, collectively,
the "Financing Agreements").
Borrower has requested that Congress agree to certain amendments to the
Financing Agreements and Congress is willing to agree to such amendments,
subject to the terms and conditions contained herein. Borrower and Congress
desire and intend to evidence such amendments by this letter agreement.
In consideration of the foregoing, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment, unless otherwise defined
herein shall have the respective meanings assigned thereto in the Financing
Agreements.
2. Section 4.6 of the Covenant Supplement to the Accounts Agreement is
hereby amended to add a now subsection 4.6(i) as follows:
"(i) contingent Indebtedness of Borrower to National American
Insurance Company, the Security Insurance Co. of Hartford or Connecticut
Indemnity Company (collectively, the "Sureties", and individually a
"Surety") pursuant to certain agreements of Indemnity between Borrower and
such parties, true, correct and complete copies of which have been
delivered by Borrower to Congress, to reimburse and indemnify the
Sureties for amounts paid by any of them under bonds or other obligations
of suretyship which they have issued for the benefit of Borrower to
Account Debtors; provided, that:
47
(i) Congress shall receive not less than two (2) business days prior
written notice of the issuance of any such bonds or other obligations of
suretyship by any of the Sureties identifying the contract of Borrower to
which such bond or other obligation relates, the total amount payable to
Borrower under the contract, the amount of the bond, the liability of
Borrower to the Surety in connection therewith, together with such other
information with respect thereto as Congress may at any time and from time
to time require;
(ii) no Event of Default, or act, Condition or event which with
notice or passage of time both would constitute an Event of Default shall
exist or have occurred;
(iii) the aggregate amount of such contingent Indebtedness
outstanding at any one time shall not exceed $5,000,000;
(iv) Borrower shall furnish to Congress all notices, demands or
other materials concerning such Indebtedness either received by Borrower
or on its behalf, promptly after receipt thereof, or sent by Borrower, or
on its behalf, concurrently with the sending thereof, as the case any be."
3. Section 4.7 of the Covenant Supplement to the Accounts Agreement is
hereby amended to add a new subsection 4.7(e) as follows:
"(e) the liens, security interests or other claims in favor of a
Surety on (1) Accounts arising from services rendered by Borrower to an
Account Debtor pursuant to the contract for which such Surety has issued a
bond or other obligation of suretyship in favor of such Account Debtor as
permitted under Section 4.6(i) hereof and (ii) the Inventory and Equipment
identifiable to the contract for which such Surety has issued a bond or
other obligation of suretyship in favor of such Account Debtor as
permitted under Section 4.6(i) hereof; provided, that, (A) the liens,
security interests or other claim of any of the Sureties in any of such
Inventory or Equipment shall be junior and subordinate in all respects to
the security interests and liens of Congress therein and (ii) Borrower
shall not, at any time, permit to be recorded any financing statement
under the UCC or other evidence or notice of the liens, security interests
or claims of any of the Sureties in any governmental office or public
records
-2-
48
or agree to do any of the foregoing."
4. Without limiting the right of Congress to determine eligibility with
respect to any Accounts or Inventory as provided in the Accounts Agreement,
Borrower hereby acknowledges that: (a) any Accounts arising from the sale of
goods or rendition of services by Borrower pursuant to a contract for which a
Surety has issued a bond or other obligation of suretyship shall not be
considered an "Eligible Account" for purposes of determining the availability
of any loans to Borrower under the terms of the Financing Agreements to the
extent of the liabilities of Borrower to such Surety, whether pursuant to the
bond or other obligation of suretyship relating to such contract or otherwise
and (b) any Inventory identifiable to a contract for which a Surety has issued a
bond or other obligation of suretyship (as determined by Congress) shall not be
considered "Eligible Inventory" for purposes of determining the availability of
any loans to Borrower under the terms of the Financing Agreements.
5. Except as modified pursuant hereto, the Financing Agreements are hereby
specifically ratified, restated and confirmed by all parties hereto as of the
date hereof. To the extent of a conflict between the terms of this Amendment and
the other Financing Agreements, the terms of this Amendment shall control.
6. Borrower shall execute and deliver such additional documents and take
such additional actions as may be necessary or desirable, as determined by
Congress, to effectuate the provisions and purposes of this Amendment.
Very truly yours,
X.X. XXXXXXX COMPANY
By: /s/ XXXXX X. XXXXXXXX
----------------------------------
Title: Vice President, Finance
--------------------------------
ACKNOWLEDGED AND AGREED:
CONGRESS FINANCIAL CORPORATION
BY: [SIG]
------------------------------
Title: VP
----------------------------
-3-
49
AMENDMENT NO. 2 TO FINANCING AGREEMENTS
As of October 4, 1993
Congress Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
Congress Financial Corporation, a California corporation (together with
its successors and assigns, "Congress") and X.X. Xxxxxxx Company, a Minnesota
corporation (as survivor by merger with EFJ Acquisition Corp., a Delaware
corporation together with its successors and assigns, "Borrower") have entered
into certain financing arrangements as set forth in the Accounts Financing
Agreement (Security Agreement], dated as of July 31, 1992, between Congress and
Borrower (together with the various supplements thereto, the "Accounts
Agreement"), and various other agreements, documents and instruments executed
and/or delivered in connection therewith or related thereto, as amended pursuant
to Amendment No. 1 to Financing Agreements, dated January 26, 1993 (together
with the Accounts Agreement, as the same are amended hereby and may hereafter be
further amended, modified, supplemented, extended, renewed, restated or
replaced, collectively, the "Financing Agreements").
Borrower has requested that Congress agree to certain amendments to the
Financing Agreements and Congress is willing to agree to such amendments,
subject to the terms and conditions contained herein. Borrower and Congress
desire and intend to evidence such amendments by this letter agreement.
In consideration of the foregoing, the parties hereto agree as follows:
1. Definitions.
(a) All references to the term "Term Note" in the Financing
Agreements shall be deemed and each such reference is hereby amended to mean the
Amended and Restated Term Promissory Note, dated of even date herewith, made by
Borrower, payable to Congress, in the original principal amount of $5,300,000,
as the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
50
(b) All capitalized terms used herein shall have the meanings
assigned thereto in the other Financing Agreements, unless otherwise defined
herein.
2. Term Loan. As of the close of business on October 1, 1993, the
outstanding principal amount of the Term Loan was $2,447,842.50. Subject to the
terms and conditions contained herein, upon the effective date hereof, Congress
shall make a loan to Borrower in the amount of $2,852,157.50, so that the
outstanding principal amount of the Term Loan pursuant to Section 3.2 of the
Covenant Supplement to the Accounts Agreement as of the date hereof shall be
$5,300,000. Such Term Loan shall be (a) evidenced by the Amended and Restated
Term Promissory Note executed and delivered by Borrower to Congress concurrently
herewith, (b) repaid, together with interest and other amounts due thereunder,
in accordance with the terms and provisions of such note, the Accounts Agreement
and the other Financing Agreements and (c) secured by all of the Collateral.
3. Inventory Loans. Section 2 and 3 of the letter agreement with respect
to inventory loans, dated as of July 31, 1992, between Congress and Borrower
(the "Inventory Loan Letter") is hereby deleted in its entirety and the
following substituted therefor:
"2. In addition to loans which may be made by you to us, pursuant
to Section 2 of the Accounts Agreement, you shall, in your discretion,
make loans to us from time to time, at our request, of up to the following
percentages of Value of the following categories of Eligible Inventory (or
such greater or lesser percentages thereof as you shall, in your sole
discretion, determine from time to time):
(a) fifty (50%) percent of the Value of Eligible Inventory
consisting of finished goods; plus
(b) twenty (20%) percent of the Value of Eligible Inventory
consisting of raw materials and purchased parts; plus
(c) thirty-five (35%) percent of the Value of Eligible Inventory
consisting of accessories; plus
(d) fifty (50%) percent of the Value of Eligible Inventory
consisting of component products for original equipment
manufacturers (OEM); plus
(e) ten (10%) percent of the Value of Eligible Inventory
consisting of service parts.
-2-
51
3. Except in your sole discretion, the outstanding aggregate
principal amount of loans by you to us hereunder shall not exceed, at any
time, the lower of (a) the aggregate amount of the above percentages of
Value of Eligible Inventory or (b) the amount equal to twenty (20%)
percent of the aggregate amount of the Value of all categories of Eligible
Inventory."
4. Indebtedness. Section 4.6(f) of the Covenant Supplement to the Accounts
Agreement is hereby deleted in its entirety and the following substituted
therefor: "intentionally omitted;"
5. Loans, Investments, Guaranties, etc. Section 4.8 of the Covenant
Supplement to the Accounts Agreement is hereby amended by adding new subsection
4.8(d) as follows:
"(d) the loans by Borrower to Weksel and Xxxxxx X. Xxxxxx in the
original aggregate principal amount of $1,500,000; provided, that, (i) the
original of any promissory note or other instrument evidencing the
Indebtedness arising pursuant to such loan or loans shall be delivered, or
caused to be delivered, to Congress, duly endorsed and assigned as
collateral to Congress and with full recourse to Borrower, (ii) Congress
shall have received true, correct and complete copies of all other
agreements, documents and instruments relating thereto, (iii) Borrower
shall not amend, modify, alter or change the terms of the arrangements
relating thereto or any agreement or instrument evidencing such
Indebtedness so as to make the terms thereof less favorable to Borrower in
any respect, as determined by Congress, without the prior written consent
of Congress, provided, that, Borrower shall furnish copies of any
amendments to Congress whether or not the consent of Congress is required
upon the execution of any such amendments, and (iv) Borrower shall furnish
to Congress all notices, demands or other materials concerning such
Indebtedness, promptly after receipt thereof or concurrently with the
sending thereof, as the case may be."
6. Net Worth. Section 4.14 of the Covenant Supplement to the Accounts
Agreement is hereby deleted in its entirety and the following substituted
therefor:
"4.14 Net Worth. Borrower shall, at all times, maintain a
Consolidated Net Worth of not less than $5,000,000; provided, that, in the
event of any sale or issuance of capital stock by Borrower or its
shareholders, on and after the effective date of such
-3-
52
sale or issuance, Borrower shall, at all times, maintain a Consolidated
Net Worth of not less than the amount equal to sum of: (a) $5,000,000 plus
(b) fifty (50%) percent of the net cash proceeds (after deducting
underwriting commissions and discounts, if any, and all other expenses
related directly to such sale or issuance) received by Borrower pursuant
to the sale or issuance of such capital stock.:
7. Working Capital. Section 4.15 of the Covenant Supplement to the
Accounts Agreement is hereby deleted in its entirety and the following
substituted therefor:
"4.15 Working Capital. Borrower shall at all times maintain a
Consolidated Working Capital of not less than $3,000,000".
8. Capital Expenditures. Section 4.16 of the Covenant Supplement is hereby
amended by deleting the reference to the figure "$2,500,000" contained therein
and substituting the following therefor: "$5,000,000".
9. Additional Representations and Warranties. In addition to the
continuing representations and warranties heretofore or hereafter made by
Borrower to Congress pursuant to the Financing Agreements, Borrower hereby
represents and warrants to Congress as follows (which representations,
warranties and covenants are continuing and shall survive the execution and
delivery hereof and shall be incorporated into and made a part of the Financing
Agreements):
(a) No Event of Default exists on the date of this Amendment
(after giving effect to the amendments to the Financing Agreements made by this
Amendment).
(b) This Amendment has been duly executed and delivered by
Borrower and is in full force and effect as of the date hereof, and the
agreements and obligations of Borrower contained herein constitute legal, valid
and binding obligations of Borrower enforceable against Borrower in accordance
with their respective terms.
10. Conditions Precedent. The effectiveness of the amendments contained
herein shall be subject to the receipt by Congress of each of the following, in
form and substance satisfactory to Congress and its counsel:
(a) evidence that (i) Borrower has paid $2,500,000 to Xxxx in
payment in full of all Indebtedness of Borrower to Xxxx evidenced by or arising
under the Zero Coupon Note and the Xxxx Agreements, and (ii) except for
obligations under the Warrant Purchase Agreement, dated as of July 31, 1992, by
and among
-0-
00
Xxxxxxxx, XXX Holding, Weksel, Davies & Co., Inc. and Xxxx, Borrower and EFJ
Holding have no further obligations or liabilities to Xxxx (and including any
successors or assigns) pursuant to the Xxxx Agreements or otherwise, including,
but not limited to, a copy of the Zero Coupon Note marked "paid";
(b) the originals of any promissory notes or other instruments
made or issued by Weksel and Xxxxxx X. Xxxxxx payable to Borrower to evidence
their Indebtedness to Borrower, duly endorsed by Borrower as payable to the
order of Congress;
(c) the consent of any participants in the financing arrangements
of Congress with Borrower to the amendments provided for herein;
(d) an original of the Amended and Restated Term Promissory Note,
dated of even date herewith, made by Borrower payable to Congress in the
original principal amount of $5,300,000, duly authorized, executed and delivered
by Borrower;
(e) evidence that Borrower has obtained all required consents or
approvals of any persons other than Congress to the loans from Borrower to
Weksel and Xxxxxx X. Xxxxxx in the amount of $1,500,000 as contemplated under
Section 5 above and the amendments contained herein;
(f) no Event of Default shall have occurred and be continuing and
no event shall have occurred or condition be existing and continuing which, with
notice or passage of time or both, would constitute an Event of Default; and
(g) an original of this Amendment, duly authorized, executed and
delivered by Borrower.
11. Effect of this Agreement. Except as modified pursuant hereto, no
other changes or modifications to the Financing Agreement are intended or
implied, and in all other respects the Financing Agreements are hereby
specifically ratified, restated and confirmed by the parties hereto as of the
date hereof. To the extent of a conflict between the terms of this Amendment and
the other Financing Agreements, the terms of this Amendment shall control.
12. Further Assurances. Borrower shall execute and deliver such
additional documents and take such additional actions as may be necessary or
desirable, as determined by Congress, to effectuate the provisions and purposes
of this Amendment.
13. Governing Law. The rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted and determined in accordance
with the laws of the State of New York.
-5-
54
14. Binding Effect. This Amendment shall be binding upon and inure to the
benefit of each of the parties hereto and their respective successors and
assigns.
15. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment, it shall not be necessary
to produce or account for more than one counterpart thereof signed by each of
the parties hereto.
Please sign the enclosed copy of this Amendment in the space provided
below, whereupon this Amendment, as so accepted by Congress, shall become a
binding agreement between Borrower and Congress.
Very truly yours,
X.X. XXXXXXX COMPANY
By:
------------------------------------
Title:
---------------------------------
ACKNOWLEDGED AND AGREED:
CONGRESS FINANCIAL CORPORATION
By: [SIG]
----------------------------------
Title: Asst. V.P.
-------------------------------
AMERICOM CORPORATION
By:
----------------------------------
Title:
-------------------------------
EFJ HOLDING CORP.
By:
----------------------------------
Title:
-------------------------------
-------------------------------------
XXXXXXX XXXXXX, individually
-6-
55
14. Binding Effect. This Amendment shall be binding upon and inure to the
benefit of each of the parties hereto and their respective successors and
assigns.
15. Counterparts. This Amendment may be executed in any number
of counterparts, but all of such counterparts shall together constitute but one
and the same agreement. In making proof of this Amendment, it shall not be
necessary to produce or account for more than one counterpart thereof signed by
each of the parties hereto.
Please sign the enclosed copy of this Amendment in the space provided
below, whereupon this Amendment, as so accepted by Congress, shall become a
binding agreement between Borrower and Congress.
Very truly yours,
X.X. XXXXXXX COMPANY
By: /s/ XXXXXXX XXXXXX
------------------------------------
Title:
---------------------------------
ACKNOWLEDGED AND AGREED:
CONGRESS FINANCIAL CORPORATION
By:
----------------------------------
Title:
-------------------------------
AMERICOM CORPORATION
By: /s/ XXXXXXX XXXXXX
----------------------------------
Title:
-------------------------------
EFJ HOLDING CORP.
By: /s/ XXXXXXX XXXXXX
----------------------------------
Title:
-------------------------------
/s/ XXXXXXX XXXXXX
-------------------------------------
XXXXXXX XXXXXX, individually
-6-
56
AMENDMENT NO. 3 TO FINANCING AGREEMENTS
August 4, 1994
Congress Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
Congress Financial Corporation, a California corporation (together with
its successors and assigns, "Congress") and X.X. Xxxxxxx Company, a Minnesota
corporation (as survivor by merger with EFJ Acquisition Corp., a Delaware
corporation, together with its successors and assigns, "Borrower") have entered
into certain financing arrangements as set forth in the Accounts Financing
Agreement [Security Agreement], dated as of July 31, 1992, between Congress and
Borrower (together with the various supplements thereto, the "Accounts
Agreement"), and various other agreements, documents and instruments executed
and/or delivered in connection therewith or related thereto, as amended pursuant
to Amendment No. 1 to Financing Agreements, dated January 26, 1993 and Amendment
No. 2 to Financing Agreements, dated as of October 4, 1993 (together with the
Accounts Agreement, as the same are amended hereby and may hereafter be further
amended, modified, supplemented, extended, renewed, restated or replaced,
collectively, the "Financing Agreements").
