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EXHIBIT 10.42
CREDIT AGREEMENT
BY AND BETWEEN
LASALLE NATIONAL BANK
000 XXXXX XXXXXXX XXXXXX
XXXXXXX, XXXXXXXX
AND
UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.
0000 XXXXX XXXXXX XXXXXX
XXXXXXX, XXXXXXXX
DATED AS OF JULY 14, 1997
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INDEX
Article I - Definitions and Interpretation 1
Section 1.01. Defined Terms 1
Section 1.02. Accounting Terms 18
Section 1.03. Interpretation 18
Article II - The Facilities 19
Section 2.01. The Loans 19
Section 2.02. Evidences of Debt 20
Section 2.03. Maintenance of Loans: Interest 20
Section 2.04. Interest on Overdue Amounts 21
Section 2.05. Borrowing Procedures 22
Section 2.06. Payment 22
Section 2.07. Fees 24
Section 2.08. Letters of Credit 25
Section 2.09. Conversion Options: Continuance 27
Section 2.10. Requirements of Law 28
Section 2.11. Illegality 30
Section 2.12. Indemnity 30
Section 2.13. Availability of Alternative Currency 31
Section 2.14. Euro 31
Article III - Representations and Warranties 31
Section 3.01. Organization; Corporate Powers 31
Section 3.02. Authorization 32
Section 3.03. Governmental Approval 32
Section 3.04. Enforceability 32
Section 3.05. Financial Matters 32
Section 3.06. No Material Adverse Change 32
Section 3.07. Subsidiaries 32
Section 3.08. Litigation 33
Section 3.09. Compliance with Laws 33
Section 3.10. Environmental Protection 33
Section 3.11. Agreements 34
Section 3.12. Federal Reserve Regulations 34
Section 3.13. Taxes 34
Section 3.14. Labor and Employment 34
Section 3.15. Investment Company Act; Public Utility Holding Company Act 34
Section 3.16. Capitalization 35
Section 3.17. Properties; Security Interests 35
Section 3.18. Intellectual Property: Licenses 35
Section 3.19. Solvency 35
Section 3.20. Complete Disclosure 36
Article IV - Conditions to the Loans 36
Section 4.01. General Conditions 36
Section 4.02. Conditions to First Advance 37
Article V - Affirmative Covenants 39
Section 5.01. Existence 40
Section 5.02. Businesses and Properties: Compliance with Laws 40
Section 5.03. Insurance 40
Section 5.04. Obligations and Taxes 40
Section 5.05. Financial Statements: Reports 41
Section 5.06. Litigation and Other Notices 42
Section 5.07. Erisa 43
Section 5.08. Maintaining Records; Access to Premises and Inspections 43
Section 5.09. Use of Proceeds 43
Section 5.10. Banking Business: Collections 43
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Article VI - Negative Covenants 44
Section 6.01. Indebtedness 44
Section 6.02. Negative Pledge 44
Section 6.03. Sale of Assets 45
Section 6.04. Consolidations, Mergers or Purchases of Assets 45
Section 6.05. Restricted Payments 45
Section 6.06. Investments, Loans and Advances 46
Section 6.07. Transactions with Affiliates 46
Section 6.08. Line of Business 46
Section 6.09. Fiscal Year, Accounting 46
Section 6.10. Restrictions on Sale of Assets and Distributions 46
Section 6.11. Issuance of Equity Interests 46
Section 6.12. Modifications of Material Documents 47
Section 6.13. Leverage Ratio 47
Section 6.14. Tangible Net Worth 47
Section 6.15. Subordinated Debt 47
Section 6.16. Leases 48
Article VII - Defaults 48
Section 7.01. Events of Default 48
Section 7.02. Remedies upon Default 50
Article VIII - Miscellaneous 51
Section 8.01. Notices 51
Section 8.02. Survival of Agreement 52
Section 8.03. Successors and Assigns 52
Section 8.04. Expenses of the Lender; Indemnify; Judgment Currency 52
Section 8.05. Right of Setoff 54
Section 8.06. Applicable Law 54
Section 8.07. Waivers 54
Section 8.08. Amendments 55
Section 8.09. Severability 55
Section 8.10. Counterparts 55
Section 8.11. Headings 55
Section 8.12. Consent to Jurisdiction 55
Section 8.13. Waiver of Jury Trial 56
Section 8.14. Interest Limitation 57
Section 8.15. Loan Documents 57
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INDEX OF EXHIBITS AND SCHEDULES
EXHIBITS
EXHIBIT A-1 Revolving Credit Note
EXHIBIT A-2 Term Loan Note
EXHIBIT B-1 Borrower Security Agreement
EXHIBIT B-2 UAI Security Agreement
EXHIBIT B-3 Canadian Security Agreement
EXHIBIT C Mortgage
EXHIBIT D-1 Stock Pledge Agreement
EXHIBIT D-2 Canadian Pledge Agreement
EXHIBIT E-1 UAI Guaranty
EXHIBIT E-2 Canadian Guaranty
EXHIBIT F Form of Intercompany Note
EXHIBIT G Opinion of Counsel
EXHIBIT H Borrowing Base Certificate
EXHIBIT I Compliance Certificate
EXHIBIT J Lockbox Agreement
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SCHEDULES
Schedule 3.07 Subsidiaries, Affiliates and Joint Ventures
Schedule 3.08 Litigation
Schedule 3.10 Environmental Matters
Schedule 3.16 Primary Shareholders
Schedule 3.17 Properties
Schedule 6.01 Indebtedness
Schedule 6.02 Liens
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (as from time to time amended, modified,
restated, supplemented and in effect, this "AGREEMENT") is entered into as of
July 14, 1997 by and between LASALLE NATIONAL BANK, a national banking
association, its successors and assigns (the "LENDER"), and UNIVERSAL AUTOMOTIVE
INDUSTRIES, INC., a Delaware corporation (the "BORROWER").
RECITALS
A. The Borrower has requested that the Lender extend credit in the form
of (i) a revolving credit facility (including a letter of credit facility) in an
aggregate principal amount not to exceed $20,000,000 at any time and (ii) a term
loan facility in an aggregate amount not to exceed $4,450,000 at any time, in
each case for the purposes and subject to the terms and conditions hereinafter
set forth.
B. The Lender is willing to make such credit facilities available to
the Borrower and the Borrower is willing to borrow from the Under, subject to
the terms and conditions hereinafter set forth.
AGREEMENT
In consideration of the matters set forth in the Recitals and the
covenants and provisions herein set forth, and other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
ARTICLE I DEFINITIONS AND INTERPRETATION
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following
terms shall have the meanings specified below:
"ACCOUNT DEBTOR" shall mean the Account Debtor defined in the Security
Agreements.
"ACCOUNTS" shall mean the Accounts defined in the Security Agreements.
"ACCOUNTS AVAILABILITY" shall mean 80% of the net amount (after
deduction for such reserves as the Lender deems proper and necessary) of
Eligible Accounts; provided, however, that beginning in Fiscal Year 1998, if the
audited financial statements of the Borrower for Fiscal Year 1997 reflect a an
EBT for such Fiscal Year of at least $1 000,000, the Accounts Availability shall
be increased to 85 % of the net amount (after deduction for such reserves as the
Lender deems proper and necessary) of Eligible Accounts.
"ACCOUNTS REPORT" shall mean a report delivered to the Lender by the
required by SECTION 5.05(F) of this Agreement, consisting of an aged trial
balance of all of the Borrower's Accounts existing as of the date of such
Accounts Report, specifying for each Account Debtor obligated on the Accounts,
such Account Debtor's name, outstanding balance and the aging of such
outstanding balance.
"AFFILIATE" shall mean, with respect to any Person, any other Person
(including any member of the immediate family of any such natural Person) which
directly or indirectly beneficially owns or controls 5 % or more of the total
voting power of shares of capital stock of such Person having the right to vote
for directors under ordinary circumstances, any Person controlling, controlled
by or under common control with any such Person (within the meaning of Rule 405
under the Securities Act of 1933), and any shareholder, director or executive
officer of any such Person. Without limitation the foregoing, Affiliates of the
Borrower shall specifically include the Guarantors and UBP Hungary, Inc. a
corporation organized under the laws of Hungary.
"ALTERNATIVE CURRENCY" shall mean, subject to availability pursuant to
SECTION 2.13 and to the extent freely transferrable. and convertible into
Dollars, Deutsche Marks, the lawful currency of Germany.
"ALTERNATIVE CURRENCY LOANS" shall mean any Loan made pursuant to
SECTION 2,01(A)(III) in the Alternative Currency, as designated by the Borrower
pursuant to a Notice of Borrowing or Notice of Continuance.
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"ALTERNATIVE CURRENCY RATE" shall mean with respect to each Interest
Period for any Alternative Currency Loan the rate of interest per annum equal to
the quotient of (a) the rate of interest per annum (expressed as a whole number)
at which deposits in the Alternative Currency in immediately available funds are
offered to the Lender at approximately 11: 00 a.m. (London, England time) two
Business Days prior to the beginning of such Interest Period in the interbank
eurocurrency market for a period equal to such Interest Period and in an
Alternative Currency amount equal or comparable to the principal amount of such
Alternative Currency Loan, divided by (b) a number equal to 1.0 minus the daily
average for the applicable Interest Period of the maximum rate (expressed as a
decimal) at which reserves (including, without limitation, basic, supplemental,
marginal and emergency reserves) are imposed during such Interest Period by the
Board (or any successor) under Regulation D on "eurocurrency liabilities," as
defined in such Board's Regulation D (or in respect of any other category of
liabilities that includes deposits by reference to which the interest rate on
the Alternative Currency Loans is determined by any category of extension of
credit or other assets that includes loans by non-United States offices of any
lender to United States residents) subject to any amendments of such reserve
requirement by such Board or its successor, taking into account any transitional
adjustments thereto (such Alternative Currency Rate to be adjusted to the next
higher 1/16 of one percent). For purposes of this definition, the Alternative
Currency Loans shall be deemed to be "eurocurrency liabilities" as defined in
Regulation D.
"ALTERNATIVE CURRENCY SUBLIMIT" shall mean an amount not to exceed the
lesser $2,000,000 and (b) the Revolving Credit Availability.
"ALTERNATIVE CURRENCY UTILIZATION " shall mean the Current Dollar
Equivalent of outstanding Alternative Currency Loans at any time.
"APPLICABLE MARGIN" shall mean the percentage per annum specified in
the chart below for a particular Level and Leverage Ratio and a particular type
of Loan under the Revolving Credit Facility or the Term Loan Facility, as the
case may be:
====================================================================================================================
REVOLVING CREDIT FACILITY TERM LOAN FACILITY
\--------------------------------------------------------------------------------------------------------------------
LEVERAGE RATIO PRIME RATE LOANS LIBOR/ALTERNATIVE PRIME RATE LIBOR LOANS
LEVEL CURRENCY LOANS LOANS
--------------------------------------------------------------------------------------------------------------------
Level 1 4.0 .50 2.5% .75% 2.75%
--------------------------------------------------------------------------------------------------------------------
Level 2 3.4 less than 4.0 .25% 2.25% .50% 2.50%
--------------------------------------------------------------------------------------------------------------------
Level 3 3.0 less than 3.5 0% 2.00% .25% 2.25%
--------------------------------------------------------------------------------------------------------------------
Level 4 2.5 less than 3.0 0% 1.75% 0% 2.00%
--------------------------------------------------------------------------------------------------------------------
Level 5 less than 2.5 0% 1.50% 0% 1.75%
====================================================================================================================
For the period commencing on the Closing Date and ending on the date which
occurs ten (10) days after the Lender receives the financial statements and the
related Compliance Certificate required to be delivered pursuant to SECTION
5.05(B) and SECTION 5.05(E) of this Agreement with respect to the second fiscal
quarter of 1997, the Applicable Margin set forth in Level 4 above shall apply to
all Loans made under both the Revolving Credit Facility and the Tenn Loan
Facility. Thereafter, the Leverage Ratio shall be calculated as of the end of
each fiscal quarter, and shall be reported to the Lender pursuant to a
Compliance Certificate executed by a Financial Officer of the Borrower and
delivered in accordance with SECTION 5.05(E) hereof Not later than five (5)
Business Days after receipt by the Lender of each Compliance Certificate
delivered by the Borrower in accordance with SECTION 5.05(E) for each fiscal
quarter or fiscal year, as applicable, the Borrower, subject to the approval of
the Lender, shall determine the Leverage Ratio for the applicable period. The
Lender shall then determine any change in each Applicable Margin resulting
therefrom. Each Applicable Margin shall be adjusted (upwards or downwards, as
appropriate), if necessary, based on the Leverage Ratio as of the end of the
fiscal quarter immediately preceding the date of determination. The adjustment,
if any, to the Applicable Margin shall be effective as to all Loans commencing
on the tenth (10th) Business Day after the delivery of such quarterly or annual
financial statements delivered in accordance with SECTIONS 5.05(A) AND 5.05(B)
and such related Compliance Certificate of a Financial Officer of the Borrower
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delivered in accordance with SECTION 5.05(B) and shall be effective from and
including the tenth (10th) Business Day after the date the Lender receives such
Compliance Certificate to but excluding the tenth (10th) Business Day after the
date on which the next Compliance Certificate is required to be delivered
pursuant to SECTION 5.05(E); provided, however, that, in the event that the
Borrower shall fail at any time to furnish to the Lender such financial
statements and any such Compliance Certificate required to be delivered pursuant
to SECTIONS 5.05(A), 5.05(B) AND 5.05(E), the Applicable Margin set forth in
Level 1 above shall apply until the tenth (10th) Business Day after such time as
all such financial statements and each such Compliance Certificate are so
delivered to the Lender. Each determination of the Leverage Ratio by the
Borrower (subject to approval by the Lender) and each determination of the
Applicable Margin by the Lender in accordance with this definition shall be
conclusive and binding on the parties absent manifest error.
"BOARD" shall mean the Board of Governors of the Federal Reserve System
of the United States.
"BORROWER" shall mean the Borrower defined in the preamble of this
Agreement.
"BORROWER SECURITY AGREEMENT" shall mean a security agreement executed
and delivered by the Borrower on the Closing Date, in substantially the form of
EXHIBIT B-1, pursuant to which the Borrower grants the Lender a security
interest in the Collateral described in such Borrower Security Agreement.
"BORROWER'S REPRESENTATIVE" shall mean Xxxxx Xxxxx or any other person
or persons as the Borrower shall designate in writing to the Lender.
"BORROWING BASE" shall mean and, at any particular time, be equal to
the sum of (a) the Accounts Availability plus (b) the Inventory Availability,
all as determined by the Lender from time to time in accordance with this
Agreement.
"BRAKE PARTS" shall mean Universal Brake Parts, Inc., a corporation
formed under the laws of Ontario and wholly-owned subsidiary of UBP.
"BUSINESS DAY" shall mean (a) in respect of Loans other than
Alternative Currency Loans and LIBOR Loans, any day other than a Saturday,
Sunday or legal holiday in the State of Illinois on which the Lender is open for
business in Chicago, Illinois, and (b) in respect of Alternative Currency Loans
and LIBOR Loans, any day other than a Saturday, Sunday or legal holiday in the
State of Illinois or London, England on which the Lender is open for business in
Chicago, Illinois and on which banks are open for general banking business in
London, England and Germany (including dealings in foreign currency and
exchange).
"CANADIAN GUARANTY" shall mean that certain joint and several Guaranty
of UBP, Brake Parts and IDC in favor of the Lender, in substantially the form of
EXHIBIT E-2.
"CANADIAN PLEDGE AGREEMENT" shall mean those separate pledge agreements
executed and delivered by each of UBP and the Borrower on the Closing Date, in
substantially the form of EXHIBIT D-2.
"CANADIAN SECURITY AGREEMENT" shall mean those separate security
agreements executed and delivered by each of UBP, Brake Parts and IDC on the
Closing Date, in substantially the form of EXHIBIT B-3, pursuant to which each
of UBP, Brake Parts and IDC grant the Lender a security interest in the
Collateral described in such Canadian Security Agreement.
"CHANGE OF CONTROL" shall mean (a) the acquisition by any Person, or
two or more Persons acting in concert, of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934) of 30% or more of the outstanding shares of
voting stock of the Borrower; provided, however, that the acquisition by one or
more of the following individuals of 30% or more of the outstanding shares of
voting stock of the Borrower shall not be deemed to constitute a Change of
Control of the Borrower: Xxxxx Xxxxx, Xxxxxx Xxxx, Xxxxxx Xxxxx, Xxxx Israel,
Xxxx Xxxxxxx and Sirrom. Capital Corporation, or (b) during any period of 25
consecutive calendar months, commencing on the date of this Agreement, the
ceasing of those individuals ("CONTINUING DIRECTORS") who (i) were directors of
the Borrower on the first day of such period or (ii) subsequently become
directors of the Borrower and whose initial election or initial nomination for
election
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subsequent to that date was approved by a majority of Continuing Directors then
on the board of directors of the Borrower, to constitute a majority of the board
of directors of the Borrower.
"CLOSING DATE" shall mean the date on which all of the conditions
precedent set forth in ARTICLE IV have been satisfied and on which the first
Loan is made by the Lender to the Borrower hereunder.
"COLLATERAL" shall mean the Collateral defined in the Security
Agreements.
"COLLATERAL DOCUMENTS" shall mean collectively the Security Agreements,
the Stock Pledge Agreement and the Mortgage.
"COMMITMENT" shall mean the aggregate commitment of the Lender to the
Borrower to (a) make Loans and issue Letters of Credit under the Revolving
Credit Facility in a maximum principal amount not in excess of the Revolving
Credit Availability and (b) make the Loan under the Term Loan Facility.
"CONTINGENCY RESERVE" shall mean $850,000 or such other amount as the
Lender may determine as necessary from time to time in its sole discretion as a
reserve for liability in connection with First National Parts Exchange, Inc.,
Chapter 11 Debtor U.S.B.C. N.D. IL, Case No. 93-C-16978 Adv. No. 94-A-1084 Xxxx
X. Xxxxxx, Trustee v. Universal Automotive, Inc. (the "LITIGATION "); provided,
however, that the Contingency Reserve shall be reduced on a dollar-for-dollar
basis for each dollar or dollar equivalent (e.g. stock delivered at an agreed
upon valuation as of the date of delivery in the event of a settlement) paid by
the Borrower in settlement or judgment relating to the Litigation; provided,
further, that such dollar-for-dollar or dollar-equivalent reduction shall not
begin until the amount owed by Borrower in connection with the settlement or
judgment is less than or equal to the Contingency Reserve.
"CORE INVENTORY" shall mean Eligible Inventory that consists of raw
core components of brake shoes.
"CREDIT UTILIZATIONS" shall mean, at any particular time, the sum of
(a) the outstanding principal balance of the Revolving Credit Note at such time
including the Current Dollar Equivalent of any outstanding Alternative Currency
Loans, plus (b) the Letter of Credit Obligations at such time.
