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Exhibit 10.38
EXECUTION COPY
LOAN AND SECURITY AGREEMENT
DATED AS OF APRIL 7, 1997
BETWEEN
GRAFALLOY CORPORATION,
AS BORROWER,
AND
LASALLE BUSINESS CREDIT, INC.,
AS LENDER.
$4,000,000
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TABLE OF CONTENTS
PAGE
----
1. DEFINITIONS............................................................. 1
2. REVOLVING LOANS......................................................... 10
3. TERM LOANS AND CAPEX LOANS.............................................. 10
4. LETTERS OF CREDIT....................................................... 12
5. INTEREST, FEES AND CHARGES.............................................. 13
6. LOAN ADMINISTRATION..................................................... 14
7. GRANT OF SECURITY INTEREST TO LASALLE................................... 15
8. PRESERVATION OF COLLATERAL AND PERFECTION OF SECURITY INTERESTS
THEREIN................................................................. 16
9. POSSESSION OF COLLATERAL AND RELATED MATTERS............................ 16
10. COLLECTIONS............................................................. 16
11. SCHEDULES AND REPORTS................................................... 20
12. TERMINATION............................................................. 20
13. REPRESENTATIONS AND WARRANTIES.......................................... 21
14. COVENANTS............................................................... 25
15. CONDITIONS PRECEDENT.................................................... 32
16. DEFAULT................................................................. 34
17. REMEDIES UPON AN EVENT OF DEFAULT....................................... 35
18. INDEMNIFICATION......................................................... 36
19. NOTICES................................................................. 37
20. CHOICE OF GOVERNING LAW AND CONSTRUCTION................................ 37
21. FORUM SELECTION AND SERVICE OF PROCESS.................................. 37
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22. MODIFICATION AND BENEFIT OF AGREEMENT................................... 38
23. HEADINGS OF SUBDIVISIONS................................................ 38
24. POWER OF ATTORNEY....................................................... 38
25. WAIVER OF JURY TRIAL; OTHER WAIVERS; CONFIDENTIALITY.................... 38
ii.
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EXECUTION COPY
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT ("Agreement") is made as of this 7th
day of April, 1997, by and among LASALLE BUSINESS CREDIT, INC., a Delaware
corporation ("LaSalle"), with its principal office at 000 Xxxxx XxXxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000, and GRAFALLOY CORPORATION, formerly known as GRAFALLOY
ACQUISITION CORPORATION, a Delaware corporation ("Borrower"), with its principal
office at 0000 Xxxxx Xxxxxxxx Xxxxxx, Xx Xxxxx, Xxxxxxxxxx 00000.
W I T N E S S E T H:
WHEREAS, Borrower has acquired from Grafalloy, L.P., the Assets as
defined in the Asset Purchase Agreement; and
WHEREAS, from time to time Borrower may request LaSalle to make
loans and advances to and extend certain credit accommodations to Borrower, and
the parties wish to provide for the terms and conditions upon which such loans,
advances and credit accommodations shall be made;
NOW, THEREFORE, in consideration of any loans, advances and credit
accommodations (including any loans by renewal or extension) hereafter made to
Borrower by LaSalle, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by Borrower, the parties agree
as follows:
1. DEFINITIONS.
(a) General Definitions
"ACCOUNT," "ACCOUNT DEBTOR," "CHATTEL PAPER," "DOCUMENTS,"
"EQUIPMENT," "GENERAL INTANGIBLES," "GOODS," "INSTRUMENTS," and "INVENTORY,"
shall have the respective meanings assigned to such terms in the Illinois
Uniform Commercial Code, as the same may be amended, modified or supplemented
from time to time.
"AFFILIATE" shall mean any Person directly or indirectly
controlling, controlled by or under common control with Borrower.
"AMT" shall mean The American Materials & Technologies
Corporation, a Delaware corporation, which owns 100% of the issued and
outstanding shares of capital stock of Borrower.
"ASSET ACQUISITION" shall mean the acquisition by Borrower of the
assets of Grafalloy, L.P. pursuant to the Asset Purchase Agreement.
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"ASSET PURCHASE AGREEMENT" shall mean the Asset Purchase Agreement
dated February 27, 1997 by and among Borrower, as purchaser, AMT, and Grafalloy,
L.P., as seller and Grafalloy, Inc.
"BORROWING BASE" shall have the meaning specified in paragraph
2(b)(i) hereof.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday,
or such other day as banks in Illinois are authorized or required to be closed
for business.
"CAPEX FACILITY TERMINATION DATE" shall have the meaning specified
in paragraph 3(c) hereof.
"CAPEX LOANS" shall have the meaning specified in paragraph 3(c)
hereof.
"CAPEX NOTE" shall mean the promissory note in the original
principal amount of $700,000 executed by the Borrower to the order of LaSalle
and dated as of the Closing Date.
"CAPEX LOAN COMMITMENT" shall mean $700,000.
"CAPITAL EXPENDITURES" shall mean, with respect to any period, the
aggregate of all expenditures (whether paid in cash or accrued as liabilities
and including expenditures for capitalized lease obligations) by Borrower during
such period that are required by GAAP to be included in or reflected by the
property, plant or equipment or similar fixed asset accounts (or in intangible
accounts subject to amortization) in the balance sheet of Borrower.
"CCC" shall mean Xxxxxx City Composites Corp., a Delaware
corporation, and an Affiliate of Borrower.
"CLOSING DATE" shall mean the date upon which the initial Loan is
made.
"CLOSING DOCUMENT LIST" shall have the meaning specified in
paragraph 15 hereof.
"COLLATERAL" shall mean all of the personal property of Borrower
described in paragraph 7 hereof, the Key Man Life Insurance Policy (at such time
as such Policy shall be reregistered to reflect Borrower as the owner thereof,
as more fully set forth in paragraph 15(a)(xiv) hereof) and all other real or
personal property of any Obligor or any other Person now or hereafter pledged to
LaSalle to secure, either directly or indirectly, repayment of any of the
Liabilities.
"DEBT SERVICE COVERAGE RATIO" shall mean, with respect to any
period, the ratio of (A) net income after taxes for such period (excluding any
after-tax gains or losses on the sale of assets (other than the sale of
Inventory in the ordinary course of business) and excluding other after-tax
extraordinary gains or losses), plus deferred taxes, plus depreciation and
amortization deducted in determining net income for such period, minus Capital
Expenditures for such period not financed, minus any cash dividends paid or
accrued and cash withdrawals paid or accrued
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to shareholders or other Affiliates for such period which were not calculated in
determining net income after taxes, and plus the after tax increase in LIFO
reserves or minus the after tax decrease in LIFO reserves, to (B) current
principal maturities of long term debt and capitalized leases paid or scheduled
to be paid during such period, excluding any such long term debt, the
outstanding principal balance of which has been refinanced in full by an
Affiliate prior to or concurrently with the due date of the installment of
principal thereof scheduled to have been paid during such period, but including
the current principal maturities of any such refinanced debt scheduled to be
paid during such period or during any other referenced period, to the extent
that such refinanced debt constitutes long term debt, plus any prepayments on
indebtedness owed to any Person (except trade payables and revolving loans) and
paid during such period.
"DEFAULT" shall mean any event, condition or default which with
the giving of notice, the lapse of time or both would be an Event of Default.
"EBITDA" shall mean, with respect to any period, net income after
taxes for such period (excluding any after-tax gains or losses on the sale of
assets and excluding other after-tax extraordinary gains or losses) plus
interest expense, income tax expense, depreciation and amortization for such
period, less gains and losses attributable to any fixed asset sales made during
such period, plus or minus any other non-cash charges or gains which have been
subtracted or added in calculating net income after taxes for such period.
"ELIGIBLE ACCOUNT" shall mean an Account owing to Borrower which
is acceptable to LaSalle in its commercially reasonable credit judgment. LaSalle
shall, in general, consider an Account to be an Eligible Account if it meets,
and so long as it continues to meet, the following requirements:
(i) it is genuine and in all respects is what it purports to
be;
(ii) it is owned by Borrower and Borrower has the right to
subject it to a security interest in favor of LaSalle;
(iii) it arises from (A) the performance of services by Borrower
and such services have been fully performed and acknowledged and
accepted by the Account Debtor thereunder; or (B) the sale or
lease of Goods by Borrower, and such Goods have been completed in
accordance with the Account Debtor's specifications (if any) and
delivered to and accepted by the Account Debtor, such Account
Debtor has not refused to accept and has not returned or offered
to return any of the Goods, or has not refused to accept any of
the services, which are the subject of such Account, and Borrower
has possession of, or has delivered to LaSalle at LaSalle's
request, shipping and delivery receipts evidencing delivery of
such Goods;
(iv) it is evidenced by an invoice rendered to the Account
Debtor thereunder and is due and payable (A) not more than thirty
(30) days after the date of the invoice and does not remain unpaid
more than sixty (60) days past the stated due date thereof or (B)
more than thirty (30) days but not more than sixty (60) days
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after the date of the invoice and does not remain unpaid more than
ninety (90) days after the date of the invoice; provided, however,
that if more than twenty-five percent (25%) of the aggregate
dollar amount of invoices owing by a particular Account Debtor
remain unpaid for (Y) 60 days following the respective due dates
thereof, in the case of invoices containing terms described in
clause (A) hereof or (Z) 90 days following the respective issuance
dates thereof, in the case of invoices containing terms described
in clause (B) hereof, then all Accounts owing to Borrower by that
Account Debtor shall be deemed ineligible;
(v) it is not subject to any prior assignment, claim, lien,
security interest or encumbrance whatsoever, other than Permitted
Liens;
(vi) it is a valid, legally enforceable and unconditional
obligation of the Account Debtor thereunder, and is not subject to
setoff, counterclaim, credit, allowance or adjustment by such
Account Debtor, or to any claim by such Account Debtor denying
liability thereunder in whole or in part;
(vii) it does not arise out of a contract or order which fails in
any material respect to comply with the requirements of applicable
law;
(viii) the Account Debtor thereunder is not a director, officer,
employee or agent of Borrower, or a Subsidiary, Parent or
Affiliate of Borrower;
(ix) it is not an Account with respect to which the Account
Debtor is the United States of America or any department, agency
or instrumentality thereof, unless Borrower assigns its right to
payment of such Account to LaSalle pursuant to, and in full
compliance with, the Assignment of Claims Act of 1940, as amended;
(x) it is not an Account with respect to which the Account
Debtor is located in a state which requires Borrower, as a
precondition to commencing or maintaining an action in the courts
of that state, either to (A) receive a certificate of authority to
do business and be in good standing in such state, or (B) file a
notice of business activities report or similar report with such
state's taxing authority, unless (x) Borrower has taken one of the
actions described in clauses (A) or (B), (y) the failure to take
one of the actions described in either clause (A) or (B) may be
cured retroactively by Borrower at its election, or (z) Borrower
has proven, to LaSalle's satisfaction, that it is exempt from any
such requirements under any such state's laws;
(xi) it is an Account which arises out of a sale made in the
ordinary course of Borrower's business;
(xii) the Account Debtor is a resident or citizen of, and is
located within, the United States of America, unless approval is
otherwise given in writing by LaSalle;
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(xiii) it is not an Account with respect to which the Account
Debtor's obligation to pay is conditional upon the Account
Debtor's approval of the Goods or services or is otherwise subject
to any repurchase obligation or return right, as with sales made
on a xxxx-and-hold, guaranteed sale, sale on approval, sale or
return or consignment basis;
(xiv) it is not an Account (A) with respect to which any
representation or warranty contained in this Agreement is untrue
or (B) which violates any of the covenants of Borrower contained
in this Agreement;
(xv) it is not an Account which, when added to a particular
Account Debtor's other indebtedness to Borrower, exceeds ten
percent (10%) of the aggregate of Borrower's Accounts or a credit
limit determined by LaSalle in its reasonable credit judgment for
that Account Debtor, provided, however, that Accounts excluded
from Eligible Accounts solely by reason of this subparagraph (xv)
shall be Eligible Accounts to the extent of such credit limit;
(xvi) it is not an Account with respect to which the prospect of
payment or performance by the Account Debtor is or will be
impaired, as determined by LaSalle in its commercially reasonable
credit judgment.