Borrower has requested that Congress agree to certain amendments to the
Financing Agreements and Congress is willing to agree to such amendments,
subject to the terms and conditions contained herein. Borrower and Congress
desire and intend to evidence such amendments by this letter agreement.
In consideration of the foregoing, the parties hereto agree as follows:
1. Definitions. All capitalized terms used herein shall have the meanings
assigned thereto in the other Financing Agreements, unless otherwise defined
herein.
2. Inventory Loans. Section 3 of the letter agreement with respect to
inventory loans, dated as of July 31, 1992, between Congress and Borrower (the
"Inventory Loan Letter") is hereby deleted in its entirety and the following
substituted therefor:
57
"3. Except in your sole discretion, the outstanding aggregate
principal amount of loans by you to us hereunder shall not exceed, at
any time, the lower of (a) the aggregate amount of the above percentages
of Value of Eligible Inventory or (b) $4,000,000."
3. Limit on Advances on Certain Foreign Accounts. The reference to the
figure "$1,000,000" contained in the second paragraph of the letter agreement
with respect to the limit on advances on certain foreign accounts, dated as of
July 31, 1992, between Congress and Borrower (the "Foreign Accounts Letter") is
hereby deleted and the following figure substitute therefor: "$2,500,000".
4. Indebtedness. Section 4.6(i) of the Covenant Supplement to the
Accounts Agreement is hereby deleted in its entirety and the following
substituted therefor:
"(i) contingent Indebtedness of Borrower to National American
Insurance Company, the Security Insurance Co. of Hartford, Connecticut
Indemnity Company, Boston Old Colony Insurance Company, Commercial
Insurance Company of Newark, New Jersey, Fireman's Insurance Company of
Newark, New Jersey, First Insurance Company of Hawaii, Ltd., Glens Falls
Insurance Company, Kansas City Fire and Marine Insurance Company,
National-Ben Franklin Insurance Company of Illinois, National-Ben
Franklin Insurance Company of Michigan, Niagara Fire Insurance Company,
The Buckeye Union Insurance Company, The Continental Insurance Company,
The Continental Insurance Company of Canada or The Fidelity and Casualty
Company of New York (collectively, the "Sureties", and individually, a
"Surety") pursuant to certain agreements of indemnity between Borrower
and such parties, true, correct and complete copies of which have been
delivered by Borrower to Congress, to reimburse and indemnify the
Sureties for amounts paid by any of them under bonds or other
obligations of suretyship which they have issued for the benefit of
Borrower to Account Debtors; provided, that:
(i) Congress shall receive not less than two (2) business days
prior written notice of the issuance of any such bonds or other
obligations of suretyship by any of the Sureties identifying the
contract of Borrower to which such bond or other obligation relates, the
total amount payable to Borrower under the contract, the amount of the
bond, the liability of Borrower to the Surety in connection therewith,
together with such other information with respect thereto as Congress
may at any time and from time to time require;
-2-
58
(ii) no Event of Default, or act, condition or event which with
notice or passage of time both would constitute an Event of Default
shall exist or have occurred;
(iii) the aggregate amount of such contingent Indebtedness
outstanding at any one time shall not exceed $5,000,000; and
(iv) Borrower shall furnish to Congress all notices, demands or
other materials concerning such Indebtedness either received by Borrower
or on its behalf, promptly after receipt thereof, or sent by Borrower,
or on its behalf, concurrently with the sending thereof, as the case may
be."
5. Transactions with Affiliates. Section 4.9(b)(ii) of the Covenant
Supplement to the Accounts Agreement is hereby deleted in its entirety and the
following substituted therefor:
"(ii) Borrower may make payments to Weksel, Davies & Co., Inc.
for fees for executive management and financial consulting services
rendered by Weksel, Davies & Co., Inc. to Borrower in accordance with
the Executive Management Services Agreement, dated of even date
herewith, between Borrower and Weksel, Davies & Co., Inc.; provided,
that, (A) in no event shall the amount of such fees paid by Borrower to
Weksel, Davies & Co., Inc. exceed (I) $250,000 per annum, payable in
twelve (12) equal monthly installments, for the period from the date
hereof to October 31, 1993, (II) $720,000 per annum, payable in twelve
(12) equal monthly installments, for the period from November 1, 1993 to
June 30, 1994, and (III) $840,000 per annum, commencing July 1, 1994,
payable in twelve (12) equal monthly installments and (B) no Event of
Default or act, condition or event which with notice or passage of time
or both would constitute an Event of Default shall exist or have
occurred and"
6. Additional Representations and Warranties. In addition to the
continuing representations and warranties heretofore or hereafter made by
Borrower to Congress pursuant to the Financing Agreements, Borrower hereby
represents and warrants to Congress as follows (which representations,
warranties and covenants are continuing and shall survive the execution and
delivery hereof and shall be incorporated into and made a part of the Financing
Agreements):
(a) No Event of Default exists on the date of this Amendment
(after giving effect to the amendments to the Financing Agreements made by this
Amendment).
-3-
59
(b) This Amendment has been duly executed and delivered by
Borrower and is in full force and effect as of the date hereof, and the
agreements and obligations of Borrower contained herein constitute legal, valid
and binding obligations of Borrower enforceable against Borrower in accordance
with their respective terms.
7. Conditions Precedent. The effectiveness of the amendments contained
herein shall be subject to the receipt by congress of each of the following, in
form and substance satisfactory to Congress and its counsel:
(a) the consent of any participants in the financing arrangements
of Congress with Borrower to the amendments provided for herein;
(b) no Event of Default shall have occurred and be continuing and
no event shall have occurred or condition be existing and continuing which, with
notice or passage of time or both, would constitute an Event of Default; and
(c) an original of this Amendment, duly authorized, executed and
delivered by Borrower.
8. Effect of this Agreement. Except as modified pursuant hereto, no
other changes or modifications to the Financing Agreement are intended or
implied, and in all other respects the Financing Agreements are hereby
specifically ratified, restated and confirmed by the parties hereto as of the
date hereof. To the extent of a conflict between the terms of this Amendment and
the other Financing Agreements, the terms of this Amendment shall control.
9. Further Assurances. Borrower shall execute and deliver such
additional documents and take such additional actions as may be necessary or
desirable, as determined by Congress, to effectuate the provisions and purposes
of this Amendment.
10. Governing Law. The rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted and determined in accordance
with the laws of the State of New York.
11. Binding Effect. This Amendment shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors and
assigns.
12. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment, it shall not be necessary
to produce or
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account for more than one counterpart thereof signed by each of the parties
hereto.
Please sign the enclosed copy of this Amendment in the space provided
below, whereupon this Amendment, as so accepted by Congress, shall become a
binding agreement between Borrower and Congress.
Very truly yours,
X.X. Xxxxxxx Company
By: [SIG]
------------------------------------
Title: Vice President, Finance
---------------------------------
ACKNOWLEDGED AND AGREED:
CONGRESS FINANCIAL CORPORATION
By: [SIG]
----------------------------------
Title: Asst. V.P.
-------------------------------
AMERICOM CORPORATION
By: [SIG]
----------------------------------
Title:
-------------------------------
EFJ PARTNERS, a general
partnership
By: [SIG]
----------------------------------
Title: General Partner
[SIG]
-------------------------------------
XXXXXXX XXXXXX, individually
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61
AMENDMENT NO. 4 TO FINANCING AGREEMENTS
March 3, 1995
Congress Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
Congress Financial Corporation, a California corporation (together with
its successors and assigns, "Congress") and X.X. Xxxxxxx Company, a Minnesota
corporation (as survivor by merger with EFJ Acquisition Corp., a Delaware
corporation, together with its successors and assigns,, "Borrower") have entered
into certain financing arrangements as set forth in the Accounts Financing
Agreement [Security Agreement], dated July 31, 1992, between Congress and
Borrower (the "Accounts Agreement"), the Covenant Supplement to Accounts
Financing Agreement [Security Agreement], dated July 31, 1992, between Congress
and Borrower (the "Covenant Supplement"), and various other agreements,
documents and instruments executed and/or delivered in connection therewith or
related thereto, as amended pursuant to Amendment No. 1 to Financing Agreements,
dated January 26, 1993, Amendment No. 2 to Financing Agreements, dated as of
October 4,1993 and Amendment No. 3 to Financing Agreements dated August 4, 1994
(together with the Accounts Agreement, as the same are amended hereby and may
hereafter be further amended, modified, supplemented, extended, renewed,
restated or replaced, collectively, the "Financing Agreements").
Borrower has requested that Congress agree to certain amendments to the
Financing Agreements and Congress is willing to agree to such amendments,
subject to the terms and conditions contained herein. Borrower and Congress
desire and intend to evidence such amendments by this Amendment.
In consideration of the foregoing, the parties hereto agree as follows:
1. Definitions.
(a) Additional Definitions. As used herein, the following terms
shall have the respective meanings given to them below and the Financing
Agreements are hereby amended to include, in addition and not in limitation,
each of the following:
62
(i) "Amendment No. 4" shall mean the Amendment No. 4 to
Financing Agreements, dated as of even date hereof, between Congress, Borrower,
EFJ Partners and Weksel, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
(ii) "Bonded Contracts" shall mean agreements by Borrower for
the purchase of goods or rendition of services in the ordinary course of
business, for which a Surety has any liability for any payments or performance
by Borrower owing to an Account Debtor pursuant to a bond, indemnity, guarantee,
contract of suretyship, other instrument or otherwise.
(b) Amendments to Definitions.
(i) All references to the term "Maximum Credit" in the
Financing Agreements shall be deemed and each such reference is hereby amended
to mean $35,000,000.
(ii) All references to the term "Term Note" in the Financing
Agreements shall be deemed and each such reference is hereby amended to mean the
Second Amended and Restated Term Promissory Note, dated of even date herewith,
made by Borrower, payable to Congress, in the original principal amount of
$8,400,000, as the same now exists or may hereinafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(iii) All references to the term "Renewal Date" in the
Financing Agreements shall be deemed and each such reference is hereby amended
to mean "March 3, 1998".
(iv) All references to the term "Surety" shall be deemed and
each such reference is hereby amended to mean any person who at any time becomes
liable for any payments or performance by Borrower owing to an Account Debtor
pursuant to a bond, indemnity, guarantee, contract of suretyship, or other
instrument or otherwise, including, but not limited to, Hartford Fire Insurance
Company or any of its insurance company affiliates (whether pursuant to the
arrangements of Borrower in connection with the General Indemnity Agreement,
dated December 24, 1994, by Borrower in favor of them or otherwise).
(v) All references to the term "Consolidated Working Capital"
shall be deemed and each such reference is hereby amended to mean, as to any
Person, at any time, on a consolidated basis for such Person and its
Subsidiaries, the amount equal to the difference between: (a) the aggregate net
book value of all assets of such Person and its Subsidiaries, on a consolidated
basis, calculating the book value of inventory for this purpose on a
first-in-first-out basis, which would, in accordance with GAAP, be classified as
current assets and (b) all Indebtedness of such Person and its Subsidiaries, on
a consolidated basis, which would in accordance with GAAP, be
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63
classified as current liabilities; provided that, for purposes of this
definition, current liabilities (A) shall include Indebtedness of Borrower to
Congress arising pursuant to the revolving-loans by Congress to Borrower under
the Accounts Agreement and the other Financing Agreements and (B) shall not
include amounts due from Borrower to Motorola pursuant to the existing license
agreement between Borrower and Motorola (as in effect on the date hereof).
(c) Interpretation. All capitalized terms used herein shall have
the meanings assigned thereto in the other Financing Agreements, unless
otherwise defined herein.
2. Eligible Accounts. Section 1.15 of the Covenant Supplement is hereby
deleted in its entirety and the following substituted therefor:
"1.15 "Eligible Accounts" shall mean Accounts created by Borrower in
the ordinary course of its business arising out of the sale of goods
or rendition of services, which are and at all times shall continue
to be acceptable to Congress in all respects. Standards of
eligibility may be fixed and revised from time to time solely by
Congress in its exclusive judgment. In determining eligibility,
Congress may, but need not, rely on agings, reports and schedules of
Accounts furnished to Congress by Borrower, but reliance by Congress
thereon from time to time shall not be deemed to limit Congress'
right to revise standards of eligibility at any time as to both
present and future Accounts. In general, an Account shall not be
deemed eligible unless: (a) the Account Debtor on such Account is at
all times and continues to be acceptable to Congress, (b) such
Account complies in all respects with the representations, covenants
and warranties set forth herein and in the other Financing
Agreements, (c) more than sixty (60) days have elapsed since the
original due date of such Account, but in any event no more than one
hundred eighty (180) days have elapsed since the original invoice
date of such Account, (d) if it is a Foreign Account, such Foreign
Account is secured or payable by a letter of credit or acceptance
issued by a bank and on terms acceptable to Congress (the original
of which has been delivered to Congress and the issuer of which has
been notified of the assignment thereof to Congress) or the Foreign
Account is subject
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64
to credit insurance payable to Congress issued by an insurer and on
terms and in an amount acceptable to Congress, (e) if it is a
Government Account, Borrower shall have complied in all respects
with the Federal Assignment of Claims Act of 1940, as amended, and
any state or local equivalent in a manner satisfactory to Congress
with respect to such Account, (f) the Account is not owed by an
Account Debtor who has or whose Affiliates have more than fifty
(50%) percent of its and their Accounts outstanding and unpaid more
than sixty (60) days past the original due date of the invoice of
such Account, but in any event, no more than one hundred (180) days
have elapsed since the original invoice date of such Account, and
(g) as to the Accounts arising from the sale of goods or rendition
of services by Borrower pursuant to a Bonded Contract, no more than
$5,000,000 of such Accounts which otherwise constitute Eligible
Accounts shall be deemed Eligible Accounts. Any accounts which
Congress determines to be ineligible or unacceptable for
availability purposes at any time shall nevertheless be and remain
at all times part of the Collateral."
3. Loans on Accounts. Section 2.1 of the Accounts Agreement is hereby
deleted in its entirety and the following substituted therefor:
"2.1 You shall, in your discretion, make loans to us from time to
time, at our request, of up to the following percentages of the Net
Amount of Eligible Accounts (or such greater or lesser percentage as
you shall in your sole discretion determine from time to time): (a)
eighty-five (85%) percent of the Net Amount of Eligible Accounts
(other than Accounts arising from the sale or installation of radio
systems or networks) and (b) seventy (70%) percent of the Net Amount
of Eligible Accounts arising from the sale or installation of radio
systems or networks; provided that, in the event that the
Consolidated Net Worth of Borrower does not, at any time, equal or
exceed the sum of the amounts set forth on Exhibit A to Amendment
No. 4 for the applicable period set forth therein, plus ninety (90%)
percent of the net cash proceeds received by Borrower pursuant to
the sale or issuance of capital
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65
stock (after deducting underwriting commissions and discounts, if
any, and all other expenses related directly to such sale or
issuance), you may, at your option, either reduce such percentage
with respect to the Net Amount of Eligible Accounts arising from the
sale or installation of radio systems or networks or no longer
consider such Accounts as Eligible Accounts."
4. Interest. The first three sentences of Section 3.1 of the Accounts
Agreement are hereby deleted in their entirety and the following substituted
therefor:
"3.1 Interest shall be payable by us to you on the first day of
each month upon the closing daily balances in our loan account
for each day during the immediately preceding month, at a rate
equal to one and three-quarters of one percent (1-3/4%) per annum
in excess of the prime commercial interest rate from time to time
publicly announced by CoreStates Bank, N.A., Philadelphia,
Pennsylvania, whether or not such announced rate is the best rate
available at such bank. The interest rate charged hereunder shall
increase or decrease, respectively, in said prime loan rate,
effective on the first day of the month after any change in said
prime loan rate based on the prime loan rate in effect on the
last day of the month in which any such change occurs."
5. Term Loan. As of the close of business on March 1, 1995, the
outstanding principal amount of the Term Loan was $2,797,222.26. Subject to the
terms and conditions contained herein, upon the effective date hereof, Congress
shall make an additional advance to Borrower in the amount of $5,602,777.74, so
that the outstanding principal amount of the Term Loan pursuant to Section 3.2
of the Covenant Supplement as of the date hereof shall be $8,400,000. Such Term
Loan shall be (a) evidenced by the Second Amended and Restated Term Promissory
Note executed and delivered by Borrower to Congress concurrently herewith, (b)
repaid, together with interest and other amounts due thereunder, in accordance
with the terms and provisions of such Note, the Accounts Agreement and the other
Financing Agreements and (c) secured by all of the Collateral.