"CURRENT DOLLAR EQUIVALENT" shall mean at any date, with respect to
Alternative Currency Loans, the amount of Dollars into which the principal
amount of such Loan outstanding as of such date may be converted at the spot
rate at which Dollars are offered to the Lender in Chicago for the Alternative
Currency in an amount comparable to the amount of such Loan at approximately
11:00 a.m. (Chicago time) on the second Business Day prior to such date.
"DEFAULT" shall mean any event that with notice or lapse of time or
both would constitute an Event of Default.
"DOLLARS" and the symbol "$" shall mean the lawful currency of the
United States of America.
"DOLLAR EQUIVALENT" shall mean with respect to each Alternate Currency
Loan to be made, continued or converted in an Alternative Currency, the amount
of Dollars into which the principal amount of such advance may be converted at
the spot rate at which Dollars are offered to the Lender in Chicago for the
Alternative Currency in an amount comparable to the amount of such advance at
approximately 11:00 a.m. (Chicago time) the second Business Day prior to the
date such advance is to be made or continued, as the case may be.
"EBT" shall mean, for any period, on a consolidated basis for the
Borrower and its Subsidiaries, Net Income of the Borrower and its Subsidiaries,
plus consolidated income tax expense for the Borrower and its Subsidiaries
deducted in determining Net Income for such period, all as determined in
accordance with GAAP.
"ELIGIBLE ACCOUNTS" shall mean those Accounts of each of UAI, UBP,
Brake Parts and IDC included in an Accounts Report which, as of the date of such
Accounts Report and at all times thereafter do not violate the negative
covenants and other provisions of this Agreement and do satisfy the affirmative
covenants and other provisions of this Agreement, including all of the following
criteria:
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(a) The Account arises because of the sale of goods in the
ordinary course of business and such goods have been shipped or
delivered on open account and on an absolute sale basis and not on
consignment, on approval or on a sale-or-return basis or subject to any
other repurchase or return agreement and no material part of such goods
has been returned, repossessed, rejected, lost or damaged;
(b) The Account is not evidenced by chattel paper or an
instrument of any kind;
(c) The Account Debtor obligated on such Account is not
insolvent or the subject of any bankruptcy or insolvency proceeding of
any kind and the Lender is satisfied with the creditworthiness of such
Account Debtor;
(d) The Account Debtor's principal place of business is
located in the United States or Canada and the Account Debtor does not
owe other amounts to the Borrower that are more than 90 days past due;
provided, however, that (i) if 25 % or more of all amounts owed by the
Account Debtor to the Borrower are more than 90 days past due, all
amounts owed by such Account Debtor shall be excluded from Eligible
Accounts in their entirety, and (ii) if less than 25 % of all amounts
owed by the Account Debtor are more than 90 days past due, only such
amounts with respect to such Account Debtor that are more than 90 days
past due will be excluded from Eligible Accounts in their entirety;
(e) The Account is a valid, legally enforceable obligation of
the relevant Account Debtor and such Account Debtor has not asserted
any offset, counterclaim or defense denying liability thereunder;
(f) The Account is subject to and covered by the Lender's
perfected, first priority security interest and is not subject to any
other Lien, claim or security interest (except for Permitted Liens);
(g) The Account is evidenced by an invoice or other
documentation in a form acceptable to the Lender, which invoice is
dated no later than the date of shipment to the Account Debtor and has
a due date not later than 90 days after the invoice date;
(h) The Account is not owing from an employee, officer, agent,
director, stockholder or Affiliate or from the United States or Canada
or any department, agency or instrumentality thereof;
(i) The Account does not arise out of a contract or order
which by its terms forbids, restricts or makes void or unenforceable
the assignment by the Borrower to the Lender of the Account arising
with respect thereto;
(j) The Account Debtor is not located in New Jersey, Minnesota
or any other state denying creditors access to its courts in the
absence of a Notice of Business Activities Report or similar filing,
unless the Borrower (or UAI, UBP, Brake Parts or IDC, as the case may
be) has either qualified as a foreign corporation, authorized to
transact business in such state or has filed a Notice of Business
Activities Report or similar filing with the applicable state agency
for the then current year;
(k) Each of the warranties and representations set forth
herein and in the Security Agreements with respect to the Account has
been reaffirmed with respect to such Account at the time the most
recent Accounts Report was delivered to the Lender;
(1) The Account is one against which the Lender is legally
permitted to make advances and all applicable legal requirements with
respect to such Account have been satisfied; and
(m) The Account is not a "contra receivable" and is net of any
account payable by the Borrower or its Affiliates to such Account
Debtor.
An Account which is at any time an Eligible Account, but which subsequently
fails to meet any of the foregoing requirements, shall forthwith cease to be an
Eligible Account.
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"ELIGIBLE INVENTORY" shall mean that Inventory of each of UAI, UBP,
Brake Parts and IDC included in an Inventory Certification Report which, as of
the date of such Inventory Certification Report and at all times thereafter,
does not violate the negative covenants and other provisions of this Agreement
and does satisfy the affirmative covenants and other provisions of this
Agreement, including all of the following criteria:
(a) The Inventory is in good condition, meets all standards
imposed by any governmental agency, or department or division thereof,
having regulatory authority over such goods, their use or sale and is
either currently usable or currently saleable in the ordinary course of
the Borrower's business and is not otherwise unacceptable to the Lender
due to age, type, category or quantity;
(b) The Inventory is located at the Premises (and if any part
of the Premises is leased, is subject to a landlord's waiver
satisfactory to the Lender), is subject to and covered by the Lender's
perfected, first-priority security interest and is not subject to any
other Lien, claim, encumbrance or security interest (except for
Permitted Liens);
(c) The Inventory has not been consigned to a customer of, or
from a supplier to, the Borrower;
(d) Each of the warranties and representations set forth
herein and in the Security Agreements relating to Inventory has been
reaffirmed with respect thereto at the time the most recent Inventory
Certification Report was delivered to the Lender;
(e) The Inventory is not so identified to a contract to sell
that it constitutes an Account;
(f) The Inventory is not being held by a third party
processor, unless (i) the Lender has a first priority Lien in such
Inventory which has been acknowledged by such processor in writing
reasonably acceptable to the Lender, (ii) such processor has waived any
and all lien rights it may now or in the future have with respect to
such Inventory, and (iii) such processor has agreed, for the benefit of
the Lender, that such Inventory shall be clearly marked as being
Inventory of the Borrower and shall be segregated from other inventory
and materials held by time to time by such processor;
(g) The Inventory was not purchased by UAI, UBP, Brake Parts
or IDC as pan of a "bulk" transfer or sale of assets unless all
applicable bulk sales or bulk transfer laws have been complied with;
and
(h) The Inventory is not work-in-process or "expense added
merchandise" Inventory and is net of any finished goods "burden" and
raw materials "burden."
Inventory of UAI, UBP, Brake Parts or IDC which is at any time Eligible
Inventory, but which subsequently fails to meet any of the foregoing
requirements, shall forthwith cease to be Eligible Inventory.
"ENVIRONMENTAL LAWS" shall mean all laws relating to environmental,
health or safety matters, including those relating to fines, orders,
injunctions, penalties, damages, contribution, cost recovery, compensation,
losses or injuries resulting from the release or threatened release of Hazardous
Materials and to the generation, use, storage, transportation, or disposal of
Hazardous Materials, in any manner applicable to the Borrower or its
Subsidiaries or their respective properties, each as heretofore and hereafter
amended or supplemented, and any analogous future or present local, state or
Federal statutes, rules and regulations promulgated thereunder or pursuant
thereto, and any other present or future law, ordinance, rule, regulation,
permit or permit condition, order or directive addressing environmental, health
or safety issues.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time.
"ERISA AFFILIATE" shall mean any corporation, trade or business that is
treated as a single employer with the Borrower or any of its Subsidiaries
pursuant to Section 4001(b)(1) of ERISA.
"EVENT OF DEFAULT" shall mean the Events of Default specified in
Section 7.01.
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"FEDERAL FUNDS RAT " shall mean, for any period, a fluctuating interest
rate per annum equal for each day during such period to (a) the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York or (b) if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Lender from three Federal funds brokers of
recognized standing selected by it.
"FEES" shall mean all of the fees payable by the Borrower to the Lender
pursuant to SECTIONS 2.07 AND 2.08(h) of this Agreement and elsewhere under the
Loan Documents.
"FINANCIAL OFFICER" shall mean either the Chief Executive Officer, the
President or the Chief Financial Officer of the Borrower.
"FISCAL YEAR" or "FISCAL YEAR" shall mean each twelve-month period
ending on December 31.
"FOREIGN CONTROL REGULATIONS" shall have the meaning set forth in
SECTION 3.09.
"GUARANTY" shall mean any obligation, contingent or otherwise, of any
Person guarantying or having the economic effect of guarantying any Indebtedness
of any other Person in any manner, whether directly or indirectly, and including
any obligation of such Person, direct or indirect (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (b) to purchase property, securities or
services for the purpose of assuring the owner of such Indebtedness of the
payment of such Indebtedness, or (c) to maintain working capital, equity capital
or other financial condition of the primary obligor so as to enable the primary
obligor to pay such Indebtedness (including any obligation to make capital
contributions, loans or other payments pursuant to a keep well guaranty or
similar instrument); provided, however, that the term "Guaranty" shall not
include endorsements for collection or deposit, in either case in the ordinary
course of business.
"GUARANTORS " shall mean UAI, UBP, Brake Parts and IDC.
"HAZARDOUS MATERIALS" shall mean (a) any chemical, material or
substance defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous waste,"
"restricted hazardous waste," "toxic pollutants," "contaminants," "pollutants,"
"toxic substances" or words of similar import under any applicable local, state
or Federal law or under the regulations adopted or publications promulgated
pursuant thereto, including Environmental Laws, (b) any oil, petroleum or
petroleum derived substances, any drilling fluids, produced waters or other
wastes associated with the exploration, development or production of crude oil,
any flammable substances or explosives, any radioactive materials, any hazardous
wastes or substances, any toxic wastes or substances or any other materials or
pollutants which (i) pose a hazard to any property of the Borrower or any of its
Subsidiaries or to. Persons on or about such properties, or (ii) cause such
properties to be in violation of any Environmental Laws, (c) asbestos in any
form which is or could become friable, radon gas, urea formaldehyde foam
insulation, or transformers or other electrical equipment which contain any oil
or dielectric fluid containing polychlorinated biphenyls, and (d) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority.
"HEDGING AGREEMENT" shall mean any interest rate or currency hedging
contract now existing or hereafter entered into by any Person.
"HEDGING RESERVE" shall mean 8 % of the notional (face) amount of any
Hedging Agreement between the Borrower and/or any of its Subsidiaries and any
Person.
"INDEBTEDNESS" shall mean, with respect to any Person, without
duplication (a) all obligations of such Person for borrowed money, or with
respect to deposits with such Person or advances to such Person of any kind, (b)
all obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such Person upon which interest charges are
customarily paid, (d) all obligations of such Person under conditional sale or
other title retention agreements relating to property purchased by such Person,
(e) all obligations of such Person issued or assumed as the deferred purchase
price of property or services (other than trade payables and
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accrued expenses incurred in the ordinary course of business not yet due and
payable or not yet more than 60 days in arrears or with respect to which such
Person is contesting in good faith the amount or validity thereof), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (g) all obligations of such Person under
leases that are classified as capital leases under generally accepted accounting
principles, (h) all Guaranties of such Person including, but not limited to, the
Subsidiary Guaranties, (i) all obligations of such Person under any Hedging
Agreement, and 0) all obligations of such Person under or with respect to
letters of credit and bankers acceptances.
"INTERCOMPANY NOTES" shall mean those promissory notes of each of UAI,
UBP, Brake Parts and IDC in favor of the Borrower, in substantially in the form
of EXHIBIT F.
"INTEREST PAYMENT DATE" shall mean: (a) with respect to any Prime Rate
Loan, the first Business Day of each calendar month and the date of any
conversion of such Prime Rate Loan into a LIBOR Loan; and (b) with respect to
any LIBOR Loan or Alternative Currency Loan, the last Business Day of each 30
day period during each applicable Interest Period.
"INTEREST PERIOD" shall mean with respect to any LIBOR Loan or
Alternative Currency Loan (a) initially, the period commencing on the initial
date of borrowing as set forth in the Notice of Borrowing described in SECTION
2.05 or the conversion date, or continuation date, as the case may be, with
respect to such LIBOR Loan or Alternative Currency Loan and ending one month,
two months or three months thereafter, as selected by the Borrower in the Notice
of Borrowing or Notice of Conversion, and (b) thereafter, each period commencing
on the last day of the next preceding Interest Period applicable to such LIBOR
Loan or Alternative Currency Loan and ending one month, two months or three
months thereafter, as selected by the Borrower in the Notice of Continuance
described in SECTION 2.09(b); provided that the foregoing provisions relating to
Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day which is not a
Business Day, that Interest Period shall be extended to the next succeeding
Business Day except if the result of such extension would be for such Interest
Period to end in another calendar month in which event such Interest Period
shall end on the immediately preceding Business Day;
(ii) any Interest Period that would otherwise extend beyond the
Revolving Credit Termination Date shall end on the Revolving Credit Termination
Date, and any Interest Period that would otherwise extend beyond the Tenn Loan
Maturity Date shall end on the Tenn Loan Maturity Date;
(iii) if the Borrower fails to give notice of the length of the
Interest Period it requests with respect to the LIBOR Loan or Alternative
Currency Loan, it shall be deemed to have selected a LIBOR Loan or Alternative
Currency Loan of one month;
(iv) any Interest Period pertaining to a LIBOR Loan or Alternative
Currency Loan that begins on the last Business Day of a calendar month (or a day
for which there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the last Business Day of a calendar
month; and
(v) no Interest Period with respect to any Loan under the Term Loan
Facility shall extend beyond a date on which the Borrower is required to make a
scheduled payment of principal of any Loan under the Term Loan Facility unless
the aggregate principal amount of the Loans under the Tenn Loan Facility that
are Prime Rate Loans plus the aggregate principal amount of Loans under the Term
Loan Facility that are LIBOR Loans with Interest Periods expiring on or before
such date equals or exceeds the principal amount required to be paid on any such
Loan under the Tenn Loan Facility on such date.
"IDC" shall mean International Discus Corporation, a corporation formed
under the laws of Ontario and wholly-owned subsidiary of UBP.
"INVENTORY" shall mean the Inventory defined in the Security
Agreements.
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"INVENTORY AVAILABILITY " shall mean the lesser of (a) the sum of (i)
with respect to Eligible Inventory other than Core Inventory, 50% of the
aggregate value of such Eligible Inventory, and (ii) with respect to Eligible
Inventory which is Core Inventory, 25 % of the aggregate value of such Eligible
Inventory (lower of cost or market, with cost generally determined using the
weighted average method, which approximates the first-in, first-out method, net
of such reserves as the Lender deems proper and necessary); and (b) $9,000,000;
provided, however, that beginning in Fiscal Year 1998, if the audited financial
statements of the Borrower for Fiscal Year 1997 reflect an EBT for such Fiscal
Year of at least $1,000,000, the amount in subsection (b) of this definition
shall be increased to $10,000,000, effective on the date of delivery of such
audited financial statements pursuant to SECTION 5.05(a).
"INVENTORY CERTIFICATION REPORT" shall mean a report delivered to the
Lender by the Borrower, as required by SECTION 5.05, consisting of a detailed
listing of all of UAI's and UBP's Inventory as of the date of such Inventory
Certification Report describing the kind, type, quality, quantity, location and
the lower of cost (computed on the basis of a first-in, first-out cost flow
assumption) or market value of such Inventory.
"LENDER" shall mean the Lender defined in the preamble of this
Agreement.
"LETTER OF CREDIT" shall mean any letter of credit issued by the Lender
for the account of the Borrower in accordance with SECTION 2.08.
"LETTER OF CREDIT OBLIGATIONS" shall mean, at any particular time, the
sum of (a) Reimbursement Obligations and (b) the aggregate maximum amount then
available to be drawn under the Letters of Credit.
"LETTER OF CREDIT REIMBURSEMENT AGREEMENT" shall mean, with respect to
a Letter of Credit, such reimbursement agreement as the Lender may employ in the
ordinary course of business for its own account.
"LEVERAGE RATIO" shall mean, as at any date of determination thereof,
the ratio of (a) the total Indebtedness of the Borrower and its Subsidiaries to
(b) the sum of (i) the Tangible Net Worth of the Borrower and its Subsidiaries
plus (ii) the Subordinated Debt of the Borrower and its Subsidiaries for the
most recently ended fiscal quarter, all calculated on a consolidated basis in
accordance with generally accepted accounting principles applied on a consistent
basis.
"LIBOR RATE" shall mean with respect to each Interest Period for any
LIBOR Loan the rate of interest per annum equal to the quotient of (a) the rate
of interest per annum (expressed as a whole number) at which deposits in U.S.
Dollars in immediately available funds are offered to the Lender at
approximately 11: 00 a.m. (London, England time) two Business Days prior to the
beginning of such Interest Period in the London interbank eurodollar market for
a period equal to such Interest Period and in a Dollar amount equal or
comparable to the principal amount of such LIBOR Loan, divided by (b) a number
equal to 1.0 minus the daily average for the applicable Interest Period of the
maximum rate (expressed as a decimal) at which reserves (including, without
limitation, basic, supplemental, marginal and emergency reserves) are imposed
during such Interest Period by the Board (or any successor) under Regulation D
on to "eurocurrency liabilities," as defined in such Board's Regulation D (or in
respect of any other category of liabilities that includes deposits by reference
to which the interest rate on the LIBOR Loans is determined by any category of
extension of credit or other assets that includes loans by non-United States
offices of any lender to United States residents) subject to any amendments of
such reserve requirement by such Board or its successor, taking into account any
transitional adjustments thereto (such LIBOR Rate to be adjusted to the next
higher 1/16 of one percent). For purposes of this definition, the LIBOR Loans
shall be deemed to be "eurocurrency liabilities" as defined in Regulation D.
"LIBOR LOAN" shall mean any Loan (or portion thereof) bearing interest
at the LIBOR Rate, as designated by Borrower in its Notice of Borrowing, Notice
of Conversion or Notice of Continuance.
"LIEN" shall mean, with respect to any asset, any hen, mortgage,
security interest, charge or encumbrance of any kind, including the rights of a
vendor, lessor, or similar party under any conditional sale agreement or other
title retention agreement or lease substantially equivalent thereto, any
production or advance payment and any other right of or arrangement with any
creditor to have his claim satisfied out of any property or assets, or the
proceeds therefrom, prior to the general creditors of the owner thereof.