"ELIGIBLE INVENTORY" shall mean Inventory of Borrower which is
acceptable to LaSalle in its commercially reasonable credit judgment. Without
limiting LaSalle's discretion, LaSalle shall, in general, consider Inventory to
be Eligible Inventory if it meets, and so long as it continues to meet, the
following requirements:
(i) it is owned by Borrower and Borrower has the right to
subject it to a security interest in favor of LaSalle;
(ii) it is located on the premises listed on Exhibit A and is
not in transit;
(iii) it is not subject to any prior assignment, claim, lien,
security interest or encumbrance whatsoever, other than Permitted
Liens;
(iv) it is held for sale or lease or furnishing under contracts
of service, it is (except as LaSalle may otherwise consent in
writing) new and unused and free from defects which would, in
LaSalle's sole determination, affect its market value;
(v) it is not stored with a bailee, consignee, warehouseman,
processor or similar party unless LaSalle has given its prior
written approval and Borrower has caused any such bailee,
consignee, warehouseman, processor or similar party to issue and
deliver to LaSalle, in form and substance acceptable to LaSalle,
such UCC financing statements, warehouse receipts, waivers and
other documents as LaSalle shall require;
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(vi) LaSalle has determined in accordance with LaSalle's
customary business practices that it is not unacceptable due to
age, type, category or quantity;
(vii) it consists solely of finished goods or raw materials; and
(viii) it is not Inventory (A) with respect to which any of the
representations and warranties contained in this Agreement are
untrue; (B) which consists of WIP; or (C) which violates any of
the covenants of Borrower contained in this Agreement.
"EVENT OF DEFAULT" shall have the meaning specified in paragraph
16 hereof.
"EXCESS AVAILABILITY" shall mean, as of any date of determination
by LaSalle, the excess, if any, of (i) the Borrowing Base over (ii) the
outstanding Revolving Loans and Letter of Credit Obligations, in each case as of
the close of business on such date. For purposes of calculating Borrower's
Excess Availability and the amount of the Borrowing Base relating thereto,
LaSalle may, in the exercise of its commercially reasonable credit judgment,
establish a reserve in an aggregate amount based on Borrower's outstanding trade
payables which are not current or which are past due in any material respect, as
of such date of determination, to the extent thereof.
"EXHIBIT A" shall mean the exhibit entitled Exhibit A - Business
and Collateral Locations which is attached hereto and made a part hereof.
"FISCAL YEAR" shall mean the fiscal year of the Borrower
commencing on January 1, and ending on December 31.
"GAAP" shall mean generally accepted accounting principles and
policies in the United States of America as in effect from time to time.
"GRAFALLOY, L.P." shall mean Grafalloy, L.P., a Delaware limited
partnership.
"INDEMNIFIED PARTY" shall have the meaning specified in paragraph
18 hereof.
"KEY MAN LIFE INSURANCE POLICY" shall mean the policy of insurance
owned by Borrower in the face amount of $1,000,000, policy number 2,723,128,
issued by First Colony Life Insurance Company, insuring the life of Xxxxxxx
Xxxxxxx.
"LETTERS OF CREDIT" shall mean those letters of credit issued for
Borrower's account in accordance with the terms of paragraph 4 hereof.
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"LETTER OF CREDIT OBLIGATIONS" shall mean, as of any date of
determination, the sum of (i) the aggregate undrawn amount of all Letters of
Credit and (ii) the aggregate unreimbursed amount of all drawn Letters of
Credit.
"LIABILITIES" shall mean any and all obligations, liabilities and
indebtedness of Borrower to LaSalle or to any parent, affiliate or subsidiary of
LaSalle of any and every kind and nature, howsoever created, arising or
evidenced and howsoever owned, held or acquired, whether now or hereafter
existing, whether now due or to become due, whether primary, secondary, direct,
indirect, absolute, contingent or otherwise (including, without limitation,
obligations of performance), whether several, joint or joint and several, and
whether arising or existing under written or oral agreement or by operation of
law.
"LOAN" or "LOANS" shall mean any and all Revolving Loans, the
Capex Loans, and the Term Loan made by LaSalle to Borrower pursuant to
paragraphs 2 and 3 hereof and all other loans, advances and financial
accommodations made by LaSalle to or on behalf of Borrower hereunder.
"LOCK BOX" and "BLOCKED ACCOUNT" shall have the meanings specified
in paragraph 10 hereof.
"MATERIAL ADVERSE EFFECT" shall mean with respect to any event,
act, condition or occurrence of whatever nature (including any adverse
determination in any litigation, arbitration or governmental investigation or
proceeding), whether singly or in conjunction with any other event or events,
act or acts, condition or conditions, occurrence or occurrences, whether or not
related, a material adverse change in, or a material adverse effect upon, any of
the business, property assets, operations, condition (financial or otherwise) or
prospects of Borrower.
"NOTE" shall mean the Revolving Note, the Capex Note or the Term
Note.
"OBLIGOR" shall mean Borrower and each Person who is or shall
become primarily or secondarily liable for any of the Liabilities, provided,
however, that such term shall not include any Account Debtor.
"OTHER AGREEMENTS" shall mean all agreements, instruments and
documents including, without limitation, guaranties, mortgages, trust deeds,
pledges, powers of attorney, consents, assignments, contracts, notices, security
agreements, leases, financing statements and all other writings heretofore, now
or from time to time hereafter executed by or on behalf of Borrower or any other
Person and delivered to LaSalle or to any parent, affiliate or subsidiary of
LaSalle in connection with the Liabilities or the transactions contemplated
hereby.
"PARENT" shall mean any Person now or at any time or times
hereafter owning or controlling (alone or with any other Person) at least a
majority of the issued and outstanding stock of Borrower or any Subsidiary.
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"PERMITTED LIENS" shall mean (i) statutory liens of landlords,
carriers, warehousemen, mechanics, materialmen or suppliers incurred in the
ordinary course of business and securing amounts not yet due or declared to be
due by the claimant thereunder, or being contested in good faith by appropriate
proceedings that have the effect of preventing the forfeiture or sale of the
property or assets subject to such lien, (ii) liens or security interests in
favor of LaSalle, (iii) zoning restrictions and easements, rights of way,
licenses, covenants and other restrictions affecting the use of real property
that do not individually or in the aggregate have a material adverse effect on
Borrower's ability to use such real property for its intended purpose in
connection with Borrower's business, (iv) liens securing the payment of taxes or
other governmental charges not yet delinquent or being contested in good faith
and by appropriate proceedings, (v) liens incurred or deposits made in the
ordinary course of Borrower's business in connection with capitalized leases or
purchase money security interests for purchase of, and applying only to,
Equipment included in the permitted borrowings under paragraph 13(q) or
permitted as Capital Expenditures under paragraph 14(o), the documents relating
to such liens to be in form and substance acceptable to LaSalle, (vi) liens
securing indebtedness owing by any Subsidiary to Borrower to the extent such
indebtedness is permitted under paragraph 14(i), or to any other Subsidiary of
Borrower, (vii) deposits to secure performance of bids, tenders, trade
contracts, leases, progress payments, surety and appeal bonds and other
obligations of like nature in each case incurred in the ordinary course of
business and statutory obligations (to the extent not excepted elsewhere
herein), (viii) liens specifically permitted by LaSalle in writing as set forth
on Schedule 1(a) attached hereto; (ix) any lien arising out of the refinancing,
extension, renewal or refunding of any indebtedness secured by a lien permitted
by any of the foregoing sections (i) through (viii) inclusive, provided that (A)
such indebtedness is not secured by any additional assets, and (B) the amount of
such indebtedness is not increased, (x) pledges or deposits in connection with
worker's compensation, unemployment insurance and other social security
legislation, (xi) grants of security and rights of setoff in deposit accounts,
securities and other properties held at banks or financial institutions to
secure the payment or reimbursement under overdraft, acceptance and other
facilities, (xii) rights of setoff, banker's liens and other similar rights
arising solely by operation of law and (xiii) liens securing the payment and
performance of the Subordinated Notes, as such liens are in effect on the
Closing Date.
"PERSON" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, entity, party or foreign or United States government
(whether federal, state, county, city, municipal or otherwise), including,
without limitation, any instrumentality, division, agency, body or department
thereof.
"PRIME RATE" shall mean the publicly announced prime rate of
LaSalle National Bank, Chicago, Illinois, in effect from time to time. The Prime
Rate is not intended to be the lowest or most favorable rate of LaSalle National
Bank in effect at any time.
"REVOLVING LOANS" shall have the meaning specified in paragraph 2
hereof.
"REVOLVING LOAN COMMITMENT" shall mean the sum of $3,000,000.
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"REVOLVING NOTE" shall mean the promissory note in the original
principal amount of $3,000,000, executed by Borrower to the order of LaSalle,
dated as of the Closing Date.
"SUBORDINATED NOTES" shall mean the promissory notes made by
Borrower to Grafalloy, L.P. dated February 28, 1997 in the following original
principal amounts: $800,000, $747,254 and $175,000.
"SUBSIDIARY" shall mean any corporation of which more than fifty
percent (50%) of the outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether at the time stock of any other class of such corporation shall have or
might have voting power by reason of the happening of any contingency) is at the
time, directly or indirectly, owned by Borrower or by any partnership or joint
venture of which more than fifty percent (50%) of the outstanding equity
interests are at the time, directly or indirectly, owned by Borrower.
"TANGIBLE NET WORTH" shall mean shareholders' equity (including
retained earnings) less the amount of any prepaid expenses, less the book value
of all intangible assets, plus the amount of any debt subordinated to LaSalle on
terms and conditions acceptable to LaSalle in its commercially reasonable
judgment, all as determined in accordance with GAAP, consistently applied.
"TERM" shall have the meaning specified in paragraph 12 hereof.
"TERM LOAN" shall have the meaning specified in paragraph 3(a)
hereof.
"TERM NOTE" shall mean the promissory note in the original
principal amount equal to the amount of the Term Loan, executed by Borrower to
the order of LaSalle and dated as of the Closing Date.
"TOTAL CREDIT FACILITY" shall mean the sum of $4,000,000.
"WIP" shall mean Inventory of Borrower consisting of
work-in-process.
(b) Accounting Terms and Definitions. Unless otherwise defined or
specified herein, all accounting terms used in this Agreement shall be construed
in accordance with GAAP. All accounting determinations for purposes of
determining compliance with the financial covenants contained in paragraph 14(o)
shall be made in accordance with GAAP as in effect on the Closing Date. The
financial statements required to be delivered hereunder from and after the
Closing Date, and all financial records, shall be maintained in accordance with
GAAP. If GAAP shall change from the basis used on or before the Closing Date to
establish the calculation of the financial covenants contained in paragraph
14(o), then the certificates required to be delivered pursuant to paragraph
14(b) demonstrating compliance with such covenants shall include, at the
election of Borrower or upon the request of LaSalle, calculations setting forth
the adjustments necessary to demonstrate how Borrower is in compliance with the
financial covenants based upon GAAP as in effect on the Closing Date.
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2. REVOLVING LOANS. Subject to the terms and conditions of this
Agreement and the Other Agreements, during the Term, absent the existence of an
Event of Default:
(a) LaSalle shall make such revolving loans and advances (the
"REVOLVING LOANS") to Borrower as Borrower shall from time to time request, in
accordance with the terms of paragraph 2(b) hereof. The aggregate unpaid
principal amount of all Revolving Loans outstanding at any one time made to
Borrower shall not exceed the lesser of (A) the Borrowing Base and (B) the
Revolving Loan Commitment minus the outstanding Letter of Credit Obligations.
All Revolving Loans shall be repaid in full upon the earlier to occur of (i) the
last day of the Term and (ii) the acceleration of the Liabilities pursuant to
paragraph 17 of this Agreement. If at any time the outstanding principal balance
of the Revolving Loans made to Borrower exceeds (A) the Borrowing Base or (B)
the Revolving Loan Commitment less the outstanding Letter of Credit Obligations,
Borrower shall immediately, and without the necessity of a demand by LaSalle,
pay to LaSalle such amount as may be necessary to eliminate such excess, and
LaSalle shall apply such payment against the outstanding principal balance of
the Revolving Loans. Borrower hereby authorizes LaSalle, in its reasonable
credit judgment, to charge any of Borrower's accounts to make any payments of
principal or interest required by this Agreement. All Revolving Loans shall be
evidenced by the Revolving Note.
(b) LaSalle shall make Revolving Loans to Borrower up to the
lesser of the following amounts, the amount calculated pursuant to clause (i)
below being hereinafter referred to as the "BORROWING BASE":
(i) (A) up to eighty-five percent (85%) of the face
amount (less maximum discounts, credits and allowances
which may be taken by or granted to Account Debtors in
connection therewith) of Eligible Accounts, plus (B) up to
the lesser of (1) an amount equal to the sum of up to fifty
percent (50%) of the value of Eligible Inventory consisting
of finished goods and raw materials and (2) $1,000,000
minus (C) such reserves as LaSalle elects to establish from
time to time in the exercise of its commercially reasonable
credit judgment, consistent with generally accepted
practices in the financial services industry for credit
transactions of the type contemplated between LaSalle and
the Borrower, minus (D) the outstanding amount of all
Letter of Credit Obligations, and
(ii) the Revolving Loan Commitment, minus the
outstanding amount of all Letter of Credit Obligations.
