Contract
Exhibit
10.1
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BY
AND AMONG
MAGNETECH
INDUSTRIAL SERVICES, INC.
XXXXXXX
ELECTRIC, LLC
HK
ENGINE COMPONENTS, LLC
MAGNETECH
POWER SERVICES, LLC
IDEAL
CONSOLIDATED, INC.
3-D
SERVICE, LTD.
AMERICAN
MOTIVE POWER, INC.
AND
XXXXX
FARGO BANK, NATIONAL ASSOCIATION
Acting
through its Xxxxx Fargo Business Credit operating division
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January
14, 2008
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Dated
January 14, 2008
MISCOR
GROUP, LTD., an Indiana corporation (“MISCOR”), MAGNETECH INDUSTRIAL SERVICES,
INC., an Indiana corporation (“MIS”), XXXXXXX ELECTRIC, LLC, an Indiana
limited liability company (“Xxxxxxx”), HK ENGINE COMPONENTS, LLC, an Indiana
limited liability company (“HK”), MAGNETECH POWER SERVICES, LLC, an Indiana
limited liability company (“MPS”), IDEAL CONSOLIDATED, INC., an Indiana
corporation (“Ideal”), 3-D SERVICE, LTD., an Ohio limited liability company
(“3D”), and AMERICAN MOTIVE POWER, INC., a Nevada corporation (“AMP” and
together with MISCOR, MIS, Xxxxxxx, XX, MPS, Ideal and 3D, the “Borrowers” and
each a “Borrower”) and XXXXX FARGO BANK, NATIONAL ASSOCIATION (as more fully
defined in Article I herein, the “Lender”) acting through its Xxxxx Fargo
Business Credit operating division, hereby agree as follows:
ARTICLE
I
DEFINITIONS
Section
1.1 Definitions. Except
as otherwise expressly provided in this Agreement, the following terms shall
have the meanings given them in this Section:
“Accounts”
shall have the meaning given it under the UCC.
“Accounts
Advance Rate” means up to eighty five percent (85%), or such lesser rate as the
Lender in its sole discretion may deem appropriate from time to
time.
“Advance”
means a Revolving Advance or the Real Estate Advance.
“Affiliate”
or “Affiliates” means any Person controlled by, controlling or under common
control with the Borrowers, including any Subsidiary of any
Borrower. For purposes of this definition, “control,” when used with
respect to any specified Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise.
“Aggregate
Face Amount” means the aggregate amount that may then be drawn under each
outstanding Letter of Credit, assuming compliance with all conditions for
drawing.
“Agreement”
means this Credit and Security Agreement.
“Availability”
means the amount, if any, by which the Borrowing Base exceeds the sum of
(i) the outstanding principal balance of the Revolving Note and (ii) the
L/C Amount.
“Book
Net
Worth” means the aggregate of the Stockholders’ equity in the Borrowers,
determined on a consolidated basis in accordance with GAAP.
“Borrowing
Base” means at any time the lesser of:
(a) The Maximum Line Amount; or
(b) Subject to change from time to time in the Lender’s sole
discretion, the sum of:
(i)
The lesser of (A) the sum of (1) the product of the Accounts Advance Rate times Eligible
Accounts of each of MIS, HK, MPS, 3D and, upon its acceptance by the Lender
as
an Eligible Borrower, AMP, plus (2) the
lesser
of (x) the product of the Special Accounts Advance Rate times Eligible
Accounts of each of Xxxxxxx and Ideal, or (y) $2,000,000, or
(B) $13,750,000, less
(ii)
The Borrowing Base Reserve, less
(iii)
The Personal Property Tax Reserve, less
(iv)
The Real Estate Tax Reserve, less
(v)
Indebtedness that any Borrower owes to the Lender that has not yet been advanced
on the Revolving Note, including, without limitation, the L/C Amount, and the
dollar amount that the Lender in its reasonable discretion then determines
to be
a reasonable determination of each Borrower’s credit exposure with respect to
any swap, derivative, foreign exchange, hedge, deposit, treasury management
or
other similar transaction or arrangement offered to any Borrower by Lender
that
is not described in Article II of this Agreement.
“Borrowing
Base Reserve” means, as of any date of determination, such amounts (expressed as
either a specified amount or as a percentage of a specified category or item)
as
the Lender may from time to time establish and adjust in reducing Availability
(a) to reflect events, conditions, contingencies or risks which, as determined
by the Lender, do or may affect (i) the Collateral or its value, (ii) the
assets, business or prospects of each Borrower, or (iii) the security interests
and other rights of the Lender in the Collateral (including the enforceability,
perfection and priority thereof), or (b) to reflect the Lender’s judgment that
any collateral report or financial information furnished by or on behalf of
any
Borrower to the Lender is or may have been incomplete, inaccurate or misleading
in any material respect, or (c) in respect of any state of facts that the Lender
determines constitutes a Default or an Event of Default..
“Business
Day” means day on which the Federal Reserve Bank of New York is open for
business, and such day relates to a LIBOR Advance a day on which dealings are
carried on in the London Interbank Eurodollar market.
“Capital
Expenditures” means for a period, any expenditure of money during such period
for the lease, purchase or other acquisition of any capital asset, whether
payable currently or in the future.
“Change
of Control” means the occurrence of any of the following events:
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(a)
With regard to MISCOR, any Person or “group” (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934) other than Xxxx Xxxxxxx
and Tontine Capital Partners LP and/or its affiliates is or becomes the
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934, except that a Person will be deemed to have “beneficial
ownership” of all securities that such Person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than forty nine percent (49%) of the voting
power of all classes of Owners of MISCOR.
(b)
With regard to the Borrowers other than MISCOR, any such Borrower is no longer
a
wholly owned Subsidiary of MISCOR.
(c)
Xxxx Xxxxxxxxx or a replacement selected by Tontine Partners and acceptable
to
the Lender in its sole discretion shall cease to actively manage the Borrowers’
day-to-day business activities.
“Collateral”
means all of each Borrower’s Accounts, chattel paper and electronic chattel
paper, deposit accounts, documents, Equipment, General Intangibles, goods,
instruments, Inventory, Investment Property, letter-of-credit rights, letters
of
credit, all sums on deposit in any Collateral Account, and any items in any
Lockbox; together with (i) all substitutions and replacements for and
products of any of the foregoing; (ii) in the case of all goods, all
accessions; (iii) all accessories, attachments, parts, equipment and
repairs now or hereafter attached or affixed to or used in connection with
any
goods; (iv) all warehouse receipts, bills of lading and other documents of
title now or hereafter covering such goods; (v) all collateral subject to
the Lien of any Security Document; (vi) any money, or other assets of any
Borrower that now or hereafter come into the possession, custody, or control
of
the Lender; (vii) all sums on deposit in the Special Account;
(viii) proceeds of any and all of the foregoing; (ix) books and records of
each Borrower, including all mail or electronic mail addressed to any Borrower;
and (x) all of the foregoing, whether now owned or existing or hereafter
acquired or arising or in which any Borrower now has or hereafter acquires
any
rights.
“Collateral
Account” means the “Lender Account” as defined in each Wholesale Lockbox and
Collection Account Agreement.
“Collateral
Pledge Agreement” means the Collateral Pledge Agreement by MISCOR in favor of
the Lender pursuant to which MISCOR has pledged to the Lender its ownership
interest in each of the other Borrowers.
“Commitment”
means the Lender’s commitment to make Advances to, and to issue Letters of
Credit for the account of, the Borrowers.
“Constituent
Documents” means with respect to any Person, as applicable, such Person’s
certificate of incorporation, articles of incorporation, by-laws, certificate
of
formation, articles of organization, limited liability company agreement,
management agreement, operating agreement, shareholder agreement, partnership
agreement or similar document or agreement governing such Person’s existence,
organization or management or concerning disposition of ownership interests
of
such Person or voting rights among such Person’s owners.
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“Credit
Facility” means the credit facility under which Revolving Advances and Letters
of Credit may be made available to the Borrowers by the Lender under Article
II.
“Current
Maturities of Long Term Debt” means as of a given date, the amount of the
Borrower’s long-term debt (other than Revolving Advances) and capitalized leases
which became due during the fiscal year-to-date period ending on the designated
date.
“Cut-off
Time” means 11:00 a.m. Central Time.
“Debt
Service Coverage Ratio” means (i) the sum of (A) Net Income (Loss), and (B)
depreciation and amortization to the extent the same has reduced such Net Income
(Loss), dividedby
(ii) the sum of
(A) Current Maturities of Long Term Debt, and (B) Unfinanced Capital
Expenditures.
“Default”
means an event that, with giving of notice or passage of time or both, would
constitute an Event of Default.
“Default
Period” means any period of time beginning on the day a Default or Event of
Default occurs and ending on the date identified by the Lender in writing as
the
date that such Default or Event of Default has been cured or
waived.
“Default
Rate” means an annual interest rate in effect during a Default Period or
following the Termination Date, which interest rate shall be equal to three
percent (3%) over the applicable Floating Rate, as such rate may change from
time to time.
“Director”
means a director if the Borrower is a corporation, a governor or manager if
the
Borrower is a limited liability company, or a general partner if the Borrower
is
a partnership.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from
time
to time.
“ERISA
Affiliate” means any trade or business (whether or not incorporated) that is a
member of a group which includes any Borrower and which is treated as a single
employer under Section 414 of the IRC.
“Eligible
Accounts” means, as to each Eligible Borrower, all unpaid Accounts of such
Borrower arising from the sale or lease of goods or the performance of services,
net of any credits, but excluding any such Accounts having any of the following
characteristics:
(i)
That portion of Accounts unpaid one hundred twenty (120) days or more after
the
invoice date;
(ii)
That portion of Accounts related to goods or services with respect to which
such
Borrower has received notice of a claim or dispute, which are subject to a
claim
of offset or a contra account, or which reflect a reasonable reserve for
warranty claims or returns;
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(iii)
That portion of Accounts not yet earned by the final delivery of goods by
such
Borrower to the account debtor, or that portion of Accounts not yet earned
by
the final rendition of services by such Borrower to the account debtor, unless
such Accounts constitute progress xxxxxxxx of Xxxxxxx or Ideal;
(iv)
Accounts constituting (i) proceeds of copyrightable material unless such
copyrightable material shall have been registered with the United States
Copyright Office, or (ii) proceeds of patentable inventions unless such
patentable inventions have been registered with the United States Patent
and
Trademark Office;
(v)
Accounts owed by any unit of government, whether foreign or domestic (except
that there shall be included in Eligible Accounts that portion of Accounts
owed
by such units of government for which such Borrower has provided evidence
satisfactory to the Lender that (A) the Lender has a first priority
perfected security interest and (B) such Accounts may be enforced by the
Lender directly against such unit of government under all applicable
laws);
(vi) Accounts
denominated in any currency other than United States dollars.
(vii)
Accounts owed by an account debtor located outside the United States or Canada
which are not (A) backed by a bank letter of credit naming the Lender as
beneficiary or assigned to the Lender, in the Lender’s possession or control,
and with respect to which a control agreement concerning the letter-of-credit
rights is in effect, and acceptable to the Lender in all respects, in its
sole
discretion, or (B) covered by a foreign receivables insurance policy
acceptable to the Lender in its sole discretion;
(viii)
Accounts owed by an account debtor that is insolvent, the subject of bankruptcy
proceedings or has gone out of business;
(ix)
Accounts owed by an Owner, Subsidiary, Affiliate, Officer or employee of
such
Borrower;
(x)
Accounts not subject to a duly perfected security interest in the Lender’s favor
or which are subject to any Lien in favor of any Person other than the
Lender;
(xi)
That portion of Accounts that has been restructured, extended, amended or
modified;
(xii)
That portion of Accounts that constitutes advertising, finance charges, service
charges or sales or excise taxes;
(xiii)
Accounts owed by an account debtor, regardless of whether otherwise eligible,
to
the extent that the aggregate balance of such Accounts exceeds fifteen percent
(15%) of the aggregate amount of all Accounts of such Borrower;
(xiv)
Accounts owed by an account debtor, regardless of whether otherwise eligible,
if
thirty five percent (35%) or more of the total amount of Accounts due from
such
debtor is ineligible under clauses (i), (ii), or (x) above;
and
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(xv)
Accounts, or portions thereof, otherwise deemed ineligible by the Lender in
its
sole discretion.
“Eligible
Borrower” means each Borrower from time to time a party to this Agreement and
which the Lender has approved as an “Eligible Borrower” following completion of
a satisfactory pre-loan audit conducted by the Lender, receipt by the Lender
of
a Customer Identification Information Form and such other forms and
verifications as the Lender may need to comply with the U.S.A. Patriot Act
and
receipt by the Lender of such agreements, instruments and certifications as
the
Lender requires for such Borrower and which are substantially the same as such
items or deliveries the Lender normally requires from a Borrower prior to the
making of an initial advance, all as generally set forth in Section 4.1
hereof. Each of the Borrowers party to this Agreement as of the
Funding Date, other than AMP, shall be deemed to be an Eligible
Borrower.
“Environmental
Law” means any federal, state, local or other governmental statute, regulation,
law or ordinance dealing with the protection of human health and the
environment.
“Equipment”
shall have the meaning given it under the UCC.
“Event
of
Default” is defined in Section 7.1.
“Financial
Covenants” means the covenants set forth in Section 6.2.
“Floating
Rate” means an annual interest rate equal to the Prime Rate, which interest rate
shall change when and as the Prime Rate changes.
“Floating
Rate Advance” means an Advance bearing interest at the Floating
Rate.
“Funding
Date” is defined in Section 2.1.
“GAAP”
means generally accepted accounting principles, applied on a basis consistent
with the accounting practices applied in the financial statements described
in
Section 5.6.
“General
Intangibles” shall have the meaning given it under the UCC.
“Guarantor”
means any Person now or in the future who agrees to guaranty the
Indebtedness.
“Guaranty”
means each unconditional continuing guaranty executed by a Guarantor in favor
of
the Lender (collectively, the “Guaranties”).
“Hazardous
Substances” means pollutants, contaminants, hazardous substances, hazardous
wastes, petroleum and fractions thereof, and all other chemicals, wastes,
substances and materials listed in, regulated by or identified in any
Environmental Law.
“Indebtedness”
is used herein in its most comprehensive sense and means any and all advances,
debts, obligations and liabilities of the Borrowers to the Lender, heretofore,
now or hereafter made, incurred or created, whether voluntary or involuntary
and
however arising,
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whether
due or not due, absolute or contingent, liquidated or unliquidated, determined
or undetermined, including under any swap, derivative, foreign exchange, hedge,
deposit, treasury management or other similar transaction or arrangement at
any
time entered into by the Borrowers with the Lender, and whether any Borrower
may
be liable individually or jointly with others, or whether recovery upon such
Indebtedness may be or hereafter becomes unenforceable.
“Indemnified
Liabilities” is defined in Section 8.6
“Indemnitees”
is defined in Section 8.6.
“IRC”
means the Internal Revenue Code of 1986, as amended from time to
time.
“Infringement”
or “Infringing” when used with respect to Intellectual Property Rights means any
infringement or other violation of Intellectual Property Rights.
“Intellectual
Property Rights” means all actual or prospective rights arising in connection
with any intellectual property or other proprietary rights, including all rights
arising in connection with copyrights, patents, service marks, trade dress,
trade secrets, trademarks, trade names or mask works.
“Interest
Payment Date” is defined in Section 2.9(a).
“Interest
Period” means the period that commences on (and includes) the Business Day on
which either a LIBOR Advance is made or continued, or on which a Floating Rate
Advance is converted to a LIBOR Advance, and ending on (but excluding) the
Business Day numerically corresponding to such date that is one, two or three
months thereafter as designated by the Borrower, during which period the
outstanding principal balance of the LIBOR Advance shall bear interest at the
LIBOR Advance Rate; provided, however,
that:
(a)
No Interest Period may be selected for an Advance for a principal amount less
than One Million Dollars ($1,000,000), and no more than five (5) different
Interest Periods may be outstanding at any one time;
(b)
If an Interest Period would otherwise end on a day which is not a Business
Day,
then the Interest Period shall end on the next Business day thereafter, unless
that Business Day is the first Business Day of a month, in which case the
Interest Period shall end on the last Business Day of the preceding
month;
(c)
No Interest Period may end later than the Maturity Date.
“Inventory”
shall have the meaning given it under the UCC.
“Investment
Property” shall have the meaning given it under the UCC.
“L/C
Amount” means the sum of (i) the Aggregate Face Amount of any outstanding
Letters of Credit, plus (ii) the
amount
of each Obligation of Reimbursement that either remains unreimbursed or has
not
been paid through a Revolving Advance on the Credit Facility.
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“L/C
Application” means an application for the issuance of standby letters of credit pursuant
to
the terms of a Standby Letter of Credit Agreement in form acceptable to the
Lender.
“Ledger
Balance” means the balance in the Borrowers’ Operating Account at the end of
each Business Day after all debits and credits for that Business Day have been
posted.
“Lender”
means Xxxxx Fargo Bank, National Association in its broadest and most
comprehensive sense as a legal entity, and is not limited in its meaning to
Lender’s Xxxxx Fargo Business Credit operating division, or to any other
operating division of Lender.