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"LOAN" shall mean any advance made by the Lender to the Borrower under
the Revolving Credit Facility (including any Alternative Currency Loan) or the
Term Loan Facility.
"LOAN ACCOUNT " shall mean the Loan Account defined in SECTION 2.06(b).
"LOAN DOCUMENTS" shall mean collectively this Agreement, the Notes, the
Collateral Documents, the UAI Guaranty, the Canadian Guaranty, the Intercompany
Notes, the Subordination Agreement and the reports, certificates, financial
statements and other agreements and instruments executed and delivered by the
Borrower or any Guarantor, as the case may be, in connection herewith or
therewith.
"LOCKBOX AGREEMENT" shall mean the Lockbox Agreement among the Lender,
the Borrower and the Guarantors, executed and delivered on the Closing Date in
substantially the form of EXHIBIT J.
"MARGIN STOCK" shall have the meaning assigned such term in Regulation
U.
"MATERIAL ADVERSE EFFECT" shall mean (a) a material adverse effect upon
the business, operations, prospects, properties, assets, liabilities, operating
results, cash flows or condition (financial or otherwise) of the Borrower or any
of the Guarantors or (b) a material impairment of the ability of the Borrower or
any Guarantor to perform the obligations, or the impairment of the validity or
enforceability of, or material impairment of the rights or remedies of, or
benefits to, the Lender, under any Loan Document, including a material
impairment of the value of any Collateral.
"MORTGAGE" shall mean the mortgage in substantially the form of EXHIBIT
C.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan (within the
meaning of Section 3(37) of ERISA) that is maintained for employees of the
Borrower or any of its Subsidiaries or any ERISA Affiliate.
"NET INCOME" shall mean, for any period, with respect to the Borrower
and its Subsidiaries on a consolidated basis, cumulative Net Income earned
during such period, determined in accordance with GAAP.
"NOTES" shall mean collectively the Revolving Credit Note and the Term
Loan Note to be executed and delivered by the Borrower on the Closing Date.
"NOTICE OF BORROWING" shall mean the Notice of Borrowing described in
SECTION 2.05.
"NOTICE OF CONTINUATION" shall mean the Notice of Continuation
described SECTION 2.09(b).
"NOTICE OF CONVERSION" shall mean the Notice of Conversion described in
SECTION 2.09(a).
"OBLIGATIONS" shall mean the Obligations as defined in the Borrower
Security Agreement.
"PENSION PLAN" shall mean any Plan and any Multiemployer Plan that is
subject to the provisions of Section 302 of ERISA or Title IV of ERISA.
"PERMITTED LIENS" shall mean the Liens permitted by SECTION 6.02.
"PERSON" shall mean and includes natural persons, corporations
(business, municipal or not-for-profit), limited partnerships, general
partnerships, limited liability companies, joint stock companies, joint
ventures, associations, companies, trusts, banks, trust companies, land trusts,
business trusts and other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof.
"PLAN" shall mean any employee Benefit plan (within the meaning of
Section 3(3) of ERISA), other than a Multiemployer Plan, that is maintained for
employees of the Borrower or any ERISA Affiliate.
"PREMISES" shall mean the Premises described in SECTION 3.17.
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"PRIME RATE" shall mean on any day a fluctuating rate per annum. equal
to the higher of (i) the rate of interest designated by the Lender from time to
time as its "Prime Rate," and (ii) a rate of interest equal to the sum of (A)
the Federal Funds Rate, plus (B) 0. 5 %. The Prime Rate is not necessarily the
lowest rate of interest charged by the Lender in connection with extensions of
credit. Changes in the rate of interest on the Loan shall take effect
simultaneously with each change in the Prime Rate. The applicaM2 Prime Rate
shall be determined by the Lender in its sole judgment, and such determination
shall be conclusive absent manifest error.
"PRIME RATE LOAN" shall mean any Loan (or portion thereof) bearing
interest at the Prime Rate, as designated by the Borrower pursuant to its Notice
of Borrowing, Notice of Conversion or Notice of Continuance.
"REGULATION D, G, T, U OR X" shall mean Regulation D, G, T, U or X of
the Board, as each of the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof.
"REIMBURSEMENT OBLIGATION" shall mean all amounts owed by the Borrower
to the Lender (whether or not evidenced by any note or instrument), direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, representing the principal of and interest on payments made
by the Lender under or in connection with any Letter of Credit, including but
not limited to, all unpaid drawings, fees, premiums, expenses, attorneys' fees,
accountants' fees, capital adequacy charges, increased costs and similar costs
and expenses owed or payable under this Agreement or any Letters of Credit,
including but not limited to, the fees set forth in SECTION 2.08 hereof.
"REPORTABLE EVENT" shall mean any Reportable Event within the meaning
of Section 4043(b) of Title IV of ERISA or the regulations issued thereunder.
"REVOLVING CREDIT AVAILABILITY" shall mean the Revolving Credit
Availability described in SECTION 2.01(a).
"REVOLVING CREDIT FACILITY" shall mean the Revolving Credit Facility
described in SECTION 2.01(a).
"REVOLVING CREDIT NOTE" shall mean the Revolving Credit Note described
in SECTION 2.02, to be executed and delivered by the Borrower on the Closing
Date, in substantially the form of EXHIBIT A-1.
"REVOLVING CREDIT TERMINATION DATE" shall mean May 1, 1999.
"SECURITY AGREEMENTS" shall mean the Borrower Security Agreement, the
UAI Security Agreement and the Canadian Security Agreement.
"SHAREHOLDERS' EQUITY" shall mean the sum of the capital stock, capital
in excess of par and stated value of shares of its capital stock, retained
earnings and any other account, including any special account for common stock
subject to redemption, which, in accordance with generally accepted accounting
principles, constitutes stockholder's equity (or such other appropriate account
designation).
"STOCK PLEDGE AGREEMENT" shall mean that certain Stock Pledge Agreement
executed and delivered by the Borrower on the Closing Date, in substantially the
form of EXHIBIT D-1, pursuant to which the Borrower pledges the stock of UAI and
UBP to the Lender.
"SUBORDINATION AGREEMENT" the Intercreditor and Subordination Agreement
among the Borrower, the Lender and Sirrom Capital Corporation to be executed and
delivered as of the Closing Date.
"SUBORDINATED DEBT" shall mean funded Indebtedness of the Borrower
payable to a Person on terms and subject to conditions satisfactory to the
Lender and which is subordinated to the Obligations pursuant to a written
subordination agreement satisfactory to the Lender in its sole discretion. The
Subordination Agreement executed and delivered on the Closing Date shall be
deemed satisfactory to the Lender.
"SUBSIDIARY" shall mean, as to any Person (a) any corporation, more
than 50 % of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have
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voting power by reason of the happening of any contingency) is at the time owned
by such Person and/or one or more Subsidiaries of such Person and (b) any
partnership, association, joint venture, or other entity in which such Person
and/or one or more Subsidiaries of such Person has greater than a 50% equity
interest at the time.
"SUBSIDIARY GUARANTIES" shall mean the UAI Guaranty and the Canadian
Guaranty.
"TANGIBLE NET WORTH" shall mean, as of any particular date, the
Borrower's Shareholders' Equity, minus the value of the Borrower's unamortized
debt discount and expense, prepaid expenses, deposits, unamortized deferred
charges, goodwill, organization costs, noncompetition agreements, patents,
copyrights, trademarks and other intangible items, all as determined in
accordance with generally accepted accounting principles.
"TAXES" shall mean the Taxes detailed in SECTION 2.06(e).
"TERM LOAN FACILITY" shall mean the Term Loan Facility described in
SECTION 2.01(b).
"TERM LOAN MATURITY DATE" shall mean May 1, 2002.
"TERM LOAN NOTE" shall mean the Term Loan Note described in Section
2.02, to be executed and delivered by the Borrower on the Closing Date in
substantially the form of EXHIBIT A-2.
"TOOLING INVENTORY" shall mean coreboxes and other patterns used for
the purpose of producing parts or castings.
"TRANSACTIONS" shall mean collectively the execution, delivery and
performance by the Borrower and the Guarantors of this Agreement and each of the
other Loan Documents, the borrowing by the Borrower hereunder, the grant of
Liens pursuant to the Collateral Documents and all other transactions
contemplated by this Agreement and the other Loan Documents.
"UAI" shall mean Universal Automotive, Inc., an Illinois corporation
and wholly subsidiary of the Borrower.
"UAI GUARANTY" shall mean that certain Guaranty of UAI in favor of the
Lender, in substantially the form of EXHIBIT E-1.
"UAI SECURITY AGREEMENT" shall mean a security agreement executed and
delivered by UAI on the Closing Date, in substantially the form of EXHIBIT
B-2,pursuant to which UAI grants the Lender a security interest in the
Collateral described in such UAI Security Agreement.
"UBP" shall mean UBP Canholdings, Inc., a corporation formed under the
laws of Ontario and wholly-owned subsidiary of the Borrower.
"UNITED STATES" and "U.S." shall each mean the United States of
America.
SECTION 1.02. ACCOUNTING TERMS. Except as otherwise herein specifically
provided, each accounting term used herein shall have the meaning given it under
generally accepted accounting principles in effect from time to time in the
United States applied on a consistent basis; provided, however, that each
reference in ARTICLE VI hereof, or in the definition of any term used in ARTICLE
VI hereof, to generally accepted accounting principles, shall mean generally
accepted accounting principles as in effect in the United States on the date
hereof.
SECTION 1.03. INTERPRETATION. In this Agreement and each other Loan
Document, unless a clear contrary intention appears:
(a) the singular number includes the plural number and vice versa;
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(b) reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns are permitted by
the Loan Documents, and reference to a Person in a particular capacity excludes
such Person in any other capacity;
(c) reference to either gender includes the other gender;
(d) reference to any agreement (including this Agreement and the
Schedules and Exhibits and the other Loan Documents), document or instrument
means such agreement, document or instrument as amended or modified and in
effect from time to time in accordance with the terms thereof and, if
applicable, the terms hereof and the other Loan Documents, and reference to any
promissory note includes any promissory note which is an extension or renewal
thereof or a substitute or replacement therefor;
(e) reference to any law, rule, regulation, order, decree, requirement,
policy, guideline, directive or interpretation means as amended, modified,
codified, replaced or reenacted, in whole or in part, and in effect on the
determination date, including rules and regulations promulgated thereunder;
(f) reference to any Article, Section, Schedule, or Exhibit means such
Article or Section of this Agreement or Schedule or Exhibit to this Agreement;
(g) "hereunder," "hereof," "hereto" and words of similar import shall
be deemed references to this Agreement as a whole and not to any particular
Article, Section or other provision hereof;
(h) "including" (and with correlative meaning "include") means limiting
the generality of any description preceding such term; and
(i) relative to the determination of any period of time, "from" means
"from and including" and "to" means "to but excluding."
ARTICLE II THE FACILITIES
SECTION 2.01. THE LOANS.
(a) REVOLVING CREDIT FACILITY.
(i) Subject to the terms and-conditions of this Agreement, the
Lender shall make available to the Borrower from time to time during
the term of this Agreement up to the Revolving Credit Termination Date,
a revolving line of credit (the "REVOLVING CREDIT FACILITY") in an
aggregate amount not to exceed at any one time the lesser of (A)
$20,000,000, and (B) the Borrowing Base; provided, however, that such
lesser amount shall be reduced by the amount of (w) any Letter of
Credit Obligations, (x) the Contingency Reserve, (y) the Hedging
Reserve and (z) the Alternative Currency Utilization (the "REVOLVING
CREDIT AVAILABILITY").
(ii) If (A) the Borrower's audited financial statements for
Fiscal Year 1997 reflect (1) an EBT of at least $3,000,000 for such
Fiscal Year and (2) a Leverage Ratio of less than 3. 0: 1.0 at the end
of Fiscal Year 1997 and (B) at such time, the Borrower is in compliance
with all covenants contained in this Agreement (and no Default or Event
of Default otherwise exists hereunder), the Borrowing Base limitation
on the Revolving Credit Availability shall be suspended. If thereafter
the Borrower (A) incurs a net loss (calculated for the Borrower and its
Subsidiaries on a consolidated basis in accordance with GAAP) as at the
end of any subsequent month, calculated on a cumulative, year-to-date
basis as of the end of such month, (B) has a Leverage Ratio of greater
than 3. 0: 1. 0 at the end of any month or (C) is in noncompliance with
any covenant contained in this Agreement or a Default or Event of
Default otherwise occurs, the Borrowing Base limitation on the
Revolving Credit Availability shall be automatically reinstated as of
the earliest of the events specified in clauses (A), (B) or (C) above
to occur, until such time as (x) with respect to a noncompliance with
clauses (B) or (C), such noncompliance ceases to exist, and (y) in the
event of noncompliance with clause (A) above, until such time as the
Borrower records a positive
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Net Income for a period of three consecutive months, calculated on a
cumulative, year-to-date basis; whereupon following the curing of such
noncompliance, the Borrowing Base limitation on the Revolving Credit
Availability shall be rescinded, subject to reinstatement upon a
subsequent violation of clause (A), (B) or (C) above.
(iii) Subject to the terms and conditions of this Agreement,
the Lender shall make available to the Borrower from time to time under
the Revolving Credit Facility during the term of this Agreement up to
the Revolving Credit Termination Date Alternative Currency Loans in a
Dollar Equivalent not to exceed at any one time (together with the
Current Dollar Equivalent at such time of all outstanding Alternative
Currency Loans) the Alternative Currency Sublimit. The Current Dollar
Equivalent of outstanding Alternative Currency Loans shall constitute
utilization under the Revolving Credit Facility.
(iv) Subject to the terms and conditions of this Agreement,
the Borrower may borrow, repay, prepay and reborrow under the Revolving
Credit Facility.
(b) TERM LOAN FACILITY. Subject to the terms and conditions of this
Agreement, the Lender shall make available to the Sorrow"e-i on the Closing Date
a term loan (the "TERM LOAN FACILITY") in an aggregate amount of up to
$4,450,000. Repayments and prepayments of the Term Loan Facility shall not be
subject to reborrowing.
SECTION 2.02. EVIDENCES OF DEBT. The Revolving Credit Facility and the
Loans made by the Lender to the Borrower thereunder shall be evidenced by the
Revolving Credit Note. The Term Loan Facility shall be evidenced by the Term
Loan Note. Alternative Currency Loans under the Revolving Credit Facility shall
be maintained and recorded by the Lender in accordance with its usual practice
for evidencing such Loans (and the Borrower agrees to execute and deliver upon
the request of the Lender a promissory note or other evidence of debt
denominated in the Alternative Currency and in the amount of the Alternative
Currency Sublimit, in which case any such note shall be deemed a "Note"
hereunder for all purposes.) The Lender shall, and is hereby authorized by the
Borrower to, record on any schedules attached to the Notes (or on a continuation
of such schedules attached to the Notes and made a part thereof), or otherwise
record in the Lender's internal records, an appropriate notation evidencing the
date and amount of each Loan from the Lender, each payment of principal of any
portion of each Loan, each payment of interest on each Loan and the other
information provided for on such schedule; provided, however, that the failure
of the Lender to make such a notation or any error in such a notation shall not
affect the obligation of the Borrower to repay the Loans in accordance with the
terms of the Notes and this Agreement.
SECTION 2.03. MAINTENANCE OF LOANS: INTEREST.
(a) MAINTENANCE OF LOANS. The Loans may be made and maintained
as (i) Prime Rate Loans, (ii) LIBOR Loans, (iii) Alternative Currency
Loans (subject to the limitations on Alternative Currency Loans
contained herein), or (iv) any combination of Prime Rate Loans, LIBOR
Loans and Alternative Currency Loans (subject to the limitations on
Alternative Currency Loans contained herein), provided that all Loans
comprising a part of the same borrowing shall be of the same type. The
aggregate principal amount of each Loan, whether new, converted or
continued, shall not be less than $100,000 for a Prime Rate Loan or
$1,000,000 for a LIBOR Loan or an Alternative Currency Loan and shall
be in integral multiples of $25,000 for Prime Rate Loans and $500,000
for LIBOR Loans and Alternative Currency Loans. More than one borrowing
may occur on the same date, but at no time shall there be outstanding
more than five LIBOR Loans and Alternative Currency Loans.
(b) INTEREST. Except as set forth in SECTION 2.04, the
Borrower shall pay the Lender interest on the outstanding principal
balance of the Loans from time to time at a rate per annum equal to (i)
with respect to Prime Rate Loans, the Prime Rate plus the Applicable
Margin per annum; (ii) with respect to LIBOR Loans, the LIBOR Rate plus
the Applicable Margin per annum; and (iii) with respect to Alternative
Currency Loans, the Alternative Currency Rate plus the Applicable
Margin per annum. The records of the Lender as to the interest rate
applicable to a particular advance shall be binding and conclusive
absent manifest error. Interest shall be payable from the day of such
advance of the Loan to the day of repayment of such advance. Interest
shall be computed on the basis of the actual number of days elapsed on
the basis of a year consisting of 360 days, and shall be payable as
provided in SECTION 2.06.
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(c) INABILITY TO DETERMINE INTEREST RAT. In the event, and on
each occasion, that on the day two Business Days prior to the
commencement of any Interest Period for a LIBOR Loan or Alternative
Currency Loan, the Lender shall have determined in good faith (which
determination shall be conclusive and binding upon the Borrower) that
currency deposits in the amount of such LIBOR Loan or Alternative
Currency Loan, as the case may be, are not generally available in the
London Interbank market, or that the rate at which such currency
deposits are being offered will not adequately and fairly reflect the
cost to the Lender of maintaining the principal amount of such LIBOR
Loan or Alternative Currency Loan during such Interest Period, the
Lender shall promptly after such determination shall have been made
give telex or telecopy notice of such determination, confirmed in
writing, to the Borrower. In the event of such a determination, any
request by the Borrower for (i) the making of, conversion to or
continuation of a LIBOR Loan shall be deemed to be a request for a
Prime Rate Loan and (ii) the making of or continuation of an
Alternative Currency Loan shall be deemed to be withdrawn by the
Borrower and any outstanding Alternative Currency Loan shall be repaid
on such date. The Lender shall use reasonable efforts to notify the
Borrower of a change in the circumstances causing the LIBOR Loan or
Alternative Currency Loans to be unavailable but shall not incur any
liability for any failure so to notify the Borrower.