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3. TERM LOANS AND CAPEX LOANS.
(a) On the Closing Date, LaSalle shall make a term loan to
Borrower in the original principal amount of Three Hundred Thousand Dollars
($300,000) ("the TERM LOAN"). Principal payable on account of the Term Loan
shall be payable in successive monthly installments (i) payable on the first day
of each month, the first of which installments shall be due and payable on the
first day of the month immediately following the month during which the Closing
Date occurs and (ii) based on an amortization schedule consisting of thirty-six
(36) equal and level payments, provided, however, that the entire unpaid
principal balance of the Term Loan shall be due and payable in full upon the
expiration of the Term of this Agreement. Notwithstanding anything hereinabove
to the contrary, the entire unpaid principal balance of the Term Loan, and any
accrued and unpaid interest thereon, shall be immediately due and payable upon
the earlier to occur of (i) the last day of the Term of this Agreement, and (ii)
the acceleration of the Liabilities pursuant to paragraph 17 of this Agreement.
(b) If Borrower sells any Equipment, other than Equipment
purchased with the proceeds of the Capex Loans, or if any of the Collateral is
damaged, destroyed or taken by condemnation, Borrower shall pay to LaSalle,
unless otherwise specifically provided herein or otherwise agreed to by LaSalle,
as and when received by Borrower and as a mandatory prepayment of the Term Loan,
to be applied against the last maturing installments of principal thereof, in
the inverse order thereof (or, at LaSalle's option, such of the other
Liabilities of Borrower as LaSalle may elect), a sum equal to the proceeds
received by Borrower from (i) such sale or (ii) such damage, destruction or
condemnation, provided, however, that without LaSalle's consent, unless and
until an Event of Default has occurred and is continuing:
(i) obsolete or worn out Equipment, other than Equipment
purchased with the proceeds of the Capex Loans, may be sold or otherwise
disposed of by Borrower and the proceeds thereof may be retained by Borrower, so
long as (A) LaSalle shall have received five (5) Business Days prior written
notice of any such disposition and (B) the fair market value of any such
Equipment sold or otherwise disposed of in any single transaction is less than
$100,000, and the fair market value, in the aggregate, of all such Equipment
sold or otherwise disposed of by Borrower during any twelve-month period is less
than $100,000; and
(ii) proceeds of Equipment arising from the damage,
destruction or condemnation thereof may be retained by Borrower and used by
Borrower to repair, restore or replace such Equipment, as the case may be, so
long as the fair market value of any such Equipment damaged, destroyed or
condemned in any single incident is less than $100,000, and the fair market
value, in the aggregate, of all such Collateral owned by Borrower and damaged,
destroyed or condemned during any twelve-month period is less than $100,000.
(c) On the Closing Date and through that date which is one year
from the date that LaSalle shall have made the first Capex Loan (THE "CAPEX
FACILITY TERMINATION DATE"), LaSalle shall make revolving loans and advances for
capital expenditures ("CAPEX LOANS") to Borrower as Borrower shall from time to
time request in accordance with the terms of paragraph 3(d) hereof, the proceeds
of which Capex Loans will be used to make capital expenditures for use in the
Borrower's business, which expenditures are approved by LaSalle as reasonably
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necessary to the Borrower's business. The aggregate unpaid principal amount of
all Capex Loans outstanding at any one time made to Borrower shall not exceed
the Capex Loan Commitment. If at any time the outstanding principal balance of
the Capex Loans made to Borrower exceeds the Capex Loan Commitment, then,
without the necessity of a demand by LaSalle, Borrower shall pay to LaSalle,
within not more than two (2) Business Days' after LaSalle's notice to Borrower
of such excess, such amount as may be necessary to eliminate such excess, and
LaSalle shall apply such payment against the outstanding principal balance of
the Capex Loans. Principal payable on account of all Capex Loans outstanding as
of the Capex Facility Termination Date shall be payable in successive monthly
installments (i) payable on the first day of each month, the first of which
installments shall be due and payable on the first day of the month immediately
following the Capex Facility Termination Date and (ii) based on an amortization
schedule consisting of sixty (60) equal and level principal payments; provided,
however, that the entire unpaid principal balance of the Capex Loans shall be
due and payable in full upon the expiration of the Term of this Agreement.
Notwithstanding anything hereinabove to the contrary, the entire unpaid
principal balance of the Capex Loans, and any accrued and unpaid interest
thereon, shall be immediately due and payable upon the earlier to occur of (i)
the last day of the Term and (ii) the acceleration of the Liabilities pursuant
to paragraph 17 of this Agreement.
(d) Each Capex Loan to Borrower shall be in a principal amount
not greater than eighty-five percent (85%) of the purchase price of the
Equipment to be purchased with the proceeds of such Capex Loan; provided,
however, that for purposes of calculation thereof, the purchase price of
Equipment shall not include the related costs of freight, shipping and
installation and sales or other related taxes and provided further that no Capex
Loan shall be made to the extent that the sum of the amount of such Capex Loan
plus the aggregate unpaid principal amount of all other Capex Loans shall exceed
the Capex Loan Commitment.
(e) If the Borrower sells, transfers or otherwise disposes of
any Equipment purchased with the proceeds of a Capex Loan, the Borrower shall
pay to LaSalle a sum equal to the net cash proceeds received by the Borrower
from any such disposition (unless otherwise specifically provided herein or
otherwise agreed to by LaSalle), as and when received by Borrower and as a
mandatory prepayment of all Capex Loans, to be applied (i) if received prior to
the Capex Facility Termination Date, pro rata against the then unpaid principal
balance of each such Capex Loan then outstanding and (ii) if received on or
after the Capex Facility Termination Date, pro rata against the last maturing
installments of principal of each such Capex Loan then outstanding, in the
inverse order of such installments (or, at LaSalle's option, such of the other
Liabilities of the Borrower as LaSalle my elect).
4. LETTERS OF CREDIT. Subject to the terms and conditions of this
Agreement, and the Other Agreements, during the Term, LaSalle shall, absent the
existence of an Event of Default, from time to time cause the issuance of and
co-sign for, upon Borrower's request, Letters of Credit, provided that the
aggregate undrawn amount of all such Letters of Credit shall at no time exceed
Five Hundred Thousand Dollars ($500,000), and provided further that no Letter of
Credit shall have an expiry date (i) more than 365 days from the date of
issuance, in the case of a stand-by Letter of Credit, (ii) more than 180 days
from the date of issuance, in the case of a documentary Letter of Credit, or
(iii) beyond five (5) days prior to the expiration of
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the Term. Borrower's reimbursement obligation in respect of the Letters of
Credit shall automatically reduce, dollar for dollar, the amount which Borrower
may borrow based upon the Revolving Loan Commitment and the Borrowing Base. Any
payment made by LaSalle to any Person on account of any Letter of Credit shall
constitute a Revolving Loan hereunder. At no time shall the aggregate sum of
direct Revolving Loans by LaSalle to Borrower plus the contingent liability of
LaSalle under the outstanding Letters of Credit be in excess of the Revolving
Loan Commitment or the Borrowing Base.
5. INTEREST, FEES AND CHARGES.
(a) Rates of Interest. Interest accrued on the Loans shall be
due on the earliest of (i) the first day of each month (for the immediately
preceding month), computed through the last calendar day of the preceding month,
(ii) the occurrence of an Event of Default in consequence of which LaSalle
elects to accelerate the maturity and payment of the Liabilities, or (iii)
termination of this Agreement pursuant to paragraph 12 hereof. Interest shall
accrue on the principal amount of the Revolving Loans outstanding at the end of
each day, the unpaid principal balance of the Term Loan outstanding at the end
of each day, and the unpaid principal balance of the Capex Loans outstanding at
the end of each day, in each case at a fluctuating rate per annum equal to one
percent (1%) above the Prime Rate. The rate of interest payable on the Loans
shall increase or decrease by an amount equal to any increase or decrease in the
Prime Rate, effective as of the opening of business on the day that any such
change in the Prime Rate occurs. Upon and after the occurrence of an Event of
Default, and during the continuation thereof, the principal amount of all Loans
shall bear interest on demand at a rate per annum equal to the rate of interest
then in effect hereunder plus two percent (2%).
(b) Computation of Interest and Fees. Interest and collection
charges hereunder shall be calculated daily and shall be computed on the actual
number of days elapsed over a year consisting of three hundred and sixty (360)
days. For the purpose of computing interest hereunder, all items of payment
received by LaSalle shall be deemed applied by LaSalle on account of the
Liabilities (subject to final payment of such items) on the second Business Day
after receipt by LaSalle of good funds in LaSalle's account located in Chicago,
Illinois.
(c) Maximum Interest. It is the intent of the parties that the
rate of interest and the other charges to Borrower under this Agreement shall be
lawful; therefore, if for any reason the interest or other charges payable under
this Agreement are found by a court of competent jurisdiction, in a final
determination, to exceed the limit which LaSalle may lawfully charge Borrower,
then the obligation to pay interest and other charges shall automatically be
reduced to such limit and, if any amount in excess of such limit shall have been
paid, then such amount shall be refunded to Borrower.
(d) Letter of Credit Fees. Borrower shall remit to LaSalle a
Letter of Credit fee equal to one percent (1%) per annum on the aggregate
undrawn face amount of all outstanding Letters of Credit issued for the account
of Borrower, which fee shall be payable monthly in arrears on each day that
interest is payable hereunder. Borrower shall also pay on demand the normal and
customary administrative charges for issuance, amendment, negotiation, renewal
or extension of any Letter of Credit imposed by the bank issuing such Letter of
Credit.
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Upon the occurrence and during the continuance of an Event of Default, all
Letters of Credit fees shall be payable on demand at a rate equal to three
percent (3%) per annum on the aggregate undrawn face amount thereof.
(e) Closing Fee. Borrower shall pay to LaSalle a closing fee of
Forty Thousand Dollars ($40,000), which shall be fully earned, nonrefundable and
due on the Closing Date.
(f) Unused Line Fee. Borrower shall pay to LaSalle at the end
of each month, in arrears, an Unused Line Fee equal to one-half of one percent
(1/2 of 1%) per annum on the daily average amount by which the Revolving Loan
Commitment exceeds the sum of (i) the outstanding principal balance of the
Revolving Loans and (ii) the outstanding Letter of Credit Obligations. The
Unused Line Fee shall accrue from the Closing Date until the last day of the
Term.
(g) Examination and Appraisal Fees. In addition to the costs
and expenses described in paragraph 14(n) hereof, Borrower shall pay to LaSalle
an examination fee of $2,000 for each examination performed by or at LaSalle's
direction of Borrower's books and records and Collateral and such other matters
as LaSalle shall deem appropriate in its commercially reasonable judgment, each
such fee to be paid upon the completion of each such examination. Such
examinations are generally performed not more than four (4) times in any twelve
(12) month period, unless an Event of Default has occurred and is continuing.
(h) Capital Adequacy Charge. If LaSalle shall have determined
that the adoption of any law, rule or regulation regarding capital adequacy, or
any change therein or in the interpretation or application thereof, or
compliance by LaSalle with any request or directive regarding capital adequacy
(whether or not having the force of law) from any central bank or governmental
authority enacted after the Closing Date, does or shall have the effect of
reducing the rate of return on LaSalle's capital as a consequence of its
obligations hereunder to a level below that which LaSalle could have achieved
but for such adoption, change or compliance (taking into consideration LaSalle's
policies with respect to capital adequacy) by a material amount, then from time
to time, after submission by LaSalle to Borrower of a written demand therefor
(which demand should be made with reasonable promptness following such
determination), Borrower shall pay to LaSalle such additional amount or amounts
as will compensate LaSalle for any such reduction occurring on and after the
date of notice that LaSalle shall be entitled to payment hereunder. A
certificate of LaSalle claiming entitlement to payment as set forth above shall
be conclusive in the absence of manifest error. Such certificate shall set forth
the nature of the occurrence giving rise to such reduction, the additional
amount or amounts to be paid to LaSalle, and the method by which such amounts
were determined. In determining such amount, LaSalle may use any reasonable
averaging and attribution method, applied on a non-discriminatory basis.
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6. LOAN ADMINISTRATION.