“Letter
of Credit” is defined in Section 2.3(a).
“LIBOR”
means the rate per annum (rounded upward, if necessary, to the nearest whole
one
eighth of one percent (1/8 %) determined pursuant to the following
formula:
|
LIBOR
=
|
Base
LIBOR
|
|
|
100%
- LIBOR Reserve Percentage
|
(i)
"Base LIBOR" means the rate per annum for United States dollar deposits quoted
by the Lender as the Inter-Bank Market Offered Rate, with the understanding
that
such rate is quoted by the Lender for the purpose of calculating effective
rates
of interest for loans making reference thereto, on the first day of a Interest
Period for delivery of funds on said date for a period of time approximately
equal to the number of days in such Interest Period and in an amount
approximately equal to the principal amount to which such Interest Period
applies. The Borrower understands and agrees that the Lender may base its
quotation of the Inter-Bank Market Offered Rate upon such offers or other market
indicators of the Inter-Bank Market as the Lender in its discretion deems
appropriate including the rate offered for U.S. dollar deposits on the London
Inter-Bank Market.
(ii)
"LIBOR Reserve Percentage" means the reserve percentage prescribed by the Board
of Governors of the Federal Reserve System (or any successor) for "Eurocurrency
Liabilities" (as defined in Regulation D of the Federal Reserve Board, as
amended), adjusted by the Lender for expected changes in such reserve percentage
during the applicable Interest Period.
“LIBOR
Advance” means a Revolving Advance bearing interest at the LIBOR Advance
Rate.
“LIBOR
Advance Rate” means, an annual interest rate equal to the sum of LIBOR plus two and
eight
tenths (2.8%) percent.
“Licensed
Intellectual Property” is defined in Section 5.11(c).
“Lien”
means any security interest, mortgage, deed of trust, pledge, lien, charge,
encumbrance, title retention agreement or analogous instrument or device,
including the interest of each lessor under any capitalized lease and the
interest of any bondsman under any payment
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or
performance bond, in, of or on any assets or properties of a Person, whether
now
owned or subsequently acquired and whether arising by agreement or operation
of
law.
“Loan
Documents” means this Agreement, the Revolving Note, the Real Estate Note, each
Guaranty, each Subordination Agreement, each L/C Application, each Standby
Letter of Credit Agreement and the Security
Documents, together with every other agreement, note, document, contract or
instrument to which any Borrower now or in the future may be a party and which
is required by the Lender.
“Loan
Year” is defined in Section 2.7(b).
“Lockbox”
means “Lockbox” as defined in each Wholesale Lockbox and Collection Account
Agreement.
“Material
Adverse Effect” means any of the following:
(i)
A material adverse effect on the business, operations, results of operations,
prospects, assets, liabilities or financial condition of the Borrowers, as
a
whole;
(ii)
A material adverse effect on the ability of the Borrowers to perform their
obligations under the Loan Documents;
(iii)
A material adverse effect on the ability of the Lender to enforce the
Indebtedness or to realize the intended benefits of the Security Documents,
including a material adverse effect on the validity or enforceability of any
Loan Document or of any rights against any Guarantor, or on the status,
existence, perfection, priority (subject to Permitted Liens) or enforceability
of any Lien securing payment or performance of the Indebtedness; or
(iv)
Any claim against a Borrower or threat of litigation which if determined
adversely to such Borrower would cause such Borrower to be liable to pay an
amount exceeding Two Hundred Fifty Thousand Dollars ($250,000) or would result
in the occurrence of an event described in clauses (i), (ii) and (iii)
above.
“Maturity
Date” is defined in Section 2.11.
“Maximum
Line Amount” means Thirteen Million Seven Hundred Fifty Thousand Dollars
($13,750,000).
“Minimum
Interest Charge” has the meaning given in Section 2.7(c).
“Mortgage”
means that certain Real Estate Mortgage, Security Agreement and Assignment
of
Leases and Rents by MIS in favor of the Lender.
“Multiemployer
Plan” means a multiemployer plan (as defined in Section 4001(a)(3) of ERISA) to
which any Borrower or any ERISA Affiliate contributes or is obligated to
contribute.
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“Net
Income (Loss)” means the Borrowers’ aggregate fiscal year-to-date after-tax net income (loss)
from
continuing operations, including
extraordinary, non-operating or non-cash losses but excluding
extraordinary, non-operating or non-cash gains, all as determined on a
consolidated basis in accordance with GAAP.
“Note”
means the Revolving Note or the Real Estate Note, and “Notes” means the
Revolving Note and the Real Estate Note.
“OFAC”
is
defined in Section 6.11(c).
“Obligation
of Reimbursement” means the obligation of a Borrower to reimburse the Lender
pursuant to the terms of the Standby Letter of Credit Agreement and any applicable
L/C
Application.
“Officer”
means with respect to any Borrower, an officer if such Borrower is a
corporation, a manager if such Borrower is a limited liability company, or
a
partner if such Borrower is a partnership.
“Operating
Account” means deposit account number 0000000000 maintained by the Borrowers
with the Lender, or any other deposit account which the parties agree shall
be
the Operating Account.
“Original
Maturity Date” means January 1, 2011.
“Overadvance”
means the amount, if any, by which the outstanding principal balance of the
Revolving Note, plus the L/C Amount, is in excess of the then-existing Borrowing
Base.
“Owned
Intellectual Property” is defined in Section 5.11(a).
“Owner”
means with respect to any Borrower, each Person having legal or beneficial
title
to an ownership interest in such Borrower or a right to acquire such an
interest.
“Patent
and Trademark Security Agreement” means each Patent and Trademark Security
Agreement now or hereafter executed by a Borrower in favor of the
Lender.
“Pension
Plan” means a pension plan (as defined in Section 3(2) of ERISA) maintained for
employees of the Borrower or any ERISA Affiliate and covered by Title IV of
ERISA.
“Permitted
Lien” and “Permitted Liens” are defined in Section 6.3(a).
“Person”
means any individual, corporation, partnership, joint venture, limited liability
company, association, joint-stock company, trust, unincorporated organization
or
government or any agency or political subdivision thereof.
“Personal
Property Tax Reserve” means, at any time, an amount equal to the difference of
(i) the sum, without duplication, of (a) personal property taxes on each
Borrower’s assets assessed in prior years, plus (b) one
twelfth
(1/12) of the total estimated assessment of personal property taxes on each
Borrower’s assets for the current calendar year multiplied by the
number
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of
calendar months or portions thereof, elapsed since the beginning of the current
calendar year, minus (ii) any
portion of such personal property taxes which have been paid, as evidenced
by an
official receipt of the relevant taxing authority.
“Plan”
means an employee benefit plan (as defined in Section 3(3) of ERISA) maintained
for employees of a Borrower or any ERISA Affiliate.
“Premises”
means all locations where each Borrower conducts its business or has any rights
of possession, including but not limited to the locations described in Exhibit D attached
hereto.
“Prime
Rate” means at any time the rate of interest most recently announced by the
Lender at its principal office as its Prime Rate, with the understanding that
the Prime Rate is one of the Lender’s base rates, and serves as the basis upon
which effective rates of interest are calculated for those loans making
reference thereto, and is evidenced by the recording thereof in such internal
publication or publications as the Lender may designate. Each change
in the rate of interest shall become effective on the date each Prime Rate
change is announced by the Lender.
“Real
Estate” means MIS’ real property subject to the Mortgage located in Saraland,
Alabama.
“Real
Estate Advance” is defined in Section 2.5.
“Real
Estate Note” means the Borrowers’ promissory note, payable to the order of the
Lender in substantially the form of Exhibit B hereto, as same may
be renewed and amended from time to time, and all replacements
thereto.
“Real
Estate Tax Reserve” means, at any time, an amount equal to the difference of (i)
the sum, without duplication, of (a) real estate taxes on the Real Estate
assessed in prior years, plus (b) one
twelfth
(1/12) of the total estimated assessment of real estate taxes on the Real Estate
for the current calendar year multiplied by the
number of calendar months or portions thereof elapsed since the beginning of
the
current calendar year, minus (ii) any
portion of such real estate taxes which have been paid, as evidenced by an
official receipt of the relevant taxing authority.
“Reportable
Event” means a reportable event (as defined in Section 4043 of ERISA), other
than an event for which the thirty (30) day notice requirement under ERISA
has
been waived in regulations issued by the Pension Benefit Guaranty
Corporation.
“Revolving
Advance” is defined in Section 2.1.
“Revolving
Note” means the Borrowers’ revolving promissory note, payable to the order of
the Lender in substantially the form of Exhibit A hereto, as same may
be renewed and amended from time to time, and all replacements
thereto.
“Security
Documents” means this Agreement, the Wholesale Lockbox and Collection Account
Agreement, the Patent and Trademark Security Agreement, the Mortgage, the
Collateral
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Pledge
Agreement, and any
other document delivered to the Lender from time to time to secure the
Indebtedness.
“Security
Interest” is defined in Section 3.1.
“Special
Account” means a specified cash collateral account maintained with Lender or
another financial institution acceptable to the Lender in connection with
Letters of Credit, as contemplated by Section 2.4.
“Special
Accounts Advance Rate” means up to forty percent (40%), or such lesser rate as
the Lender in its sole discretion may deem appropriate from time to time,
including, without limitation, in the event the Borrowers hereafter request
that
the Lender make Advances based on Inventory or Equipment.
“Standby
Letter of Credit Agreement” means an agreement governing the issuance of standby
letters of credit by Lender entered into between a Borrower as applicant and
Lender as issuer.
“Subordinated
Creditor” means each of
(i) Xxxx Xxxxxxx, (ii) Strasbourger, Pearson, Tulcin, Wolfee, Inc., as the
authorized agent for the holders of certain subordinated Secured Convertible
Debentures, (iii) BDeWees, Inc., and XGenIII, Ltd., as former owners of 3D,
and
(iv) every other Person now or in the future who agrees to subordinate
indebtedness of a Borrower held by that Person to the payment of the
Indebtedness, in each case on terms acceptable to the Lender in its
discretion.
“Subordination
Agreement” means a subordination agreement executed by a Subordinated Creditor
in favor of the Lender and acknowledged by the
applicable Borrower.
“Subsidiary”
means any Person of which more than fifty percent (50%) of the outstanding
ownership interests having general voting power under ordinary circumstances
to
elect a majority of the board of directors or the equivalent of such Person,
regardless of whether or not at the time ownership interests of any other class
or classes shall have or might have voting power by reason of the happening
of
any contingency, is at the time directly or indirectly owned by a Borrower,
by
such Borrower and one or more other Subsidiaries, or by one or more other
Subsidiaries.
“Target
Ledger Balance” means Zero Dollars ($0.00), or such other dollar amount which
the parties agree shall be the Target Ledger Balance that is to remain in the
Operating Account as of the end of each Business Day.
“Termination
Date” means the earliest of (i) the Maturity Date, (ii) the date the Borrowers
terminate the Credit Facility, or (iii) the date the Lender demands payment
of
the Indebtedness, following an Event of Default, pursuant to Section
7.2.
“Treasury
Management Start Date” means, with respect to each Borrower, the date a Lockbox
and depository accounts for such Borrower have been established with the Lender
and have become fully operational.
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“UCC”
means the Uniform Commercial Code in effect in the state designated in this
Agreement as the state whose laws shall govern this Agreement, or in any other
state whose laws are held to govern this Agreement or any portion of this
Agreement.
“Unfinanced
Capital Expenditures” means Capital Expenditures for which the Borrower has not
become indebted to another party or incurred a contractual liability (other
than
to the Lender).
“Unused
Amount” is defined in Section 2.8(b).
“Wholesale
Lockbox and Collection Account Agreement” means each Wholesale Lockbox and
Collection Account Agreement by and between one or more Borrowers and the
Lender.
Section
1.2 Other Definitional
Terms;
Rules of Interpretation. The words “hereof”, “herein” and
“hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. All accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP. All terms defined
in the UCC and not otherwise defined herein have the meanings assigned to them
in the UCC. References to Articles, Sections, subsections, Exhibits,
Schedules and the like, are to Articles, Sections and subsections of, or
Exhibits or Schedules attached to, this Agreement unless otherwise expressly
provided. The words “include”, “includes” and “including” shall be
deemed to be followed by the phrase “without limitation”. Unless the
context in which used herein otherwise clearly requires, “or” has the inclusive
meaning represented by the phrase “and/or”. Defined terms include in
the singular number the plural and in the plural number the
singular. Reference to any agreement (including the Loan Documents),
document or instrument means such agreement, document or instrument as amended
or modified and in effect from time to time in accordance with the terms thereof
(and, if applicable, in accordance with the terms hereof and the other Loan
Documents), except where otherwise explicitly provided, and reference to any
promissory note includes any promissory note which is an extension or renewal
thereof or a substitute or replacement therefor. Reference to any
law, rule, regulation, order, decree, requirement, policy, guideline, directive
or interpretation means as amended, modified, codified, replaced or reenacted,
in whole or in part, and in effect on the determination date, including rules
and regulations promulgated thereunder.
ARTICLE
II
AMOUNT
AND TERMS OF THE
CREDIT FACILITY
Section
2.1 Revolving
Advances. The Lender agrees, subject to the terms and
conditions of this Agreement, to make advances (“Revolving Advances”) to the
Borrowers from time to time from the date that all of the conditions set forth
in 4.1 are satisfied (the “Funding Date”) to and until (but not including) the
Termination Date in an amount not in excess of the Maximum Line
Amount. The Lender shall have no obligation to make a Revolving
Advance to the extent that the amount of the requested Revolving Advance exceeds
Availability. The Borrowers’ joint and several obligation to pay the
Revolving Advances shall be evidenced by the Revolving Note and shall be secured
by the Collateral as provided in Article III and the
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Mortgage. Within
the limits set forth in this Section 2.1, the Borrower may borrow, prepay
pursuant to Section 2.12, and reborrow.
Section
2.2 Procedures for Initiating
Revolving Advances; the Loan Manager Service. Revolving
Advances shall be initiated either (i) manually by the Borrowers pursuant to
the
procedure set forth in this Section 2.2, or (ii) upon Borrowers’ request and
with the Lender’s consent, automatically by the Lender through the Lender’s Loan
Manager service, which credits Revolving Advances on an ongoing basis to the
Operating Account without the further request of the Borrowers. The
Loan Manager service is a service that is offered by the Lender to the Borrowers
in the Lender’s sole discretion, and may be terminated by the Lender at any time
following reasonable notice to the Borrowers. If the Lender offers to
make the Loan Manager service available to the Borrowers, and the Borrowers
agree to utilize the Loan Manager service, then the Borrowers hereby authorize
and direct the Lender, subject to Availability, to advance funds each Business
Day in an amount sufficient to restore the Ledger Balance of the Operating
Account to the Target Ledger Balance. If the Loan Manager service is
terminated for any reason, by either the Borrowers or the Lender, then it is
the
responsibility of the Borrowers after termination to initiate Revolving Advances
manually from time to time as the Borrowers deem appropriate.
The
Borrowers shall comply with the following procedures in requesting Revolving
Advances:
(a)
Selection
of Interest Rates for Revolving Advances. During any period in
which the Borrowers are enrolled in the Loan Manager service, each Revolving
Advance may only be funded as a Floating Rate Advance. During any
period in which the Borrowers are not enrolled in the Loan Manager service,
then
each Revolving Advance may be funded as either a Floating Rate Advance or a
LIBOR Advance, as the Borrowers shall specify in a request delivered to the
Lender conforming to the requirements of Section 2.2(b). Floating
Rate Advances and LIBOR Advances may be outstanding at the same
time. Each request for a LIBOR Advance shall be in multiples of One
Million Dollars ($1,000,000), with a minimum request of at least One Million
Dollars ($1,000,000). LIBOR Advances shall not be available during
Default Periods.
(b)
Procedures
for Requesting Revolving Advances. If the Borrowers do not
utilize the Loan Manager service, the Borrowers shall request each Revolving
Advance so that the request is received by the Lender not later than the Cut-off
Time on the Business Day, as applicable, on
which a Floating
Rate Advance is to be made or the Cut-off Time on the third Business Day
preceding the Business Day on which a LIBOR Advance is to be made. Each request that
conforms to the terms of this Agreement shall be effective upon receipt by
the
Lender, shall be in writing or by telephone or telecopy transmission, and shall
be confirmed in writing by the Borrowers if so requested by the Lender, by
(i)
an Officer of the Borrowers, or (ii) a Person designated as the Borrowers’ agent
by an Officer of the Borrowers in a writing delivered to the Lender, or (iii)
a
Person whom the Lender reasonably believes to be an Officer of the Borrowers
or
such a designated agent, which confirmation shall specify whether the Advance
shall be a Floating Rate Advance or a LIBOR Advance and, with respect to any
LIBOR Advance, shall specify the principal amount of the LIBOR Advance and
the
Interest Period applicable thereto. The Borrower shall repay all
Revolving Advances even if the Lender does not receive such confirmation and
even if the Person requesting a Revolving Advance was not in
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fact
authorized to do so. Any request for a Revolving Advance, whether
written or telephonic, and whether initiated manually by the Borrowers or
automatically through the Borrowers’ utilization of the Lender’s Loan Manager
service, shall be deemed to be a representation by the Borrowers that all
conditions set forth in Article IV of this Agreement have been satisfied as
of
the time of the request.