6. inventory Loans. Sections 2 and 3 of the letter agreement with
respect to inventory loans, dated as of July 31, 1992, between Congress and
Borrower (the "Inventory Loan Letter") are hereby deleted in its entirety and
the following substituted therefor:
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66
"2. In addition to loans which may be made by you to us, pursuant
to Section 2 of the Accounts Agreement, you shall, in your
discretion, make loans to us from time to time, at our request,
of up to the following percentages of Value of the following
categories of Eligible Inventory (or such greater or less
percentages thereof as you shall, in your sole discretion,
determine from time to time):
(a) sixty (60%) percent of the Value of Eligible Inventory
consisting of radio finished goods; plus
(b) forty (40%) percent of the Value of Eligible Inventory
consisting of raw materials and purchased parts; plus
(c) thirty-five (35%) percent of the Value of Eligible
Inventory consisting of accessories; plus
(d) fifty (50%) percent of the Value of Eligible Inventory
consisting of component products; plus
(e) ten (10%) percent of the Value of Eligible Inventory
consisting of service parts.
3. Except in your sole discretion, the outstanding aggregate
principal amount of loans by you to us hereunder shall not
exceed, at any time, the lower of (a) the aggregate amount of the
above percentages of Value of Eligible Inventory or (b)
$8,000,000."
7. Line Increase Fee. Borrower shall pay to Congress a line increase
fee in the amount of $150,000, which amount shall be payable simultaneously with
the execution hereof and shall be deemed fully earned as of the date hereof.
Such line increase fee, may, at Congress' option be charged directly to any
account of Borrower maintained with Congress.
8. Unused Line Fee. Section 3.5 of the Accounts Agreement is hereby
deleted in its entirety and the following substituted therefor:
"3. If the average outstanding daily principal balance of all
loans by you to us under this Agreement or any Supplement hereto
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67
in any calendar month shall be less than $30,000,000, we shall pay
to you on or before the tenth (10th) day of the next succeeding
calendar month an unused line fee equal to one-half of one percent
(1/2%) per annum upon the amount by which $30,000,000 exceeds the
average outstanding daily principal balance of all such loans in
respect of such month."
9. Letters of Credit.
(a) The reference to $4,000,000 in Section 1.5 of the Trade
Financing Agreement Supplement to Accounts Financing Agreement [Security
Agreement], dated March 18, 1993, between Congress and Borrower (the "Trade
Financing Agreement") is hereby deleted and the following substituted therefor:
"$5,000,000".
(b) Section 1.3 of the Trade Financing Agreement is hereby
deleted in its entirety and the following substituted therefor:
"1.3 No Credits shall be available unless on the date of the
proposed issuance of any Credit, the revolving loans available to
Borrower under the Agreement (subject to the Maximum Credit) are
equal to or greater than: (i) if the proposed Credit is for the
purpose of purchasing Eligible Inventory, the sum of (A) the
applicable percentage with respect to the type of Eligible Inventory
being purchased as set forth in Section 2 of the letter agreement
with respect to the inventory loans between you and us of the cost
of such Eligible Inventory, plus (B) freight, taxes, duty and other
amounts which you estimate must be paid in connection with such
Inventory upon arrival and for delivery to one of our locations for
Eligible Inventory within the United States of America and (ii) if
the proposed Credit is for any other purpose, an amount equal to one
hundred (100%) percent of the face amount thereof and all other
commitments and obligations made or incurred by you with respect
thereto."
(c) Section 1.8 of the Trade Financing Agreement is hereby deleted in
its entirety and the following substituted therefor:
"1.8. In addition to all other fees, charges and expenses payable
under the Agreement, this Supplement, and to any bank or other
issuer or correspondent in connection with
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68
any Credit, we agree to pay you a letter of credit fee at a rate
equal to two and one-half (2 1/2%) percent per annum on the daily
outstanding balance of all outstanding Credits for the immediately
preceding month (or part thereof), payable in arrears as of the
first day of each succeeding month. Such letter of credit fee shall
be calculated on the basis of a three hundred sixty (360) day year
and actual days elapsed and the obligation of Borrower to pay such
fee shall survive the termination or non-renewal of the Agreement.
We also agree to pay you, your and any bank's, other issuer's or
correspondent's customary charges for amendments, extensions and
administration relating to any Credit, which charges shall be due
and payable on the first day of the month following the date of
incurrence and, at your option may be changed to any of our
account(s) maintained by you."
10. Indebtedness.
Section 4.6(i) of the Covenant Supplement is hereby deleted in
its entirety and the following substituted therefor:
"(i) contingent Indebtedness of Borrower to Sureties pursuant to
certain agreements of indemnity between Borrower and such parties,
true, correct and complete copies of which have been delivered by
Borrower to Congress, to reimburse and indemnify the Sureties for
amounts paid by any of them under any bond, indemnity, guarantee,
contract of suretyship or other instrument which any Surety has
issued for the benefit of Borrower to an Account Debtor; provided,
that:
(i) Congress shall receive not less than two (2) business days
prior written notice of the issuance of any such bond, indemnity,
guarantee, contract of suretyship, other instrument or other
obligation by any of the Sureties, which notice shall identify the
contract of Borrower to which such bond, indemnity, guarantee,
contract of suretyship, other instrument or other obligation
relates, the total amount payable to Borrower under the contract,
the amount of the bond, indemnity, guarantee, contract of
suretyship, other instrument or other obligation, the liability of
Borrower to the Surety in
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69
connection therewith, a copy of the contract of Borrower to which
such bond or other obligation relates, together with such other
information with respect thereto as Congress may at any time and
from time to time require;
(ii) at the time of and after incurring such indebtedness, no
Event of Default, or act, condition or event which with notice or
passage of time both would constitute an Event of Default shall
exist or have occurred;
(iii) the aggregate amount of such contingent Indebtedness
outstanding at any one time shall not exceed $20,000,000;
(iv) all Inventory identifiable to a Bonded Contract shall be
segregated from the other Inventory of Borrower and shall not be
considered Eligible Inventory;
(v) on a monthly basis or more frequently as Congress may
request, Congress shall receive a report of all of the outstanding
contingent Indebtedness of Borrower to any Surety, including the
amount of the outstanding Accounts arising under Bonded Contracts,
the amount of the bonds, indemnity, guarantee, contract of
suretyship or other instrument or the obligations then outstanding,
the scope and nature of such bonds or the obligation, and such other
information with respect thereto as Congress may request;
(vi) Borrower shall furnish to Congress all notices, demands or
other materials concerning such Indebtedness either received by
Borrower or on its behalf, promptly after receipt thereof, or sent
by Borrower, or on its behalf, concurrently with the sending
thereof, as the case may be."
11. Net Worth. Section 4.14 of the Covenant Supplement is hereby
deleted in its entirety and the following substituted therefor:
"4.14 Net Worth. Borrower shall, at the end of each fiscal
quarter, have a Consolidated Net Worth of not less than $11,000,000;
provided, that, in the event of any sale or
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70
issuance of capital stock by Borrower or its shareholders, on and
after the effective date of such sale or issuance, Borrower shall,
at the end of each fiscal quarter, have a Consolidated Net Worth of
not less than the amount equal to the sum of: (a) $11,000,000 plus
(b) seventy-five (75%) percent of the net cash proceeds (after
deducting underwriting commissions and discounts, if any, and all
other expenses related directly to such sale or issuance) received
by Borrower pursuant to the sale or issuance of such capital stock."
12. Working Capital. Section 4.15 of the Covenant Supplement is hereby
deleted in its entirety and the following substituted therefor:
"4.15 Working Capital. Borrower shall, at the end of each fiscal
quarter, have Consolidated Working Capital of not less than
$2,000,000."
13. Termination.
(a) Section 9.1 of the Accounts Agreement is hereby deleted in
its entirety and the following substituted therefor:
"9.1 This Agreement shall become effective upon acceptance by
you and shall continue in full force and effect for a term ending
March 3, 1998 (the "Renewal Date") and from year to year thereafter,
unless sooner terminated pursuant to the terms hereof. Either party
may terminate this Agreement on the Renewal Date or on the
anniversary of the Renewal Date in any year by giving the other
party at least sixty (60) days prior written notice by registered or
certified mail, return receipt requested, and, in addition, you
shall have the right to terminate this Agreement immediately at any
time upon the occurrence and continuation of an Event of Default. No
termination of this Agreement, however, shall relieve or discharge
us of our duties, obligations and covenants hereunder until all
Obligations have been paid in full, and your continuing security
interest in the Collateral shall remain in effect until such
Obligations have been fully discharged."
(b) Section 9.2 of the Accounts Agreement is hereby deleted in
its entirety and the following substituted therefor:
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71
"9.2 If you terminate this Agreement upon the occurrence of an Event
of Default or at our request, in view of the impracticability and
extreme difficulty of ascertaining actual damages and by mutual
agreement of the parties as to a reasonable calculation of your lost
profits as a result thereof, we hereby agree that we shall pay to
you, upon the effective date of such termination, an early
termination fee in an amount equal to: (a) two percent (2%) of the
Maximum Credit if such termination occurs on or prior to March 3,
1996; (b) one percent (1%) of the Maximum Credit if such termination
occurs after March 3, 1996 but on or prior to March 3, 1997; or (c)
one percent (1%) of the Maximum Credit if such termination occurs
after March 3, 1997 but prior to the Renewal Date. Such termination
fee shall be presumed to be the amount of damages sustained by said
early termination and we agree that it is reasonable under the
circumstances currently existing. The early termination fee provided
for in this paragraph 9.2 shall be deemed included in the
Obligations."
14. Capital Expenditures. Section 4.16 of the Covenant Supplement is
hereby deleted in its entirety and the following substituted therefor:
"Intentionally omitted."
15. Additional Representations and Warranties. In addition to the
continuing representations and warranties heretofore or hereafter made by
Borrower to Congress pursuant to the Financing Agreements, Borrower hereby
represents and warrants to Congress as follows (which representations,
warranties and covenants are continuing and shall survive the execution and
delivery hereof and shall be incorporated into and made a part of the Financing
Agreements):
(a) No Event of Default exists on the date of this Amendment
(after giving effect to the amendments to the Financing Agreements made by this
Amendment).
(b) Borrower has obtained or received all required consents and
approvals of any persons other than Congress in connection with the amendments
contemplated by the Amendment, except for any consent or approval if the failure
to obtain or receive the same will not have a material adverse effect on the
business of Borrower.
(c) No material adverse change in the business, operations,
profits or prospects of Borrower or in the condition
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72
of the assets of Borrower shall have occurred since the date of the last field
examination by Congress of Borrower.
(d) This Amendment has been duly executed and delivered by
Borrower and is in full force and effect as of the date hereof, and the
agreements and obligations of Borrower contained herein constitute legal, valid
and binding obligations of Borrower enforceable against Borrower in accordance
with their respective terms.
16. Conditions Precedent. The effectiveness of the amendments contained
herein shall be subject to the satisfaction of the following conditions
precedent in a manner satisfactory to Congress and its counsel:
(a) Borrower shall have received the consent of any participants
in the financing arrangements of Congress with Borrower to the amendments
provided for herein;
(b) no Event of Default shall have occurred and be continuing and
no event shall have occurred or condition be existing and continuing which, with
notice or passage of time or both, would constitute an Event of Default;
(c) Congress shall have received evidence, in form and substance
satisfactory to Congress, that Borrower has obtained all required consents and
approvals of any persons other than Congress in connection with the amendments
contemplated by this Amendment, except for any consent or approval if the
failure to obtain or receive the same will not have a material adverse effect on
the business of Borrower;
(d) Congress shall have received, in form and substance
satisfactory to Congress, an original of the Second Amended and Restated Term
Promissory Note, dated of even date herewith, made by Borrower payable to
Congress in the original principal amount of $8,400,000, duly authorized,
executed and delivered by Borrower; and
(e) Congress shall have received, in form and substance
satisfactory to Congress, an original of this Amendment, duly authorized,
executed and delivered by Borrower, EFJ Partners, Xxxxxxx Xxxxxx and Xxxxxx X.
Xxxxxx.
17. Effect of this Agreement. Except as modified pursuant hereto, no
other changes or modifications to the Financing Agreement are intended or
implied, and in all other respects the Financing Agreements are hereby
specifically ratified, restated and confirmed by the parties hereto as of the
date hereof. To the extent of a conflict between the terms of this Amendment and
the other Financing Agreements, the terms of this Amendment shall control.
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73
18. Further Assurances. Borrower shall execute and deliver such
additional documents and take such additional actions as may be necessary or
desirable, as determined by Congress, to effectuate the provisions and purposes
of this Amendment.
19. Governing Law. The rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted and determined in accordance
with the laws of the State of New York.
20. Binding Effect. This Amendment shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors and
assigns.
21. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment, it shall not be necessary
to produce or account for more than one counterpart thereof signed by each of
the parties hereto.
Please sign the enclosed copy of this Amendment in the space provided
below, whereupon this Amendment, as so accepted by Congress, shall become a
binding agreement between Borrower and Congress.
Very truly yours,
X.X. XXXXXXX COMPANY
By: [SIG]
----------------------------------
Title:
-------------------------------
ACKNOWLEDGED AND AGREED:
CONGRESS FINANCIAL CORPORATION
By: [SIG]
----------------------------------
Title:
-------------------------------
EFJ PARTNERS, a general
partnership
By: [SIG]
----------------------------------
Title: General Partner
[SIG]
-------------------------------------
XXXXXXX XXXXXX, individually
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EXHIBIT A
to
AMENDMENT NO. 4 TO FINANCING AGREEMENTS
Time Period Consolidated Net Worth*
----------- ----------------------
12/31/94 - 3/30/95 11,946,000
3/31/95 - 6/29/95 11,971,000
6/30/95 - 9/29/95 12,757,000
9/30/95 - 12/30/95 14,309,000
12/31/95 - 3/30/96 16,794,000
3/31/96 - 6/29/96 17,294,000
6/30/96 - 9/29/96 17,794,000
9/30/96 - 12/30/96 18,294,000
12/31/96 - 3/30/97 18,794,000
3/31/97 - 6/29/97 19,294,000
6/30/97 - 9/29/97 19,794,000
9/30/97 - 12/30/97 20,294,000
12/31/97 and at all 20,794,000
times thereafter
* For purposes of this Exhibit A, Consolidated Net Worth does not include
any net cash proceeds received by Borrower pursuant to the sale or issuance of
capital stock.
75
AMENDMENT No. 5 TO FINANCING AGREEMENTS
March 14, 1995
Congress Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
Congress Financial Corporation, a California corporation (together with
its successors and assigns, "Congress") and X.X. Xxxxxxx Company, a Minnesota
corporation (as survivor by merger with EFJ Acquisition Corp., a Delaware
corporation, together with its successors and assigns, "Borrower") have entered
into certain financing arrangements as set forth in the Accounts Financing
Agreement [Security Agreement], dated July 31, 1992, between Congress and
Borrower (the "Accounts Agreement"), the Covenant Supplement to Accounts
Financing Agreement [Security Agreement], dated July 31, 1992, between Congress
and Borrower (the "Covenant Supplement"), and various other agreements,
documents and instruments executed and/or delivered in connection therewith or
related thereto, as amended pursuant to Amendment No. 1 to Financing Agreements,
dated January 26, 1993, Amendment No. 2 to Financing Agreements, dated as of
October 4, 1993, Amendment No. 3 to Financing Agreements, dated August 4, 1994,
Amendment No. 4 to Financing Agreements, dated March 3, 1995 (together with the
Accounts Agreement, as the same are amended hereby and may hereafter be further
amended, modified, supplemented, extended, renewed, restated or replaced,
collectively, the "Financing Agreements").
On November 29, 1994, Borrower formed a wholly-owned subsidiary known as
EFJ Communications Inc., a Minnesota corporation ("EFJ Communications").
Borrower has made arrangements with the United States Federal Communications
Commission ("FCC") to transfer to EFJ Communications the licenses issued by the
FCC to Borrower listed on Exhibit A hereto (collectively, the "FCC Licenses").
Borrower plans to issue and sell 925,850 shares of its Series I Class B
Preferred Shares ("Series I Preferred Stock") and a warrant to purchase up to
291,790 shares of the common stock of Borrower, to Securicor Communications
Inc., a Delaware corporation ("Securicor"), pursuant to the Stock Purchase
Agreement dated March 14, 1995 between Borrower and Securicor (the "Stock
Purchase Agreement"). In addition, Securicor may make unsecured subordinated
loans to Borrower. The Indebtedness of Borrower to Securicor arising pursuant to
such loans will be evidenced by 11% Junior Subordinated Notes in the form
included
76
as an exhibit to the Stock Purchase Agreement (the "Junior Subordinated Notes").
Borrower has requested that Congress consent to the foregoing and agree
to certain amendments to the Financing Agreements and Congress is willing to
consent to the foregoing and agree to such amendments, subject to the terms and
conditions contained herein. Borrower and Congress desire and intend to evidence
such amendments by this Amendment.
In consideration of the foregoing, the parties hereto agree as follows:
1. Definitions.
(a) Additional Definitions. As used herein, the following terms
shall have the respective meanings given to them below and the Financing
Agreements are hereby amended to include, in addition and not in limitation,
each of the following:
(i) "Amendment No. 5" shall mean the Amendment No. 5 to
Financing Agreements, dated as of even date hereof, between Congress, Borrower,
EFJ Partners, Weksel and EFJ Communications, as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
(ii)"EFJ Communications" shall mean EFJ Communications Inc., a
Minnesota Corporation, and its successors and assigns.