SECTION 2.04. INTEREST ON OVERDUE AMOUNTS. If the Borrower shall
default in the payment of the principal of or interest on any Loan or any other
amount becoming due hereunder, by scheduled maturity, notice of prepayment,
acceleration or otherwise, the Borrower shall on demand from time to time from
the Lender pay interest, to the extent permitted by law, on such defaulted
amount from the day after the due date thereof to the date of actual payment
(after as well as before judgment) at a rate per annum computed on the basis of
the actual number of days elapsed on the basis of a year consisting of 360 days,
equal to (a) with respect to Prime Rate Loans, the Prime Rate 4LIus the
Applicable Margin) plus 3 % per annum, (b) with respect to LIBOR Loans, the rate
applicable to such Loans pursuant to SECTION 2.03(b) above until the end of the
applicable Interest Period, plus 3 % per annum, and thereafter at a rate equal
to the Prime Rate plus the Applicable Margin) plus 3 % per annum, and (c) with
respect to Alternative Currency Loans, the rate applicable to such Loans
pursuant to SECTION 2.03(b) above, plus 3 % per annum (any such applicable
post-default rate, the "DEFAULT RATE").
SECTION 2.05. BORROWING PROCEDURES. In order to effect a Loan under
the Revolving Credit Facility or the Term Loan Facility, Borrower's
Representative shall give the Lender written notice or telephone notice
(immediately confirmed by facsimile) not later than 11:00 a.m., Chicago time, on
(a) the third Business Day prior to the proposed borrowing date in the case of a
LIBOR Loan or Alternative Currency Loan, and (b) not later than 11: 00 a.m.,
Chicago time, on the proposed borrowing date in the case of a Prime Rate Loan
(the "NOTICE OF BORROWING"). The Borrower hereby authorizes the Lender to extend
advances and make Loans to Borrower based on written or telephone notice from
Borrower's Representative. Each Notice of Borrowing shall specify the principal
amount of the Loans to be made pursuant to such borrowing, the date of such
borrowing (which shall be a Business Day), whether the Loans being made pursuant
to such Borrowing are to be initially maintained as Prime Rate Loans,
Alternative Currency Loans or LIBOR Loans and, if LIBOR Loans or Alternative
Currency Loans, the initial Interest Period to be applicable thereto. The Term
Loan Facility shall only be subject to borrowing on the Closing Date and the
Commitment with respect to the Term Loan Facility shall expire and terminate on
the Closing Date.
SECTION 2.06. PAYMENT
(a) PRINCIPAL AND INTEREST. If not sooner paid, the
outstanding principal amount of each Loan made under the Revolving
Credit Facility (including Alternative Currency Loans) shall be paid on
the Revolving Credit Termination Date. If not sooner paid, the
outstanding principal amount of the Loan made under the Term Loan
Facility shall be repaid monthly on the first Business Day of each
month in equal principal payments of $24,722, with the remaining
outstanding balance of principal and all accrued interest payable on
the Tenn Loan Maturity Date. All principal payments of the Loans shall
be accompanied by accrued interest on the principal amount being repaid
to the date of payment. Interest on all Loans shall be payable in
arrears on each Interest Payment Date. All payments by the Borrower
pursuant to this Agreement, the Notes or any other Loan Document,
whether in respect of principal, interest, or otherwise, shall be made
without setoff, counterclaim or deduction in same day funds by the
Borrower to the Lender. All such payments required to be made to the
Lender shall be made not later than 2:00 p.m., Chicago time, on the
date due by wire transfer (or by advice of transfer from or between
accounts of the Borrower at the
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Lender) to the Loan Account or such other account as the Lender shall
specify from time to time by notice to the Borrower. All payments in
respect of LIBOR Loans and Prime Rate Loans shall be made in
immediately available Dollars. All payments of Alternative Currency
Loans shall be made in immediately available Alternative Currency.
Funds received after that time shall be deemed to have been received by
the Lender on the next following Business Day. Whenever any payment to
be made shall otherwise be due on a day which is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in computing interest, if any, in
connection with such payment.
(b) LOAN ACCOUNT. The Borrower shall maintain a demand deposit
account ("LOAN ACCOUNT") with the Lender into which all advances of
the Loans by the Lender to the Borrower shall be made. The Borrower
hereby authorizes the Lender, and the Lender may, in its sole and
absolute discretion, charge for any payments due hereunder, under the
Notes and under the other Loan Documents, the Loan Account or any other
bank account of the Borrower with the Lender; provided, however, that
the provisions of this SECTION 2.06(b) shall not affect the Borrower's
obligation to pay when due all amounts payable by the Borrower under
this Agreement, the Notes and any other Loan Document, whether or not
there are sufficient funds in the Loan Account or any such other bank
account of the Borrower.
(c) MANDATORY PAYMENTS. If, at any time the Credit
Utilizations exceed the Revolving Credit Availability, the Borrower
immediately shall pay to the Lender an amount equal to such excess,
which will be (i) first, used to prepay the outstanding principal
amount of the Revolving Credit Note and (ii) second, held by the Lender
as cash collateral to secure the obligations of the Borrower hereunder
with respect to the Letters of Credit. The Lender shall give written
notice to the Borrower of any such excess, but failure to give such
notice shall not relieve the Borrower of its obligation to immediately
pay to the Lender such excess as provided above. If on the last
Business Day of any month the Current Dollar Equivalent of outstanding
Alternative Currency Loans exceeds the Alternative Currency Sublimit,
the Borrower immediately shall pay the Lender an amount in the
Alternative Currency equal to such excess, which will be used to prepay
the outstanding principal amount of Alternative Currency Loans under
the Revolving Credit Facility.
(d) APPLICATION OF PAYMENTS. The Borrower irrevocably waives
the right to direct the application of payments and collections
received by the Lender from or on behalf of the Borrower, and the
Borrower agrees that the Lender shall have the continuing exclusive
right to apply and reapply any and all such payments and collections
against the Obligations in such manner as the Lender may deem
appropriate, notwithstanding any entry by the Lender upon any of its
books and records. To the extent that the Borrower makes a payment or
payments to the Lender or the Under receives any payment or proceeds of
the Collateral for the Borrower's benefit, which payments or proceeds
or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy act, state or
Federal law, common law or equitable cause, then, to the extent of such
payment or proceeds received, the Obligations or part thereof intended
to be satisfied shall be revived and shall continue in full force and
effect, as if such payments or proceeds had not been received by the
Lender.
(e) TAXES ON PAYMENTS. All Payments made by the Borrower under
the Notes or this Agreement shall be made free and clear Of, and
without deduction or withholding for Or on account of, any present or
future income, stamp or other taxes, levies, assessments, imposts,
deductions, charges, or withholdings imposed by any foreign, Federal,
state, local or other jurisdiction or any governmental agency thereof
or political subdivision or taxing authority therein, excluding taxes
imposed on the overall net income of the Lender by the jurisdiction in
which the Lender has its principal office (all such non-excluded taxes
being hereinafter called "TAXES"). If any Taxes are required to be
withheld from any amounts so payable to the Lender hereunder or under
the Notes, the amounts so payable to the Lender shall be increased to
the extent necessary to yield to the Lender (after payment of all
Taxes) interest or any such other amounts payable hereunder at the
rates or in the amounts specified in the Notes or this Agreement. If
(i) any Borrower or any other Person is required by law to make any
deduction or withholding on account of any Taxes or other amount from
any sum paid or expressed to be payable by the Borrower to the Lender
under this Agreement; or (ii) any party to this Agreement (or any
Person on its behalf) other than the Borrower is required by law to
make any deduction or, withholding from, or any payment on or
calculated
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by reference to the amount of, any such sum received or receivable by
the Lender under this Agreement, then: (A) the Borrower shall notify
the Lender of any such requirement or any change in any such
requirement as soon as the Borrower becomes aware of it; (B) the
Borrower shall pay any such Taxes or other amount before the date on
which penalties attached thereto become due and payable, such payment
to be made (if the liability to pay is imposed on the Borrower) for its
own account or (if that liability is imposed on any other party to this
Agreement) on behalf of and in the name of that party; (C) the sum
payable by the Borrower in respect of which the relevant deduction,
withholding or payment is required shall be increased to the extent
necessary to ensure that, after the making of that deduction,
withholding or payment, that party receives on the due date and retains
(free from any liability in respect of any such deduction, withholding
or payment) a sum equal to that which it would have received and so
retained had no such deduction, withholding or payment been required or
made; and (D) within thirty (30) days after payment of any sum from
which the Borrower is required by law to make any deduction or
withholding, and within thirty (30) days after the due date of payment
of any Taxes or other amount which it is required by clause (B) above
to pay, it shall deliver to the Lender all such certified documents and
other evidence as to the making of such deduction, withholding or
payment as (1) are reasonably satisfactory to other affected parties as
proof of such deduction, withholding or payment and of the remittance
thereof to the relevant taxing or other authority and (2) are
reasonably required by any such party to enable it to claim a tax
credit with respect to such deduction, withholding or payment. If the
Borrower fails to pay any Taxes when due to the appropriate taxing
authority, the Borrower shall indemnify the Lender for any incremental
taxes, interest or penalties that may become payable by the Lender as a
result of any such failure.
SECTION 2.07. FEES. The Borrower shall pay the Lender (a) a one-time
closing fee of $12,000 on the Closing Date, which fee shall be fully earned and
nonrefundable when paid and (b) a commitment fee of .25 % per annum. of the
average daily unused portion of the maximum aggregate amount of the Revolving
Credit Facility as specified in SECTION 2.01(a)(M), payable in arrears on the
first Business Day of each calendar quarter.
SECTION 2.08. LETTERS OF CREDIT.
(a) OBLIGATION TO ISSUE. Subject to the terms and conditions
of this Agreement, the Lender hereby agrees to issue for the account of
the Borrower one or more Letters of Credit, up to an aggregate face
amount (which shall be in Dollars) at any one time outstanding equal to
the unused amount of the Revolving Credit Availability from time to
time during the term of this Agreement up to the Business Day which is
15 Business Days prior to the Revolving Credit Termination Date. The
Letter of Credit Obligations shall constitute financial accommodations
under the Revolving Credit Facility and shall increase the utilization
of the Revolving Credit Facility by the stated amount of such Letter of
Credit; provided, however, that with respect to Loans made to reimburse
the Lender for a drawing under a Letter of Credit, Letter of Credit
Obligations shall not include the amount of such drawing.
(b) TYPES AND AMOUNTS. The Lender shall not have any
obligation to issue any Letter of Credit at any time: (i) if the
aggregate maximum amount then available for drawing under Letters of
Credit, after giving effect to the Letter of Credit requested
hereunder, shall exceed any limit imposed by law or regulation upon the
Lender; (ii) if the proposed Letter of Credit has an expiration date
later than five Business Days immediately preceding the Revolving
Credit Termination Date; or (iii) if, after giving effect to the Letter
of Credit requested hereunder, the Credit Utilizations would exceed the
Revolving Credit Availability.
(c) CONDITIONS. In addition to being subject to the
satisfaction of the conditions precedent contained in Article IV, the
obligation of the Lender to issue any Letter of Credit is subject to
the satisfaction in full of the following conditions: (i) the Borrower
shall have delivered to the Lender, at such times and in such manner as
the Lender may prescribe and if required by the Lender, a Letter of
Credit Reimbursement Agreement and such other documents and materials
as may be required by the Lender pursuant to the terms thereof, and the
terms of the proposed Letter of Credit shall be reasonably satisfactory
to the Lender and shall be consistent with the Lender's ordinary
practice with respect to terms of its letters of credit; and (ii) as of
the date of issuance of the Letter of Credit, no order, judgment or
decree of any court, arbitrator or governmental authority shall purport
by its terms to enjoin or restrain the Lender from issuing the Letter
of Credit and no law, rule or regulation applicable to the Lender and
no request or
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directive (whether or not having the force of law and whether or not
the failure to comply therewith would be unlawful) from any
governmental authority with jurisdiction over the Lender shall prohibit
or request the Lender to refrain from the issuance of Letters of Credit
generally or the issuance of that Letter of Credit specifically.
(d) ISSUANCE OF LETTERS OF CREDIT. The Borrower shall give the
Lender written notice of a requested issuance of a Letter of Credit,
which Letter of Credit shall be issued in a manner and within such
period of time consistent with the Lender's ordinary practice with
respect to issuing letters of credit. Such notice shall be irrevocable
and in the form of the customary letter of credit application used by
the Lender and shall specify (i) the stated amount of the Letter of
Credit requested, (ii) the effective date (which day shall be a
Business Day) of issuance of such requested Letter of Credit, (iii) the
date on which such requested Letter of Credit is to expire (subject to
SECTION 2.08(b)(II)), (iv) the Person for whose benefit the requested
Letter of Credit is to be issued, and (v) the amount of Letter of
Credit Obligations then outstanding.
(e) EXTENSION/AMENDMENT OF LETTERS OF CREDIT. The Lender shall
not be obligated to extend or amend any Letter of Credit if the
issuance of a new Letter of Credit having the same terms as such Letter
of Credit as so extended or amended would be prohibited by SECTION
2.08(b).
(f) REIMBURSEMENT OBLIGATIONS: DUTIES OF THE LENDER.
Notwithstanding any provisions to the contrary in any Letter of Credit
Reimbursement Agreement: (i) the Borrower shall reimburse the Lender
for drawings under a Letter of Credit issued by it no later than the
earlier of (A) the time specified in such Letter of Credit
Reimbursement Agreement, and (B) one Business Day after the payment by
the Lender of such drawing; and (ii) any Reimbursement &ligation with
respect to any Letter of Credit shall bear interest from the date of
the relevant drawing under the pertinent Letter of Credit at the
interest rate applicable to Prime Rate Loans under the Revolving Credit
Facility for one Business Day after such date and thereafter at the
interest rate for past due Prime Rate Loans in accordance with SECTION
2.04. In the event this Agreement and any Letter of Credit
Reimbursement Agreement are inconsistent, the terms of this Agreement
shall prevail.
(g) PAYMENT OF REIMBURSEMENT OBLIGATIONS. The Borrower agrees
to pay to the Lender the amount of all Reimbursement Obligations,
interest and other amounts payable to the Lender under or in connection
with any Letter of Credit issued on behalf of the Borrower immediately
when due, irrespective of any claim, setoff, defense or other right
which the Borrower may have at any time against the Lender or any other
Person.
(h) COMPENSATION FOR LETTERS OF CREDIT. The Borrower shall pay
to the Lender on the first Business Day of each calendar quarter
(January, April, May and October) a letter of credit fee at a rate per
annum (the "LETTER OF CREDIT FEES") equal to 1.0% per annum of the
stated amount of each Letter of Credit. In addition, the Borrower shall
pay to the Lender any other processing, issuance, amendment or other
similar fees customarily charged in connection with letters of credit,
together with the Lender's out-of-pocket costs of issuing and servicing
letters of credit. All Letter of Credit Fees shall be computed on the
basis of the actual number of days elapsed in a year of 360 days.
(i) INDEMNIFICATION; EXONERATION. In addition to amounts
payable as elsewhere provided in this SECTION 2.08, the Borrower hereby
agrees to protect, indemnify, pay and save the Lender harmless from and
against any and all loss, liability, damage and expense (including
reasonable attorneys' fees and expenses) which the Lender may incur or
be subject to as a consequence, direct or indirect, of (i) the issuance
of a Letter of Credit, other than as a result of its gross negligence
or willful misconduct, or (ii) the failure of the Lender to honor a
drawing under such Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de
facto governmental authority. As between the Borrower and the Lender,
the Borrower assumes all risks of the acts and omissions of or misuse
of such Letter of Credit by the beneficiary of such Letter of Credit.
In furtherance and not in limitation of the foregoing, subject to the
provisions of the Letter of Credit Reimbursement Agreements, the Lender
shall not be responsible for (A) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any
party in connection with the application for and issuance of a Letter
of Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate,
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fraudulent or forged, (B) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a Letter
of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any
reason, (C) errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex, or other
similar form of teletransmission or otherwise, whether or not they be
in cipher, (D) errors in interpretation of technical terms; (E) any
loss or delay in the transmission or otherwise of any document required
in order to make a drawing under-any Letter of Credit or of the
proceeds thereof, (F) the misapplication by the beneficiary of a Letter
of Credit of the proceeds of any drawing under such Letter of Credit,
(G) any consequences arising from causes beyond the control of the
Lender, except in each case if caused by the gross negligence or
willful misconduct of the Lender, and (H) any other act or omission for
which banks are relieved of responsibility under the Uniform Customs &
Practices for Documentary Credits of the International Chamber of
Commerce. In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted
by the Lender under or in connection with letters of Credit issued on
behalf of the Borrower or any related certificates, if taken or omitted
in good faith, shall not in the absence of gross negligence or willful
misconduct by the Lender, put the Lender under any resulting liability
to the Borrower or relieve the Borrower of any of its obligations
hereunder to the Lender.
SECTION 2.09 CONVERSION OPTIONS: CONTINUANCE.
(a) CONVERSION REQUIREMENTS. Provided that no Default or Event
of Default has occurred and is continuing, the Borrower may elect from
time to time to convert a Prime Rate Loan, or any portion thereof, to a
LIBOR Loan by giving the Lender at least three Business Days' prior
irrevocable notice of conversion (which notice must be received by the
Lender prior to 11:00 a.m. (Chicago time) (the "NOTICE OF CONVERSION").
If the date on which a Prime Rate Loan is to be converted to a LIBOR
Loan is not a Business Day, then such conversion shall be made on the
next succeeding Business Day, and during the period from such date to
such succeeding Business Day, such Prime Rate Loan shall bear interest
as if it were a Prime Rate Loan. All or any part of outstanding
borrowings may be converted as provided herein.
(b) CONTINUANCE. Any LIBOR Loan or Alternative Currency Loan
may be continued as such, in whole or in part, upon the expiration of
an Interest Period with respect thereto if the Borrower gives the
Lender irrevocable notice of continuance (which notice must be received
by the Lender prior to 11: 00 a.m. (Chicago time), at least three
Business Days prior to the date of expiration of the Interest Period
expiring with respect to the LIBOR Loan or Alternative Currency Loan
which is requested to be continued, specifying (i) the LIBOR Loan or
Alternative Currency Loan, or portion thereof, requested to be
continued; (ii) the date of expiration of the Interest Period expiring
with respect to the LIBOR Loan or Alternative Currency Loan, or portion
thereof, which is requested to be continued; and (iii) the length of
the Interest Period with respect to such LIBOR Loan or Alternative
Currency Loan, or portion thereof, after the continuation thereof;
provided, that no LIBOR Loans or Alternative Currency Loans may be
continued as such when any Default or Event of Default has occurred and
is continuing, but shall be automatically (A) converted to a Prime Rate
Loan (in the case of LIBOR Loans) or (B) due and payable (in the case
of Alternative Currency Loans) on the last day of the Interest Period
for such Loan (the "NOTICE OF CONTINUANCE"). If the Borrower does not
comply with the notice provisions of this clause (b), such (x) LIBOR
Loan shall be automatically converted to a Prime Rate Loan upon the
expiration of the Interest Period with respect thereto and (y)
Alternative Currency Loan shall continue automatically for an Interest
Period of one month upon the expiration of the Interest Period with
respect thereto. Notwithstanding the foregoing, no Alternative Currency
Loan shall be continued for a new Interest Period if the Current Dollar
Equivalent (as determined as of the date of any proposed continuation
thereof) to be outstanding after giving effect to such conversion
causes the Credit Utilizations to exceed the Revolving Credit
Availability.