(c)
Protective
Advances by the Lender. The Lender may at any time initiate a
Revolving Advance in such amount as the Lender, in its sole discretion, deems
necessary to (i) protect its interest as secured party in any Collateral, (ii)
purchase Collateral for the Borrowers, or (iii) exercise any other rights
granted to it by the Borrowers under this Agreement.
(d)
Disbursement. During
any period in which the Borrowers are not enrolled in the Loan Manager service,
the Lender shall disburse the proceeds of the requested Revolving Advance by
crediting them to the Borrowers’ Operating Account, unless the Lender and the
Borrowers shall agree to another manner of disbursement. If the
Borrowers are enrolled in the Lender’s Loan Manager service, the Lender shall
disburse the proceeds of each automated Revolving Advance by crediting the
Borrowers’ Operating Account. The Lender may also disburse the
proceeds of any Revolving Advance that it may initiate under this Section 2.2
by
crediting them to the Operating Account or directly to any third Person as
the
Lender may deem necessary.
Section
2.3 Letters of
Credit.
(a)
Issuance
of
Letters of Credit. The Lender agrees, subject to the
terms and conditions of this Agreement, issue, at any time after the Funding
Date and prior to the Termination Date, one or more irrevocable standby or
documentary letters of credit (each, a “Letter of Credit”) for the Borrowers’
account. The Lender will not issue any Letter of Credit if the face
amount of the Letter of Credit to be issued would exceed the lesser of (i)
One
Million Dollars ($1,000,000), or (ii) Availability. Each Letter of
Credit, if any, shall be issued pursuant to a separate L/C Application made
by
the Borrower. The terms and conditions set forth in each such L/C
Application shall supplement the terms and conditions of the Standby Letter
of
Credit Agreement.
(b)
Expiry
Date. No Letter of Credit shall be issued with an expiry date
later than one (1) year from the date of issuance or the Maturity Date in effect
as of the date of issuance, whichever is earlier.
(c)
Conditions
Precedent. Any request for issuance of a Letter of Credit
shall be deemed to be a representation by the Borrowers that the conditions
set
forth in Section 4.2 have been satisfied as of the date of the
request.
(d)
Obligation
of Reimbursement. If a draft is submitted under a Letter of
Credit when the Borrowers are unable, because a Default Period exists or for
any
other reason, to obtain a Revolving Advance to pay the Obligation of
Reimbursement, the Borrowers shall pay to the Lender on demand and in
immediately available funds, the amount of the Obligation of Reimbursement
together with interest, accrued from the date of the draft until payment in
full
at the Default Rate. Notwithstanding the Borrowers’ inability to
obtain a Revolving Advance for
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any
reason, the Lender may, in its sole discretion, make a Revolving Advance in
an
amount sufficient to discharge any outstanding Obligation of Reimbursement
and
any accrued but unpaid interest and fees payable with respect to
same.
Section
2.4 Special Account. If
the Credit Facility is terminated for any reason while any Letter of Credit
is
outstanding, the Borrowers shall thereupon pay the Lender in immediately
available funds for deposit in the Special Account an amount equal to the L/C
Amount plus any anticipated fees and costs. If the Borrowers fail to
promptly make any such payment in the amount required hereunder, then the Lender
may make a Revolving Advance against the Credit Facility in an amount sufficient
to fulfill this obligation and deposit the proceeds to the Special
Account. The Special Account shall be an interest bearing account
either maintained with the Lender or with a financial institution acceptable
to
the Lender. Any interest earned on amounts deposited in the Special
Account shall be credited to the Special Account. The Lender may
apply amounts on deposit in the Special Account at any time or from time to
time
to the Indebtedness in the Lender’s sole discretion. The Borrowers
may not withdraw any amounts on deposit in the Special Account as long as the
Lender maintains a security interest therein. The Lender agrees to
transfer any balance in the Special Account to the Borrowers when the Lender
is
required to release its security interest in the Special Account under
applicable law.
Section
2.5 Real
Estate Advance.
(a) The
Lender agrees, subject to the terms and conditions of this Agreement, to make
a
single advance to the Borrowers on the later of the Funding Date or the date
the
condition in Section 4.1(dd) has been satisfied (the “Real Estate Advance”) in
the amount of One
Million Two Hundred Fifty Thousand Dollars ($1,250,000). The
Borrowers’ joint and several obligation to pay the Real Estate Advance shall be
evidenced by the Real Estate Note and shall be secured by the Collateral as
provided in Article III and the Mortgage.
(b)
Upon fulfillment of the applicable conditions set forth in Article IV, the
Lender shall disburse the proceeds of the Real Estate Advance in the manner
specified in Section 2.2(d).
Section
2.6 Payment of Real
Estate
Note. The outstanding principal balance of the Real Estate
Note shall be due and payable as follows:
(a)
In equal monthly installments of Ten Thousand Four Hundred Seventeen Dollars
($10,417), beginning on either the first day of the month following the making
of the Real Estate Advance if made on or prior to the fifteenth (15th)
day of
the month or the first day of the second month following the making of the
Real
Estate Advance if made on or after the sixteenth (16th)
of the
month, and on the 1st
day of
each month thereafter, with a
final payment of the entire unpaid principal balance of the Real Estate Note,
and all unpaid interest accrued thereon, due on January 1, 2018;
and
(b)
If the Lender at any time
obtains an appraisal of the
Real Estate and the appraisal shows the outstanding principal balance of the
Real Estate Note to exceed seventy five percent (75%) of the appraised “as is”
market value of the Real Estate, then the Borrowers shall, upon demand by the
Lender, make additional monthly principal payments in an amount equal to the
amount of such excess divided by twelve (12) months, or, in Lender’s
discretion,
immediately
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prepay
the Real Estate Note in the
amount of such excess, together, in each case, with any prepayment fee owed
pursuant to Section 2.8.
(c)
All
prepayments of principal with
respect to the Real Estate Note shall be applied to the most remote principal
installment or installments then unpaid.
(d)
Notwithstanding
the foregoing, on the
Termination Date, the Lender may, in its sole discretion, declare the entire unpaid
principal
balance of the Real Estate Note, and all unpaid interest accrued thereon, to
be
immediately due and payable.
Section
2.7 Interest; Minimum
Interest
Charge; Default Interest Rate; Application of Payments; Participations;
Usury.
(a)
Interest. Except
as provided in Section 2.2, Section 2.7(c) and Section 2.7(f), the principal
amount of each Advance shall bear interest at the Floating Rate.
(b)
Minimum
Interest Charge. Notwithstanding any other terms of this
Agreement to the contrary, the Borrowers shall pay to the Lender interest of
not
less than (i) Twenty Five Thousand Dollars ($25,000) per month during the first
Loan Year, (ii) Twenty Thousand Dollars ($20,000) per month during the second
Loan Year, and (iii) Fifteen Thousand Dollars ($15,000) per month during each
Loan Year thereafter (the “Minimum Interest Charge”) during the term of this
Agreement, and the Borrowers shall pay any deficiency between the Minimum
Interest Charge and the amount of interest otherwise calculated under Section
2.7(a) on the first day of each month and on the Termination
Date. When calculating this deficiency, the Default Rate, if
applicable, shall be disregarded. As used in this
subsection (b), “Loan Year” means each one-year period ending on an anniversary
of the Funding Date.
(c)
Default
Interest Rate. At any time during any Default Period or
following the Termination Date, in the Lender’s sole discretion and without
waiving any of its other rights or remedies, the principal of the Notes shall
bear interest at the Default Rate or such lesser rate as the Lender may
determine, effective as of the first day of the month in which any Default
Period begins through the last day of such Default Period, or any shorter time
period that the Lender may determine. The decision of the Lender to
impose a rate that is less than the Default Rate or to not impose the Default
Rate for the entire duration of the Default Period shall be made by Lender
in
its sole discretion and shall not be a waiver of any of its other rights and
remedies, including its right to retroactively impose the full Default Rate
for
the entirety of any such Default Period or following the Termination
Date.
(d)
Application
of Payments. Payments received in the Lender’s general account
shall be applied to the Indebtedness as provided in Section 2.13, but the amount
of principal paid shall continue to accrue interest at the applicable rate
following application to the Indebtedness through the end of the Business Day
thereafter. If the Borrowers have elected to use the Lender’s Ready
Remit service, then payments received by wire transfer directly into the
Lender’s general account shall be applied to the Indebtedness as provided in
Section 2.10, but the amount of principal paid shall continue to accrue interest
at the applicable rate following application to the Indebtedness through the
end
of the Business Day thereafter.
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(e)
Participations. If
any Person shall acquire a participation in the Advances or the Obligation
of
Reimbursement, the Borrowers shall be obligated to the Lender to pay the full
amount of all interest calculated under this Section 2.7, along with all other
fees, charges and other amounts due under this Agreement, regardless if such
Person elects to accept interest with respect to its participation at a lower
rate than that calculated under this Section 2.7, or otherwise elects to accept
less than its prorata share of such fees, charges and other amounts due under
this Agreement.
(f)
Usury. In
any event no rate change shall be put into effect which would result in a rate
greater than the highest rate permitted by law. Notwithstanding
anything to the contrary contained in any Loan Document, all agreements which
either now are or which shall become agreements between the Borrowers and the
Lender are hereby limited so that in no contingency or event whatsoever shall
the total liability for payments in the nature of interest, additional interest
and other charges exceed the applicable limits imposed by any applicable usury
laws. If any payments in the nature of interest, additional interest
and other charges made under any Loan Document are held to be in excess of
the
limits imposed by any applicable usury laws, it is agreed that any such amount
held to be in excess shall be considered payment of principal hereunder, and
the
indebtedness evidenced hereby shall be reduced by such amount so that the total
liability for payments in the nature of interest, additional interest and other
charges shall not exceed the applicable limits imposed by any applicable usury
laws, in compliance with the desires of the Borrowers and the
Lender. This provision shall never be superseded or waived and shall
control every other provision of the Loan Documents and all agreements between
the Borrowers and the Lender, or their successors and assigns.
Section
2.8 Fees.
(a)
Origination
Fee. The Borrowers shall pay the Lender a fully earned and
non-refundable origination fee of Ninety Thousand Dollars ($90,000), due and
payable upon the execution of this Agreement.
(b)
Unused
Line
Fee. For the purposes
of this Section 2.8, “Unused Amount” means the Maximum Line Amount reduced by
outstanding Revolving Advances. The Borrowers agree to pay to the
Lender an unused line fee at the rate of two tenths percent (.20%) per annum
on
the average daily Unused Amount from the date of this Agreement to and including
the Termination Date, due and payable monthly in arrears on the first day of
the
month and on the Termination Date.
(c)
Collateral
Exam Fees. The Borrowers shall pay the Lender fees in
connection with any collateral exams, audits or inspections conducted by or
on
behalf of the Lender of any Collateral or the Borrowers’ operations or business
at the rates established from time to time by the Lender as its collateral
exam
fees (which fees are currently Nine Hundred Fifty Dollars ($950) per day per
collateral examiner), together with all actual out-of-pocket costs and expenses
incurred in conducting any such collateral examination or
inspection.
(d)
Collateral
Monitoring Service Fees. The Borrowers shall pay the Lender
fees in connection with any service conducted by or on behalf of the Lender
for
purposes of identifying ineligible Collateral, calculating the Borrowing Base,
and performing related collateral
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monitoring
services at the rates established from time to time by the Lender (which fees
currently include an initial set-up fee of Seven Hundred Fifty Dollars ($750)
for each receivable aging for each Borrower that is being monitored,
and a monthly fee of Ninety Dollars ($90) for each such aging), together with
any out-of-pocket costs and expenses incurred by Lender, which fees shall be
due
and payable monthly in arrears on the first day of the month and on the
Termination Date.
(e)
Letter
of
Credit Fees. The Borrowers shall pay to the Lender a fee with
respect to each Letter of Credit that has been issued, which shall be calculated
on a per diem basis at an annual rate equal to two percent (2.0%) of
the
Aggregate Face Amount, from and including the date of issuance of the Letter
of
Credit until the date that the Letter of Credit terminates or is returned to
the
Lender, which fee shall be due and payable monthly in arrears on the first
day
of each month and on the date that the Letter of Credit terminates or is
returned to the Lender; provided, however,
effective as
of the first day of the month in which any Default Period begins through the
last day of such Default Period, or any shorter time period that the Lender
may
determine, in the Lender’s sole discretion and without waiving any of its other
rights and remedies, such fee shall increase to five percent (5.0%) of
the Aggregate Face
Amount. The foregoing fee shall be in addition to any other fees,
commissions and charges imposed by Lender with respect to such Letter of
Credit.
(f)
Letter
of
Credit Administrative Fees. The Borrowers shall pay all administrative
fees charged by Lender in connection with the honoring of drafts under any
Letter of Credit, amendments thereto, transfers thereof and all other activity
with respect to the Letters of Credit at the then – current rates published by
Lender for such services rendered on behalf of customers of Lender
generally.
(g)
Termination
Fees. If (i) the Lender terminates the Credit Facility during a Default
Period, or if (ii) the Borrowers terminate the Credit Facility on a date prior
to the Maturity Date, then the Borrowers shall pay the Lender as liquidated
damages and not as a penalty a termination fee in an amount equal to a
percentage of the Maximum Line Amount calculated as
follows: (A) two percent (2.0%) if the termination occurs on or
before the first anniversary of the Funding Date; (B) one percent (1.0%) if
the termination occurs after the first anniversary of the Funding Date, but
on
or before the second anniversary of the Funding Date; and (C) one half
percent (.5%) if the termination occurs after the second anniversary of the
Funding Date.
(h)
Prepayment
Fees. The Borrowers
may
prepay the principal amount of the Real Estate Note at any time, whether
voluntarily or by acceleration, subject to the payment of fees as
follows: If the Real Estate Note is prepaid for any reason, the
Borrowers shall pay to the Lender a prepayment fee in an amount equal to
(i) two percent (2.0%) of the amount prepaid, if prepayment occurs on or
before the first anniversary of the Funding Date; (ii) one percent (1.0%)
of the amount prepaid, if prepayment occurs after the first anniversary of
the
Funding Date but on or before the second anniversary of the Funding Date; and
(iii) one half percent (.50%) of the amount prepaid, if prepayment occurs
after the second anniversary of the Funding Date.
The
Borrowers acknowledge that prepayment may result in Lender incurring additional
costs, expenses and/or liabilities, and that it is difficult to ascertain the
full extent of such costs,
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expenses
and/or liabilities. The Borrowers therefore agree to pay the
above-described prepayment fee and agree that said prepayment fee represents
a
reasonable estimate of the prepayment costs, expenses and/or liabilities of
the
Lender.
(i)
Contracted
Funds Breakage Fees. The Borrower may prepay the principal
amount of the Revolving Note at any time, whether voluntarily or by
acceleration, provided,
however, that if the
principal amount of any LIBOR Advance is prepaid, the Borrower shall pay to
the
Lender immediately upon demand a contracted funds breakage fee equal to the
sum
of the discounted monthly differences for each month from the month of
prepayment through the month in which such Interest Period matures, calculated
as follows for each such month:
|
|
(i)
|
Determine
the
amount of interest which would have accrued each month on the amount
prepaid at the interest rate applicable to such amount had it remained
outstanding until the last day of the applicable Interest Period.
|
|
|
(ii)
|
Subtract
from
the amount determined in (i) above the amount of interest which would
have
accrued for the same month on the amount prepaid for the remaining
term of
such Interest Period at LIBOR in effect on the date of prepayment
for new
loans made for such term in a principal amount equal to the amount
prepaid.
|
|
|
(iii)
|
If
the result obtained in (ii) for any month is greater than zero, discount
that difference by LIBOR used in (ii) above.
|
The
Borrower acknowledges that a prepayment of the Revolving Note may result in
the
Lender incurring additional costs, expenses or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses or
liabilities. The Borrower therefore agrees to pay the above-described
contracted funds breakage fee and agrees that this fee represents a reasonable
estimate of the contracted funds breakage costs, and any expenses or liabilities
of the Lender.
(j)
Treasury
Management Fees. The Borrowers will pay service fees to the
Lender for treasury management services provided to them by the Lender pursuant
to the Master Agreement for Treasury Management services (the “Master Treasury
Agreement”) entered into among the Borrowers and the Lender, or, if a Master
Treasury Agreement has not been entered into, the Borrowers will pay service
fees for its use of the Loan Manager service, the Ready Remit service, or any
other service that the Lender may provide to the Borrowers under this Agreement
or any other agreement entered into by the parties, in the amount prescribed
in
the Lender’s current service fee schedule.