(iii) "EFJ Communications Assets" shall mean the assets of
Borrower transferred to EFJ Communications, including, but not limited to, the
FCC licenses set forth on Exhibit A to Amendment No. 5.
(iv)"Junior Subordinated Notes" shall mean, collectively, the
11% Junior Subordinated Notes to be issued by Borrower payable to the order of
Securicor, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(v) "Securicor" shall mean Securicor Communications Inc., a
Delaware corporation, and its successors and assigns.
(b) Interpretation. All capitalized terms used herein shall have the
meanings assigned thereto in the other Financing Agreements, unless otherwise
defined herein.
2. Consent to Transfer of Assets, Sale of Stock and to Securicor Loans.
Subject to the terms and conditions contained
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77
herein, Congress hereby consents to: (a) the formation by Borrower of EFJ
Communications, (b) the capital contribution by Borrower to EFJ Communications
as of the date hereof, (c) the transfer by Borrower to EFJ Communications of the
EFJ Communications Assets, (d) the issuance and sale of the Series I Preferred
Stock to Securicor pursuant to the Stock Purchase Agreement and (e) the loans by
Securicor to Borrower evidenced by the Junior Subordinated Notes.
3. Investments. Section 4.8 of the Covenant Supplement is hereby amended
by adding a new Section 4.8(e) thereto as follows:
"(e) the capital contribution by Borrower to EFJ Communications of the
EFJ Communications Assets."
4. Indebtedness. Section 4.6(j) of the Covenant Supplement is hereby
amended by adding a new Section 4.6(j) thereto as follows:
"(j) the unsecured Indebtedness of Borrower to Securicor arising after
the date hereof evidenced by the Junior Subordinated Notes as in effect
on the dates of the execution thereof, which Indebtedness is subject and
subordinate in right of payment to the right of Congress to receive the
prior full and final payment of all of the Obligations; provided, that:
(i) the total principal amount of such Indebtedness thereunder shall not
exceed $5,000,000, less all repayments of principal in respect thereof,
plus interest thereon at the rate set forth in the Junior Subordinated
Notes as in effect on the dates of the execution thereof, (ii) Congress
shall have received not less than five (5) business days prior written
notice of the intention to incur such Indebtedness, which notice shall
set forth in reasonable detail satisfactory to Congress, the amount of
such Indebtedness, the person or persons to whom such Indebtedness will
be owed, the interest rate, the schedule of repayments and maturity date
with respect thereto and such other information as Congress may
reasonably request with respect thereto, (iii) Congress shall have
received true, correct and complete copies of all agreements, documents
and instruments evidencing or otherwise related to such Indebtedness,
(iv) on and before the date of incurring such Indebtedness and after
giving effect thereto, no Event of Default, or event which with the
passage of time or both would constitute an Event of Default, shall
exist or have occurred and be continuing, (v) Congress shall have
received, in form and substance satisfactory to Congress, a
subordination agreement between Congress and Securicor, providing for
the terms of the subordination in right of payment of the Indebtedness
of Borrower to Securicor to the payment of the
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78
Obligations and related matters, duly authorized, executed and delivered
by each of Securicor and Borrower, (vi) the terms and conditions of such
Indebtedness shall, in all respects, be reasonably satisfactory to
Congress, (vii) Borrower shall not, directly or indirectly, make any
payments in respect of such Indebtedness, including, but not limited to,
any prepayments or other nonmandatory payments, except that until an
Event of Default, or event which with notice or passage of time or both
would constitute an Event of Default, shall exist or have occurred and
be continuing, Borrower may make regularly scheduled payments of
interest in accordance with the terms of the Junior Subordinated Notes
as in effect on the date of the execution thereof, (viii) Borrower shall
not, directly or indirectly, (A) amend, modify, alter or change the
terms of such Indebtedness or any agreement, document or instrument
related thereto, or (B) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, or set aside or otherwise deposit or invest
any sums for such purpose, and (ix) Borrower shall furnish to Congress
all notices, demands or other materials in connection with such
Indebtedness either received by Borrower or on its behalf, promptly
after the receipt thereof, or sent by Borrower or on its behalf,
concurrently with the sending thereof, as the case may be.
5. Additional Representations and Warranties. In addition to the
continuing representations and warranties heretofore or hereafter made by
Borrower to Congress pursuant to the Financing Agreements, Borrower hereby
represents and warrants to Congress as follows (which representations,
warranties and covenants are continuing and shall survive the execution and
delivery hereof and shall be incorporated into and made a part of the Financing
Agreements):
(a) No Event of Default exists on the date of this Amendment (after
giving effect to the amendments to the Financing Agreements made by this
Amendment).
(b) Borrower has obtained or received all required consents and
approvals of any persons other than Congress in connection with (i) the transfer
of the EFJ Communications Assets to EFJ Communications, (ii) the issuance and
sale of the Series I Preferred Stock to Securicor pursuant to the Stock Purchase
Agreement, (iii) the loans by Securicor to Borrower evidenced by the Junior
Subordinated Notes and (iv) the amendments contemplated by this Amendment.
(c) As of the date hereof, Borrower is the direct and beneficial
owner and holder of one hundred (100%) percent of all of the issued and
outstanding shares of common stock of EFJ
- 4 -
79
Communications, free and clear of all claims and encumbrances, other than the
liens of Congress and restrictions under any agreements among the stockholders
of EFJ Communications. All such shares are fully paid and non-assessable.
(d) No court of competent jurisdictions has issued any injunction,
restraining order or other order which prohibits consummation of the
transactions consented to by Congress herein and no governmental or other action
or proceeding has been threatened or commenced, seeking any injunction,
restraining order or other order which seeks to void or otherwise modify the
transactions consented to by Congress herein.
(e) This Amendment has been duly executed and delivered by Borrower
and is in full force and effect as of the date hereof, and the agreements and
obligations of Borrower contained herein constitute legal, valid and binding
obligations of Borrower enforceable against Borrower in accordance with their
respective terms.
6. Conditions Precedent. The effectiveness of the amendments contained
herein shall be subject to the satisfaction of the following conditions
precedent in a manner satisfactory to Congress and its counsel:
(a) Borrower shall have received the consent of any participants in
the financing arrangements of Congress with Borrower to the amendments provided
for herein;
(b) no Event of Default shall have occurred and be continuing and no
event shall have occurred or condition be existing and continuing which, with
notice or passage of time or both, would constitute an Event of Default;
(c) Congress shall have received evidence, in form and substance
satisfactory to Congress, that Borrower has obtained all required consents and
approvals of any persons other than Congress in connection with (i) the transfer
of the EFJ Communications Assets to EFJ Communications, (ii) the issuance and
sale of the Series I Preferred Stock to Securicor pursuant to the Stock Purchase
Agreement, (iii) the loans by Securicor to Borrower evidenced by the Junior
Subordinated Notes and (iv) the amendments contemplated by this Amendment.
(d) Congress shall have received the originals of the stock
certificates representing all of the issued and outstanding shares of capital
stock of EFJ Communications owned by Borrower, together with stock powers duly
executed in blank by Borrower with respect thereto;
(e) all requisite corporate action and proceedings in connection
with this Amendment shall be in form and substance satisfactory to Congress, and
Congress shall have received all
- 5 -
80
information and copies of all documents, including, without limitation, records
of requisite corporate action and proceedings which Congress may have reasonably
requested in connection therewith, such documents when requested by Congress or
its counsel to be certified by appropriate corporate officers or governmental
authorities;
(f) Congress shall have received, in form and substance satisfactory
to Congress, (i) a Pledge and Security Agreement by Borrower in favor of
Congress with respect to all of the outstanding shares of capital stock of EFJ
Communications owned by Borrower, (ii) a Guarantee and Waiver, by EFJ
Communications in favor of Congress of the obligations of Borrower to Congress,
(iii) a General Security Agreement by EFJ Communications in favor of Congress;
(iv) UCC-1 financing statements between EFJ Communications, as debtor, and
Congress, as secured party, duly authorized, executed and delivered by Borrower
and EFJ Communications;
(g) Borrower shall have received not less than $9,999,900 in cash or
other immediately available funds constituting proceeds from the issuance and
sale of the Series I Preferred Stock to Securicor;
(h) Congress shall have received, in cash or other immediately
available funds for application to the Obligations in such order and manner as
Congress shall determine, the amount of $2,154,352.08 representing a portion of
the proceeds payable to Borrower from the issuance and sale of the Series I
Preferred Stock to Securicor pursuant to the Stock Purchase Agreement (as in
effect on the date hereof), the balance of which has been paid by Borrower to
Linear Modulation Technology, Limited for the purchase of technology in
accordance with the terms of the Stock Purchase Agreement (as in effect on the
date hereof) and to Securicor in settlement of certain of the existing
indebtedness of Borrower owing to Securicor; and
(i) Congress shall have received, in form and substance satisfactory
to Congress, an original of this Amendment, duly authorized, executed and
delivered by Borrower, EFJ Partners, Xxxxxxx Xxxxxx and EFJ Communications.
7. Effect of this Agreement. Except as modified pursuant hereto, no other
changes or modifications to the Financing Agreement are intended or implied, and
in all other respects the Financing Agreements are hereby specifically ratified,
restated and confirmed by the parties hereto as of the date hereof. To the
extent of a conflict between the terms of this Amendment and the other Financing
Agreements, the terms of this Amendment shall control.
8. Further Assurances. Borrower shall execute and deliver such additional
documents and take such additional actions as may
- 6 -
81
be necessary or desirable, as determined by Congress, to effectuate the
provisions and purposes of this Amendment.
9. Governing Law. The rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted and determined in accordance
with the laws of the State of New York.
10. Binding Effect. This Amendment shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors and
assigns.
11. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment, it shall not be necessary
to produce or account for more than one counterpart thereof signed by each of
the parties hereto.
Please sign the enclosed copy of this Amendment in the space provided
below, whereupon this Amendment, as so accepted by Congress, shall become a
binding agreement between Borrower and Congress.
Very truly yours,
X.X. XXXXXXX COMPANY
By: [SIG]
------------------------------------
Title: Vice Chairman
---------------------------------
ACKNOWLEDGED AND AGREED:
CONGRESS FINANCIAL CORPORATION
By: [SIG]
---------------------------------
Title: Asst VP
------------------------------
EFJ PARTNERS, a general partnership
By: [SIG]
---------------------------------
Title: General Partner
EFJ COMMUNICATIONS, INC.
By: [SIG]
---------------------------------
Title: Vice Chairman
------------------------------
-------------------------------------
XXXXXXX XXXXXX, individually
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82
be necessary or desirable, as determined by Congress, to effectuate the
provisions and purposes of this Amendment.
9. Governing Law. The rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted and determined in accordance
with the laws of the State of New York.
10. Binding Effect. This Amendment shall be binding upon and inure to the
benefit of each of the parties hereto and their respective successors and
assigns.
11. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment, it shall not be necessary
to produce or account for more than one counterpart thereof signed by each of
the parties hereto.
Please sign the enclosed copy of this Amendment in the space provided
below, whereupon this Amendment, as so accepted by Congress, shall become a
binding agreement between Borrower and Congress.
Very truly yours,
X.X. XXXXXXX COMPANY
By:
------------------------------------
Title:
---------------------------------
ACKNOWLEDGED AND AGREED:
CONGRESS FINANCIAL CORPORATION
By:
---------------------------------
Title:
------------------------------
EFJ PARTNERS, a general partnership
By:
---------------------------------
Title: General Partner
EFJ COMMUNICATIONS, INC.
By:
---------------------------------
Title:
------------------------------
/s/ XXXXXXX XXXXXX
-------------------------------------
XXXXXXX XXXXXX, individually
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83
EXHIBIT A
to
AMENDMENT NO. 5 TO FINANCING AGREEMENTS
List of licenses in the name of EFJ Communications Inc.
Call Transmitter Location/ Type of
Sign Site Coordinates Service
---- ---------------- -------
KLJ860 Us Nationwide IB
(used for equipment demonstrations)
XXXX000 Xxxxx, XX YX
31 32 57 N 084 00 19 W
(license held for Rodd Electronics)
WNHX915 Ashville, NC YX
35 36 04 N 082 39 06 W
(license held for Xxxxxxx Communication
Service)
WNIC919 Biloxi, MS YX*
30 25 55 N 088 57 23 W
(license held for Gulf States Systems)
WNGV226 Borger, TX YX
35 38 27 N 101 29 55 W
(license held for Pittencrieff Communications)
WNZX470 Burley, ID YX*
42 19 36 N 113 39 20 W
(license held for Radio Service Company)
XXXX000 Xxxxxxxxxx, XX YX
44 44 42 N 093 16 36 W
(license for Xxxxxxx Xxxxxx and staff)
WNJI714 Columbia, SC YX
34 08 23 N 081 03 22 W
(license held for South Carolina Comms. Ltd.)
XXXX000 Xxxxxxxx, XX YX*
37 30 10 N 100 54 22 W
(license held for Xxxxx TV & Two Way)
WPBD582 Dakota, MN (WNXH854) YB
70 MIRA 44 44 42 N 093 16 36 W (SMR end
(license applied for to load SMR system for user)
dealer)
XXXX000 Xxxxx, XX YX*/**
41 53 52 N 089 36 20 W
(pursuant to Business Marketing Agreement with
Radio Ranch, Inc.)