(c) RESTATEMENT OF REPRESENTATIONS AND WARRANTIES. Any Notice
of Conversion or Continuance pursuant to this SECTION 2.09 shall be
deemed to be a representation that all of the representations and
warranties of the Borrower contained in this Agreement shall then be
true and correct in all material respects as if made on such date,
except to the extent that such representations and warranties expressly
relate to an earlier date, and that no Default or Event of Default
shall 'have occurred and be continuing.
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SECTION 2.10 REQUIREMENTS OF LAW.
(a) INCREASED COSTS. Notwithstanding any other provisions
herein, in the event that the introduction of or any change in any law,
rule, regulation, treaty or directive or in the interpretation or
application thereof, or compliance by the Lender with any request or
directive (whether or not having the force of law) from any central
bank or other governmental authority, agency or instrumentality or
regulatory body:
(i) subjects the Lender to any tax of any kind
whatsoever with respect to this Agreement, the Notes, the
other Loan Documents or the Loans made hereunder, or changes
the basis of taxation of payments to the Lender of principal,
interest or any other amount payable hereunder (except for
changes in the rate of tax imposed on the overall net income
of the Lender by the United States, any state or subdivision
thereof);
(ii) imposes, modifies, holds applicable any reserve,
special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or
for the account of, advances or loans by, or other credit
extended by, or any other acquisition of funds by, any office
of the Lender (which is not otherwise included in the
determination of the LIBOR Rate or Alternative Currency Rate
hereunder); or
(iii) imposes on the Lender or the London interbank
market any other condition;
and the result of any of the foregoing is to increase the cost to the Lender of
agreeing to make, making, continuing or maintaining or participating in LIBOR
Loans or Alternative Currency Loans, or to reduce any amount receivable
thereunder or to increase the withholding taxes payable then, in any such case,
the Borrower shall pay the Lender, within 15 days after the demand by the
Lender, any additional amounts necessary to compensate the Lender on an
after-tax basis for such additional cost or reduced amount receivable or
increased withholding taxes payable which the Lender deems to be material as
determined by the Lender with respect to this Agreement, the Notes, the other
Loan Documents or the Loans made hereunder.
(b) CAPITAL ADEQUACY. In the event that the Lender shall have
determined that the adoption of any law, rule, regulation, treaty or
guideline regarding capital adequacy, or any change in any of the
foregoing or in the interpretation or application of any of the
foregoing or compliance by the Lender with any request or directive
regarding capital adequacy (whether or not having the force of law)
from any central bank or other governmental authority, agency or
instrumentality or regulatory body, does or shall have the effect of
reducing the rate of return on the Lender's or its parent's capital as
a consequence of its obligations under this Agreement to a level below
that which the Lender or such parent could have achieved but for such
adoption, change, or compliance (taking into consideration the Lender's
or such parent's policies with respect to capital adequacy) by an
amount deemed by the Lender to be material, then from time to time,
after submission by the Lender to the Borrower of a written request
therefor, the Borrower shall pay to the Lender, within 15 days after
its demand, such additional amount or amounts as will compensate the
Lender or such parent on an after-tax basis for such reduction.
(c) CERTIFICATE FOR CLAIM. If the Lender or its parent becomes
entitled to claim any additional amounts pursuant to this SECTION 2.10,
it shall promptly notify the Borrower of the event by reason of which
it has become so entitled. A certificate setting forth in reasonable
detail any additional amounts payable pursuant to the foregoing
sentence submitted by the Lender or its parent shall be conclusive and
binding on the Borrower in the absence of manifest error. The
provisions of this SECTION 2.10 shall survive the repayment of the
Loans and the termination of this Agreement.
(d) NO WAIVER. Failure on the part of the Lender or its parent
to demand compensation for any increased costs or reduction in amounts
received or receivable or reduction in return on capital with respect
to any period shall not constitute a waiver of such party's :right to
demand compensation with respect to such period or any other period.
The protection of this SECTION 2.10 shall be available to such party
regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, guideline or other change
or condition which shall have occurred or been imposed; provided,
however that
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if such party shall have recouped any amount theretofore paid to it by
the Borrower under this Section 2.10, the Lender shall pay to the
Borrower an amount equal to the net recoupment so received by such
party, as determined in good faith by such party.
SECTION 2.11 ILLEGALITY . The Lender may make or maintain LIBOR Loans
and Alternative Currency Loans at or for the credit of any branch, subsidiary or
affiliate office inside or outside the United States or any international
banking facility within the United States, as the Lender may elect from time to
time. Notwithstanding any other provisions herein, if any law, rule, regulation,
treaty or directive or any change therein or in the interpretation or
application thereof, shall make it unlawful for the Lender to maintain LIBOR
Loans or Alternative Currency Loans as contemplated by this Agreement, the
agreement of the Lender to make or maintain LIBOR LOANS or Alternative Currency
Loans, as the case may be, shall terminate and (a) all outstanding LIBOR Loans
shall be converted automatically to Prime Rate Loans, on the last day of the
then current Interest Period or within such earlier period as required by law
and (b) all outstanding Alternative Currency Loans shall be due and payable and
repaid by the Borrower on the last day of the then current Interest Period or
within such earlier period as required by law.
SECTION 2.12 INDEMNITY. The Borrower agrees to indemnify the Lender and
to hold the Lender harmless from any cost, loss or expense which the Lender may
sustain or incur and any lost profit of the Lender as a consequence of (a) the
Borrower making a payment or prepayment of principal or interest on any LIBOR
Loan or Alternative Currency Loan (including, without limitation, through a
conversion to the same or a different type of Loan or pursuant to SECTIONS
2.03(c) AND 2.11 above) on a day which is not the last day of an Interest Period
with respect thereto, (b) any failure by the Borrower to borrow or convert any
Loan hereunder after a Notice of Borrowing or Notice of Conversion has been
given (in the case of LIBOR Loans or Alternative Currency Loans), (c) default by
the Borrower in making any prepayment after the Borrower has given a notice of
prepayment, and (d) any acceleration of the maturity of the Loans in accordance
with the terms of this Agreement, including, but not limited to, any such
reasonable cost, loss or expense arising in liquidating the Loans and from
interest or fees payable by the Lender to lenders of funds obtained by it in
order to maintain the Loans hereunder. For purposes hereof, "lost profits" shall
mean, without duplication of any amounts otherwise payable pursuant to this
SECTION 2.12 or otherwise, an amount equal to the excess, if any, as reasonably
determined by such Lender, of (i) its cost of obtaining the funds for the Loan
being paid, prepaid, converted or not borrowed (based on the LIBOR Rate or
Alternative Currency Rate applicable thereto) for the period from the date of
such payment, prepayment, conversion or failure to borrow to the last day of the
Interest Period for such Loan (or, in the case of a failure to borrow, the
Interest Period for such Loan which would have commenced on the date of such
failure) over (H) the amount of interest (as reasonably determined by such
Lender) that would be realized by such Lender in re-employing the funds so paid,
prepaid, converted or not borrowed for such period or Interest Period, as the
case may be. A certificate setting forth in reasonable detail any additional
amounts payable pursuant to the preceding sentence submitted by Lender shall be
conclusive and binding upon the Borrower absent manifest error. The provisions
of this Section 2.12 shall survive the repayment of the Loans and the
termination of this Agreement.
SECTION 2.13 AVAILABILITY OF ALTERNATIVE CURRENCY. The Lender shall not
be required to make or continue any Loan requested to be made or continued in
the Alternative Currency if, at any time prior to making or continuing such
Loan, the Lender shall determine, in its sole discretion, that (a) deposits in
the Alternative Currency in the amounts and maturities required to fund such
Loan will not be available to the Lender; (b) a fundamental change has occurred
in the foreign or interbank-markets with respect to the Alternative Currency
(including, without limitation, changes in national or international financial,
political or economic conditions or currency exchange rates or exchange
controls); or (c) it has become otherwise materially impractical for the Lender
to make or continue such Loan in the Alternative Currency. Whenever, pursuant to
any provision of this Agreement, (x) a Loan is initially funded, as opposed to
any continuation or conversion thereof, in the Alternative Currency, the amount
to be advanced hereunder will be the equivalent in the Alternative Currency of
the Dollar Equivalent of such Loan, and (y) an existing Alternative Currency
Loan is to be continued, in whole or in part, the amount of the new Loan shall
be continued in the Alternative Currency.
SECTION 2.14 EURO. If the "Euro" (or some other similar unit of
account) becomes a currency in its own right in connection with European
monetary union contemplated by the Maestricht Treaty, in replacement of the
Alternative Currency, then the Borrower and the Lender agree to negotiate in
good faith an amendment to this Agreement satisfactory in form and substance to
the Borrower and the Lender to account therefor.
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ARTICLE III REPRESENTATIONS AND WARRANTIES
To induce the Lender to execute this Agreement and perform its
obligations hereunder, the Borrower represents and warrants to the Lender as
follows:
SECTION 3.01. ORGANIZATION; CORPORATE POWERS. The Borrower and its
Subsidiaries are each duly organized, validly existing and in good standing
under the laws of the jurisdictions of their respective organization. Each of
the Borrower and its Subsidiaries has the requisite power and authority,
including all material licenses, registrations, permits, franchises, patents,
copyrights, trademarks, trade names, consents and approvals, to own its property
and assets and to carry on its business as now conducted and is qualified to do
business and in good standing in every jurisdiction where such qualification is
required, except where failure to so qualify could not have a Material Adverse
Effect. The Borrower has all requisite power and authority to consummate the
Transactions.
SECTION 3.02. AUTHORIZATION. The consummation of the Transactions (a)
has been duly authorized by all requisite corporate action of the Borrower and
the Guarantors and (b) will not (i) violate (A) any provision of law, statute,
rule or regulation (including Regulations D, G, T, U or X) or the articles of
incorporation or other constitutive documents or the by-laws or regulations of
the Borrower or the Guarantors, (B) any order of any court, or any rule,
regulation or order of any other agency of government binding upon the Borrower
or the Guarantors, or (C) any provisions of any material indenture, agreement or
other instrument to which the Borrower or any of the Guarantors is a party, or
by which the Borrower or any of the Guarantors or any of their respective
properties or assets is or may be bound, (ii) be in conflict with, result in a
breach of or constitute (alone or with notice or lapse of time or both) a
default under any indenture, agreement or other instrument referred to in clause
(b)(i)(C) above or (iii) result in the creation or imposition of any Lien (other
than in favor of the Lender as contemplated by this Agreement) upon any property
or assets of the Borrower or the Guarantors.
SECTION 3.03. GOVERNMENTAL APPROVAL. Except as specifically provided by
the Loan Documents, no registration with or consent or approval of, or other
action by, any Federal, state or other governmental agency, authority or
regulatory body is or will be required in connection with the consummation of
the Transactions by the Borrower or the Guarantors.
SECTION 3.04. ENFORCEABILITY. This Agreement constitutes, and each of
the other Loan Documents when duly executed and delivered by the Borrower will'
constitute, legal, valid and binding obligations of the Borrower enforceable in
accordance with their respective terms. When duly executed and delivered by the
Guarantors, each of the Loan Documents to be executed and delivered by the
Guarantors will constitute legal, valid and binding obligations of the
Guarantors enforceable in accordance with their respective terms, except to the
extent enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) the availability of equitable
remedies.
SECTION 3.05. FINANCIAL MATTERS. The Borrower has heretofore furnished
to the Lender audited financial statements for the year ending December 31, 1996
and unaudited financial statements for the 3-months ended March 31, 1997, which
financial statements fairly state the Borrower's financial condition and results
of operations as of the dates, and for the periods, set forth therein. Such
financial statements and the notes thereto, together with the schedules to this
Agreement, disclose all material liabilities, direct or contingent, of the
Borrower and its Subsidiaries as of the dates thereof. The financial statements
referred to in this SECTION 3.05 have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis.
SECTION 3.06. NO MATERIAL ADVERSE CHANGE. Since March 31, 1997 there
has been no event or occurrence that could have a Material Adverse Effect.
SECTION 3.07. SUBSIDIARIES. All Subsidiaries of the Borrower are
identified on SCHEDULE 3.07 hereto, together with the ownership structure of
each such Subsidiary and Affiliate. The Borrower does not have any subsidiaries
and is not a partner or joint venturer in any partnerships or joint ventures
except as set forth on SCHEDULE 3.07. The Borrower owns all of the issued and
outstanding capital stock of each Subsidiary. All such capital stock is owned
free and clear of all Liens (other than Liens created by the Loan Document). The
Borrower has the unencumbered right to vote all such equity interests. There are
no outstanding options, warrants or rights to
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purchase or any shareholder agreement or other agreement for the subscription,
purchase or acquisition of any such equity interest.
SECTION 3.08. LITIGATION. Except as described in SCHEDULE 3.08, there
are no actions, suits or proceedings at law or in equity or by or before any
arbitrator or any governmental instrumentality or other agency or regulatory
authority now pending or threatened against or affecting the Borrower or any of
its Subsidiaries or the businesses, assets or rights of the Borrower or any of
its Subsidiaries (a) which involve this Agreement or any of the other Loan
Documents or any of the Transactions, or (b) as to which, if adversely
determined, could, individually or in the aggregate, have a Material Adverse
Effect.
SECTION 3.09 COMPLIANCE WITH LAWS. Neither the Borrower nor any of its
Subsidiaries are in violation in any material respect of any applicable law,
rule. or regulation, including but not limited to, (a) any Environmental Law,
and (b) any for4iga asset control regulations ("Foreign Control Regulations") of
the United States Treasury Department, 31 C.F.R. , Subtitle B, Chapter V, as
amended, or any ruling issued thereunder or any enabling legislation or
Presidential Executive Order granting authority therefor, nor will the proceeds
of the Loan be used by the Borrower in any manner that would violate any
thereof. Neither the Borrower nor any of its Subsidiaries is in default with
respect to any judgment, writ, injunction, decree, rule or regulation of any
court or governmental agency or instrumentality.
SECTION 3.10. ENVIRONMENTAL PROTECTION. Except as specified in SCHEDULE
3.10 and after giving effect to the Transactions: (a) the business of the
Borrower and its Subsidiaries, the methods and means employed by the Borrower
and its Subsidiaries in the operation thereof (including all operations and
conditions at or in the properties of the Borrower and its Subsidiaries), and
the assets owned, leased, held or operated by the Borrower and its Subsidiaries,
comply in all material respects with all applicable laws, rules, regulations,
ordinances and codes of every kind, including Environmental Laws; (b) each of
the Borrower and its Subsidiaries have obtained all permits under Environmental
Laws necessary to its operations other than such permits the absence of which
could not, individually or in the aggregate, have a Material Adverse Effect, and
all such permits are in good standing and the Borrower and its Subsidiaries are
in compliance with all material terms and conditions of such permits; and (c)
neither the Borrower nor its Subsidiaries have received (i) any claim or notice
of violation, lien, complaint, suit, order or other claim or notice to the
effect that it is or may be liable to any Person as a result of (A) the
environmental condition of any of their respective properties or any other
property, or (B) the release or threatened release of any Hazardous Materials,
or (ii) any letter or request for information under Section 104 of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S.C. ss.9604), or comparable state laws, and to the best of the
Borrower's knowledge, none of the operations of the Borrower or its Subsidiaries
are the subject of any Federal or state investigation evaluating whether any
remedial action is needed to respond to a release or threatened release of any
Hazardous Material at the Borrower's or its Subsidiaries' properties or at any
other location, including any location to which the Borrower or its Subsidiaries
have transported, or arranged for the transportation of, any Hazardous
Materials.
SECTION 3.11. AGREEMENTS. Neither the Borrower nor its Subsidiaries is
a party to any agreement or instrument or subject to any restriction that has a
present Material Adverse Effect.
SECTION 3.12. FEDERAL RESERVE REGULATIONS. Neither the Borrower nor its
Subsidiaries are engaged principally, or as of one of their important
activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock. Neither the Loans nor any of the proceeds thereof, are
for the purpose, whether immediate, incidental or ultimate of (a) buying or
carrying Margin Stock, or (b) extending credit to others for the purpose of
buying or carrying Margin Stock, or (c) refunding indebtedness originally
incurred for such purpose, or for any purpose which entails a violation of, or
which is inconsistent with, the provisions of Regulations of the Board,
including Regulations D, G, T, U and X thereof.
SECTION 3.13. TAXES. The Borrower and each of its Subsidiaries have
filed or caused to be filed all Federal, foreign state and local tax returns
which are required to be filed by it, and has paid or caused to be paid all
taxes shown to be due and payable on such returns or on any assessments received
by it, other than any taxes or assessments, the validity of which the Borrower
is contesting in good faith by appropriate proceedings, and with respect to
which the Borrower shall have set aside on its books adequate reserves.
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SECTION 3.14. LABOR AND EMPLOYMENT. The Borrower, each of its
Subsidiaries and each Plan is in compliance in all material respects with those
provisions of ERISA, the Internal Revenue Code of 1986, as amended and the Age
Discrimination in Employment Act, and the regulations and published
interpretations thereunder which are applicable to the Borrower, its
Subsidiaries or such Plan. As of the date hereof, no Reportable Event has
occurred with respect to any Pension Plan as to which the Borrower or any of its
Subsidiaries was required to file a report with the Pension Benefit Guaranty
Corporation. No Pension Plan (other than a Multiemployer Plan) has any material
amount of unfunded benefit liabilities (within the meaning of Section
4001(a)(18) of ERISA) or any accumulated funding deficiency (within the meaning
of Section 302(a)(2) of ERISA), whether or not waived, and neither the Borrower
nor any of its ERISA Affiliates has incurred or expects to incur any material
withdrawal liability under Subtitle E of Title IV of ERISA to a Multiemployer
Plan. No Plan of the Borrower or its Subsidiaries obligates any of them to
provide post-retirement medical benefits, except as may be required by the
Consolidated Omnibus Budget Reconciliation Act of 1986. The Borrower and its
Subsidiaries are in compliance in all material respects with all labor and
employment laws, rules, regulations and requirements of all applicable domestic
and foreign jurisdictions. There are no pending or threatened labor disputes,
work stoppages or strikes.
SECTION 3.15. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY
ACT. Neither the Borrower nor any of its Subsidiaries is (a) an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 4940, as amended or (b) a "holding company" or
a "subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
SECTION 3.16. CAPITALIZATION. The capital stock of the Borrower is
publicly traded and listed on the NASDAQ Small Cap Market. Each record and
beneficial owner of 10 % or more of the outstanding equity interests of the
Borrower are set forth in Schedule 3.1-6.