(k)
Overadvance
Fees. The Borrowers shall pay an Overadvance fee in the amount
of One Thousand Dollars ($1,000) for each day during which an Overadvance
exists, regardless of how the Overadvance arises or whether or not the
Overadvance has been agreed to in advance by the Lender; provided, however,
that from
the first day of any month during which any Default Rate commences or exists
at
any time, the daily Overadvance charge (if an Overadvance exists) shall be
Two
Thousand Dollars ($2,000). The acceptance of payment of an
Overadvance fee by the Lender shall not be deemed to constitute either consent
to the Overadvance or the waiver of the resulting Event of Default, unless
the
Lender specifically consents to the Overadvance in writing that waives the
Event
of Default on whatever conditions the Lender deems appropriate.
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(l)
Other
Fees
and Charges. The Lender
may
from time to time impose additional fees and charges as consideration for
Advances made in excess of Availability or for other events that constitute
an
Event of Default or a Default hereunder, including fees and charges for the
administration of Collateral by the Lender, and fees and charges for the late
delivery of reports, which may be assessed in the Lender’s sole discretion on
either an hourly, periodic, or flat fee basis, and in lieu of or in addition
to
imposing interest at the Default Rate.
Section
2.9 Time
for Interest Payments; Payment on Non-Business Days; Computation of Interest
and
Fees.
(a)
Time
For
Interest Payments. Accrued and unpaid interest shall be due
and payable on the first day of each month and on the Termination Date (each
an
“Interest Payment Date”), or if any such day is not a Business Day, on the next
succeeding Business Day. Interest will accrue from the most recent date to
which
interest has been paid or, if no interest has been paid, from the date of
advance to the Interest Payment Date. If an Interest Payment Date is
not a Business Day, payment shall be made on the next succeeding Business
Day.
(b)
Payment
on
Non-Business Days. Whenever any payment to be made hereunder
shall be stated to be due on a day which is not a Business Day, such payment
may
be made on the next succeeding Business Day, and such extension of time shall
in
such case be included in the computation of interest on the Advances or the
fees
hereunder, as the case may be.
(c)
Computation
of Interest and Fees. Interest accruing on the outstanding
principal balance of the Advances and fees hereunder outstanding from time
to
time shall be computed on the basis of actual number of days elapsed in a year
of three hundred sixty (360) days.
Section
2.10 Lockbox; Collateral
Account;
Application of Payments.
(a)
Treasury
Management Start Date. With respect to each Borrower, until
the Treasury Management Start Date has occurred for such Borrower, such Borrower
shall continue to use its currently existing lockbox and treasury management
services with its current service providers; provided, that
collections are forwarded to the Lender for application to payment of the
Indebtedness upon terms and conditions acceptable to the Lender. The
Borrowers agree to cooperate with the Lender to establish each Lockbox, the
Collateral Account and other depository accounts with the Lender, and, in any
event, the Treasury Management Start Date for each of MIS, Magnetech, Xxxxxxx,
XX, MPS, Ideal and 3D shall occur by not later than 21, 2008.
(b)
Lockbox;
Collateral Account; Ready RemitSMService. Upon
the occurrence of the applicable Treasury Management Start Date and thereafter
during the term hereof, each Borrower shall instruct all account debtors to
pay
Accounts owed to such Borrower as follows:
(i)
All payments by check shall be sent directly to the applicable Lockbox;
and
(ii)
All payments by wire transfer or ACH shall be sent to the Collateral Account,
unless the Lender and Borrowers have agreed that the Borrowers may use
the
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Lender’s
Ready Remit service, in which case the Borrowers shall instruct account debtors
originating wire transfers for payment purposes to use the payment
identification code assigned by the Lender to the Borrowers, which will cause
such payments to be received directly into the Lender’s general
account.
If,
notwithstanding such instructions, the Borrowers receive any payments directly,
the Borrowers shall promptly deposit such payments directly into the Collateral
Account. The Borrowers shall also deposit all other cash proceeds of
Collateral regardless of source or nature directly into the Collateral
Account. Until so deposited, the Borrowers shall hold all such
payments and cash proceeds in trust for and as the property of the Lender shall
not commingle such property with any of its other funds or
property. All deposits in the Collateral Account shall constitute
proceeds of Collateral and shall not constitute payment of the
Indebtedness.
(c)
Application
of Payments to the Borrowers’ Indebtedness.
(i)
Checks, ACH deposits and wire transfers to the Collateral Account shall be
processed in accordance with the terms of the Wholesale Lockbox and Collateral
Account Agreement, and the collected funds then transferred to the Lender’s
general account, where they will be applied to the Indebtedness on the Business
Day of receipt in the Lender’s general account.
(ii)
Wire transfers received in the Lender’s general account pursuant to the Ready
Remit service shall be applied to the Indebtedness on the Business Day of
receipt, if received no later than 12:30 p.m. Central Time, or the next Business
Day if received after 12:30 p.m. Central Time.
Section
2.11 Maturity
Date. Unless terminated (i) by the Lender on the Maturity Date
or pursuant to Section 7.2 or (ii) by the Borrowers pursuant to Section 2.12,
the Credit Facility shall remain in effect until the Original Maturity Date
and,
thereafter, shall automatically renew for successive one year periods (the
Original Maturity Date and each anniversary thereof which is at the end of
any
one year period in which the Credit Facility has been automatically renewed
is
herein referred to as a “Maturity Date”).
Section
2.12 Voluntary Prepayment;
Termination of the Credit Facility by the Borrowers. Except as otherwise
provided herein, the Borrowers may prepay the Advances in whole at any time
or
from time to time in part. The Borrowers may terminate the Credit
Facility at any time if the (i) give the Lender at least thirty (30) days
advance written notice prior to the proposed Termination Date, and (ii) pay
the Lender applicable termination and prepayment fees and contracted funds
breakage fees in accordance with Sections 2.9(g), 2.9(h) and
2.9(i). If the Borrowers terminate the Credit Facility, all
Indebtedness shall be immediately due and payable, and if the Borrowers give
the
Lender less than the required thirty (30) days advance written notice, then
the
interest rate applicable to borrowings evidenced by Revolving Note shall be
the
Default Rate for the period of time commencing thirty (30) days prior to the
proposed Termination Date through the date that the Lender actually receives
such written notice. If the Borrowers do not wish the Lender to consider renewal
of the Credit Facility on the next Maturity Date, then the Borrowers shall
give
the Lender at least thirty (30) days written notice prior to the Maturity Date
that it will not be requesting renewal. If the Borrowers fail to give the Lender
such
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timely
notice, then the interest rate applicable to borrowings evidenced by the
Revolving Note shall be the Default Rate for the period of time commencing
thirty (30) days prior to the Maturity Date through the date that the Lender
actually receives such written notice.
Section
2.13 Mandatory
Prepayment. Without notice or demand, unless the Lender shall
otherwise consent in a written agreement that sets forth the terms and
conditions which the Lender in its discretion may deem appropriate, including,
without limitation, the payment of an Overadvance fee, if an Overadvance shall
at any time exist with respect to the Credit Facility, then the Borrowers shall
(i) first, immediately prepay the Revolving Advances to the extent
necessary to eliminate such excess; and (ii) if prepayment in full of the
Revolving Advances is insufficient to eliminate such excess (due, for example,
to the L/C Amount), pay to the Lender in immediately available funds for deposit
in the Special Account an amount equal to the remaining excess. Any
voluntary or mandatory payment received by the Lender under this Agreement
may
be applied to the Indebtedness, in such order and in such amounts as the Lender
in its sole discretion may determine from time to time.
Section
2.14 Revolving Advances
to Pay
Indebtedness. Notwithstanding
the terms of Section 2.1, the Lender may, in its discretion at any time or
from
time to time, without the Borrowers’ request and even if the conditions set
forth in Section 4.2 would not be satisfied, make a Revolving Advance in an
amount equal to the portion of the Indebtedness from time to time due and
payable.
Section
2.15 Use
of Proceeds. The Borrowers shall use the proceeds of the
initial Advances to repay outstanding indebtedness, if any, to MFB Financial
and
to finance the acquisition of the stock of AMP, and thereafter the proceeds
of
Advances and each Letter of Credit shall be used for ordinary working capital
purposes and other proper business purposes to the extent permitted
hereunder.
Section
2.16 Liability
Records. The Lender may maintain from time to time, at its
discretion, records as to the Indebtedness. All entries made on any
such record shall be presumed correct until the Borrowers establish the
contrary. Upon the Lender’s demand, the Borrowers will admit and
certify in writing the exact principal balance of the Indebtedness that the
Borrowers then assert to be outstanding. Any billing statement or
accounting rendered by the Lender shall be conclusive and fully binding on
the
Borrowers unless the Borrowers give the Lender specific written notice of
exception within thirty (30) days after receipt.
ARTICLE
III
SECURITY
INTEREST;
OCCUPANCY; SETOFF
Section
3.1 Grant
of Security Interest. Each Borrower hereby pledges, assigns and grants to
the Lender, a lien and security interest (collectively referred to as the
“Security Interest”) in the Collateral, as security for the payment and
performance of: (a) all present and future Indebtedness of the Borrowers to
the
Lender; (b) all obligations of the Borrowers and rights of the Lender under
this
Agreement; and (c) all present and future obligations of each of the Borrowers
to the Lender of other kinds. Upon request by the Lender, each Borrower
will
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grant
to
the Lender, a security interest in all commercial tort claims that such Borrower
may have against any Person.
Section
3.2 Notification of
Account
Debtors and Other Obligors. The Lender may at any time a
Default Period then exists notify any account debtor or other Person obligated
to pay the amount due that such right to payment has been assigned or
transferred to the Lender for security and shall be paid directly to the
Lender. The Borrowers will join in giving such notice if the Lender
so requests. At any time after the Borrowers or the Lender gives such
notice to an account debtor or other obligor, the Lender may, but need not,
in
the Lender’s name or in a Borrower’s name, demand, xxx for, collect or receive
any money or property at any time payable or receivable on account of, or
securing, any such right to payment, or grant any extension to, make any
compromise or settlement with or otherwise agree to waive, modify, amend or
change the obligations (including collateral obligations) of any such account
debtor or other obligor. The Lender may, in the Lender’s name or in a
Borrower’s name, as such Borrower’s agent and attorney-in-fact,
notify the United States Postal Service to change the address for delivery
of
such Borrower’s mail to any address designated by the Lender, otherwise
intercept such Borrower’s mail, and receive, open and dispose of such Borrower’s
mail, applying all Collateral as permitted under this Agreement and holding
all
other mail for such Borrower’s account or forwarding such mail to such
Borrower’s last known address.
Section
3.3 Assignment of
Insurance. As additional security for the payment and
performance of the Indebtedness, each Borrower hereby assigns to the Lender
any
and all monies (including proceeds of insurance and refunds of unearned
premiums) due or to become due under, and all other rights of such Borrower
with
respect to, any and all policies of insurance now or at any time hereafter
covering the Collateral or any evidence thereof or any business records or
valuable papers pertaining thereto, and each Borrower hereby directs the issuer
of any such policy to pay all such monies directly to the Lender. At
any time, whether or not a Default Period then exists, the Lender may (but
need
not), in the Lender’s name or in a Borrower’s name, execute and deliver proof of
claim, receive all such monies, endorse checks and other instruments
representing payment of such monies, and adjust, litigate, compromise or release
any claim against the issuer of any such policy. Any monies received
as payment for any loss under any insurance policy mentioned above (other than
liability insurance policies) or as payment of any award or compensation for
condemnation or taking by eminent domain, shall be paid over to the Lender
to be
applied, at the option of the Lender, either to the prepayment of the
Indebtedness or shall be disbursed to the Borrowers under staged payment terms
reasonably satisfactory to the Lender for application to the cost of repairs,
replacements, or restorations. Any such repairs, replacements, or
restorations shall be effected with reasonable promptness and shall be of value
at least equal to the value of the items or property destroyed prior to such
damage or destruction.
Section
3.4 Occupancy.
(a)
Right
to
Possession Upon Default. Each Borrower hereby irrevocably
grants to the Lender the right to take exclusive possession of the Premises
at
any time during a Default Period without notice or consent.
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(b)
Lender’s
Use of Premises. The Lender may use the Premises only to hold,
process, manufacture, sell, use, store, liquidate, realize upon or otherwise
dispose of goods that are Collateral and for other purposes that the Lender
may
in good xxxxx xxxx to be related or incidental purposes.
(c)
Termination
of Occupancy. The Lender’s right to hold the Premises shall
cease and terminate upon the earlier of (i) payment in full and discharge
of all Indebtedness and termination of the Credit Facility, and (ii) final
sale or disposition of all goods constituting Collateral and delivery of all
such goods to purchasers.
(d)
No
Obligation. The Lender shall not be obligated to pay or
account for any rent or other compensation for the possession, occupancy or
use
of any of the Premises; provided, however,
that if the
Lender does pay or account for any rent or other compensation for the
possession, occupancy or use of any of the Premises, the Borrowers shall
reimburse the Lender promptly for the full amount thereof. In
addition, the Borrowers will pay, or reimburse the Lender for, all taxes, fees,
duties, imposts, charges and expenses at any time incurred by or imposed upon
the Lender by reason of the execution, delivery, existence, recordation,
performance or enforcement of this Agreement or the provisions of this Section
3.4.
Section
3.5 License. Without
limiting the generality of any other Security Document, each Borrower hereby
grants to the Lender a non-exclusive, worldwide and royalty-free license to
use
or otherwise exploit all Intellectual Property Rights of such Borrower for
the
purpose of: (a) completing the manufacture of any in-process
materials during any Default Period so that such materials become saleable
Inventory, all in accordance with the same quality standards previously adopted
by such Borrower for its own manufacturing and subject to such Borrower’s
reasonable exercise of quality control; and (b) selling, leasing or
otherwise disposing of any or all Collateral during any Default
Period.
Section
3.6 Financing
Statement. Each Borrower authorizes the Lender to file from
time to time, such financing statements against collateral described as “all
personal property” or “all assets” or describing specific items of collateral
including commercial tort claims as the Lender deems necessary or useful to
perfect the Security Interest. All financing statements filed before
the date hereof to perfect the Security Interest were authorized by the
Borrowers and are hereby re-authorized. A carbon, photographic or
other reproduction of this Agreement or of any financing statements signed
by a
Borrower is sufficient as a financing statement and may be filed as a financing
statement in any state to perfect the security interests granted
hereby. For this purpose, the Borrowers represent and warrant that
the information set forth on Schedule 3.6 is true and correct.
Section
3.7 Setoff. The
Lender may at any time or from time to time, at its sole discretion and without
demand and without notice to anyone, setoff any liability owed to a Borrower
by
the Lender, whether or not due, against any Indebtedness, whether or not
due. In addition, each other Person holding a participating interest
in any Indebtedness shall have the right to appropriate or setoff any deposit
or
other liability then owed by such Person to a Borrower, whether or not due,
and
apply the same to the payment of said participating interest, as fully as if
such Person had lent directly to a Borrower the amount of such participating
interest.
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Section
3.8 Collateral. This Agreement does not contemplate a sale of
accounts, contract rights or chattel paper, and, as provided by law, the
Borrowers are entitled to any surplus and shall remain liable for any
deficiency. The Lender’s duty of care with respect to Collateral in its
possession (as imposed by law) shall be deemed fulfilled if it exercises
reasonable care in physically keeping such Collateral, or in the case of
Collateral in the custody or possession of a bailee or other third Person,
exercises reasonable care in the selection of the bailee or other third Person,
and the Lender need not otherwise preserve, protect, insure or care for any
Collateral. The Lender shall not be obligated to preserve any rights
any Borrower may have against prior parties, to realize on the Collateral at
all
or in any particular manner or order or to apply any cash proceeds of the
Collateral in any particular order of application. The Lender has no
obligation to clean-up or otherwise prepare the Collateral for
sale. Each Borrower waives any right it may have to require the
Lender to pursue any third Person for any of the Indebtedness.
ARTICLE
IV
CONDITIONS
OF
LENDING
Section
4.1 Conditions Precedent
to the
Initial Advances and Letter of Credit. The Lender’s obligation
to make the initial Advances or to issue any Letters of Credit shall be subject
to the condition precedent that the Lender shall have received all of the
following, each properly executed by the appropriate party and in form and
substance satisfactory to the Lender:
(a)
This Agreement.
(b)
The Notes.
(c)
A Standby Letter of Credit Agreement, and L/C Application for each Letter of
Credit that a Borrower wishes to have issued thereunder.
(d)
A true and correct copy of any and all leases pursuant to which a Borrower
is
leasing the Premises, together with a landlord’s disclaimer and consent with
respect to each such lease.
(e)
A true and correct copy of any and all mortgages pursuant to which a Borrower
has mortgaged the Premises, together with a mortgagee’s disclaimer and consent
with respect to each such mortgage.
(f)
A true and correct copy of any and all agreements pursuant to which a Borrower’s
property is in the possession of any Person other than such Borrower, together
with, in the case of any goods held by such Person for resale, (i) a
consignee’s acknowledgment and waiver of Liens, (ii) UCC financing
statements sufficient to protect such Borrower’s and the Lender’s interests in
such goods, and (iii) UCC searches showing that no other secured party has
filed a financing statement against such Person and covering property similar
to
such Borrower’s other than such Borrower, or if there exists any such secured
party, evidence that each such secured party has received notice from such
Borrower and the Lender sufficient to protect such Borrower’s and the Lender’s
interests in such Borrower’s goods from any claim by such secured
party.