84
XXXX000 Xxxxxx, XX (WNBW509) YB
40 MIRA 36 03 40 N 078 57 16 W (SMR end
(license applied for to load SMR system) user)
WNWN359 Eufaula, AL YX*
31 54 30 N 085 09 51 W
(license held for Xxxxxx Communications)
XXXX000 Xxxx Xx Xxx, XX YX
43 47 57 N 088 22 25 W
(pursuant to Business Marketing Agreement with
Communications Electronics)
WNHS600 Fort Xxxxx, IN YX*
41 06 25 N 085 11 46 W
(pursuant to Business Marketing Agreement with
Xxxxxxxxx Electronics)
XXXX000 Xxxxxx, XX YX
43 06 08 N 093 35 51 W
(license held for Electronic Specialties)
WNXS394 Xxxxxxx City, IA YX
42 43 45 N 094 26 33 W
(license held for Electronic Specialties)
XXXX000 Xxxxxx, XX YX**
38 26 45 N 077 31 49 W
(license held for Mid Atlantic Communications)
Pending Gretna, FL YX
30 33 24 N 084 36 05 W
(license applied for CHQ/Liberty Xxxx)
WNHA514 Hanover Township, PA YX
41 10 58 N 075 52 26 W
(license held for Industrial Electronics)
WNSQ809 Hennepin, MN (KNAP937) YB
25 MIRA 44 58 32 N 093 16 18 W (SMR end
(license held for the Company's employees) user)
WZV242 Houston, TX GX
29 44 13 N 095 27 39 W
(purchased by Nextel)
WXV926 Houston, TX GX
29 44 13 N 095 27 39 W
(purchased by Nextel)
XXX000 Xxxxxxx, XX GX
29 44 13 N 095 27 39 W
(purchased by Nextel)
2
85
XXX000 Xxxxxxx, XX GX
29 44 13 N 095 27 39 W
(purchased by Nextel)
XXX000 Xxxxxxx, XX GX
29 44 13 N 093 27 39 W
(purchased by Nextel)
XXXX000 Xxxxxxx, XX YX***
32 16 25 N 090 11 53 W
(license held for Gulf States Systems)
WNRI505 Jefferson City, MO YX
38 33 15 N 092 12 00 W
(pursuant to Business Marketing Agreement with
Central Mobile Phone)
WNZX471 Xxxxxx, ID YX*
42 43 42 N 114 24 43 W
(license held for Radio Service Company)
XXXX000 Xxxxx, XX YX
46 09 51 N 122 51 31 13 W
(license held for Questar)
KNIY865 Lakeside, MT YX*
48 00 40 N 114 21 48 W
(license held for Xxxxx Communications;
Mobilephone operating the system)
XXXX000 Xxxxx, XX YX*
20 50 00 N 156 48 50 W
(license held for Xxxxxx Radio & Electronics)
KNJH433 Little Rock, AR YX
34 47 31 N 092 28 38 W
(license held for Central Arkansas Radio
Systems)
WNDX296 Manitou, CO YX
38 44 38 N 104 51 39 W
(license held for Questar)
XXXX000 Xxxxxxxxxxxx, XX YX*
36 42 16 N 079 50 06 W
(license held for Professional Communications)
Pending Milford, IA YX
43 19 32 N 095 08 45 W
(license applied for Electronic Specialties due
to 40 mile conflict)
XXXX000 Xxxxx Xxxxx Xxxxxxx, XX GX
40 05 34 N 077 12 59 W
(license held for Industrial Electronics)
3
86
WNSK781 New Hampton, IA YX
43 02 46 N 092 18 09 W
(license held for Circle K Communications)
WNKE856 New Castle, OK YX*
35 12 07 N 097 35 18 W
(license held for Leon's Radio)
XXXX000 Xxxxxxx, XX YX
46 58 23 N 123 08 41 W
(license held for Questar)
XXXX000 Xxxx Xxxxx, XX YX
40 28 43 N 077 23 05 W
(license held for Centre Communications)
XXXX000 Xx. Xxxxxxx, XX (WNHJ738) YB
45 MIRA 30 23 07 N 089 55 20 W (SMR end
(license held for Two Way Communications) user)
XXXX000 Xxxxxx Xxxxx, XX YX****
35 13 00 N 106 27 07 W
(license held for Pittencrieff Communications)
WNFW757 Searcy, AR YX
35 12 41 N 091 48 26 W
(purpose of license unknown)
XXXX000 Xxxxxx, XX (KNHH640) YB
30 MIRA 35 09 17 N 089 49 20 W (SMR end
(license applied for to load SMR system for user)
dealer)
XXXX000 Xxxxx Xxxx, XX YX
42 29 39 N 096 24 54 W
(license held for Xxx Xxxxx Xxxxxxxxxxxxxx)
XXXX000 Xxx Xxxxxx, XX YX
33 51 57 N 116 25 56 W
(license held for Applied Technology)
XXXX000 Xxxxxxx, XX YX*
47 34 14 N 117 04 56 W
(pursuant to Business Marketing Agreement with
Industrial Communications)
XXXX000 Xxxxxxxxxx, XX YX*
36 11 18 N 094 05 27 W
(pursuant to Business Marketing Agreement with
Xxxxx Two Way)
WNQS449 Summit, MS YX*
31 16 40 N 090 26 56 W
(license held for A & H Communications)
4
87
Pending Swea City, IA YX
43 23 10 N 094 18 40 W
(license applied for Electronic Specialties due
to 40 mile conflict)
XXXX000 Xxxxxxxxx, XX YX
42 59 23 N 078 51 15 W
(license held for XX Xxxxxxxxxxxxxx)
XXXX000 Xxxxxx, XX XY
32 26 00 N 110 46 51 W
(J-Net contract with Master Communications)
XXXX000 Xxxxxx, XX YX
39 20 38 N 081 29 48 W
(license hold for Xxxxxx Xxxxxxxxxxxxxx)
XXXX000 Xxxx, XX YX
31 33 03 N 097 08 57 W
(license held for Pittencrieff Communications)
XXXX000 Xxxxxxxx, XX YX*
35 50 44 N 075 38 50 W
(pursuant to Business Marketing Agreement with
Mid Atlantic Communications)
XXX000 Xxxxxx, XX IX
44 04 07 N 093 30 37 W
(license held for the Company's manufacturing)
XXX0000 Xxxxxx, XX ZA
44 04 07 N 093 30 37 W
(license held for the Company's employees)
WNSV860 Waseca, MN IB
75 MIRA 44 04 07 N 093 30 37 W
(license held for the Company's manufacturing)
XXX0000 Xxxxxx, XX ZA
44 04 47 N 093 30 37 W
(license held for the Company's employees)
XXXX000 Xxxxxxxx, XX YX
42 25 16 N 092 19 00 W
(license held for Circle K Communications)
WNGQ408 Xxxxxx, Xxxxxxx, Issaquah, Quilcence, Mount XX
Xxxxxx, WA (KNJA564, KNGR395, KNEM363, KNGR386) (SMR end
70 MIRA user)
(license applied for to load SMR system for dealer)
WIK669 Williamstown, NJ IB
39 40 57 N 075 01 43 W
(license held for Atlantic Coast Communications)
5
00
XXXX000 Xxxxxxxxx Xxxxxx, XX YX
44 22 28 N 089 43 09 2 W
(license held for Air Communications of Central WI)
* These licenses are in the process of being assigned as shown:
WNIC919 - Gulf States Systems (filed 7/13/94)
WNQU982 - Radio Ranch, Inc. (filed 10/25/94)
WNWN359 - Garbo Dispatch Communications (filed 12/9/94)
WNHS600 - Communications Alert (filed 11/4/94)
WNFW626 - Mid Atlantic Communications
WNPE218 - Xxxxxx Radio & Electronics (filed 8/30/94)
WNIT711 - Professional Communications Inc.
KNJH505 - Industrial Communnications, Inc. (filed 10/25/94)
WNRB672 - Xxxxx Two Way (filed 11/9/93)
WNQS449 - A & H Communications
WNPP594 - Mid Atlantic Communications
WNZX471 - Radio Service Company
WNZX470 - Radio Service Company (filed 1/17/95)
WNAU560 - SWK Leasing filed 2/7/95)
KNIY865 - Richon, Inc.
** Finder's Preference pending against this license by Xxxxx Xxx Xxxxxxxxx.
Filed on 6/30/94.
*** Finder's Preference pending against this license by DKM, Incorporated.
Filed on 7/15/94
**** The Finder's Preference pending against this license was withdrawn on
January 13, 1995. The FCC has not corrected its list to reflect such
action.
6
89
AMENDMENT NO. 6 TO FINANCING AGREEMENTS
July 29, 1996
Congress Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
Congress Financial Corporation, a California corporation (together with
its successors and assigns, "Congress") and X.X. Xxxxxxx Company, a Minnesota
corporation (as survivor by merger with EFJ Acquisition Corp., a Delaware
corporation, together with its successors and assigns, "Borrower") have entered
into certain financing arrangements as set forth in the Accounts Financing
Agreement [Security Agreement], dated July 31, 1992, between Congress and
Borrower (the "Accounts Agreement"), the Covenant Supplement to Accounts
Financing Agreement [Security Agreement], dated July 31, 1992, between Congress
and Borrower (the "Covenant Supplement"), and various other agreements,
documents and instruments executed and/or delivered in connection therewith or
related thereto, as amended pursuant to Amendment No. 1 to Financing Agreements,
dated January 26, 1993, Amendment No. 2 to Financing Agreements, dated as of
October 4, 1993, Amendment No. 3 to Financing Agreements dated August 4, 1994,
Amendment No. 4 to Financing Agreements, dated March 3, 1995 and Amendment No. 5
to Financing Agreements, dated March 14, 1995 (together with the Accounts
Agreement, as the same are amended hereby and may hereafter be further amended,
modified, supplemented, extended, renewed, restated or replaced, collectively,
the "Financing Agreements").
Borrower has requested that Congress agree to certain amendments to the
Financing Agreements and Congress is willing to agree to such amendments,
subject to the terms and conditions contained herein. Borrower and Congress
desire and intend to evidence such amendments by this Amendment.
In consideration of the foregoing, the parties hereto agree as follows:
1. Definitions.
(a) Additional Definitions. As used herein, the term "Amendment No. 6"
shall mean the Amendment No. 6 to Financing Agreements, dated as of even date
hereof, by and among Congress, Borrower, EFJ Partners, EFJ Communications Inc.,
Weksel and Xxxxxx X. Xxxxxx, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or
90
replaced and the Financing Agreements are hereby amended to include, in addition
and not in limitation, such definition.
(b) Interpretation. All capitalized terms used herein shall have the
meanings assigned thereto in the other Financing Agreements, unless otherwise
defined herein.
2. Loans on Accounts. Section 2.1 of the Accounts Agreement is hereby
deleted in its entirety and the following substituted therefor:
"2.1 You shall, in your discretion, make loans to us from time
to time, at our request, of up to the following percentages of
the Net Amount of Eligible Accounts (or such greater or lesser
percentage as you shall in your sole discretion determine from
time to time): (a) eighty-five (85%) percent of the Net Amount
of Eligible Accounts (other than Accounts arising from the sale
or installation of radio systems or networks) and (b) seventy
(70%) percent of the Net Amount of Eligible Accounts arising
from the sale or installation of radio systems or networks;
provided that, in the event that the Consolidated Net Worth of
Borrower does not, at any time, equal or exceed the sum of the
amounts set forth on Exhibit A to Amendment No. 6 for the
applicable period set forth therein, plus ninety (90%) percent
of the net cash proceeds received by Borrower pursuant to the
sale or issuance of capital stock (after deducting underwriting
commissions and discounts, if any, and all other expenses
related directly to such sale or issuance), you may, at your
option, either reduce such percentage with respect to the Net
Amount of Eligible Accounts arising from the sale or
installation of radio systems or networks or no longer consider
such Accounts as Eligible Accounts."
3. Net Worth. Section 4.14 of the Covenant Supplement is hereby deleted
in its entirety and the following substituted therefor:
"4.14 Net Worth. Borrower shall, at the end of each fiscal
quarter, have a Consolidated Net Worth of not less than the
amount set forth on Exhibit A to Amendment No. 6 for the
applicable period set forth therein; provided, that, in the
event of any sale or issuance of capital stock by Borrower or
its
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91
shareholders, on and after the effective date of such sale or
issuance, Borrower shall, at the end of each fiscal quarter,
have a Consolidated Net Worth of not less than the amount equal
to the sum of: (a) the amount set forth on Exhibit A to
Amendment No. 6 for the applicable period set forth therein plus
(b) seventy-five (75%) percent of the net cash proceeds (after
deducting underwriting commissions and discounts, if any, and
all other expenses related directly to such sale or issuance)
received by Borrower pursuant to the sale or issuance of such
capital stock."
4. Amendment Fee. Borrower shall pay to Congress a fee in the amount of
$35,000, which amount shall be payable simultaneously with the execution hereof
and shall be deemed fully earned as of the date hereof. Such fee, may, at
Congress' option be charged directly to any account of Borrower maintained with
Congress.
5. Additional Representations and Warranties. In addition to the
continuing representations and warranties heretofore or hereafter made by
Borrower to Congress pursuant to the Financing Agreements, Borrower hereby
represents and warrants to Congress as follows (which representations,
warranties and covenants are continuing and shall survive the execution and
delivery hereof and shall be incorporated into and made a part of the Financing
Agreements):
(a) No Event of Default exists on the date of this Amendment
(after giving effect to the amendments to the Financing Agreements made by this
Amendment).
(b) Borrower has obtained or received all required consents and
approvals of any persons other than Congress in connection with the amendments
contemplated by the Amendment, except for any consent or approval if the failure
to obtain or receive the same will not have a material adverse effect on the
business of Borrower.
(c) No material adverse change in the business, operations,
profits or prospects of Borrower or in the condition of the assets of Borrower
shall have occurred since the date of the last field examination by Congress of
Borrower.
(d) This Amendment has been duly executed and delivered by
Borrower and is in full force and effect as of the date hereof, and the
agreements and obligations of Borrower contained herein constitute legal, valid
and binding obligations of Borrower enforceable against Borrower in accordance
with their respective terms.
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92
6. Conditions Precedent. The effectiveness of the amendments contained
herein shall be subject to the satisfaction of the following conditions
precedent in a manner satisfactory to Congress and its counsel:
(a) Borrower shall have received the consent of any participants
in the financing arrangements of Congress with Borrower to the amendments
provided for herein;
(b) no Event of Default shall have occurred and be continuing and
no event shall have occurred or condition be existing and continuing which, with
notice or passage of time or both, would constitute an Event of Default;
(c) Congress shall have received evidence, in form and substance
satisfactory to Congress, that Borrower has obtained all required consents and
approvals of any persons other than Congress in connection with the amendments
contemplated by this Amendment, except for any consent or approval if the
failure to obtain or receive the same will not have a material adverse effect on
the business of Borrower; and
(d) Congress shall have received, in form and substance
satisfactory to Congress, an original of this Amendment, duly authorized,
executed and delivered by Borrower, EFJ Partners, EFJ Communications Inc.,
Weksel and Xxxxxx X. Xxxxxx.
7. Effect of this Agreement. Except as modified pursuant hereto, no
other changes or modifications to the Financing Agreement are intended or
implied, and in all other respects the Financing Agreements are hereby
specifically ratified, restated and confirmed by the parties hereto as of the
date hereof. To the extent of a conflict between the terms of this Amendment and
the other Financing Agreements, the terms of this Amendment shall control.
8. Further Assurances. Borrower shall execute and deliver such
additional documents and take such additional actions as may be necessary or
desirable, as determined by Congress, to effectuate the provisions and purposes
of this Amendment.
9. Governing Law. The rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted and determined in accordance
with the laws of the State of New York.
10. Binding Effect. This Amendment shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors and
assigns.
11. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall
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93
together constitute but one and the same agreement. In making proof of this
Amendment, it shall not be necessary to produce or account for more than one
counterpart thereof signed by each of the parties hereto.
Please sign the enclosed copy of this Amendment in the space provided
below, whereupon this Amendment, as so accepted by Congress, shall become a
binding agreement between Borrower and Congress.
Very truly yours,
X.X. XXXXXXX COMPANY
By: /s/ XXXXXXX XXXXXX
-----------------------------------------
Title: President
ACKNOWLEDGED AND AGREED:
CONGRESS FINANCIAL CORPORATION
By: /s/ [sig] ???????????
----------------------------------
Title: Vice President
EFJ PARTNERS, a general partnership
By: /s/ XXXXXXX XXXXXX
----------------------------------
Title: General Partner
EFJ COMMUNICATIONS, INC.
By: /s/ XXXXXXX XXXXXX
----------------------------------
Title: President
XXXXXXX XXXXXX
-------------------------------------
XXXXXXX XXXXXX, individually
XXXXXX X. XXXXXX
-------------------------------------
XXXXXX X. XXXXXX, individually
-5-
94
EXHIBIT A
to
AMENDMENT NO. 6 TO FINANCING AGREEMENTS
Time Period Consolidated Net Worth
----------- ----------------------
10/1/95 - 12/31/95 12,906,000
1/1/96 - 6/30/96 7,515,000
7/1/96 - 9/30/96 7,656,000
10/1/96 - 12/31/96 7,727,000
1/1/97 - 3/31/97 9,168,000
4/l/97 - 6/30/97 10,968,000
7/l/97 - 9/30/97 12,768,000
10/1/97 - 12/31/97 14,928,000
1/l/98 - 3/31/98 17,547,000
and at all times thereafter
----------
* For purposes of this Exhibit A, Consolidated Net Worth does not
include any net cash proceeds received by Borrower pursuant to the sale or
issuance of capital stock.
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95
[6/9/97]
AMENDMENT NO. 7 TO FINANCING AGREEMENTS
June ___, 1997
Congress Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
Congress Financial Corporation, a California corporation (together with
its successors and assigns, "Congress") and X.X. Xxxxxxx Company, a Minnesota
corporation (as survivor by merger with EFJ Acquisition Corp., a Delaware
corporation, together with its successors and assigns, "Borrower") have entered
into certain financing arrangements as set forth in the Accounts Financing
Agreement [Security Agreement], dated July 31, 1992, between Congress and
Borrower (the "Accounts Agreement"), the Covenant Supplement to Accounts
Financing Agreement [Security Agreement], dated July 31, 1992, between
Congress and Borrower (the "Covenant Supplement"), and various other agreements,
documents and instruments executed and/or delivered in connection therewith or
related thereto, as amended pursuant to Amendment No. 1 to Financing Agreements,
dated January 26, 1993, Amendment No. 2 to Financing Agreements, dated as of
October 4, 1993, Amendment No. 3 to Financing Agreements dated August 4, 1994,
Amendment No. 4 to Financing Agreements, dated March 3, 1995, Amendment No. 5 to
Financing Agreements, dated March 14, 1995 and Amendment No. 6 to Financing
Agreements, dated July 29, 1996 (together with the Accounts Agreement, as the
same are amended hereby and may hereafter be further amended, modified,
supplemented, extended, renewed, restated or replaced, collectively, the
"Financing Agreements").
Borrower has requested that Lender (a) consent to the contingent
indebtedness of Borrower to Transcrypt International, Inc. ("Transcrypt") with
respect to letter or letters of credit to be issued for the account of
Transcrypt payable to Acstar Insurance Company ("Acstar") or another surety in
respect of bid and performance bonds issued or to be issued by Acstar or such
other surety for the benefit of Borrower, (b) consent to the license by Borrower
to Transcrypt of certain intellectual property pursuant to the Transcrypt
License Agreement (as hereinafter defined), (c) consent to the subordinate
security interests and liens of Transcrypt in the assets of Borrower and (d)
agree to certain amendments to the Financing Agreements in connection therewith.
Congress is willing to consent to such indebtedness, license and liens
and agree to such amendments, subject to the terms and sale conditions contained
herein. By this Amendment, Congress and Borrower desire and intend to evidence
such consents and amendments.
96
In consideration of the foregoing, the parties hereto agree as follows:
1. Definitions.
(a) Additional Definitions. As used herein, the following terms
shall have the meanings given to them below and the Accounts Agreement and the
other Financing Agreements are hereby amended to include, in addition and not in
limitation, the following definitions:
(i) "Acstar" shall mean Acstar Insurance Company, an
Illinois corporation, and its successors and assigns.