SECTION 3.17. PROPERTIES; SECURITY INTERESTS. The Borrower has good and
marketable title to, or valid leasehold interests in, all of its material assets
and properties reflected in its March 31, 1997 balance sheet, except for such
properties as are no longer useful in the conduct of its business or have been
disposed of in the ordinary course of business, subject to no Liens except for
Permitted Liens. All such assets and properties are in good repair, working
order and condition and all such assets and properties are owned by the Borrower
free and clear of all Liens except for Permitted Liens. With the exceptions set
forth therein, the Security Agreements create and grant to the Lender a valid
and perfected first priority security interest in all the Collateral. All real
estate owned or leased by, and all public warehouses utilized by, the Borrower
("PREMISES") or its Subsidiaries is listed on SCHEDULE 3.17. The Mortgage
creates and grants to the Lender a valid and perfected first-priority mortgage
in the Premises (as reflected on SCHEDULE 3.17 , subject only to Permitted
Liens.
SECTION 3.18. INTELLECTUAL PROPERTY: LICENSES. The Borrower and each of
its Subsidiaries possesses adequate assets, licenses, patents, patent
applications, copyrights, trademarks, trademark applications and tradenames to
continue to conduct its business as heretofore conducted. No event has occurred
which permits, or after notice or lapse of time or both would permit, the
revocation or termination of any of the foregoing which taken in isolation or
when considered with all other such revocations or terminations could have a
Material Adverse Effect. Neither the Borrower nor any of its Subsidiaries have
notice or knowledge of any fact or any past, present or threatened occurrence
that could preclude or impair the Borrower's or any such Subsidiaries' ability
to retain or obtain any authorization necessary for the operation of their
respective businesses.
SECTION 3.19. SOLVENCY. Neither the Borrower nor any of the Guarantors
is insolvent and the execution and delivery of this Agreement and the other Loan
Documents pursuant thereto and the consummation of the Transactions will not
render the Borrower or any Guarantor insolvent. Each of the fair value and
present fair saleable value of the assets of the Borrower and the Guarantors
exceeds its liabilities. The Borrower understands that in this context
"insolvent" means that the present fair saleable value of the total assets of
the Borrower or any Guarantor is less than the amount of the total liabilities
of the Borrower or any Guarantor. The Borrower also understands that the term
"liabilities" includes any legal liability, whether matured or unmatured,
liquidated or unliquidated, absolute, fixed or contingent (with contingent
liabilities valued based on the Borrower's good faith estimate of the
probability of occurrence). The Borrower and each Guarantor will be able to pay
its debts as they become absolute and mature. In the event that the maximum
amount available under this Agreement is borrowed by
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the Borrower, the Borrower-and each Guarantor will not incur debts beyond its
ability to pay as they mature. The borrowing of the maximum amount available
under this Agreement, and the Borrower's and each Guarantor's granting liens on
their respective properties pursuant to this Agreement and the other Loan
Documents executed pursuant thereto, will not leave the Borrower or such
Guarantor with property remaining in its hands constituting unreasonably small
capital with which to conduct its business.
SECTION 3.20. COMPLETE DISCLOSURE. All factual information furnished by
or on behalf of the Borrower to the Lender for purposes of or in connection with
this Agreement or the Transactions is, and all other such factual information
hereafter furnished by or on behalf of the Borrower will be, true and accurate
in all material respects on the date as of which such information is furnished
and not incomplete by omitting to state any fact necessary to make such
information not misleading at such time in light of the circumstances under
which such information was provided.
ARTICLE IV CONDITIONS TO THE LOANS
SECTION 4.01. GENERAL CONDITIONS. The obligation of the Lender to make
each Loan or issue each Letter of Credit under the Revolving Credit Facility is
subject to the satisfaction of the Lender with the fulfillment of the following
conditions precedent:
(a) Revolving Credit Available. After giving effect to such
Loan or the issuance of such Letter of Credit, the Credit Utilizations
will not exceed the Revolving Credit Availability.
(b) Borrowing Notice. The Lender shall have received a notice
of such borrowing or issuance of such Letter of Credit as required by
SECTION 2.05 OR SECTION 2.08, as the case may be.
(c) Representations. The representations and warranties set
forth in Article III shall be true and correct in all material respects
with the same effect as though made on and as of such date.
(d) Compliance. The Borrower and each of the Guarantors shall
be in compliance in all material respects with all the terms and
provisions contained herein and in the other Loan Documents to be
observed or performed, and at the time of and immediately after such
borrowing or issuance, no Default or Event of Default shall have
occurred and be continuing.
The acceptance by the Borrower of the proceeds of any Loan or the issuance of
any Letter of Credit hereunder shall be deemed to constitute a representation
and warranty by the Borrower on the date of such Loan or the date of the
issuance of such Letter of Credit, as the case may be, that all of the
conditions set forth in Section 4.01 have been satisfied.
SECTION 4.02. CONDITIONS TO FIRST ADVANCE. The obligations of the
Lender to make the initial advance of the Revolving Credit Facility and the Term
Loan Facility is subject to the following additional conditions precedent, all
of which shall be in form and substance satisfactory to the Lender in its sole
and absolute discretion:
(a) Legal Opinion(s). The Lender shall have received a
favorable written opinion(s) of counsel for the Borrower and the
Guarantors in substantially the form contained in EXHIBIT G.
(b) Authorization Documentation. The Lender shall have
received (i) a copy of the certificate/articles of incorporation of the
Borrower and the Guarantors, certified by the applicable Secretary of
State as of a recent date, and a certificate as to the good standing
from such Secretary of State and from the Secretary of State of the
States of Illinois, Texas and California, all dated as of a recent
date, (ii) a certificate of the Secretary or an Assistant Secretary of
the Borrower and the Guarantors, dated the Closing Date and certifying
(A) that attached thereto is a true and complete copy of the
certificate/articles of incorporation and bylaws of the Borrower and
the Guarantors as in effect on the date of such certificate, (B) that
attached thereto is a true and complete copy of resolutions duly
adopted by the Borrower and the Guarantors authorizing the execution,
delivery and performance of the Transactions, and that such resolutions
have not been modified, rescinded or amended and are in full force and
effect, and (C) as to the
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incumbency and specimen signature of each officer of the Borrower or
the Guarantors executing this Agreement or the other Loan Documents,
(iii) a certificate of another officer of the Borrower or the
Guarantors as to the incumbency and specimen signature of the Secretary
or such Assistant Secretary of such corporation, (iv) such documents
with respect to any other Subsidiaries as the Lender or its counsel may
reasonably request and (v) such other documents as the Lender or its
counsel may reasonably request.
(c) Notes. The Lender shall have received the Revolving Credit
Note and the Term Loan Note, duly executed and delivered by the
Borrower, payable to its order on behalf of the Lender and otherwise
complying with the provisions of SECTION 2.02.
(d) Guaranties . The Lender shall have received (i) the UAI
Guaranty, duly executed and delivered by UAI and (ii) the Canadian
Guaranty, duly executed and delivered by UBP, Brake Parts and IDC, and
a contribution agreement with respect thereto, duly executed and
delivered by all of the Guarantors.
(e) Security Agreements. The Lender shall have received (i)
the Borrower Security Agreement, duly executed and delivered by the
Borrower, (h) the UAI Security Agreement, duly executed and delivered
by UAI and (iii) the Canadian Security Agreement, duly executed and
delivered by UBP, Brake Parts and IDC, together with all UCC financing
statements and other instruments as may be necessary to create the
first priority security interests to be created th6ieunder (and
post-filing searches confirming such priority and filings).
(f) Mortgage. The Lender shall have received the duly executed
and delivered Mortgage, together with (i) evidence of the completion
(or satisfactory arrangements for the completion) of all recordings and
filings of such Mortgage as may be necessary or, in the opinion of the
Lender, desirable to effectively create a valid, perfected first
priority lien and security interest in the Premises, and (ii) a title
insurance policy in the amount of the appraised value of the Premises,
issued by a title insurer satisfactory to the lender (or a signed and
effective "xxxx-up" thereof) ("TITLE INSURANCE POLICY"), insuring the
Lien of the Mortgage as prior and paramount Lien against the Borrower's
fee simple interest in such Premises subject only to the Permitted
Liens (the Title Insurance Policy shall contain (A) a comprehensive
endorsement, (B) a 3.1 zoning endorsement, to the extent available
based on the existing surveys (modified to cover parking and off-street
loading, if available), (C) a survey endorsement specifically insuring
the Lender that the survey described accurately depicts the same real
estate covered by the Title Insurance Policy, (D) an access
endorsement, (E) a usury endorsement, (F) an environmental lien
endorsement (insuring against environmental protection liens filed in
the applicable court or recorded in the public records) and (G) a
revolving credit and letter of credit endorsement, and (H) any other
endorsements the Lender or its counsel may reasonably require).
(g) Stock Pledges. The Lender shall have received the Stock
Pledge Agreement and the Canadian Pledge Agreement, duly executed and
delivered by the Borrower or UBP, as the case may be.
(h) Intercompany Notes. The Lender shall have received the
Intercompany Notes, duly executed and delivered by each of UAI, UBP,
Brake Parts and IDC, together with subordination agreements relating
thereto in form and substance satisfactory to the Lender.
(i) Insurance. The Lender shall have received certificates
evidencing the insurance required under the Security Agreements, the
Mortgage and SECTION 5.03 of this Agreement.
(j) Certification. The Lender shall have received a
certificate, dated as of the Closing Date, whereby the Borrower
certifies as to the matters specified in SECTIONS 4.01(a) (c) AND (d).
(k) Searches: Releases. The Lender shall have received
recently dated reports (which may be post-filing searches) describing
all Lien filings with respect to the Borrower reflected in the records
of the State of Illinois, Xxxx County, Illinois, the State of
California, Los Angeles County, California, the State of Texas, and
Xxxx County, Texas. The Lender shall have received recently dated
reports describing all Lien filings with respect to UAI reflected in
the records of the State of Illinois, Xxxx County, Illinois, the State
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of California, Los Angeles County, California, the State of Texas, and
Xxxx County, Texas. The Lender shall have received recently dated
reports describing all Lien filings with respect to UBP reflected in
the records of the State of Illinois and the Providence of Ontario. No
such report shall list any Lien other than (i) Permitted Liens and (ii)
Liens released on or before the Closing Date pursuant to such
termination statements, releases and other documents as are acceptable
to the Lender. The Lender shall have received releases of all Liens to
be released on or before the Closing Date in form and substance
satisfactory to the Lender or other provision satisfactory to the
Lender in its sole discretion shall have been made for release of such
Liens. The Lender shall also have received recently dated judgment and
state and Federal tax hen search reports for the Borrower and each
Guarantor, satisfactory to the Lender.
(1) Survey. The Lender shall have received plats of survey of
the Premises certified to the Lender, together with certificates from
the Borrower as to no changes since the date such survey was prepared.
(m) Environmental Matters. The Lender shall have received (i)
an environmental reports for the Premises, and (ii) executed,
recordable originals of any statement or disclosure required to be
filed under the Illinois Responsible Property Transfer Act.
(n) Appraisals. The Lender shall have received an appraisal of
the Premises certified to the Lender, prepared by an independent MAI
certified appraiser satisfactory to the Lender, complying with
standards promulgated by the Board, the Federal Deposit Insurance
Corporation and the Office of the Comptroller of the Currency.
(o) Subordinated Debt. At least $3,000,000 of Subordinated
Debt shall have been funded and the Lender shall have received complete
copies of all documents relating to or evidencing the Subordinated
Debt, together with a fully executed Subordination Agreement.
(p) Collection Accounts: Lockbox Requirements. The Lender
shall have received the Lockbox Agreement pursuant to which all
Accounts and other collections and proceeds of Collateral of the
Borrower and the Guarantors shall be paid.
(q) Landlord's Waivers. A waiver from each lessor of property
leased by the Borrower or its Subsidiaries on which Collateral is
located, if any.
(r) Fees. The Lender shall have received the amounts to be
paid on the Closing Date pursuant to SECTION 2.07 hereof.
(s) Further Assurances. The Lender shall have received all
further documents, notifications and other assurances reasonably
required by the Lender to evidence and secure the Loan.
ARTICLE V AFFIRMATIVE COVENANTS
The Borrower covenants and agrees with the Lender that, so long as this
Agreement shall remain in effect or the principal of or interest on the Notes,
any Fee or any other expense or amount payable hereunder shall be unpaid, unless
the Lender shall otherwise consent in writing, the Borrower shall, and shall
cause each of its Subsidiaries to:
SECTION 5.01. EXISTENCE. Do or cause to be done all things necessary to
preserve, renew and keep in full force. and effect its legal existence.
SECTION 5.02. BUSINESSES AND PROPERTIES: COMPLIANCE WITH LAWS. At all
times (a) do or cause to be done all things necessary to preserve, renew and
keep in full force and effect the rights, licenses, registrations,
authorizations, permits, franchises, patents, copyrights, trademarks and trade
names, material to the conduct of its business, (b) maintain and operate its
business in substantially the manner in which it is presently conducted and
operated, (c) comply in all material respects with all laws and regulations
applicable to the operation of such business, including but not limited to, all
Environmental Laws and all Foreign Control Regulations, whether now in
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effect or hereafter enacted and with all other applicable laws and regulations,
(d) take all action which may be required to obtain, preserve, renew and extend
all franchises, registrations, licenses, permits and other authorizations which
may be material to the operation of such business, (e) maintain, preserve and
protect all property material to the conduct of such business, and (f) keep its
property in good repair, working order and condition and from time to time make,
or cause to be made, all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the business
carried on in connection therewith may be properly conducted at all times.
SECTION 5.03. INSURANCE. Maintain insurance required by the Loan
Documents, including but not limited to, coverage on its insurable properties,
including all inventory, equipment and real property, against the perils of
fire, theft, burglary, public liability, worker's compensation and business
interruption and such other risks as are customary with companies similarly
situated and in the same or similar business under policies issued by
financially sound and reputable insurers in such amounts as are customary with
companies similarly situated and in the same or similar business. The Borrower
shall pay all insurance premiums payable by it and shall deliver the policy or
policies of such insurance (or certificates of insurance with copies of such
policies) to the Lender. All insurance policies of the Borrower shall contain
endorsements, in form and substance reasonably satisfactory to the Lender,
providing that the insurance shall not be cancellable except upon 30 days' prior
notice to the Lender. The Lender shall be shown as an additional named insured
party under all such insurance policies.
SECTION 5.04. OBLIGATIONS AND TAXES. Pay and discharge promptly when
due all taxes, assessments and governmental charges or levies imposed upon it or
upon its income or profits or in respect of its property before the same shall
become delinquent or in default, as well as all lawful claims for labor,
materials and supplies or otherwise, which, if unpaid, might give rise to liens
or charges upon such properties or any part thereof-, provided, however, that
the Borrower shall not be required-to pay -And discharge or to cause to be paid
and discharged any such tax, assessment, charge, levy or claim so long as the
validity or amount thereof shall be contested in good faith by appropriate
proceedings and the Borrower shall have set aside on its books adequate reserves
with respect thereto.
SECTION 5.05. FINANCIAL STATEMENTS: REPORTS. Furnish to the Lender:
(a) Annual Statements. Within 120 days after the end of each
Fiscal Year a consolidated balance sheet and income statement and cash
flows statement of the Borrower and each of its Subsidiaries showing
the financial condition of the Borrower and each of its Subsidiaries as
of the close of such year and the results of operations during such
year, all the foregoing financial statements to be audited by a firm of
independent certified public accountants acceptable to the Lender,
together with an audit report to the effect that such financial
statements have been prepared in accordance with GAAP and present
fairly in accordance with GAAP the consolidated financial condition of
the Borrower and its subsidiaries as of the close of such fiscal year
and the results of their operations and cash flows for the fiscal year
then ended.
(b) Quarterly Statements. Within 60 days after the end of each
fiscal quarter, an unaudited consolidating balance sheet and income
statement showing the financial condition and results of operations of
the Borrower and each of its Subsidiaries as of the end of such fiscal
quarter and for the time elapsed portion of the current fiscal year,
together with a certificate of a Financial Officer that such financial
statements have been prepared in accordance with generally accepted
accounting principles consistently applied.
(c) Monthly Statements. Within 45 days after the end of each
month, unaudited balance sheets and income statements showing the
financial condition and results of operations of the Borrower and each
of its Subsidiaries as of the end of each such month and for the then
elapsed portion of the current fiscal year, together with a certificate
of a Financial Officer that such financial statements have been
prepared in accordance with generally accepted accounting principles
consistently applied.
(d) Borrowing Base Certificate. Within 3 days after the end of
each week, a borrowing base certificate of a Financial Officer in the
form of EXHIBIT H; PROVIDED, however , that beginning in Fiscal Year
1998, if (i) the Borrower has positive Net Income for three consecutive
months and (ii) the Leverage Ratio is less than or equal to 3.5: 1,
then such borrowing base certificates shall only be required to be
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delivered to the Lender within 15 days of the end of each month. If at
any time thereafter (i) the Borrower incurs a net loss as at the end of
any calendar month, calculated on a cumulative, year-to-date basis, or
(ii) the Leverage Ratio is greater than 3.5: 1 at the end of any month,
borrowing base certificates shall be required to be delivered to the
Lender within 3 days after the end of each week until the conditions
set forth in clauses (i) and (ii) of the first sentence of this Section
5.05(d) are again satisfied.
(e) Compliance Certificate. Within 15 days after the end of
each month, a certificate of a Financial Officer M-the t6fih of EXHIBIT
1.
(f) Account and Inventory Reports. Within 15 days after the
end of each month, an Accounts Report and Inventory Certification
Report.
(g) Accountant Reports. Promptly upon the receipt thereof,
copies of all reports, if any, submitted to the Borrower by independent
certified public accountants in connection with each annual, interim or
special review of the financial statements of the Borrower or any of
its Subsidiaries made by such accountants, including but not limited
to, any comment letter submitted by such accountants to management in
connection with any annual review.
(h) Regulatory Reports. Promptly upon completion thereof,
copies of all financial statements, reports and proxy statements
furnished to shareholders of the Borrower, and promptly upon filing
thereof, copies of all registration statements and annual, quarterly,
monthly and other regular reports which the Borrower or its
Subsidiaries are required to file with the Securities and Exchange
Commission.
(i) Additional Information. Promptly, from time to time, such
other information regarding the compliance by the Borrower or any of
its Subsidiaries with the terms of this Agreement and the other Loan
Documents or the affairs, operations or condition (financial or
otherwise) of the Borrower or any of its Subsidiaries as the Lender may
reasonably request and which is capable of being obtained, produced or
generated by the Borrower or any of its Subsidiaries or of which the
Borrower or any of its Subsidiaries has knowledge.