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(g)
An acknowledgment and waiver of Liens from each warehouse in which a Borrower
is
storing Inventory.
(h)
A true and correct copy of any and all agreements pursuant to which a Borrower’s
property is in the possession of any Person other than such Borrower, together
with, (i) an acknowledgment and waiver of Liens from each subcontractor who
has possession of such Borrower’s goods from time to time, (ii) UCC
financing statements sufficient to protect such Borrower’s and the Lender’s
interests in such goods, and (iii) UCC searches showing that no other
secured party has filed a financing statement covering such Person’s property
other than such Borrower, or if there exists any such secured party, evidence
that each such secured party has received notice from such Borrower and the
Lender sufficient to protect such Borrower’s and the Lender’s interests in such
Borrower’s goods from any claim by such secured party.
(i)
A Wholesale Lockbox and Collection Account Agreement with respect to the
Borrowers.
(j)
An agreement with MFB Financial in respect of lockbox receipts of certain
Borrowers to be forwarded to the Lender from and after the Funding
Date.
(k)
A Patent and Trademark Security Agreement from each applicable
Borrower.
(l)
The
Collateral Pledge
Agreement of MISCOR, together with original certificates evidencing its
ownership interest in each of the other Borrowers, to the extent applicable,
together with stock powers duly executed in blank.
(m)
The
Mortgage.
(n)
A Subordination Agreement from each of the initial Subordinated Creditors,
each
acknowledged by the Borrowers.
(o)
Current searches of appropriate filing offices showing that (i) no Liens
have been filed and remain in effect against any Borrower except Permitted
Liens
or Liens held by Persons who have agreed in writing that upon receipt of
proceeds of the initial Advances, they will satisfy, release or terminate such
Liens in a manner satisfactory to the Lender, and (ii) the Lender has duly
filed all financing statements necessary to perfect the Security Interest,
to
the extent the Security Interest is capable of being perfected by
filing.
(p)
A certificate of each Borrower’s Secretary or Assistant Secretary certifying
that attached to such certificate are (i) the resolutions of such
Borrower’s Directors and, if required, Owners, authorizing the execution,
delivery and performance of the Loan Documents, (ii) true, correct and
complete copies of such Borrower’s Constituent Documents, and
(iii) examples of the signatures of such Borrower’s Officers or agents
authorized to execute and deliver the Loan Documents and other instruments,
agreements and certificates, including Advance requests, on such Borrower’s
behalf.
(q)
With respect to each Borrower, a current certificate issued by the Indiana
Secretary of State or similar state authority, certifying that the
Borrower
is in compliance with all applicable organizational requirements of the state
of
such Borrower’s organization.
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(r)
Evidence that each Borrower is duly licensed or qualified to transact business
in all jurisdictions where the character of the property owned or leased or
the
nature of the business transacted by it makes such licensing or qualification
necessary.
(s)
A certificate of an Officer of each Borrower confirming the representations
and
warranties set forth in Article V.
(t)
An authorized individuals letter regarding those Persons authorized to request
Advances, confirm such requests, and sign collateral reports.
(u)
Certificates of the insurance required hereunder, with all hazard insurance
containing a lender’s loss payable endorsement and mortgagee endorsement in the
Lender’s favor and with all liability insurance naming the Lender as an
additional insured.
(v)
Promptly following the execution thereof by all parties, a fully executed copy
of that certain Stock Purchase Agreement made and entered into as of January
7,
2008, by and among MISCOR , as Purchaser and the Shareholders of AMP, Xxxxxxxx
Xxxxxxxxxxxx, Xxxxxx Xxxxxx, Xxxxxx Xxxx, Xxxxxxx Xxxxxxxx, and Xxxx
Xxxxx.
(w)
Payment of the fees and commissions due under Section 2.8 through the date
of
the initial Advance or Letter of Credit and expenses incurred by the Lender
through such date and required to be paid by the Borrowers under Section 8.5,
including all legal expenses incurred through the date of this
Agreement.
(x)
Evidence that after making the initial Revolving Advance, satisfying all
obligations owed to MFB Financial, satisfying all trade payables older than
sixty (60) days from invoice date, book overdrafts and closing costs,
Availability shall be not less than either (i) Two Million Dollars ($2,000,000)
if the Real Estate Advance is made simultaneously with the initial Revolving
Advance or (ii) One Million Five Hundred Thousand Dollars if Real Estate Advance
is not made simultaneously with the initial Revolving Advance.
(y)
Evidence that the Borrowers’ Book Net Worth is at least Thirty Five Million
Dollars ($35,000,000) as of the Funding Date.
(z)
A Customer Identification Information form and such other forms and verification
as Lender may need to comply with the U.S.A. Patriot Act.
(aa)
with respect to the Real Estate (i) an appraisal ordered by the Lender or its
agent of said real property and all improvements thereon, conforming to Uniform
Standards of Professional Appraisal Practice and issued by a real estate
appraiser acceptable to the Lender, reflecting values acceptable to the Lender
in its discretion, (ii) an American Land Title Association policy of title
insurance, with such endorsements as the Lender may require, issued by an
insurer in such amounts as the Lender may require, insuring the Lender’s first
priority lien on said real estate, subject only to such exceptions as the Lender
in its discretion may approve, together with such evidence relating to the
payment of liens or potential liens as the Lender may require, and (iii) an
American Land Title Association survey certified to the Lender and to the title
company that is acceptable to the Lender.
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(bb)
with respect to the Real Estate (i) a current environmental site assessment
indicating that the real property is subject to no “recognized environmental
conditions”, as that term is defined by the American Society for Testing and
Materials, in its standards for environmental due diligence, and is not in
need
of remedial action to avoid subjecting its owner to any present or future
liability or contingent liability with respect to the release of toxic or
hazardous wastes or substances.
(cc)
with respect to the Real Estate (i) a flood hazard determination form,
confirming whether or not the parcel is in a flood hazard area and whether
or
not flood insurance must be obtained, and, if the real estate is located in
a
flood hazard area, (ii) a policy of flood insurance.
(dd)
with respect to the making of the Real Estate Advance only, either (i) a copy
of
a “closure letter” from the appropriate environmental agency or authority of the
State of Alabama with regard to the removal of certain fuel storage tanks
formerly on the Real Estate, or (ii) evidence of the Borrowers’ purchase of
environmental insurance satisfactory to the Lender in its discretion with
respect to the Real Estate covering potential liabilities with regard to such
tanks and their removal; provided, however,
that
notwithstanding the Lender’s willingness to make the Real Estate Advance based
on receipt of such policy, in the event the Borrowers have not obtained the
“closure letter” referred to above by January 31, 2009, an Event of Default
shall be deemed to have occurred.
(ee)
with respect to the Real Estate, copies of management services and maintenance
contracts, fire, health and safety reports, certificates of occupancy, leases
and rent rolls, and such other information relating to the real estate and
the
improvements thereon that the Lender in its discretion deems
necessary.
(ff)
Such other documents as the Lender in its sole discretion may
require.
Section
4.2 Conditions Precedent
to All
Advances and Letters of Credit. The Lender’s obligation to
make each Advance or to issue any Letter of Credit shall be subject to the
further conditions precedent that:
(a)
the representations and warranties contained in Article V are correct on
and as of the date of such Advance or issuance of a Letter of Credit as though
made on and as of such date, except to the extent that such representations
and
warranties relate solely to an earlier date; and
(b)
no event has occurred and is continuing, or would result from such Advance
or
issuance of a Letter of Credit which constitutes a Default or an Event of
Default.
ARTICLE
V
REPRESENTATIONS
AND
WARRANTIES
Each
Borrower (as to such Borrower) represents and warrants to the Lender as
follows:
Section
5.1 Existence and Power;
Name;
Chief Executive Office; Inventory and Equipment Locations; Federal Employer
Identification Number and Organizational Identification
Number. Each Borrower is a corporation or a limited liability
company, duly organized, validly
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existing
and in good standing under the laws of the State of Indiana and each Borrower
is
duly licensed or qualified to transact business in all jurisdictions where
the
character of the property owned or leased or the nature of the business
transacted by it makes such licensing or qualification necessary. The
Borrower has all requisite power and authority to conduct its business, to
own
its properties and to execute and deliver, and to perform all of its obligations
under, the Loan Documents. During its existence, the Borrower has
done business solely under the names set forth in Schedule 5.1. The
Borrower’s chief executive office and principal place of business is located at
the address set forth in Schedule 5.1, and all of
the Borrower’s records relating to its business or the Collateral are kept at
that location. All Inventory and Equipment is located at that
location or at one of the other locations listed in Schedule 5.1. The
Borrower’s federal employer identification number and organization
identification number are correctly set forth in Schedule 3.6.
Section
5.2 Capitalization. Schedule
5.2 constitutes a
correct and complete list of all ownership interests of the Borrower and rights
to acquire ownership interests including the record holder, number of interests
and percentage interests on a fully diluted basis, and an organizational chart
showing the ownership structure of all Subsidiaries of the
Borrower.
Section
5.3 Authorization of
Borrowing;
No Conflict as to Law or Agreements. The execution, delivery
and performance by the Borrower of the Loan Documents and the borrowings from
time to time hereunder have been duly authorized by all necessary corporate
or
company action, as applicable, and do not and will not (i) require any
consent or approval of the Borrower’s Owners; (ii) require any
authorization, consent or approval by, or registration, declaration or filing
with, or notice to, any governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, or any third party, except
such
authorization, consent, approval, registration, declaration, filing or notice
as
has been obtained, accomplished or given prior to the date hereof;
(iii) violate any provision of any law, rule or regulation (including
Regulation X of the Board of Governors of the Federal Reserve System) or of
any order, writ, injunction or decree presently in effect having applicability
to the Borrower or of the Borrower’s Constituent Documents; (iv) result in
a breach of or constitute a default under any indenture or loan or credit
agreement or any other material agreement, lease or instrument to which the
Borrower is a party or by which it or its properties may be bound or affected;
or (v) result in, or require, the creation or imposition of any Lien (other
than the Security Interest) upon or with respect to any of the properties now
owned or hereafter acquired by the Borrower.
Section
5.4 Legal
Agreements. This Agreement constitutes and, upon due execution
by the Borrower, the other Loan Documents to which the Borrower is a party
will
constitute the legal, valid and binding obligations of the Borrower, enforceable
against the Borrower in accordance with their respective terms.
Section
5.5 Subsidiaries. Except
as set forth in Schedule
5.5 hereto, the Borrower has no Subsidiaries.
Section
5.6 Financial Condition;
No
Adverse Change. The Borrower has furnished to the Lender its
audited financial statements of MISCOR for its fiscal year ended December 31,
2006, and unaudited financial statements for the fiscal-year-to-date period
ended December 31, 2007, and those statements fairly present the Borrower’s
financial condition on the dates thereof
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30
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and
the
results of its operations and cash flows for the periods then ended and were
prepared in accordance with generally accepted accounting
principals. Since the date of the most recent financial statements,
there has been no change in the Borrower’s business, properties or condition
(financial or otherwise) which has had a Material Adverse Effect.
Section
5.7 Litigation. There
are no actions, suits or proceedings pending or, to the Borrower’s knowledge,
threatened against or affecting the Borrower or any of its Affiliates or the
properties of the Borrower or any of its Affiliates before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which, if determined adversely to the Borrower or any
of
its Affiliates, would have a Material Adverse Effect on the financial condition,
properties or operations of the Borrower or any of its Affiliates.
Section
5.8 Regulation U. The
Borrower is not engaged in the business of extending credit for the purpose
of
purchasing or carrying margin stock (within the meaning of Regulation U of
the
Board of Governors of the Federal Reserve System), and no part of the proceeds
of any Advance will be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying any margin
stock.
Section
5.9 Taxes. The
Borrower and its Affiliates have paid or caused to be paid to the proper
authorities when due all federal, state and local taxes required to be withheld
by each of them. The Borrower and its Affiliates have filed all
federal, state and local tax returns which to the knowledge of the Officers
of
the Borrower or any Affiliate, as the case may be, are required to be filed,
and
the Borrower and its Affiliates have paid or caused to be paid to the respective
taxing authorities all taxes as shown on said returns or on any assessment
received by any of them to the extent such taxes have become due.
Section
5.10 Titles and
Liens. The Borrower has good and absolute title to all
Collateral free and clear of all Liens other than Permitted Liens. No
financing statement naming the Borrower as debtor is on file in any office
except to perfect only Permitted Liens.
Section
5.11 Intellectual Property
Rights.
(a)
Owned
Intellectual Property. Schedule 5.11 is a complete
list of all patents, applications for patents, trademarks, applications to
register trademarks, service marks, applications to register service marks,
mask
works, trade dress and copyrights for which the Borrower is the owner of record
(the “Owned Intellectual Property”). Except as disclosed on Schedule 5.11, (i) the
Borrower owns the Owned Intellectual Property free and clear of all restrictions
(including covenants not to xxx a third party), court orders, injunctions,
decrees, writs or Liens, whether by written agreement or otherwise, (ii) no
Person other than the Borrower owns or has been granted any right in the Owned
Intellectual Property, (iii) all Owned Intellectual Property is valid,
subsisting and enforceable and (iv) the Borrower has taken all commercially
reasonable action necessary to maintain and protect the Owned Intellectual
Property.
(b)
Intentionally Left
Blank.
(c)
Intellectual
Property Rights Licensed from Others. Schedule 5.11 is a complete
list of all agreements under which the Borrower has licensed Intellectual
Property Rights from
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another
Person (“Licensed Intellectual Property”) other than readily available,
non-negotiated licenses of computer software and other intellectual property
used solely for performing accounting, word processing and similar
administrative tasks (“Off-the-shelf Software”) and a summary of any ongoing
payments the Borrower is obligated to make with respect
thereto. Except as disclosed on Schedule 5.11 and in written
agreements, copies of which have been given to the Lender, the Borrower’s
licenses to use the Licensed Intellectual Property are free and clear of all
restrictions, Liens, court orders, injunctions, decrees, or writs, whether
by
written agreement or otherwise. Except as disclosed on Schedule 5.11, the Borrower is
not obligated or under any liability whatsoever to make any payments of a
material nature by way of royalties, fees or otherwise to any owner of, licensor
of, or other claimant to, any Intellectual Property Rights.
(d)
Other
Intellectual Property Needed for Business. Except for
Off-the-shelf Software and as disclosed on Schedule 5.11, the Owned
Intellectual Property and the Licensed Intellectual Property constitute all
Intellectual Property Rights used or necessary to conduct the Borrower’s
business as it is presently conducted or as the Borrower reasonably foresees
conducting it.
(e)
Infringement. Except
as disclosed on Schedule
5.11, the Borrower has no knowledge of, and has not received any written
claim or notice alleging, any Infringement of another Person’s Intellectual
Property Rights (including any written claim that the Borrower must license
or
refrain from using the Intellectual Property Rights of any third party) nor,
to
the Borrower’s knowledge, is there any threatened claim or any reasonable basis
for any such claim.
Section
5.12 Plans. Except
as disclosed to the Lender in writing prior to the date hereof, neither the
Borrower nor any ERISA Affiliate (i) maintains or has maintained any Pension
Plan, (ii) contributes or has contributed to any Multiemployer Plan or
(iii) provides or has provided post-retirement medical or insurance benefits
with respect to employees or former employees (other than benefits required
under Section 601 of ERISA, Section 4980B of the IRC or applicable state
law). Neither the Borrower nor any ERISA Affiliate has received any
notice or has any knowledge to the effect that it is not in full compliance
with
any of the requirements of ERISA, the IRC or applicable state law with respect
to any Plan. No Reportable Event exists in connection with any
Pension Plan. Each Plan which is intended to qualify under the IRC is
so qualified, and no fact or circumstance exists which may have an adverse
effect on the Plan’s tax-qualified status. Neither the Borrower nor
any ERISA Affiliate has (i) any accumulated funding deficiency (as defined
in Section 302 of ERISA and Section 412 of the IRC) under any Plan, whether
or
not waived, (ii) any liability under Section 4201 or 4243 of ERISA for any
withdrawal, partial withdrawal, reorganization or other event under any
Multiemployer Plan or (iii) any liability or knowledge of any facts or
circumstances which could result in any liability to the Pension Benefit
Guaranty Corporation, the Internal Revenue Service, the Department of Labor
or
any participant in connection with any Plan (other than routine claims for
benefits under the Plan).
Section
5.13 Default. The
Borrower is in compliance with all provisions of all agreements, instruments,
decrees and orders to which it is a party or by which it or its property is
bound or affected, the breach or default of which could have a Material Adverse
Effect.
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Section
5.14 Environmental
Matters.
(a)
Presence
of
Hazardous Substances. Except as disclosed on Schedule 5.14, there are
not
present in, on or under the Premises any Hazardous Substances in such form
or
quantity as to create any material liability or obligation for either the
Borrower or the Lender under the common law of any jurisdiction or under any
Environmental Law, and no Hazardous Substances have ever been stored, buried,
spilled, leaked, discharged, emitted or released in, on or under the Premises
in
such a way as to create any such material liability.