(ii) "Surety Letters of Credit" shall mean, individually
and collectively, letters of credit from time to time issued by Norwest Bank
Minnesota, National Association for the account of Transcrypt payable to any
bonding company (including Acstar) as beneficiary to induce such bonding company
to issue or continue to issue bid or performance bonds to customers of Borrower
in connection with goods sold and services rendered by Borrower to such
customers in the ordinary course of the business of Borrower.
(iii) "Transcrypt" shall mean Transcrypt International,
Inc., a Delaware corporation, and its successors and assigns.
(iv) "Transcrypt License Agreement" shall mean the License
Agreement, dated June ___, 1997, by and among Transcrypt, Borrower, X.X. Xxxxxxx
Communications, Inc. and X.X. Xxxxxxx International, Inc., as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
(b) Interpretation. All capitalized terms used herein shall have
the meanings assigned thereto in the other Financing Agreements, unless
otherwise defined herein.
2. Consent. Subject to the terms and conditions contained herein,
Congress hereby confirms that it has no objection to (a) the contingent
reimbursement obligations of Borrower to Transcrypt with respect to the Surety
Letters of Credit, (b) the license by Borrower of certain intellectual property
to Transcrypt pursuant to the Transcrypt License Agreement (as in effect on the
date hereof) and (c) the security interests and liens of Transcrypt in the
assets of Borrower which secure the contingent reimbursement obligations of
Borrower to Transcrypt arising pursuant to the issuance of the Surety Letters of
Credit as set forth in the letter of intent, dated June 6, 1997, between
Borrower and Transcrypt, and which are junior in priority to the
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security interests and liens of Congress in the assets of Borrower.
3. Indebtedness. Section 4.6 of the Covenant Supplement is hereby
amended by adding a new Section 4.6(k) thereto as follows:
"(k) contingent Indebtedness of Borrower to Transcrypt with
respect to the Surety Letters of Credit as set forth in the
[letter of intent, dated June 6, 1997, between Borrower and
Transcrypt], a true, correct and complete copy of which has been
delivered to Congress; provided, that, (i) Congress shall
receive not less than ten (10) business days prior written
notice of the issuance of any Surety Letter of Credit; (ii) upon
the issuance of any Surety Letter of Credit, no Event of
Default, or act, condition or event which with notice or passage
of time both would constitute an Event of Default shall exist or
have occurred; (iii) the aggregate amount of such contingent
Indebtedness outstanding at any one time shall not exceed
$2,000,000; and (iv) Borrower shall furnish to Congress all
notices, demands or other materials concerning such Indebtedness
either received by Borrower or on its behalf, promptly after
receipt thereof, or sent by Borrower, or on its behalf,
concurrently with the sending thereof, as the case may be."
4. Limitation on Liens. Section 4.7 of the Covenant Supplement is hereby
amended by adding a new Section 4.7(f) thereto as follows:
"(f) the license by Borrower of certain intellectual property to
Transcrypt pursuant to the Transcrypt License Agreement and the
liens and security interests of Transcrypt on the assets of
Borrower to secure the Indebtedness of Borrower to Transcrypt
permitted under Section 4.6(k) hereof, which liens and security
interests are, in all respects, subject and subordinate in
priority to the liens and security interests of Congress
pursuant to the Intercreditor Agreement between Congress and
Transcrypt."
5. Additional Representations and Warranties. In addition to the
continuing representations and warranties heretofore or hereafter made by
Borrower to Congress pursuant to the Financing Agreements, Borrower hereby
represents and warrants to Congress as follows (which representations,
warranties and covenants are continuing and shall survive the execution and
delivery hereof
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98
and shall be incorporated into and made a part of the Financing Agreements):
(a) Transcrypt shall deliver to Acstar on the date hereof Surety
Letters of Credit with a face amount of $_________ . Immediately upon the
receipt by Acstar of such Surety Letters of Credit from Transcrypt, Borrower
shall cause Acstar to remit directly to Congress in immediately available funds
the amount of $_________ , currently held by Acstar as cash collateral for the
obligations of Borrower to Acstar in respect of bid and performance bonds issued
by Acstar for the benefit of Borrower.
(b) Borrower has delivered, or caused to be delivered, true,
correct and complete copies of the Transcrypt License Agreement and all other
agreements by Borrower with, to or in favor of Transcrypt (including the letter
of intent).
(c) No Event of Default exists on the date of this Amendment
(after giving effect to the amendments to the Financing Agreements made by this
Amendment).
(d) Borrower has obtained or received all required consents and
approvals of any persons other than Congress in connection with the amendments
contemplated by the Amendment, except for any consent or approval if the failure
to obtain or receive the same will not have a material adverse effect on the
business of Borrower.
(e) No material adverse change in the business, operations
profits or prospects of Borrower or in the condition of the assets of Borrower
shall have occurred since the date of the list field examination by Congress of
Borrower.
(f) This Amendment has been duly executed and delivered by
Borrower and is in full force and effect as of the date hereof, and the
agreements and obligations of Borrower contained herein constitute legal, valid
and binding obligations of Borrower enforceable against Borrower in accordance
with their respective terms.
6. Conditions Precedent. The effectiveness of the amendments contained
herein shall be subject to the satisfaction of the following conditions
precedent in a manner satisfactory to Congress and its counsel:
(a) Congress shall have received the consent of any participants
in the financing arrangements of Congress with Borrower to the amendments
provided for herein;
(b) no Event of Default shall have occurred and be continuing and
no event shall have occurred or condition be
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99
existing and continuing which, with notice or passage of time or both, would
constitute an Event of Default;
(c) Congress shall have received true, correct and complete
copies of the Transcrypt License Agreement and all other agreements by Borrower
with, to or in favor of Transcrypt (including the letter of intent);
(d) Congress shall have received, in form and substance
satisfactory to Congress, an Intercreditor Agreement between Congress and
Transcrypt and acknowledged by Borrower, EFJ Partners, EFJ Communications,
Weksel and Xxxxxx X. Xxxxxx, duly authorized, executed and delivered by the
parties thereto;
(e) Congress shall have received evidence, in form and substance
satisfactory to Congress, that Borrower has obtained all required consents and
approvals of any persons other than Congress in connection with the amendments
contemplated by this Amendment, except for any consent or approval if the
failure to obtain or receive the same will not have a material adverse effect on
the business of Borrower; and
(f) Congress shall have received, in form and substance
satisfactory to Congress, an original of this Amendment, duly authorized,
executed and delivered by Borrower, EFJ Partners, EFJ Communications Inc.,
Weksel and Xxxxxx X. Xxxxxx.
7. Effect of this Agreement, Except as modified pursuant hereto, no
other changes or modifications to the Financing Agreement are intended or
implied, and in all other respects the Financing Agreements are hereby
specifically ratified, restated and confirmed by the parties hereto as of the
date hereof. To the extent of a conflict between the terms of this Amendment and
the other Financing Agreements, the terms of this Amendment shall control.
Nothing contained herein shall be deemed to constitute the consent of Congress
to any sale or other disposition of the assets of Borrower to Transcrypt or
otherwise.
8. Further Assurances. Borrower shall execute and deliver such
additional documents and take such additional actions as may be necessary or
desirable, as determined by Congress, to effectuate the provisions and purposes
of this Amendment.
9. Governing Law. The rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted and determined in accordance
with the laws of the State of New York.
10. Binding Effect. This Amendment shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors and
assigns.
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11. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment, it shall not be necessary
to produce or account for more than one counterpart thereof signed by each of
the parties hereto.
Please sign the enclosed copy of this Amendment in the space provided
below, whereupon this Amendment, as so accepted by Congress, shall become a
binding agreement between Borrower and Congress.
Very truly yours,
X.X. XXXXXXX COMPANY
By:
-----------------------------------------
Title:
--------------------------------------
ACKNOWLEDGED AND AGREED:
CONGRESS FINANCIAL CORPORATION
By:
----------------------------------
Title:
-------------------------------
EFJ PARTNERS, a general partnership
By:
----------------------------------
Title: General Partner
EFJ COMMUNICATIONS, INC.
By:
----------------------------------
Title:
-------------------------------
-------------------------------------
XXXXXXX XXXXXX, individually
-------------------------------------
XXXXXX X. XXXXXX, individually
101
11. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment, it shall not be necessary
to produce or account for more than one counterpart thereof signed by each of
the parties hereto.
Please sign the enclosed copy of this Amendment in the space provided
below, whereupon this Amendment, as so accepted by Congress, shall become a
binding agreement between Borrower and Congress.
Very truly yours,
X.X. XXXXXXX COMPANY
By:
-----------------------------------------
Title:
--------------------------------------
ACKNOWLEDGED AND AGREED:
CONGRESS FINANCIAL CORPORATION
By: /s/ [SIG]
----------------------------------
Title: Senior Vice President
-------------------------------
EFJ PARTNERS, a general partnership
By:
----------------------------------
Title: General Partner
EFJ COMMUNICATIONS, INC.
By:
----------------------------------
Title:
-------------------------------
-------------------------------------
XXXXXXX XXXXXX, individually
-------------------------------------
XXXXXX X. XXXXXX, individually
102
11. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment, it shall not be necessary
to produce or account for more than one counterpart thereof signed by each of
the parties hereto.
Please sign the enclosed copy of this Amendment in the space provided
below, whereupon this Amendment, as so accepted by Congress, shall become a
binding agreement between Borrower and Congress.
Very truly yours,
X.X. XXXXXXX COMPANY
By: /s/ XXXXXXX XXXXXX
-----------------------------------------
Title: CEO
--------------------------------------
ACKNOWLEDGED AND AGREED:
CONGRESS FINANCIAL CORPORATION
By:
----------------------------------
Title:
-------------------------------
EFJ PARTNERS, a general partnership
By: /s/ XXXXXXX XXXXXX
----------------------------------
Title: General Partner
-------------------------------
EFJ COMMUNICATIONS, INC.
By: /s/ XXXXXXX XXXXXX
----------------------------------
Title: ?????????????
-------------------------------
/s/ XXXXXXX XXXXXX
-------------------------------------
XXXXXXX XXXXXX, individually
/s/ XXXXXX X. XXXXXX
-------------------------------------
XXXXXX X. XXXXXX, individually
[AMENDMENT NO. 8 TO FINANCING AGREEMENTS WILL BE FILED BY AMENDMENT]
103
AMENDMENT NO. 9 TO FINANCING AGREEMENTS
July 31, 1997
Congress Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
Congress Financial Corporation, a California corporation (together with
its successors and assigns, "Congress") and X.X. Xxxxxxx Company, a Minnesota
corporation (as survivor by merger with EFJ Acquisition Corp., a Delaware
corporation, together with its successors and assigns, "Borrower") have entered
into certain financing arrangements as set forth in the Accounts Financing
Agreement [Security Agreement], dated July 31, 1992, between Congress and
Borrower (the "Accounts Agreement"), the Covenant Supplement to Accounts
Financing Agreement [Security Agreement], dated July 31, 1992, between Congress
and Borrower (the "Covenant Supplement"), and various other agreements,
documents and instruments executed and/or delivered in connection therewith or
related thereto, as amended pursuant to Amendment No. 1 to Financing Agreements,
dated January 26, 1993, Amendment No. 2 to Financing Agreements, dated as of
October 4, 1993, Amendment No. 3 to Financing Agreements dated August 4, 1994,
Amendment No. 4 to Financing Agreements, dated March 3, 1995, Amendment No. 5 to
Financing Agreements, dated March 14, 1995, Amendment No. 6 to Financing
Agreements, dated July 29, 1996, Amended No. 7 to Financing Agreements, dated
June 11, 1997 and Amendment No. 8 to Financing Agreements, dated July 22, 1997
(together with the Accounts Agreement, as the same are amended hereby and may
hereafter be further amended, modified, supplemented, extended, renewed,
restated or replaced, collectively, the "Financing Agreements").
Borrower has requested that Lender (a) consent to the sale of all of the
issued and outstanding shares of common stock of Borrower by EFJ Partners to
Transcrypt International, Inc. ("Transcrypt"), (b) consent to the purchase by
Transcrypt of all of the securities of Borrower held by Securicor Radiocoms
Limited and NorAm Energy Corp. and the cancellation of the indebtedness of
Borrower to NorAm Energy Corp., (c) agree to terminate any and
all guarantees of Borrower's obligations to Congress given by Xxxxxxx Xxxxxx,
Xxxxxx Xxxxxx and Xxxxxx X. Xxxxxx, including the Limited Guarantee and Waiver,
dated July 31, 1992, by Xxxxxxx Xxxxxx in favor of Congress, the Limited
Guarantee and Waiver, dated June 5, 1995, by Xxxxxx X. Xxxxxx in favor of
Congress and
104
the Limited Guarantee and Waiver, dated November 15, 1996, by Xxxxxx X. Xxxxxx
in favor of Congress, (d) agree to terminate the junior Participation Agreement
between Xxxxxxx Xxxxxx and Congress and (e) agree to certain amendments to the
Financing Agreements in connection therewith.
Congress is willing to consent to such sale, purchases of securities,
cancellation of indebtedness, termination of guarantees and participation
agreement and agree to such amendments, subject to the terms and conditions
contained herein. By this Amendment, Congress and Borrower desire and intend to
evidence such consents and amendments.
In consideration of the foregoing, the parties hereto agree as follows:
1. Definitions.
(a) Additional Definitions. As used herein, the following terms
shall have the meanings given to them below and the Accounts Agreement and the
other Financing Agreements are hereby amended to include, in addition and not in
limitation, the following definitions:
(i) "Capital Stock" shall mean, with respect to any
person, any and all shares, interests, participation or other equivalents
(however designated) of such person's capital stock at any time outstanding, and
any and all rights, warrants or options exchangeable for or convertible into
such capital stock (but excluding any debt security that is exchangeable for or
convertible into such capital stock).
(ii) "NorAm Purchase Agreements" shall mean, individually
and collectively, the Preferred Stock Purchase Agreement, dated July 31, 1997,
between NorAm and Transcrypt and all related agreements, documents and
instruments by Borrower, Transcrypt and/or any of their Affiliates, as the same
now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
(iii) "Purchase Agreements" shall mean, collectively, the
Transcrypt Purchase Agreements, the NorAm Purchase Agreements and the Securicor
Purchase Agreements.
(iv) "Securicor Purchase Agreements" shall mean,
individually and collectively, the Series B Preferred Stock Purchase Agreement,
dated July 31, 1997, between Securicor and Transcrypt and all related
agreements, documents and instruments
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105
executed by Transcrypt, Borrower and/or any of their Affiliates, as the same now
exist or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
(v) "Transcrypt" shall mean Transcrypt International,
Inc., a Delaware corporation, and its successors and assigns.
(vi) "Transcrypt Purchase Agreements" shall mean,
individually and collectively, the Transcrypt Stock Purchase Agreement and all
related agreements, documents and instruments executed by EFJ Partners, Borrower
and/or any of their Affiliates, as the same now exist or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
(vii) "Transcrypt Stock Purchase Agreement" shall mean the
Stock Purchase Agreement, dated July 31, 1997, between Transcrypt and EFJ
Partners, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(b) Amendments to Definitions.
(i) All references to the term "Maximum Credit" herein and
in the Accounts Agreement and the other Financing Agreements shall be deemed and
each such reference is hereby amended to mean $18,000,000.
(ii) All references to the term "NorAm" herein and in the
Accounts Agreement and in the other Financing Agreements shall be deemed to
mean, and each such reference shall mean, NorAm Energy Corp., a Delaware
corporation formerly known as Arkla, Inc., and its successors and assigns.
(iii) All references to the term "Renewal Date"
herein and in the Accounts Agreement and the other Financing Agreements shall be
deemed and each such reference is hereby amended to mean October 31, 1997.
(iv) The definition of "Consolidated Working Capital" in
Section 1.12 of the Covenant Supplement is hereby amended by adding the
following to the end thereof: "provided, that, for purposes of this definition,
current liabilities shall not included Indebtedness permitted under Section
4.6(e) hereof."
(c) Interpretation. All capitalized terms used herein shall have
the meanings assigned thereto in the other Financing Agreements, unless
otherwise defined herein.
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106
2. Change of Control. Subject to the terms and conditions contained
herein, Congress hereby consents to the sale by EFJ Partners to Transcrypt of
all of the issued and outstanding shares of Capital Stock of Borrower on or
about the date hereof pursuant to the Transcrypt Stock Purchase Agreement as in
effect on the date hereof (provided, that, the foregoing shall not be construed
as a consent to or waiver of any Event of Default as a result of any other or
subsequent change of majority control or ownership of Borrower).