(a) Loan Requests. A request for a Revolving Loan shall be made
or shall be deemed to be made and a request for a Capex Loan shall be made, each
in the following manner: (i) Borrower shall give LaSalle, in the case of a
Revolving Loan, same day notice, no later than 11:30 A.M. (Chicago time) of such
day, of its intention to borrow a Revolving Loan, and, in the case of a Capex
Loan, at least two (2) Business Days notice of its intention to borrow a Capex
Loan, in which notice Borrower shall specify the amount of the proposed
borrowing and the proposed borrowing date, and in the case of a notice for a
Capex Loan, a statement of the purpose for the Capex Loan together with
documentation substantiating the purchase or commitment to purchase Equipment or
the making of or the commitment to make the capital expenditures, which
documentation shall be satisfactory to LaSalle in its sole discretion; provided,
however, that no such request may be made at a time when there exists a Default
or an Event of Default; and (ii) the becoming due of any amount required to be
paid under this Agreement or any Note, whether on account of interest or for any
other Liability, shall be deemed irrevocably to be a request for a Revolving
Loan on the due date thereof in the amount required to pay such interest or
other Liability. As an accommodation to Borrower, LaSalle may permit telephone
requests for Revolving Loans and electronic transmittal of instructions,
authorizations, agreements or reports to LaSalle by Borrower. Unless Borrower
specifically directs LaSalle in writing not to accept or act upon telephonic or
electronic communications from Borrower, LaSalle shall have no liability to
Borrower for any loss or damage suffered by Borrower as a result of LaSalle's
honoring of any requests, execution of any instructions, authorizations or
agreements or reliance on any reports communicated to it telephonically or
electronically and purporting to have been sent to LaSalle by Borrower and
LaSalle shall have no duty to verify the origin of any such communication or the
authority of the Person sending it. Each notice of borrowing shall be
irrevocable by and binding on Borrower. Any Capex Loan shall be in the minimum
amount of $20,000.
(b) Disbursement. Borrower hereby irrevocably authorizes
LaSalle to disburse the proceeds of each Revolving Loan requested by Borrower,
or deemed to be requested by Borrower, and each Capex Loan requested by Borrower
as follows: (i) the proceeds of each Revolving Loan and each Capex Loan
requested under paragraph 6(a)(i) shall be disbursed by LaSalle in lawful money
of the United States of America in immediately available funds, in the case of
the initial borrowing, in accordance with the terms of the written disbursement
letter from Borrower, and in the case of each subsequent borrowing, by wire
transfer to such bank account as may be agreed upon by Borrower and LaSalle from
time to time, or elsewhere if pursuant to a written direction from Borrower; and
(ii) the proceeds of each Revolving Loan requested under paragraph 6(a)(ii)
shall be disbursed by LaSalle by way of direct payment of the relevant interest
or other Liability.
7. GRANT OF SECURITY INTEREST TO LASALLE. As security for the payment
of all Loans now or in the future made by LaSalle to Borrower hereunder and for
the payment or other satisfaction of all other Liabilities of Borrower, Borrower
hereby collaterally assigns to LaSalle, and grants to LaSalle a continuing
security interest in, all of Borrower's right, title and interest in and to each
of the kinds and types of property described in subparagraphs (a) through (f)
hereof, all replacements, additions, accessions, substitutions and
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repairs thereof, all documents, books, records, ledger sheets and files of
Borrower relating thereto, and all Proceeds of the foregoing property, in each
case, whether now owned or hereafter arising, acquired or created and wherever
located: (a) all Accounts (whether or not Eligible Accounts), including Accounts
arising from sales made or services rendered under any tradename, tradestyle or
division, and all Goods whose sale, lease or other disposition by Borrower has
given rise to Accounts and which have been returned to or repossessed or stopped
in transit by Borrower; (b) all Chattel Paper, Instruments, Documents and
General Intangibles (including, without limitation, all patents, patent
applications, trademarks, trademark applications, tradenames, trade secrets,
goodwill, copyrights, registrations, licenses, franchises, customer lists, tax
refund claims, claims against carriers and shippers, guarantee claims, contracts
rights and rights to payments, whether or not earned by performance, security
interests, security deposits, rights as assignee of Borrower as purchaser under
the Asset Purchase Agreement, including rights of indemnification under Article
11 thereof and any other rights to indemnification, howsoever arising); (c) all
Inventory; (d) all Goods (other than Inventory) including, without limitation,
Equipment, vehicles and fixtures; (e) all shares of capital stock and interests
in capital stock owned beneficially or of record, and all certificates
evidencing same and (f) all deposits and cash and any other property of Borrower
now or hereafter in the possession, custody or control of LaSalle, its parent or
any of its affiliates or subsidiaries, or any participant with LaSalle in the
Loans for any purpose (whether for safekeeping, deposit, collection, custody,
pledge, transmission or otherwise). Proceeds means and includes (i) whatever is
now or hereafter received by Borrower upon the sale, exchange, collection or
other disposition of any item of such property and (ii) any such items which are
now or hereafter acquired by Borrower with any proceeds of such property.
8. PRESERVATION OF COLLATERAL AND PERFECTION OF SECURITY INTERESTS
THEREIN. Borrower shall, at LaSalle's request, at any time and from time to
time, execute and deliver to LaSalle such financing statements, documents and
other agreements and instruments (and pay the cost of filing or recording the
same in all public offices deemed reasonably necessary or desirable by LaSalle)
and do such other acts and things as LaSalle may deem necessary or desirable in
order to establish and maintain a valid, attached and perfected security
interest in the Collateral in favor of LaSalle (free and clear of all other
liens, claims and rights of third parties whatsoever, whether voluntarily or
involuntarily created, except Permitted Liens) to secure payment of the
Liabilities, and in order to facilitate the collection of the Collateral.
Borrower irrevocably hereby makes, constitutes and appoints LaSalle (and all
Persons designated by LaSalle for that purpose) as Borrower's true and lawful
attorney and agent-in-fact to execute such financing statements, documents and
other agreements and instruments and do such other acts and things as may be
necessary to preserve and perfect LaSalle's security interest in the Collateral.
Borrower further agrees that a carbon, photographic, photostatic or other
reproduction of this Agreement or of a financing statement shall be sufficient
as a financing statement.
9. POSSESSION OF COLLATERAL AND RELATED MATTERS. Until an Event of
Default has occurred and is continuing, Borrower shall have the right, except as
otherwise provided in this Agreement, in the ordinary course of Borrower's
business, to (a) sell, lease or furnish under contracts of service any of
Borrower's Inventory normally held by Borrower for any such purpose, and (b) use
and consume any raw materials, work in process
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or other materials normally held by Borrower for such purpose, provided,
however, that a sale in the ordinary course of business shall not include any
transfer or sale in satisfaction, partial or complete, of a debt owed by
Borrower.
10. COLLECTIONS.
(a) Borrower shall direct all of its Account Debtors to make
all payments on the Accounts directly to a post office box ("LOCK BOX") with a
financial institution acceptable to, and in the name and under exclusive control
of, LaSalle. Borrower shall establish an account ("BLOCKED ACCOUNT") in
LaSalle's name for the benefit of Borrower with a financial institution
acceptable to LaSalle, into which all payments received in the Lock Box shall be
deposited, and into which Borrower will immediately deposit all payments made
for Inventory or services sold or rendered by Borrower and received by Borrower
in the identical form in which such payments were made, whether by cash or
check. If Borrower, any Affiliate or Subsidiary of Borrower, or any shareholder,
officer, director, employee or agent of Borrower or any Affiliate or Subsidiary,
or any other Person acting for or in concert with Borrower shall receive any
monies, checks, notes, drafts or other payments relating to or as proceeds of
Accounts or other Collateral, Borrower and each such Person shall receive all
such items in trust for, and as the sole and exclusive property of, LaSalle and,
immediately upon receipt thereof, shall remit the same (or cause the same to be
remitted) in kind to the Blocked Account. Each financial institution with which
a Lock Box and Blocked Account are established shall acknowledge and agree, in a
manner satisfactory to LaSalle, that the amounts on deposit in such Lock Box and
Blocked Account are the sole and exclusive property of LaSalle, that such
financial institution has no right to setoff against such Lock Box or Blocked
Account or against any other account maintained by such financial institution
into which the contents of such Blocked Account are transferred, and that such
financial institution shall wire, or otherwise transfer in immediately available
funds in a manner satisfactory to LaSalle, funds deposited in the Blocked
Account on a daily basis as such funds are collected. Borrower agrees that all
payments made to the Blocked Account established by Borrower or otherwise
received by LaSalle, whether in respect of the Accounts of Borrower or as
proceeds of other Collateral of Borrower or otherwise, will be applied on
account of the Liabilities of Borrower in accordance with the terms of this
Agreement. Borrower agrees to pay all fees, costs and expenses which Borrower
incurs in connection with opening and maintaining a Lock Box and Blocked
Account. All of such fees, costs and expenses which remain unpaid by Borrower
pursuant to any Lock Box or Blocked Account Agreement with Borrower, to the
extent same shall have been paid by LaSalle hereunder shall constitute Revolving
Loans hereunder, shall be payable to LaSalle by Borrower upon demand, and, until
paid, shall bear interest at the highest rate then applicable to Revolving Loans
hereunder. All checks, drafts, instruments and other items of payment or
proceeds of Collateral delivered to LaSalle in kind shall be endorsed by
Borrower to LaSalle, and, if that endorsement of any such item shall not be made
for any reason, LaSalle is hereby irrevocably authorized to endorse the same on
Borrower's behalf. For the purpose of this paragraph, Borrower irrevocably
hereby makes, constitutes and appoints LaSalle (and all Persons designated by
LaSalle for that purpose) as Borrower's true and lawful attorney and
agent-in-fact (i) to endorse Borrower's name upon said items of payment and/or
proceeds of Collateral of Borrower and upon any Chattel Paper, document,
instrument, invoice or similar document or agreement relating to any Account of
Borrower or goods pertaining thereto; (ii) to take control in any
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manner of any item of payment or proceeds thereof; (iii) to have access to any
lock box or postal box into which any of Borrower's mail is deposited; and (iv)
open and process all mail addressed to Borrower and deposited therein, provided,
however, that LaSalle shall not exercise any such powers described in clauses
(i), (ii) and (iv) unless and until an Event of Default has occurred and is
continuing.
(b) LaSalle may, at any time and from time to time after the
occurrence and during the continuance of an Event of Default, whether before or
after notification to any Account Debtor and whether before or after the
maturity of any of the Liabilities, (i) enforce collection of any of Borrower's
Accounts or contract rights by suit or otherwise; (ii) exercise all of
Borrower's rights and remedies with respect to proceedings brought to collect
any Accounts; (iii) surrender, release or exchange all or any part of any
Accounts of Borrower, or compromise or extend or renew for any period (whether
or not longer than the original period) any indebtedness thereunder; (iv) sell
or assign any Account of Borrower upon such terms, for such amount and at such
time or times as LaSalle deems advisable; (v) prepare, file and sign Borrower's
name on any proof of claim in bankruptcy or other similar document against any
Account Debtor indebted on an Account of Borrower; and (vi) do all other acts
and things which are necessary, in LaSalle's sole discretion, to fulfill
Borrower's obligations under this Agreement and to allow LaSalle to collect the
Accounts. In addition to any other provision hereof, LaSalle may at any time on
or after the occurrence and during the continuance of an Event of Default, at
Borrower's expense, notify any parties obligated on any of the Accounts of
Borrower to make payment directly to LaSalle of any amounts due or to become due
thereunder.
(c) LaSalle shall, within two (2) Business Days after receipt
by LaSalle at its office in Chicago, Illinois of cash or other immediately
available funds from collections of items of payment and proceeds of any
Collateral, apply the whole or any part of such collections or proceeds: (i) if
such Collateral consists of Accounts, and no Event of Default has occurred and
is continuing, (A) on any day other than a day when a payment of interest,
charges, fees or expenses is due hereunder, to the outstanding principal balance
of the Revolving Loans made to Borrower, and (B) on a day when a payment by
Borrower of interest, charges, fees or expenses is due hereunder, first to the
payment of such charges (other than interest charges), fees or expenses; second
to the payment of interest payable by Borrower and third to the outstanding
principal balance of the Revolving Loans and (ii) if such Collateral consists of
any property other than Accounts, against the Liabilities of Borrower in such
order as LaSalle shall determine in its sole discretion. Upon the occurrence and
during the continuance of an Event of Default, LaSalle may apply the whole or
any part of such collections or proceeds, regardless of the type or kind of
Collateral giving rise thereto, against the Liabilities in such order as LaSalle
shall determine in its sole discretion.