(b)
Disposal
of
Hazardous Substances. Except as disclosed on Schedule 5.14, the Borrower
has not disposed of Hazardous Substances in such a manner as to create any
material liability under any Environmental Law.
(c)
Claims. Except
as disclosed on Schedule
5.14, there have not existed in the past, nor are there any threatened or
impending requests, claims, notices, investigations, demands, administrative
proceedings, hearings or litigation relating in any way to the Premises or
the
Borrower, alleging material liability under, violation of, or noncompliance
with
any Environmental Law or any license, permit or other authorization issued
pursuant thereto.
(d)
Compliance
with Environmental Law. Except as disclosed on Schedule 5.14, the Borrower’s
businesses are and have in the past always been conducted in accordance with
all
Environmental Laws and all licenses, permits and other authorizations required
pursuant to any Environmental Law and necessary for the lawful and efficient
operation of such businesses are in the Borrower’s possession and are in full
force and effect, nor has Borrower been denied insurance on grounds related
to
potential environmental liability. No permit required under any
Environmental Law is scheduled to expire within 12 months and there is no threat
that any such permit will be withdrawn, terminated, limited or materially
changed.
(e)
Lists. Except
as disclosed on Schedule
5.14, the Premises are not and never have been listed on the National
Priorities List, the Comprehensive Environmental Response, Compensation and
Liability Information System or any similar federal, state or local list,
schedule, log, inventory or database.
(f)
Environmental
Reports. The Borrower has delivered to the Lender all
environmental assessments, audits, reports, permits, licenses and other
documents describing or relating in any way to the Premises or Borrower’s
businesses.
Section
5.15 Submissions to
Lender. All financial and other information provided to the
Lender by or on behalf of the Borrower in connection with the Borrower’s request
for the credit facilities contemplated hereby (i) is true and correct in
all material respects, (ii) does not omit any material fact necessary to
make such information not misleading and, (iii) as to projections,
valuations or proforma financial statements, presents a good faith opinion
as to
such projections, valuations and proforma condition and results.
Section
5.16 Financing
Statements. The Borrower has authorized the filing of
financing statements sufficient when filed to perfect the Security Interest
and
the other security interests created in the Borrower’s Collateral by the
Security Documents. When such financing statements are filed in the
offices noted therein, the Lender will have a valid and perfected
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33
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security
interest in all Collateral which is capable of being perfected by filing
financing statements. None of the Collateral is or will become a
fixture on real estate, unless a sufficient fixture filing is in effect with
respect thereto.
Section
5.17 Rights to
Payment. Each right to payment and each instrument, document,
chattel paper and other agreement constituting or evidencing Collateral is
(or,
in the case of all future Collateral, will be when arising or issued) the valid,
genuine and legally enforceable obligation, subject to no defense, setoff or
counterclaim, of the account debtor or other obligor named therein or in the
Borrower’s records pertaining thereto as being obligated to pay such
obligation.
Section
5.18 Financial
Solvency. Both before and after giving effect to all of the
transactions contemplated in the Loan Documents, none of the
Borrowers:
(a)
Was or will be insolvent, as that term is used and defined in Section 101(32)
of
the United States Bankruptcy Code and Section 2 of the Uniform Fraudulent
Transfer Act;
(b)
Has unreasonably small capital or is engaged or about to engage in a business
or
a transaction for which any remaining assets of such Borrowers are unreasonably
small;
(c)
By executing, delivering or performing its obligations under the Loan Documents
or other documents to which it is a party or by taking any action with respect
thereto, intends to, nor believes that it will, incur debts beyond its ability
to pay them as they mature;
(d)
By executing, delivering or performing its obligations under the Loan Documents
or other documents to which it is a party or by taking any action with respect
thereto, intends to hinder, delay or defraud either its present or future
creditors; and
(e)
At this time contemplates filing a petition in bankruptcy or for an arrangement
or reorganization or similar proceeding under any law of any jurisdiction,
nor,
to the best knowledge of such Borrower, is the subject of any actual, pending or
threatened bankruptcy, insolvency or similar proceedings under any law of any
jurisdiction.
ARTICLE
VI
COVENANTS
So
long
as the Indebtedness shall remain unpaid, or the Credit Facility shall remain
outstanding, the Borrowers will comply with the following requirements, unless
the Lender shall otherwise consent in writing:
Section
6.1 Reporting
Requirements. The Borrowers will deliver, or cause to be
delivered, to the Lender (or its designated agent) each of the following, which
shall be in form and detail acceptable to the Lender:
(a)
Annual
Financial Statements. As soon as available, and in any event
within ninety (90) days after the end of each fiscal year of the Borrowers,
the Borrowers’ audited financial statements with the unqualified opinion of
independent certified public accountants
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34
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selected
by the Borrowers and acceptable to the Lender, which annual financial statements
shall include the Borrowers’ balance sheet as at the end of such fiscal year and
the related statements of the Borrowers’ income, retained earnings and cash
flows for the fiscal year then ended, prepared on a consolidating and
consolidated basis all in reasonable detail and prepared in accordance with
GAAP, together with (i) copies of all management letters prepared by such
accountants; (ii) a report signed by such accountants stating that in
making the investigations necessary for said opinion they obtained no knowledge,
except as specifically stated, of any Default or Event of Default and all
relevant facts in reasonable detail to evidence, and the computations as to,
whether or not the Borrowers are in compliance with the Financial Covenants;
and
(iii) a certificate signed by the Officer who is the Borrowers’ chief
financial officer substantially in the form of Exhibit C hereto stating that
such financial statements have been prepared in accordance with GAAP, fairly
represent the Borrowers’ financial position and the results of operations, and
whether or not such Officer has knowledge of the occurrence of any Default
or
Event of Default and, if so, stating in reasonable detail the facts with respect
thereto.
(b)
Monthly
Financial Statements. As soon as available and in any event
within thirty (30) days after the end of each month, the unaudited/internal
balance sheet and statements of income and retained earnings of the Borrowers
as
at the end of and for such month and for the year-to-date period then ended,
prepared, if the Lender so requests, on a consolidating and consolidated basis,
in reasonable detail and stating in comparative form the figures for the
corresponding date and periods in the previous year, all prepared in accordance
with GAAP, subject to year-end audit adjustments and which fairly represent
the
Borrowers’ financial position and the results of operations; and accompanied by
a certificate signed by the Officer who is the Borrowers’ chief financial
officer, substantially in the form of Exhibit C hereto stating
(i) that such financial statements have been prepared in accordance with
GAAP, subject to year-end audit adjustments, and fairly represent the Borrowers’
financial position and the results of its operations, (ii) whether or not
such Officer has knowledge of the occurrence of any Default or Event of Default
not theretofore reported and remedied and, if so, stating in reasonable detail
the facts with respect thereto, and (iii) all relevant facts in reasonable
detail to evidence, and the computations as to, whether or not the Borrowers
are
in compliance with the Financial Covenants.
(c)
Collateral
Reports. Within fifteen (15) days after the end of each month
or more frequently if the Lender so requires, agings of each Borrower’s accounts
receivable and accounts payable, a detailed inventory report, and a calculation
of each Borrower’s Accounts, Eligible Accounts, Inventory and Eligible Inventory
as at the end of such month or shorter time period.
(d)
Projections. No
later than fifteen (15) days prior to the last day of each fiscal year, the
Borrowers’ projected balance sheets, income statements, statements of cash flow
and projected Availability for each month of the succeeding fiscal year, each
in
reasonable detail. Such items will be certified by the Borrowers’
chief financial officer as being the most accurate projections available and
identical to the projections used by the Borrowers for internal planning
purposes and be delivered with a statement of underlying assumptions and such
supporting schedules and information as the Lender may in its discretion
require.
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35
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(e)
Supplemental
Reports. Weekly, or more frequently if the Lender so requires,
the Borrowers will deliver to the Lender the “daily collateral reports,”
including receivables schedules and collection reports, and if so requested
by
the Lender from time to time, copies of invoices to account debtors in excess
of
amounts determined by the Lender from time to time, and signed and dated
shipment documents and delivery receipts for goods sold to said account
debtors.
(f)
Litigation. Immediately
after commencement thereof, notice in writing of all litigation or of any
adversarial proceedings before a governmental or regulatory agency affecting
the
Borrower (i) that is of the type described in Section 5.14(c) or
(ii) which seek a monetary recovery against the Borrower in excess of One
Hundred Thousand Dollars ($100,000).
(g)
Defaults. When
any Officer of the Borrowers becomes aware of the probable occurrence of any
Default or Event of Default, and no later than three (3) days after such Officer
becomes aware of such Default or Event of Default, notice of such occurrence,
together with a detailed statement by a responsible Officer of the Borrowers
of
the steps being taken by the Borrowers to cure the effect thereof.
(h)
Plans. As
soon as possible, and in any event within thirty (30) days after any
Borrower knows or has reason to know that any Reportable Event with respect
to
any Pension Plan has occurred, a statement signed by the Officer who is the
Borrowers’ chief financial officer setting forth details as to such Reportable
Event and the action which the Borrowers propose to take with respect thereto,
together with a copy of the notice of such Reportable Event to the Pension
Benefit Guaranty Corporation. As soon as possible, and in any event
within ten (10) days after any Borrower fails to make any quarterly
contribution required with respect to any Pension Plan under Section 412(m)
of
the IRC, the Borrowers will deliver to the Lender a statement signed by the
Officer who is the Borrowers’ chief financial officer setting forth details as
to such failure and the action which the Borrowers propose to take with respect
thereto, together with a copy of any notice of such failure required to be
provided to the Pension Benefit Guaranty Corporation. As soon as
possible, and in any event within ten (10) days after any Borrower knows or
has
reason to know that it has or is reasonably expected to have any liability
under
Sections 4201 or 4243 of ERISA for any withdrawal, partial withdrawal,
reorganization or other event under any Multiemployer Plan, the Borrowers will
deliver to the Lender a statement of the Borrowers’ chief financial officer
setting forth details as to such liability and the action which the Borrowers
propose to take with respect thereto.
(i)
Disputes. Promptly
upon knowledge thereof, notice of (i) any disputes or claims by any
Borrower’s customers either made outside the ordinary course of business, in
each case exceeding Twenty Thousand Dollars ($20,000) individually, or exceeding
Thirty Thousand Dollars ($30,000) in the aggregate during any fiscal year;
(ii) credit memos; and (iii) any goods returned to or recovered by a
Borrower.
(j)
Officers
and Directors. Promptly upon knowledge thereof, notice any
change in the persons constituting the Borrowers’ Officers and
Directors.
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(k)
Collateral. Promptly
upon knowledge thereof, notice of any loss of or material damage to any
Collateral or of any substantial adverse change in any Collateral or the
prospect of payment thereof.
(l)
Commercial
Tort Claims. Promptly upon knowledge thereof, notice of any
commercial tort claims it may bring against any Person, including the name
and
address of each defendant, a summary of the facts, an estimate of the Borrowers’
damages, copies of any complaint or demand letter submitted by a Borrower,
and
such other information as the Lender may request.
(m)
Intellectual
Property.
(i)
Thirty (30) days prior written notice of its intent to acquire material
Intellectual Property Rights; except for transfers permitted under Section
6.17,
the Borrowers will give the Lender thirty (30) days prior written notice of
its
intent to dispose of material Intellectual Property Rights and upon request
shall provide the Lender with copies of all proposed documents and agreements
concerning such rights.
(ii)
Promptly upon knowledge thereof, notice of (A) any Infringement of its
Intellectual Property Rights by others, (B) claims that a Borrower is
Infringing another Person’s Intellectual Property Rights and (C) any
threatened cancellation, termination or material limitation of its Intellectual
Property Rights.
(iii)
Promptly upon receipt, copies of all registrations and filings with respect
to
its Intellectual Property Rights.
(n)
Reports
to
Owners. Promptly upon their distribution, copies of all
financial statements, reports and proxy statements which the Borrowers shall
have sent to their Owners.
(o)
SEC
Filings. Promptly after the sending or filing thereof, copies
of all regular and periodic reports which the Borrowers shall file with the
Securities and Exchange Commission or any national securities
exchange.
(p)
Tax Returns
of Borrowers. As soon as possible, and in any event no later
than five (5) days after they are due to be filed, copies of the state and
federal income tax returns and all schedules thereto of Borrowers.
(r)
Violations
of Law. Promptly upon knowledge thereof, notice of any
Borrower’s violation of any law, rule or regulation, the non-compliance with
which could have a Material Adverse Effect on the Borrowers.
(s)
Other
Reports. From time to time, with reasonable promptness, any
and all receivables schedules, inventory reports, collection reports, deposit
records, equipment schedules, copies of invoices to account debtors, shipment
documents and delivery receipts for goods sold, and such other material,
reports, records or information as the Lender may request.
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Section
6.2 Financial
Covenants.
(a)
Minimum
Book Net Worth. The Borrower
will
maintain, as of each date described below during the term hereof, its Book
Net
Worth at an amount not less than the amount set forth below opposite such
date:
|
Date
|
Minimum
Book Net Worth
|
|
December
31, 2007
|
Book
Net Worth as of prior December 31 minus $2,300,000
|
|
December
31, 2008, and each December 31 thereafter
|
Book
Net Worth as of prior December 31 plus
$1,000,000
|
(b)
Minimum
Net
Income. The Borrower will achieve during each fiscal
year-to-date period ending during the periods described below, Net Income of
not
less than the amount set forth opposite such period (numbers appearing between
“< >” are negative):
|
Period
|
Minimum
Net Income
|
|
Fiscal
year ending December 31, 2007
|
<$2,300,000>
|
|
Fiscal
year ending December 31, 2008, and each fiscal year
thereafter
|
$1,000,000
|
(c)
Capital
Expenditures. The Borrowers will not incur or contract to
incur Capital Expenditures of more than One Million Five Hundred Thousand
Dollars ($1,500,000) in the aggregate during any fiscal year during the term
hereof, with no more than Five Hundred Thousand Dollars ($500,000) to be paid
from the Borrowers’ working capital in any fiscal year.
(d)
Debt
Service Coverage Ratio. The Borrowers will maintain a Debt
Service Coverage ratio of not less than (i) 1.0 to 1.0 as of the end of each
fiscal quarter for the fiscal year-to-date period then ended, (ii) 1.1 to 1.0
as
of each fiscal year end for the fiscal year then ended.
Section
6.3 Permitted Liens;
Financing
Statements.
(a)
No Borrower will create, incur or suffer to exist any Lien upon or of any of
its
assets, now owned or hereafter acquired, to secure any indebtedness; excluding, however,
from the
operation of the foregoing, the following (each a “Permitted Lien”;
collectively, “Permitted Liens”):
(i)
In the case of any Borrower’s property which is not Collateral, covenants,
restrictions, rights, easements and minor irregularities in title which do
not
materially interfere with such Borrower’s business or operations as presently
conducted;
(ii)
Liens in existence on the date hereof and listed in Schedule 6.3 hereto, securing
indebtedness for borrowed money permitted under Section 6.4;
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38
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(iii)
The Security Interest and Liens created by the Security Documents;
and
(iv)
Purchase money Liens relating to the acquisition of machinery and equipment
of
such Borrower not exceeding the lesser of cost or fair market value thereof
and
so long as no Default Period is then in existence and none would exist
immediately after such acquisition.
(b)
No Borrower will amend any financing statements in favor of the Lender except
as
permitted by law.
Section
6.4 Indebtedness. No
Borrower will incur, create, assume or permit to exist any indebtedness or
liability on account of deposits or advances or any indebtedness for borrowed
money or letters of credit issued on such Borrower’s behalf, or any other
indebtedness or liability evidenced by notes, bonds, debentures or similar
obligations, except:
(a)
Any existing or future Indebtedness or any other obligations of such Borrower
to
the Lender;
(b)
Any indebtedness of such Borrower in existence on the date hereof and listed
in
Schedule 6.4 hereto;
(c)
Any indebtedness relating to Permitted Liens; and
(d)
Any indebtedness incurred in connection with an acquisition by such Borrower
in
accordance with the provisions of Section 6.6(e).
Section
6.5 Guaranties. No
Borrower will assume, guarantee, endorse or otherwise become directly or
contingently liable in connection with any obligations of any other Person,
except:
(a)
The endorsement of negotiable instruments by such Borrower for deposit or
collection or similar transactions in the ordinary course of business;
and
(b)
Guaranties, endorsements and other direct or contingent liabilities in
connection with the obligations of other Persons, in existence on the date
hereof and listed in Schedule
6.4 hereto.