3. Cancellation of Indebtedness to NorAm and Securicor. Notwithstanding
anything to the contrary contained in Sections 4.6(d) or 4.6(e) of the Covenant
Supplement as to Indebtedness of Borrower to NorAm or Section 4.6(j) of the
Covenant Supplement as to Indebtedness of Borrower to Securicor, but subject to
the terms and conditions contained herein, (a) as of the date hereof, Transcrypt
shall purchase all of the Capital Stock of Borrower owned by NorAm, including,
without limitation, all contingent Indebtedness of Borrower to NorAm under the
terms of the Preferred Stock; (b) as of the date hereof Transcrypt shall
purchase the Series I Preferred Stock and any warrants at any time issued by
Borrower to Securicor or otherwise arising under or in connection with the Stock
Purchase Agreement, dated March 14, 1995, between Borrower and Securicor; (c)
the total amount paid by Transcrypt to NorAm and Securicor in respect of all
such shares of Capital Stock shall not exceed the aggregate amount of
$10,000,000, which amount shall be paid only in the form of common stock of
Transcrypt, (d) as of the date hereof, all of the outstanding Indebtedness of
Borrower to NorAm and Securicor shall be cancelled so that Borrower shall have
no further obligation or liability to NorAm or Securicor and (e) Congress shall
have received such agreements, documents and instruments by NorAm and Securicor
releasing Borrower and its Affiliates as Congress may reasonably require.
4. Indebtedness.
(a) Sections 4.6(d), 4.6(f) and 4.6(j) of the Covenant Supplement
are each hereby deleted in their entirety and the following substituted
therefor: "intentionally omitted".
(b) Section 4.6(e) of the Covenant Supplement is hereby deleted
in its entirety and the following substituted therefor:
"(e) unsecured Indebtedness of Borrower arising after the date
hereof pursuant to loans in cash or other immediately available
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107
funds by Transcrypt to Borrower, provided, that, (i) such
Indebtedness is subject and subordinate in right of payment to
the right of Congress to receive the prior indefeasible payment
and satisfaction in full of all of the Obligations, on
substantially the terms set forth on Exhibit A to Amendment No. 9
hereto; (ii) the terms of such Indebtedness shall not require any
payments in respect of the principal thereof or interest thereon
at any time prior to the end of the then current term of this
Agreement, and (iii) Borrower shall not, directly or indirectly,
make any payments in respect of such Indebtedness, including, but
not limited to, any prepayment or other non-mandatory payments."
5. Transactions with Affiliates. Sections 4.9(b)(ii) and 4.9(b)(iii) of
the Covenant Supplement are each hereby deleted in their entirety and the
following substituted therefor: "intentionally omitted".
6. Dividends. Section 4.10(b) of the Covenant Supplement is hereby
deleted in its entirety and the following substituted therefor: "intentionally
omitted".
7. Net Worth. Effective on and after the date that Congress receives the
financial statements referred to in Section 11 below, Section 4.14 of the
Covenant Supplement shall be deleted in its entirety and the following
substituted therefor:
"4.14 Net Worth. Borrower shall, at all times maintain a
Consolidated Net Worth of not less than the amount equal to: (a)
the Consolidated Net Worth as set forth in the balance sheet of
Borrower received by Congress pursuant to Section 11 of
Amendment No. 9 hereto minus (b) $1,500,000."
8. Working Capital. Effective on and after the date Congress receives
the financial statements referred to in Section 11 below, Section 4.15 of the
Covenant Supplement shall be deleted in its entirety and the following
substituted therefor:
"4.15 Working Capital. Borrower shall, at all times, maintain a
Consolidated Working
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Capital of not less than the amount equal to: (a) the
Consolidated Working Capital as set forth in the balance sheet
of Borrower received by Congress pursuant to Section 11 of
Amendment No. 9 hereto minus (b) $1,500,000."
9. Unused Line Fee. Section 3.5 of the Accounts Agreement is hereby
deleted in its entirety and the following substituted therefor:
"3.5 If the average outstanding daily principal balance of all
loans by you to us under this Agreement or any Supplement hereto
in any calendar month shall be less than $18,000,000, we shall
pay to you on or before the tenth (10th) day of the next
succeeding calendar month an unused line fee equal to one-half
of one percent (1/2%) per annum upon the amount by which
$18,000,000 exceeds the average outstanding daily principal
balance of all such loans in respect of such month."
10. Term. Section 9.1 of the Accounts Agreement is hereby deleted in its
entirety and the following substituted therefor:
"9.1 This Agreement shall become effective upon acceptance by
you and shall continue in full force and effect for a term
ending October 31, 1997 (the "Renewal Date"), unless sooner
terminated pursuant to the terms hereof. This Agreement shall
terminate on the Renewal Date, unless otherwise agreed by you
and us in writing, and, in addition, you shall have the right to
terminate this Agreement immediately at any time upon the
occurrence and continuation of an Event of Default. No
termination of this Agreement, however, shall relieve or
discharge us of our duties, obligations and covenants hereunder
until all obligations have been paid in full, and your
continuing security interest in the Collateral shall remain in
effect until such obligations have been fully discharged. All
Obligations shall be absolutely and unconditionally due and
payable in full in cash or other immediately available funds
(including such cash collateral as we may
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require for contingent Obligations with respect to letters of
credit or checks which have not been collected or otherwise) on
the Renewal Date, unless otherwise-agreed by you and us in
writing."
11. Delivery of Financial Statements. Borrower shall furnish to Congress
within thirty (30) days after the date hereof financial statements in form and
substance satisfactory to Congress reflecting the transactions contemplated by
this Amendment, including, without limitation, the purchases of Capital Stock of
Borrower by Transcrypt and the cancellation of Indebtedness of Borrower owing to
NorAm.
12. Termination of Weksel and Davies Guarantees and Junior
Participation. Upon the satisfaction of the conditions to the effectiveness of
this Amendment:
(a) any and all guarantees of Borrower's obligations to Congress
given by Xxxxxxx Xxxxxx, Xxxxxx Xxxxxx and Xxxxxx X. Xxxxxx, including the
Limited Guarantee and Waiver, dated July 31, 1992, by Weksel in favor of
Congress with respect to the Obligations, the Limited Guarantee and Waiver,
dated June 5, 1995, by Xxxxxx X. Xxxxxx in favor of Congress with respect to the
obligations, and the Limited Guarantee and Waiver, dated November 15, 1996, by
Xxxxxx X. Xxxxxx in favor of Congress with respect to the Obligations, shall
terminate; and
(b) the Junior Participation Agreement, dated July 31, 1992,
between Weksel and Congress shall terminate (and Weksel hereby irrevocably
authorizes and directs Congress to remit all amounts payable by Congress to
Weksel pursuant to such termination to the bank account set forth on Exhibit B
hereto); and
(c) Congress shall execute and deliver to any of Xxxxxxx Xxxxxx,
Xxxxxx Xxxxxx and Xxxxxx X. Xxxxxx, at the cost and expense of Borrower, such
instruments and documents, including without limitation, a Release of Mortgage
and Security Agreement, in each case in such form and substance as is reasonably
acceptable to Congress, as any such individual shall reasonably request in
writing for the purpose of giving effect to the termination of guarantees
provided for in this Section 12.
13. Additional Representations and Warranties. In addition to the
continuing representations and warranties heretofore or hereafter made by
Borrower to Congress pursuant to the Financing Agreements, Borrower hereby
represents and warrants and covenants
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to Congress as follows (which representations, warranties and covenants are
continuing and shall survive the execution and delivery hereof and shall be
incorporated into and made a part of the Financing Agreements):
(a) The Purchase Agreements and the transactions contemplated
thereunder have been duly executed, delivered and performed in accordance with
their terms by the respective parties thereto in all respects, including the
fulfillment (not merely the waiver) of all conditions precedent set forth
therein. After giving effect to the terms of the Purchase Agreements, Transcrypt
has good title to all of the issued and outstanding shares of the Capital Stock
of Borrower. All of the Indebtedness of Borrower to NorAm and Securicor has been
cancelled and Borrower has no other or further obligations or liabilities to
NorAm or Securicor.
(b) All actions and proceedings required by the Purchase
Agreements, applicable law or regulation (including, but not limited to,
compliance with the Xxxx-Xxxxx-Xxxxxx Anti-Trust Improvements Act of 1976, as
amended) have been taken and the transactions required thereunder have been duly
and validly taken and consummated.
(c) No court of competent jurisdiction has issued any injunction,
restraining order or other order which prohibits consummation of the
transactions described in the Purchase Agreements and no governmental or other
action or proceeding has been threatened or commenced, seeking any injunction,
restraining order or other order which seeks to void or otherwise modify the
transactions described in the Purchase Agreements.
(d) Borrower has delivered, or caused to be delivered, to
Congress, true, correct and complete copies of the Purchase Agreements. Set
forth in Exhibit C hereto is a correct and complete list of the Purchase
Agreements and all other agreements, documents and instruments existing as of
the date hereto between Borrower, any of its Affiliates, Transcrypt and any of
its Affiliates or NorAm or Securicor.
(e) All of the issued and outstanding shares of Capital Stock of
Borrower are directly and beneficially owned and held by Transcrypt and all of
such shares have been duly authorized and are fully paid and non-assessable,
free and clear of all claims, liens, pledges and encumbrances of any kind.
(f) Transcrypt has, on or before the date hereof, made a cash
equity contribution to Borrower in the amount of
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$2,000,000 as consideration for shares of Capital Stock of Borrower, the
proceeds of which have been delivered to Congress for application to the
obligations in such order and manner as Congress shall determine.
(g) Neither the execution and delivery of the Purchase
Agreements, nor the consummation of the transactions contemplated by the
Purchase Agreements, nor compliance with the provisions thereof, shall result in
the creation nor imposition of any lien, charge or encumbrance upon any of the
Collateral.
(h) Neither the execution and delivery of the Purchase Agreements
nor the consummation of the transactions therein contemplated, nor compliance
with the provisions thereof, has violated or shall violate any law or regulation
or any order or decree of any court or governmental instrumentality in any
respect or does or shall conflict with or result in the breach of, or constitute
a default in any respect under, any indenture, mortgage, deed of trust, security
agreement, agreement or instrument to which Borrower is a party or may be bound,
or violate any provision of the Certificate of Incorporation or By-Laws of
Borrower.
(i) Borrower and EFJ Partners have obtained or received all
required consents and approvals of any persons other than Congress in connection
with the transfer of the shares of Capital Stock of Borrower by EFJ Partners to
Transcrypt pursuant to the Transcrypt Purchase Agreements, the purchase and
cancellation of the Indebtedness of Borrower to NorAm and Securicor and the
other transactions contemplated by the Amendment.
(j) The failure of Borrower to comply with the covenants,
conditions and agreements contained herein or in any other agreement, document
or instrument at any time executed and/or delivered by Borrower with, to or in
favor of Congress shall constitute an Event of Default under the Financing
Agreements.
(k) This Amendment has been duly executed and delivered by
Borrower and is in full force and effect as of the date hereof, and the
agreements and obligations of Borrower contained herein constitute legal, valid
and binding obligations of Borrower enforceable against Borrower in accordance
with their respective terms.
14. Conditions Precedent. The effectiveness of the amendments contained
herein shall be subject to the satisfaction
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of the following conditions precedent in a manner satisfactory to Congress and
its counsel:
(a) Congress shall have received the consent of any participants
in the financing arrangements of Congress with Borrower to the amendments
provided for herein;
(b) Congress shall have received true, correct and complete
copies of the Transcrypt Purchase Agreements and all other agreements by
Borrower with, to or in favor of Transcrypt (including the letter of intent);
(c) Congress shall have received, in form and sub stance
satisfactory to Congress, an unconditional general release of Congress, its
officers, directors, employees, agents and other Affiliates by EFJ Partners,
Weksel and Xxxxxx X. Xxxxxx, duly authorized, executed and delivered by such
persons;
(d) Congress shall have received evidence, in form and substance
satisfactory to Congress, that Borrower has obtained all required consents and
approvals of any persons other than Congress in connection with the sale of all
of the Capital Stock of Borrower by EFJ Partners to Transcrypt pursuant to the
Transcrypt Stock Purchase Agreements and the other transactions contemplated by
this Amendment;
(e) the sale of all of the Capital Stock of Borrower by EFJ
Partners to Transcrypt pursuant to the Stock Purchase Agreement shall have
occurred by no later than July 31, 1997;
(f) Congress shall have received evidence, in form and substance,
satisfactory to Congress that (i) all Indebtedness of Borrower to NorAm and
Securicor (and to Transcrypt as the purchaser of such Indebtedness) has been
duly and validly can celled in accordance with the terms of the agreements,
documents or instruments evidencing such Indebtedness, and (ii) NorAm and
Securicor have released Borrower from all obligations, liabili ties and other
Indebtedness owing to them;
(g) Congress shall have received in cash or other immediately
available funds not less than $2,000,000 with the proceeds of a cash equity
capital contribution by Transcrypt to Borrower on or before the date hereof, for
application to the Obligations in such order and manner as Congress may
determine;
(h) all requisite corporate action and proceedings in connection
with this Amendment shall be in form and substance satisfactory to Congress, and
Congress shall have received all
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information and copies of all documents, including, without limitations, records
of requisite corporate action and proceed ings which Congress may have
reasonably requested in connection therewith, such documents where requested by
Congress or its counsel to be certified by appropriate corporate officers or
work governmental authorities;
(i) all representations and warranties contained herein shall be
true and correct;
(j) Congress shall have received, in form and sub stance
satisfactory to Congress, an original of this Amendment, duly authorized,
executed and delivered by Borrower, EFJ Partners, EFJ Communications Inc.,
Weksel and Xxxxxx X. Xxxxxx.
15. Fee. In addition to all other fees, charges, interest and expenses
payable by Borrower to Congress under the other Financing Agreements, Borrower
hereby agrees to pay to Congress a consent and extension fee in an amount equal
to $25,000, which amount shall be payable on the date hereof, and which amount
is fully earned as of such date, and may be charged directly to Borrower's loan
account maintained by Congress.
16. Effect of this Agreement. Except as modified pursuant hereto, no
other changes or modifications to the Financing Agreement are intended or
implied, and in all other respects the Financing Agreements are hereby
specifically ratified, restated and confirmed by the parties hereto as of the
date hereof. To the extent of a conflict between the terms of this Amendment and
the other Financing Agreements, the terms of this Amendment shall control.
17. Further Assurances. Borrower shall execute and deliver such
additional documents and take such additional actions as may be necessary or
desirable, as determined by Congress, to effec tuate the provisions and purposes
of this Amendment.
18. Governing Law. The rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted and determined in accordance
with the laws of the State of New York.
19. Binding Effect. This Amendment shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors and
assigns.
20. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall
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together constitute but one and the same agreement. In making proof of this
Amendment, it shall not be necessary to produce or account for more than one
counterpart thereof signed by each of the parties hereto.
Please sign the enclosed copy of this Amendment in the space provided
below, whereupon this Amendment, as so accepted by Congress, shall become a
binding agreement between Borrower and Congress.
Very truly yours,
X.X. XXXXXXX
By: /s/
-------------------------------------
Title: Chairman and CEO
-------------------------------------
ACKNOWLEDGED AND AGREED:
CONGRESS FINANCIAL CORPORATION
By: /s/
-----------------------------------
Title: Senior Vice President
EFJ PARTNERS, a general partnership/
By: /s/
-----------------------------------
Title: General Partner
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[SIGNATURES CONTINUED ON THE PREVIOUS PAGE]
/s/ Xxxxxxx Xxxxxx
------------------------------------------
XXXXXXX XXXXXX, individually
/s/ Xxxxxx X. Xxxxxx
------------------------------------------
XXXXXX X. XXXXXX, individually
TRANSCRIPT INTERNATIONAL, INC.
By: /s/
-----------------------------------
Title: Chairman
-----------------------------------
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EXHIBIT A TO AMENDMENT NO. 9
1. DEFINITIONS
As used above and in this Subordination Agreement, the following terms
shall have the meanings ascribed to them below:
1.1 "Agreements" shall mean, collectively, the Senior Creditor
Agreements and the Junior Creditor Agreements.
1.2 "Creditors" shall mean, collectively, Senior Creditor and
Junior Creditor and their respective successors and assigns.
1.3 "Debtor" shall mean X.X. Xxxxxxx Company, a Minnesota
corporation and its successors and assigns, including, without limitation, a
receiver, trustee or debtor-in-possession on behalf of such person or on behalf
of any such successor or assign.
1.4 "Junior Creditor" shall mean Transcrypt International, Inc.
a Delaware corporation, and its successors and assigns.
1.5 "Junior Creditor Agreements" shall mean, collectively,
_______________ and all agreements, documents and instruments at any time
executed and/or delivered by Debtor or any other person to, with or in favor of
Junior Creditor in connection therewith or related thereto, as all of the
foregoing now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.6 "Junior Debt" shall mean all obligations, liabilities and
indebtedness of every kind, nature and description owing by Debtor to Junior
Creditor arising after the date hereof other than in connection with the
Transcrypt Stock Purchase Agreement (as defined in the Senior Creditor
Agreements) or the contingent indebtedness of Debtor to reimburse Junior
Creditor in the event of a draw under the Congress Letter of Credit or the
Acestar Letter of Credit (as each such term is defined in the Senior Creditor
Agreements), including principal, interest, charges, fees, premiums, indemnities
and expenses, however evidenced, whether as principal, surety, endorser,
guarantor or otherwise, whether arising under or evidenced by the Junior
Creditor Agreements or otherwise, whether now existing or hereafter arising,
whether arising before, during or after the initial or any renewal term of the
Junior Creditor Agreements or after the commencement of any case with respect to
Debtor under
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the U.S. Bankruptcy Code or any similar statute (and including, without
limitation, any principal, interest, fees, costs, expenses and other amounts,
whether or not such amounts are allowable in whole or in part, in any such case
or similar proceeding), whether direct or indirect, absolute or contingent,
joint or several, due or not due, primary or secondary, liquidated or
unliquidated, secured or unsecured, and whether arising directly or howsoever
acquired by Junior Creditor.