(d) In its reasonable credit judgment, without waiving or
releasing any obligation, liability or duty of Borrower under this Agreement or
the Other Agreements or any Event of Default, at any time or times hereafter,
except for Permitted Liens, LaSalle may (but shall not be obligated to) pay,
acquire or accept an assignment of any security interest, lien, encumbrance or
claim asserted by any Person in, upon or against the Collateral. All sums paid
by LaSalle in respect thereof and all costs, fees and expenses (including
without limitation reasonable attorney fees, all court costs and all other
charges relating thereto) incurred by
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LaSalle shall constitute Revolving Loans, payable by Borrower to LaSalle on
demand and, until paid, shall bear interest at the highest rate then applicable
to Revolving Loans hereunder.
(e) Immediately upon Borrower's receipt of any portion of the
Collateral evidenced by an agreement, Instrument or Document including, without
limitation, any Chattel Paper, Borrower shall deliver the original thereof to
LaSalle together with an appropriate endorsement or other specific evidence of
assignment thereof to LaSalle (in form and substance acceptable to LaSalle). If
an endorsement or assignment of any such items shall not be made for any reason,
LaSalle is hereby irrevocably authorized, as Borrower's attorney and
agent-in-fact, to endorse or assign the same on Borrower's behalf.
11. SCHEDULES AND REPORTS.
(a) Borrower shall deliver to LaSalle on Monday of each week
(or on the next Business Day if such Monday is not a Business Day), by facsimile
transmission, a report of Borrower's invoice activity for the previous week.
(b) Within fifteen (15) days after the close of each calendar
month, and at such other times as may be requested by LaSalle from time to time
hereafter, Borrower shall deliver to LaSalle a borrowing base certificate for
such month, in form and substance satisfactory to LaSalle, together with an aged
trial balance of Borrower's accounts payable as of the end of such month. At
such times as may be requested by LaSalle from time to time hereafter, Borrower
shall deliver to Lasalle: (i) a schedule identifying by age each Account of
Borrower together with copies of the invoices when requested by LaSalle (with
evidence of shipment attached) pertaining to each such Account, for the month
(or other applicable period) immediately preceding; (ii) such additional
schedules, certificates, reports and information with respect to the Collateral
as LaSalle may from time to time reasonably require and (iii) a confirmation of
the collateral assignment of any or all items of Collateral to LaSalle. LaSalle,
through its officers, employees or agents, shall have the right, at any time and
from time to time in LaSalle's name, in the name of a nominee of LaSalle or in
Borrower's name, to verify the validity, amount or any other matter relating to
any of Borrower's Accounts, by mail, telephone, telegraph or otherwise. Borrower
shall reimburse LaSalle, on demand, for all reasonable costs, fees and expenses
incurred by LaSalle in this regard.
(c) Without limiting the generality of the foregoing, Borrower
shall deliver to LaSalle, at least once a month within fifteen (15) days after
the close of each month (or more frequently when requested by LaSalle), a report
with respect to Borrower's Inventory. Borrower shall immediately notify LaSalle
of any event causing loss or depreciation in value of Borrower's Inventory
(other than normal depreciation occurring in the ordinary course of business).
(d) All schedules, certificates, reports and assignments and
other items delivered by Borrower to LaSalle hereunder shall be executed by an
authorized representative of Borrower and shall be in such form and contain such
information as LaSalle shall reasonably request. Borrower shall deliver from
time to time such other schedules and reports pertaining to the Collateral of
Borrower as LaSalle may reasonably request.
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12. TERMINATION.
(a) This Agreement shall be in effect during the period from
the date hereof until the date which coincides with the third anniversary of the
Closing Date (such period being referred to herein as the "TERM"). Borrower
shall pay all of the Liabilities in full on the last day of the Term unless the
due date of the Liabilities is accelerated pursuant to paragraph 17 hereof. This
Agreement shall terminate on the date that the Liabilities are paid in full,
provided, however, that the security interests and liens created under this
Agreement and the Other Agreements shall survive such termination until the date
upon which payment and satisfaction in full of the Liabilities shall have
occurred. At such time as Borrower has repaid all of the Liabilities and this
Agreement has terminated, (i) if Borrower is obtaining new financing from
another lender, Borrower shall deliver such lender's indemnification of LaSalle,
in form and substance satisfactory to LaSalle, for checks which LaSalle has
credited to Borrower's account, but which subsequently are dishonored for any
reason and (ii) LaSalle shall deliver to Borrower executed UCC-3 termination
statements terminating LaSalle's security interests in the Collateral, and any
other document or instrument relating to such repayment of the Liabilities as
Borrower may reasonably request.
(b) If, during the term of this Agreement, Borrower prepays all
or any portion of the Liabilities, and in connection therewith, Borrower either
(a) permits any security agreement, financing statement or analogous instrument
to be executed or filed with respect to the Collateral for the benefit of
someone other than LaSalle, or (b) creates, incurs or assumes any liability for
borrowed money (except for borrowings from LaSalle and borrowings permitted
pursuant to paragraph 13(q) hereof), owing by Borrower, Borrower agrees to pay
to LaSalle, as a prepayment fee, in addition to the payment of all other
Liabilities owing by Borrower, an amount equal to: (i) one percent (1%) of the
Total Credit Facility if this Agreement is terminated during the first or second
year of the Term; and (ii) one-half of one percent (1/2 of 1%) of the Total
Credit Facility if this Agreement is terminated during the third year of the
Term, except if such prepayment is the result of LaSalle's election to terminate
the Loan Agreement for any reason other than Borrower's default hereunder.
Notwithstanding the foregoing, Borrower shall not be obligated to pay the
prepayment fee described in the immediately preceding sentence, if, but only if,
all of the following conditions shall have been met: (1) Borrower shall have
incurred liability for borrowed money to prepay the Liabilities; (2) the
proceeds of such borrowed money shall have been used in whole or in part (A) to
acquire, directly or indirectly, all or substantially all of the assets or
capital stock of any Person and, (B) to prepay the Liabilities; and (3) prior to
the incurrence of such liability for borrowed money, Borrower shall have offered
to LaSalle, and LaSalle shall have declined in writing, in a timely fashion, the
opportunity to increase the Total Credit Facility in order to consummate the
transaction described in clause (2)(A) hereof.
(c) Borrower shall make a mandatory prepayment of the unpaid
principal balance of all Loans, together with a payment of the accrued and
unpaid interest thereon, which prepayment and payment shall be due and payable
on the date, if any, of prepayment by CCC of the obligations owing by it to
LaSalle, pursuant to paragraph 12(b) of the Loan and Security Agreement between
them dated as of December 19, 1995.
20.
24
13. REPRESENTATIONS AND WARRANTIES. Borrower hereby makes the
following representations, warranties and covenants:
(a) the financial statements delivered or to be delivered by
Borrower to LaSalle at or prior to the date of this Agreement and at all times
subsequent thereto accurately reflect the financial condition of Borrower, and
there has been no event or development which has occurred since the date of the
Borrower's financial statements delivered to LaSalle most recently prior to the
date of this Agreement which has had, or is reasonably likely to have, a
Material Adverse Effect;
(b) the office where Borrower keeps its books, records and
accounts (or copies thereof) concerning the Collateral, Borrower's principal
place of business and all of Borrower's other places of business, locations of
Collateral and post office boxes are as set forth in Exhibit A; Borrower shall
promptly (but in no event less than ten (10) days prior thereto) advise LaSalle
in writing of the proposed opening of any new place of business, the closing of
any existing place of business, any change in the location of Borrower's books,
records and accounts (or copies thereof) or the opening or closing of any post
office box of Borrower;
(c) the Collateral, including without limitation the Equipment
(except any part thereof which prior to the date of this Agreement Borrower
shall have advised LaSalle in writing consists of Collateral normally used in
more than one state) is and shall be kept, or, in the case of vehicles, based,
only at the addresses set forth on the first page of this Agreement or on
Exhibit A, and at other locations within the continental United States of which
LaSalle has been advised by Borrower in writing;
(d) so long as Borrower has title to any Goods, Borrower shall
immediately give written notice to LaSalle of any use of any such Goods in any
state other than a state in which Borrower has previously advised LaSalle such
Goods shall be used, and such Goods shall not, unless LaSalle shall otherwise
consent in writing, be used outside of the continental United States;
(e) no security agreement, financing statement or analogous
instrument exists or shall exist with respect to any of the Collateral other
than any security agreement, financing statement or analogous instrument
evidencing Permitted Liens;
(f) each Account or item of Inventory which Borrower shall,
expressly or by implication, request LaSalle to classify as an Eligible Account
or as Eligible Inventory, respectively, shall, as of the time when such request
is made, conform in all respects to the requirements of such classification as
set forth in the respective definitions of Eligible Account and Eligible
Inventory and as otherwise established by LaSalle from time to time, and
Borrower shall promptly notify
21.
25
LaSalle in writing if any such Eligible Account or Eligible Inventory shall
subsequently become ineligible;
(g) Borrower is and shall at all times during the Term be the
lawful owner of all Collateral now purportedly owned or hereafter purportedly
acquired by Borrower, free from all liens, claims, security interests and
encumbrances whatsoever, whether voluntarily or involuntarily created and
whether or not perfected, other than the Permitted Liens;
(h) Borrower has the right and power and is duly authorized and
empowered to enter into, execute and deliver this Agreement and the Other
Agreements and perform its obligations hereunder and thereunder; Borrower's
execution, delivery and performance of this Agreement and the Other Agreements
does not conflict with the provisions of any statute, regulation, ordinance or
rule of law, or any agreement, contract or other document which is binding on
Borrower, and Borrower's execution, delivery and performance of this Agreement
and the Other Agreements shall not result in the imposition of any lien or other
encumbrance upon any of Borrower's property under any existing indenture,
mortgage, deed of trust, loan or credit agreement or other agreement or
instrument by which Borrower or any of its property may be bound or affected,
other than in favor of LaSalle;
(i) as of the Closing Date, there are no actions or proceedings
which are pending against Borrower except as set forth on Schedule 13(i). There
are no actions or proceedings pending against Borrower that are reasonably
likely to have a Material Adverse Effect. There are no actions or proceedings
which, to the best of Borrower's knowledge, are threatened against Borrower
which are reasonably likely to have a Material Adverse Effect and Borrower
shall, promptly upon becoming aware of any such threatened action or proceeding,
give written notice thereof to LaSalle;
(j) Borrower has obtained all licenses, authorizations,
approvals and permits, the lack of which would have a Material Adverse Effect on
the operation of its business, and Borrower is and shall remain in compliance in
all material respects with all applicable federal, state, local and foreign
statutes, orders, regulations, rules and ordinances (including, without
limitation, statutes, orders, regulations, rules and ordinances relating to
taxes, employer and employee contributions and similar items, securities,
employee retirement and welfare benefits, employee health and safety or
environmental matters), the failure to comply with which would have or is
reasonably likely to have a Material Adverse Effect;
22.
26
(k) all written information now, heretofore or hereafter
furnished by Borrower to LaSalle is and shall be true and correct in all
material respects as of the date with respect to which such information was or
is furnished (except for financial projections, which have been prepared in good
faith based upon reasonable assumptions);
(l) Borrower is not conducting, permitting or suffering to be
conducted, nor shall it conduct, permit or suffer to be conducted, any
activities pursuant to or in connection with which any of the Collateral is now,
or will (while any Liabilities remain outstanding) be owned by any Affiliate;
provided, however, that Borrower may enter into transactions with Affiliates in
the ordinary course of business pursuant to terms that are no less favorable to
Borrower than the terms upon which such transfers or transactions would have
been made had they been made to or with a Person that is not an Affiliate and,
in connection therewith, may transfer cash or property to Affiliates for fair
value;
(m) Borrower's name has always been as set forth on the first
page of this Agreement and Borrower uses no tradenames or division names in the
operation of its business, except as otherwise disclosed in writing to LaSalle
and Borrower shall notify LaSalle in writing within ten (10) days of the change
of its corporate name or the use of any tradenames or division names not
previously disclosed to LaSalle in writing;
(n) with respect to Borrower's Equipment: (i) Borrower has good
and indefeasible and merchantable title to and ownership of all Equipment,
including, without limitation, the Equipment described or listed on the schedule
of Equipment delivered to LaSalle concurrently with this Agreement; (ii)
Borrower shall keep and maintain the Equipment in good operating condition and
repair and shall make all necessary replacements thereof and renewals thereto so
that the value and operating efficiency thereof shall at all times be preserved
and maintained, ordinary wear and tear excepted; (iii) Borrower shall not permit
any such items to become a fixture to real estate or an accession to other
personal property; (iv) from time to time Borrower may sell, exchange or
otherwise dispose of obsolete, unused or worn out Equipment, but only to the
extent provided in paragraph 3(b)(i) hereof; and (v) Borrower, immediately on
demand by LaSalle, shall deliver to LaSalle any and all evidence of ownership
of, including, without limitation, certificates of title and applications of
title to, any of the Equipment;
(o) this Agreement and the Other Agreements to which Borrower
is a party are the legal, valid and binding obligations of Borrower and are
enforceable against Borrower in accordance with their respective terms, except
to the extent that such enforceability may be limited by applicable law
affecting the rights of creditors generally and by other equitable principles of
law;
23.