SECTION 5.06. LITIGATION AND OTHER NOTICES. Give the Lender prompt
written notice of the following:
(a) Orders: Injunction. The issuance by any court or
governmental agency or authority of any injunction, order, decision or
other restraint prohibiting, or having the effect of prohibiting, the
making of any Loan or the issuance of any Letter of Credit or the
initiation of any litigation or similar proceeding seeking any such
injunction, order or other restraint.
(b) Litigation. The filing or commencement of any action,
suit or proceeding against the Borrower or any of its Subsidiaries
whether at law or in equity or by or before any court or any Federal,
state, municipal or other governmental agency or authority and which,
if adversely determined against the Borrower or any of its Subsidiaries
could result in liability in excess of $100,000 in the aggregate, and
any material developments relating to the Contingency Reserve.
(c) Environmental Matters. (i) Any release or threatened
release of any Hazardous Material required to be reported to any
Federal, state or local governmental or regulatory agency under any
applicable Environmental Laws, (h) any remedial action taken by the
Borrower or any of its Subsidiaries or any other Person in response to
any Hazardous Material on, under or about the Borrower's or any of its
Subsidiaries' properties or any other property, and (iii) any violation
by the Borrower or any of its Subsidiaries of any Environmental Law, in
each case, which could result in a Material Adverse Effect.
(d) Default. Any Default or Event of Default, specifying the
nature and extent thereof and the action (if any) which is proposed to
be taken with respect thereto.
(e) Material Adverse Effect. Any development in the business
or affairs of the Borrower or any of its Subsidiaries, which could have
a Material Adverse Effect.
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SECTION 5.07. ERISA. Comply in all material respects with the
applicable provisions of ERISA and the provisions of the Internal Revenue Code
of 1986, as amended, relating thereto and furnish to the Lender (a) as soon as
possible, and in any event within 30 days after the Borrower knows or has reason
to know thereof, notice of (i) the establishment by the Borrower or any ERISA
Affiliate of any Pension Plan, (ii) the commencement by the Borrower or any of
its Subsidiaries of contributions to a Multiemployer Plan, (iii) any failure by
the Borrower or any ERISA Affiliate to make contributions required by Section
302 of ERISA (whether or not such requirement is waived pursuant to Section 303
of ERISA), or (iv) the occurrence of any Reportable Event with respect to any
Pension Plan for which the reporting requirement is not waived, together with a
statement of a Financial Officer setting forth details as to such Reportable
Event and the action which the Borrower proposes to take with respect thereto,
together with a copy of the notice of such Reportable Event given to the Pension
Benefit Guaranty Corporation if any notice is required to be given to said
Corporation, (b) promptly after receipt thereof, a copy of any notice the
Borrower or any of its Subsidiaries may receive from the Pension Benefit
Guaranty Corporation relating to the intention of said Corporation to terminate
any Pension Plan, or to appoint a trustee to administer any Pension Plan and (c)
promptly after receipt thereof, a copy of any notice of withdrawal liability
from any Multiemployer Plan.
SECTION 5.08. MAINTAINING RECORDS; ACCESS TO PREMISES AND INSPECTIONS.
Maintain financial records in accordance with generally accepted practices and,
upon reasonable notice, at all reasonable times and as often as the Lender may
reasonably request, permit any authorized representative designated by the
Lender to visit and inspect the properties and financial records of the Borrower
and any of its Subsidiaries and to make extracts from such financial records at
the Borrower's expense, and permit any authorized representative designated by
the Lender to discuss the affairs, finances and condition of the Borrower and
any of its Subsidiaries with the Borrower's or such Subsidiary's chief financial
officer and such other officers as the Borrower shall deem appropriate, and the
Borrower's independent public accountants.
SECTION 5.09. USE OF PROCEEDS. Use the proceeds of the Loans only for
the following purposes:
(a) Revolving Credit Facility -The Revolving Credit Facility
shall only be used for working capital purposes for the Borrower, the
issuance of Letters of Credit and the refinancing and repayment of
certain existing indebtedness of the Borrower to First Chicago NBD
Corporation.
(b) Term Loan Facility. The Term Loan Facility shall only be
used for refinancing and repayment of certain existing indebtedness of
the Borrower to First Chicago NBD Corporation.
SECTION 5.10. BANKING BUSINESS: COLLECTIONS. In order to facilitate the
Lender's maintenance and monitoring of its security interest in the Collateral,
the Borrower and the Guarantors shall maintain all of their accounts and other
banking activities with the Lender, including for international services and
cash management requirements. The Borrower and the Guarantors shall at all times
maintain lockbox arrangements at the Lender for all Accounts, collections and
other proceeds of Collateral.
ARTICLE VI NEGATIVE COVENANTS
The Borrower covenants and agrees with the Lender that, so long as this
Agreement shall remain in effect or the principal of or interest on the Notes,
any Fee or any other expense or amount payable hereunder shall be unpaid, unless
the Lender shall otherwise consent in writing, it will not and it will not
permit any of its Subsidiaries to, either directly or indirectly:
SECTION 6.01. INDEBTEDNESS. Incur, create, assume or permit to exist
any Indebtedness, including pursuant to any Guaranty, except that the following
Indebtedness is permitted: (a) Indebtedness incurred pursuant to this Agreement
and the other Loan Documents, (b) Indebtedness incurred in the ordinary course
of business with respect to customer deposits, trade payables and other
unsecured current liabilities not the result of borrowing and not evidenced by
any note or other evidence of indebtedness, (c) Indebtedness pursuant to the
Intercompany Notes, and (d) the Indebtedness listed on SCHEDULE 6.01.
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SECTION 6.02. NEGATIVE PLEDGE. Create, incur, assume or permit to exist
any Lien on any property or assets now owned or hereafter acquired by it or on
any income or rights in respect of any thereof, except the following permitted
Liens (the "PERMITTED LIE"):
(a) Liens created pursuant to the Loan Documents on behalf of
the Lender;
(b) Liens for or priority claims imposed by law which are
incidental to the conduct of business or the ownership of properties
and assets (including mechanic's, warehousemen's, attorneys' and
statutory landlords' liens) and deposits, pledges or liens to secure
statutory obligations, surety or appeal bonds or other liens of like
general nature incurred in the ordinary course of business and not in
connection with the borrowing of money; provided, however that in each
case, the obligation secured is not overdue or, if overdue, is being
contested in good faith and adequate reserves have been set up by the
Borrower as the case may be; provided, further, that the lien and
security interest provided in the Loan Documents or any portion thereof
created or intended to be created thereby is not, in the opinion of the
Lender, unreasonably jeopardized thereby;
(c) Liens securing the payment of taxes, assessments and
governmental charges or levies incurred in the ordinary course of
business, either (i) not delinquent, or (ii) being contested in good
faith by appropriate legal or administrative proceedings and as to
which the Borrower shall have set aside on its books adequate reserves,
and so long at during the period of any such contest, the Borrower
shall suffer no loss of any privilege of doing business or any other
right, power or privilege necessary or material to the operation of its
business; and
(d) Liens securing the Indebtedness listed on SCHEDULE 6.02;
(e) Permitted Encumbrances (as defined in the Mortgage); and
(f) Liens in favor of Waupaca Foundry, Inc. on Tooling
Inventory in the possession of Waupaca Foundry, Inc. from time to time;
(g) Liens securing purchase money security interests in favor
of lessors or vendors of assets to the Borrower in the ordinary course
of business; and
(h) extensions, renewals and replacements of Liens referred to
in paragraphs (a) through (g) of this SECTION 6.02; provided, however,
that any such extension, renewal or replacement Lien shall be limited
to the property or assets covered by the Lien extended, renewed or
replaced and that the obligations secured by any such extension,
renewal or replacement Lien shall be in an amount not greater than the
amount of the obligations secured by the Lien extended, renewed or
replaced.
SECTION 6.03. SALE OF ASSETS. Except as expressly permitted by the
Security Agreements, sell, transfer or otherwise dispose of any of its assets,
including the Collateral and the Premises, except (a) Inventory disposed of in
the ordinary course of business, (b) obsolete equipment disposed of in the
ordinary course of business and (c) subject to the prior written consent of the
Lender, which consent shall not be unreasonably withheld, the sale in whole or
in part of the assets or capital stock of the Hungarian foundry owned directly
or indirectly by the Borrower, UBP Hungary, Inc. or UBP Csepel, Iron Foundry,
Kft.
SECTION 6.04. CONSOLIDATIONS, MERGERS OR PURCHASES OF ASSETS. Merge
into or consolidate or combine with any other Person, or purchase, lease or
otherwise acquire (in one transaction or a series of related transactions) all
or any part of the property or assets of any Person (other than purchases or
other acquisitions of inventory, materials, leases, property and equipment in
the ordinary course of business).
SECTION 6.05. RESTRICTED PAYMENTS. Declare or pay, directly or
indirectly, any dividend or distribution or any other payment of any kind to any
Person, including, but not limited to, any of its stockholders or its Affiliates
(including any redemption, purchase or acquisition of, whether in cash,
property, securities or a combination thereof, any partnership interests or
capital accounts or warrants, options or any of its other securities) or set
apart any sum for the aforesaid purposes, except for (a) payments on
Intercompany Notes in accordance with the terms of such
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Intercompany Notes, (b) payments or prepayments on Subordinated Debt (but only
pursuant to the terms of the Subordination Agreement and provided no Default or
Event of Default has occurred and is continuing or would result therefrom) and
(c) payment of the Indebtedness set forth on Schedule 6.01.
SECTION 6.06. INVESTMENTS, LOANS AND ADVANCES. Purchase, or hold
beneficially, any stock, other securities or evidences of Indebtedness of, or
make or permit to exist any loan, Guaranty or advance to, or make any investment
or acquire any interest whatsoever in, any other Person (including, but not
limited to, the formation or acquisition of any Subsidiaries not existing on the
date of this Agreement), except loans evidenced by the Intercompany Notes from
the Borrower to each of the Guarantors and (b) intercompany loans of up to
$3,850,000 to UBP Hungary, Inc., $1,600,000 of which sum shall be used to repay
in full a loan of UBP Hungary, Inc. to First National Bank of Chicago -
Frankfurt Branch (provided that neither the Borrower, UBP nor UAI shall make any
additional or future loans, advances or Guaranties for the benefit of UBP
Hungary, Inc.).
SECTION 6.07. TRANSACTIONS WITH AFFILIATES. Sell or transfer any assets
to, or purchase or acquire any assets of, or make any loan (other than pursuant
to the Intercompany Notes), advance or investment in, or otherwise engage in any
material transaction with, or permit any Affiliate to sell or transfer assets
to, or purchase or acquire any assets of, or otherwise engage in any other
material transaction with any other Affiliate, except for sales to and purchases
from Affiliates in the ordinary course of business on "arms-length" terms no
less favorable to the Borrower than similar arrangements with third parties. The
transactions specified in Schedule 6.01 and any refinancings thereof shall not
be deemed in default of the provisions of this Agreement.
SECTION 6.08. LINE OF BUSINESS. Engage, directly or indirectly, in any
businesses other than the businesses in which it is engaged on the Closing Date.
SECTION 6.09. FISCAL YEAR, ACCOUNTING. Change its Fiscal Year or method
of accounting (other than immaterial changes and methods), except as required by
generally accepted accounting principles.
SECTION 6.10. RESTRICTIONS ON SALE OF ASSETS AND DISTRIBUTIONS. Permit
or place any material restriction, directly or indirectly, on the sale, pledge,
transfer or other disposition of any material asset (other than such
restrictions as ordinarily appear in contracts entered into in the ordinary
course of business, examples of which include restrictions on the ability to
assign leases or contract rights and obligations and the restrictions arising
under this Agreement and the other Loan Documents).
SECTION 6.11 ISSUANCE OF EQUITY INTERESTS. Without the prior written
approval of the Lender, issue any capital stock or other equity interests of the
Borrower or any Subsidiary or any options or warrants to purchase, or securities
convertible into, capital or equity interests of the Borrower or any Subsidiary,
except for warrants for (i) common stock of the Borrower issuable to Sirrom
Capital Corporation in connection with Subordinated Debt, (ii) common stock of
the Borrower issued in connection with the Borrower's initial public offering,
(iii) common stock of the Borrower issuable with respect to warrants or options
presently outstanding, (iv) options to purchase common stock of the Borrower
(and the common stock issuable upon exercise of such options) with respect to
the authorized options issuable pursuant to the Borrower's existing stock option
plan, which permits the issuance of up to 300,000 shares of common stock of the
Borrower in the aggregate upon exercise of such options, (v) rights to acquire
common stock of the Borrower in accordance with the settlement of the
Litigation, or (vi) issuance of capital stock in accordance with secondary
public or private offerings priced at not less than 80% of the then existing
fair market value of the Borrower's common stock; provided, however, that 50 %
of the net cash proceeds (after deductions for reasonable expenses in connection
with the issuance) from such offering shall be used to make prepayments on the
Loans, applied first, to scheduled principal payments of the Term Loan, if any
amounts remain outstanding thereunder, in inverse order of maturity and second,
to permanently reduce the Revolving Credit Availability; further provided,
however, that if at the time of such issuance the Leverage Ratio is less than or
equal to 2.5: 1.0, once the outstanding principal balance of the Tenn Loan has
been paid down to $2,250,000, no further prepayment shall be required for such
issuance.
SECTION 6.12 MODIFICATIONS OF MATERIAL DOCUMENTS. Without the prior
written approval of the Lender, amend, terminate, modify or waive (or agree to
the amendment, modification or termination or waiver of) any material term or
provision of the articles/certificate of incorporation or bylaws of the Borrower
or any of its Subsidiaries, or any document evidencing Subordinated Debt.
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SECTION 6.13 LEVERAGE RATIO. Permit the Leverage Ratio to be no greater
than the following during each of the following periods, measured as of the end
of each fiscal quarter during each such period:
=========================================================================
PERIOD LEVERAGE RATIO
-------------------------------------------------------------------------
Closing Date through 12/30/97 4.50:1.0
-------------------------------------------------------------------------
12/31/97 through 12/30/98 3.75:1.0
-------------------------------------------------------------------------
12/31/98 and thereafter 3.50:1.0
=========================================================================
SECTION 6.14 TANGIBLE NET WORTH. Permit Tangible Net Worth to be less
than the following amounts at the end of any fiscal quarter during following
fiscal years:
=========================================================================
PERIOD TANGIBLE NET WORTH
-------------------------------------------------------------------------
Closing Date through 12/30/97 $5,500,000
-------------------------------------------------------------------------
12/31/97 through 12/30/98 $6,000,000
-------------------------------------------------------------------------
12/31/98 and thereafter $6,500,000
=========================================================================
SECTION 6.15 SUBORDINATED DEBT. Permit the Subordinated Debt of the
Borrower to be less than $3,000,000 at any time (including after giving effect
to any payments or prepayments).
SECTION 6.16 LEASES. Enter into or permit to exist any arrangements for
the leasing by the Borrower or its Subsidiaries of any real or personal property
(or interests therein) under leases, other than leases existing as of the date
of this Agreement, which require the payment of rental amounts in excess of
$500,000 in any Fiscal Year.
ARTICLE VII DEFAULTS
SECTION 7.01. EVENTS OF DEFAULT. Each of the following events shall
constitute events of default ("Events of Default") hereunder:
(a) any representation or warranty made by or on behalf of the
Borrower in connection with this Agreement or the other Loan Documents
or any of the Transactions shall prove to have been false or misleading
in any material respect when made;
(b) default shall be made in the payment of any principal on
the Loans or any Reimbursement Obligations when and as the same shall
become due and payable, whether at the due date thereof or at a date
fixed for prepayment thereof or by acceleration thereof or otherwise.
(c) default shall be made in the payment of any interest or
other amounts payable hereunder or under the other Loan Documents when
and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise, and such amount shall remain unpaid for 3
Business Days.
(d) default shall be made in the due observance of any
covenant, condition or agreement on the part of the Borrower contained
in SECTIONS 5.01, 5.05, 5.06(d) OR ARTICLE VI.
(e) default shall be made in the due observance or performance
of any other covenant, condition or agreement to be observed or
performed by the Borrower pursuant to the terms of this Agreement or
the other Loan Documents and such default shall continue unremedied for
a period of 30 days after the earlier
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of (i) written notice from the Lender of such default or (ii) actual
knowledge by the Borrower of such default;
(f) the Borrower, the Guarantors or any of their Subsidiaries
shall (i) voluntarily commence any proceeding or file any petition
seeking relief under Title I I of the United States Code or any other
Federal or state bankruptcy, insolvency or similar law, (ii) consent to
the institution of, or fail to controvert in a timely and appropriate
manner, any such proceeding or the filing of any such petition, (iii)
apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator or similar official for the Borrower, any
Guarantor or any of their Subsidiaries or for a substantial part of
their respective properties or assets, (iv) file an answer admitting
the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors,
(vi) become unable generally, or admit in writing its inability, to pay
its debts as they become due, (vii) suspend the transaction of all or a
substantial portion of its usual business or (viii) take corporate
action for the purpose of effecting any of the foregoing;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Borrower, any
Guarantor or any of their Subsidiaries of a substantial part of any of
their respective properties or assets under Title 11 of the United
States Code or any other Federal or state bankruptcy, insolvency or
similar law, (ii) the appointment of a receiver, trustee, custodian,
sequestrator or similar official for the Borrower, any Guarantor or any
of their Subsidiaries or for a substantial part of their respective
properties, or (iii) the winding-up or liquidation of the Borrower, any
Guarantor or any of their Subsidiaries; and such proceeding or petition
shall continue undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall continue unstayed and in effect
for 60 days;
(h) a default shall be made with respect to any Indebtedness
of the Borrower or any Guarantor, including, but not limited to, the
Subordinated Debt of the Borrower payable to Sirrom Capital
Corporation, or any event shall occur if the effect of any such default
or event shall be to accelerate, or to permit the holder or obligee of
any Indebtedness (or any trustee or agent on behalf of such holder or
obligee) to accelerate (with or without notice or lapse of time or
both), the maturity of Indebtedness in an aggregate amount in excess of
$100,000; or any payment of principal or interest, regardless of
amount, on any Indebtedness of the Borrower or any Guarantor or any of
their Subsidiaries in an aggregate principal amount in excess of
$100,000, shall not be paid when due, whether at maturity, by
acceleration or otherwise (after giving effect to any period of grace
specified in the instrument evidencing or governing such Indebtedness);
(i) a Reportable Event shall have occurred with respect to any
Pension Plan or a notice of intent to terminate a Pension Plan shall
have been furnished to the affected parties (as provided in Section
4041(c)(1) of ERISA); or the Pension Benefit Guaranty Corporation shall
have instituted proceedings to terminate any Pension Plan, or a trustee
shall have been appointed by a United States District Court to
administer any Pension Plan, if in any such case such Pension Plan then
has an amount of unfunded benefit liabilities (within the meaning of
Section 4001(a)(18) of ERISA) aggregating in excess of $100,000 or the
Borrower or any ERISA Affiliate incurs withdrawal liability to any
Multiemployer Plan under subtitle E of Title IV of ERISA aggregating in
excess of $100,000;
(j) a final judgment for the payment of money in excess of
$100,000 shall be rendered by a court or other tribunal against the
Borrower or any of its Subsidiaries and shall remain undischarged for a
period of 30 consecutive days during which execution of such judgment
shall not have been stayed effectively or final judgments for the
payment of money aggregating in excess of $100,000 shall be rendered
against the Borrower or any of its Subsidiaries and such judgments
shall remain undischarged for a period of 30 consecutive days during
which execution of such judgments shall not have been stayed
effectively;
(k) the Subsidiary Guaranties or any Collateral Document shall
cease to be in full force and effect, enforceable in accordance with
its terms, or the Borrower or any Guarantor shall assert the invalidity
of any such instrument, or any security interest or Lien purported to
be created by any Collateral Document shall cease to be a valid and
perfected first priority security interest in any collateral described
therein;
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(1) a default or event of default shall occur under any of the
other Loan Documents, which shall remain uncured after the expiration
of any applicable notice, cure or grace period, if any;
(m) the Borrower or any of its Subsidiaries shall be the
subject to any proceeding pertaining to the release by (i) the Borrower
or its Subsidiaries, (ii) any Person acting on the Borrower's behalf,
or (iii) any predecessor in interest to the assets and properties of
the Borrower or its Subsidiaries, of Hazardous Materials into the
environment or any violation of any Environmental Loans which, in
either case, could have a Material Adverse Effect.