1.7 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including, without limitation, any
corporation which elects subchapter S status under the Internal Revenue Code of
1986, as amended), business trust, unincorporated association, joint stock
company, trust, joint venture, or other entity or any government or any agency
or instrumentality or political subdivision thereof.
1.8 "Senior Creditor" shall mean Congress Financial Corporation,
a California corporation, and its successors and assigns.
1.9 "Senior Creditor Agreements" shall mean, collectively, the
Accounts Financing Agreement [Security Agreement], dated of July 31, 1992,
between Senior Creditor and Debtor and all agreements, documents and instruments
at any time executed and/or delivered by Debtor or any other person to, with or
in favor of Senior Creditor in connection therewith or related thereto, as all
of the foregoing now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.10 "Senior Debt" shall mean all obligations, liabilities and
indebtedness of every kind, nature and description owing by Debtor to Senior
Creditor and/or its affiliates, or participants, including principal, interest,
charges, fees, premiums, indemnities and expenses, however evidenced, whether as
principal, surety, endorser, guarantor or otherwise, whether arising under the
Senior Creditor Agreements or otherwise, whether now existing or hereafter
arising, whether arising before, during or after the initial or any renewal term
of the Senior Creditor Agreements or after the commencement of any case with
respect to Debtor under the U.S. Bankruptcy Code or any similar statute (and
including, without limitation, any principal, interest, fees, costs, expenses
and other amounts, whether or not such amounts are allowable either in whole or
in part, in any such case or similar proceeding), whether direct or indirect,
absolute or contingent, joint or several, due or not due, primary or secondary,
liquidated or unliquidated, secured or
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unsecured, and whether arising directly or howsoever acquired by Senior
Creditor.
1.11 All terms used herein which are defined in the Uniform
Commercial Code as in effect in the State of _________, unless otherwise defined
herein shall have the meanings set forth therein. All references to any term in
the plural shall include the singular and all references to any term in the
singular shall include the plural.
2. SUBORDINATION OF JUNIOR DEBT
2.1 Subordination. Junior Creditor hereby subordinates its right
to payment and satisfaction of the Junior Debt and the payment thereof, directly
or indirectly, by any means whatsoever, is deferred, to the indefeasible payment
and satisfaction in full of all Senior Debt.
2.2 Distributions.
(a) In the event of any distribution, division, or
application, partial or complete, voluntary or involuntary, by operation of law
or otherwise, of all or any part of the assets of Debtor or the proceeds thereof
to the creditors of Debtor or readjustment of the obligations and indebtedness
of Debtor, whether by reason of liquidation, bankruptcy, arrangement,
receivership, assignment for the benefit of creditors, marshalling of assets of
Debtor or any other action or proceeding involving the readjustment of all or
any part of indebtedness of Debtor or the application of the assets of Debtor to
the payment or liquidation thereof, or upon the dissolution or other winding up
of Debtor's business, or upon the sale of all or substantially all of Debtor's
assets, then, and in any such event, (i) Senior Creditor shall first receive
indefeasible payment in full in cash of all of the Senior Debt prior to the
payment of all or any part of the Junior Debt, and (ii) Senior Creditor shall be
entitled to receive any payment or distribution of any kind or character,
whether in cash, securities or other property, which be payable or deliverable
in respect of any or all of the Junior Debt.
(b) In order to enable Senior Creditor to enforce
its rights under Section 2.3(a) above, Senior Creditor is hereby irrevocably
authorized and empowered (in its own name or in the name of Junior Creditor or
otherwise), but shall have no obligation, to enforce claims comprising any of
the Junior Debt by proof of debt, proof of claim, suit or otherwise and take
generally any action which Junior Creditor might otherwise be entitled to take,
as Senior Creditor may deem necessary or
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advisable for the enforcement of its rights or interests hereunder.
(c) To the extent necessary for Senior Creditor to realize
the benefits of the subordination of the Junior Debt provided for herein
(including the right to receive any and all payments and distributions which
might otherwise be payable or deliverable with respect to the Junior Debt in any
proceeding described in Section 2.3(a) or otherwise), Junior Creditor shall
execute and deliver to Senior Creditor such instruments or documents (together
with such assignments or endorsements as Senior Creditor shall deem necessary),
as may be requested by Senior Creditor.
2.3 Payments Received by Junior Creditor. Should any payment or
distribution or security or instrument or proceeds thereof be received by the
Junior Creditor in respect of the Junior Debt, Junior Creditor shall receive and
hold the same in trust, as trustee, for the benefit of Senior Creditor,
segregated from other funds and property of Junior Creditor and shall forthwith
deliver the same to Senior Creditor (together with any endorsement or assignment
of Junior Creditor where necessary), for application to any of the Senior Debt.
In the event of the failure of Junior Creditor to make any such endorsement or
assignment to Senior Creditor, Senior Creditor, or any of its officers or
employees, are hereby irrevocably authorized on behalf of Junior Creditor to
make the same.
2.4 Instrument Legend and Notation. Any instrument at any time
evidencing the Junior Debt, or any portion thereof, shall be permanently marked
on its face with a legend conspicuously indicating that payment thereof is
subordinate in right of payment to the Senior Debt and subject to the terms and
conditions of this Subordination Agreement, and (a) after being so marked
certified copies thereof shall be delivered to Senior Creditor and (b) the
original of any such instrument shall be immediately delivered to Senior
Creditor upon Senior Creditor's request, at any time on or after the occurrence
of an event of default under the Senior Creditor Agreements. In the event any
legend or endorsement is omitted, Senior Creditor, or any of its officers or
employees, are hereby irrevocably authorized on behalf of Junior Creditor to
make the same. No specific legend, further assignment or endorsement or delivery
of notes, guarantees or instruments shall be necessary to subject any Junior
Debt to the subordination thereof contained in this Agreement.
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3. COVENANTS
3.1 Additional Covenants. Junior Creditor and Debtor agree in
favor of Senior Creditor that:
(a) Debtor shall not, directly or indirectly, make and
Junior Creditor shall not, directly or indirectly, accept or receive any payment
of principal or interest or any prepayment or non-mandatory payment or any
payment pursuant to acceleration or claims of breach or any payment to acquire
Junior Debt or otherwise in respect of any Junior Debt;
(b) Debtor shall not grant to Junior Creditor and Junior
Creditor shall not acquire any security interest, lien, claim or encumbrance on
any assets or properties of Debtor or any [additional] guarantees for any of the
Junior Debt;
(c) Junior Creditor shall not sell, assign, pledge,
encumber or otherwise dispose of any of the Junior Debt and guarantees, if any,
or subordinate any of the Junior Debt to any indebtedness of Debtor other than
the Senior Debt, [except, that, Junior Creditor may assign, pledge or encumber
the Junior Debt so long as Senior Creditor shall have received from any
assignee, pledgee or other person acquiring any interest in the Junior Debt a
written acknowledgment of receipt of a copy of this Agreement together with the
written agreement of such person to be bound by the terms and conditions of this
Subordination Agreement];
(d) Junior Creditor and Debtor shall, at any time or times
upon the request of Senior Creditor, promptly furnish to Senior Creditor a true,
correct and complete statement of the outstanding Junior Debt; and
(e) Junior Creditor and Debtor shall execute and deliver
to Senior Creditor such additional agreements, documents and instruments and
take such further actions as may be necessary or desirable in the opinion of
Senior Creditor to effectuate the provisions and purposes of this Subordination
Agreement.
3.2 Waivers. Notice of acceptance hereof, the making of loans,
advances and extensions of credit or other financial accommodations to, and the
incurring of any expenses by or in respect of, Debtor by Senior Creditor, and
presentment, demand, protest, notice of protest, notice of nonpayment or default
and all other notices to which Junior Creditor and Debtor are or may be entitled
are hereby waived (except as expressly provided for herein or as to Debtor, in
the Senior Creditor Agreements).
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Junior Creditor also waives notice of, and hereby consents to, (a) any
amendment, modification, supplement, renewal, restatement or extensions of time
of payment of or increase or decrease in the amount of any of the Senior Debt or
to the Senior Creditor Agreements or any collateral at any time granted to or
held by Senior Creditor, (b) the taking, exchange, surrender and releasing of
collateral at any time granted to or held by Senior Creditor or guarantees now
or at any time held by or available to Senior Creditor for the Senior Debt or
any other person at any time liable for or in respect of the Senior Debt, (c)
the exercise of, or refraining from the exercise of any rights against Debtor or
any other obligor or any collateral at any time granted to or held by Senior
Creditor, (d) the settlement, compromise or release of, or the waiver of any
default with respect to, any of the Senior Debt, and/or (e) Senior Creditor's
election, in any proceeding instituted under the U.S. Bankruptcy Code of the
application of Section 1111(b)(2) of the U.S. Bankruptcy Code. Any of the
foregoing shall not, in any manner, affect the terms hereof or impair the
obligations of Junior Creditor hereunder.
3.3 Subrogation; Marshalling. Junior Creditor shall not be
subrogated to, or be entitled to any assignment of any Senior Debt or Junior
Debt or of any collateral for or guarantees or evidence of any thereof until all
of the Senior Debt is indefeasibly paid and satisfied in full. Junior Creditor
hereby waives any and all rights to have any collateral or any part thereof
granted to or held by Senior Creditor marshalled upon any foreclosure or other
disposition of such collateral by Senior Creditor or Debtor with the consent of
Senior Creditor.
3.4 No Offset. In the event Junior Creditor at any time incurs
any obligation to pay money to Debtor, Junior Creditor hereby irrevocably agrees
that it shall pay such obligation in cash or cash equivalents in accordance with
the terms of the contract governing such obligation and shall not deduct from or
setoff against any amounts owed by the Junior Creditor to Debtor in connection
with any such transaction any amounts the Junior Creditor claims are due to it
with respect to the Junior Debt.
4. MISCELLANEOUS
4.1 Amendments. Any waiver, permit, consent or approval by either
Creditor of or under any provision, condition or covenant to this Subordination
Agreement must be in writing and shall be effective only to the extent it is set
forth in writing and as to the specific facts or circumstances covered
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thereby. Any amendment of this Subordination Agreement must be in writing and
signed by each of the parties to be bound thereby.
4.2 Successors and Assigns.
(a) This Subordination Agreement shall be binding upon the
parties hereto and their respective successors and assigns and shall inure to
the benefit of each of Creditors and its respective successors, participants and
assigns.
(b) Senior Creditor reserves the right to grant
participations in, or otherwise sell, assign, transfer or negotiate all or any
part of, or any interest in, the Senior Debt and the collateral securing same;
provided, that, Junior Creditor shall not be obligated to give any notices to or
otherwise in any manner deal directly with any participant in the Senior Debt
and no participant shall be entitled to any rights or benefits under this
Subordination Agreement except through Senior Creditor. In connection with any
participation or other transfer or assignment, Senior Creditor (i) may disclose
to such assignee, participant or other transferee or assignee all documents and
information which Senior Creditor now or hereafter may have relating to the
Senior Debt or any collateral and (ii) shall disclose to such participant or
other transferee or assignee the existence and terms and conditions of this
Subordination Agreement.
(c) In connection with any assignment or transfer of any
or all of the Senior Debt, or any or all rights of Senior Creditor in the
property of Debtor (other than pursuant to a participation), Junior Creditor
agrees to execute and deliver an agreement containing terms substantially
identical to those contained herein in favor of any such assignee or transferee
and, in addition, will execute and deliver an agreement containing terms
substantially identical to those contained herein in favor of any third person
who succeeds to or replaces any or all of Senior Creditor's financing of Debtor,
whether such successor financing or replacement occurs by transfer, assignment,
"takeout" or any other means.
4.3 Insolvency. This Subordination Agreement shall be applicable
both before and after the filing of any petition by or against Debtor under the
U.S. Bankruptcy Code and all converted or succeeding cases in respect thereof,
and all references herein to Debtor shall be deemed to apply to a trustee for
Debtor and Debtor as debtor-in-possession. The relative rights of Senior
Creditor and, Junior Creditor to repayment of the Senior Debt and the Junior
Debt, respectively, and in or to any distributions
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from or in respect of Debtor or any proceeds of Debtor's property and assets,
shall continue after the filing thereof on the same basis as prior to the date
of the petition, subject to any court order approving the financing of, or use
of cash collateral by, Debtor as debtor-in-possession.
4.4 Bankruptcy Financing. If Debtor shall become subject to a
proceeding under the U.S. Bankruptcy Code and if Senior Creditor desires to
permit the use of cash collateral or to provide financing to Debtor under either
Section 363 or Section 364 of the U.S. Bankruptcy Code, Junior Creditor agrees
as follows: (a) adequate notice to Junior Creditor shall have been provided for
such financing or use of cash collateral if Junior Creditor receives notice two
(2) business days prior to the entry of the order approving such financing or
use of cash collateral and (b) no objection will be raised by Junior Creditor to
any such use of cash collateral or financing. For purposes of this Section,
notice of a proposed financing or use of cash collateral shall be deemed given
when given in the manner prescribed by Section 4.5 hereof to Junior Creditor.
4.5 Notices. All notices, requests and demands to or upon the
respective parties hereto shall be in writing and shall be deemed to have been
duly given or made: if delivered in person, immediately upon delivery; if by
telex, telegram or facsimile transmission, immediately upon sending and upon
confirmation of receipt; if by nationally recognized overnight courier service
with instructions to deliver the next business day, one (1) business day after
sending; and if mailed by certified mail, return receipt requested, five (5)
days after mailing. All notices, requests and demands are to be given or made to
the respective parties at their addresses set forth below (or to such other
addresses as either party may designate by notice in accordance with the
provisions of this Section:
To Senior Creditor: Congress Financial Corporation
(____________)
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Attention:
-------------------
To Junior Creditor:
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Attention:
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Either Creditor may change the addresses) to which all notices, requests and
other communications are to be sent by giving written notice of such address
change to the other Creditor in conformity with this Section 4.5, but such
change shall not be effective until notice of such change has been received by
the other Creditor.
4.6 Counterparts. This Subordination Agreement may be executed in
any number of counterparts, each of which shall be an original with the same
force and effect as if the signatures thereto and hereto were upon the same
instrument.
4.7 Governing Law. The validity, construction and effect of this
Subordination Agreement shall be governed by the laws of the State of New York
(without giving effect to principles of conflicts of law).
4.8 Consent to Jurisdiction; Waiver of Jury Trial. Each of the
parties hereto hereby irrevocably consents to the non-exclusive jurisdiction of
____________________________ and the United States District Court for the
_____________ District of _____________ and waives trial by jury in any action
or proceeding with respect to this Subordination Agreement.
4.9 Complete Agreement. This written Subordination Agreement is
intended by the parties as a final expression of their agreement and is intended
as a complete statement of the terms and conditions of their agreement.
4.10 No Third Parties Benefitted. Except as expressly provided in
Section 4.2, this Subordination Agreement is solely for the benefit of the
Creditors and their respective successors, participants and assigns, and no
other person (including Debtor) shall have any right, benefit, priority or
interest under, or because of the existence of, this Subordination Agreement.
Nothing contained herein shall relieve Debtor of its obligations to Junior
Creditor to make payment in respect of Junior Debt.
4.11 Disclosures, Non-Reliance. Each Creditor has the means to,
and shall in the future remain, fully informed as to the financial condition and
other affairs of Debtor and no Creditor shall have any obligation or duty to
disclose any such information to any other Creditor. Except as expressly set
forth in this Subordination Agreement, the parties hereto have not otherwise
made to each other nor do they hereby make to each other any warranties, express
or implied, nor do they assume any liability to each other with respect to: (a)
the enforceability, validity, value or collectability of any of the Junior Debt
or
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the Senior Debt or any collateral or guarantee which may have been granted to
any of them in connection therewith, (b) Debtor's title to or right to any of
its assets and properties or (c) any other matter except as expressly set forth
in this Subordination Agreement.
4.12 Term. This Subordination Agreement is a continuing agreement
and shall remain in full force and effect until the indefeasible satisfaction in
full of all Senior Debt and the termination of the financing arrangements
between Senior Creditor and Debtor.
IN WITNESS WHEREOF, the parties have caused this Subordination Agreement
to be duly executed as of the day and year first above written.
CONGRESS FINANCIAL CORPORATION
(____________)
By:
--------------------------------
Title:
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By:
--------------------------------
Title:
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By:
--------------------------------
Title:
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