Section
6.6 Investments and
Subsidiaries. No Borrower will make or permit to exist any
loans or advances to, or make any investment or acquire any interest whatsoever
in, any other Person or Affiliate, including any partnership or joint venture,
nor purchase or hold beneficially any stock or other securities or evidence
of
indebtedness of any other Person or Affiliate, except:
(a)
Investments in direct obligations of the United States of America or any agency
or instrumentality thereof whose obligations constitute full faith and credit
obligations of the United States of America having a maturity of one year or
less, commercial paper issued by U.S. corporations rated “A-1” or “A-2” by
Standard & Poor’s Ratings Services or “P-1” or “P-2” by Xxxxx’x
Investors Service or certificates of deposit or bankers’ acceptances having a
maturity of
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39
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one
year
or less issued by members of the Federal Reserve System having deposits in
excess of One Hundred Million Dollars ($100,000,000) (which certificates of
deposit or bankers’ acceptances are fully insured by the Federal Deposit
Insurance Corporation);
(b)
Travel advances or loans to such Borrower’s Officers and employees not exceeding
at any one time an aggregate of Fifty Thousand Dollars ($50,000);
(c)
Prepaid rent not exceeding one month or security deposits;
(d)
Current investments in the Subsidiaries in existence on the date hereof and
listed in Schedule 5.5
hereto; and
(e)
Acquisitions of all or substantially all of the equity interests or assets
of
another Person or its business in compliance with the limitations set forth
in
Section 6.20, provided the
financing for such acquisitions is provided by third parties on either an
unsecured basis or secured only by the assets of the Person or business being
acquired, and no funds of any Borrower (other than the proceeds of such third
party financing) are used in any acquisition or for the funding of any such
new
subsidiary’s or business unit’s working capital needs without the prior written
consent of the Lender.
Section
6.7 Dividends and
Distributions. MISCOR will not declare or pay any dividends
(other than dividends payable solely in stock of MISCOR) on any class of its
stock or make any payment on account of the purchase, redemption or other
retirement of any shares of such stock or make any distribution in respect
thereof, either directly or indirectly.
Section
6.8 Intentionally
Left Blank.
Section
6.9 Books
and Records; Collateral
Examination,
Inspection and Appraisals.
(a)
The Borrowers will keep accurate books of record and account for itself
pertaining to the Collateral and pertaining to the Borrowers’ business and
financial condition and such other matters as the Lender may from time to time
request in which true and complete entries will be made in accordance with
GAAP
and, upon the Lender’s request, will permit any officer, employee, attorney,
accountant or other agent of the Lender to audit, review, make extracts from
or
copy any and all company and financial books and records of the Borrowers at
all
times during ordinary business hours, to send and discuss with account debtors
and other obligors requests for verification of amounts owed to the Borrowers,
and to discuss the Borrowers’ affairs with any of its Directors, Officers,
employees or agents.
(b)
The Borrowers hereby irrevocably authorize all accountants and third parties
to
disclose and deliver to the Lender or its designated agent, at the Borrowers’
expense, all financial information, books and records, work papers, management
reports and other information in their possession regarding the
Borrowers.
(c)
The Borrowers will permit the Lender or its employees, accountants, attorneys
or
agents, to examine and inspect any Collateral or any other property of the
Borrowers at any time during ordinary business hours.
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(d)
The Lender may also, from time to time so long as no Default Period then exists,
no more than one time each calendar year, obtain at the Borrowers’ expense an
appraisal of the Collateral and of the Real Estate by an appraiser
acceptable to the Lender in its sole discretion. Unless an Event of
Default has occurred and is continuing, in which event the Lender may obtain
such appraisals as it deems necessary, new appraisals are typically obtained
prior to the extension of the maturity date of the Credit Facility, prior to
advancing any additional funds based on the value of the appraised assets and
to
ascertain the impact of changes in market conditions; provided; however,
that the
foregoing list of possible reasons for obtaining an appraisal shall not limit
the Lender’s rights to obtain such appraisals as are provided for
herein.
Section
6.10 Account
Verification.
(a)
The Lender or its agent may at any time and from time to time send or require
the Borrowers to send requests for verification of accounts or notices of
assignment to account debtors and other obligors. The Lender or its agent may
also at any time and from time to time telephone account debtors and other
obligors to verify accounts.
(b)
The Borrowers shall pay when due each account payable due to a Person holding
a
Permitted Lien (as a result of such payable) on any Collateral.
Section
6.11 Compliance with
Laws.
(a)
The Borrowers shall (i) comply with the requirements of applicable laws and
regulations, the non-compliance with which would materially and adversely affect
its business or its financial condition and (ii) use and keep the
Collateral, and require that others use and keep the Collateral, only for lawful
purposes, without violation of any federal, state or local law, statute or
ordinance.
(b)
Without limiting the foregoing undertakings, each Borrower specifically agrees
that it will comply with all applicable Environmental Laws and obtain and comply
with all permits, licenses and similar approvals required by any Environmental
Laws, and will not generate, use, transport, treat, store or dispose of any
Hazardous Substances in such a manner as to create any material liability or
obligation under the common law of any jurisdiction or any Environmental
Law.
(c)
The Borrowers shall (i) ensure that no Owner shall be listed on the
Specially Designated Nationals and Blocked Person List or other similar lists
maintained by the Office of Foreign Assets Control ("OFAC"), the Department
of
the Treasury or included in any Executive Orders, (ii) not use or permit
the use of the proceeds of the Credit Facility or any other financial
accommodation from Lender to violate any of the foreign asset control
regulations of OFAC or other applicable law, (iii) comply with all
applicable Bank Secrecy Act laws and regulations, as amended from time to time,
and (iv) otherwise comply with the USA Patriot Act as required by federal
law and the Lender's policies and practices.
Section
6.12 Payment of Taxes
and Other
Claims. The Borrowers will pay or discharge, when due,
(a) all taxes, assessments and governmental charges levied or imposed upon
it or upon its income or profits, upon any properties belonging to it (including
the Collateral) or upon or against the creation, perfection or continuance
of
the Security Interest,
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prior
to
the date on which penalties attach thereto, (b) all federal, state and
local taxes required to be withheld by it, and (c) all lawful claims for
labor, materials and supplies which, if unpaid, might by law become a Lien
upon
any properties of a Borrower; provided, that the Borrowers shall not be required
to pay any such tax, assessment, charge or claim whose amount, applicability
or
validity is being contested in good faith by appropriate proceedings and for
which proper reserves have been made.
Section
6.13 Maintenance of
Properties.
(a)
The Borrowers will keep and maintain the Collateral and all of their respective
other properties necessary or useful in its business in good condition, repair
and working order (normal wear and tear excepted) and will from time to time
replace or repair any worn, defective or broken parts; provided, however,
that nothing
in this covenant shall prevent the Borrowers from discontinuing the operation
and maintenance of any of their respective properties if such discontinuance
is,
in the Borrowers’ judgment, desirable in the conduct of the Borrowers’ business
and not disadvantageous in any material respect to the Lender. The
Borrowers will take all commercially reasonable steps necessary to protect
and
maintain their respective Intellectual Property Rights.
(b)
The Borrowers will defend the Collateral against all Liens, claims or demands
of
all Persons (other than the Lender) claiming the Collateral or any interest
therein. The Borrowers will keep all Collateral free and clear of all Liens
except Permitted Liens. The Borrowers will take all commercially reasonable
steps necessary to prosecute any Person Infringing their respective Intellectual
Property Rights and to defend itself against any Person accusing any of them
of
Infringing any Person’s Intellectual Property Rights.
Section
6.14 Insurance. The
Borrowers will obtain and at all times maintain insurance with insurers
acceptable to the Lender, in such amounts, on such terms (including any
deductibles) and against such risks as may from time to time be required by
the
Lender, but in all events in such amounts and against such risks as is usually
carried by companies engaged in similar business and owning similar properties
in the same general areas in which the Borrowers operate. Without
limiting the generality of the foregoing, the Borrowers will at all times
maintain business interruption insurance including coverage for force majeure
and keep all tangible Collateral insured against risks of fire (including
so-called extended coverage), theft, collision (for Collateral consisting of
motor vehicles) and such other risks and in such amounts as the Lender may
reasonably request, with any loss payable to the Lender to the extent of its
interest, and all policies of such insurance shall contain a lender’s loss
payable endorsement for the Lender’s benefit.
Section
6.15 Preservation of
Existence. Each Borrower will preserve and maintain its
existence and all of its rights, privileges and franchises necessary or
desirable in the normal conduct of its business and shall conduct its business
in an orderly, efficient and regular manner.
Section
6.16 Delivery of Instruments,
etc. Upon request by the Lender, the Borrowers will promptly
deliver to the Lender in pledge all instruments, documents and chattel paper
constituting Collateral, duly endorsed or assigned by the applicable
Borrower.
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Section
6.17 Sale
or Transfer of Assets; Suspension of Business Operations. No
Borrower will sell, lease, assign, transfer or otherwise dispose of (i) the
stock of any Subsidiary, (ii) all or a substantial part of its assets, or
(iii) any Collateral or any interest therein (whether in one transaction or
in a series of transactions) to any other Person other than (a) the sale of
Inventory in the ordinary course of business and (b) the sale of Equipment
which
is either obsolete or no longer used in such Borrower’s business or which is to
be replaced. No Borrower will liquidate, dissolve or suspend business
operations. No Borrower will transfer any part of its ownership
interest in any Intellectual Property Rights nor permit any agreement under
which it has licensed Intellectual Property to lapse, except that a Borrower
may
transfer such rights or permit such agreements to lapse if it shall have
reasonably determined that the applicable Intellectual Property Rights are
no
longer useful in its business. If a Borrower transfers any
Intellectual Property Rights for value, such Borrower will pay over the proceeds
to the Lender for application to the Indebtedness. No Borrower will
license any other Person to use any of such Borrower’s Intellectual Property
Rights, except that each Borrower may grant licenses in the ordinary course
of
its business in connection with sales of Inventory or provision of services
to
its customers.
Section
6.18 Consolidation and
Merger;
Asset Acquisitions. No Borrower will consolidate with or merge
into any Person, or permit any other Person to merge into it, or acquire (in
a
transaction analogous in purpose or effect to a consolidation or merger) all
or
substantially all the assets of any other Person, other than in accordance
with
the provisions of Section 6.6(e).
Section
6.19 Sale
and Leaseback. No Borrower will enter into any arrangement,
directly or indirectly, with any other Person whereby such Borrower shall sell
or transfer any real or personal property, whether now owned or hereafter
acquired, and then or thereafter rent or lease as lessee such property or any
part thereof or any other property which such Borrower intends to use for
substantially the same purpose or purposes as the property being sold or
transferred.
Section
6.20 Restrictions on
Nature of
Business. The Borrowers provide mechanical and electrical
solutions and intend to continue to pursue the acquisition of entities in these
markets and no Borrower will engage in any line of business materially different
from that presently engaged in by the Borrowers nor purchase, lease or otherwise
acquire assets not related to such business.
Section
6.21 Accounting. No
Borrower will adopt any material change in accounting principles other than
as
required by GAAP. No Borrower will adopt, permit or consent to any
change in its fiscal year.
Section
6.22 Discounts,
etc. After notice from the Lender, no Borrower will grant any
discount, credit or allowance to any customer of such Borrower or accept any
return of goods sold. No Borrower will at any time modify, amend,
subordinate, cancel or terminate the obligation of any account debtor or other
obligor of such Borrower.
Section
6.23 Plans. Unless
disclosed to the Lender in writing pursuant to Section 5.12, neither any
Borrower nor any ERISA Affiliate will (i) adopt, create, assume or become a
party to any Pension Plan, (ii) incur any obligations to contribute to any
Multiemployer Plan, (iii) incur
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any
obligation to provide post-retirement medical or insurance benefits with respect
to employees or former employees (other than benefits required by law) or (iv)
amend any Plan in a manner that would materially increase its funding
obligations.
Section
6.24 Place
of Business; Name. No Borrower will transfer its chief
executive office or principal place of business, or move, relocate, close or
sell any business location. No Borrower will permit any tangible
Collateral or any records pertaining to the Collateral to be located in any
state or area in which, in the event of such location, a financing statement
covering such Collateral would be required to be, but has not in fact been,
filed in order to perfect the Security Interest. No Borrower will
change its name or jurisdiction of organization.
Section
6.25 Constituent
Documents. No Borrower will amend its Constituent
Documents.
Section
6.26 Performance by the
Lender. If a Borrower at any time fails to perform or observe
any of the foregoing covenants contained in this Article VI or elsewhere
herein, and if such failure shall continue for a period of ten (10) calendar
days after the Lender gives the Borrowers written notice thereof (or in the
case
of the agreements contained in Section 6.12 and Section 6.14, immediately upon
the occurrence of such failure, without notice or lapse of time), the Lender
may, but need not, perform or observe such covenant on behalf and in the name,
place and stead of such Borrower (or, at the Lender’s option, in the Lender’s
name) and may, but need not, take any and all other actions which the Lender
may
reasonably deem necessary to cure or correct such failure (including the payment
of taxes, the satisfaction of Liens, the performance of obligations owed to
account debtors or other obligors, the procurement and maintenance of insurance,
the execution of assignments, security agreements and financing statements,
and
the endorsement of instruments); and the Borrowers shall thereupon pay to the
Lender on demand the amount of all monies expended and all costs and expenses
(including reasonable attorneys’ fees and legal expenses) incurred by the Lender
in connection with or as a result of the performance or observance of such
agreements or the taking of such action by the Lender, together with interest
thereon from the date expended or incurred at the Default Rate. To
facilitate the Lender’s performance or observance of such covenants of the
Borrowers, the Borrowers hereby irrevocably appoint the Lender, or the Lender’s
delegate, acting alone, as each Borrower’s attorney in fact (which appointment
is coupled with an interest) with the right (but not the duty) from time to
time
to create, prepare, complete, execute, deliver, endorse or file in the name
and
on behalf of the Borrowers any and all instruments, documents, assignments,
security agreements, financing statements, applications for insurance and other
agreements and writings required to be obtained, executed, delivered or endorsed
by the Borrowers hereunder.
ARTICLE
VII
EVENTS
OF DEFAULT, RIGHTS
AND REMEDIES
Section
7.1 Events
of Default. “Event of Default”, wherever used herein, means
any one of the following events:
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(a)
Default in the payment of the Revolving Note, the Real Estate Note, any
Obligation of Reimbursement, or any default with respect to any other
Indebtedness due from Borrowers to Lender as such Indebtedness becomes due
and
payable;
(b)
Default in the performance, or breach, of any covenant or agreement of the
Borrowers contained in this Agreement; provided, however,
that in the
case of a default in the performance under any of Sections 6.1(a), (b), (d)
or
(p) for failure to make a timely delivery thereunder, such a default shall
not
constitute an Event of Default if the subject deliveries are made within five
(5) days of the Borrowers’ receipt of notice from the Lender of such
default.
(c)
An Overadvance arises as the result of any reduction in the Borrowing Base,
or
arises in any manner on terms not otherwise approved in advance by the Lender
in
writing;
(d)
A Change of Control shall occur;
(e)
Any Borrower or any Guarantor shall be or become insolvent, or admit in writing
its or his inability to pay its or his debts as they mature, or make an
assignment for the benefit of creditors; or any Borrower or any Guarantor shall
apply for or consent to the appointment of any receiver, trustee, or similar
officer for it or him or for all or any substantial part of its or his property;
or such receiver, trustee or similar officer shall be appointed without the
application or consent of such Borrower or such Guarantor, as the case may
be;
or any Borrower or any Guarantor shall institute (by petition, application,
answer, consent or otherwise) any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, dissolution, liquidation or similar
proceeding relating to it or him under the laws of any jurisdiction; or any
such
proceeding shall be instituted (by petition, application or otherwise) against
such Borrower or such Guarantor; or any judgment, writ, warrant of attachment
or
execution or similar process shall be issued or levied against a substantial
part of the property of any Borrower or any Guarantor;
(f)
A petition shall be filed by or against any Borrower or any Guarantor under
the
United States Bankruptcy Code or the laws of any other jurisdiction naming
such
Borrower or such Guarantor as debtor;
(g)
Any representation or warranty made by any Borrower in this Agreement, by any
Guarantor in any guaranty delivered to the Lender, or by any Borrower (or any
of
its Officers) or any Guarantor in any agreement, certificate, instrument or
financial statement or other statement contemplated by or made or delivered
pursuant to or in connection with this Agreement or any such guaranty shall
be
incorrect in any material respect;
(h)
The rendering against any Borrower of an arbitration award, final judgment,
decree or order for the payment of money in excess of One Hundred Thousand
Dollars ($100,000) and the continuance of such arbitration award, judgment,
decree or order unsatisfied and in effect for any period of thirty
(30) consecutive days without a stay of execution;
(i)
A default under any bond, debenture, note or other evidence of material
indebtedness of any Borrower owed to any Person other than the Lender, or under
any indenture or other instrument under which any such evidence of indebtedness
has been issued or by which it is governed, or under any material lease or
other
contract, and the expiration of the applicable
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period
of
grace, if any, specified in such evidence of indebtedness, indenture, other
instrument, lease or contract;
(j)
Any Reportable Event, which the Lender determines in good faith might constitute
grounds for the termination of any Pension Plan or for the appointment by
the
appropriate United States District Court of a trustee to administer any Pension
Plan, shall have occurred and be continuing thirty (30) days after written
notice to such effect shall have been given to the Borrowers by the Lender;
or a
trustee shall have been appointed by an appropriate United States District
Court
to administer any Pension Plan; or the Pension Benefit Guaranty Corporation
shall have instituted proceedings to terminate any Pension Plan or to appoint
a
trustee to administer any Pension Plan; or any Borrower or any ERISA Affiliate
shall have filed for a distress termination of any Pension Plan under Title
IV
of ERISA; or any Borrower or any ERISA Affiliate shall have failed to make
any
quarterly contribution required with respect to any Pension Plan under Section
412(m) of the IRC, which the Lender determines in good faith may by itself,
or
in combination with any such failures that the Lender may determine are likely
to occur in the future, result in the imposition of a Lien on the Borrowers’
assets in favor of the Pension Plan; or any withdrawal, partial withdrawal,
reorganization or other event occurs with respect to a Multiemployer Plan
which
results or could reasonably be expected to result in a material liability
of the
Borrowers to the Multiemployer Plan under Title IV of ERISA;
(k)
An event of default shall occur under any Security Document;
(l)
Default in the payment of any amount owed by the Borrowers to the Lender
other
than any Indebtedness arising hereunder;
(m)
Any Guarantor shall repudiate, purport to revoke or fail to perform any
obligation under such Guaranty in favor of the Lender, any individual Guarantor
shall die or any other Guarantor shall cease to exist;
(n)
Any Borrower shall take or participate in any action which would be prohibited
under the provisions of any Subordination Agreement or make any payment with
respect to indebtedness that has been subordinated pursuant to any Subordination
Agreement;
(o)
The Lender believes in good faith that the prospect of payment in full of
any
part of the Indebtedness, or that full performance by the Borrowers under
the
Loan Documents, is impaired, or that there has occurred any material adverse
change in the business or financial condition of the Borrowers;
(p)
There has occurred any breach, default or event of default by, or attributable
to, any Affiliate under any agreement between the Affiliate and the Lender;
or
(q)
The indictment of any Director, Officer, Guarantor, or any Owner of at least
twenty percent (20%) of the issued and outstanding common stock of MISCOR
for a
felony offence under state or federal law.