27
(p) Borrower is solvent, is able to pay its debts as they
become due and has capital sufficient to carry on its business, now owns
property having a value both at fair valuation and at present fair saleable
value greater than the amount required to pay its debts, and will not be
rendered insolvent by the execution and delivery of this Agreement or any of the
Other Agreements or by completion of the transactions contemplated hereunder or
thereunder;
(q) Borrower is not now obligated, whether directly or
indirectly, for any loans or other indebtedness, whether for borrowed money or
otherwise other than (i) the Liabilities; (ii) indebtedness disclosed to LaSalle
on Schedule 13 (q); (iii) unsecured indebtedness to trade creditors arising in
the ordinary course of Borrower's business; (iv) indebtedness arising under the
Subordinated Notes; (v) unsecured indebtedness arising from the endorsement of
drafts and other instruments for collection, in the ordinary course of
Borrower's business; and (vi) indebtedness incurred in connection with the
financing of Capital Expenditures;
(r) Borrower does not own any margin securities, and none of
the proceeds of the Loans hereunder shall be used for the purpose of purchasing
or carrying any margin securities or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase any margin securities or
for any other purpose not permitted by Regulation G or Regulation U of the Board
of Governors of the Federal Reserve System as in effect from time to time;
(s) except as otherwise disclosed on Schedule 13(s), Borrower
has no Parents, Subsidiaries or divisions, nor is Borrower engaged in any joint
venture or partnership with any other Person;
(t) Borrower is duly organized and in good standing in its
state of organization and Borrower is duly qualified and in good standing in all
states where the nature and extent of the business transacted by it or the
ownership of its assets makes such qualification necessary, except for such
other states in which the failure to so qualify would not have a Material
Adverse Effect;
(u) Borrower is not in default under any material contract,
lease or commitment to which it is a party or by which it is bound, nor does
Borrower know of any dispute regarding any contract, lease or commitment which
is material to the continued financial success and well-being of Borrower;
(v) there are no controversies pending or threatened between
Borrower and any of its employees, other than employee grievances arising in the
ordinary course of business which are not, in the aggregate, material to the
continued financial success and well-being of Borrower, and Borrower is in
compliance in all material respects with all federal and state laws respecting
employment and employment terms, conditions and practices, except where the
failure to so comply would not have a Material Adverse Effect; and
24.
28
(w) Borrower possesses, and shall continue to possess, adequate
licenses, patents, patent applications, copyrights, service marks, trademarks,
trademark applications, tradestyles and tradenames to continue to conduct its
business as heretofore conducted by it.
Borrower represents, warrants and covenants to LaSalle that all representations,
warranties and covenants of Borrower contained in this Agreement (whether
appearing in paragraphs 13 or 14 hereof or elsewhere) shall be true at the time
of Borrower's execution of this Agreement, shall survive the execution, delivery
and acceptance hereof by the parties hereto and the closing of the transactions
described herein or related hereto, and shall be remade by Borrower at the time
each Loan is made and each Letter of Credit is issued pursuant to this
Agreement.
14. COVENANTS. Until payment or satisfaction in full of all
Liabilities and termination of this Agreement, unless Borrower obtains LaSalle's
prior written consent waiving or modifying any of Borrower's covenants hereunder
in any specific instance, Borrower agrees as follows:
(a) Borrower shall at all times keep accurate and complete
books, records and accounts with respect to all of Borrower's
business activities, in accordance with GAAP, consistently
applied, and shall keep such books, records and accounts, and any
copies thereof, only at the addresses indicated for such purpose
on Exhibit A;
(b) Borrower agrees to deliver to LaSalle the following
information, including the following financial information, all of
which financial information shall be prepared in accordance with
GAAP, consistently applied: (i) no later than forty-five (45) days
after each calendar month, copies of internally prepared financial
statements of Borrower and its Subsidiaries, on a consolidated and
consolidating, monthly and year-to-date basis including, without
limitation, balance sheets and statements of income, retained
earnings and cash flow of Borrower and its Subsidiaries, certified
by the chief financial officer of Borrower and accompanied by an
officer's certificate certifying that no Event of Default exists
hereunder, together, if applicable, with a comparison to the
balance sheets, statements of income, retained earnings and cash
flow of the Borrower or its Subsidiaries for the same periods in
the prior year; (ii) no later than ninety (90) days after the end
of each of the Parent's fiscal years, annual financial statements
of the Parent and its Subsidiaries on a consolidated basis
certified by independent certified public accountants selected by
the Parent and reasonably satisfactory to LaSalle, together with
such accountants' "management letter"; and (iii) no later than
fifteen (15) days prior to the end of each fiscal year, beginning
with the fiscal year ended December 31, 1997, projections on a
month-by-month basis of Borrower's financial condition and results
of operations for the next succeeding year, including a projected
balance sheet, statement of income, statement of retained
earnings, and statement of cash flows, such projections to be
prepared by the chief financial officer of Borrower;
25.
29
(c) LaSalle, or any Persons designated by it, shall have the
right, at any time, in the exercise of its commercially reasonable
credit judgment, to call at Borrower's places of business at any
reasonable times upon prior notice (unless an Event of Default has
occurred and is continuing), and, without hindrance or delay, to
inspect the Collateral and to inspect, audit, check and make
extracts from Borrower's books, records, journals, orders,
receipts and any correspondence and other data relating to
Borrower's business, the Collateral or any transactions between
the parties hereto, and shall have the right to make such
verification concerning Borrower's business as LaSalle may
consider reasonable under the circumstances. Borrower shall
furnish to LaSalle such information relevant to LaSalle's rights
under this Agreement as LaSalle shall at any time and from time to
time reasonably request. Borrower authorizes LaSalle to discuss
the affairs, finances and business of Borrower with any officers
or directors of Borrower or any Affiliate or with those managerial
employees of Borrower with whom LaSalle has determined in its
commercially reasonable judgment to be necessary or desirable to
converse, or directors of any Affiliate, and to discuss the
financial condition of Borrower with Borrower's independent public
accountants. Any such discussions shall be without liability to
LaSalle or to such accountants. Borrower shall pay to or reimburse
LaSalle for all reasonable fees, costs, and out-of-pocket expenses
incurred by LaSalle in the exercise of its rights hereunder (other
than the fees payable by Borrower pursuant to paragraph 5(g)
hereof in connection with LaSalle's examination, prior to the
occurrence and continuance of an Event of Default, of Borrower's
books and records and Collateral) and all of such costs, fees and
expenses shall constitute Revolving Loans hereunder, shall be
payable on demand and, until paid, shall bear interest at the
highest rate then applicable to Loans hereunder;
(d) (i) Borrower shall: keep the Collateral properly
housed and shall keep the Collateral insured
against such risks and in such amounts as are
customarily insured against by Persons engaged in
businesses similar to that of Borrower with such
companies, in such amounts and under policies in
such form as shall be reasonably satisfactory to
LaSalle. Originals or certified copies of such
policies of insurance have been or shall be
delivered to LaSalle within fifteen (15) days
after the Closing Date, together with evidence of
payment of all premiums therefor, and shall
contain an endorsement, in form and substance
acceptable to LaSalle, showing loss under such
insurance policies payable to LaSalle. Such
endorsement, or an independent instrument
furnished to LaSalle, shall provide that the
insurance company shall give LaSalle at least
thirty (30) days written notice before any such
policy of insurance is altered or cancelled and
that no act, whether willful or negligent, or
default of Borrower or any other Person shall
affect the right of LaSalle to recover under such
policy of insurance
26.
30
in case of loss or damage. Borrower hereby
directs all insurers under such policies of
insurance to pay all proceeds payable thereunder
directly to LaSalle. Borrower irrevocably, makes,
constitutes and appoints LaSalle (and all
officers, employees or agents designated by
LaSalle) as Borrower's true and lawful attorney
(and agent-in-fact) for the purpose of making,
settling and adjusting claims under such policies
of insurance, endorsing the name of Borrower on
any check, draft, instrument or other item of
payment for the proceeds of such policies of
insurance and making all determinations and
decisions with respect to such policies of
insurance, provided, however, that LaSalle shall
exercise such rights only upon the occurrence and
during the continuance of an Event of Default;
(ii) Borrower shall maintain, at its expense,
such public liability and third party property
damage insurance as is customary for Persons
engaged in businesses similar to that of Borrower
with such companies and in such amounts, with
such deductibles and under policies in such form
as shall be reasonably satisfactory to LaSalle
and originals or certified copies of such
policies have been or shall be delivered to
LaSalle within fifteen (15) days after the
Closing Date, together with evidence of payment
of all premiums therefor; each such policy shall
contain an endorsement showing LaSalle as
additional insured thereunder and providing that
the insurance company shall give LaSalle at least
thirty (30) days written notice before any such
policy shall be altered or cancelled; and
(iii) If Borrower at any time or times hereafter
shall fail to obtain or maintain any of the
policies of insurance required above or to pay
any premium in whole or in part relating thereto,
then LaSalle, without waiving or releasing any
obligation or default by Borrower hereunder, may
(but shall be under no obligation to) obtain and
maintain such policies of insurance and pay such
premiums and take such other actions with respect
thereto as LaSalle deems advisable. All sums
disbursed by LaSalle in connection with any such
actions, including, without limitation, court
costs, expenses, other charges relating thereto
and reasonable attorneys' fees, shall constitute
Revolving Loans hereunder and, until paid, shall
bear interest at the highest rate then applicable
to Revolving Loans hereunder.
27.
31
(e) Borrower shall not use the Collateral, or any part
thereof, in any unlawful business or for any unlawful
purpose or use or maintain any of the Collateral in any
manner that does or could result in material damage to the
environment or a violation of any applicable environmental
laws, rules or regulations, if any such use has or is
reasonably likely to have a Material Adverse Effect;
Borrower shall keep the Collateral in good condition,
repair and order, ordinary wear and tear excepted; Borrower
shall not permit the Collateral, or any part thereof, to be
levied upon under execution, attachment, distraint or other
legal process; Borrower shall not sell, lease, grant,
suffer or otherwise permit to exist a security interest in
or otherwise dispose of any of its property except as
expressly permitted by this Agreement; and Borrower shall
not secrete or abandon any of the Collateral, or remove or
permit removal of any of the Collateral from any of the
locations listed on Exhibit A or in any written notice to
LaSalle pursuant to paragraph 13 hereof, except for the
removal of Inventory sold in the ordinary course of
Borrower's business as permitted in this Agreement;
(f) all monies and other property obtained by Borrower from
LaSalle pursuant to this Agreement will be used solely for
business purposes of Borrower, and, in the case of the
initial Loan, may be used to pay costs and expenses
directly associated with the closing of this Agreement and
the repayment of obligations incurred in connection with
the Asset Acquisition;
(g) Borrower shall, at the request of LaSalle, indicate on
its records concerning the Collateral a notation, in form
reasonably satisfactory to LaSalle, of the security
interest of LaSalle hereunder, and Borrower shall not
maintain duplicates or copies of such records at any
address other than Borrower's principal place of business
set forth on the first page of this Agreement; provided,
however, that Borrower, in the ordinary course of its
business, may furnish copies of such records to its
accountants, attorneys and other agents or advisors as it
may determine to be necessary or desirable, in the exercise
of its commercially reasonable judgment;
(h) Borrower shall file all required tax returns and pay
all of its taxes when due, including, without limitation,
taxes imposed by federal, state or municipal agencies, and
shall cause any liens for taxes to be promptly released;
provided that Borrower shall have the right to contest the
payment of such taxes in good faith by appropriate
proceedings so long as (i) the amount so contested is shown
on Borrower's financial statements, (ii) upon the
occurrence and during the continuance of Event of Default,
Borrower keeps on deposit with LaSalle (such deposit to be
held without interest) an amount of money which, in the
sole judgment of LaSalle, is sufficient to pay such taxes
and any interest or penalties that may accrue thereon, and
(iii) if Borrower fails to prosecute such contest with
reasonable diligence, LaSalle may apply the money so
deposited in payment of such taxes. If Borrower fails to
pay any such taxes and in the absence of any such contest
by Borrower, LaSalle may (but shall be under no obligation
to) advance and pay any sums required to pay any such taxes
and/or to secure the
28.