(n) a Change of Control shall occur.
SECTION 7.02. REMEDIES UPON DEFAULT. Upon the occurrence of any Event
of Default (other than an event described in Section 7.01(f) or W), and at any
time thereafter during the continuance of such event, the Lender may, by written
notice to the Borrower, take either or all of the following actions-at the same
or different times: (a) terminate forthwith the Commitment (including the
Revolving Credit Facility and any obligation to issue Letters of Credit
hereunder) of the Lender hereunder, and (b) declare the Notes to be forthwith
due and payable, whereupon the principal of the Notes, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the
Borrower accrued hereunder and under the other Loan Documents, shall become
forthwith due and payable both as to principal and interest, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Borrower, anything contained herein or in the
Notes to the contrary notwithstanding, or (c) take any other action available at
law or in equity. Upon the occurrence of any event described in Section 7.01(f)
or (g)), (i) the Commitment (including the Revolving Credit Facility, and any
obligation to issue Letters of Credit hereunder) of the Lender shall
automatically terminate, and (ii) the principal amount outstanding under the
Notes, together with Eon accrued interest thereon and any accrued unpaid Fees
and all other liabilities of the Borrower accrued hereunder and under the other
Loan Documents, shall automatically become due and payable, both as to principal
and interest, without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by the Borrower, anything contained
herein or in the Notes to the contrary notwithstanding. Upon any acceleration of
the Notes and the other amounts payable hereunder, the Borrower shall pay to the
Lender an amount equal to the aggregate stated amount of all Letters of Credit
to be held by the Lender as cash collateral to secure the obligations of the
Borrower hereunder with respect to the Letters of Credit.
ARTICLE VIII MISCELLANEOUS
SECTION 8.01. NOTICES. (a) Notices and other communications provided
for herein and in the other Loan Documents shall be in writing and shall be
delivered personally or mailed, by certified or registered mail, postage prepaid
(or in the case of facsimile communication, delivered by telex, graphic scanning
or other facsimile communications equipment) or delivered by overnight courier
addressed:
If to Lender:
LaSalle National Bank
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. XxXxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx & Xxxxxx
Three First Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Borrower:
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Universal Automotive Industries, Inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx & Xxxxxxxx Ltd.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) All notices and other communications given to any party
hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt, in each case
addressed to such Person as provided in this Section 8.01 or in
accordance with the latest unrevoked direction from such Person.
SECTION 8.02. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Borrower herein and in the other Loan
Documents shall be considered to have been relied upon by the Lender and shall
survive the making by the Lender of the Loans and the execution and delivery to
the Lender of the Notes evidencing the Loans and shall continue in full force
and effect until the Notes and all accrued interest thereon and all other
Obligations then due and payable have been fully paid and the Lender has no
further commitment to lend hereunder.
SECTION 8.03. SUCCESSORS AND ASSIGNS. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of the Borrower or the Lender that are contained in this
Agreement shall bind and inure to the benefit of their respective successors and
assigns. The Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of the Lender. The
Lender shall have the right to sell participations in and make assignments of
all or any part of the Commitment, the Notes and the Letters of Credit in its
sole and absolute discretion and without the consent of or notice to the
Borrower.
SECTION 8.04. EXPENSES OF THE LENDER; INDEMNIFY; JUDGMENT CURRENCY.
(a) The Borrower agrees to pay all- out-of-pocket expenses
reasonably incurred by the Lender (including the fees and expenses of
the Lender's counsel and its paralegals, field exam expenses and
related fees and environmental audit and appraisal fees) in connection
with the preparation and administration of this Agreement and the other
Loan Documents, or with any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the Transactions shall be
consummated) or reasonably incurred by the Lender (including the fees
and expenses of the Lender's counsel and its paralegals) in connection
with the enforcement of its rights in connection with this Agreement or
the other Loan Documents. The Borrower further agrees that it shall
indemnify the Lender from and hold it harmless against any documentary
taxes, assessments or charges made by any governmental authority by
reason of the execution and delivery of this Agreement or any of the
other Loan Documents.
(b) The Borrower agrees to indemnify the Lender and its
Affiliates, directors, officers, employees and agents against, and to
hold the Lender and such Persons harmless from, any and all losses,
claims, damages, liabilities, penalties, actions, judgments, suits,
costs, and related expenses, including legal and paralegal fees and
expenses, incurred by or asserted against the Lender or any such
Persons arising out of, in any way connected with, or as a result of
any claim, investigation, litigation or other proceeding (whether or
not the Lender is a party) relating to (i) this Agreement or the other
Loan Documents, (ii) the performance by the parties hereto and thereto
of their respective obligations hereunder and thereunder
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(including the making of the Commitment), (iii) the consummation of the
Transactions, (iv) the release, presence, spillage, disposal,
discharge, transporting, emission or leakage of Hazardous Materials,
which is at, in, on, under, about, from or affecting the Premises,
including any damage or injury resulting from any such Hazardous
Materials to or affecting the Borrower's properties or the soil, water,
air, vegetation, buildings, personal property, persons or animals
located on such properties or on any other property or otherwise, or
(v) any violation of any Environmental Laws. The foregoing indemnity
includes the cost of remedial action to the extent required to cause
the Borrower's properties to be in compliance with all applicable
Environmental Laws. Notwithstanding the foregoing, this indemnity shall
not apply to any such losses, claims, damages, liabilities or related
expenses arising solely from the gross negligence or willful misconduct
of the Lender.
(c) The relationship between the Borrower (and its
Subsidiaries) and the Lender shall be solely that of borrower and
lender. The Lender shall not have any fiduciary responsibilities to the
Borrower (or its Subsidiaries). The Lender does not undertake any
responsibility to the Borrower (or its Subsidiaries) to review or
inform the Borrower (or its Subsidiaries) of any matter in connection
with any phase of the Borrower's (or its Subsidiaries') business or
operations. The Borrower agrees that the Lender shall not have
liability to the Borrower or its Subsidiaries (whether sounding in
tort, contract or otherwise) for losses suffered by the Borrower or its
Subsidiaries in connection with, arising out of, or in any way related
to, the transactions contemplated and the relationship established by
the Loan Documents, or any act, omission or event occurring in
connection therewith, unless it is determined by a court of competent
jurisdiction in a final and non-appealable order that such losses
resulted from the gross negligence or willful misconduct of the party
from which recovery is sought. The Lender shall not have any liability
with respect to, and the Borrower hereby waives, releases and agrees
not to xxx for, any special, indirect or consequential damages suffered
by the Borrower or its Subsidiaries in connection with, arising out of,
or in any way related to the Loan Documents or the transactions
contemplated thereby.
(d) If for any purpose, including the obtaining of judgment in
any court, it is necessary to convert a sum due hereunder from the
currency in which it is payable (the "PAYMENT CURRENCY") into another
currency (the "JUDGMENT CURRENCY"), the parties hereto agree, to the
fullest extent that they may lawfully and effectively do so, that the
rate of exchange used shall be that at which, in accordance with normal
banking procedures, the Lender could purchase the Payment Currency with
the Judgment Currency in the Chicago foreign exchange market on the
Business Day preceding the date of final judgment. The obligation of
the Borrower in respect of any sum due from it to the Lender hereunder
shall, notwithstanding any judgment or payment in a currency other than
the Payment Currency, be discharged only to the extent that on the
Business Day following receipt by the Lender of any sum so paid or
adjudged to be so due in the Judgment Currency the Lender may in
accordance with normal banking procedures, purchase the Payment
Currency with the amount of Judgment Currency so paid or adjudged to be
due; if the amount in the Payment Currency so purchased is less than
the sum originally due to the Lender in the Payment Currency, the
Borrower agrees, as a separate obligation and additional cause of
action and notwithstanding any such payment or judgment, to indemnify
the Lender against such loss and if the amount in the Payment Currency
so purchased exceeds the sum originally due to the Lender in the
Payment Currency, the Lender agrees to remit to the Borrower such
excess. The term "rate of exchange" in this SECTION 8.04 means the spot
rate at which the Lender, in accordance with normal practices, is able
on the relevant date to purchase the Payment Currency with the Judgment
Currency and includes any premium and costs of exchange payable in
connection with the purchase.
(e) The provisions of this Section shall remain operative and
in full force and effect regardless of the expiration of the term of
this Agreement, the other Loan Documents, the consummation of the
Transactions, the repayment of any of the Loans, the invalidity or
unenforceability of any term or provision of this Agreement or any of
the other Loan Documents, or any investigation made by or on behalf of
the Lender. All amounts due under this Section 8.04 shall be payable on
written demand in reasonable detail therefor.
SECTION 8.05. RIGHT OF SETOFF. The Lender is hereby authorized at any
time and from time to time after the occurrence and during the continuance of an
Event of Default to setoff and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by the
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Lender to or for the credit or the account of the Borrower (other than trust
accounts held for the benefit of third parties in the ordinary course of the
Borrower's business) to amounts then due and payable under this Agreement and
the other Loan Documents, irrespective of whether or not the Lender shall have
made any demand under this Agreement or any of the other Loan Documents. The
rights of the Lender under this Section 8.05 are in addition to other rights and
remedies (including other rights of setoff) which the Lender may have under
applicable law.
SECTION 8.06 APPLICABLE LAW. THIS AGREEMENT, THE NOTES AND EACH OF THE
OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF ILLINOIS, WITHOUT GIVING EFFECT TO ILLINOIS CHOICE OF LAW
DOCTRINE.
SECTION 8.07. WAIVERS. No failure or delay of the Lender in exercising
any power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Lender hereunder are cumulative and not exclusive of any
rights or remedies which it would otherwise have. No waiver of any provision of
this Agreement, the Notes or the other Loan Documents, or consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be authorized as provided in Section 8.08, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances.
SECTION 8.08. AMENDMENTS. Neither this Agreement nor any provision
hereof may be waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by the Borrower and the Lender.
SECTION 8.09. SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement, the Notes or the other Loan Documents
should be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein or
therein shall not in any way be affected or impaired thereby.
SECTION 8.10. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which
when taken together shall constitute but one contract, and shall become
effective when copies hereof which, when taken together, bear the signatures of
each of the parties hereto shall be delivered or mailed to the Lender and the
Borrower.
SECTION 8.11. HEADINGS. Article and Section headings and the Table of
Contents used herein are for convenience of reference only and are not to affect
the construction of, or to be taken into consideration in interpreting, this
Agreement.
SECTION 8.12. CONSENT TO JURISDICTION. THE BORROWER IRREVOCABLY AGREES
THAT ANY LEGAL ACTION, SUIT OR PROCEEDING AGAINST IT WITH RESPECT TO ITS
OBLIGATIONS, LIABILITIES OR ANY OTHER MATTER UNDER OR ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT, AND THE OTHER LOAN DOCUMENTS, OR FOR RECOGNITION
OR ENFORCEMENT OF ANY JUDGMENTS RENDERED IN ANY SUCH ACTION, SUIT, OR
PROCEEDINGS MAY BE BROUGHT IN THE UNITED STATES COURT FOR THE NORTHERN DISTRICT
OF ILLINOIS OR IN THE COURTS OF THE STATE OF ]ILLINOIS LOCATED IN XXXX COUNTY
(AND THE BORROWER WAIVES ANY OTHER PREFERENTIAL JURISDICTION BY REASON OF ITS
PRESENT OR FUTURE DOMICILE OR OTHERWISE), AS 11-1E LENDER MAY ELECT AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER HEREBY UNCONDITIONALLY
AND IRREVOCABLY ACCEPTS AND SUBMITS TO THE JURISDICTION OF EACH OF THE AFORESAID
COURTS IN PERSON", GENERALLY AND UNCONDITIONALLY WITH RESPECT TO ANY SUCH
ACTION, SUIT OR PROCEEDING FOR IT AND IN RESPECT OF ITS PROPERTIES, ASSETS AND
REVENUES. THE BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY DESIGNATES,
APPOINTS AND EMPOWERS XXXXX XXXXX (THE "PROCESS AGENT"), AS ITS DESIGNEE,
APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND
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ACKNOWLEDGE FOR AND ON BEHALF OF THE BORROWER AND ITS PROPERTIES, ASSETS AND
REVENUES, SERVICES OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS
THAT MAY BE SERVED IN ANY SUCH ACTION, SUIT OR PROCEEDING IN THE UNITED STATES
COURT FOR THE NORTHERN DISTRICT OF ILLINOIS OR THE COURTS OF THE STATE OF
ILLINOIS LOCATED IN XXXX COUNTY, WHICH SERVICE MAY BE MADE ON THE PROCESS AGENT
IN ACCORDANCE WITH LEGAL PROCEDURES PRESCRIBED FOR SUCH COURTS. THE BORROWER
FURTHER AGREES THAT SERVICE UPON THE PROCESS AGENT MALL CONSTITUTE VALID AND
EFFECTIVE SERVICE UPON THE BORROWER AND THAT THE FAILURE OF THE PROCESS AGENT TO
GIVE ANY NOTICE OF SUCH SERVICE TO THE BORROWER SHALL NOT AFFECT THE VALIDITY OF
SUCH SERVICE OR ANY JUDGMENT RENDERED IN ANY ACTION OR PROCEEDING BASED THEREON,
AND THAT SERVICE OF ANY AND ALL SUCH PROCESS OR OTHER DOCUMENT ON THE BORROWER
MAY ALSO BE EFFECTED BY REGISTERED MAIL OR REGISTERED AIR MAIL, AS THE CASE MAY
BE, POSTAGE PREPAID, TO THE ADDRESS OF THE BORROWER SET FORTH IN SECTION 8.01
HEREOF, SUCH SERVICE TO BE EFFECTIVE 4 BUSINESS DAYS AFTER THE MAILING THEREOF.
NOTHING HEREIN SHALL, OR MALL BE CONSTRUED SO AS TO, LIMIT THE RIGHT OF THE
LENDER, TO THE EXTENT PERMITTED) BY APPLICABLE LAW, TO BRING ACTIONS, SUITS OR
PROCEEDINGS WITH RESPECT TO THE OBLIGATIONS AND LIABILITIES OF THE BORROWER
UNDER, OR ANY OTHER MATTER ARISING OUT OF OR IN CONNECTION WITH, THIS AGREEMENT
OR THE LOAN DOCUMENTS OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT RENDERED
IN ANY SUCH ACTION, SUIT OR PROCEEDING IN THE COURTS OF ANY JURISDICTION IN
WHICH ANY OFFICE OF THE LENDER MAY BE LOCATED OR ANY ASSETS, PROPERTIES OR
REVENUES OF THE BORROWER MAY BE FOUND OR AS THE LENDER SHALL OTHERWISE DEEM
APPROPRIATE, OR THE RIGHT TO AFFECT SERVICE OF PROCESS IN ANY JURISDICTION IN
ANY OTHER MANNER PERMITTED BY LAW. IN ADDITION, THE BORROWER IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS, SUITS OR PROCEEDINGS BROUGHT IN
ANY OF THE COURTS REFERRED TO ABOVE, AND FURTHER IRREVOCABLY AND UNCONDITIONALLY
WAIVES AND AGREES NOT TO PLEAD OR CLAIM THAT ANY SUCH ACTION, SUIT OR PROCEEDING
BROUGHT IN ANY OF THE AFORESAID COURTS HAS BEEN BROUGHT IN ANY INCONVENIENT
FORUM.
SECTION 8.13. WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER HEREBY
EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHT, POWER, OR REMEDY UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER WAN DOCUMENT OR UNDER OR IN CONNECTION WITH ANY
AMENDMENT, INSTRUMENT, DOCUMENT, OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION OR THEREWITH OR ARISING FROM ANY BANKING
RELATIONSHIP EXISTING IN CONNECTION WITH TIES AGREEMENT OR ANY OTHER LOAN
DOCUMENT, AND AGREE THAT ANY SUCH ACTION MALL BE TRIM BEFORE A COURT AND NOT
BEFORE A JURY. THE TERMS AND PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL
INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT.
SECTION 8.14. INTEREST LIMITATION. Anything in this Agreement, the
Notes or any Loan Document to the contrary notwithstanding, the Borrower shall
never be required to pay interest at a rate in excess of the highest lawful
rate, and if the effective rate of interest that would otherwise be payable
under this Agreement, the Notes or any Loan Document would exceed the highest
lawful rate, or if any holder of the Notes shall receive monies that are deemed
to constitute interest which would increase the effective rate of interest
payable under this Agreement, the Notes or any Loan Document to a rate in excess
of the highest lawful rate, then (a) the amount of interest that would otherwise
be payable under this Agreement, the Notes and the Loan Documents shall be
reduced to the amount allowed under applicable law, and (b) any interest paid in
excess of the highest lawful rate shall, at the option of the holders of the
Notes, be either refunded to the payor or credited on the principal of the
Notes.
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SECTION 8.15. LOAN DOCUMENTS. In the event of any conflict or
inconsistency between the terms and provisions of this Agreement and those of
any other Loan Document, the terms and provisions of this Agreement shall govern
and control to the extent of such conflict or inconsistency.
The parties hereto have caused this Agreement to be duly executed by
their duly authorized officers, all as of the day and year first above written.
BORROWER:
UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.
By:
----------------------------------
Its:
---------------------------------
LENDER:
LASALLE NATIONAL BANK
By:
----------------------------------
Its:
---------------------------------
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