Section
7.2 Rights
and Remedies. During any Default Period, the Lender may
exercise any or all of the following rights and remedies:
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(a)
The Lender may, by notice to the Borrowers, declare the Commitment to be
terminated, whereupon the same shall forthwith terminate;
(b)
The Lender may, by notice to the Borrowers, declare the Indebtedness to be
forthwith due and payable, whereupon all Indebtedness shall become and be
forthwith due and payable, without presentment, notice of dishonor, protest
or
further notice of any kind, all of which the Borrowers hereby expressly
waive;
(c)
The Lender may, without notice to the Borrowers and without further action,
apply any and all money owing by the Lender to any Borrower to the payment
of
the Indebtedness;
(d)
The Lender may exercise and enforce any and all rights and remedies available
upon default to a secured party under the UCC, including the right to take
possession of Collateral, or any evidence thereof, proceeding without judicial
process or by judicial process (without a prior hearing or notice thereof,
which
the Borrowers hereby expressly waive) and the right to sell, lease or otherwise
dispose of any or all of the Collateral (with or without giving any warranties
as to the Collateral, title to the Collateral or similar warranties), and,
in
connection therewith, the Borrowers will on demand assemble the Collateral
and
make it available to the Lender at a place to be designated by the Lender which
is reasonably convenient to the parties;
(e)
The Lender may make demand upon the Borrowers and, forthwith upon such demand,
the Borrowers will pay to the Lender in immediately available funds for deposit
in the Special Account pursuant to Section 2.4 an amount equal to the aggregate
maximum amount available to be drawn under all Letters of Credit then
outstanding, assuming compliance with all conditions for drawing
thereunder;
(f)
The Lender may exercise and enforce its rights and remedies under the Loan
Documents;
(g)
The Lender may without regard to any waste, adequacy of the security or solvency
of any Borrower, apply for the appointment of a receiver of the Collateral,
to
which appointment the Borrowers hereby consent, whether or not foreclosure
proceedings have been commenced under the Security Documents and whether or
not
a foreclosure sale has occurred; and
(h)
The Lender may exercise any other rights and remedies available to it by law
or
agreement.
Notwithstanding
the foregoing, upon the occurrence of an Event of Default described in Section
7.1(e) or (f), the Indebtedness shall be immediately due and payable
automatically without presentment, demand, protest or notice of any
kind. If the Lender sells any of the Collateral on credit, the
Indebtedness will be reduced only to the extent of payments actually
received. If the purchaser fails to pay for the Collateral, the
Lender may resell the Collateral and shall apply any proceeds actually received
to the Indebtedness.
Section
7.3 Certain
Notices. If notice to a Borrower of any intended disposition
of Collateral or any other intended action is required by law in a particular
instance, such notice
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shall
be
deemed commercially reasonable if given (in the manner specified in Section
8.3)
at least ten (10) calendar days before the date of intended disposition or
other
action.
ARTICLE
VIII
MISCELLANEOUS
Section
8.1 No
Waiver; Cumulative Remedies; Compliance with Laws. No failure
or delay by the Lender in exercising any right, power or remedy under the Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy under
the
Loan Documents. The remedies provided in the Loan Documents are
cumulative and not exclusive of any remedies provided by law. The
Lender may comply with any applicable state or federal law requirements in
connection with a disposition of the Collateral and such compliance will not
be
considered adversely to affect the commercial reasonableness of any sale of
the
Collateral.
Section
8.2 Amendments;
Etc. No amendment, modification, termination or waiver of any
provision of any Loan Document or consent to any departure by the Borrowers
therefrom or any release of a Security Interest shall be effective unless the
same shall be in writing and signed by the Lender, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. No notice to or demand on the Borrowers in
any case shall entitle the Borrowers to any other or further notice or demand
in
similar or other circumstances.
Section
8.3 Notices; Communication
of
Confidential Information; Requests for Accounting. Except as
otherwise expressly provided herein, all notices, requests, demands and other
communications provided for under the Loan Documents shall be in writing and
shall be (a) personally delivered, (b) sent by first class United
States mail, (c) sent by overnight courier of national reputation,
(d) transmitted by telecopy, or (e) sent as electronic mail, in each case
delivered or sent to the party to whom notice is being given to the business
address, telecopier number, or e-mail address set forth below next to its
signature or, as to each party, at such other business address, telecopier
number, or e-mail address as it may hereafter designate in writing to the other
party pursuant to the terms of this Section. All such notices,
requests, demands and other communications shall be deemed to be an
authenticated record communicated or given on (a) the date received if
personally delivered, (b) when deposited in the mail if delivered by mail,
(c) the date delivered to the courier if delivered by overnight courier, or
(d) the date of transmission if sent by telecopy or by e-mail, except that
notices or requests delivered to the Lender pursuant to any of the provisions
of
Article II shall not be effective until received by the
Lender. All notices, financial information, or other business records
sent by either party to this Agreement may be transmitted, sent, or otherwise
communicated via such medium as the sending party may deem appropriate and
commercially reasonable; provided, however,
that the
risk that the confidentiality or privacy of such notices, financial information,
or other business records sent by either party may be compromised shall be
borne
exclusively by the Borrowers. All requests for an accounting under
Section 9-210 of the UCC (i) shall be made in a writing signed by a Person
authorized under Section 2.2(b), (ii) shall be personally delivered, sent
by registered or certified mail, return receipt requested, or by overnight
courier of national
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reputation,
(iii) shall be deemed to be sent when received by the Lender and (iv) shall
otherwise comply with the requirements of Section 9-210 of the
UCC. The Borrowers request that the Lender respond to all such
requests which on their face appear to come from an authorized individual and
releases the Lender from any liability for so responding. The
Borrowers shall pay the Lender the maximum amount allowed by law for responding
to such requests.
Section
8.4 Further
Documents. The Borrowers will from time to time execute,
deliver, endorse and authorize the filing of any and all instruments, documents,
conveyances, assignments, security agreements, financing statements, control
agreements and other agreements that the Lender may reasonably request in order
to secure, protect, perfect or enforce the Security Interest or the Lender’s
rights under the Loan Documents (but any failure to request or assure that
the
Borrowers executes, delivers, endorses or authorizes the filing of any such
item
shall not affect or impair the validity, sufficiency or enforceability of the
Loan Documents and the Security Interest, regardless of whether any such item
was or was not executed, delivered or endorsed in a similar context or on a
prior occasion).
Section
8.5 Costs
and Expenses. The Borrowers shall pay on demand all costs and
expenses, including reasonable attorneys’ fees, incurred by the Lender in
connection with the Indebtedness, this Agreement, the Loan Documents, any Letter
of Credit and any other document or agreement related hereto or thereto, and
the
transactions contemplated hereby, including all such costs, expenses and fees
incurred in connection with the negotiation, preparation, execution, amendment,
administration, performance, collection and enforcement of the Indebtedness
and
all such documents and agreements and the creation, perfection, protection,
satisfaction, foreclosure or enforcement of the Security Interest.
Section
8.6 Indemnity. In
addition to the payment of expenses pursuant to Section 8.5, the Borrowers
shall
indemnify, defend and hold harmless the Lender, and any of its participants,
parent corporations, subsidiary corporations, affiliated corporations, successor
corporations, and all present and future officers, directors, employees,
attorneys and agents of the foregoing (the “Indemnitees”) from and against any
of the following (collectively, “Indemnified Liabilities”):
(i)
Any and all transfer taxes, documentary taxes, assessments or charges made
by
any governmental authority by reason of the execution and delivery of the Loan
Documents or the making of the Advances;
(ii)
Any claims, loss or damage to which any Indemnitee may be subjected if any
representation or warranty contained in Section 5.14 proves to be incorrect
in
any respect or as a result of any violation of the covenant contained in Section
6.11(b); and
(iii)
Any and all other liabilities, losses, damages, penalties, judgments, suits,
claims, costs and expenses of any kind or nature whatsoever (including the
reasonable fees and disbursements of counsel) in connection with the foregoing
and any other investigative, administrative or judicial proceedings, whether
or
not such Indemnitee shall be designated a party thereto, which may be imposed
on, incurred by or asserted against any such Indemnitee, in any manner related
to or arising out of or in connection with the making of the Advances and the
Loan Documents or the use or intended use of
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the
proceeds of the Advances. Notwithstanding the foregoing, the Borrowers shall
not
be obligated to indemnify any Indemnitee for any Indemnified Liability caused
by
the willful misconduct of such Indemnitee.
If
any
investigative, judicial or administrative proceeding arising from any of the
foregoing is brought against any Indemnitee, upon such Indemnitee’s request, the
Borrowers, or counsel designated by the Borrowers and satisfactory to the
Indemnitee, will resist and defend such action, suit or proceeding to the extent
and in the manner directed by the Indemnitee, at the Borrowers’ sole costs and
expense. Each Indemnitee will use its best efforts to cooperate in
the defense of any such action, suit or proceeding. If the foregoing
undertaking to indemnify, defend and hold harmless may be held to be
unenforceable because it violates any law or public policy, the Borrowers shall
nevertheless make the maximum contribution to the payment and satisfaction
of
each of the Indemnified Liabilities which is permissible under applicable
law. The Borrowers’ obligations under this Section 8.6 shall survive
the termination of this Agreement and the discharge of the Borrowers’ other
obligations hereunder.
Section
8.7 Participants. The
Lender and its participants, if any, are not partners or joint venturers, and
the Lender shall not have any liability or responsibility for any obligation,
act or omission of any of its participants. All rights and powers
specifically conferred upon the Lender may be transferred or delegated to any
of
the Lender’s participants, successors or assigns.
Section
8.8 Execution in Counterparts;
Telefacsimile Execution. This Agreement and other Loan
Documents may be executed in any number of counterparts, each of which when
so
executed and delivered shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same
instrument. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed
counterpart of this Agreement by telefacsimile also shall deliver an original
executed counterpart of this Agreement but the failure to deliver an original
executed counterpart shall not affect the validity, enforceability, and binding
effect of this Agreement.
Section
8.9 Retention of Borrowers’
Records. The Lender
shall have no obligation to maintain any
electronic records or any documents, schedules, invoices, agings, or other
papers delivered to the Lender by the Borrowers or in connection with the Loan
Documents for more than thirty (30) days after receipt by the
Lender. If there is a special need to retain specific records, the
Borrowers must inform the Lender of the need to retain those records with
particularity, which must be delivered in accordance with the notice provisions
of Section 8.3 within thirty (30) days of the Lender taking control of
same.
Section
8.10 Binding Effect;
Assignment;
Complete Agreement; Sharing Information. The Loan Documents
shall be binding upon and inure to the benefit of the Borrowers and the Lender
and their respective successors and assigns, except that the Borrowers shall
not
have the right to assign their respective rights thereunder or any interest
therein without having first received the Lender’s prior written
consent. To the extent permitted by law, the Borrowers waive and will
not assert against any assignee any claims, defenses or set-offs which the
Borrowers could assert against the Lender. This Agreement shall also
bind all Persons who become a party to this Agreement as a
borrower. This Agreement, together with the Loan
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Documents,
comprises the complete and integrated agreement of the parties with respect
to
each credit that is subject hereto, and supersedes all prior negotiations,
communications, discussion, correspondence and agreements, written or oral,
on
the subject matter of this Agreement. To the extent that any
provision of this Agreement contradicts other provisions of the Loan Documents,
this Agreement shall control. The Lender may share any information
they may have in their possession regarding the Borrower and their respective
Affiliates, with the Lender’s affiliates, participants, accountants, lawyers and
other advisors, and the Borrowers waive any right of confidentiality they may
have with respect to the sharing of such information.
Section
8.11 Severability of
Provisions. Any provision of this Agreement which is
prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof.
Section
8.12 Headings. Article,
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
Section
8.13 Governing Law; Jurisdiction,
Venue; Waiver of Jury Trial. The Loan Documents shall be
governed by and construed in accordance with the substantive laws (other than
conflict laws) of the State of Wisconsin. The parties hereto hereby
(i) consent to the personal jurisdiction of the state and federal courts
located in the State of Wisconsin in connection with any controversy related
to
this Agreement; (ii) waive any argument that venue in any such forum is not
convenient; (iii) agree that any litigation initiated by the Lender or the
Borrowers in connection with this Agreement or the other Loan Documents may
be
venued in either the state or federal courts located in the City of Milwaukee,
County of Milwaukee, Wisconsin; and (iv) agree that a final judgment in any
such suit, action or proceeding shall be conclusive and may be enforced in
other
jurisdictions by suit on the judgment or in any other manner provided by
law.
THE
BORROWERS AND THE LENDER WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION AT
LAW
OR IN EQUITY OR IN ANY OTHER PROCEEDING BASED ON OR PERTAINING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by
their respective officers thereunto duly authorized as of the date set forth
in
the initial caption of this Agreement.
Signatures
on following page.
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|
0000
Xxxxx Xxxxxx Xxxxxx
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||
|
Xxxxx
Xxxx, Xxxxxxx 00000
|
||
|
Telecopier: 574/232-7648
|
By:
|
/s/ Xxxx X. Xxxxxxx |
|
Attention: Xxxxxxx
X. Xxxxxx
|
Xxxx
X. Xxxxxxx, Chief Executive Officer
|
|
|
e-mail: xxxxxxx@xxxxxx.xxx
|
||
|
MAGNETECH
INDUSTRIAL SERVICES,
INC.
|
||
|
By:
|
/s/ Xxxx X. Xxxxxxx | |
|
Xxxx
X. Xxxxxxx, Chief Executive Officer
|
||
|
XXXXXXX
ELECTRIC, LLC
|
||
|
By:
|
/s/ Xxxx X. Xxxxxxx | |
|
Xxxx
X. Xxxxxxx, Chief Executive Officer
|
||
|
HK
ENGINE COMPONENTS,
LLC
|
||
|
By:
|
/s/ Xxxx X. Xxxxxxx | |
|
Xxxx
X. Xxxxxxx, Chief Executive Officer
|
||
|
MAGNETECH
POWER SERVICES, LLC
|
||
|
By:
|
/s/ Xxxx X. Xxxxxxx | |
|
Xxxx
X. Xxxxxxx, Chief Executive Officer
|
||
|
IDEAL
CONSOLIDATED, INC.
|
||
|
By:
|
/s/ Xxxx X. Xxxxxxx | |
|
Xxxx
X. Xxxxxxx, Chief Executive Officer
|
||
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3-D
SERVICE, LTD.
|
||
|
By:
|
/s/ Xxxx X. Xxxxxxx | |
|
Xxxx
X. Xxxxxxx, Chief Executive Officer
|
||
|
AMERICAN
MOTIVE POWER, INC.
|
||
|
By:
|
/s/ Xxxx X. Xxxxxxx | |
|
Xxxx
X. Xxxxxxx, Chief Executive Officer
|
||
|
Xxxxx
Fargo Bank, National Association,
|
XXXXX
FARGO BANK, NATIONAL ASSOCIATION
|
|
|
000
Xxxx Xxxxx Xxxxxx, 0xx
Xxxxx
|
||
|
MAC
X0000-00X
|
||
|
Xxxx
Xxxxx, Xxxxxxx 00000
|
By:
|
|
|
Telecopier: 260/461-6037
|
Xxxx
X. Xxxxxx, Vice President
|
|
|
Attention: Xxxx
X. Xxxxxx
|
||
|
e-mail: xxxx.x.xxxxxx@xxxxxxxxxx.xxx
|
||
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