32
release of any lien therefor, and any sums so advanced by
LaSalle shall constitute Revolving Loans hereunder, shall
be payable by Borrower to LaSalle on demand, and, until
paid, shall bear interest at the highest rate then
applicable to Revolving Loans hereunder;
(i) Borrower shall not (i) incur, create, assume or suffer
to exist any indebtedness other than (A) indebtedness
arising under this Agreement, (B) unsecured indebtedness
owing in the ordinary course of business to trade
suppliers, (C) indebtedness arising under the Subordinated
Notes and (D) any other indebtedness described in paragraph
13(q)(ii) hereof; or (ii) assume, guarantee or endorse, or
otherwise become liable in connection with, the obligations
of any Person, except by endorsement of instruments for
deposit or collection or similar transactions in the
ordinary course of business;
(j) Borrower shall not enter into any merger or
consolidation, or sell, lease or otherwise dispose of all
or substantially all of its assets; provided, however, that
Borrower may merge with CCC, upon the prior written consent
of LaSalle, which consent shall not be unreasonably
withheld or delayed. Without the prior written consent of
LaSalle, which consent shall not be unreasonably withheld
or delayed, Borrower shall not create any new Subsidiary or
Affiliate or issue any shares of, or warrants or other
rights to receive or purchase any shares of, any class of
its stock. Borrower shall not enter into any transaction
outside the ordinary course of Borrower's business;
(k) Except as may be required to repay on the Closing Date
obligations to AMT incurred in connection with the Asset
Acquisition, Borrower shall not (i) declare or pay any
dividend or other distribution (whether in cash or in kind)
on, purchase, redeem or retire any shares of any class of
its stock, or make any payment on account of, or set apart
assets for the repurchase, redemption, defeasance or
retirement of, any class of its stock; or (ii) make any
optional payment or prepayment on or redemption (including
without limitation by making payments to a sinking fund or
analogous fund) or repurchase of any indebtedness for
borrowed money other than indebtedness pursuant to this
Agreement;
(l) Borrower shall not make any investment in, or make any
loan, advance, capital contribution or transfer of property
to, any Person, whether in cash, securities or other
property of any kind, other than direct obligations of the
United States or interest-bearing demand or time deposits
insured by the Federal Deposit Insurance Corporation or
similar federal insurance program or publicly traded
obligations of LaSalle, ABN AMRO Bank N.V. or any other
subsidiary of ABN AMRO Bank N.V. except that Borrower may
make loans or advances in the ordinary course of business
to CCC, so long as such loans and advances are made at
arm's length and on fair and reasonable terms;
29.
33
(m) Without prior written notice to LaSalle, Borrower shall
not make any material change in its organizational
documents; provided, however, that Borrower shall not make
any change to its organizational documents that would
adversely affect, or would be reasonably likely to
adversely affect, LaSalle. Borrower shall not change its
fiscal year;
(n) Borrower shall reimburse LaSalle for all costs and
expenses including, without limitation, legal expenses and
reasonable attorneys' fees (including the allocated costs
of in-house counsel), incurred by LaSalle in connection
with the documentation and consummation of this transaction
and any other transactions between Borrower and LaSalle,
including, without limitation, Uniform Commercial Code and
other public record searches, lien filings, Federal Express
or similar express or messenger delivery, appraisal costs,
surveys, title insurance and environmental audit or review
costs, and in seeking to collect, protect or enforce any
rights in or to the Collateral or incurred by LaSalle in
seeking to collect any Liabilities and to administer and
enforce any of LaSalle's rights under this Agreement.
Borrower shall also pay all normal service charges with
respect to accounts maintained by LaSalle for the benefit
of Borrower. All such costs, expenses and charges shall
constitute Revolving Loans hereunder, shall be payable by
Borrower to LaSalle on demand, and, until paid, shall bear
interest at the highest rate then applicable to Revolving
Loans hereunder; and
(o) Borrower shall maintain and keep in full force and
effect each of the financial covenants set forth below. The
calculation and determination of each such financial
covenant, and all accounting terms contained therein, shall
be so calculated and construed in accordance with GAAP:
(i) Tangible Net Worth. Borrower shall maintain
at all times a Tangible Net Worth of not less than
$1,000,000.
(ii) Interest Coverage Ratio. Borrower shall
maintain as of the end of each fiscal quarter, commencing
with the fiscal quarter ending June 30, 1997 a ratio of (A)
EBITDA for such fiscal quarter to (B) interest expense for
such fiscal quarter, of not less than 1.50 to 1.00.
(iii) Debt Service Coverage Ratio. For each period
set forth below, Borrower shall maintain a Debt Service
Coverage Ratio, as of the end of each such period, of not
less than the ratio set forth below opposite each such
period; provided, however, that for purposes of determining
compliance with this covenant, (A) indebtedness incurred or
repaid in connection with Revolving Loans shall be excluded
and (B) each scheduled monthly installment of principal of
each Capex Loan and Term Loan payable during the last year
of the Term shall be deemed to constitute "current
principal maturities of long term debt", as such phrase is
used in clause (B) of the definition of Debt Service
Coverage Ratio:
30.
34
Minimum Debt Service
Period Coverage Ratio
--------------------------- ------------------------
fiscal quarter ending in 1.00 to 1.00
June, 1997
two fiscal quarters ending in 1.00 to 1.00
September, 1997
three fiscal quarters ending 1.00 to 1.00
in December, 1997
four fiscal quarters ending 1.00 to 1.00
in March, 1998
each period of four fiscal 1.00 to 1.00
quarters ending in June,
September, and
December, 1998
four fiscal quarters ending 1.25 to 1.00
in Xxxxx, 0000, and
each period of four fiscal
quarters thereafter
(iv) Capital Expenditures. Other than Capital Expenditures the
acquisition of which is financed, Borrower shall not make Capital
Expenditures, of an aggregate amount of more than (A) $200,000 during
Fiscal Year 1997, (B) $200,000 during Fiscal Year 1998 and (C)
$900,000 during Fiscal Year 1999.
(p) Notwithstanding paragraph 14(h)(ii), Borrower shall not make any
payments or prepayments of principal of or interest on the
Subordinated Notes other than pursuant to the terms thereof, as in
effect on the Closing Date and Borrower shall not amend or modify the
Subordinated Notes.
15. CONDITIONS PRECEDENT.
(a) The obligation of LaSalle to fund the Term Loans, the Capex Loan
or to fund the initial Revolving Loan, and to co-sign as applicant for the
initial Letter of Credit, is subject to the satisfaction or waiver on or before
the Closing Date of the following conditions precedent:
(i) LaSalle shall have received each of the agreements,
opinions, reports, approvals, consents, certificates and other
documents set forth on the closing document list attached hereto as
Schedule A (the "Closing Document List").
(ii) Since November 30, 1996 no event shall have occurred
which has had or could reasonably be expected to have a Material
Adverse Effect (as determined by LaSalle in its sole discretion),
Borrower shall not be in default under any agreement or
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instrument to which it is a party or pursuant to which it or its
property is bound and Borrower shall be in compliance with all laws,
orders, regulations and rules applicable to it.
(iii) LaSalle shall have received payment in full of all fees
and expenses payable to it by Borrower on or before the Closing Date.
(iv) LaSalle shall have determined that immediately after
giving effect to (A) the making of the initial Loans, including
without limitation the Term Loan, the Capex Loan and the Revolving
Loans, if any, requested to be made on the Closing Date, (B) the
issuance of the initial Letter of Credit, if any, requested to be made
on the Closing Date and (C) the payment or reimbursement by Borrower
of LaSalle for all closing costs and expenses incurred in connection
with the transactions contemplated hereby, on a pro forma basis the
Excess Availability of Borrower shall not be less than Three Hundred
Thousand Dollars ($300,000).
(v) LaSalle shall have received a certificate from Borrower's
chief executive officer or chief financial officer, pursuant to which
such officer shall certify that in calculating the Excess Availability
described in clause (iv) above, Borrower's outstanding trade payables
were (and are) current and not past due in any material respect.
(vi) The Obligors shall have executed and delivered to LaSalle
all documents which LaSalle determines are reasonably necessary to
consummate the transactions contemplated hereby.
(vii) LaSalle shall have reviewed to its satisfaction the
results of a field examination, performed by LaSalle as of a recent
date, of the Collateral and of Borrower's books and records and its
trade suppliers.
(viii) LaSalle shall have received the approval of its credit
committee of the transactions contemplated to occur hereunder.
(ix) Borrower shall have delivered to LaSalle copies of the
executed Asset Purchase Agreement with all attachments and schedules
thereto.
(x) LaSalle shall have determined that on a pro forma basis,
after giving effect to the consummation of the Asset Acquisition, the
consummation of the other transactions contemplated by this Agreement
and the Other Agreements, and the making of the initial Loans, both
before and after such events, Borrower shall not (A) be insolvent or
rendered insolvent, (B) be left with an unreasonably small amount of
capital with which to engage in its business or (C) have incurred
debts beyond its ability to pay as such debts mature.
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(xi) LaSalle shall have reviewed to its satisfaction,
projections prepared by Borrower of its financial performance, on a
month-by-month basis, for the twelve (12) month period following the
Closing Date.
(xii) LaSalle shall have reviewed to its satisfaction, the
results of an environmental examination of all real property owned or
operated by Borrower, such examination to be performed by an
environmental consulting firm acceptable to LaSalle.
(xiii) LaSalle shall have received a guarantee in form and
substance satisfactory to it, from AMT and from CCC.
(xiv) Borrower shall execute an instrument of assignment
pursuant to which the Key Man Life Insurance Policy shall be
collaterally assigned to LaSalle to secure the payment and performance
of the Liabilities, such instrument to contain terms and conditions
satisfactory to LaSalle and to be acknowledged in writing by the
issuer of the Key Man Life Insurance Policy.
(xv) Borrower shall cause to be delivered to LaSalle a
landlord's waiver and consent agreement, executed in favor of LaSalle
by the lessor of the premises located at 0000 X. Xxxxxxxx Xxxxxx, Xx
Xxxxx, Xxxxxxxxxx 00000, such agreement to contain terms and
conditions acceptable to LaSalle in its commercially reasonable
judgment.
(xvi) CCC shall have entered into a First Amendment to Loan
and Security Agreement with LaSalle, in form and substance
satisfactory to LaSalle.
(b) After the Closing Date, the obligation of LaSalle to make any
requested Revolving Loan, Capex Loan or Term Loan, or to co-sign as applicant
for any requested Letter of Credit is subject to the satisfaction of the
conditions precedent set forth below. Each such request shall constitute a
representation and warranty that such conditions are satisfied:
(i) All representations and warranties contained in this
Agreement and the Other Agreements shall be true and correct in all
material respects on and as of the date of such request, as if then
made, other than representations and warranties that relate solely to
an earlier date;
(ii) No Default or Event of Default shall have occurred, or
would result from the making of the requested Revolving Loan, Capex
Loan or Term Loan, or the issuance of the requested Letter of Credit,
which has not been waived; and
(iii) Since the Closing Date, no event has occurred which has
had or could reasonably be expected to have a Material Adverse Effect.
16. DEFAULT. The occurrence of any one or more of the following events
shall constitute an "EVENT OF DEFAULT" hereunder:
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(a) the failure of any Obligor to pay when due, declared due, or
demanded by LaSalle in accordance with the terms hereof, any of the Liabilities;
(b) the failure of any Obligor to perform, keep or observe any of the
covenants, conditions, promises, agreements or obligations of such Obligor under
this Agreement or any of the Other Agreements;
(c) the making or furnishing by any Obligor to LaSalle of any
representation, warranty, certificate, schedule, report or other communication
within or in connection with this Agreement or the Other Agreements or in
connection with any other agreement between such Obligor and LaSalle, which is
untrue or misleading in any material respect at the time made;
(d) the creation (whether voluntary or involuntary) of any lien or
other encumbrance upon any of the Collateral, other than the Permitted Liens, or
the making of any levy, seizure or attachment thereof;
(e) the commencement of any proceedings (i) in bankruptcy by or
against any Obligor, (ii) for the liquidation or reorganization of any Obligor,
(iii) alleging that such Obligor is insolvent or unable to pay its debts as they
mature, or (iv) for the readjustment or arrangement of any Obligor's debts,
whether under the United States Bankruptcy Code or under any other law, whether
state or federal, now or hereafter existing for the relief of debtors, or the
commencement of any analogous statutory or non-statutory proceedings involving
any Obligor; provided, however, that if such commencement of proceedings against
such Obligor is involuntary, such action shall not constitute an Event of
Default unless such proceedings are not dismissed within thirty (30) days after
the commencement of such proceedings;
(f) the appointment of a receiver or trustee for any Obligor, for any
of the Collateral or for any substantial part of any Obligor's assets or the
institution of any proceedings for the dissolution, or the full or partial
liquidation, or the merger or consolidation, of any Obligor which is a
corporation or a partnership; provided, however, that if such appointment or
commencement of proceedings against such Obligor is involuntary, such action
shall not constitute an Event of Default unless such appointment is not revoked
or such proceedings are not dismissed within sixty (60) days after the
commencement of such proceedings;
(g) the entry of any judgment or order in excess of $200,000 against
any Obligor which remains unsatisfied or undischarged and in effect for thirty
(30) days after such entry without a stay of enforcement or execution;
(h) the occurrence of an Event of Default under, or the revocation or
termination of, any agreement, instrument or document executed and delivered by
any Person to LaSalle pursuant to which such Person has guaranteed to LaSalle
the payment of all or any of the Liabilities or has granted LaSalle a security
interest in or lien upon some or all of such Person's real and/or personal
property to secure the payment of all or any of the Liabilities;
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(i) the occurrence of an Event of Default under any agreement or
instrument evidencing indebtedness for borrowed money in excess of $100,000
executed or delivered by Borrower or pursuant to which agreement or instrument
Borrower or its properties is or may be bound;
(j) the occurrence of an Event of Default under the Loan and Security
Agreement dated as of December 19, 1995 between CCC and LaSalle; or
(k) the occurrence of any event or condition which has or is
reasonably likely to have a Material Adverse Effect.
17. REMEDIES UPON AN EVENT OF DEFAULT.
(a) Upon the occurrence and during the continuance of an Event of
Default described in paragraph 16(e) hereof, all of the Liabilities shall
immediately and automatically become due and payable, without notice of any
kind. Upon the occurrence and during the continuance of any other Event of
Default, all of the Liabilities may, at the option of LaSalle, and without
demand, notice or legal process of any kind, be declared, and immediately shall
become, due and payable.
(b) Upon the occurrence and during the continuance of an Event of
Default, LaSalle may exercise from time to time any rights and remedies
available to it under the Uniform Commercial Code and any other applicable law
in addition to, and not in lieu of, any rights and remedies expressly granted in
this Agreement or in any of the Other Agreements and all of LaSalle's rights and
remedies shall be cumulative and non-exclusive to the extent permitted by law.
In particular, but not by way of limitation of the foregoing, LaSalle may,
without notice, demand or legal process of any kind, take possession of any or
all of the Collateral (in addition to Collateral of which it already has
possession), wherever it may be found, and for that purpose may pursue the same
wherever it may be found, and may enter into any of Borrower's premises where
any of the Collateral may be, and search for, take possession of, remove, keep
and store any of the Collateral until the same shall be sold or otherwise
disposed of, and LaSalle shall have the right to store the same at any of
Borrower's premises without cost to LaSalle. At LaSalle's request, Borrower
shall, at Borrower's expense, assemble the Collateral and make it available to
LaSalle at one or more places to be designated by LaSalle and reasonably
convenient to LaSalle and Borrower. Borrower recognizes that if Borrower fails
to perform, observe or discharge any of its Liabilities under this Agreement or
the Other Agreements, no remedy at law will provide adequate relief to LaSalle,
and Borrower agrees that LaSalle shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages. Any notification of intended disposition of any of the Collateral
required by law will be deemed reasonably and properly given if given at least
five (5) calendar days before such disposition. Any proceeds of any disposition
by LaSalle of any of the Collateral may be applied by LaSalle to the payment of
expenses in connection with the Collateral including, without limitation, legal
expenses and reasonable attorneys' fees (both in-house and outside counsel) and
any balance of such proceeds may be applied by LaSalle toward the payment of
such of the Liabilities, and in such order of application, as LaSalle may from
time to time elect.
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18. INDEMNIFICATION. Borrower agrees to defend (with counsel reasonably
satisfactory to LaSalle), protect, indemnify and hold harmless LaSalle, each
affiliate or subsidiary of LaSalle, and each of their respective officers,
directors, employees, attorneys and agents (each an "INDEMNIFIED PARTY") from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature (including, without limitation, the disbursements and the reasonable
fees of counsel for each Indemnified Party in connection with any investigative,
administrative or judicial proceeding, whether or not the Indemnified Party
shall be designated a party thereto), which may be imposed on, incurred by, or
asserted against, any Indemnified Party (whether direct, indirect or
consequential and whether based on any federal, state or local laws or
regulations including, without limitation, securities, environmental and
commercial laws and regulations, under common law or in equity, or based on
contract or otherwise) in any manner relating to or arising out of this
Agreement or any Other Agreement, or any act, event or transaction related or
attendant thereto, the making and the management of the Loans or any letters of
credit or the use or intended use of the proceeds of the Loans or any letters of
credit; provided, however, that Borrower shall not have any obligation hereunder
to any Indemnified Party with respect to matters caused by or resulting from the
willful misconduct or gross negligence of such Indemnified Party. To the extent
that the undertaking to indemnify set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, Borrower
shall satisfy such undertaking to the maximum extent permitted by applicable
law. Any liability, obligation, loss, damage, penalty, cost or expense covered
by this indemnity shall be paid to each Indemnified Party on demand, and,
failing prompt payment, shall, together with interest thereon at the highest
rate then applicable to Revolving Loans hereunder from the date incurred by each
Indemnified Party until paid by Borrower, be added to the Liabilities of
Borrower and be secured by the Collateral. The provisions of this paragraph 18
shall survive the satisfaction and payment of the other Liabilities and the
termination of this Agreement.
19. NOTICES. All written notices and other written communications with
respect to this Agreement shall be sent by ordinary, certified or overnight
mail, by telecopy or delivered in person, and in the case of LaSalle shall be
sent to it at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: District
Credit Manager, with a copy to Xxxxxx Xxxxx, Esq., Lowenthal, Landau, Xxxxxxx &
Bring, P.C., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and in the case of
Borrower shall be sent to Borrower at its principal place of business as set
forth on the first page of this Agreement, with a copy to Xxxxx Xxxxxxxx, Esq.,
Xxxxx, Xxxx & Xxxxx LLP, Xxx Xxxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
20. CHOICE OF GOVERNING LAW AND CONSTRUCTION. This Agreement and the Other
Agreements are submitted by Borrower to LaSalle for LaSalle's acceptance or
rejection at LaSalle's principal place of business as an offer by Borrower to
borrow monies from LaSalle now and from time to time hereafter, and shall not be
binding upon LaSalle or become effective until accepted by LaSalle, in writing,
at said place of business. If so accepted by LaSalle, this Agreement and the
Other Agreements shall be deemed to have been made at said place of business.
THIS AGREEMENT AND THE OTHER AGREEMENTS SHALL BE GOVERNED AND CONTROLLED BY THE
INTERNAL LAWS OF THE STATE OF ILLINOIS AS TO INTERPRETATION, ENFORCEMENT,
VALIDITY, CONSTRUCTION, EFFECT, AND IN ALL OTHER RESPECTS, INCLUDING,
36.
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WITHOUT LIMITATION, THE LEGALITY OF THE INTEREST RATE AND OTHER CHARGES, BUT
EXCLUDING PERFECTION OF THE SECURITY INTERESTS IN THE COLLATERAL, WHICH SHALL BE
GOVERNED AND CONTROLLED BY THE LAWS OF THE RELEVANT JURISDICTION. If any
provision of this Agreement shall be held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or remaining provisions of this Agreement.
21. FORUM SELECTION AND SERVICE OF PROCESS. To induce LaSalle to accept this
Agreement, Borrower irrevocably agrees that, subject to LaSalle's sole and
absolute election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT,
ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT, THE OTHER AGREEMENTS OR THE
COLLATERAL SHALL BE LITIGATED IN COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO,
STATE OF ILLINOIS. BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF
ANY LOCAL, STATE OR FEDERAL COURTS LOCATED WITHIN SAID CITY AND STATE. Borrower
hereby irrevocably appoints and designates the Secretary of State of Illinois,
whose address is Springfield, Illinois (or any other person having and
maintaining a place of business in such state whom Borrower may from time to
time hereafter designate upon ten (10) days written notice to LaSalle and who
LaSalle has agreed in its sole discretion in writing is satisfactory and who has
executed an agreement in form and substance satisfactory to LaSalle agreeing to
act as such attorney and agent), as Borrower's true and lawful attorney and duly
authorized agent for acceptance of service of legal process. Borrower agrees
that service of such process upon such person shall constitute personal service
of such process upon Borrower. BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO
TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST BORROWER BY
LASALLE IN ACCORDANCE WITH THIS PARAGRAPH.
22. MODIFICATION AND BENEFIT OF AGREEMENT. This Agreement and the Other
Agreements may not be modified, altered or amended except by an agreement in
writing signed by Borrower and LaSalle. Borrower may not sell, assign or
transfer this Agreement, or the Other Agreements or any portion thereof
including, without limitation, Borrower's rights, titles, interest, remedies,
powers or duties thereunder. Borrower hereby consents to LaSalle's sale,
assignment, transfer or other disposition, at any time and from time to time
hereafter, of this Agreement, or the Other Agreements, or of any portion
thereof, or participations therein including, without limitation, LaSalle's
rights, titles, interest, remedies, powers and/or duties thereunder. Borrower
agrees that it shall execute and deliver such documents as LaSalle may request
in connection with any such sale, assignment, transfer or other disposition.
23. HEADINGS OF SUBDIVISIONS. The headings of subdivisions in this
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the provisions of this Agreement.
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24. POWER OF ATTORNEY. Borrower acknowledges and agrees that its appointment
of LaSalle as its attorney and agent-in-fact for the purposes specified in this
Agreement is an appointment coupled with an interest and shall be irrevocable
until all of the Liabilities are paid in full and this Agreement is terminated.
25. WAIVER OF JURY TRIAL; OTHER WAIVERS; CONFIDENTIALITY.
(a) LASALLE AND BORROWER HEREBY WAIVE ALL RIGHTS TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS
AGREEMENT, ANY OF THE OTHER AGREEMENTS, THE LIABILITIES, THE COLLATERAL, ANY
ALLEGED TORTIOUS CONDUCT OF BORROWER OR LASALLE OR WHICH, IN ANY WAY, DIRECTLY
OR INDIRECTLY, ARISES OUT OF OR RELATES TO THE RELATIONSHIP BETWEEN BORROWER AND
LASALLE. IN NO EVENT SHALL LASALLE BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL
OR CONSEQUENTIAL DAMAGES.
(b) BORROWER HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY
KIND PRIOR TO THE EXERCISE BY LASALLE OF ITS RIGHTS TO REPOSSESS THE COLLATERAL
OF BORROWER WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON SUCH
COLLATERAL WITHOUT PRIOR NOTICE OR HEARING.
(c) Borrower hereby waives demand, presentment, protest and notice of
nonpayment, and further waives the benefit of all valuation, appraisal and
exemption laws.
(d) LaSalle's failure, at any time or times hereafter, to require
strict performance by Borrower of any provision of this Agreement or any of the
Other Agreements shall not waive, affect or diminish any right of LaSalle
thereafter to demand strict compliance and performance therewith. Any suspension
or waiver by LaSalle of an Event of Default under this Agreement or any default
under any of the Other Agreements shall not suspend, waive or affect any other
Event of Default under this Agreement or any other default under any of the
Other Agreements, whether the same is prior or subsequent thereto and whether of
the same or of a different kind or character. No delay on the part of LaSalle in
the exercise of any right or remedy under this Agreement or any Other Agreement
shall preclude other or further exercise thereof or the exercise of any right or
remedy. None of the undertakings, agreements, warranties, covenants and
representations of Borrower contained in this Agreement or any of the Other
Agreements and no Event of Default under this Agreement or default under any of
the Other Agreements shall be deemed to have been suspended or waived by LaSalle
unless such suspension or waiver is in writing, signed by a duly authorized
officer of LaSalle and directed to Borrower specifying such suspension or
waiver.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the 7th day of April, 1997.
LASALLE BUSINESS CREDIT, INC.
By: /s/ XXXX XXXXX XXXXX-XXXXX
-------------------------------
Title: Vice President
GRAFALLOY CORPORATION
By: /s/ XXXXXXX X. XXXXXXXXX
-------------------------------
Title: Director
39.
